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o Explicitly disallow ADUs/JADUs to count toward meeting the IZO requirement o Improve feasibility for on-site inclusionary units by providing additional flexibility as to smaller unit sizes/types, and clustering of inclusionary units in some circumstances o Add quantitative standards to ensure minimum unit sizes, and other standards are met. FINANCIAL STATEMENT The City has collected between approximately $1.75 million and $2.35 million per year in the Lower Income Housing Fund in the last three years (FY21-23); considering offsetting expenditures, the fund has grown annually by between approximately $685,000 and $1.26 million in the same period. Funds contributed to the account in the past three years generally comprise fees paid by projects not subject to the IZO (i.e., small residential and commercial projects). The effects of changing the inclusionary rate on the amount of fees collected will vary in the future depending on the type and pace of development, as well as any decisions made by City Council to accept payment of in-lieu fees for specific projects. However, calibrating the affordable housing fee more closely to the cost of developing on-site affordable units will likely increase the amount of fees collected (since in most cases, equivalent fees per unit will go up) and provide an additional financial resource to the City to support programs and projects to meet the community’s affordable housing needs. BACKGROUND Inclusionary Zoning Ordinance–Overview The IZO Chapter 17.44 of the Pleasanton Municipal Code was adopted in 2000 and has not been updated or amended since then (Attachment 1). Key elements of the current IZO include:  For projects of 15 or more units, a requirement to include affordable units at a rate of 15% of total units for multi-family projects; and 20% of total units for single-family projects. The IZO does not distinguish between rental and for-sale projects.  Inclusionary units within multi-family must be affordable to very-low or low- income households; within single-family projects, units can be affordable to very- low, low, and/or moderate-income households. The IZO does not establish proportions of units that must be targeted to each of these affordability levels, nor does it specify a specific income limit within the very-low, low- or moderate- income range.  Commercial, office, and industrial development is required to either pay the Lower Income Housing Fee (LIHF) or provide affordable housing as part of the project.  Allowance for projects to propose a range of alternatives to building on-site units. These include payment of in-lieu fees, dedication of land, and construction of Page 4 of 40