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5 of 11 existing multi-family rate). Even under this reduced inclusionary scenario, there is room to increase the in-lieu fees for ownership projects, with specific fee levels to be considered by the City Council at a future date and in light of the overall fee program . The report noted that the current market is extremely challenging for multi-family projects, and so increasing either the rate or the in-lieu fee could further impact the feasibility of multi-family development – thus, an increase in the inclusionary rate is unlikely to be feasible in the near term. August 20, 2024 Workshop The City Council held a follow-up workshop on August 20, focused on the Inclusionary Zoning Ordinance.2 At this meeting, EPS provided additional analysis and refined scenarios for the inclusionary rate and in-lieu affordable housing fee. Staff also provided information and analysis and requested direction on several key policy questions regarding the content of the IZO. A majority of the City Council provided consensus direction on these items, although there was not unanimity on every point. The outcomes and recommendations made by the City Council are outlined further in the analysis and discussion of the amendments to the IZO, below. ANALYSIS Direction provided by City Council at the August 20, 2024 workshop has been incorporated into a more comprehensive set of revisions to the IZO, provided in redline/strikeout format as shown in Exhibit A. In addition to items on which the City Council provided specific direction, the proposed revisions include various other updates, clarifications and improvements to the IZO, principally intended to provide more clear and objective standards, clarify procedures, and align the ordinance with more standard language in definitions and other terms. Substantive changes to the IZO are outlined below. Inclusionary Rate and Affordability Levels (17.44.040.B. and C.) The IZO has been amended to reflect the direction of City Council to establish the inclusionary rate and affordability levels for ownership and rental projects as follows: • For-Sale Projects (attached and detached): 15 percent inclusionary; units affordable to households making up to a maximum of 120 percent Area Median Income (AMI) – i.e. moderate income • Rental Projects: 15 percent inclusionary; units affordable to households making a maximum of 60 percent Area Median Income (AMI) – i.e. low-income. Of note, the amended IZO would distinguish between for-sale and rental projects as the basis to apply the inclusionary requirements. As outlined in the May 7, 2024 report, this contrasts to the current structure that uses “single-family” and “multi-family” criteria. Most local inclusionary ordinances reviewed by staff use tenure as a basis to determine the inclusionary rate because there is a strong relationship between tenure and related market-rate and affordable sales or rental price.3 2 Link to August 20, 2024 City Council Agenda Item and Attachments: https://weblink.cityofpleasantonca.gov/WebLink/0/doc/309074/Page1.aspx 3 City Council also recommended modifying the current fee structure to be assessed on a per square foot basis for residential development (rather than per unit), which helps to scale the fee collected to the size of the home, and potentially encourage