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CITY COUNCIL AGENDA REPORT <br />August 20, 2024 <br />Community Development <br />TITLE: PROVIDE DIRECTION ON KEY POLICY CONSIDERATIONS FOR AN <br />UPDATE OF THE INCLUSIONARY ZONING ORDINANCE AND <br />AFFORDABLE HOUSING FEE <br />SUMMARY <br />Following the May 7, 2024, City Council workshop, at which initial findings from the <br />evaluation of changes to the City’s Development Impact Fees, Sewer and Water <br />Connection Fees, and Inclusionary Housing rate were presented, this second workshop <br />requests further City Council input and direction on the Inclusionary Zoning Ordinance <br />(IZO), inclusionary rate, and fees. <br />Staff provides the following recommendations, based on City Council discussion at the <br />May meeting, subsequent analysis by Economic & Planning Systems (EPS), and <br />consideration of the balance between securing the largest number of inclusionary units <br />in market-rate projects, while considering project feasibility of new residential <br />development: <br />Establish a 15% inclusionary rate for both rental and for-sale projects (all unit <br />types), with rental units at 60% Area Median Income (low-income) and for-sale <br />projects at 120% AMI (moderate income), and reduce “threshold” project size <br />from 15 to 10 units. <br />Establish an affordable housing in-lieu fee for projects not subject to inclusionary <br />requirements, or otherwise permitted to pay in-lieu fees, of up to $45.57 per <br />square foot for single-family and townhome projects, and up to $20-25 per <br />square foot for multi-family projects, with these preliminary recommendations <br />subject to refinement as part of the broader consideration of the overall fee <br />program. <br />As an interim measure to stimulate multi-family housing production, allow rental <br />apartment projects to pay fees in lieu of constructing on-site housing for up to <br />30% of the required units. <br />Adopt various modifications to the existing IZO to: <br />o Make all alternative compliance proposals subject to City Council review <br />and approval, and subject to findings <br />o Make proposals fully compliant with the IZO subject to approval at the <br />same level as the underlying project <br />o Continue to include a range of alternative compliance options, including <br />payment of in-lieu fees, with such proposals subject to City Council review <br />and approval <br />Item #1.a. <br />Page 3 of 40