Mountain View City Council
May 12, 2026

In August 2012, Council approved the Greenhouse Gas Reduction Program (GGRP ). The GGRP aims to implement General Plan mobility policies, comply with state climate change legislation (Senate Bill (SB) 375 and Assembly Bill (AB) 32) , and comply with regional Bay Area Air Quality Management District (BAAQMD) guidelines. Since transportation -related emissions account for nearly 60% of emissions Citywide, addressing transportation i s a major focus of the City’s efforts in relation to the GGRP. The GGRP established:

1. Mandatory commute trip reductions for development projects generating new employment;

2. TDM requirements for new development in certain areas of the City; and

3. Planned actions for reducing greenhouse gas emissions , including Measure T-1.1, Transportation Demand Management, which calls for adoption of a Citywide TDM Ordinance with TDM performance reporting requirements, procedures, and funding mechanisms.

Since 2014, Council has also adopted four Precise Plans —San Antonio Precise Plan (2014), El Camino Real Precise Plan (2014), North Bayshore Precise Plan (2014), and East Whisman Precise Plan (2019) —that establish TDM requirements for each Precise Plan area.

Additionally, the Downtown Precise Plan (1988) has guidance related to trip-reduction plans. However, TDM requirements are uniform only across Precise Plan areas and not on a Citywide basis.

On October 22, 2019, Council adopted the Sustainability Action Plan 4 (SAP-4) that created a fund to advance sustainability actions, including funding to hire a TDM analyst to support the planned expansion of TDM requirements Citywide. The Public Works Department hired a TDM analyst in January 2022, which allowed work to begin on developing a Citywide TDM Ordinance.

On June 22, 2021, Council adopted Strategic Priorities for Fiscal Years 2021-23, which included developing a Citywide TDM Ordinance to standardize trip-reduction targets across the City and establish uniform TDM monitoring and reporting provisions. On June 13, 2023, Council reaffirmed this item as a Council Priority for Fiscal Years 2023-25 and categorized development of a Citywide TDM Ordinance as one of the City’s highest priorities. The intent of the Ordinance is to build on the demonstrated effectiveness of TDM in the Precise Plan areas and apply its practice more consistently and predictably on a Citywide basis.

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On February 20, 2023, the City executed a contract with Steer Davies & Gleave, Inc., to provide professional services to support development of a Citywide TDM Ordinance. The project team has undertaken the following tasks:

• Reviewing and analyzing the regulatory context and existing TDM requirements.

• Defining the vision, goals, and principles for the TDM Ordinance.

• Developing a draft framework for the Citywide Ordinance , including analysis of approaches in peer and best practice cities.

• Engaging an internal Technical Advisory Committee consisting of City staff from Economic Vitality, Planning, Sustainability, Traffic, Transportation, and Land Development.

• Engaging with community members, developers, employers, and property managers, including meetings with the Downtown Business Association on June 13, 2023, Mountain View Chamber of Commerce on June 14, 2023, Mountain View Transportation Management Association (TMA) Board on May 25, 2023 and May 30, 2024, a community meeting on January 21, 2025, and 14 one-on-one conversations with stakeholders.

• Presenting key deliverables and gathering feedback from the following advisory bodies:

— The Bicycle/Pedestrian Advisory Committee (BPAC) reviewed the project vision and objectives on October 25, 2023 and TDM Policy framework on January 29, 2025;

— The Environmental Planning Commission (EPC) reviewed the project vision and objectives on November 1, 2023 and TDM Policy framework February 5, 2025;

— The Council Transportation Committee (CTC) review ed the project vision and objectives on January 30, 2024 and TDM Policy framework on March 4, 2025; and

— The City Council held a Study Session on the TDM Policy framework on June 10, 2025.

• Drafting Ordinance language and commenc ing the TDM cost estimation and implementation planning study.

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ANALYSIS

TDM refers to strategies and incentives designed to reduce SOV trips and encourage use of alternative transportation modes, such as transit, walking, bicycling, and carpooling.

Common TDM measures include transit subsidies, vanpool and carshare services, commuter incentives, bicycle facilities, and flexible work arrangements. Successful implementation of TDM programs can reduce traffic and congestion, mitigate demand for on-site parking, and achieve transportation mode shift to sustainable travel options.

The City’s approach to TDM spans a mix of project size and land use types as shown in Figure 1, where at least 27 entitled development projects in Mountain View have existing TDM requirements as part of their Conditions of Approval. These requirements are supported by broad enabling policies, including the General Plan, Precise Plans, GGRP, and Sustainability Action Plan in addition to state laws and regulations. Within Mountain View, TDM requirements are applied to a wide range of land uses, including office or commercial development (44%), mixed use (19%), Master Plan areas (7%), multi- family residential (19%), hotel (7%), and medical facilities (4%).

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Figure 1: Existing Citywide TDM Requirements

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To develop a policy framework for a Citywide TDM Ordinance, the project team synthesized information on existing TDM requirements by conducting community and stakeholder outreach in 2023 to 2025. Staff gathered the following feedback to understand the current state of practice of TDM in the City:

• Stakeholders, such as employers, small businesses, and property managers, indicated that they understand the value of TDM measures in providing benefits to employees or residents in terms of safe, sustainable, and equitable mobility options.

• Employers noted that the City’s TDM requirements provide the basis to support ongoing investment in their commuter programs.

• Stakeholders expressed support for greater standardization of TDM requirements, including a TDM menu of options from which they can select to shape their TDM Plans and meet their transportation goals.

• Several stakeholders requested greater flexibility to update or adjust their TDM Plan following implementation to respond to evolving travel patterns and availability of mobility options and new technologies.

• Employers and developers noted that the current process for including TDM Conditions of Approval could benefit from increased standardization of TDM requirements to increase predictability during the entitlement process.

As such, the following vision for the project was established to shape the development of the Citywide Ordinance based on Council’s original direction as well as the existing conditions analysis and input from community members, stakeholders, BPAC, EPC, and CTC:

“The Transportation Demand Management (TDM) Ordinance seeks to reduce single-occupancy vehicle trips for new development and increase use of multi - modal transportation alternatives that are sustainable, equitable, effective, and respond to changing demands.”

Additionally, the Ordinance framework was informed by the four guiding principles of predictability, effectiveness, sustainable mobility, and equity, as shown in Figure 2.

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Figure 2: Guiding Principles for Developing the TDM Ordinance

Draft Ordinance Framework

The proposed TDM Ordinance establishes standardized guidelines for a Citywide TDM Program applicable to new development, including modifications, change of us e, and expansions of existing sites, which would exceed defined trip generation threshold s.

Participation in the new TDM Program will be determined by the following components:

• Applicability: All projects generating 200 or more net new Average Daily Trips (ADT), including residential, commercial, and mixed-use developments.

• Performance Metric : ADT will be the primary metric to assess the estimated trip generation rates from development, consistent with the City’s Multi -Modal Transportation Analysis (MTA) Handbook.

• Trip Reduction Targets: The proposed ADT reduction targets (see Table 1, below) are based on the City’s existing Precise Plans targets and benchmarking against comparable TDM programs in peer jurisdictions, including San Francisco, San Mateo County, Redwood City, San Jose, Sunnyv ale, and Santa Monica, as well as attainable TDM strategies modeled in the VTA Vehicle Miles Traveled (VMT) evaluation tool.

To achieve the necessary trip reductions, staff has developed a TDM Toolkit comprised of measures that reflect varying levels of effectiveness for reducing trip generation. The Toolkit (Attachment 3—Draft TDM Toolkit) is designed to offer a menu of strategies that vary in scale and cost, allowing projects to create site-specific TDM Plans to fit the project.

The TDM measures are grouped into two categories of Core and Auxiliary Strategies. The applicant is required to select the requisite number of Core Strategies in accordance with project size and estimated ADT generation. To support implementation of Core Strategies, 195
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the project will be required to implement a set number of Auxiliary Strategies in accordance with the project size. The tiered requirement for Auxiliary Strategies is as follows:

• Small Projects: At least two (2) Auxiliary Strategies. • Medium Projects: At least three (3) Auxiliary Strategies. • Large Projects: At least five (5) Auxiliary Strategies.

As shown in Table 1 below, reduction targets scale with project size with adjusted (lower) targets for Transit -Oriented Development (TOD) to reflect their inherently lower baseline trip generation. TOD projects are those located in a High -Quality Transit Area, defined as areas where at least fifty percent (50%) of the project area is within one-half (0.5) mile of a high-quality transit corridor or a major transit stop. Such transit facilities may include:
(a) an existing rail station or ferry terminal served by bus or rail; (b) a bus stop with peak service frequency of fifteen (15) minutes or less; o r (c) a planned rail station or planned ferry terminal served by bus or rail, as defined in California Pu blic Resources Code Section 21155(b).

Table 1: Proposed ADT Reduction

Project Size ADT Generation ADT Reduction Target
Standard Projects TOD1 Projects
Small Project 200-499 30% reduction 20% reduction
Medium Project 500-999 40% reduction 30% reduction
Large Project 1,000+ 50% reduction 20% reduction

• TDM Plans: Subject projects will submit and adopt a TDM Plan prior to project approval. The TDM Plan will include selections from a menu of strategies available in the TDM Toolkit (Attachment 3 —TDM Toolkit) that encompass a mix of Core and Auxiliary Strategies. Projects will be required to adopt the requisite number of Core Strategies consistent with their ADT reduction target. Core Strategies will offer an array of flexible and proven trip-reduction strategies that applicants may select from to develop a TDM Plan. Additionally, “Auxiliary Strategies” are those that may not have significant trip-reduction potential as stand-alone strategies but supplement the implementation of Core Strategies. Finally, a TDM Agreement will be executed by the developer prior to entitlement to formalize the adoption and intent to implement the approved TDM Plan.

• Monitoring and Reporting: To demonstrate compliance and provide data on effectiveness of TDM efforts, a ll projects will be required to submit o ngoing

1 “Transit-Oriented Development (TOD)” means projects where at least 50% of the project is located within one - half (0.5) mile of high -quality transit as defined in California Public Resources Code, Section 2115(b) and Section 21064.3, as may be amended.
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standardized annual reporting following the first year of postoccupancy, consistent with their project size:

— Small Projects (200 to 400 ADT): Annually for three (3) years. — Medium Projects (500 to 999 ADT): Annually for ten (10) years. — Large Projects (1,000+ ADT): Annually for twenty (20) years.

Additionally, for nonresidential projects:

— Annual reporting will include assessment of the project’s performance in achieving its trip cap, supported by commute travel surveys and driveway count data.

• Enforcement: All projects subject to the TDM Ordinance are required to comply with the provisions of the Municipal Code . Noncompliance will be enforced pursuant to Section 1.7 (Article 1, Violations) and Section 1.17 (Article 2, Administrative Penalties) of City’s Code Enforcement regulations.

Examples of violations of the TDM requirements may include, but are not limited to:

— Failure to submit required annual TDM monitoring reports or updates to the TDM Plan.

— Failure to implement or maintain approved TDM measures and strategies.

— Failure of nonresidential projects to achieve the required ADT reduction target or exceeding an established site-specific trip cap.

Projects found to be out of compliance may be subject to administrative penalties and other enforcement actions in accordance with the Municipal Code.

TDM Policy Framework

The proposed Ordinance reflects several changes to the TDM Policy framework, which have been incorporated based on feedback from key stakeholders since the Council Study Session on June 10, 2025. To support successful implementation of the TDM Program, the proposed changes will:

• Implement Program 1.2(c) and Program 1.3(d) of the Sixth Cycle 2023-2031 Housing Element, which requires the City to adopt a TDM Ordinance , study the cost of TDM requirements on typical residential developments, and allow residential developers to meet TDM goals through lower -cost options . To support this, the proposed 197
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Ordinance will allow residential parking reductions and exempt ions from parking requirements for projects proposing to use enhanced features of a TDM Plan , which achieve a higher level of trip reduction than the minimum requirement.

— To satisfy the enhanced TDM criteria for exemption from the minimum parking standard, a residential project must either: (1) exceed its applicable ADT reduction target by at least five percent (5%); or (2) adopt one (1) additional Core Strategy and two (2) additional Auxiliary Strategies over the minimum required number.

— The enhanced TDM criteria are intended to incentivize higher levels of trip reduction and reduced parking demand while increasing mobility options for residential projects as well as support the City’s broader goals related to expanding affordable housing.

• Provide specific exemptions for “patron-driven uses” under applicability standards:

— Development consisting of patron-driven uses less than net new 100,000 square feet will be exempted from the TDM Program. Patron-driven uses are defined as nonresidential uses who se trip generation is primarily patrons, rather than employees. Examples include child -care centers, religious institutions, retail (general merchandise, grocery, and similar) , restaurants, entertainment, medical, and other personal services. Such uses are local-serving and support economic vitality by attracting and retaining retail and other service-oriented mixed uses.

• Monitoring and reporting provisions for residential and p atron-driven uses: All residential and patron -driven uses will be exempted from site-specific trip caps and associated ADT reduction target requirements, including provisions requiring travel surveys and driveway counts. The exemptions reflect existing conditions and local and state regulations, which seek to reduce financial costs and administrative burdens related to delivering more affordable housing and local-serving uses. However, these projects will still be required to adopt and implement a TDM Plan and provide ongoing annual TDM reporting in accordance with project size.

• Required TDM Strategies: Mountain View Transportation Management Association Membership. As a private nonprofit membership organization, the TMA is funded by Mountain View businesses and property owners to address transportation challenges for the benefit of the community. The MVgo shuttle service, which provides fare-free last-mile connections between the Transit Center and main employment hubs, is administered and funded by the TMA’s Board of Directors. While the TMA assesses fees of its members to fund MVgo operations and similar TDM programs, there is risk 198
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of potential violation of Proposition 18, which was adopted in 1996 to ensure that all taxes and most charges on property owners are subject to voter approval. As such, establishing a Property-Based Improvement District (P BID) is a remedy to ensure an equitable means of assessing membership fees to fund MVgo and other TMA - provided services in the future.

— The TDM Policy Framework adopted last June included the TMA membership requirement for medium and large nonresidential projects and large residential projects only. Due to the issues noted above, the proposed Ordinance will not require projects of any size to join the TMA . Membership in the TMA will be optional and included in the TDM Toolkit, incentivizing new projects to join as a way to satisfy their TDM requirements and trip-reduction goals.

— While TMA membership will not be required, staff with the TMA, will explore the process of establishing a PBID in Mountain View following adoption of the Ordinance. Similar to other jurisdictions, such as the City of Emeryville, the goal of establishing the PBID will be to provide a long-term and scalable approach to funding TMA-provided services, including the MVgo shuttle. A PBID in Mountain View would also support growing membership in the TMA by clearly defining the structure for governance and assessment of member fees.

• Enforcement and Penalties: The proposed Ordinance seeks to align the enforcement provisions under Section 1.7 (Code enforcement—Violations) and Section 1.17 (Administrative penalties) of the Mountain View City Code. This approach is consistent with neighboring jurisdictions that situate violations of TDM noncompliance under municipal code sections in accordance with administrative citations. Where the project is not at fault for noncompliance , the assessment of penalty fees may be waived under certain circumstances, such as unavailability of a TDM service provider, high vacancy, or economic hardship. Additionally, the City Code enforcement provisions will consistently apply to all projects subject to the Ordinance rather than specific project Conditions of Approval. Staff will work with existing projects who request to opt into the Citywide TDM Ordinance in order to benefit from this streamlined enforcement approach.

FISCAL IMPACT

To support effective implementation of the TDM Ordinance and ensure long‑term program sustainability, the City has hired a consultant to support co st estimat ing and an implementation planning study. This study will evaluate the range of City staff time and administrative resources required to administer the Ordinance, including TDM Plan review during entitlement, ongoing monitoring and reporting, compliance and enforcement activities, program evaluation, and maintenance of any supporting software platforms. The 199
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findings will inform consideration of a potential annual TDM fee, intended to recover a portion of the City’s ongoing costs associated with administering and enforcing the Ordinance. The study will account for efficiencies gained through standardized reporting, automation, and potential partnerships, with the intent of helping align any future fee with the level of effort required to support participating developments over time. Following completion of this fee study, staff will draft a resolution for the City Council to review and adopt.

As part of developing a TDM Toolkit, staff has identified a range of flexible and affordable options for applicants to choose from based on cost- effectiveness and trip -reduction potential. The TDM Toolkit benchmark s the TDM measures along the expected cost level for implementing a prospective strategy. For example, strategies will range from as low as ($0 to $5,000), medium cost ($5,000 to $50,000), and high ($50,000 and above), or cost - neutral. Actual costs may vary by project according to scale of proposed measure(s), subsidy, and participant coverage, which would provide needed cost elasticity to projects implementing a TDM program.

ENVIRONMENTAL REVIEW

The City Council finds, pursuant to Title 14 of the California Code of Regulations, Section 15307 that this ordinance is not subject to the California Environmental Quality Act (CEQA) because it is an action undertaken by a local agency for the purposes of protecting natural resources. The City Council also finds that on a separate and independent basis, pursuant to Title 14 of the California Code of Regulations, Section 15308 that this ordinance is not subject to the California Environmental Quality Act (CEQA) because it is an action undertaken by a local agency for the purposes of protecting the environment.

ENVIRONMENTAL PLANNING COMMISSION REVIEW

The EPC does not have recommendation authority over standalone municipal ordinances outside of Chapter 36 (Zoning), such as the proposed Transportation Demand Management (TDM) Ordinance. Consistent with this provision, staff is not seeking a formal EPC recommendation. However, the TDM Ordinance is consistent with the EPC’s role to monitor and advise the City Council on general planning matters and environmental quality.

Further, the Ordinance will necessitate subsequent amendments to Precise Plans , which are within the EPC’s purview. Therefore, staff is presenting the draft Ordinance to the EPC at this time to support its role in establishing and monitoring the City’s environmental planning process and in providing input on policy matters related to plan implementation.

In lieu of a formal recommendation, staff will forward to Council any comments on the draft Ordinance shared by a majority of the EPC.

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NEXT STEPS

Following EPC review, the proposed ordinance and the EPC comments will be forwarded to the City Council at a public hearing tentatively scheduled for June 9, 2026. If approved by the City Council in June, a second reading of the Ordinance will occur June 23, 2026, and the proposed Ordinance would be effective 30 days after the second reading. Once adopted, implementation steps will include:

• Development and refinement of the TDM Program Standards and a TDM Toolkit;

• Update Precise Plans and the City Code to implement Housing Element action items and Ordinance provisions;

• Present an annual TDM fee resolution to Council for review and adoption;

• Explore feasibility of establishing a Property-Based Assessment District Citywide;

• Integration with the City’s permitting and entitlement processes;

• Establishment of ongoing monitoring and reporting systems, including identifying technology solutions/providers; and

• Coordination with stakeholders and regional partners.

Staff anticipates final adoption of the Ordinance by summer 2026.

CONCLUSION

The proposed TDM Ordinance provides a consistent, Citywide approach to TDM program implementation that will inform future updates to Precise Plans and ensure align ment between development standards and transportation impact analyses. Adoption of the Ordinance represents a key step in advancing the City’s efforts to reduce single-occupancy vehicle trips for development and increase use of sustainable travel options. The proposed Ordinance also fulfils a key Council Strategic Priority of the General Plan and Sustainability Action Plan intended to bolster more healthy, sustainable patterns of transportation and planned growth.

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PUBLIC NOTIFICATION

The meeting agenda and staff report were posted on the City’s website and distributed to interested stakeholders, including community groups, business organizations, and individuals who have requested notification on TDM -related topics. A newspaper notice has been circulated for this meeting.

Prepared by: Approved by:

Ben Pacho Jennifer Ng
Transportation Planner Public Works Director

Diana Pancholi
Principal Planner

Reviewed by:

Allison Boyer
Assistant Public Works Director

PWK/BP-04-15-26SR

Attachments: 1. Draft Citywide Transportation Demand Management Ordinance

2. Draft TDM Program Standards

3. Draft TDM Toolkit
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City of Mountain View
Legislation Text

CITY HALL
500 CASTRO STREET
File #: 205148, Version: 1
Code Amendment to Chapter 36 (Zoning)-Below Market Rate Housing Program (First Reading) It is recommended that the City Council:

1. Introduce an Ordinance of the City of Mountain View Amending Chapter 36 (Zoning), Article XIV, Division 2 (Residential Development: Below-Market-Rate Housing Program) of the Mountain View City Code to Modify the Below-Market-Rate Program and Add Section 36.40.32 Governing Graduated Fee Reduction for Small Projects, and Finding that These Code Amendments are Not Subject to the California Environmental Quality Act, to be read in title only, further reading waived, and set a second reading for June 9, 2026, (Attachment 1 to the Council report).

2. Approve Relocating the Below-Market-Rate Housing Program Provisions in the Mountain View City Code from Chapter 36 (Zoning) to Chapter 46 (Housing) and Direct Staff to Bring Back Ordinance Amendments Before the End of 2026 for Council Consideration.

City of Mountain View Printed on 5/7/2026Page 1 of 1
powered by Legistar™
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DATE:

May 12, 2026
CATEGORY:

Public Hearing
DEPT.:

Housing Department

TITLE: Code Amendment to Chapter 36
(Zoning)—Below Market Rate Housing
Program (First Reading)

RECOMMENDATION

It is recommended that the City Council:

1. Introduce an Ordinance of the City of Mountain View Amending Chapter 36 (Zoning), Article XIV, Division 2 (Residential Development: Below -Market-Rate Housing Program) of the Mountain View City Code to Modify the Below-Market- Rate Program and Add Section 36.40.32 Governing Graduated Fee Reduction for Small Projects, and Finding that These Code Amendments are Not Subject to the California Environmental Quality Act, to be read in title only, further reading waived, and set a second reading for June 9, 2026, (Attachment 1 to the Council report).

2. Approve R elocating the Below -Market-Rate Housing Program Provisions in the Mountain View City Code from Chapter 36 (Zoning) to Chapter 46 (Housing) and Direct Staff to Bring Back Ordinance Amendments Before the End of 2026 for Council Consideration.

EXECUTIVE SUMMARY

The City’s State-certified 2023–31 Housing Element includes Program 1.9, which requires the City to evaluate the effectiveness of the Below Market Rate Housing Program (BMR Program) in 2023 and again in 2028. On December 12, 2023, City Council held a Study Session to complete the first required review, which concluded that the BMR Program is effective in increasing the supply and diversity of affordable housing. Council directed staff to further study potential modifications to enhance program effectiveness and return with recommended amendments.

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In 2025, the City advanced a two -phase process to implement updates to the BMR Program.

Phase One, focused on clean-up items, was approved by the Environmental Planning Commission (EPC) and City Council in February 2025. Phase Two amendments were reviewed by Council on November 4, 2025, at which time Council approved staff’s recommendations and directed staff to return with Ordinance amendments through the public hearing process.

The Phase Two amendments include:

1. Increasing the physical accessibility of BMR units;

2. Establishing updated requirements for alternative means of compliance, including new acquisition/preservation options and Affirmatively Furthering Fair Housing (AFFH) provisions;

3. Updating the in-lieu fee methodology and amounts;

4. Completing remaining program clean-up items;

5. Removing the homeowner association (HOA) Reserve Fund requirement;

6. Adopting a graduated in-lieu fee reduction for small projects; and

7. Allowing administrative updates to the BMR Program Guidelines.

On March 4, 2026, the EPC held a Public Hearing and unanimously supported the Phase Two amendments, with two additional recommendations related to adding requirements for development partners in alternative compliance proposals and further evaluating locational criteria or other mapping tools to avoid concentration of lower -income households. The draft Ordinance amendments include criteria to determine “qualified development partner.”

Staff evaluated other mapping tools after the EPC meeting and determined that the originally proposed “highest resource” opportunity map maximizes affordable housing sites and would generally not cause concentration of lower -income households . Modifications to the draft ordinance since EPC’s review are highlighted in yellow in Attachment 1 to this report.

This report presents the Phase Two BMR Ordinance amendments for City Council’s consideration and first reading, consistent with prior Council direction and EPC input.

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BACKGROUND

The City’s Below Market Rate Housing Program was adopted in 1999 and underwent its first major update in August 2019. The BMR Program’s objective standard requires developers of market-rate housing to integrate affordable housing units within the same building as the market-rate units. Table 1 summarizes the key features of the BMR Program:

Table 1: Summary of Current BMR Program
Requirement Criteria
Objective
Standard
On-site BMR units integrated with market units.

Applicability Any development that 1) creates one or more dwelling units, 2) converts nonresidential uses to residential uses, or 3) converts residential units from rental units to ownership units.

Project Size • Projects with 7 or more units:
− 15% BMR: rental or ownership (non-rowhouse/townhouse) projects.
− 25% BMR: for rowhouse/townhouse projects.
• Projects with less than 7 units: fractional in-lieu fees for partial units.

Affordability
Levels
• Rental:
‒ 15% BMR units at AMI greater than 50% up to 80% of Area Median Income (AMI), with 65% AMI weighted average.
• Ownership:
‒ 15% BMR units at AMI greater than 80% up to 120% AMI, with 100% AMI weighted average (non -rowhouse/non-townhome
projects).
‒ Additional 10% requirement for rowhouse/townhouse projects at AMI greater than 120% up to 150% AMI, with 135% AMI
weighted average.

Development
Standards
• BMR units comparable to market -rate units in size, location, and design.

Duration • Affordable in perpetuity.

Alternative
Compliance1
• Applicant may request alternative means of compliance.

1 To date, the BMR Program has used the term “alternative mitigation.” Going forward, staff recommends using the term “alternative means of compliance,” which aligns with the term in Assembly Bill (AB) 1505, as codified in 206
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Requirement Criteria
• Council has discretionary approval.
• Alternative compliance must be of greater value than onsite BMR units.
• In-lieu fees, land dedication, off- site development of units, and catch-all option.

Allowed Rent
Increase
• Maximum 3% annual increase.

Housing Element Review

On December 12, 2023, Council held a Study Session to review the efficacy of the City’s Below Market Rate Housing Program, meeting the City’s State -certified 2023- 31 Housing Element Program 1.9 requirement to complete the first of two reviews by December 31, 2023. The review included five criteria in the Housing Element as follows:

• Criterion 1: Continue BMR program, as revised in 2019, to include more opportunities for inclusionary units as opposed to fees.

• Criterion 2: Review BMR program to evaluate program efficacy and identify potential modifications to improve efficacy based on City goals, including furthering affordable housing production across unit types, special needs (including accessible units), and affordability levels.

• Criterion 3: Whether the BMR program facilitates mobility and access to opportunity and if any improvements could be made to increase mobility and access to opportunity.

• Criterion 4 : Potential policy changes based on best practices, new laws, or unanticipated program outcomes.

• Criterion 5: Potential Cleanup in Guidelines/Policies/Procedures.

The review concluded that the BMR Program is effective in increasing the supply and diversity of affordable housing. Council approved staff’s recommendations to further study specific

relevant part at California Government Code section 65850(g), that reaffirms the authority of jurisdictions to implement BMR programs.
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amendments based on the Housing Element criteria that would enhance the BMR Program’s efficacy, and to bring back recommended amendments for additional discussion prior to actual Ordinance amendments.

Two-Phase Ordinance Modification Process

Phase One: On February 5 and February 25, 2025 , the EPC and City Council, respectively, held Public Hearings and approved the first set of BMR Ordinance amendments , which focused on Criterion 5 clean -up items plus one additional item clarifying the definition of “residential development.” These amendments were necessary to advance the Housing Element requirements as expeditiously as possible by implementing the amendments that were ready and to enhance project reviews.

Phase Two: On November 4, 2025, the City Council approved staff’s recommended amendments for the remaining Housing Element evaluation criteria based on the direction given to staff in the December 2023 Study Session. Th is report focuses on implementing Council’s direction for the Phase Two modifications. As will be discussed in greater detail below, the remaining seven amendments include:

1. Increase the physical accessibility of BMR units.

2. Add Requirements for Alternative Means of Compliance.

3. Update the in-lieu fee escalator and amounts.

4. Complete remaining program clean-up items, including a) allowing ownership projects to have a weighted average affordability of up to 100 percent AMI and b) updating the administering department to the Housing Department.

5. Remove the homeowner association (HOA) Reserve Fund requirement.

6. Adopt a graduated fractional in-lieu fee reduction for small projects.

7. Allow updates to the BMR Program Guidelines to occur administratively.

City Council Meeting Summary – November 4, 2025

Two members of the public spoke in support of the proposed updates to the BMR ordinance.

Speakers expressed general support for the changes and encouraged the City to continue refining 208
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its approach, including consideration of expanding the graduated fee exemption to 10 units to better align with recent state laws.

A written comment was also received recommending changes to the rowhome/townhome 25% requirement and other amendments that are not under consideration at this time.

Council unanimously approved staff’s recommended modifications for Phase Two changes , and also directed staff to evaluate two additional items for the BMR ordinance modifications:

‒ Additional Item 1:

The motion included evaluating adjusting the graduated fee reduction to work proportionally with the maximum number of units physically possible for a project and to direct staff to evaluate the feasibility of incorporating the graduated fee reduction with maximizing the development potential of small sites, up to 10 units ( SB 684, as codified in relevant part at California Government Code sections 65913.4.5 and 66499.41, and SB 1123, as codified in relevant part at California Government Code section 66499.41 ), and return to the Council with options.

‒ Additional Item 2:

Currently, the Administrative Guidelines stipulate that “the off- site BMR units shall be completed and receive the Certificate of Occupancy no later than issuance of the Certificate of Occupancy for the market-rate units.” Council directed staff to evaluate the feasibility of including staff discretion in the BMR Administrative Guidelines to grant a developer acting in good faith to receive up to a six -month extension for delivery of the off-site BMR units if the developer is working in good faith. The intent of an extension is to recognize that off-site fully affordable housing developments are challenging to finance in today’s economic environment and may not be feasible for the affordable development to be developed concurrently with the market rate units.

These additional items are discussed in further detail in the relevant sections below.

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Code Amendment to Chapter 36 (Zoning)—
Below Market Rate Housing Program (First Reading)
May 12, 2026

Environmental Planning Commission – March 4, 2026

Based on Council’s direction from its November 2025 meeting, staff drafted the BMR ordinance amendments and brought it forward to the EPC for consideration in a public hearing on March 4, 2026.

Three members of the public spoke in support of the City’s evaluation efforts while emphasizing the need to improve development feasibility. Speakers noted that high fees (not related to BMR fees) and construction costs in Mountain View can discourage housing production, particularly for smaller developers, and encouraged the City to consider additional incentives, such as extending fee exemptions to parks and other impact fees for projects up to 10 units and not just six units, aligning with State legislation (e.g., SB 684 and SB 1123), lowering the BMR requirement for rowhome/townhome projects (which currently have a 25% requirement) , and providing greater flexibility in the timing and delivery of BMR units.

The EPC unanimously supported staff’s recommendations, with two additional recommended modifications related to alternative means of compliance. These included:

‒ Additional Recommendation 1:

Add provisions to ensure that development partners associated with alternative compliance proposals meet appropriate qualifications and performance standards.

‒ Additional Recommendation 2:

Conduct additional evaluation to ensure that off-site alternative compliance proposals do not contribute to the concentration of lower-income households within the City.

Detailed discussion and staff recommendations on each topic are provided in their respective sections of this report.

ANALYSIS

The following sections summarize each proposed amendment, including prior Council direction from its November 4, 2025 meeting , EPC ’s recommendations from its March 4, 2026 Public Hearing, and the recommended ordinance changes for Council consideration.

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Code Amendment to Chapter 36 (Zoning)—
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Amendment 1: Increase the Physical Accessibility of BMR Units

In the December 2023 Study Session, Council directed staff to identify options to improve the physical accessibility of BMR units to respond to Housing Element Criterion 2. After further study, staff found that approximately 13–18% of low -income households in California have a physical disability, and that existing state and federal building codes already require extensive accessibility features in designated “accessible” units of new residential projects.

Staff determined that adding local accessibility requirements beyond these standards is difficult due to wide variability in needs and costs, limited administrative capacity, and legal constraints such as AB 130, as codified in relevant part at California Health and Safety Code sections 17958, 17958.5, 17958.7, and 18941.5, which imposes stricter local building standards until 2031.

Developers indicated that additional features would likely need to be optional and incentivized, though some voluntarily include or design “adaptable” units that can be modified later. Low-cost smart-home features can also be installed by residents themselves.

Council Direction (November 2025): In its November 2025 meeting, Council supported staff’s recommendation of amending the BMR Ordinance to require that 15% of the total BMR units in a project or one (1) BMR unit, whichever is greater, be part of a project’s overall number of units that are designated as “accessible.” This approach improves access to BMR housing without imposing additional local building code requirements.

EPC Recommendation (March 2026): The EPC supported staff’s recommendation without modification.

Tonight’s Recommendation: Staff recommends no changes to the November 2025 Council direction for this amendment and recommends adoption of the provision as incorporated into Section 36.40.10(l) of the proposed Ordinance.

Amendment 2: Add Requirements for Alternative Means of Compliance

Amendment 2 establishes updated requirements for applicants proposing alternative means of compliance in lieu of providing on- site BMR units. These changes respond to Housing Element Criteria 3 and 4 and are intended to align the BMR Program with State requirements, improve clarity, and ensure applicants provide su fficient information for efficient review under State streamlined timelines.

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Code Amendment to Chapter 36 (Zoning)—
Below Market Rate Housing Program (First Reading)
May 12, 2026

At the December 2023 Study Session, Council directed staff to refine the allowable alternative compliance options. Council retained land dedication and off-site development, removed in-lieu fees and the “catch- all” option, and added acquisition/preservatio n of existing housing units (including those subject to CSFRA). This results in three allowable options: land dedication, off- site development, and acquisition/preservation. Council also affirmed that alternative compliance should apply to both rental and ownership projects.

Based on Council direction from November 2025, the following general requirements apply to all alternative compliance projects:

• Require submittal of a comprehensive Below Market Rate Compliance Plan with the initial development application, including a detailed description of the proposal, pro forma, financing plan, feasibility analysis, equivalency analysis, and supporting documentation.

• Require a finding that the proposed alternative compliance provides value equivalent no less than the cost of providing on-site BMR units.

• Require a finding that the proposed alternative compliance supports Affirmatively Furthering Fair Housing (AFFH) by promoting access to opportunity.

• Require a finding that the applicant will provide sufficient financial resources to successfully deliver the alternative compliance project, including land value (if applicable) and any additional funding needed.

• If a partnership is proposed, require demonstration that financial responsibilities are appropriately allocated and that the applicant does not shift market-rate project costs to the affordable housing partner or receive compensation for obligations it would otherwise bear.

These general provisions have been incorporated into Section 36.40.30 (a).

As previously directed by Council, a cost-recovery fee applies to alternative compliance proposals to reflect the additional staff resources required for review. The FY 2025– 26 fee is $32,000 and will be adjusted annually based on CPI.

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Code Amendment to Chapter 36 (Zoning)—
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May 12, 2026

Specific Amendments for Land Dedication Option

In addition to the above general requirements, Council approved the staff- recommended requirements specifically for the land dedication option as summarized in Table 2 below.

New/updated criteria are identified in bold text and have been added to Section 36.40.30 (b).

Table 2: Criteria for Land Dedication Proposals

Standard Requirement
Parcel Size and
Capacity (Existing -
no changes)
‒ The site being dedicated must be a minimum parcel size of 0.75 acres, and be of a suitable size to accommodate the number and distribution of BMR units that would have been required for the site with market-rate units.

Location (NEW) At least one of the following must be true for the site being dedicated:
‒ Site is identified as a Housing Element Opportunity Site ‒ Site is within 0.5 mile of the underlying project.
‒ Site is located south of El Camino Real.
‒ Site is included in the El Camino Precise Plan.
‒ Site is located in an area designated by the California Department of Housing and Community Development -as a “Highest Resource Area.”
Environmental
Conditions (Existing
– no changes)
‒ Applicant must submit environmental conditions reports, including but not limited to Phase I and Phase II environmental site assessments as applicable, and
‒ Applicant must complete any necessary remediation to make the site suitable for residential development prior to conveyance of the land.

Special Conditions
(Existing – no
changes)
‒ Applicant must submit a comprehensive budget demonstrating dedicated site is not subject to any conditions when compared to the site of the primary market -rate residential development that would create higher cost burdens for affordable housing development (e.g., poorer soil conditions).

Site Infrastructure
(Existing – no
changes)
‒ Applicant shall provide or fund all infrastructure necessary to serve the site—including utilities, streets, sidewalks, and lighting up to the border of the dedicated parcel — and be consistent with any applicable Precise Plan standards.

Cost Recovery
(NEW)
‒ Applicant shall pay a fee as set forth in the City’s master fee schedule based on the City’s costs for construction of BMR units 213
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Standard Requirement
on the dedicated site as would have been required for the site with market-rate units.2
Timing of Land
Dedication (existing)
‒ Dedicated site and any required contribution must be transferred to the City prior to the issuance of the first building permit for the underlying project.

Specific Amendments for Off-Site Development

Table 3 below summarizes the new or amended criteria that applicants must meet for the off- site development option. These amendments were informed by learnings from projects that have included off-site development of BMR units, such as The Sevens and 685 W. Middlefield Road.

New/updated criteria are identified in bold text and have been incorporated into Section

36.40.30 (c).

Table 3. Criteria for Off-Site Development Proposals
Standard Requirement
Location (updated) At least one of the following must be true for the site of the off -site BMR units:
‒ Site is identified as a Housing Element Opportunity Site ‒ Site is adjacent to underlying project (same or separate parcel are both permissible).
‒ Site is within 0.5 mile of the underlying project.
‒ Site is located south of El Camino Real.
‒ Site is included in the El Camino Precise Plan.
‒ Site is located in an area designated by the California Department of Housing and Community Development (HCD)
as a “Highest
Resource Area.”
Suitability (existing -
recommend
deleting)
The proposed BMR units must be deemed suitable by the City based on
‒ location,
‒ type of project,
‒ number of units/bedrooms,
‒ compliance with BMR requirements,
‒ adjacent uses,
‒ comparability to market-rate units, and
‒ other planning criteria.

Access to Amenities
(NEW)
If any portion of any of the off -site BMR units is located within 750 feet of the underlying project parcel boundary, residents of all off-site

2 This cost recovery contribution has already been implemented as part of the Fiscal Year 2025- 26 Master Fee Schedule update and is currently $950,000.
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Standard Requirement
BMR units must be granted access to shared amenities located on the underlying project parcel.

Unit Requirement
(updated)
The off -site BMR units shall meet the same requirements for percentage requirement, design of BMR units, qualifying households, term, and accessible or adaptable units as those provided in the underlying project.

The off -site BMR units shall have proportionally the same mix of bedroom counts (studios, one bedroom units, two bedroom units, etc.) as the market -rate units, except the BMR units shall be permitted to include more bedrooms than the market-rate units.

Special Conditions Applicant will submit a financing plan that confirms no financial contributions will be required from the City.

Off-Site Partner
(NEW)
If the applicant opts to partner with another entity, the Compliance Plan must include:
‒ The applicant’s financial contributions.
‒ The terms offered to the partner.
‒ The process for partner selection.
‒ The structure of the agreement that forms the relationship between applicant and the partnering entity.

City oversight of
partnership (NEW)
If the applicant elects to select a partner through a Request for Proposals (RFP) process, City may review the RFP to confirm compliance.

Applicant’s partner -
minimum threshold
requirements
(NEW)*
If the applicant elects to partner with an entity to undertake the off- site development, that partner shall meet all of the following requirements:
‒ The partner shall have verifiable experience developing at least three affordable housing projects within the last ten years that are similar in size, scale, tenure, type, target population, and overall physical and financial complexity to the proposed project. ‒ In the past 10 years, the partner shall not have been subject to any adverse judgment or enforcement action by a public entity in connection with development activities, housing or public contracting.
‒ The partner must not have filed for bankruptcy within the past 10 years.
‒ In the past 10 years, that partner must not have been involuntarily removed from an ownership or controlling interest in any publicly- funded development project.
‒ In the past 10 years, the partner shall not have been debarred or considered for debarment, suspended, declared ineligible, or 215
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Standard Requirement
excluded by any local, state or federal department or agency from participation in government funded programs or contracts.

Timing of delivery
(updated)**
‒ The off -site BMR units shall be constructed and receive the Certificate of Occupancy for all units no later than issuance of the first Certificate of Occupancy for any use in the underlying project, unless an alternative timeframe is approved by the final decision - making body to ensure that the BMR units are constructed prior to the final Certificate of Occupancy for the market-rate units. *Added per EPC recommendation from its March 4, 2026 Public Hearing ** Flexibility added per City Council recommendation from its November 4, 2025 meeting

Specific Requirement for Acquisition/Preservation

The acquisition and preservation of existing housing units and their conversion into deed- restricted affordable housing is an allowable alternative compliance option under State law. In December 2023, Council directed staff to add this option and evaluate how to structure the program.

Staff reviewed acquisition and preservation options in BMR Programs implemented in comparison jurisdictions to identify best practices, options, feasibility, and financing approaches to inform recommendations for Council consideration.

Additionally, staff reviewed the preservation and conversion of 660 Mariposa, which is covered under the City’s rent stabilization program, into permanent deed -restricted affordable housing to satisfy the BMR requirements of the market-rate development at 1720 Villa Street (now known as The Tillery). Table 4 summarizes staff recommendations for this new alternative compliance option. The entire table is bold because Acquisition/Preservation is a new option. These criteria have been incorporated into Section 36.40.30 (d).

Table 4: Requirements for New Acquisition/Preservation Option

Standard Requirement
Eligibility (NEW) The units to be acquired must be existing residential units located on a different site than the underlying project and not be subject to any existing restrictions requiring affordability to moderate - or low - income households.

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Standard Requirement
The acquired units shall be converted into deed-restricted rental or ownership BMR units with the tenure type consistent with the underlying market-rate project.

Location (NEW) Meet one or more of the following:
‒ CSFRA units
‒ Site is identified as a Housing Element Opportunity Site ‒ Withing ½ mile of market-rate project
‒ South of El Camino Real
‒ Within the El Camino Precise Plan
‒ In a HCD-designated “Highest Resource Area.”
Rehabilitation and
Physical Needs
Assessment and
Standards (NEW)
Compliance Plan must identify:
‒ Building- and unit-level needs assessments of existing conditions. ‒ Required rehabilitation, repairs, or replacements, including accessibility requirements, based on applicable State and local requirements.
‒ Improvements that make the acquired units comparable in terms of interior design, appearance, materials, and quality of finish as the market-rate units.
‒ Estimated rehabilitation costs.

Soft-story buildings must be retrofitted for current seismic compliance according to state and local requirements, as applicable, based on the physical needs assessment
Affordability (NEW) ‒ Aligns with the general provisions of the affordability levels that would have been provided in the underlying project.

Unit Count /
Bedrooms (NEW)
‒ Acquired units must meet or exceed bedroom count of on -site BMR units that would have otherwise been provided.
‒ Studios count as 0.5 bedrooms.
‒ Total number of acquired units cannot exceed 1.5 times the required number of BMR units.

Special Conditions
(NEW)
Applicant must submit a financing plan that confirms no financial contributions will be required from the City.

Off-site partner
(NEW)
If the applicant opts to partner with another entity, the Compliance Plan must include:
‒ Applicant’s financial contributions
‒ Terms offered to the partner
‒ Process for partner selection and
‒ The structure of the agreement that forms the relationship between applicant and the partnering entity.
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Standard Requirement
City oversight of
partnership (NEW)
If developer elects to select a partner through a Request for Proposals process, City may review the RFP to confirm compliance.

Applicant’s partner -
minimum threshold
requirements
(NEW)*
If the applicant elects to partner with an entity to undertake the off-site development, that partner shall meet all of the following requirements:
‒ The partner shall have verifiable experience developing at least three affordable housing projects within the last ten years that are similar in size, scale, tenure, type, target population, and overall physical and financial complexity to the proposed project. ‒ In the past 10 years, the partner shall not have been subject to any adverse judgment or enforcement action by a public entity in connection with development activities, housing or public contracting.
‒ The partner must not have filed for bankruptcy within the past 10 years.
‒ In the past 10 years, that partner must not have been involuntarily removed from an ownership or controlling interest in any publicly-funded development project.
‒ In the past 10 years, the partner shall not have been debarred or considered for debarment, suspended, declared ineligible, or excluded by any local, state or federal department or agency from participation in government funded programs or contracts.

Relocation
Assistance and First
Right to Return
(NEW)
Applicants must provide relocation assistance and first right of return to any existing occupant of the units proposed for rehabilitation, as consistent with the City’s Tenant Relocation Assistance Ordinance (TRAO).

Timing (NEW)** The units shall be acquired, all necessary rehabilitation work shall be completed, and all acquired and rehabilitated units shall receive a Certificate of Occupancy no later than the issuance of the first Certificate of Occupancy for the market-rate units, unless an alternative timeframe is approved by the final decision-making body to ensure that the units are acquired and preserved as BMR units prior to the final Certificate of Occupancy for the market-rate units.

*Added per EPC recommendation from its March 4, 2026 Public Hearing ** Flexibility added per City Council recommendation from its November 4, 2025 meeting

Council Direction (November 2025): City Council accepted staff’s recommendations , and, as mentioned above, made a motion for staff to evaluate the feasibility of including in the 218
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Administrative Guidelines staff discretion to grant an extension of delivery ( for off-site development and acquisition/ preservation) of up to six months if the developer is working in good faith.

EPC Recommendation (March 2026): The Environmental Planning Commission unanimously supported staff’s recommendations, with two additional recommendations referenced earlier in this report. These included:

• Adding provisions to ensure that development partners associated with alternative compliance proposals meet appropriate qualifications and performance standards.

EPC expressed concern that a market -rate developer could partner with an affordable housing developer with a history of poor performance or compliance issues, and emphasized the importance of ensuring that such partnerships do not undermine the delivery or quality of affordable housing.

Staff analysis and recommendation: In response to the EPC’s Additional Recommendation 1 provided during its March 2026 Public Hearing and as referenced earlier in the report, staff has incorporated threshold requirements to ensure qualified development partners, which must be demonstrated in the Affordable Housing Compliance Plan submitted by the applicant as part of its development application. During the EPC Public Hearing, staff noted that adding criteria for determining what constitutes a “qualified developer partner” can be incorporated into the requirements. After the EPC meeting, staff reviewed criteria the City has used in prior Request for Qualifications/Requests for Proposals, as well as examples used in other jurisdictions for determining a qualified entity. Staff looked but did not find similar examples in Santa Clara County or San Mateo County in the short time available after the EPC meeting.

Staff did find relevant examples used in the City of Napa, City of Los Angeles, and the City of San Francisco.

Based on this research, staff recommends the following minimum threshold requirements if an applicant chooses to work with a partner to deliver the alternative compliance via off-site delivery of units or an acquisition/preservation project for the following categories (See Tables 3 and 4 for detailed requirements):

1. Relevant Development Experience

2. Financial Integrity and Program Performance
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Staff recommends incorporating EPC’s recommendation relating to staff’s developed threshold requirements for developer partner selection into Table 36.40.30-2: Criteria for Off-Site Development Proposals and Table 36.40.30-3: Criteria for Acquisition/Preservation Proposals of the ordinance.

• Conducting an additional evaluation to ensure that off-site alternative compliance proposals do not contribute to the concentration of lower-income households within the City.

The locational criteria included in Tables 2, 3, and 4 reference “Highest Resource Areas” as defined by maps developed by the California Department of Housing and Community Development (HCD), adopted by the California Tax Credit Allocation Committee (TCAC), and incorporated into the City’s Housing Element. These maps show geographic areas within a city with greater access to opportunity — such as proximity to jobs, schools, and transit — and are used at the State level to guide affordable housing investments that support Affirmatively Furthering Fair Housing (AFFH) goals.

The E PC raised concerns about using the Opportunity Map as a locational standard for alternative compliance. Commissioners noted that some areas identified as “Highest Resource” may also include lower -income neighborhoods and expressed concern that allowing development in these areas could unintentionally reinforce existing socioeconomic disparities. The EPC emphasized the importance of ensuring that locational criteria are applied in a manner that supports equitable distribution of affordable housing and does not contribute to the concentration of lower-income households.

The EPC also discussed whether additional maps, such as the segregation and poverty concentration maps included in the Housing Element, should be used to further evaluate or refine locational criteria. While these maps were not incorporated into the propose d standards, the EPC recommended that staff consider whether such tools could better address concerns related to the concentration of lower-income households.

Staff analysis and recommendation : In response to EPC’s concerns that use of the TCAC Opportunity Map and “Highest Resource” areas could inadvertently reinforce econ omic segregation, staff evaluated other maps in the Housing Element that could potentially be used to identify locations for alternative means of compliance that would not increase the concentration of low-income households.

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Specifically, staff compared the Opportunity Map with the State’s segregation and poverty- concentration maps used for the Housing Element's AFFH analysis. Staff found that the opportunity map generally do es not overlap with areas shown as high concentrations of lower-income households in the segregation/poverty concentration maps . Rather, the two types of maps are complementary: where the Opportunity Map shows areas with the highest resources, the segregation/poverty map shows the same areas as lower in segregation and poverty, and vice versa.

Accordingly, staff ’s review is that the use of the Opportunity Map provides an objective , State-aligned locational standard that supports AFFH goals, maximizes the potential for affordable housing sites, and would not generally contribute to increased concentration of lower-income households, which was the source of the EPC’s concern . Therefore, s taff recommends keeping the use of the “highest resource” Opportunity Map used in the Housing Element as one of the criteria for allowable sites for alternative compliance proposals.

In addition to s taff’s recommendation to retain the proposed “Highest Resource Area” requirement without modification, staff recommends adding the Housing Element opportunity sites to the locational requirements. The Housing Element opportunity sites have already been identified in the Housing Element and the BMR Ordinance amendments is not intended to reduce the number of sites already identified as appropriate for housing development.

Tonight’s Recommendation: Based on Council direction and EPC input, the alternative means of compliance provisions related to adding qualified developer thresholds and including Housing Element Opportunity Sites have been incorporated into Section 36.40.30 of the proposed Ordinance.

Timing Flexibility

As noted above, in its November 2025 meeting, Council directed staff to evaluate the feasibility of timing flexibility in the BMR Administrative Guidelines regarding the delivery of off- site units and acquisition/preservation units relative to the market- rate units, due to the challenging economic and financing conditions for affordable housing.

After the November 2025 Council meeting, staff conducted analysis and received input from developers that an additional six months after the market- rate units receive their Certificate of Occupancy is insufficient for an off-site, fully affordable project to be completed. 221
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Staff determined that this provision is more appropriately addressed in the Ordinance rather than the guidelines. As reflected in Ordinance Tables 36.40.30 -2 and Table 36.40.30- 4, st aff recommends that flexibility can be provided through an alternative timeframe, if needed, to ensure delivery of the BMR units. The alternative timeframe would still require the BMR units to be either constructed or acquired and preserved prior to the final Certificate of Occupancy for the market-rate units. Applicants will be required to comply with the on-site BMR requirements if these timing requirements are not met.

This recommended modification achieves the intent of the November 2025 Council motion for greater flexibility, responds to developer input that an additional six months may not be sufficient due to the realities and complexities of securing affordable hous ing financing, and balances the need for the City to retain some certainty regarding when the affordable housing units will be delivered, in satisfaction of the market-rate project’s BMR obligations.

Amendment 3: Update the In-Lieu Fee Escalator and Amounts

Although in-lieu fees will no longer be an option for applicants, the fees will still remain as part of the BMR program and updated annually to be used as the method by which to calculate the value that an alternative compliance proposal via land dedicatio n, off- site development, or acquisition/preservation needs to meet

3. Update the Annual Escalator

At the December 2023 Study Session, Council directed staff to evaluate whether an alternative escalator should be used to annually adjust the in- lieu fee under Housing Element Criterion 4.

The current escalator uses the Consumer Price Index (CPI), which reflects changes in consumer goods and is not directly tied to construction costs.

Staff evaluated alternative indices and identified the California Construction Cost Index (CCCI) as the most appropriate measure . The CCCI reflects changes in labor and material costs and is therefore better aligned with the methodology used to calculate in-lieu fees.

3 The in-lieu fee represents the subsidy needed to produce a BMR unit. The fee amount is the difference between the cost to develop a BMR unit and the economic value of the BMR unit to a developer. This approach sets the in- lieu fee at a level where the cost of the fees is economically equivalent for a developer to build the BMR unit, which increases the likelihood of achieving the BMR Program’s objective standard of producing units instead of receiving fees.
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Update the In-Lieu Fee Amounts

In the November 2025 meeting, Council approved updating the in-lieu amounts as shown in Table

5. Table 5: Current and Proposed BMR In-Lieu Fees

The current in-lieu fee schedule was determined using the “equivalency methodology” to reflect the value of the BMR units if they were provided integrated with market- rate units. The fees were based on economic and financial conditions in 2019 when the BMR Program was last comprehensively updated. Since that time – due to a combination of COVID-19 impacts; changes in construction costs and financing terms; changes in rents and sales prices, increases in State income level assumptions; and other factors – the in-lieu fee amounts have changed.

Council Direction (November 2025): In November 2025, Council supported staff’s recommendations to replace the CPI with the CCCI as the annual escalator for in- lieu fees and update the in-lieu fee amounts.

EPC Recommendation (March 2026): The EPC supported staff’s recommendations without modification.

Tonight’s Recommendation: Staff recommends no changes to the November 2025 Council direction for this amendment and recommends adoption of the provision incorporating the CCCI escalator into Section 36.40.10(d) of the proposed Ordinance. The updated in-lieu fee amounts will be implemented through the City’s Master Fee Schedule as part of the Fiscal Year 2026 –27 budget process.

Housing Typology
Current In-Lieu Fees in City
Master Fee Schedule
(2025)
Updated
In-Lieu Fees
% Change
Rental Housing $118/net new habitable
sq. ft.
$98/net new habitable
sq. ft.
17% decrease
Ownership - Rowhome/
Townhomes
$153/net new habitable sq.
ft.
$118/net new habitable
sq. ft.
23% decrease
Ownership - All Other
Projects
$67/net new
habitable sq. ft.
$91/net new habitable
sq. ft.
36% increase
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Amendment 4: Complete Remaining Clean-up items

As noted above, Phase 1 amendments were completed in 2025 and included a portion of the clean-up items identified during the December 2023 Study Session. The following two clean- up items remain and have been incorporated into the BMR Ordinance amendments:

• Allow ownership projects to have a weighted average affordability of up to 100 percent AMI.

• Update the administering department to the Housing Department. The current Ordinance references the Community Development Department (CDD); however, the Housing Department, established in Fiscal Year 2023–24, now administers the BMR Program.

Council Direction (November 2025): In November 2025, Council supported staff’s recommendations to implement these remaining clean-up items.

EPC Recommendation (March 2026) : The EPC supported the recommendations without modification.

Tonight’s Recommendation: No changes are proposed to these amendments from the November 2025 Council direction. Staff recommends adoption of the provisions, as incorporated into Sections 36.40.10(b)(1) and 36.40.10(k) of the proposed Ordinance.

Amendment 5: Remove the HOA Reserve Fund Requirement

When the BMR Program was updated in 2019, Council required an HOA Reserve Fund for ownership projects with very-low and low-income units to help offset future HOA fee increases that could make homeownership unaffordable.

In 2023, the State adopted Assembly Bill (AB) 572, as codified in California Civil Code section 5605 (effective January 1, 2024), which limits annual HOA fee increases on deed-restricted affordable units to 5% plus CPI, capped at 10%, to protect low- income and below homeowners from excessive increases.

Based on staff and consultant analysis , it was determined that AB 572 generally addresses the policy concern that the HOA Reserve Fund was intended to mitigate. Additionally, developers have indicated that the reserve requirement can impact project feasibility and limit the production of ownership housing.

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Council Direction (November 2025): In November 2025, Council supported staff’s recommendation to remove the HOA Reserve Fund requirement for low-income ownership BMR units.

EPC Recommendation (March 2026): The EPC supported staff’s recommendation without modification.

Tonight’s Recommendation: Staff recommends no changes to the November 2025 Council direction for this amendment and recommends adoption of the provision, which removes the requirement from Section 36.40.10(b)(1) of the proposed Ordinance.

Amendment 6: Adopt a Graduated In-Lieu Fee Reduction for Small Projects

The BMR Program allows small projects (up to six units) to pay the in-lieu fee to satisfy the BMR requirements. The cutoff is six units because a 15 percent requirement for small projects would generate only a fraction of a BMR unit. Therefore, the in-lieu fee for a small project would be for a fractional BMR unit.

During the November 2025 City Council meeting, staff recommended incorporating a “graduated fee reduction” for small projects, meaning that the more units a developer builds, up to a maximum of six units, the lower the per-unit fee, as shown in Table 6.

Table 6: Example of Graduated Fee Reduction

Number of
units*
Graduated
Reduction
Without reductions With reductions
Total Fee Fee Per unit Total Fee Fee Per unit
1 0% (full fee) $22,136 $22,136 $22,136 $22,136
2 20% $44,273 $22,136 $35,418 $17,709
3 40% $66,409 $22,136 $39,846 $13,282
4 60% $88,546 $22,136 $35,418 $8,855
5 80% $110,682 $22,136 $22,136 $4,427
6 100% (No fee) $132,818 $22,136 $0 $0
*Each unit is 2,200 square feet for the purposes of this example, which is the average size of a newly constructed single family home.

The graduated fee reduction is intended to achieve two purposes:

• Incentivize developers of small projects to maximize the development potential of their sites, including small-scale infill development and R1 sites zoned for one single -family unit.
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• Further Housing Element Goal 2.2 - Pilot ADU & SB9 Financial Incentives Program. A graduated fee reduction could maximize the use of lot splits enabled by State legislation, such as Senate Bill (SB) 9, and achieve incrementally more new housing supply than without the graduated reduction.

Staff recommended structuring the graduated fee exemption for small projects so that it does not incentivize a developer to build less than they could have otherwise on a site.

Council Direction (November 2025): Council approved the graduated fee reduction recommendation, and as discussed earlier in this report, included two additional provisions in the Council motion:

• Adjust the graduated fee reduction to work proportionally with the maximum number of units physically possible for a project, and

• Direct staff to evaluate the feasibility of incorporating the graduated fee reduction with maximizing the development potential of small sites, up to 10 units (SB 684, and SB 1123), and return to the Council with options.

Staff Analysis of the Council Direction: Staff recommends using the legally permitted development density to calculate the number of units physically possible for a project, given the site on which it is located. Staff believes that the legally allowable density for a particular site provides the most objective standard and would be based on base density allowed by the General Plan and zoning designations, as well as the provisions in Senate Bill 684 that allow a site to be developed up to ten (10) units by -right, prior to applying potential State Density Bonus Law considerations.

Table 7 provides an example comparing a project that can build a maximum of six units to one that can build a maximum of four units, and how the in-lieu fee changes.

Table 7: Example of Graduated Fee Reduction

Max.

Units
Graduated
Reduction
Fee
Reduction
Max.

Units
Graduated
Reduction
Fee
Reduction
1 0% (full fee) $22,136 1 0% (full fee) $22,136
2 20% $17,709 2 33% $14,758
3 40% $13,282 3 67% $7,378
4 60% $8,855 4 100% (no fee) $0
5 80% $4,427
6 100% (no fee) $0
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May 12, 2026

The specific methodology for calculating the legally allowed density will be further clarified in the Administrative Guidelines, including the graduated reduction schedule for projects at different unit maximums, up to six maximum units.

Staff conducted preliminary evaluation of extending the graduated fee reduction for small projects, up to 10 units. However, additional analysis needs to be conducted to determine if this is feasible. Because smaller projects, up to 10 units, might be more often oriented towards ownership models, staff recommends conducting additional analysis as part of the Low- and Middle-Income Homeownership Strategy and the next scheduled BMR review in 2028 as required by the City’s 2023-31 Housing Element.

EPC Recommendation (March 2026): The EPC supported staff’s recommendation without modification.

Tonight’s Recommendation: Staff recommends using the legally allowed development density to calculate the number of units that is physically possible for a project and scaling the fee reduction schedule accordingly. This policy has been incorporated into a new section of the municipal code SEC. 36.40.32.

Amendment 7: Allow Updates to the BMR Program Guidelines to Occur Administratively

The BMR Program currently stipulates that the BMR Administrative Guidelines necessary for the implementation of the Ordinance be adopted by resolution (Section 36.40.10(j)). An administrative process would enable staff to more efficiently incorporate operational adjustments, clean-ups, and clarifications, including those necessitated by changes in State or laws. Additionally, allowing staff -level edits would promote greater re sponsiveness and consistency with other City guidelines. For example, the City’s Density Bonus Guidelines is administratively prepared, adopted, and periodically updated.

Council Direction (November 2025): In November 2025, Council supported removing the resolution requirement and allowing the Guidelines to be adopted and periodically updated administratively.

EPC Recommendation (March 2026): EPC accepted staff’s recommendation without modification.

Tonight’s Recommendation: Staff recommends no changes to the November 2025 Council direction for this amendment and recommends adoption of the provision, which incorporates this change into Section 36.40.10(j) of the proposed Ordinance. 227
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Updated Recommendation – Moving BMR Ordinance from Chapter 36 to Chapter 46 In November 2025, Council approved staff’s recommendation to evaluate relocating the BMR Ordinance from Chapter 36 (Zoning) to Chapter 46 (Housing). This change would consolidate it with the City’s Tenant Relocation Assistance and Mobile Home Rent Stabilization ordinances, improving accessibility for developers. Because the Housing Department administers the BMR Program, relocating the ordinance would also better reflect its administrative and financial nature and align oversight accordingly. Other jurisdictions, such as San Jose, similarly place inclusionary housing programs within housing-related code sections rather than zoning.

Relocation would also eliminate the requirement for the EPC to hold public hearings on future amendments, streamlining the update process.

Following the November 2025 direction, staff analyzed potential impacts but could not initially confirm how the change would affect the BMR program. As a result, staff recommended retaining the ordinance in Chapter 36 at the EPC’s March 2026 public hearing.

Staff subsequently determined that the move is feasible, and the benefits of consolidation and streamlined amendments are significant. Accordingly, staff now recommends moving the BMR Ordinance to Chapter 46. If approved, the amendment will be brought forward before the end of 2026.

FISCAL IMPACT

Approval of the proposed ordinance does not create a direct fiscal impact. However, eliminating the in-lieu fee option as an alternative means of compliance is expected to result in the loss of future revenues that would otherwise have been generated by these fees.

LEVINE ACT

California Government Code Section 84308 (also known as the Levine Act) prohibits city officials from participating in any proceeding involving a “license, permit, or other entitlement for use” if the official has received a campaign contribution exceeding $500 from a party, participant, or agent of a party or participant within the last 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information, see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to- play-limits-and-prohibitions.html

Please see below for information about whether the recommended action for this agenda item is subject to or exempt from the Levine Act.
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EXEMPT FROM THE LEVINE ACT
☒ General policy and legislative actions

CONCLUSION

The proposed amendments represent the implementation of Phase Two of the City’s Below Market Rate (BMR) Program updates, consistent with Council direction provided in November 2025 and informed by the Environmental Planning Commission’s review in March 202 6.

Collectively, these amendments are intended to strengthen the effectiveness of the BMR Program by improving clarity, aligning with State housing policies and funding frameworks, and addressing key Housing Element objectives related to housing production, access to opportunity, and program administration.

The updates refine alternative compliance provisions, modernize fee structures, enhance accessibility requirements, and remove or streamline provisions that may constrain housing feasibility, such as the HOA Reserve Fund requirement and administrative processes. In addition, the amendments incorporate targeted improvements to support smaller-scale development and ensure that affordable housing delivery remains feasible and competitive in a constrained development environment.

Overall, the proposed Ordinance maintains the City’s commitment to requiring on-site affordable housing while providing clear, objective, and implementable standards for alternative compliance where appropriate. Staff recommends adoption of the Ordinance to codify prior Council direction and continue advancing the City’s housing goals in a manner that is both equitable and responsive to current market and regulatory conditions.

ALTERNATIVES

1. Do not approve the recommended amendments.

2. Provide other direction.

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Below Market Rate Housing Program (First Reading)
May 12, 2026

PUBLIC NOTICING – The City Council’s agenda is advertised on Channel 26, and the agenda and this report appear on the City’s website . A n email distribution to the City Housing Element interest list and developer distribution list, and a public notice of hearing were published in a newspaper of general circulation.

Prepared by:

Julie Barnard
Affordable Housing Manager

Wayne Chen
Housing Director
Approved by:

Kimbra McCarthy
City Manager

Attachment: 1. Ordinance Amending Chapter 36 (Zoning) of the City Code

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Attachment 1

ORDINANCE NO.

AN ORDINANCE OF THE CITY OF MOUNTAIN VIEW AMENDING CHAPTER 36, ARTICLE XIV, DIVISION 2 (RESIDENTIAL DEVELOPMENT: BELOW-MARKET-RATE HOUSING

PROGRAM) OF THE MOUNTAIN VIEW CITY CODE TO MODIFY THE BELOW-MARKET-RATE PROGRAM AND ADD SECTION 36.40.32 GOVERNING GRADUATED FEE REDUCTION FOR

SMALL PROJECTS, AND FINDING THAT THESE CODE AMENDMENTS ARE NOT

SUBJECT TO THE CALIFORNIA ENVIRONMENTAL QUALITY ACT

THE CITY COUNCIL OF THE CITY OF MOUNTAIN VIEW DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. Findings. The City Council hereby makes the findings pursuant to Section 36.52.70 of the Mountain View City Code.
a. The proposed amendment is consistent with the General Plan. The proposed amendments, which will result in the enactment of a more comprehensive Below-Market- Rate Housing Program, are consistent with the General Plan vision of supporting Mountain View’s diversity through innovative housing approaches for lower-income populations.

b. The proposed amendments would not be detrimental to the public interest, health, safety, convenience, or welfare of the City . The proposed amendments are not detrimental to the public interest, health, safety, convenience, or welfare of the City because these amendments result in the enactment of a more comprehensive Below -Market-Rate Housing Program to encourage residential developments serving a broad range of diverse households and incomes. c. The proposed amendments are in compliance with the provisions of the California Environmental Quality Act (CEQA) . Pursuant to California Code of Regulations section 15060(c)(2), these code amendments are not subject to the California Environmental Quality Act (“CEQA”) because they will not result in a direct or a reasonably foreseeable indirect physical change in the environment as the proposed amendments do not approve any particular project and do not change land use designations.

SECTION 2. Code Amendments. Chapter 36, Article XIV, Division 2 of the Mountain View City Code is amended to add, delete, or modify its title, sections, subsections, and provisions as set forth below. Section titles are shown in bold font, additions are shown in red underline font and deletions are shown by strikethrough font. Provisions that are not shown in underline or strikethrough font are not changed.
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ARTICLE XIV AFFORDABLE HOUSING PROGRAM
DIVISION 2. RESIDENTIAL DEVELOPMENT: BELOW-MARKET-RATE HOUSING PROGRAM SEC. 36.40.10. General requirements.

The words and terms used in this chapter shall have the meaning indicated as follows, unless the context clearly indicates otherwise:
a. Objective standard. The basic requirement of the BMR program is the provision of BMR units on-site and integrated with market-rate units for both rental and ownership projects. b. Percentage requirement. All residential development as defined in Sec. 36.40.05 are subject to the BMR program and shall provide at least fifteen (15) percent (15%) of the total number of dwelling units as affordable units.

1. Ownership units. All nonexempt ownership residential developments other than rowhouses and townhouses (as defined in Article IV of Chapter 36 of the city code) shall include at least fifteen (15) percent (15%) of the total number of ownership dwelling units within the development as units affordable to Moderate -income households. The affordable ownership units must be provided at a minimum of two (2) income levels, with a resulting income level equal to or less than a weighted average of one hundred (100) percent (100%) of the AMI when considering all of the affordable ownership units cumulatively. Rowhouses and townhouses in residential ownership developments shall be subject to a twenty- five (25) percent (25%) on-site BMR requirement, with fifteen (15) percent (15%) of the units as affordable to an income level equal to or less than at a one hundred (100) percent (100%) AMI weighted average with a range of Low-income household and Moderate-income household units; and a ten (10) percent (10%) on-site BMR requirement of the units at a one hundred thirty -five (135) percent (135%) AMI weighted average with a range of units above one hundred twenty (120) percent (120%) and up to one hundred fifty (150) percent (150%) AMI. The city does not allow BMR ownership units set at an income level lower than eighty (80) percent AMI to count toward a for -sale project's BMR requirements, unless a reserve is established that can be utilized by lower-income owners to fully pay for future expenses related to increases in homeowners association (HOA) fees or other assessments, such that the overall housing cost of homeownership is maintained at an affordable level.

2. Rental units. All rental residential developments shall include at least fifteen (15) percent (15%) of the total number of rental dwelling units within the development as units affordable to Low- income households and Moderate -income households. The affordable rental units must be provided at a minimum of two (2) income levels, with a resulting income level no greater than a weighted average of sixty -five (65) percent (65%) of the AMI when considering all of the BMR rental units cumulatively, except as set forth in this article.
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c. Size of project. The BMR requirement shall apply to all new residential developments and applicable condominium conversions.
d. In-lieu fees for fractions of units. Residential projects with less than seven (7) units shall have the option of paying a fee in lieu of the fractional BMR unit. A residential project with seven (7) units or more may pay an in-lieu fee for fractional units when the BMR obligation results in a fractional BMR unit that is less than 0.5 (i.e., less than half a unit) .; and a A fractional unit equal to 0.5 or greater shall be rounded up and the project must provide one (1) BMR unit on- site to satisfy the fractional obligation. Payment of an in -lieu fee for qualifying fractional units shall be made in full prior to issuance of the project's first building permit, and shall be based on the fee level equivalent to providing the BMR units on- site and as published in the master fee schedule. The Housing Director community development director or designee shall be authorized to adjust the rental and ownership fees annually based on the California Construction Cost Index (CCCI), as recorded by Engineering News Record and reported regularly by the California Department of General Services. Consumer Price Index (CPI), All Urban Consumers, San Francisco-Oakland-San Jose, published by the U.S. Department of Labor, Bureau of Labor Statistics .
e. Concurrent development of BMR on -site units. All BMR on -site units in a residential development and phases of a development shall be constructed concurrently with or prior to the construction of market-rate units.
f. Location and design of BMR on -site units. All BMR units shall be reasonably dispersed throughout the project and consistent with federal and state fair housing laws, have a distribution of units by number of bedrooms proportionate to the market-rate units, and be of comparable size to the market- rate units based on net habitable square footage of the units, except that affordable units for seniors shall comply with applicable requirements for senior housing. For purposes of this subdivision (f), “net habitable square footage” shall mean the floor area enclosed within the walls of structure for sleeping, eating or cooking, and living, including the floor area for bathrooms, toilet compartments, closets, halls, and interior storage areas. Net habitable square footage shall be measured from the outside perimeter of the unit’s walls expressed in square feet and fractions thereof. Garages, exterior storage, common circulation areas shared between more than one unit, patios and other outdoor spaces (whether or not such spaces are enclosed) shall not be part of net habitable square footage. The actual location of a BMR rental unit within a complex shall be permanently assigned to a particular dwelling unit.

The exterior design of the BMR units shall be consistent with the market-rate units in the project and be comparable in terms of interior design, appearance, materials, and quality of finish.

However, the BMR units may differ from market-rate units in the project by using lower-cost alternatives to certain amenities considered to be luxury items. BMR units shall have the same access to project amenities and recreational facilities as market-rate units. 233

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g. Qualifying households. All BMR rental units shall be rented only to qualified Low- income households or Moderate-income households, and all BMR ownership units shall be sold only to qualified Moderate -income households, except households for rowhouses/townhouses shall qualify based on the BMR requirement as referenced in this Sec. 36.40.10. Rents, sales prices, and eligible household sizes of BMR units shall comply with the requirements pursuant to the BMR guidelines.

Preference is given to eligible applicants for a BMR unit if they live or work in the City of Mountain View., unless otherwise prohibited Preference will not be allowed if not permitted by state or federal law or other fair housing restrictions. h. Term. BMR units subject to this division shall be maintained as affordable housing in perpetuity, unless (i) the BMR units are delivered through an alternative means of compliance and are located in a separate building which shall have one hundred percent (100%) affordable housing, and a different period of time is required by the construction or mortgage financing assistance program, mortgage insurance program, or rental subsidy program, provided that such term shall be no less than fifty five (55) years, or (ii) otherwise provided by state law.
i. Density bonus and replacement units. Compliance with the provisions of this article may be applied towards a request for a density bonus and/or towards any obligation under state law to replace housing units in connection with a project, provided that the affordable units meet the stricter of the BMR program requirements and the density bonus law and/or replacement housing requirements, as applicable.
j. Administrative guidelines. The Housing Director may issue guidelines consistent with the provisions of this Article for the purpose of carrying out and enforcing the provisions of this Article.The city shall adopt, by resolution, BMR administrative guidelines (BMR guidelines) necessary for the implementation of the provisions of this article. k. Administration. The Housing Department or its designee shall administer the BMR program shall be administered by the community development department or its designee who and may issue written procedures to implement the BMR program and guidelines. l. Accessible or Adaptable BMR Units. If a development includes both (i) at least one accessible or adaptable unit, and (ii) at least one BMR unit, then at least fifteen percent (15%) of the BMR units or one BMR unit, whichever is greater, must be accessible or adaptable. If the development’s obligation to provide at least fifteen percent (15%) of the BMR units as accessible or adaptable results in a fractional obligation that is less than 0.5 (i.e., less than half a unit), such fractional obligation shall be rounded down after the first accessible or adaptable BMR unit. An obligation to provide a fractional accessible or adaptable BMR unit equal to 0.5 or greater shall be rounded up and the project must provide one (1) accessible or adaptable BMR unit to satisfy the fractional obligation.

For purposes of this subdivision (l), “accessible” and “adaptable” shall mean standards for 234

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features or fixtures, designs, or other improvements, which are equal to or exceed the minimum requirements of Chapter 11A of the California Building Code or any successor legislation.

SEC. 36.40.15. Determination of rents for BMR rental units.

The monthly rental rate for each BMR unit shall be based on the designated income level for the BMR unit and household size as established by the City of Mountain View BMR program administrative guidelines. The units shall be designated for Low- income households and Moderate-income households, with a cumulative weighted average of no more than sixty-five (65) percent (65%) AMI, and rent shall be based on no more than thirty (30) percent (30%) of the designated income level for the BMR unit qualifying tenant's gross household monthly income , according to the procedures set forth in the BMR program guidelines. The rent range for Low- income households and Moderate -income households may be adjusted annually to reflect adjustments in the gross household income levels for Santa Clara County published periodically by the California Department of Housing and Community Development.

Sec. 36.40.16. Rent Increases for BMR Units.

The following provisions shall apply to rent increases on BMR units. a. The rental rate for an occupied BMR unit shall not be increased more than three percent (3%) within a twelve -month period. This provision shall not prohibit a landlord from increasing the rental rate on a vacant BMR unit more than 3% to align the rental rate with current applicable State Income Limits set by the California Department of Housing and Community Development.
b. The rental rate for an occupied BMR unit shall not be increased more than one time in a twelve-month period.
c. A tenant shall be provided written notice of any increase in the rental rate for their unit no less than thirty (30) days prior to the effective date of the rent increase. The notice shall at a minimum include the new rental rate and the date the new rate will become effective.

Written notice of a rent increase shall be hand-delivered to the tenant or served by U.S. mail in accordance with Section 1013 of the California Code of Civil Procedure. A tenant shall not be liable for any rent increase imposed without notice delivered in accordance with this subsection.
d. A landlord who demands, accepts, receives, or retains any payment of rent in violation of this section shall be liable in a civil action to the tenant from whom those payments are demanded, accepted, received, or retained for all of the following:

1. Injunctive relief.
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2. Damages in the amount of the rent demanded, accepted, received, or retained in violation of this section.

3. In the court's discretion, reasonable attorney's fees and costs.

SEC. 36.40.20. Determination of sale prices for BMR ownership units.

A project's BMR ownership units shall be sold at prices affordable to Moderate -income households with a cumulative weighted average of no more than one hundred (100) percent (100%) AMI, except sales prices for rowhouses/townhouses shall be based on the BMR requirements for such developments as referenced in this Sec. 36.40.20, and ownership sales prices shall be based on the selected income level for each unit and the presumed household size that corresponds with the various unit sizes as set forth in the B MR guidelines. The eligible household income range may be adjusted annually to reflect adjustments in the median household income level for Santa Clara County published periodically by the California Department of Housing and Community Development. The sal es price for each BMR unit shall result in a total monthly payment that shall not exceed thirty (30) percent (30%) of the AMI level designated selected household income level for that unit adjusted by unit size and presumed household size, and includes mortgage, taxes, utilities, HOA dues, insurance and private mortgage insurance.

For units sold at or less than eighty (80) percent AMI, the developer shall set aside a reserve and describe the reserve in the CC&Rs to cover future special assessments and increases in HOA dues for those households, and the total housing cost shall not exceed thirty (30) percent of the household's selected income level for the unit over the life of the mortgage. The community development director or designee may establish standards for calculating the amount of the reserve.

SEC. 36.40.25. Resale controls on ownership units.

All BMR units shall be subject to deed restrictions, covenants, resale restrictions, and other applicable conditions and documentation to ensure compliance with the BMR program, and which includes an option that entitles the city or its designee the first right to purchase a BMR ownership unit at the lower of the following purchase prices:
a. Market value;
b. The purchase price paid by the seller, plus one -third of the increase (during the period of seller's ownership) in a CPI, All Urban Consumers, San Francisco-Oakland-San Jose, published by the U.S. Department of Labor, Bureau of Labor Statistics; or c. An amount equal to the price affordable to household earning the income level specific to 236

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the BMR unit.

An exception to the city -imposed restriction that the BMR unit be sold to a city -approved BMR household may be granted if:

1. The applicant demonstrates the inability to obtain a qualified buyer within a one hundred eighty (180) day period; and

2. The city decides not to exercise its option to purchase the BMR unit. The seller will be entitled to the lowest purchase price listed above. The balance of the proceeds shall be paid to the City of Mountain View to be deposited in the city's housing fund. The deed restrictions shall prohibit sales or transfers of the property except with the written consent of the city and at a price listed above.

Owners of BMR ownership units shall provide the city/designee a notification of intent to sell prior to listing the unit. If an owner intends to refinance, change title, or transfer ownership of the BMR ownership unit, the owner shall notify and receive approval from the city/designee prior to initiating a refinance, title change, or transfer of ownership. The city is entitled to pursue all available remedies against an owner if an owner fails to notify and receive approval from the city/designee, including the city's exercise of its option to purchase the BMR ownership unit or a city action to foreclose on the BMR ownership unit under the city's deed of trust.

The BMR ownership deed restrictions and conditions shall contain such other provisions as are considered necessary by the city to implement the BMR program and the city may require that additional notices or other document(s) be recorded. A reference to the deed restrictions and conditions shall be included in all deeds or conveyances of BMR units.

SEC 36.40.30. Alternative Compliance Measuresmitigations.

The basic objective standard of the program is the creation of residential developments with affordable housing units integrated on-site with market-rate residential unitsdevelopments. As an alternative to building the affordable housing units on- site, developers of market -rate residential projects, regardless of whether such projects provide rental units or ownership units, may submit a request to meet their BMR program obligations through other means, such as the dedication of land, off-site development of BMR units and/or the acquisition and preservation of existing housing units to be converted into deed- restricted BMR units the provision of other resources, payment of an in-lieu fee, or other alternatives.

The applicant has the burden of demonstrating that the request for an alternative mitigation compliance measure meets the findings criteria set forth below. The alternative compliance measure shall be approved if each of the criteria herein are satisfied. requirements; however, meeting the findings requirements does not constitute automatic approval of the alternative mitigation request. Such requests may only be granted by the city council, if the city council determines that such alternative will further affordable housing opportunities in the city to a 237

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greater extent than providing units on- site based on the standards in the administrative guidelines and/or other procedures promulgated and that the alternative mitigation is preferred to the on-site requirement.
a. General Requirements.

1. Compliance Plan. A request for alternative compliance measure must include a BMR Compliance Plan (“Compliance Plan”). The Compliance Plan shall include: (i) a description of the proposed alternative means of compliance, with details including but not limited to the number, size, density, and affordability of BMR Units, as applicable; (ii) pro forma financial statements; (iii) a financing plan; (iv) a feasibility analysis that demonstrates the applicant will successfully deliver the proposed BMR alternative, including through financial contributions as applicable; (v) an equivalency analysis that demonstrates that the value of the proposed alternative is no less than the value of providing on-site BMR units; (vi) supporting documentation as required by the BMR guidelines . Additionally, if the proposed alternative involves partner ing with another entity, the Compliance Plan shall include information that demonstrates the partnering entity meets the partner requirements listed in Table 36.40.30-2 or Table 36.40.30-3, as applicable. A Compliance Plan with the information required herein shall be submitted in order for informal planning review to be deemed complete.

2. Findings. A request for alternative compliance may only be granted if the Housing Director makes each of the following findings:

(a) Equivalency. The value of the proposed alternative compliance measure is no less than the cost of providing BMR units on- site, based on the fee level equivalent to providing the BMR units on-site and as published in the master fee schedule. (b) Financing of the Alternative Compliance Measure. The applicant has demonstrated that it will successfully deliver the proposed alternative compliance measure.

Applicant’s contribution towards financing the proposed alternative shall include, as applicable, the full value of the land in perpetuity, as well as additional funding or other resources as needed. If the proposed alternative involves a partnership with another entity, the applicant has demonstrated that (i) the partnering entity will not be required to provide any monetary compensation to the applicant; (ii) the partnering entity will only be required to fund costs directly related to providing the BMR units and a proportional share of infrastructure serving the BMR units; and (iii) it has not shifted any of its own financial responsibility or development costs related solely to the market -rate units onto the partnering entity. The City may, at the applicant’s expense, retain a consultant to review the reasonableness of the Compliance Plan’s feasibility analysis.
b. Land Dedication. In addition to the General Requirements in Section 36.40.30(a), a request for alternative compliance in the form of a land dedication to the City shall not be approved unless all the following requirements specified in Table 36.40.30-1 are met:
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Table 36.40.30-1: Criteria for Land Dedication Proposals

Standard Requirement
Parcel Size and Capacity The site being dedicated must be a minimum parcel size of 0.75 acres, and be of a suitable size to accommodate the number and distribution of BMR units that would have been required for the site with market-rate units.

Location At least one of the following must be true for the site being dedicated:
• Site is identified as a Housing Element Opportunity Site. • Site is within 0.5 mile of the underlying project.
• Site is located south of El Camino Real.
• Site is included in the El Camino Precise Plan.
• Site is located in an area designated by the California Department of Housing and Community Development as a
“Highest Resource Area.”
Environmental
Conditions
Applicant must submit environmental conditions reports, including but not limited to Phase I and Phase II environmental site assessments as applicable, and must complete any necessary remediation to make the site suitable for residential development prior to conveyance of the land.

Special Conditions Applicant shall submit a feasibility analysis with their Compliance Plan that includes a City-led appraisal of the land to be dedicated.

Site Infrastructure Applicant shall provide or fund all infrastructure necessary to serve the site—including utilities, streets, sidewalks, and lighting up to the border of the dedicated parcel—and be consistent with any applicable Precise Plan standards.

Cost Recovery Applicant shall pay a fee as set forth in the City’s master fee schedule based on the City’s costs for construction of BMR units on the dedicated site as would have been required for the site with market-rate units.

Timing of Land
Dedication
Dedicated site and any required financial contribution, if applicable, must be transferred to the City prior to the issuance of the first building permit for the underlying project.

c. Off-site Development . In addition to the General Requirements in Section 36.40.30(a), a request for alternative compliance in the form of off- site development of BMR units shall not be approved unless all the following requirements specified in Table 36.40.30-2 are met:

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Table 36.40.30-2: Criteria for Off-Site Development Proposals

Standard Requirement
Location At least one of the following must be true for the site of the off- site BMR units:
• Site is identified as a Housing Element Opportunity Site. • Site is adjacent to underlying project (same or separate parcel are both permissible).
• Site is within 0.5 mile of the underlying project.
• Site is located south of El Camino Real.
• Site is included in the El Camino Precise Plan.
• Site is located in an area designated by the California Department of Housing and Community Development
as a “Highest Resource Area.”
Access to Amenities If any portion of any of the off-site BMR units is located within 750 feet of the underlying project parcel boundary,
residents of all off-site BMR units must be granted access to shared amenities located on the underlying project parcel.

Unit Requirements The off-site BMR units shall meet the same requirements for percentage requirement, design of BMR units, qualifying households, term, and accessible or adaptable units as described in Section 36.40.10.

The off-site BMR units shall have proportionally the same mix of bedroom counts (studios, one bedroom units, two bedroom units, etc.) as the market-rate units, except the
BMR units shall be permitted to include more bedrooms than the market-rate units.

Special Conditions Applicant shall submit a financing plan that confirms no financial contributions will be required from the City.

Off-Site Partner If the applicant opts to partner with another entity, the Compliance Plan must include:
• The applicant’s financial contributions.
• The terms offered to the partner.
• The process for partner selection.
• The structure of the agreement that forms the
relationship between applicant and the partnering entity. 240

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City Oversight of
Partnership
If applicant elects to select a partner through a Request for Proposals (RFP) process, the RFP shall comply with Section

36.40.30(a)(2)(b) and the City may review the RFP to ensure such compliance.

Partner requirements If the applicant elects to partner with an entity to undertake the off-site development, that partner shall meet all of the following requirements:
• The partner shall have verifiable experience developing at least three affordable housing projects within the last ten years that are similar in size, scale, tenure, type, target population, and overall physical and financial
complexity to the proposed project.
• In the past 10 years, the partner shall not have been subject to any adverse judgment or enforcement action by a public entity in connection with development activities, housing or public contracting.
• The partner must not have filed for bankruptcy within the past 10 years.
• In the past 10 years, that partner must not have been involuntarily removed from an ownership or controlling
interest in any publicly-funded development project.
• In the past 10 years, the partner shall not have been debarred or considered for debarment, suspended, declared ineligible, or excluded by any local, state or federal department or agency from participation in government funded programs or contracts.

Timing The off-site BMR units shall be constructed and receive the Certificate of Occupancy for all units no later than issuance of the first Certificate of Occupancy for any use in the underlying project, unless an alternative timeframe is approved by the final decision-making body to ensure that the BMR units are constructed prior to the final Certificate of Occupancy for the market-rate units.

If the applicant fails to obtain a Certificate of Occupancy for the off-site BMR units by the deadline herein, the underlying project shall be required to comply with the
general requirements in Section 36.40.10.

d. Acquisition and Preservation of Existing Housing Units . In addition to the General Requirements in Section 36.40.30(a), a request for alternative compliance in the form of acquisition and preservation of existing housing units to be converted into deed- restricted 241

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BMR units shall not be approved unless all of the following requirements specified in Table

36.40.30-3 are met:

Table 36.40.30-3: Criteria for Acquisition/Preservation Proposals

Standard Requirement
Eligibility The units to be acquired must be existing residential units located on a different site than the underlying project and not be subject to any existing restrictions requiring affordability to moderate- or low-income households.

The acquired units shall be converted into deed-restricted rental or ownership BMR units with the tenure type consistent with the underlying market-rate project.

Location At least one of the following must be true for the units to be acquired:
• The units are subject to Article XVII of the Mountain View Charter (Community Stabilization and Fair Rent Act).
• Site is identified as a Housing Element Opportunity Site • The units are within 0.5 mile of the underlying project. • The units are located south of El Camino Real.
• The units are located on a site that is included in the El Camino Precise Plan.
• The units are located in an area designated by the
California Department of Housing and Community Development as a “Highest Resource Area.”
Rehabilitation and
Physical Needs
Assessment and
Standards
The Compliance Plan must identify:
• Building and unit-level physical needs assessments of existing conditions.
• Required rehabilitation, repairs, or replacements,
including accessibility requirements, based on
applicable State and local requirements.
• Improvements that make the acquired units comparable in terms of interior design, appearance, materials, and quality of finish as the market-rate units.
• Estimated rehabilitation costs.

Soft-story buildings must be retrofitted for current seismic compliance according to state and local requirements, as applicable, based on the physical needs assessment.
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Affordability For units to be converted into ownership BMR units, the affordability requirements shall be the same as the affordability requirements described for ownership units in Section

36.40.10(b)(1).

For units to be converted into rental BMR units, the affordability requirements shall be the same as the affordability requirements described for rental units in Section 36.40.10(b)(2).

Unit Count/
Bedrooms
Acquired units must meet or exceed the bedroom count of on- site BMR units that would have otherwise been provided.

Studios count as 0.5 bedrooms.

The total number of acquired units cannot exceed 1.5 times the number of BMR units that would have been required on-site.

Special Conditions Applicant shall submit a financing plan that confirms no financial contributions will be required from the City.

Off-Site Partner If the applicant opts to partner with another entity, the Compliance Plan must include:
• The applicant’s financial contributions.
• The terms offered to the partner.
• The process for partner selection.
• The structure of the agreement that forms the
• relationship between applicant and the partnering entity.

City Oversight of
Partnership
If applicant elects to select a partner through a Request for Proposals (RFP) process, the RFP shall comply with Section

36.40.30(a)(2)(b) and the City may review the RFP to ensure such compliance.

Partner requirements If the applicant elects to partner with an entity to undertake the acquisition and preservation of existing housing units, that partner shall meet all of the following requirements:
• The partner shall have verifiable experience developing at least three affordable housing projects within the last ten years that are similar in size, scale, tenure, type, target population, and overall physical and financial
complexity to the proposed project.
• In the past 10 years, the partner shall not have been subject to any adverse judgment or enforcement action by a public entity in connection with development activities, housing or public contracting.
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• The partner must not have filed for bankruptcy within the past 10 years.
• In the past 10 years, that partner must not have been involuntarily removed from an ownership or controlling
interest in any publicly-funded development project.
• In the past 10 years, the partner shall not have been debarred or considered for debarment, suspended, declared ineligible, or excluded by any local, state or federal department or agency from participation in government funded programs or contracts.

Relocation Assistance Applicants must provide relocation assistance and first right of return to any existing occupant of the units proposed for rehabilitation, as consistent with the City’s Tenant
Relocation Assistance Ordinance (TRAO).

Timing The units shall be acquired, all necessary rehabilitation work shall be completed, and all acquired and rehabilitated units shall receive a Certificate of Occupancy no later than the issuance of the first Certificate of Occupancy for the market-rate units, unless an alternative timeframe is approved by the final decision-making body to ensure that the units are acquired and preserved as BMR units prior to the final Certificate of Occupancy for the market-rate units.

If the applicant fails to obtain a Certificate of Occupancy for the acquired and preserved BMR units by the deadline herein, the underlying project shall be required to comply
with the general requirements in Section 36.40.10.

SEC. 36.40.32. Graduated Fee Reduction for Small Projects.

A fee reduction shall be available to projects that: (i) construct between one and six units, and (ii) develop at the maximum permissible residential base density permitted on the project site. The graduated fee reduction schedule shall be provided in the administrative guidelines issued by the Housing Director under Section 36.40.10(j).

The fee reduction shall depend on the maximum permissible residential base density permitted on the project site.

SEC. 36.40.35. BMR household eligibility requirements.

a. The city or its designee shall select potential occupants of BMR units from a list of those persons qualified on the basis of household income, relationship between household size 244

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and the size of available units, and further criteria and procedures to be established by the city in the BMR guidelines.
b. Each purchaser of a BMR unit shall certify, prior to close of escrow, in a form acceptable to the city or its designee, that said unit is being purchased and shall be maintained as the purchaser's primary place of residence.
c. The household income of each renter of a BMR unit shall be verified annually by the city or its designee to confirm the household's continued income eligibility for the unit as set forth in the BMR guidelines and other procedures that the city may promulgate.

SEC. 36.40.40. BMR housing fund.

A housing fund is hereby established for the deposit of all in -lieu fees and other penalties and payments made to the city under the BMR program. The purpose of the fund is to assist in providing housing that is affordable to very low- , low- and moderate-income households and cover administrative costs of the BMR program. The city has sole discretion in determining the income levels(s) that shall be funded with the housing fund, and the housing fund shall not be used to fund units in the above moderate-income category.

SEC. 36.40.45. Compliance.

Any individual or household that rents, purchases, or sells a BMR unit in violation of the BMR program requirements or the intent of the BMR program shall be subject to penalties, and shall be required to forfeit all monetary amounts so obtained in excess of the permitted resale price or rental rates. Such amount shall be deposited in the city's BMR housing fund. If the city/designee undertakes any enforcement action to obtain compliance with the requirements of the BMR program, the city/designee shall be entitled to recover its attorney's fees and staff costs for such enforcement effort.

SEC. 36.40.50. Exemptions and appeals.
a. Exemptions—Historic resources. Exemptions from, or credit toward, BMR requirements may be granted for certain historic resources pursuant to this section. b. Exemptions—Precise plans. Exemptions from BMR requirements may be granted in precise plans where the precise plan expressly provides different BMR requirements or exceptions from specific requirements of this Article XIV, Division 2, including the BMR Administrative Gguidelines. c. Appeals of determinations based on the administrative requirements of the BMR program as established in the BMR guidelines must be in the form of a written request by the appellant and be addressed to the Housing Director community development director . The Housing Directorcommunity development director or designee shall make the ruling, and all rulings shall be final. The city may establish cost recovery fees for appeals. 245

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SEC. 36.40.55. Grandfather provision.

The provisions of the BMR program shall become effective on August 24, 2019 and apply to all residential developments, except the following residential developments:
a. Non-gatekeeper projects with formal applications submitted by June 30, 2019 and the submittal of all additional information (if any) by August 24, 2019 as requested in the city's thirty (30) day letter responding to the applicant's formal application submittal. b. "Gatekeeper" developments deemed ready by the city, by December 20, 2019, for a public hearing for consideration of project approval and processed in accordance with City Code Secs. 36.50.90, 36.52.20, and 36.52.55.

SECTION 4. Severability. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be unconstitutional, such decision shall not affect the validity of the other remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, sentence, clause, or phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, or phrases be declared unconstitutional.

SECTION 5. Publication. Pursuant to Mountain View City Charter Section 522, at least two (2) days prior to final adoption of this ordinance, the City Clerk shall post the ordinance in three (3) prominent places in the City and publish in the City’s official newspaper notice setting forth the title of the ordinance, the date of its introduction, and a list of the places where copies of the ordinance are posted.

SECTION 6. Effective Date. Pursuant to Mountain View City Charter Section 519, this ordinance shall become effective thirty (30) days after the date of its adoption.

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