INCLUSIONARY HOUSING
ORDINANCE UPDATE
CITY COUNCIL WORKSHOP
DECEMBER 2, 2025
BACKGROUND
Current ordinance:
• 15% affordable units for projects of 5+ units.
• Existing income mix no longer reflects current housing needs.
Housing Element Direction (Program 7):
• Calls for shifting toward deeper affordability.
• Ensure requirements remain feasible for housing development.
Why Update Now:
• Total RHNA (2023-2031): 5,353 units; Progress to date: 447 units. • Maintain eligibility for State/Regional funding tied to housing affordability.
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 2
STATE AND REGIONAL REQUIREMENTS
Under State Law
Cities may require 15% affordable
rental units
Must offer alternative compliance
options
State may review ordinances for
feasibility
Transit Oriented Communities
Funding Eligibility
Rental: 15% <= Low Income
Ownership: 15% <= Moderate
Income
In-lieu fee: $100,000 per unit
Waivers allowed only if infeasibility
is demonstrated
3CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE
PROCESS AND ENGAGEMENT
Feasibility Study:
Conducted by StreetLevel Advisors to
model income mixes, feasibility, and
cost impacts.
Internal stakeholders:
• Housing and Human Services
Division
• Alameda Housing Authority
• Planning Board subcommittee
members
External stakeholders:
• Market-rate developers
• Nonprofit affordable housing
developers
Planning Board workshops:
• January 17, 2025
• May 27, 2025
• November 10, 2025
4 CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE KEY FINDINGS - Market Realities & Feasibility
What We Learned About Feasibility:
• Rental and ownership projects have different economics • Updated ratios can keep overall costs similar to today’s ordinance • Small adjustments can encourage either on-site units or in-lieu fees Will this Make a Difference?
Refining inclusionary requirements helps, but broader economic factors (materials, labor, financing) ultimately determine feasibility. 5 CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE KEY FINDINGS – HOUSING NEED
Targeting Alameda’s Housing Need
• Moderate-Income rentals often mirror market rents and offer limited added benefit.
• Low-Income units best match unmet rental housing needs in Alameda.
• Very Low-Income units are typically produced through
larger nonprofit or publicly funded projects w/ the
Alameda Housing Authority.
6 CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE KEY FINDINGS – IN LIEU FEES
7 Fee Structure
• Expand in-lieu fees to all project types
• Set fees comparable to on-site unit costs
• Use per-square-foot rates so fees scale with unit size Policy & Legal Considerations
• Expanding fees to larger projects will require a nexus study • Fees can be calibrated to guide outcomes:
• Higher fees to incentivize on-site units.
• Lower fees to incentivize fee payment to fund affordable housing. • Structure allows the City to adjust over time to changing housing needs.
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE
OTHER KEY FINDINGS
8 Criteria for Clustered Option
• Allows larger projects to separate affordability levels (MOD onsite; deeper-affordability off-site).
• Off-site units may be delivered by nonprofit partners (e.g., AHA). • Requires establishing better, clearer criteria and a formal review process.
Term of Affordability
• Defines how long units must remain deed-restricted affordable. • Best practice is shifting from a 59-year term to 99 years.
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE
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
9 • Alameda County AMI (2024): $159,800 for 4-person household • All values are approximate / rounded
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 10 RENTAL INCLUSIONARY REQUIREMENT
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE Recommended Rental Requirement
11 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.
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE Recommended Rental Requirement
12 Very Low
Income Low Income Moderate
Income TOTAL COST / SF
Existing 4% 4% 7% 15% $17.50
Option 1 * -- 15% -- 15% $20.00
Option 2 5% 5% -- 10% $19.00
Option 3 8% -- -- 8% $19.50
*Primary staff recommendation
NOTE: Costs are relative using baseline assumptions – per month CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 13 OWNERSHIP INCLUSIONARY REQUIREMENT
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE Recommended Ownership Requirement
14 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.
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE Recommended Ownership Requirement
15 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 CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE Recommended In-Lieu Fee Framework
16 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.
Expanding fees to larger projects will require a nexus study.
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 17
LOCAL IN-LIEU FEES
Other cities collect fees per unit, based on valuation
$27.50 Existing Fee
Equivalent
$50 - Recommended
For-Sale In-lieu Fee
$25 - Recommended
Rental In-lieu Fee
Recommended In-Lieu Fee Framework
18 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
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 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.
19 CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 20 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, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 21 Planning Board/Developer Feedback
Planning Board Feedback:
• Supports staff’s primary recommendation and expanding flexibility • Supports temporary relief measures to support housing production Developer Feedback:
• Support allowing in-lieu fees for larger projects
• Request lower fee levels (as low as $10/sq ft) to improve feasibility Staff Response:
• Support expanding compliance options; will prepare nexus study. • Caution: Reducing inclusionary requirements alone may not guarantee new housing, as feasibility depends on broader market conditions.
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE 22 RECOMMENDATION SUMMARY
Compliance Option Existing
Requirements
Proposed Rental Proposed Ownership
Inclusionary Units 15% =
7% MOD +
4% LI +
4% VLI
15% Low Income
And other options in Table 2
5% Low Income & 10%
Moderate
And other options in Table 3
In-Lieu Fee
(Subject to nexus
study)
Projects with
5 to 9 units only:
$28,149 per unit
All projects > 5 units:
$25 per net sq ft
All projects > 5 units:
$50 per net sq ft
Clustered Option Subject to
Planning Board
approval
• Establish standard
procedures
• Require City Manager
approval
• Ensure competitiveness for
leveraged funding.
• Require land + cash equal
to the in-lieu fee value.
Same as Rental
Period of Affordability 59 years 99 years 99 years
CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE
NEXT STEPS
1. Prepare a draft ordinance for Planning Board and City Council review in Spring 2026.
2. Work with City Attorney on a Nexus Study for expanding in-lieu fees (separate track from the ordinance update).
3. Implement any additional direction from the City Council. 23 CITY COUNCIL, DECEMBER 2, 2025 – INCLUSIONARY HOUSING ORDINANCE UPDATE