REVIEW & UPDATE: PROPOSED
INCLUSIONARY HOUSING ORDINANCE AND
THE RECOMMENDATIONS FROM THE
HOUSING SUBCOMMITTEE
CITY COUNCIL STUDY SESSION
MAY 19, 2026
Housing Element Background & Key Dates
On Jan. 31, 2023, the City Council adopted the Housing Element.
On Mar. 30, 2023, the California Department of Housing & Community Development (HCD) determined the Orinda Housing Element to be in full compliance with State Housing Element Law.
Since May 2023, the city has been working on the Inclusionary Housing Ordinance and Housing Affordability project.
2 Housing Element Policy
Action 3.G: Inclusionary Housing Ordinance
Determine the appropriateness
of an inclusionary ordinance
within two years after adoption
of the Housing Element. If
determined appropriate, adopt
an inclusionary ordinance within
one year of making the
determination.
• Key considerations:
• Project size threshold
• Percentage of affordable units
• Design and timing requirements
• In-lieu fee amount
• Developer incentives
• Affordability administration
3 Housing Element Policy Implementation
California Government Code Section 65588
Local governments shall review to evaluate the following:
(1) The appropriateness of the housing goals, objectives, and policies in contributing to the attainment of the state housing goal.
(2) The effectiveness of the housing element in attainment of the community’s housing goals and objectives.
(3) The progress of the city, county, or city and county in implementation of the housing element.
(4) The effectiveness of the housing element goals, policies, and related actions to meet the community’s needs, pursuant to paragraph (7) of subdivision (a) of Section 65583.”
4 Review of July/August 2025
City Council Discussion*
No. Questions Discussion Recommendations
1 Size of development? Incentivizes small projects
Applies to residential and mixeduse residential projects with 11 or more units
2 Percentage of affordable units?
Market study shows no
constraint on development and
aligned with MTC TOC Policy
15% of units in applicable
residential projects be deedrestricted affordable housing units 3 Best mix of affordable units? Units are proportionate Clear language on affordable units as same as market rate
4 In-lieu fee for projects below on-site
requirement?
Raised fee above MTC TOC base
level of $12.66 (~$100k) and
below $69.39 ($548k)
Set in-lieu fee at $26.30 per net
residential rentable or sellable
square foot (~$207k)
5 Any development incentives? Already qualifying for waivers and concessions None
* Need for on-going monitoring and administration requirements discussed 5 Jan. 2026 City Council: Key Actions
Affordable Housing Subcommittee Meeting (April 13, 2026)
1. Elaborate on maintaining affordable
housing quality while creating units
2. Consider a 10% affordable housing
percentage
3. Consider including single-family homes
4. Calculate the in-lieu fee on a flat fee per
required affordable unit and consider
partial build-out alternatives
6 Economic & Market Feasibility
Key Findings: Study
• The Orinda market is characterized
by limited supply and consistently
high home values
• Median single-family home prices
in Orinda are notably higher than in
surrounding areas, with recent
observations at approximately
$1,950,000
7 Single Family Home Median Sales Price 2012-2025
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
$2,200,000
Orinda Contra Costa County
Source: Redfin
Economic & Market Feasibility
In-Lieu Fee
Preliminary Recommendation
• Set an in-lieu fee at the maximum
demonstrated rate of $548,300 per
required affordable unit
• This equates to approximately $69
per total next residential rentable or
sellable sf
• This is based on a 15% affordable
requirement
8 Table 1: In-Lieu Fee Units Comparison
Regional
Comparables
In-lieu Fee per
NRSF
In-lieu Fee per
1,180 sqft
Unit
In-lieu Fee
Total 134 Unit
Project
In-lieu Fee per
Required
Affordable Unit
at 15%
Median $25.22 $30,241 $4,022,080 $201,608
Average $26.30 $31,166 $4,145,012 $207,770
75th Percentile $29.28 $34,697 $4,614,674 $231,312
Max in-lieu fee based on
Study $69.39 $82,227 $10,936,211 $548,181
Lowest Based on MTC
TOC $12.66 $15,002 $1,995,279 $100,014
SECTION 1: MAINTAINING AFFORDABLE
HOUSING QUALITY WHILE CREATING UNITS
9 Maintaining Affordable Housing Quality
Key Findings
10 1
2 The IHO advances affordable housing as an integrated part of residential development projects.
Adopting an IHO avoids units that are of low quality and requires units that are comparable in size and type to market rate units. The SDBL does not include explicit requirements related to building quality or access to amenities and common areas.
The IHO will help the City ensure affordable units are comparable in quality, size, and type.
SECTION 2: A 10% AFFORDABLE HOUSING
PERCENTAGE
11 Affordable Housing Percentage
Key Findings
12 1
2 Multifamily rental and some multifamily for sale residential development projects were considerable feasible with a 15% affordable housing percentage.
A 10% affordable housing percentage would help projects navigate local development conditions and increase economic feasibility. The reduction would address the challenging development setting while at the same time signal the City’s commitment to affordable housing.
State Density Bonus Law
Inclusionary Housing Ordinance (IHO)
1. The IHO is an additional tool to the SDBL
2. IHO helps to mitigate any no net loss scenario
by requiring housing at a range of income
categories
3. Recent projects have used State Density
Bonus Law to increase economic value
4. Projects*:
1. Orinda Grove (8 du)
2. 2 Irwin Way – Monteverde (66 du)
3. 15 Irwin Way – Vista Verde (51 du)
4. 23 Altarinda Rd (1 du)
13 * Number of units rented at affordable rents
State Density Bonus Eligibility
Requisite Percentage of Affordable Units in a Housing Development To qualify for a density bonus, a project must have 5+ units and include at least one of these provisions*:
• Very Low-Income (VLI): Starts at 20% bonus for 5% affordability, scaling up to the maximum 50% bonus for 15% affordability
• Low-Income (LI): Starts at 20% bonus for 10% affordability, scaling up to the maximum 50% bonus for 15% affordability
• Moderate-Income (For-sale): Starts at 5% bonus for 10% affordability, scaling up to the maximum of 50% bonus for 44% affordability
• Senior Citizen Housing: Bonus is 20% of the number of senior units in the base project • 100% Affordable Projects: Projects with (≥ 80%) lower-income units (and ≤ 20%) moderate are entitled to an 80% density bonus.
• Note: If within 0.5 miles of major transit, local density limits are eliminated. 14 * Additional provisions include Special Populations, College Students, Land Donation and Child Care Facility SECTION 3: INCLUDING SINGLE-FAMILY
HOMES
15 Including or Exempting Single-family
Economic Feasibility and Market Study: For Sale
16 100% Market Rate 4% Affordable
Market Rate Sales Price $2,215,447 $2,215,447
Gross Development Cost Per Unit $1,926,357 $1,924,658
Developer Profit
Return on Cost 15.01% 10.99%
Feasibility (12%)
Feasibility Yes No
* RL-10 (Single-family)
Including or Exempting Single-Family
Key Findings
17 1
2 The single-family, for sale scenario did not achieve an adequate return on cost, even when considering a much lower 4% affordable housing percentage.
Very few opportunities to accommodate single-family residential development projects with 11 or more units exist in Orinda where Inclusionary Housing Ordinance would apply.
SECTION 4: A FLAT IN-LIEU FEE PER
REQUIRED AFFORDABLE UNIT
18 In-Lieu Fee Units of Calculation
Cost per Required Affordable Unit
19 Calculation RH-40 DC
NRSF 209,885 104,445
Units (Affordable) 179 (27) 88 (13)
In-lieu Fee $26.30 $26.30
Total $5,519,976 $2,746,905
Per Required Affordable Unit $204,444 $211,300
In-Lieu Fee Per Required Affordable Unit $207,872 $207,872 Source: Lisa Wise Consulting, Memorandum, Revised March 19, 2026 In-lieu Fee Units of Calculation
Key Findings
20 1
2 The use of the NRSF (Net Residential Square Footage) method makes administration difficult and not easy to apply to a partial build proposal.
A flat fee per required affordable unit basis will facilitate the administration of development applications, including partial build applications. Rounding up and not down for the calculations of whole affordable units would benefit the City’s Housing Element goals to create more units and fund resources.
In-Lieu Fee Units of Calculation
Recommended In-Lieu Fee Per Required Affordable Unit
21 Maximum Recommended Minimum (Per MTC TOC)
$548,300 $207,872 $100,000
Source: Lisa Wise Consulting, Memorandum, Revised March 19, 2026 Ordinance
Code Language
• Draft Ordinance
• Ch. 17 (Zoning) Text Changes
• Ch.17.14 – Affordable Housing
• Sec. 17.14.1 – Inclusionary Housing
• Sec. 17.14.2 – Affordable Housing
Incentive Program and Density Bonus
22 IHO Incentives
For Developers
• Reduced Affordability Mandate
• Lowering the affordability unit mandate from 15% to 10% to improve overall project financial feasibility
• Operational Flexibility
• Implementing a Partial Build Scenario, allowing developers more options for how and when affordable units are integrated
• Simplified In-Lieu Fees
• Providing developers with greater cost certainty during the planning phase • Waivers and Modifications
• An applicant may submit a request to the City Council to waive or modify the requirements of Section 17.14.1
23 City Council
Direction to Staff
• Is the city council supportive of the recommendations from the Affordable Housing Subcommittee and staff proposed changes? • Change to percentage requirement to 10% from 15%
• Continue to exempt single family residential development projects • Change the in-lieu fee from NRSF to flat fee per required affordable unit • Modification to the ordinance to update the definitions and remove SDBL from exemption section
• Next Steps – Preparation for a hearing before the Planning Commission & City Council
24 THANK YOU!
Economic Feasibility and Market Study
Development Prototypes
26 Development Standard RH-40 DCOR RL-10
FAR 1.17 1.87 0.12
DUI/Acre 35.69 47.10 2
Height 50 45 27
Number of Stories 4 4 1
Land Area Acres 5 1.87 12
Gross Building SF 266,958 235,577 60,126
Net Building Area SF 209,885 137,547 60,126
Retail Gross SF 0 33,102 0
Total Units 179 88 24
Average Unit Size 1,173 1,187 2,509
Total Parking Spaces 179* 221* 96
* Assumes parking ratios lower than code requirements due to AB2097 A. Purpose and Intent
B. Definitions
C. Applicability
D. Inclusionary Housing Requirements
E. Alternative Compliance Methods
F. Affordable Housing Plan
G. Affordable Housing Agreement
H. Construction Timing
Sec. 17.14.1 – Inclusionary Housing
I. Implementation and Administration
J. Waivers and Modifications
K. Appeals
L. Enforcement
Applicability
Sec. 17.14.1 – Inclusionary Housing
Shall apply to all residential development
projects that propose 11 or more dwelling units
Requirements
Sec. 17.14.1 – Inclusionary Housing
• At least 15% of total units
• For-rent projects average 80% of AMI
• For-sale projects average 120% of AMI
Unit Mix and Design Standards
Sec. 17.14.1 – Inclusionary Housing
• Inclusionary Units shall reflect the range of
unit types in the Residential Development
Project.
• The proportion of Inclusionary Units by
bedroom count shall be the same
proportionately to the market-rate units.
• Inclusionary Units shall be dispersed
throughout the project and shall not be
isolated in separate buildings or floors.
Unit Mix and Design Standards
Sec. 17.14.1 – Inclusionary Housing
• Inclusionary Units shall be constructed with
the same exterior appearance, quality, and
durability, such that they are visually and
functionally indistinguishable from market-rate
units.
• Inclusionary Units shall be constructed with
the same size, finishes, distribution
throughout the development, and access to
common areas as market rate units.
Alternative Compliance Method
Sec. 17.14.1 – Inclusionary Housing
• In-Lieu Fee
• May provide an In-Lieu Fee instead of
providing some, or all, of the required units.
• Calculated on the net residential square
footage (for a partial build, minus the square
footage of the of the affordable units to be
constructed).
Alternative Compliance Method
Sec. 17.14.1 – Inclusionary Housing
• In-Lieu Fee
• May provide an In-Lieu Fee instead of
providing some, or all, of the required units.
• Calculated on the net residential square
footage (for a partial build, minus the square
footage of the of the affordable units to be
constructed).
Waivers and Modifications
Sec. 17.14.1 – Inclusionary Housing
• An Applicant may submit a request to the City
Council to waive or modify the requirements
of this Section.
• The City Council may waive or modify the
requirements of this Section upon findings:
o Applying the requirements would take property
o Alternative proposal would produce more
affordable units
o Requirements would render project economically
infeasible
Summary
Key Variables
No. TITLE QUESTION ORDINANCE
C. Applicability Size of development? Propose 11 or more dwelling units D. Inclusionary Housing Requirements Percentage of affordable units? 15% Income Targeting What average AMI is desirable? For-rent projects average 80% For-sale projects average 120%
Unit Mix and Design Standards Best mix of affordable units? Same exterior appearance: size, finishes, distribution, access
E. Alternative Compliance Methods In-lieu fee for projects below on-site requirement?
May pay an In-Lieu Fee instead of
providing some or all the required
J. Waivers and Modifications What incentives, flexibility? Can make request to City Council to waive or modify