Inclusionary Housing Policy

The City's 2016 Housing Action Plan seeks to increase affordable housing development - a key tool in that effort is the Housing Allocation Plan Ordinance (also known as the "Inclusionary Housing" Ordinance).  The Ordinance requires that housing projects include affordable units on-site or contribute funds for affordable housing development in the City.

The Housing Action Plan also calls for the preparation of the Commercial Linkage Fee Study to evaluate if such a fee may provide the City with another affordable housing funding source to help increase inclusionary housing.  

On October 22, 2019, the Inclusionary Housing Ordinance was amended by Council.  The key amendments (1) revised the inclusionary (on-site) affordable unit percentage requirement, (2) modified the Housing Impact Fee structure, (3) reduced the inclusionary percentage and housing impact fee for multifamily housing and mixed-use development in the Downtown Area to help encourage higher intensity development, and (4) established a new Commercial Linkage Fee to increase affordable housing development within the City.  The ordinance and fees take effect December 2, 2019. 

Adopted Ordinance and Fees

Inclusionary Housing Ordinance (October 2019)

Housing Impact Fee Resolution (October 2019)

Commercial Impact Fee Resolution (October 2019)

Reference Documents

Community/Stakeholder Workshop Memo (August 2019)

Residential Impact Fee Nexus and Feasibility Study (May 2019)

Commercial Linkage Fee Nexus and Feasibility Study (May 2019)

Housing Allocation Plan Ordinance Update White Paper (July 2019)

Project Schedule

The following is the anticipated schedule for the project:

Project Kickoff, Initial Stakeholder Engagement, and ResearchSeptember-December 2017
White Paper with back ground information and optionsJuly 2019
Community / Stakeholder WorkshopAugust 7, 2019
Planning Commission Study SessionAugust 8, 2019
Housing Authority Study SessionAugust 26, 2019
City Council Study SessionAugust 27, 2019
City Council Public HearingOctober 1, 2019 

Background Information

In October 2016, the City Council accepted the Housing Action Plan (Plan), which includes a variety of programs aimed at addressing the City’s ongoing unmet housing needs. Program 1 of the Plan is to “increase inclusionary housing”.

Inclusionary housing is a requirement that some portion/percentage of a new housing development be affordable to lower income households.

With Program 1 of the Plan, the City Council’s goal is to increase the production of affordable housing as part of market‐rate housing projects.

Housing Allocation Plan

The City’s Housing Allocation Plan (HAP) Ordinance, which provides regulations for the development of housing units affordable to lower income households, was first adopted in June 1992. Since that time, the Ordinance has been amended several times.

Prior to 1995, the HAP required most housing projects to provide units affordable to lower income households on a project site (aka inclusionary housing). At that time, 15% of total project units were to be affordable to low income households. Projects on smaller sites, where applying 15 % would not produce one affordable unit, were subject to an in‐lieu fee.

As is true today, there were other alternatives for compliance in the original ordinance, including off‐site development of affordable units and land dedication on or off‐site.

In 1995, the ordinance was revised to require residential developments under 20 acres to pay the in‐lieu fee. In 2002, the requirement was changed again to apply to projects of 15 acres or less. The HAP was most recently revised in 2012 to include payment of a housing impact fee as the basic requirement for all residential projects.

Housing Allocation Plan Amendment Direction

With the acceptance of the Housing Action Plan, the City Council provided direction to amend the Housing Allocation Plan Ordinance as follows:

  • Seek inclusionary units in for‐sale housing projects. Include a requirement that for‐sale housing projects include on‐site affordable units, which would be for sale to moderate income (up to 120 percent of area median income, or AMI) and low income (up to 80 percent of AMI) households.
  • As part of the amendment, require a minimum of 15 % of the for‐sale project’s total units to be affordable to a mix of low and moderate income households.
  • Specify additional regulatory and financial incentives and alternative compliance measures as may be needed to maximize production of affordable housing units.
  • Encourage innovation in achieving increased inclusionary housing.

In June 2017, the City released a Request for Proposals (RFP) to various consulting firms to assist with the development of an amended Housing Allocation Plan Ordinance, as directed by the City Council.