CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
9/28/2026
1 SUBJECT:
Resolution of the City Council of the City of Pacifica to revise the schedule for payments in lieu of providing Below Market Rate Units under the Inclusionary Housing Program and establishing annual adjustments based on the Consumer Price Index for San Franscico-Oakland-Hayward, CA
RECOMMENDED ACTION
Adopt a Resolution of the City Council of the City of Pacifica to revise the schedule for payments in lieu of providing Below Market Rate Units under the Inclusionary Housing Program and establishing annual adjustments based on the Consumer Price Index for San FranscicoOakland-Hayward, CA; and Find the fee adoption exempt from California Environmental Quality Act.
STAFF CONTACT
Samantha Updegrave, Community Development Director
(650) 738-7341
[email protected]
Michael Christensen, Community Development Deputy Director (650) 738-7341
[email protected]
BACKGROUND/DISCUSSION:
On September 14, 2026,1the City Council held a public hearing and introduced an Ordinance 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, and discussed proposed updates to City Council Resolution No. 24-20072(Attachment A) for inclusionary in-lieu fees.
The updates to the in-lieu fees would be based on the adjustments to the dollar amounts established in City Council Resolution No. 24-2007 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 1 City Council Agenda Packet, September 14, 2026:
https://pacificacityca.iqm2.com/Citizens/FileOpen.aspx?Type=1&ID=1656&Inline=True 2 City Council Resolution No. 24-
2007: https://pacificacityca.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1730 Pacifica City Council 2
September 28, 2026
units staff are proposing a single average rate based on the 2007 80 percent of AMI rental fee, adjusted by CPI. For homeownership projects, there is no change in the AMI of units provided (80 percent and 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 1: 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: $349,566
FOR SALE:
Detached Single Family: $944,921
Condominium/Townhouse: $548,052
RENTAL: $205,416
FOR SALE:
Detached Single Family: $561,910
Condominium/Townhouse: $356,910
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
The proposed fee adoption is exempt from the provisions of CEQA pursuant to CEQA Guidelines (14 Cal. Code Regs. 15000 et seq.), including without limitation under the “Common Sense” exemption Section 15061(b)(3) of the CEQA Guidelines, because it can be seen with certainty that there is no possibility their adoption may have a significant effect on the environment.
ALTERNATIVE ACTION
Council could take no action on updating the Inclusionary in-lieu fees and wait until completion of the Residential Feasibility Study is completed. Given that the current resolution is 19 years old and does not account for the changes in affordability levels, staff does not recommend this approach. Updating the resolution with the adjusted amount increases transparency and predictability, and aligns with the programs adopted in the Housing Element.
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.
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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
o HE-I-5 Fund a Housing Action Fund
o HE-I-6 Strengthen Inclusionary Housing
The update to the fee resolution contemporaneous with updating Article 47 Inclusionary Housing and BMR Housing Program provides clear and current information about the amount of in lieu fees that can be contributed 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.
FISCAL IMPACT:
Updates to the In Lieu Fee Resolution does not have an immediate fiscal impact, as it would be implemented through standard development review which is primarily cost recovery. However, 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 - CC Resolution No. 24-2007 In Lieu Fees (PDF) Pacifica City Council 4
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RESOLUTION NO. ______
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PACIFICA REVISING THE
SCHEDULE FOR PAYMENTS IN LIEU OF PROVIDING BELOW MARKET RATE UNITS
UNDER THE INCLUSIONARY HOUSING PROGRAM AND ESTABLISHING ANNUAL ADJUSTMENTS BASED ON THE CONSUMER PRICE INDEX FOR SAN FRANCISCOOAKLAND-HAYWARD, CA WHEREAS, the City of Pacifica has a below market rate ("BMR") (inclusionary) program pursuant to Article 47 of Title 9, Chapter 4 of the Pacifica Municipal Code (PMC); and
WHEREAS, PMC Section 9-4. 4705(b)(1) requires that the method of determining the amount of such "in-lieu" payments be set forth in a resolution adopted by the City Council at a level that reflects the estimated cost to provide BMR units at rents or sale prices that are affordable to moderate- and lower-income household in Pacifica; and
WHEREAS, on May 29, 2007, the Pacifica City Council adopted resolution 24- 2007 establishing an in-lieu fee schedule based on standards set by the United States Department of Housing (HUD) and California Department of Housing and Community Development (HCD) for determining the rents and housing prices that are affordable to Lower Income and Moderate Income Households, as defined in the ordinance, in the San Francisco Primary Metropolitan Statistical Area, and the County of San Mateo; and WHEREAS, Resolution 24-2007 established that the in-lieu payment shall be reviewed and adjusted annually to reflect any increase or decrease in the median housing sale prices in Pacifica and such other factors as the City Council determines are relevant; and
WHEREAS, as part of a general update to the below market rate program, the City Council is revising the income requirements of rental inclusionary units from 7.5 percent of the development’s units at 80 percent of Area Median Income (AMI) and 7.5 percent of units at 120 percent of AMI to 5 percent of the development’s units at 50 percent of AMI, 5 percent at 80 percent of AMI, and 5 percent at 110 percent of AMI; and WHEREAS, as part of that same update, in-lieu payments will be required for any inclusionary fractional units with a decimal below 0.5.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Pacifica that:
SECTION 1. Change in Median Housing Prices in Pacifica. According to the San Mateo County Association of Realtors, the median price for a single-family dwelling in the City Pacifica City Council 5
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of Pacifica increased 84.0 percent between 2006 and 2025, from $720,000 to $1,325,000, and the median price for a condominium or town house increased 77.7 percent over the same period, from $515,000 to $915,000.
SECTION 2. Change in Consumer Price Index. According to the United States Bureau of Labor Statistics, the Consumer Price Index increased 70.2 percent from 2006 to 2025 for all items in San Francisco-Oakland-Hayward, CA (all urban consumers, not seasonally adjusted).
SECTION 3. In-Lieu Payment Schedule. To reflect the increase in median home sales prices and the Consumer Price Index for all items in San Francisco-Oakland-Hayward, CA, recognize the changes in the annual median income (AMI) requirements for rental inclusionary units, require payments for fractional units, and simplify administration, the payment schedule for in-lieu fee for an on-site BMR unit shall be as follows:
Rental Unit: $349,566
For Sale Unit:
Detached Single Family: $944,921
Condominium/Townhouse: $548,052
SECTION 4. Fractional Units. Where a development is providing on-site units and a fractional unit of less than 0.5 units remains, the fee shall be the per-unit rate above, times the remaining fractional percentage.
SECTION 5. Annual Adjustments. For calendar year 2027 and each year thereafter, the inlieu fees shall be adjusted annually, as follows:
(A) The rental in-lieu fee shall be adjusted on March 1 of each year in proportion to any increase in the annual change for the previous calendar year in the in the Consumer Price Index for all items in San Francisco-OaklandHayward, CA (all urban consumers, not seasonally adjusted), and posted by the Community Development Department after City Manager approval. (B) The in-lieu fee for condos/townhouses and single-family homeownership projects shall be adjusted on March 1 of each year by the most prior calendar year annual increase in Pacifica median home values, as published by the San Mateo County Association of Realtors, and posted by the Community Development Department after City Manager approval.
SECTION 6. Waiver and Variance Procedures. In-lieu payments are subject to the adjustment and waiver provisions of the waiver and variance procedures of Sec. 9-4.4711 of the City of Pacifica Municipal Code.
SECTION 7. Use of Fees. Fees shall be segregated into a housing fund and used only for those purposes set forth in Article 47 of the Municipal Code.
SECTION 8. Compliance with CEQA. The City Council hereby finds that the action to adopt this Ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA), pursuant to the CEQA Guidelines (14 Cal. Code Regs. 15000 et seq.), including Pacifica City Council 6
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without limitation under the “Common Sense” exemption Section 15061(b)(3) of the CEQA Guidelines, because it can be seen with certainty that there is no possibility their adoption may have a significant effect on the environment. The City Clerk shall file a Notice of Exemption with the San Mateo County Clerk.
SECTION 9. Effective Date of Updated Fees. The updated fee amounts established by this Resolution shall be effective 60 days after adoption of this Resolution. • • • • •
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Pacifica, California, held on the 28th day of September 2026, by the following vote:
AYES, Councilmembers:
NOES, Councilmembers:
ABSENT, Councilmembers:
ABSTAIN, Councilmembers:
Christine Boles, Mayor
ATTEST: APPROVED AS TO FORM:
______________________________ ______________________________ Sarah Coffey, City Clerk Michelle Kenyon, City Attorney