INCLUSIONARY HOUSING
ORDINANCE UPDATE
CITY COUNCIL WORKSHOP
NOVEMBER 18, 2025
BACKGROUND: HOUSING ELEMENT PROGRAM 7
Housing Element Program 7
• Current ordinance: 15% affordable units for projects of 5+ units. • Housing Element calls for shifting from Moderate toward Low and Very Low Income units to meet greater need.
• Program 7 directs an update to the ordinance to:
• Maintain feasibility for development
• Align with state and regional funding that prioritize deeper affordability. • Quantified Objective: At least 803 affordable units over 8 years (~100/year) • Total RHNA: 5,353 units
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 2
CONTEXT: STATE AND REGIONAL REQUIREMENTS
AB 1505 (“Palmer Fix”)
Allows cities to require 15% affordable
rental units at 80% AMI.
Requires alternative compliance
options such as in-lieu fees or off-site
construction.
Allows HCD to review local ordinances
that appear more burdensome and
may require a feasibility analysis.
OBAG 4 / Transit Oriented Communities
(TOC)
Default expectations for eligibility:
Rental: 15% units affordable at 80% AMI
Ownership: 15% units at 120% AMI
In-lieu fee: $100,000 per affordable unit not
provided
Waivers are available where a
feasibility study shows the default
standard is not feasible
3CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE
PROCESS AND ENGAGEMENT
Technical analysis: Feasibility study
prepared by StreetLevel Advisors.
Internal stakeholders:
•Housing and Human Services Division
•Alameda Housing Authority
•Planning Board subcommittee members
External stakeholders:
•Real estate development professionals
•Affordable housing partners
Planning Board workshops:
•January 17, 2025
•May 27, 2025
•November 10, 2025
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 4
KEY FINDINGS
Targeting Alameda’s Housing Need
• Moderate Income rentals often mirror market
rents and offer limited added benefit.
•Low Income units best match unmet housing
needs in Alameda.
•Very Low Income units are typically produced
through larger nonprofit or publicly funded
projects w/ the Alameda Housing Authority.
Market Realities & Feasibility
• Rental and ownership projects operate under
different financial conditions, so separate ratios
help maintain feasibility across both.
• Updated inclusionary ratios should keep the
overall cost of compliance comparable to the
existing ordinance.
• Small adjustments can encourage either onsite
unit production or in lieu fees depending on
City priorities.
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 5
KEY FINDINGS – IN LIEU FEES
6CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE Purpose & Structure
• Expand to all project types to strengthen
funding for affordable housing.
• Set fees comparable to on-site unit costs
consistent with regional practice.
• Converting fees to a per-square-foot rate
ensures the fee scales with unit size and
income level.
Legal Requirements & Policy Considerations
• Expanding fees to larger developments will
require a nexus study, per direction from the
City Attorney.
• Once established, fees can be calibrated to
influence outcomes:
• Higher fees can encourage on-site unit
production.
• Lower fees can encourage payment of
fees that fund City-led or nonprofit
affordable projects.
• This structure allows the City to adapt to
changing housing needs and funding
opportunities.
KEY FINDINGS
7CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE Criteria for Clustered Option
• Allows larger projects to meet requirements by mixing income levels, where Moderate units remain on-site and deeper-affordability units are built separately.
• Off-site units may be delivered by a nonprofit partner such as the Housing Authority.
• The City should establish clear criteria and a formal review process to evaluate these proposals case by case.
Term of Affordability
• Refers to how long units must remain deed-restricted affordable. • Best practice is shifting from a 55-year term to 99 years.
INCOME LIMITS & RENT / SALES PRICES
Affordability
Category
Area Median
Income Level
Income Limit
(4-person HH)
Maximum
Rent
Maximum
Sale Price
Very Low (VLI) 50% AMI $79,900 $2,000 $108,000
Low (LI) 80% AMI $125,050 $3,250 $279,000
Median (MED) 100% AMI $159,800 $3,650 $364,000
Moderate (MOD) 120% AMI $191,750 $4,050 $449,000
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 8 • Alameda County AMI (2024): $159,800 for 4-person household • All values are approximate / rounded
RENTAL INCLUSIONARY
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 9
Recommended Rental Requirement
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 10 Require Rental Units at 15% Low Income (or equivalent)
Maintains the overall inclusionary requirement at 15%. Aligns with AB 1505 and TOC eligibility for 15% of rental units to be provided at Low Income (or equivalent).
Targets households not already served by market-rate or nonprofit development. Avoids reserving units at rent levels already attainable without subsidy.
Recommended Rental Requirement
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 11 Very Low
Income Low Income Moderate
Income TOTAL COST / SF
Existing 4% 4% 7% 15% $18.25
Option 1 * -- 15% -- 15% $20.00
Option 2 5% 5% -- 10% $18.90
Option 3 8% -- -- 8% $19.50
• Primary staff recommendation
• NOTE: Costs are relative using baseline assumptions – per month
OWNERSHIP INCLUSIONARY
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 12
Recommended Ownership Requirement
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 13 Require Ownership Units at 5% Low and 10% Moderate Income (or equivalent) Maintains the current overall share of 15% deed-restricted units. Expands ownership opportunities for lower income households. Meets TOC criteria requiring 15% of ownership units at Moderate Income or equivalent.
Better reflects local ownership demand while reducing required per-unit subsidy.
Provides eligibility for a 5% density bonus and incentives.
Recommended Ownership Requirement
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 14 Very Low
Income Low Income Moderate
Income TOTAL COST / UNIT
Existing 4% 4% 7% 15% $10,350
Option 1 -- -- 15% 15% $8,250
Option 2 -- 6% 6% 12% $7,650
Option 3 -- 10% -- 10% $7,250
Option 4 * -- 5% 10% 15% $9,125
• Primary staff recommendation
• NOTE: Costs are relative using baseline assumptions – at time of sale Recommended In-Lieu Fee Framework
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 15 Expand the In-Lieu Fee to Apply to All Housing Projects Creates a consistent and flexible local funding source for affordable housing. Supports grants that require local match contributions. Helps serve very low, extremely low, and special-needs households. Enables programs such as acquisition/rehab, seismic/flood upgrades, and nonprofit pre-development.
Note: Expanding fees to larger projects will require a nexus study, per City Attorney guidance.
Recommended In-Lieu Fee Framework
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 16 Small Projects
(5-9 units)
All Projects
(5+ units) Rental For Sale
Existing Fee
(small projects) $28,149 / unit
Equivalent to
Existing Fee $27.50
Equivalent to
Existing Unit
Requirements
$17.50 $62.00
Staff
Recommendation $25.00 $50.00
• Fees are per net square foot of floor area in the project • Allow partial fee for partial units
Recommended Clustered Development
Approach
Clustered Development Should be Encouraged
Establish clear criteria for evaluating clustered proposals. Designate the City Manager as the decision-maker.
Require review by Housing & Human Services and the Housing Authority.
Consider competitiveness for external funding sources. Ensure clustered proposals are equivalent to other compliance options.
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 17
CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 18 Recommended Affordability Term
Extend Term of Affordability
Existing requirement: 59 years
Proposed requirement: 99 years
Aligns with best practice and preserves long-term affordability CITY COUNCIL, NOVEMBER 18, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 19
RECOMMENDATION SUMMARY