CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
9/14/2026
1 SUBJECT:
File No. 2026-006 – Public Hearing Text Amendment TA-129-26, initiated by the City of Pacifica, to repeal and replace Article 41 Density Bonus Program and Article 47 City of Pacifica Below Market Rate (Inclusionary) Program of the City of Pacifica Zoning Regulations (Title 9, Chapter 4 of the Pacifica Municipal Code) relating to the implementation of state density bonus law and regulations for inclusionary housing and below market rate units, respectively. The City Council will also discuss a resolution updating the City’s Below Market Rate (“BMR”) In-Lieu Fees established pursuant to Resolution No. 24-2007.
RECOMMENDED ACTION
Conduct a public hearing and introduce an Ordinance of the City Council or the City of Pacifica repealing and replacing Article 41 (“Density Bonus Program”) and Article 47 (“City of Pacifica Below Market Rate (Inclusionary) Program”) of Chapter 4, Title 9, of the Pacifica Municipal Code; and finding adoption of the Ordinance exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3), “General Rule” (Attachment A); and discuss updates to the housing in-lieu fee resolution (Attachment B).
STAFF CONTACT
Samantha Updegrave, Community Development Director
650-738-7341
[email protected]
BACKGROUND/DISCUSSION:
The Density Bonus (DBO) and Inclusionary and Below Market Rate Program of the City of Pacifica (IHO) ordinances are separate but related ordinances that dictate the provision of affordable housing in the City of Pacifica. The Density Bonus Ordinance is based on and implements California State Density Bonus law, which allows developers to receive increased density, waivers of development standards and concessions or incentives for residential, residential mixed-use, and commercial developments in exchange for the provision of restricted affordable housing units. The Inclusionary and Below Market Rate Housing Program1 Ordinance is a local regulation that mandates the affordable housing in each residential and residential mixed-use development with more than eight units, and the policies and procedures related to that affordable housing.
These ordinances make a significant impact on the development of residential, residential mixed-use, and commercial developments in the City of Pacifica; however, neither has been updated in many years. The DBO was adopted in 1984 and last updated in 1992, and IHO was adopted in 2007 and has never been updated. There have been significant changes to state law, federal requirements, and best practices in the past 20 to 30 years. The City’s adopted 1 City of Pacifica Below Market Rate (Inclusionary) Program of the City of Pacifica to be renamed “Inclusionary and Below Market Rate Housing Program” to remove redundancy, and for ease of use, and clarity.
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Housing Element also requires that the City modernize its zoning ordinance and align our IHO with state law. The City partnered with the Housing and Regional Trust of San Mateo County (HEART) to draft amendments that will bring Pacifica’s ordinances into alignment with state law and best practices.
The City is also participating in a multi-jurisdictional Affordable Housing Study that is being conducted by Community Planning Collaborative and Strategic Economics. The study is currently under way and is exploring updates to affordable housing policies to be applied to new development projects, including residential affordable housing impact fees, inclusionary requirements and in-lieu fees, and commercial linkage fees.2 Data and analysis from the completed study are expected in 2027 and will be used to evaluate additional potential substantive changes to the City’s IHO and fee structure at a later date. Interim changes to the current in-lieu are being proposed to update the City’s in-lieu fees pending the completion of the study. The actual fee adoption will take place at a future publicly noticed hearing.
Since adoption of the Rezoning Program and certification of the City’s Housing Element has laid the framework for new development, amending these ordinances now to comply with state law and align with best practices is a priority. The proposed changes would provide clarity for developers and facilitate better outcomes for the City. These initial updates would also make future substantive changes easier to understand, review and consider, and incorporate into a future zoning text amendment.
Planning Commission Actions
On October 6, 2025, the City Council and Planning Commission held a Joint Study Session3to discuss potential updates to the DBO and IHO based on state laws and best practices. The Council then directed the City Manager to prepare a draft ordinance and return to the Planning Commission for consideration and a recommendation.
The City of Pacifica Planning Commission held three public hearings to consider the draft ordinances.
• May 4, 2026:
4 The Planning Commission held a public hearing, provided comments on the draft ordinance, and continued the item to a future meeting to allow staff additional time to coordinate the Local Coastal Program (LCP) provisions with Coastal Commission staff as well as incorporate Planning Commission edits. The full May 4, 2026, staff report packet is included as Attachment C.
• June 1, 2026:
5 City and Coastal Commission staff had not reached a resolution on the LCP provisions, so a placeholder was included in the draft. The Planning Commission adopted PC Resolution No. 2026-005 (Attachment D) recommending approval of the draft ordinance. The full June 1, 2026, staff report packet is included as Attachment E.
Staff planned to come back later in the year with additional revisions to the DBO in the Coastal Zone.
• July 20, 2026:
6 After working with the Coastal Commission, City staff found language that 2 Because Pacifica does not have commercial linkage fees for affordable housing, the City’s participation is limited to residential fees.
3 Joint City Council and Planning Commission Study Session, October 6, 2025:
• Agenda: https://pacificacityca.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1730 • Video: PCC & PPC 10/6/25 - Pacifica Joint Study Session - October 6, 2025 4 Planning Commission Agenda Packet, May 4, 2026:
https://pacificacityca.iqm2.com/Citizens/FileOpen.aspx?Type=14&ID=1640&Inline=True 5 Planning Commission Agenda packet, June 1, 2026:
https://pacificacityca.iqm2.com/Citizens/FileOpen.aspx?Type=1&ID=1643&Inline=True 6 Planning Commission Agenda packet, July 20, 2026:
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satisfied the requirements of the Coastal Commission for the Density Bonus Ordinance.
The Planning Commission adopted PC Resolution No. 2026-006 (Attachment F) with revisions to the text amendments incorporating the LCP provisions. The full July 20, 2026, staff report packet is included as Attachment G.
The draft ordinance provided for Council’s consideration combines the PC recommendations from June 1 and July 20, 2026.
Proposed Amendments
Because the ordinances are decades out of date, staff recommend repealing, reorganizing, and replacing the entire articles. As discussed during the Joint Study Session, while these changes may represent a major update to the ordinances, most of the changes incorporate current state housing and planning law, including density bonus law, or best practices, and are not substantive.
The proposed changes to Article 41 “Density Bonus” are summarized in the Table 1 below.
Table 1: Density Bonus Ordinance, Article 41
Category Summary of Changes to Density Bonus Ordinance
Applicability
9-4.4101a
Created applicability section for clarity, consistency, and ease of use Definitions
9-4.4102b
Consolidated and amended definitions to cross-reference State Density Bonus Law where appropriate to ensure consistency Application
Requirements
9-4.4103
Added a section to standardize requirements for density bonus requests, incentives/concessions, parking reductions, and waivers Added a requirement to have a tentative map or preliminary plan indicate proposed market rate and density bonus units
Added a requirement to include a construction phasing plan for affordable units in relation to market rate units
LCP Consistency
9-4.4104
Added a section to state that the City’s Density Bonus Ordinance shall not be construed to supersede or in any way alter or lessen the effect or application of the California Coastal Act
Provides that granting of a density bonus, concession or incentive, waiver, or parking reduction shall not be interpreted, in and of itself, to require a local coastal plan amendment
Added section stating that any requested density bonus, concession or incentive, waiver, or parking reduction shall be consistent with all applicable requirements of the certified Local Coastal Program, with the exception of density, including without limitation regulations to ensure coastal resources are not significantly impacted, and shall be consistent with State Density Bonus law) so long as it doesn’t lead to significant coastal resource impacts.
Application
Review
9-4.4105
Added a section to outline the process for review and approval of density bonus requests and require concurrent submission with planning entitlement application
https://pacificacityca.iqm2.com/Citizens/FileOpen.aspx?Type=1&ID=1647&Inline=True Pacifica City Council 4
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Table 1: Density Bonus Ordinance, Article 41
Category Summary of Changes to Density Bonus Ordinance
Density Bonus
Housing
Agreement
9-4.4106
Added a section outlining the requirements of a density bonus housing agreement
For-Sale BMR units: amended affordability term from 30 years to 45 years per State Density Bonus Law and resetting for each new purchase or transfer to a new owner
Rental BMR units: amended affordability term from 30 years to 55 years, or such longer time as may be required by the City’s Inclusionary and Below Market Rate Program
Added a section requiring the same proportion of bedroom sizes, exterior appearance, quality of construction, distribution of units throughout the property, and access to amenities for affordable units as market rate
Added a section requiring the affordable housing agreement to be recorded prior to final parcel map approval
Added a section requiring the building permit, final inspections, and certificates of occupancy to be filed for concurrently for affordable and market rate units
Density Bonus
Calculations
9-4.4107
Cited to state law for calculations of a density bonus, in accordance with state law
Added a section to round up fractional units to the next whole number for density bonus unit calculations, in accordance with state law
Density Bonus
Delivery and
Design Standards
9-4.4108
Referenced Inclusionary Housing Ordinance standards for unit size, design, and proportional construction phasing, and implementation requirements
Commercial
Development
9-4.4109
Added a section for commercial development to request a density bonus in partnership with an affordable housing partner, in accordance with state law
Interpretation
9-4.4110
Added a section subordinating this article to state law Table Notes
a: Section 9-4101 “Applicability” was re-ordered from the PC version for structure consistency
b: Section 9-4.4102 “Definitions” was re-ordered from the PC version for structure consistency
The proposed changes to Article 47 “Inclusionary and Below Market Rate Housing Program” are summarized in the Table 2 below.
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Table 2: Inclusionary Housing and BMR Housing Program, Article 47 Category Summary of Changes to Inclusionary Housing Ordinance Applicability
9-4.4701
Moved applicability to its own section for clarity, consistency, and ease of use
Clarified that the Inclusionary Housing Ordinance applies to residential and residential mixed-use development projects with 8 or more units, including conversion of non-residential buildings or floor area, but excluding Accessory Dwelling Units (ADUs) and Junior ADUs
Added an “opt-in” provision for projects vested under California Government Code Section 65941.1a
Definitions
9-4.4702
Updated the following definitions to comply with state
requirements and county guidelines: BMR Unit, Residential Development Project, and Household Income (Lower-Income, Moderate-Income, and Very-Low Income)
Added definitions for First Approval, Group Living
Accommodations, Household Income (110% AMI), and
Residential Unit Floor Area
Inclusionary
Requirements –
Onsite Construction
of Units
9-4.4703
Added requirement for any calculation of Below Market Rate (BMR) units that results in a fractional amount under 0.5 to be paid as an in-lieu fee, and any calculation at or above 0.5 to be rounded up to the next whole number to encourage ongoing contributions to the City’s Housing In-Lieu Fund
Lowered Area Median Income (AMI) requirement for rental units from ½ of affordable units at 120% of AMI and ½ of affordable units at 80% of AMI to:
• 1/3 of affordable units at 110% of AMI;
• 1/3 of affordable units of 80% of AMI; and
• 1/3 of affordable units at 50% of AMI
Unit Size and Design
9-4.4704
Altered comparability of size and design requirements to allow for more but smaller units, or fewer but larger units to be restricted at affordability, if approved by the Community Development Director
Alternatives b
9-4.4705
General: Increased requirements for alternatives from 15% to 20% to encourage onsite construction while providing viable alternatives
General: Clarified City Council as review authority for approval of alternatives b
In-Lieu Fee: Set In-Lieu fee alternative to be based on the cost of providing 20% of units on-site to encourage on-site construction of affordable units
In-Lieu Fee: Clarified that any in-lieu fees collected under this Article shall be deposited into the City’s Housing In-Lieu fund Pacifica City Council 6
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Table 2: Inclusionary Housing and BMR Housing Program, Article 47 Category Summary of Changes to Inclusionary Housing Ordinance Off-Site Construction: Altered requirements for off-site affordable units so that they must be located with compatible land uses, zoning, and be accessible by paved roads
Off-Site Preservation: Added alternatives for off-site preservation Off-Site Preservation: Added the ability for the Community Development Director to set requirements for rehabilitation of off-site preservation properties and protection of existing tenants in off-site preservation properties
Land Dedication: Altered section requiring an appraiser to determine the purchase price of an off-site property or land dedication to use Guidelines to determine purchase price Affordable Housing
Plan
9-4.4706
Added a section requiring an affordable housing plan as part of the development’s application for first approval
Added a section outlining the requirements and procedures for an affordable housing plan
For Sale BMR Units
9-4.4707
Altered affordability term for deed-restricted affordable units to 45 years and resetting for each new purchase or transfer to a new owner, consistent with state density bonus law
Rental BMR Units
9-4.4708
Altered affordability term for deed-restricted affordable units for 99 years
Eligibility
Requirements
9-4.4709
Required household eligibly to be approved by the City
Codified local preference policy for persons residing or working in Pacifica, in accordance with federal and state fair housing laws Provided authority for the Community Development Director to develop and approve eligibility requirements
Affordable Housing
Agreement
9-4.4710
Added a section requiring an affordable housing agreement that shall run with the land and bind all future owners
Added a section requiring that the affordable housing agreement is in place before issuance of building permits
Adjustments,
Waivers
9-4.4711
Included legal requirement to provide a pathway to waive, adjust, or reduce the inclusionary requirements if the Applicant shows that applying the requirements of this article would take property in violation of the United States or California Constitutions Hillside Preservation
and B-Lot Size
Overlay Districts
9-4.4712
Maintained existing provision stating that the inclusionary provisions to not supersede the provisions of these districts Implementation c
9-4.4713
Added a requirement that the on-site affordable units must be built at the same time as the market rate units
Provided that guidelines outlining the specifics of requirements for the affordable housing agreement, resale restrictions, marketing plan, resident selection process, rent setting, sales Pacifica City Council 7
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Table 2: Inclusionary Housing and BMR Housing Program, Article 47 Category Summary of Changes to Inclusionary Housing Ordinance price, compliance and monitoring procedures, subordination, and resale procedures will be developed for approval by the Community Development Director
Enforcement
9-4.4714
Included enforcement authority
Table Notes:
a: See discussion of opting in below
b: See discussion of alternatives and review authority below c: Monitoring and subordination fees will be added at the conclusion of the Affordable Housing Study
Alternatives to Onsite Construction of BMR Units
State law requires the City to provide options for viable alternatives to onsite construction to meet the local inclusionary requirements. The use of alternatives is only available to meet inclusionary housing requirements, as state law requires that affordable units used to qualify for a state density bonus must be built onsite.
Staff's initial recommendation to the Planning Commission included an approach to approving the use of alternatives to onsite construction of inclusionary BMR units that primarily followed the review authority for the project, with exceptions for land dedications. The three methods of alternatives approval recommended by staff were:
(1) Approval by the review authority for the project, whether by the Zoning Administrator for ministerial projects, or the Planning Commission or City Council for discretionary projects:
In-Lieu Fee payment; Off-site construction of affordable housing; Off-site preservation of affordable housing
(2) Approval by Planning Commission: Land dedication to an affordable housing developer (3) Approval by City Council: Land dedication to the City The recommendation to require the approval of the in-lieu fee payment, offsite construction, and offsite preservation by the approval authority addresses potential constraints to housing production, issues which numerous state laws are directed at resolving. First, it creates predictability for applicants, which is essential as they design housing development projects, develop programming, and pursue funding. Second, bundling the approvals necessary for a residential development project under the same review authority streamlines the permitting and approval processes by reducing the need for duplicative review or hearings. Third, the criteria for approval rely on objective criteria which do not require increased discretion. Elevating the approval of alternatives to a higher review authority then the project itself requires adds process – and time, applicant costs, staff resources, and uncertainty – without added benefit.
Higher levels of discretion are appropriate for land dedications in lieu of constructing onsite affordable units, however. Staff recommended that land dedication to a City-approved affordable housing developer be decided by the Planning Commission, as these separate developments require additional scrutiny and consideration. Further, the City Council is the only body that can accept land donations and have full discretion over such decisions. Therefore, Council review is appropriate and even mandatory.
The Planning Commission directed staff to revise the alternatives section of the draft ordinance Pacifica City Council 8
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to have any proposed alternatives decided by the City Council, which is provided in the draft ordinance for consideration (Attachment A). They also directed staff to present their initial recommendation and reasoning to the City Council so that the Council could consider the issue.
Staff’s recommendations are included as Attachment H, and as noted below under “Alternative Council Actions,” could be included in the ordinance before it is introduced and then incorporated by reference in the motion to introduce the ordinance.
Vested Allowance for Vested Projects to “Opt-In” for Inclusionary Housing Housing development projects that submit a valid preliminary application with all the information required by California Government Code section 65941.1(a) vest to the planning and zoning laws in effect at the time of that submittal. This means that any projects with a valid preliminary application prior to the effective date of this ordinance, likely around October 15, 2026, would be subject to the prior provisions. The City Council could consider whether to allow applicants of such projects to voluntarily “opt in” to the new Inclusionary Housing Ordinance without relinquishing vesting to all other planning and zoning laws. Given that the City has already started to receive applications for residential development on Housing Element sites, this would provide an opportunity to have the modern inclusionary requirements apply to these new projects, including but not limited application requirements, streamlining, and payments for fractional units. Staff has included this in the Applicability provisions of the draft Ordinance (Attachement A).
Fee Resolution Updates
In addition to updating the Inclusionary Housing Ordinance, City Council provided direction at the joint study session to increase the in-lieu fees based on the adjustments to the dollar amounts established in City Council Resolution No. 24-20077(Attachment G) and clarify the methodology for annual updates based on changes in median home values, Consumer Price Index, or the California Construction Cost Index. Under the 2007 resolution, the fees are set both by unit type and by the Area Median Income (AMI) of the unit. As such, fees were based on the cost of providing a replacement unit at 80 percent or 120 percent of AMI. Under the proposed revisions to the Inclusionary Housing Ordinance, rental units will be provided at 50 percent, 80 percent, and 110 percent of AMI, which when blended together, is an average of 80 percent of AMI. As the 2007 resolution did not anticipate the creation of 50 percent of AMI and 110 percent of AMI units staff are proposing a single rate, based on the 2007 80 percent of AMI rental fee (based on this average AMI of 80 percent), adjusted by CPI. For homeownership projects, there is no change in the AMI of units provided (80 percent of 120 percent of AMI), but since there will be a single rate for rental units, and to simplify administration of the fees, staff are recommending a simplification of the homeownership fees, by blending the 80 percent and 120 percent of AMI fees, which were adjusted by the changes in sales prices from 2007 to 2025. These new, revised fees set forth in the proposed resolution remain based on the already adopted methodology, and the annual adjustments going forward.
The City will likely consider substantive changes to the in-lieu fees, including methods of calculation, after the completion of the multi-jurisdictional Grand Nexus / Affordable Housing Study that is currently underway.
Table 3: In-Lieu Fee Adjustments
2007 In-Lieu Fee Resolution (Current) 2026 In-Lieu Fee Resolution (Proposed) In-lieu payment for a BMR Unit affordable
to Lower-Income Household (80% of AMI)
RENTAL: $205,416
7 City Council Resolution No. 24-
2007: https://pacificacityca.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1730 Pacifica City Council 9
September 14, 2026
FOR SALE:
Detached Single Family: $561,910
Condominium/Townhouse: $356,910 RENTAL: $349,566
FOR SALE:
Detached Single Family: $944,921
Condominium/Townhouse: $548,052
In-lieu payment for a BMR Unit affordable
to Moderate-Income Household (120% of
AMI)
RENTAL: $26,732
FOR SALE:
Detached Single Family: $465,023
Condominium/Townhouse: $260,023
CALIFORNIA ENVIRONMENTAL QUALITY ACT
Staff recommend that the Planning Commission find the proposed zoning text amendment in the Draft Ordinance to be exempt from the California Environmental Quality Act (CEQA). The text amendment would be exempt from CEQA pursuant to the “General Rule” exemption in CEQA Guidelines Section 15061(b)(3). The General Rule exemption provides that “the activity is covered by the commonsense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.”
The text amendment would make amendments to the existing Density Bonus Program and Inclusionary Housing Ordinances to, among other things, establish provisions related to the implementation of sate density bonus law and regulations for inclusionary housing, in accordance with state law and incorporating best practices. The amendments and regulations governing density bonus and inclusionary housing would not have a significant effect on the environment.
ALTERNATIVE ACTION
There are three primary alternative actions that the Council could consider. (1) As noted above in “Alternatives to Onsite Construction,” the City Council could consider and include staff’s recommended three-tier approach to the review and approval of proposed alternatives, replacing proposed section 9-4.4705 Alternatives with the draft provided in Attachment H. Staff recommend this option.
(2) City Council could also choose to amend only the Density Bonus and wait on changes to the Inclusionary Housing Ordinance until completion of the Grand Nexus Affordable Housing Study, leaving it as is. Given the fact that the Inclusionary Housing Ordinance is 19 years old, there are multitude of changes in state housing and planning laws, advancement of best practices in affordable housing regulations and administration, and the increased development capacity approved under the Housing Element Rezoning Program, staff do not recommend this option.
(3) Council could take no action on updating the DBO and IHO. Given that this work stems from programs adopted in the Housing Element, staff do not recommend this option.
Pacifica City Council 10 September 14, 2026
RELATION TO CITY COUNCIL GOALS AND WORKPLAN
Updates to the Density Bonus and Inclusionary Housing Ordinance directly address City Council’s Strategic Plan goals and strategies, and Community Development’s workplan.
Strategic Plan Goal No. 3: Prioritize protection and development of affordable housing Strategy C: Prioritize Housing Element program implementation and interim housing solutions. • Housing Element Programs:
o HE-I-2 Zoning Modernization and Streamlining: Advances zoning modernization and streamlining by restructuring Articles 41 and 47, aligning them with current best practices and state laws, and clarifying application and review processes o HE-I-5 Fund a Housing Action Fund: Updates to the inclusionary requirements, including requiring in-lieu payment for fractional units and updating the current fees, will provide opportunities for contributions to the City’s Housing In-Lieu Fund, which is a restricted fund to be used for purpose of providing funding assistance for the provision of affordable housing and inclusionary monitoring costs, as well as reasonable administration costs
o HE-I-6 Strengthen Inclusionary Housing: Ensures alignment with state law and best practices, increases the length of time affordable units must remain affordable, adds provisions for 110% Annual Mean Income households, and increases and clarifies requirements for alternatives to on-site construction o HE-I-14 State and Federal Law Compliance: Updates ordinances to comply with state housing and planning laws, including State Density Bonus Law FISCAL IMPACT:
Updates to the Density Bonus and Inclusionary Housing Ordinances is expected to have no significant immediate fiscal impact, as these are part of the Zoning Ordinance and are implemented through standard development review which is primarily cost recovery. However, the updates to align with state law and best practices, establish application and review requirements will increase predictability, transparency, and efficiency during review, which is expected to save staff time which has a positive impact on department and staff resources.
Additionally, the changes to in lieu fees are expected to increase contributions to the City’s Housing In-Lieu Fund, improving the City’s ability to invest in affordable housing development and preservation.
ORIGINATED BY:
Community Development Department
ATTACHMENT LIST:
Attachment A - Draft Council Ordinance_DBO+IHO Text Amendment_TA-129-26 (PDF) Attachment B - Draft In Lieu Fee Resolution (PDF)
Attachment C - Planning Commission 1st Staff Report, dated May 4, 2026(PDF) Attachment D - Planning Commission Resolution No. 2026-005 (PDF) Attachment E - Planning Commission 2nd Staff Report, dated June 1, 2026 (PDF) Attachment F - Planning Commission Resolution No. 2026-006 (PDF) Attachment G - Planning Commission 3rd Staff Report, dated July 20, 2026 (PDF) Attachment H - 9-4.4705 Alternatives-Staff Recommendation (PDF) Attachment I - CC Resolution No. 24-2007 In Lieu Fees (PDF)