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market to provide housing the way private markets provide affordable housing in 49 states other than California? The good news is that Pleasanton does not have to solve the housing problems of the Bay Area. All we have to do is provide our fair share of housing. The proposal is that the City can empower the housing market by exempting all new housing units of 1500 square feet or less from inclusionary rent controls and growth management controls. The 650 unit per year General Plan limit for market rate housing can be maintained with excess units, if any, being placed in the queue. Without rent controls there would be enthusiastic private sector demand to build smaller housing which in inherently more affordable by design. Projects would have to be approved in the normal manner at locations compatible with the General Plan and infrastructure constraints. The market for larger homes would be largely unaffected. There would soon be more housing alternatives for young families and small households that would put downward pressure on prices in the small housing sector of the market. Pleasanton can once again be worthy of the name "City of Planned Progress" by rediscovering the power of a free housing market to meet the housing needs of ordinary citizens and the next generation of Californians, including our children. Ms. Hosterman asked Mr. MacDonald if he thought that no new workforce housing units were built since the year 2000 because of inclusionary zoning? Mr. MacDonald said inclusionary zoning, plus growth management, plus a three year process, plus the kind of the thing Mr. Fred Bates had to go through with the City, are the kinds of things that are causing houses to cost one million dollars rather than equivalent houses that cost $250,000 - $300,000 in the rest of the country. Ms. Hosterman asked if the economy had anything to do with this? Mr. MacDonald said it did not. The economy will always have fluctuations up and down in demand. We have our housing supply so constricted and pent up. In Santa Clara County they lost 18% of their jobs and their housing prices stayed flat. That has never happened and the analysts cannot understand why. The answer is there is such a pent up demand and it is so hard to get housing. You cannot get housing built. The idea is to make it into an opportunity to say if you are building something 1500 square feet or less, go directly to "go." Get 100 building permits and build them. If this was done, people would be amazed at sites they would suddenly find that were buildable. People would suddenly find the wherewithal to put together projects and come in and propose them. Ms. Ayala asked Mr. MacDonald what the price would be on the 1500 square foot homes? Ms. Ayala said new housing would be $500,000. Is this affordable housing? We cannot solve this problem at this point in our build out. Mr. MacDonald asked what 1500 square homes in Pleasanton were currently selling for? He thought $375,000 to $400,000 If you allowed the building of houses up to 1500 square feet without years of growth management and without the process that is envisioned here, he expected over a period of a few years there would be a number of Pleasanton City Council 18 04/15/03 Minutes