City Council Revises Inclusionary Housing

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Tim Taylor, July 31, 2019

On July 30th the City Council approved amendments to City’s Inclusionary Ordinance.  The Ordinance, first adopted in 2003, requires that developers contribute a percentage of low-income housing or pay a fee to support low income housing when they build market rate housing.  The vote was 5-4, which leaves the measure vulnerable to a Mayoral veto.

The amendments originated with Council President Gomez and are intended to increase the amount of affordable housing that is required to be built on site, with market rate housing.  Currently most developers choose to pay the in-lieu fee, resulting in no on-site affordable housing.

Gomez’s ideas have undergone a number of changes from the original proposal contained in Gomez’s 2017 Housing Action Plan.  The result is not what affordable housing advocates were hoping for.  At the same time, the building industry is also not happy with the new regulations.

The proposed regulations would result in the following.  For rental housing 10% of the units must be affordable to and occupied by households earning at or below 50% of Average Median Income (AMI).   For for-sale housing either 10% of the total units must be set aside for households earning at or below 100% AMI or 15% of the total units for households earning at or below 120% AMI or a combination of the two.  Builders would still have the option of paying an in-lieu fee, but the fee would incrementally increase from the current $10.82 per square foot to $22.  Inclusionary units provided onsite will be exempt from Development Impact Fees and Future Benefit Assessment (FBA) District fees.

A study performed by Keyser Marston Associates on the financial feasibility and impact of the proposals, determined that they would result in additional affordable housing.  The amendments were previously approved by the Council’s Rules Committee on May 15th.

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