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Honorable Mayor and Members ofthe City Council: BACKGROUND The State of California requires that all jurisdictions in the state regularly update the Housing Element of their General Plans. Within these Housing Elements, the state mandates that local governments plan for their share of the region's housing need, for people of all income categories. In the case of the San Francisco Bay Area, ABAG, as the region's Council of Governments, and the State Housing and Community Development Department (HCD), determines the region's need for housing. ABAG then allocates that need, for all income groups, amongst the region's jurisdictions, which plan for that need in their local Housing Elements, which are eventually state-certified by HCD. The process of allocating housing units to all income groups throughout the cities and counties within the State's regions is called the Regional Housing Needs Allocation (RHNA) process. Generally, individual local agencies work with ABAG to develop a formula for allocating the number of housing units identified by the State and ABAG for the region. For the current RHNA period, which expires in June 2007, the region's target is for 230,743 new housing units. Pleasanton's share of this number is 5,059 units. Based on State law, the RHNA process has four objectives as follows: (I) Increase the housing supply and the mix of housing types, tenure, and affordability in all cities and counties within the region in an equitable manner, which shall result in each jurisdiction receiving an allocation of units for low and very low income households. (2) Promote infill development and socioeconomic equity, the protection of environmental and agricultural resources, and the encouragement of efficient development patterns. (3) Promote an improved intraregional relationship between jobs and housing. (4) Allocate a lower proportion of housing need to an income category when a jurisdiction already has a disproportionately high share of households in that income category, as compared to the countywide distribution of households in that category from the most recent decennial United States census. To assist with the RHNA process, ABAG formed the HMC comprised of elected and staff members from throughout the ABAG region. The HMC began meeting in Spring 2006 and its last meeting was held on January 4,2007. As indicated, the goal of the HMC was to develop a housing unit allocation methodology for the next RHNA period, running from June 2007 to 2014, that will be viewed as fair by local jurisdictions and to be consistent with State law including the consideration of the following factors: Page 2