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San Francisco Bay Area Draft Regional Housing Needs i\llocation, 4th Revision The following income allocation of regional housing needs to jurisdictions is recommended: . Very Low, 23 Percent Households with income up to 50 percent of the county's area median income (AMI) . Low, 16 Percent Households with income between 50 and 80 percent of the county's AMI . Moderate, 19 Percent Households with income between 80 and 120 percent of the county's AMI . Above-Moderate, 42 Percent Households with income above 120 percent of the county's AMI This recommendation is based on the recognition that the need for affordable housing is a problem shared by the region as a whole, and is not localized to specific jurisdictions. By assigning every community an equal share of the regional need for affordable units, the methodology promotes the idea that every jurisdiction should do its "fair share" to provide housing. During the discussion of the income-based allocation, some HMC members expressed concern that a potential drawback of the proposed "equal share" strategy is that it might allocate affordable housing to jurisdictions that are less likely to build the units. If this were the case, the income allocation would therefore hinder the region's ability to provide enough housing affordable to meet the region's housing needs. However, there was general agreement that the benefits of this approach outweighed the potential negative impact. In addition, the HMC members felt that this issue could be worked out through the provisions in the methodology that allow for voluntary transfer agreements between individual jurisdictions. The HMC discussed the possibility of using the proportion of households with a high housing cost burden in a jurisdiction to adjust the income allocation for each jurisdiction. As a result, areas with higher numbers of households with a cost burden would receive a larger share of affordable units. This factor is based on the premise that directing more affordable housing units to these jurisdictions would provide more housing options to residents in those areas. However, the HMC was opposed to adjusting allocations based on high housing cost burdens because there was concern that, as noted above, including a factor based on existing conditions in a jurisdiction would ultimately lead to the over-concentration of low-income households in an area. In addition, committee members were committed to the idea that the need for affordable housing is a regional problem that each local government should have an equal share in addressing. 3. Spheres ofInfluence Every city in the Bay Area has a "sphere of influence (SOl)". A city's SOl can be either contiguous with or beyond the city's boundaries. It is the areas that the city is responsible for planning, as it is the probable future boundary of the city, including areas that may eventually be annexed by the city. The SOl is designated by the county Local Area Formation Commission (LAFCO). The LAFCO influences how government responsibilities are divided among jurisdictions and service districts within a county. If there is planned household or employment growth within the unincorporated portion of an SOl during the RHNA period, the allocation methodology must include a rule for allocating housing needs to the affected city or county. November 2006, Page 12