F.1 Inclusionary Housing
Nexus Study
Study Session
1 What is Inclusionary Housing
Encourages or requires housing developers to set aside affordable units within new development projects
Local land- use Controls
Lower-income families in high resource areas
Produce revenue for future affordable housing development 2 Inclusionary Housing Policy
3 Developer Outreach Efforts
Developer interviews
Hybrid developer workshop 1/21/2025
Accepted developer feedback via email
Commercial and Residential Developer Outreach via email and through the website 1 4
Nexus Study
Conducted study included:
Discussions with other jurisdictions that have Inclusionary housing policy Analysis of comparable jurisdiction policies and associated fees including:
• Benicia
• Santa Rosa
• Sacramento
• Elk Grove
• Woodland
5 Peer Jurisdictions Inclusionary Policies
Jurisdiction Homeownership
Inclusionary Policy
Homeownership
in- lieu fee or impact
fee
Multi-Family
Inclusionary
Policy
Multi-Family
in-lieu fee or impact
fee
Minimum Unit
applicability
City of
Benicia
5% very Low and 5%
low (add’l 5% Low
for projects of 100+
units)
No Fee 5% very Low
and 5% low
Inclusionary Preferred 10
City of Santa
Rosa
10% Moderate $5/ sq ft(0-909 sq ft);
$10/ sq ft (910+ sq ft)
5% Very Low
or 8% Low
$5/ sq ft(0-909 sq ft);
$10/ sq ft (910+ sq ft)
7 City of
Sacramento
N/A $3.54/sq ft N/A $3.54/sq ft 2
City of Elk
Grove
N/A $6,289 per unit N/A $3,773 per unit 1
City of
Woodland
10% Low Calculated per
project
10% Low Calculated per project 20
6 Policy Decisions
1. Number of Units to trigger inclusionary Housing Policy for Multi-family and homeownership development
2. What level of affordability is triggered by the Inclusionary Housing Policy
3. In-Lieu Fee policy and fees
4. Objective Alternatives
5. Commercial Linkage fee and policy
6. Fractional Units
7 City of Fairfield Inclusionary Policy
Jurisdiction Homeownership
Inclusionary Policy
Homeownership
in- lieu fee or impact
fee
Multi-Family
Inclusionary Policy
Multi-Family
in-lieu fee or impact
fee
Minimum Unit
applicability
City of Fairfield 5% Moderate
income
$2.72 per Sq.ft
($6,528 per unit)
2.5% very Low and
2.5% low
$5.17 per Sq.ft.
($6,143 per unit)
10 1 8
Objective Alternative
In Lieu Fee Land Dedication
9 10
Residential Developer Feasibility – Single Family
11 • Per Single Family Unit Cost Increase from $6,500 - $13,100 • Developer Profit Reduction by between 1.1% and 2.2% * * Developer Profit (Return on Investment, unlevered = Net Revenues (Total Revenues – Total Costs) divided by Total Costs
New Development Type
Fee per Square Foot $0 $2.72 $5.44
Single Family (100 unit project, 12.5 acres)
Fee per Unit $0 $6,528 $13,056
Fee as a % of Total Development Costs, Excluding Land 0% 1.2% 2% Developer Profit (Holding All Else Constant) 15.9% 14.8% 13.7% Home Price (Holding All Else Constant) $780,000 $787,800 $795,000 Land Value (Holding All Else Constant) $12.5 million $11.8 million $11.2 million Proposed
Fee
Maximum
FeeNo Fee
Residential Developer Feasibility – Multifamily
12 • Per Multi Family Unit Cost Increase from $6,150 - $12,300 • Yield on Cost Reduction by between 0.08% and 0.16% *
* Yield on Cost (unlevered) = Net Operating Income (Annual Revenues – Annual Operating Costs) divided by Total (Development) Costs
New Development Type
Fee per Square Foot $0 $5.17 $10.35
Multifamily (100 unit project, 3.3 acres)
Fee per Unit $0 $6,143 $12,285
Fee as a % of Total Development Costs, Excluding Land 0% 1.4% 2.8% Yield (Holding All Else Constant) 5.87% 5.79% 5.71%
Rent PSF (Holding All Else Constant) $3.20 $3.23 $3.27
Land Value (Holding All Else Constant) $3.3 million $2.7 million $2.1 million Proposed
Fee
Maximum
FeeNo Fee
Documents
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Policy will be documented through an Affordable
Housing Ordinance
• High-level, providing inclusionary requirements for applicants and flexibility for City
Resolutions
• For specific metrics and fees (e.g., commercial linkage fees) • Council may adopt and adjust more easily/quickly
Other Terms of the Inclusionary Housing
Requirements
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Triggers
• Policy will apply to any residential construction or development that includes 10 or more units
Exempt from policy
• ADUs
• Projects damaged by natural disaster
• Development agreements meeting or exceeding inclusionary policy Admin Fee
• City will charge an Admin fee for processing Inclusionary applications Other Terms continued
1 15
Affordable Housing Plan
• Required with project application
• Details project compliance with ordinance, whether via units, in-lieu fees, or land dedication Regulatory Agreement & Deed Restriction
• Required when project is approved with affordable units • City may record as deed restriction against title, or City may record separate deed restriction • Ordinance provides flexibility in how City may require documents (i.e., together or separate) Housing Trust Fund
• All fees collected must be used for affordable housing. Fees will be deposited into the Housing Trust Fund
Commercial Linkage Fees
16 The maximum fee is derived by combining estimates of the average square feet of building space per worker with wages by industry and occupation. The number of worker-households requiring affordable housing support is then translated into a total affordability gap and Maximum Fee/ SF. The recommendation is for a fee level well below the maximum allowable, with no fee on Office/Medical development.
Land Use Recommended
Fee Per Sq Ft.
Maximum Fee
Per Sq.Ft.
Commercial/Retail/ Service $1.00 $104.34
Office/Medical $0.00 $22.34
Industrial: Warehouse and Distribution $1.00 $30.72
Industrial: Manufacturing $1.00 $17.18
Lodging $1.00 $26.18
Potential Annual Revenues
Single Family Units Multi-Family Units Commercial Linkage Fees Annual Revenue $2.1 Million $1.8 Million $276,600
20-Year Revenue $41.3 Million $36.9 Million $5.5 Million Number of Units / Sq.Ft. 6,326 6,011 5.97 Million Sq Ft. 1 17
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