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units off-site, and other “creative concepts” deemed consistent with the purposes of the IZO. For some alternatives, such as dedication of land and off-site construction, and other developer-proposed approaches, the IZO specifies the City Council must approve such approaches (i.e., it is discretionary as to whether such alternatives are allowed). With respect to payment of fees the IZO is permissive, stating that applicants may propose payment of fees, with City Council approval not stipulated and no parameters for approval identified. The IZO includes some limited parameters for the location and design of the inclusionary units, generally prohibiting clustering the units in a single area of the site, requiring units to incorporate identical exterior materials and finishes as the market-rate units, and allowing for units to be smaller than the market-rate units. Since its adoption in 2000, the IZO has resulted in the production of hundreds of below- market-rate units and has generated millions of dollars in affordable housing funds that have supported valuable programs and unique affordable housing projects including the Sunflower Hill residential community, Promenade Apartments, and Kottinger Gardens. While flexibility and the ability to negotiate affordable housing agreements as a component of discretionary project approvals made the IZO’s structure logical, State laws have shifted to eliminate much of the City’s discretion and negotiating authority with respect to residential projects, and to allow enforcement of only objective standards and requirements. The lack of specificity in the current Ordinance does not serve the City well in ensuring market-rate projects contribute to meeting the City’s substantial affordable housing needs and its Regional Housing Needs Allocation (RHNA) obligation. Objective Design Standards and Housing Overlay Zone–Supplemental Inclusionary Standards Understanding the existing IZO has some deficiencies, the Objective Design Standards for Housing Element Sites that were adopted in January 2023 (and subsequently amended in May 2023) included more specific parameters with respect to inclusionary units. Those requirements were reflected and further refined as part of the new Housing Opportunity Zone (HOZ) designation, to which each of the Housing Element sites was re-zoned in January 2024. The ODS and HOZ reflected more strict parameters with respect to affordability mix and bedroom mix, allowances in some circumstances for clustering of required inclusionary units, and more specificity as to the minimum size of inclusionary units compared to market rate units. An excerpted section of the ODS, with respect to Inclusionary Housing requirements is included as Attachment 2. While the standards included provide useful “bridging” guidance in the absence of a more comprehensive update to the IZO, staff believes it is appropriate to revisit and incorporate those new standards (with amendments as needed) into the IZO update. Page 5 of 40