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RHNA Income Allocation 1/04/07 Page 2 Percent Adjustment Toward Regional Average By allocating each jurisdiction an equal share based on the regional income distribution, the draft allocation scenario moves each jurisdiction 100 percent toward the regional income distribution. It is focused on promoting an equitable regional distribution for future housing production, but does not consider existing concentrations of poverty in a community or take steps to reduce them. In contrast, the first two alternative income allocation scenarios give each jurisdiction either 150 or 175 percent of the difference between their 2000 household income distribution and the 2000 regional household income distribution. The first step in this process is to determine the difference between the regional proportion of households in an income category and the jurisdiction's proportion for that category. This difference is then multiplied by either 150 or 175 percent to determine an "adjustment factor." Finally, this adjustment factor is added to the jurisdiction's initial proportion of households in the income category, which results in the total share of the jurisdiction's housing unit allocation that will be in that income category. Using the 175 percent factor and the City of Oakland's very low income category as an example, 36 percent of households in Oakland were in this category, while the regional total was 23 percent. City Jurisdiction Proportion 36 Regional Proportion 23 Difference Oakland -13 Multiplier 175% Adjustment Factor -23 Total Share 13 The difference between 23 and 36 is -13. This is multiplied by 175 percent for a result of -22.75 (rounded to 23). This is then added to the city's original distribution of36 percent, for a total share of 13 percent. A similar calculation for Piedmont, which has a relatively low proportion of households in the "very low" income category yields the following results: City Jurisdiction Proportion 9 Regional Proportion 23 Difference Piedmont 14 Multiplier 175% Adjustment Factor 24 Total Share 33 As shown above, those jurisdictions that have a larger proportion of households in an income category will receive a smaller allocation of housing units in that category. Conversely, those jurisdictions that have a relatively low proportion of households in a category would receive a higher allocation of housing units in that category. The effect of these allocation scenarios is to change the income distribution in each jurisdiction to more closely match the regional distribution by taking both a jurisdiction's existing conditions and future development into account. By addressing existing concentrations of poverty, these scenarios more aggressively promote an equitable regional income distribution. The multiplier determines how aggressively the scenario functions; the higher the multiplier, the more aggressive. Tiered Adjustment Based on Concentration of Poverty The third alternative scenario is similar to the first two alternatives in that it uses existing conditions to move each jurisdiction closer to the regional income distribution. The key difference in this scenario is that jurisdictions are first separated into three groups based on the jurisdiction's proportion of low- and very low-income households compared to the proportion for the region. The three groups correspond to