6. Study Session on Housing Element Program 3.G, Inclusionary Housing, and Program 3.E, Affordable Housing Fund

City of Piedmont

COUNCIL AGENDA REPORT
DATE: May 18, 2026
TO: Mayor and Councilmembers
FROM: Rosanna Bayon Moore, City Administrator
SUBJECT: Study Session on Housing Element Program 3.G, Inclusionary Housing, and Program 3.E, Affordable Housing Fund

RECOMMENDATION
Receive presentation Regarding Housing Element Program 3.G [Inclusionary Housing], and Program 3.E[Affordable Housing Fund]. This is an informational item.

BACKGROUND AND DISCUSSION
Pursuant to the requirements of State law, on March 20, 2023, the City Council adopted Piedmont’s 6th Cycle Housing Element. The Housing Element outlines policies and programs that the City will consider to help facilitate the development of the City’s Regional Housing Needs Allocation (RHNA) of 587 new housing units at all income levels during the 2023-2031 planning cycle. The 6th Cycle Housing Element includes approximately 77 housing programs. Two of the Housing Element programs, 3.G and 3.E, are the subject of this staff report.

These programs are described in the Housing Element as follows:

Program 3.G Inclusionary Housing
Inclusionary housing is generally a program that requires provision of affordable housing onsite or off-site, or payment of an affordable housing in-lieu fee, as part of an otherwise marketrate housing development. The City will evaluate the potential to establish inclusionary housing requirements for new multi-family housing development, which would require affordable housing development. The City should also consider alternatives, such as land dedication and/or payment of an in-lieu fee, with the fee adequately calibrated to be equivalent to the cost of constructing an affordable unit.

Objective: Provide additional affordable housing opportunities equally distributed and integrated with market-rate developments.

Timeframe: Issue RFP to hire consultant to evaluate inclusionary options by December 2023. Finalize recommendations by December 2024. Adopt requirements April 2025, if applicable and recommended by the analysis.

Responsible Agency: Planning & Building Department with direction of the City Council and Planning Commission.

Geographic Targeting: Sites for multifamily and mixed-use development in Zone C and Zone D zoning districts.

Program 3.E Affordable Housing Fund
The City will create a Piedmont Affordable Housing Fund to receive philanthropic donations, in-lieu fees, and other sources of funding. These funds could be used for affordable housing programs, including a loan program for ADUs or other programs for other affordable housing types. The Affordable Housing Fund could be administered by a nonprofit affordable housing developer, such as Habitat for Humanity or other entity, to make low-interest loans (e.g., 4% interest rate) available to low or moderate-income property owners (e.g., up to approximately $135,650 for a household of three people), with a focus on members of protected classes. Loans could be made available for the construction of new ADUs, Junior ADUs, and/or other small housing units with occupancy restricted to very-low-income (31% to 50% AMI) and extremely-low-income (30% or less of AMI) residents for a minimum period of 15 years. The City is targeting the support of approximately 10 new income-restricted ADUs, Junior ADUs, or other housing unit types during the planning period. The program could be extended to property owners with above moderate incomes with additional funding sources, such as fundraising efforts, philanthropic contributions, or grant funding.

Objective: Create Affordable Housing Fund for the construction of new ADUs and Junior ADUs and other affordable housing types with occupancy restricted to very low-income (31% to 50% AMI) and extremely-low-income (30% or less of AMI) residents for a minimum period of 15 years.

Timeframe: Meet with City Council by December 2023 to discuss potential risks and opportunities. Create affordable housing fund by July 2024.

Responsible Agency: Planning & Building Department, with direction of City Council and Planning Commission.

Geographic Targeting: Highest resource areas in Zone A and Zone E zoning districts.

Consultant Services in Support of Housing Element Implementation On May 19, 2025, the City Council approved an agreement with Dyett & Bhatia and Economic Planning Systems (EPS) for services related to the completion of eleven (11) Housing Element implementation programs including programs 1.I, 1.K, 1.N, 1.T, 3.E, 3.G, 4.J, 4.K, 5.B, 5.H, and

5.K. This diverse scope of services is consolidated under the title “Expanding Housing Options Initiative” or “EHO.”
Agenda Report Page 2
Under the EHO scope of services approved by the City Council, the Piedmont Budget Advisory & Financial Planning Committee was asked to review potential funding programs in Housing Element programs 1.K, 1.N, 3.E, and 3.G.

Previous Committee and Commission Discussions
At a study session on October 28, 2025, the Piedmont Budget Advisory & Financial Planning Committee received a presentation from staff and Economic Planning Systems (EPS) regarding Housing Element programs 1.K, 1.N, and 3.E, as well as affordable housing in-lieu fees in general.

The presentation included case studies for the following cities and towns in California: Lafayette, Belmont, and Tiburon (Program 1.K, Development Impact Fee Case Studies); El Cerrito and Elk Grove (Program 1.N Parcel Tax Case Studies); and Napa, Palo Alto, Santa Barbara, Laguna Beach, and Beverly Hills (Program 3.E, Affordable Housing Fund Case Studies).

At a study session on November 10, 2025, the Piedmont Planning Commission provided feedback on information regarding Housing Element program 3.G, Inclusionary Zoning. The Planning & Building Department team of staff and consultants presented slides introducing the EHO initiative and inclusionary zoning. Regarding inclusionary zoning, Commissioners expressed interest in the case study research, the numbers of new housing units developed under inclusionary ordinances in other jurisdictions, possible incentives for the production of rent-restricted affordable units, the applicability to development applications in practice, and other considerations.

At a study session on February 3, 2026, the Budget Advisory & Financial Planning Committee received another presentation from staff and the City’s consultants and adopted Resolution 2026- 001. The resolution includes a series of recommendations related to implementation of the Housing Element. With respect to inclusionary housing program (Inclusionary Zoning), the Budget Advisory Committee recommends to the City Council that the City commission a nexus study of an in-lieu fee as part of a potential inclusionary zoning program. With respect to the Affordable Housing Fee program, the Budget Advisory Committee recommends that the City Council direct staff to investigate a potential framework for an Affordable Housing Fund in the City Budget, identify the allowed uses of the Affordable Housing Fund, such as housing serving people earning 80 percent of the area median income for a period of 55 years or more and services supporting Agenda Report Page 3
occupants of affordable housing, the management and oversight of the Fund, and potential revenue sources, such as future in-lieu fees, and philanthropic donations.

At another study session on May 11, 2026, the Planning Commission received a progress update on the development of possible Inclusionary Zoning standards and draft Code language. The Commission expressed interest in ensuring that an inclusionary program require that affordable housing be consolidated with and integrated with market rate housing.

DISCUSSION
Inclusionary Housing
Inclusionary housing requirements are widely used in California to create affordable housing units.

The basic concept is that when there are new housing units slated for development, a certain percentage of the units are required to be affordable to households that meet pre-established income thresholds. The legal authority to establish an inclusionary requirement for for-sale units is derived from the City’s police powers to regulate land use within the community (see California Building Industry Assn. v. City of San Jose (2015) 61 Cal.4th 435), and Gov. Code section 65850.01, which authorizes inclusionary requirements for rental housing projects.

One of the overarching policy questions related to inclusionary housing is finding the balance between the program’s ability to create new high quality affordable housing units against the program’s impact on the feasibility of housing development. According to State law (Gov. Code section 65850.01(a) and MTC guidance published September 25, 2025, to ensure that a local ordinance is not a constraint on the development of housing, a local inclusionary housing ordinance that requires more than 15% of the units to be affordable, may be required to submit a feasibility study to the California Department of Housing and Community Development.

There are a number of policy decisions that would need to be considered as part of an inclusionary ordinance. The intent of this study session is to seek City Council feedback on the following elements of a potential future program:
• The minimize size of the project that the ordinance is applicable to; • Required percentage of affordable units, typically in the range of 10% to 15%; • Qualifying household income levels, typically with a mix of very low income, low income and moderate-income affordability levels;
• Number of years affordable units are restricted, typically 55 years or more; • Types of development the ordinance applies to, such as rental, for sale, and/or senior housing; • Alternative means of compliance such as in-lieu fees, land dedication, off-site development of new units or off-site acquisition of existing units, etc.;
• Limitations and procedures for the sale of owner-occupied affordable units; • Exemptions and waiver criteria;
• Program administrative procedures.

It should be noted that the development of inclusionary housing units as part of a proposed development will concurrently trigger State density bonus laws, which provide development Agenda Report Page 4
applicants an opportunity to seek concessions and waivers of various local land use requirements.

As part of an inclusionary housing program, cities can add additional local bonuses to further ensure the feasibility of the overall project.

Staff additionally notes that an inclusionary ordinance would not be applicable to the Moraga Canyon Specific Plan area, which is subject to separate requirements.

Affordable Housing Fund
Housing Element Program 3.E commits the City to create a fund for affordable housing in the City’s budget by July 2024. The primary purpose of the affordable housing fund (AFA) as described in Program 3.E is to support the development of accessory dwelling units. Other uses for the fund could be added by the City Council. The City is not required to establish a funding stream for the affordable housing fund at this time. However, it would not be uncommon to direct a possible in-lieu fee revenue to the AFA if an in-lieu fee is created in the future as part of the implementation of Program 3.G, Inclusionary Housing. Other sources of revenue could include a future local affordable housing impact fee, future State and federal grants, and philanthropic donations.

CITY ATTORNEY REVIEW
This staff report has been reviewed and approved by the City Attorney.

FISCAL IMPACT
There are no costs associated with consideration by the City Council of this informational item. In the future, the City Council may consider implementation of the Housing Element programs discussed in this report, and at that time any associated costs to the City will be described.

By: Jeff Bond, Interim Planning and Building Director
Pierce McDonald, Senior Planner

ATTACHMENTS
1) Budget Advisory Committee Resolution 2026-001
2) Budget Advisory Committee Staff Report and Presentation, February 3, 2026 3) ABAG/MTC Inclusionary Housing, September 25, 2025
4) Meeting California’s Housing Needs: Best Practices for Inclusionary Housing, Local Government Commission, November 2018
5) Alameda County Income Limits by Household Size
Agenda Report Page 5
1 RESOLUTION N. 2026-001

RECOMMENDATION OF BUDGET ADVISORY AND FINANCIAL PLANNING

COMMITTEE TO CITY COUNCIL TO IMPLEMENT HOUSING ELEMENT
PROGRAMS 1.K, 1.N, 3.E, AND 3.G
WHEREAS, State of California housing element law, as set forth in Government Code §§ 65302 and 65580, et seq., requires the City of Piedmont to periodically prepare and update its Housing Element in its General Plan, and to establish goals, policies, and programs to accommodate the maintenance, diversification, and expansion of the City’s housing supply to accommodate the City of Piedmont’s regional housing needs allocation (RHNA) of 587 housing units, comprised of 238 above moderate income units, 92 moderate income units, 94 low income units, and 163 extremely and very low income units; and
WHEREAS, the 6th Cycle Housing Element must be adopted to comply with State law, accommodate the RHNA, affirmatively further fair housing, and facilitate and encourage a variety of housing types for all income levels, including multifamily housing (Gov. Code Sections 65583.2 and 65583(c)); and
WHEREAS, the preparation, adoption, and implementation of the 6th Cycle Housing Element requires a diligent effort to include all economic segments of the community; and WHEREAS, to comply with State housing element law, the City Council of the City of Piedmont has prepared and adopted, on March 20, 2023, the 2023-2031 6th Cycle Housing Element (the 6th Cycle Housing Element); and
WHEREAS, Piedmont’s 6th Cycle Housing Element includes the following Programs:
• Program 1.K City Services Impact Fee for Multifamily Housing to study the nexus between the impacts of new multifamily development on City services and infrastructure, such as roadways, sewer, and affordable housing;
• Program 1.N Municipal Services Parcel Tax Study to study the local municipal services parcel tax, Piedmont City Code Chapter 20.B to collect an annual tax from each new unit created under Housing Element programs, such as ADUs greater than 750 square feet, SB 9 development, and multifamily development;
• Program 3.E Affordable Housing Fund to create an affordable housing fund in the City budget to support new initiatives to support income-restricted affordable housing; and • Program 3.G Inclusionary Zoning to consider a program to require a percentage of new housing units developed under Housing Element programs to be made available at belowmarket-rate rents and/or sale prices and to consider an alternative to be made available to applicants such as land dedication and/or payment of an in-lieu fee.

WHEREAS, the intent of these Housing Element programs is to facilitate the development of market-rate and below-market-rate housing to help meet the demand for affordable housing in the City and to meet commitments in the Housing Element to complete programs within certain timeframes; and
Attachment 1 Agenda Report Page 6
2 WHEREAS, The Budget Advisory & Financial Planning Committee was established by the City Council as a standing City committee in October 2014 and the City Council defined the role of the Budget Advisory & Financial Planning Committee on February 21, 2023, as follows:
a) Review the financial projections prepared for the City’s Annual Budget and provide comment on whether they provide for the long term sustainable financial future of the City. This review shall take place between the preparation of the budget in April and its approval by the City Council in June of each year.
b) Review and provide comment on the Mid-Year Budget Reports. c) Provide a financial review of any new program commitments and funding sources in excess of $250,000 in any fiscal year.
d) Periodically review and comment on the sufficiency of funding for long term obligations, including the Sewer Fund, Equipment Replacement Fund, Facilities Maintenance Fund and the City’s pension and retiree healthcare costs and funding. e) Periodically examine the need for the Municipal Services Special Tax (Parcel Tax) and recommend whether this tax should be continued, and if so, at what rate. This charge shall be accomplished not later than eighteen (18) months prior to the expiration of the tax as set forth in Chapter 20B of the City Code.
f) The Committee may propose additional financial areas of study, which must be approved by the City Council prior to being taken up by the Committee. In addition, the Council may assign additional areas of study to the Committee; and WHEREAS, at its regular meeting of October 28, 2025, the Budget Advisory and Financial Planning Committee held a regularly scheduled public meeting and received a report from staff and a presentation from Economic Planning Systems (EPS) about Housing Element Programs 1.K,

1.N, 3.E, and inclusionary in-lieu fees, including case studies for the following cities and towns in California: Lafayette, Belmont, and Tiburon (Program 1.K, Development Impact Fee Case Studies); El Cerrito and Elk Grove (Program 1.N Parcel Tax Case Studies); and Napa, Palo Alto, Santa Barbara, Laguna Beach, and Beverly Hills (Program 3.E, Affordable Housing Fund Case Studies); and
WHEREAS, on February 3, 2026, the Budget Advisory and Financial Planning Committee held a regularly scheduled public meeting and received a report from staff and a presentation from EPS outlining the appropriate steps to continue implementation of Housing Element Programs 1.K,

1.N, 3.E, and 3.G.

NOW, THEREFORE, BE IT RESOLVED that the Budget Advisory and Financial Planning Committee of the City of Piedmont (Budget Committee) does hereby resolve, declare, determine, and order, based on substantial evidence in the record, as follows:

SECTION 1. Findings.

A. That City records indicate that the above recitations are true and correct.

B. That the Budget Committee recommends to the City Council that the City of Piedmont commission the preparation of a nexus study to determine potential impacts of multifamily Attachment 1 Agenda Report Page 7
3 development, including SB 9 development, on City services and infrastructure and to determine a possible development impact fee(s);
C. That the Budget Committee recommends to the City Council that the City amend the Municipal Services Special Tax by 2037 or earlier to include a tax levied on the types of new housing units to be created under Housing Element programs, including SB 9 development, townhouses and detached and semi-detached homes on a single lot; D. That the Budget Committee recommends that the City Council direct staff to investigate a potential framework for an Affordable Housing Fund in the City Budget, identify the allowed uses of the Affordable Housing Fund, such as housing serving people earning 80 percent of the area median income for a period of 55 years or more and services supporting occupants of affordable housing, the management and oversight of the Fund, and potential revenue sources, such as future in-lieu fees, impact fees, and philanthropic donations; E. That the Budget Committee recommends to the City Council that the City commission a nexus study of an in-lieu fee as part of a potential inclusionary zoning program; F. That the Budget Committee recommends to the City Council to direct staff to study the cost and feasibility of a Mello-Roos Community Facilities District Fee in areas of Piedmont where the Housing Element plans for denser multifamily development to occur with the intent to fund infrastructure improvements, including, but not limited to, roadways, landscaping, storm drainage improvements, park and recreation facilities, and undergrounding of utilities.

G. That these efforts commence at the time that funding becomes available.

SECTION 2. All portions of this resolution are severable. If an individual component of this Resolution is adjudged by a court to be invalid and unenforceable, then the remaining portions will continue in effect.
_______________________________
Kiran Bawa, Finance Director
__________________
Date
Attachment 1 Agenda Report Page 8
City of Piedmont

CALIFORNIA

MEMORANDUM
DATE:

TO:

FROM:

SUBJECT:

February 3, 2026
Budget Advisory & Financial Planning Committee
Kevin Jackson, Planning & Building Director
Pierce Macdonald, Senior Planner
Consideration of a Resolution Recommending
Implementation of Housing Element Programs 1.K, 1.N,

3.E, and 3.G
AGENDA ITEM NUMBER 1

RECOMMENDATION
Adopt the attached resolution recommending City Council proceed with implementation of Housing Element Programs 1.K. 1.N, 3.E, and 3.G.

EXECUTIVE SUMMARY
On March 20, 2023, the City Council adopted Piedmont’s 6th Cycle Housing Element (Housing Element), comprised of several policies and over seventy programs that the City will deliver to advance the development of a Regional Housing Needs Allocation (RHNA) of 587 new housing units at all income levels during the 2023-2031 cycle. Reducing the potential impacts of growth on City services, infrastructure, and budget were important considerations during the preparation of the Housing Element. Several Housing Element programs were meant to respond to the question, “Who pays for the improvements needed to serve new development?” On May 19, 2025, the City Council approved an agreement with Dyett & Bhatia and Economic Planning Systems (EPS) for services related to the completion of eleven (11) Housing Element implementation programs including programs 1.I, 1.K, 1.N, 1.T, 3.E, 3.G, 4.J, 4.K, 5.B, 5.H, and

5.K. This diverse scope of services is consolidated under the title “Expanding Housing Options Initiative” or “EHO.”
Attachment 2 Agenda Report Page 9
At a study session on October 28, 2025, the Piedmont Budget Advisory & Financial Planning Committee received a presentation from staff and Economic Planning Systems (EPS) regarding Housing Element programs 1.K, 1.N, and 3.E, as well as affordable housing in-lieu fees in general.

At this time, City staff recommend that the Budget Advisory & Financial Planning Committee consider possible recommendations to the City Council to take the next steps to continue to implement Housing Element programs 1.K, 1.N, 3.E, and 3.G. Staff members have prepared a draft resolution for the consideration of the Committee (Attachment A) which recommends a number of nexus studies and feasibility studies to further the implementation of the Housing Element programs. The recommended nexus studies and feasibility studies are not part of the current EHO scope of services. These studies are described in the Discussion section of this report.

BACKGROUND
Under the EHO scope of services approved by the City Council, the Piedmont Budget Advisory & Financial Planning Committee is asked to review potential funding programs in Housing Element programs 1.K, 1.N, 3.E, and 3.G. These programs are described in the Housing Element as follows:

Program 1.K City Services Impact Fee for Multi-family Housing The City has high standards for provision of services to community residents. In order to maintain the existing level of services, City will study the nexus between the impacts of new multi-family development on City services and infrastructure and the costs to provide the services and infrastructure. If warranted, such study would provide the basis for the City’s impact fees for developers of multi-family housing including mixed-use multi-family housing.

Fees received will help fund continuation of service to offset potential impacts of the increased population envisioned in the Housing Element.

Objective: To ensure new projects help pay for the cost of maintaining City services and infrastructure.

Timeframe: Review impact fees by December 2024. Modify fees, as directed through study, by July 2025
Responsible Agency: Planning & Building Department with Public Works and Finance Departments with direction of City Council and Planning Commission.

Geographic Targeting: Citywide.

Program 1.N Municipal Services Parcel Tax Study
The City will study the local municipal services parcel tax to determine if the tax could be structured to collect an annual tax from each new unit created under Housing Element programs, including ADUs over 750 square feet (as allowed by State law). Potential revenue enhancements will be measured against the possibility of creating new constraints to housing production.

Objective: Study local municipal services tax to potentially generate additional revenue from units created under Housing Element programs.

Attachment 2 Agenda Report Page 2 Agenda Report Page 10 Timeframe: Conduct study by April 2026.

Responsible Agency: Planning & Building Department and Finance Department with direction of City Council and Planning Commission.

Geographic Targeting: Citywide.

Program 3.E Affordable Housing Fund
The City will create a Piedmont affordable housing fund to receive philanthropic donations, in-lieu fees, and other sources of funding. These funds could be used for affordable housing programs including a loan program for ADUs with Habitat for Humanity or other programs for other affordable housing types. The affordable housing fund could be administered by a nonprofit affordable housing developer, such as Habitat for Humanity or other entity, to make low-interest loans (e.g., 4% interest rate) available to low or moderate-income property owners (e.g., up to approximately $135,650 for a household of three people), with a focus on members of protected classes. Loans could be made available for the construction of new ADUs, Junior ADUs, and/or other small housing units with occupancy restricted to very-low-income (31% to 50% AMI) and extremely-low-income (30% or less of AMI) residents for a minimum period of 15 years. The City is targeting supporting approximately 10 new income-restricted ADUs, Junior ADUs, or other housing unit types during the planning period. The Program could be extended to property owners with above moderate incomes with additional funding sources, such as fund-raising efforts, philanthropic contributions, or grant funding.

Objective: Create Affordable Housing Fund for the construction of new ADUs and Junior ADUs and other affordable housing types with occupancy restricted to verylow-income (31% to 50% AMI) and extremely-low-income (30% or less of AMI) residents for a minimum period of 15 years.

Timeframe: Meet with City Council by December 2023 to discuss potential risks and opportunities. Create affordable housing fund by July 2024.

Responsible Agency: Planning & Building Department, with direction of City Council and Planning Commission.

Geographic Targeting: Highest resource areas in Zone A and Zone E zoning districts.

Program 3.G Inclusionary Housing
Inclusionary housing is generally a program that requires provision of affordable housing onsite or off-site, or payment of an affordable housing in-lieu fee, as part of an otherwise marketrate housing development. The City will evaluate the potential to establish inclusionary housing requirements for new multi-family housing development, which would require affordable housing development. The City should also consider alternatives, such as land dedication and/or payment of an in lieu fee, with the fee adequately calibrated to be equivalent to the cost of constructing an affordable unit.

Objective: Provide additional affordable housing opportunities equally distributed and integrated with market-rate developments.

Responsible Agency: Planning & Building Department with direction of the City Council and Planning Commission.

Attachment 2 Agenda Report Page 3 Agenda Report Page 11 Geographic Targeting: Sites for multifamily and mixed-use development in Zone C and Zone D zoning districts.

DISCUSSION
Role of the Budget Advisory & Financial Planning Committee. The Budget Advisory & Financial Planning Committee was established by the City Council on February 21, 2023, and its role includes the review of, and comment on, potential funding sources. In addition, the Council may assign additional areas of study to the Committee.

At a study session on October 28, 2025 with the Committee, during the initial informationgathering stage of the EHO planning process, the Committee Members considered the goals and objectives the Council had established and gave comments related to the feasibility of these potential revenue-generating programs in reducing fiscal impacts and establishing new funding mechanisms.

This staff report is accompanied by a slide presentation to be delivered on February 3, 2026. The slides (Attachment B) present the potential costs and benefits of the City taking the next steps to continue to implement Housing Element Programs 1.K. 1.N, 3.E, and 3.G. Several of these steps would require additional professional services estimated to cost approximately $50,000, total. The necessary nexus studies and feasibility studies are not scoped in the current EHO contract with Dyett & Bhatia and EPS.

Draft Resolution. City staff have prepared a draft resolution for the consideration of the Budget Advisory & Financial Planning Committee. The resolution (Attachment A) proposes five (5) recommendations to the City Council to further the implementation of Housing Element Programs

1.K. 1.N, 3.E, and 3.G. The proposed recommendations are as follows:
• Commission the preparation of a nexus study to determine potential impacts of multifamily development, including SB 9 development, on City services and infrastructure and to determine a possible development impact fee(s) (Program 1.K); • Amend the Municipal Services Special Tax by 2037 or earlier to include a tax levied on the types of new housing units to be created under Housing Element programs including SB 9 development, townhouses and detached and semi-detached homes on a single lot (Program 1.N);
• Direct staff to investigate a potential framework for an Affordable Housing Fund in the City Budget, identify the allowed uses of the Affordable Housing Fund, such as housing serving people earning 80 percent of the area median income for a period of 55 years or more and services supporting the occupants of affordable housing, the management and oversight of the Fund, and potential revenue sources, such as future in-lieu fees, impact fees, and philanthropic donations (Program 3.E);
• Commission a nexus study of an in-lieu fee as part of a potential inclusionary zoning program (Program 3.G); and
• Study the cost and feasibility of a Mello-Roos Community Facilities District Fee in areas of Piedmont where the Housing Element plans for denser multifamily development to occur with the intent to fund infrastructure improvements, including but not limited to Attachment 2 Agenda Report Page 4 Agenda Report Page 12 roadways, landscaping, storm drainage improvements, park and recreation facilities, and undergrounding of utilities (Program 1.K).

NEXT STEPS
The recommendations of the Budget Advisory & Financial Planning Committee will be presented at future meetings of the Planning Commission and City Council in Spring 2026. The Budget Advisory & Financial Planning Committee may play an advisory role prior to public hearings before the Planning Commission and City Council for adoption of any revenue-generating or funding programs.

ATTACHMENTS
A Pages 6-8 Resolution
B Pages 9-36 EHO Slide Presentation
C Page 37 City of Piedmont Zoning Map
Related Document
City of Piedmont 6th Cycle Housing Element, Adopted March 2023, Revised August 2023 Attachment 2 Agenda Report Page 5 Agenda Report Page 13 1 RESOLUTION N. 2026-____

RECOMMENDATION OF BUDGET ADVISORY AND FINANCIAL PLANNING

WHEREAS, the intent of these Housing Element programs is to facilitate the development of market-rate and below-market-rate housing to help meet the demand for affordable housing in the City and to meet commitments in the Housing Element to complete programs within certain timeframes; and
Attachment 2 ATTACHMENT A Agenda Report Page 6 Agenda Report Page 14 2 WHEREAS, The Budget Advisory & Financial Planning Committee was established by the City Council on February 21, 2023, and the role of the Committee is as follows:
a) Review the financial projections prepared for the City’s Annual Budget and provide comment on whether they provide for the long term sustainable financial future of the City. This review shall take place between the preparation of the budget in April and its approval by the City Council in June of each year.
b) Review and provide comment on the Mid-Year Budget Reports. c) Provide a financial review of any new program commitments and funding sources in excess of $250,000 in any fiscal year.
d) Periodically review and comment on the sufficiency of funding for long term obligations, including the Sewer Fund, Equipment Replacement Fund, Facilities Maintenance Fund and the City’s pension and retiree healthcare costs and funding. e) Periodically examine the need for the Municipal Services Special Tax (Parcel Tax) and recommend whether this tax should be continued, and if so, at what rate. This charge shall be accomplished not later than eighteen (18) months prior to the expiration of the tax as set forth in Chapter 20B of the City Code.
f) The Committee may propose additional financial areas of study, which must be approved by the City Council prior to being taken up by the Committee. In addition, the Council may assign additional areas of study to the Committee; and WHEREAS, at its regular meeting of October 28, 2025, the Budget Advisory and Financial Planning Committee held a regularly scheduled public meeting and received a report from staff and a presentation from Economic Planning Systems (EPS) about Housing Element Programs 1.K,

1.N, 3.E, and 3.G.

SECTION 1. Findings.

A. That City records indicate that the above recitations are true and correct.

B. That the Budget Committee recommends to the City Council that the City of Piedmont commission the preparation of a nexus study to determine potential impacts of multifamily development, including SB 9 development, on City services and infrastructure and to determine a possible development impact fee(s);
Attachment 2 ATTACHMENT A Agenda Report Page 7 Agenda Report Page 15 3 C. That the Budget Committee recommends to the City Council that the City amend the Municipal Services Special Tax by 2037 or earlier to include a tax levied on the types of new housing units to be created under Housing Element programs, including SB 9 development, townhouses and detached and semi-detached homes on a single lot; D. That the Budget Committee recommends that the City Council direct staff to investigate a potential framework for an Affordable Housing Fund in the City Budget, identify the allowed uses of the Affordable Housing Fund, such as housing serving people earning 80 percent of the area median income for a period of 55 years or more and services supporting occupants of affordable housing, the management and oversight of the Fund, and potential revenue sources, such as future in-lieu fees, impact fees, and philanthropic donations; E. That the Budget Committee recommends to the City Council that the City commission a nexus study of an in-lieu fee as part of a potential inclusionary zoning program; and F. That the Budget Committee recommends to the City Council to direct staff to study the cost and feasibility of a Mello-Roos Community Facilities District Fee in areas of Piedmont where the Housing Element plans for denser multifamily development to occur with the intent to fund infrastructure improvements, including but not limited to, roadways, landscaping, storm drainage improvements, park and recreation facilities, and undergrounding of utilities.

Attachment 2 ATTACHMENT A Agenda Report Page 8 Agenda Report Page 16 1330 Broadway, Suite 450  Oakland, CA 94612
510. 841.9190  www.epsys.com The Economics of Land Use

EXPANDING

HOUSING OPTIONS

INITIATIVE
City of Piedmont Budget Advisory &
Financial Planning Committee
February 3, 2026
Attachment 2 ATTACHMENT B Agenda Report Page 9 Agenda Report Page 17 BIG PICTURE QUESTION:

Who pays for the improvements needed to serve
new development?
Attachment 2 ATTACHMENT B Agenda Report Page 10 Agenda Report Page 18 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 2

OVERVIEW
Review implementation options and provide illustrative scenarios for selected funding programs:
– City Development Impact Fee
– Community Facilities District
– Municipal Parcel Tax
– Affordable Housing In-Lieu Fee
– Affordable Housing Fund
Attachment 2 ATTACHMENT B Agenda Report Page 11 Agenda Report Page 19

CITY DEVELOPMENT IMPACT FEE
Attachment 2 ATTACHMENT B Agenda Report Page 12 Agenda Report Page 20 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 4

CITY DEVELOPMENT IMPACT FEE
Staff Recommendation
• Authorize nexus study necessary to approve a one-time impact fee on new development to help fund public infrastructure.

Considerations
• Many Bay Area cities use an impact fee as a tool to manage the impacts and costs of growth.
• Revenue materializes once development occurs.
• Impact fees increase development costs, which may affect feasibility of housing production.
• City can approve fee based on a future nexus study to be prepared consistent with Mitigation Fee Act (Study Cost: ~$30,000).

Attachment 2 ATTACHMENT B Agenda Report Page 13 Agenda Report Page 21 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 5

CITY IMPACT FEE ILLUSTRATIVE SCENARIOS
Scenario 1: Modest Fee Scenario 2: Higher Fees
Housing
Element
Growth1,2
Fee / unit3 Total Revenue Fee / unit3 Total Revenue
Single Family
Detached 50 $15,000 $750,000 $25,000 $1,250,000
ADUs4 160 $4,500 $360,000 $10,000 $800,000
Townhomes /
Multifamily 434 $7,000 $3,038,000 $12,000 $5,208,000
TOTAL 644 $4,148,000 $7,258,000
[1] For simplicity, table assumes that commercial development is negligible. [2] Data of units is based on Housing Element sites inventory capacity and EPS assumptions. [3] EPS assumptions.
[4] Impact fees can only be applied to ADUs above 750 sq. ft. Calculation assumes fees would apply to 50% of projected units (80 units). The fee rate is estimated at 30% of the single-family detached fee in Scenario 1 and 40% of the SFD fee in Scenario 2.

Attachment 2 ATTACHMENT B Agenda Report Page 14 Agenda Report Page 22

MELLO-ROOS COMMUNITY FACILITIES DISTRICT
(CFD)
Attachment 2 ATTACHMENT B Agenda Report Page 15 Agenda Report Page 23 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 7

MELLO-ROOS CFD
Staff Recommendation
• Direct staff to investigate the scope, cost, and potential outcomes of preparing a CFD feasibility study.

Considerations
• Enables levy of a land-secured “special tax” to fund public infrastructure and services, paid annually.
 Infrastructure CFDs can secure tax-exempt bonds that are issued to cover specific public improvements.
 Deed-restricted affordable housing is exempt from CFD special taxes • Must be approved by 2/3rds of either property owners or registered voters (if more than 12) in defined area geography.
 Can be initiated by City Council or property owner petition Attachment 2 ATTACHMENT B Agenda Report Page 16 Agenda Report Page 24 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 8

MELLO-ROOS CFD -- CONTINUED
Considerations
• Some cities have approved a CFD overlay that requires property owners to “opt in” as a condition of project approval.
 Would only apply to developments seeking and requiring discretionary approvals.
 Moraga Canyon is a possible application.

Attachment 2 ATTACHMENT B Agenda Report Page 17 Agenda Report Page 25

MUNICIPAL SERVICES PARCEL TAX
Attachment 2 ATTACHMENT B Agenda Report Page 18 Agenda Report Page 26 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 10

MUNICIPAL SERVICES PARCEL TAX
Staff Recommendation
• Update the structure of the existing municipal services parcel tax by 2037 to capture new development types.

Considerations
• Proposed changes require 2/3rds voter approval to pass. • Current tax structure does not identify the development types that are forecasted for growth (e.g., townhomes, duplexes, triplexes, and others).

Attachment 2 ATTACHMENT B Agenda Report Page 19 Agenda Report Page 27 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 11

CURRENT MUNICIPAL SERVICES TAX
Rates are as of 2025-2026
Attachment 2 ATTACHMENT B Agenda Report Page 20 Agenda Report Page 28 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 12

POTENTIAL CHANGES TO MUNICIPAL TAX
• New combined category for Townhome / Multifamily Units. • Increase Multifamily (5+ units) rate by 10%
• Adds Townhome / Multifamily (2-4 unit structures) category  Rate = average of Single-Family (0 to 4,999 sq. ft.) and Multifamily (5+ units)
• No change to ADU tax structure, which will continue to be assessed as part of single-family development.

Attachment 2 ATTACHMENT B Agenda Report Page 21 Agenda Report Page 29 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 13

POTENTIAL NEW TAX RATE SCHEDULE
Townhome term means detached and semi-detached housing units, duplexes, triplexes, four-plexes, and airspace condominiums on one lot where each unit can be conveyed separately.

Attachment 2 ATTACHMENT B Agenda Report Page 22 Agenda Report Page 30 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 14 Land Use Existing Units1 Allowable Growth Tax Rate / Unit Annual Additional Revenue3
Single-Family
Detached 3,697 50 $732 $36,600
2-4 Unit
Structure2 144 84 $620 $68,352
5+ Unit Structure 79 350 $558 $199,329
TOTAL 3,920 484 $304,281
[1] Assumes that commercial development is negligible and that all single-family detached units pay the fee for units 0 to 4,999 sq. ft. [2] Assumes that 20% of new multifamily development is in 2-4 unit structures. [3] For single-family and 5+ unit multifamily, the additional revenue is from new units only. For 5+ multifamily, the additional revenue is the increase in units and in the rate.

PARCEL TAX REVENUE SCENARIO
Attachment 2 ATTACHMENT B Agenda Report Page 23 Agenda Report Page 31

AFFORDABLE HOUSING IN-LIEU FEE
Attachment 2 ATTACHMENT B Agenda Report Page 24 Agenda Report Page 32 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 16

AFFORDABLE HOUSING IN-LIEU FEE
Cost of
Unit Maximum
BMR rent
or sale
price
Cost per Unit
Illustrative Example
Maximum
in-lieu fee
/ unit
Affordability
gap
Staff Recommendation
• Prepare an in-lieu fee study
specific to Piedmont’s market, to
be implemented with possible new
Inclusionary Zoning Program.

Considerations
• Maximum fee equals developer
subsidy needed to build incomerestricted units.
• Typically presented as alternative
to providing affordable units onsite to meet an inclusionary requirement.

Attachment 2 ATTACHMENT B Agenda Report Page 25 Agenda Report Page 33 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 17

POTENTIAL INCLUSIONARY IN-LIEU FEE

APPLICABILITY

1. ADUs on single-family parcels greater than 5,000 sq. ft. – On lots >5,000 sq. ft., ADU construction is currently required for single-family development on vacant lots or for single-family reconstruction. – Housing Element anticipates capacity of 160 new ADUs. Fee scenario assumes property owners pay in-lieu fee for up to 10 ADUs.

2. SB 9 lot splits
– A single-family lot split as allowed by SB 9 may add up to 3 additional units per lot. – Fee scenario assumes 3 projects per year over 20 years, or 60 new units, and that property owners prefer to pay in-lieu fee for 30 units.

3. SB 1123 / SB 684 small lot subdivisions
– Fee scenario assumes up to 10 new units created and in-lieu fees paid for 5 units.

4. Multifamily development
– Based on Housing Element capacity on existing sites (644 units total). – Assume 414 units of multifamily and in-lieu fee paid for 207 units.

Attachment 2 ATTACHMENT B Agenda Report Page 26 Agenda Report Page 34 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 18

IN-LIEU FEE REVENUE SCENARIOS
Scenario 1: Berkeley In-Lieu
Fee
Scenario 2: Oakland In-Lieu
Fee
Total
Forecasted
Development
Participating
Development1
In-Lieu Fee /
sq. ft.2 Total Revenue In-Lieu Fee /
sq. ft.2 Total Revenue
ADUs in SF
lots 160 10 $18.85 $150,800 $3.80 $30,400
SB 9 lot
splits 60 30 $62.83 $2,261,880 $14.98 $539,280
SB 1123 /
SB 684
subdivisions
10 5 $62.83 $376,980 $14.98 $89,880
2-4 Unit
Structures 84 42 $62.83 $3,166,632 $14.98 $754,992
5+ Unit
Structures 330 165 $62.83 $12,440,340 $36.17 $7,161,660 TOTAL 644 252 $18,396,632 $8,576,212
[1] Assumes 50% of forecasted development would opt to pay in-lieu fees, except for ADUs. [2] The calculation assumes 800 sq. ft. for ADUs and 1,200 sq. ft. unit size for all other structure types.

In-lieu fee rates for ADUs are assumed to be 30% of the single-family fee.

Attachment 2 ATTACHMENT B Agenda Report Page 27 Agenda Report Page 35

AFFORDABLE HOUSING FUND
Attachment 2 ATTACHMENT B Agenda Report Page 28 Agenda Report Page 36 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 20 Staff Recommendation
• Housing Element Program 3.E commits the City to create an affordable housing fund in the City’s budget to receive and manage in-lieu fees, philanthropic donations, and other sources of funding.
• Direct staff to research best structure / parameters of the fund consistent with Housing Element.

AFFORDABLE HOUSING FUND
Implementation Considerations Options
Administration
• City-managed
• Third-party administrator
• Partnership with other housing trust or fund
Potential Revenue Sources
• In-lieu fees from inclusionary zoning program
• Philanthropic contributions
• Impact fees
Possible Uses
• Incentivize ADU projects in single-family lots
• Purchase of properties to convert to affordable housing • Accrue larger amounts over time to aid financing of
multifamily affordable projects
Attachment 2 ATTACHMENT B Agenda Report Page 29 Agenda Report Page 37

SUMMARY OF RECOMMENDATIONS & CONCLUSION
Attachment 2 ATTACHMENT B Agenda Report Page 30 Agenda Report Page 38 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 22

CITY DEVELOPMENT IMPACT FEE
Staff Recommendation
Adopt the resolution recommending that the City Council commission the preparation of a nexus study to determine the potential impacts of multifamily development, including SB 9 development, on City services and infrastructure and to determine a potential fee(s).
• Housing Element Program 1.K
Attachment 2 ATTACHMENT B Agenda Report Page 31 Agenda Report Page 39 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 23

MELLO-ROOS COMMUNITY FACILITIES DISTRICT
Staff Recommendation
Adopt the resolution recommending City Council direct
staff to study the cost and feasibility of a Mello-Roos Community Facilities District Fee in areas of Piedmont
where the Housing Element plans for denser multifamily
development to occur with the intent to fund infrastructure improvements, including, but not limited to, roadways,
landscaping, storm drainage improvements, park and
recreation facilities, and undergrounding of utilities. • Housing Element Program 1.K
Attachment 2 ATTACHMENT B Agenda Report Page 32 Agenda Report Page 40 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 24

MUNICIPAL SERVICES PARCEL TAX
Staff Recommendation
Adopt the resolution recommending to the City Council that the City amend the Municipal Services Special Tax by 2037 or earlier to include a tax levied on the types of new
housing units to be created under Housing Element
programs, including SB 9 development, townhouses, and
detached and semi-detached homes on a single lot.
• Housing Element Program 1.N
Attachment 2 ATTACHMENT B Agenda Report Page 33 Agenda Report Page 41 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 25

AFFORDABLE HOUSING IN-LIEU FEE
Staff Recommendation
Adopt the resolution recommending City Council
commission the preparation of an in-lieu fee study specific to Piedmont’s market to be implemented as part of a
possible new Inclusionary Zoning Program.
• Housing Element Program 3.G
Attachment 2 ATTACHMENT B Agenda Report Page 34 Agenda Report Page 42 Economic & Planning Systems, Inc. Piedmont Housing Element Programs | EPS #251027 26

AFFORDABLE HOUSING FUND
Staff Recommendation
Adopt the resolution recommending City Council direct
staff to investigate a potential framework for an Affordable Housing Fund in the City Budget, identify the allowed uses of the Affordable Housing Fund, such as housing serving people earning 80 percent of the area median income for a period of 55 years or more and services supporting the
occupants of affordable housing, the management and
oversight of the Fund, and potential revenue sources, such as future in-lieu fees, impact fees, and philanthropic
donations.
• Housing Element Program 3.E
Attachment 2 ATTACHMENT B Agenda Report Page 35 Agenda Report Page 43

THANK YOU
Attachment 2 ATTACHMENT B Agenda Report Page 36 Agenda Report Page 44 HWY 13 FWY

OAKLAND AVE

HOWE ST

PARK BLVD

MOUNTAIN BLVD

LA SALLE AVE

GRAND AVE

LINDA AVE

WILDWOOD AVE

MORAGA AVE

PIEDMONT AVE

PARK WAY

KING AVE
I 580 FWY

BONITA AVE

HARBORD DR

MAGNOLIA AVE

HAMPTON RD

JEAN ST

CALMAR AVE

MANDANA BLVD

SNAKE RD

WOOD DR

WALKER AVE
HWY 13
AMY DR

MAGELLAN DR

ROSE AVE

BLAIR AVE

CROCKER AVE

ESTATES DR

HIGHLAND AVE

SUNNYHILLS RD

MOSS AVE

MELVIN RD

HILLSIDE AVE

RAMONA AVE

PALA AVE

LEIMERT BLVD

TRESTLE GLEN RD

MASONIC AVE

CREST RD

SCENIC AVE

BALFOUR AVE

BYWOOD DR

KINGSTON AVE

YORK DR

MONTE VISTA AVE

INDIAN RD

SEA VIEW AVE

BOULEVARD WAY

TRAFALGAR PL

CLAREWOOD DR

NOVA DR

SOMERSET RD
41ST ST

LIGGETT DR
I 580 OFF.

JEROME AVE

MOUNTAIN AVE

WALA VISTA AVE

VERNON ST

MONTGOMERY ST

HARRISON ST
I 580 ON.R

MANOR DR

OLIVE AVE

JOHN ST

ARIMO AVE

PALM DR

VERMONT ST

CABOT DR

BULLARD DR

DUDLEY AVE

PRINCE ST

PACIFIC AVE

LAKE AVE

MACARTHUR BLVD

SANTA CLARA AVE

ECHO AVE

GLEN ALPINE RD

SOTELO AVE

LAKESHORE AVE

FAIRVIEW AVE

MONTEREY BLVD

UNDERHILLS RD

ZINN DR

SANTA RAY AVE

WARFIELD AVE

FAIRMOUNT AVE

FERNWOOD DR

JOHNSTON DR

RICARDO AVE

PLEASANT VALLEY AVE

GLEN AVE

MAXWELTON RD

REQUA RD

ASHMOUNT AVE

FAIRBANKS AVE

HARVARD RD

BRANDON ST

DAWES ST

ARBOR DR

VISTA AVE

THORNHILL DR

MESA AVE
HWY 13 ON.R

SANTA ROSA AVE

WINSOR AVE

EL CENTRO AVE

KENMORE AVE

SYLVAN WAY

MONTE AVE

GREENBANK AVE

ARROYO AVE

COLTON BLVD

CALVERT CT

ERIE ST

CLARENDON CREST

LINCOLN AVE

WRENN ST

HOWARD AVE ROSAL AVE

SANDRINGHAM RD

RONADA AVE

BELL AVE

EDGEWOOD AVE

MCANDREW DR
HWY 13 OFF.

YORK ST

LEXFORD RD

LONGRIDGE RD

ELWOOD AVE

EL CERRITO AVE

ARCADIA AVE

PORTAL AVE

PARAMOUNT RD

MONTICELLO AVE

SHERIDAN AVE

CARTER ST

GASPER DR

ARDMORE AVE

HILLTOP CREST

CRAIG AVE

LAKEVIEW AVE

BRUNS CT

RIDGEWAY AVE

DUNCAN WAY

CROFTON AVE

CARLSTON AVE

SCOUT RD

PARK LANE

MONTELL ST

FLORENCE AVE

PERSHING DR

HUNTLEIGH RD

MUIR AVE

LOWER GRAND AVE

OAKVIEW DR

HAGAR AVE

HUBERT RD

BELLVUE AVE

DRACENA AVE

WILDWOOD GARDENS

GILBERT ST

HERON DR

BAYO VISTA AVE

ANNERLY RD

ST JAMES DR
41RST ST

SELBORNE DR

LUCAS AVE

PALOMA AVE

GLENEDEN AVE

MEDAU PL

NACE AVE

SIMS DR

HAZEL LN

HOLLYWOOD AVE

SIERRA AVE

CAVENDISH LN

LANE CT

ENTRADA AVE

SONIA ST

EL DORADO AVE

PORTSMOUTH RD

HILL LN

WELDON AVE

GRISBORN AVE

WOODLAND WAY

RINCON DR

YOSEMITE AVE

RIO VISTA AVE

RED ROCK RD

BRIDGEVIEW DR

ESTRELLA AVE

SAN CARLOS AVE
40TH ST

ALTA AVE

LATHAM ST

ELBERT ST

DOLORES AVE

OAKMONT AVE

SHARON AVE
OAK RD

PROSPECT RD

ORANGE ST

LAFAYETTE AVE

WALDO AVE

RANLEIGH WAY

MARIPOSA AVE

CHETWOOD ST

VIEW PL

MARR AVE

PROCTOR AVE

SUNNYSIDE AVE

FARRAGUT AVE

HOLLY PL

WAWONA AVE

VALLE VISTA AVE

GLENDORA AVE

MOSS WAY

OAKMORE RD

PRIVATE DR

CARMEL AVE

MERCED AVE

SAINT PAUL CT

MONTE CRESTA AVE

BRAEMAR RD

CAMBRIDGE WAY

BLAIR PL

SAN SEBASTIAN AVE

LEIMERT PL

OAK CREST DR

TEMPLAR PL

DALE AVE

CAPERTON AVE

INDIAN CT

PRIVATE

DORMIDERA AVE

ABBOTT WAY

ARTUNA AVE

FLORADA AVE

ROSECREST DR

MODOC AVE

MIRA VISTA AVE

PARKVIEW AVE

WYNGAARD AVE

HOOVER AVE

CORTEREAL AVE

LORITA AVE

MATHER ST

SCOTT ST

BRENTWOOD RD

SUNNYSLOPE AVE

BOWLES PL

CLEMENS RD

GLENWOOD GLADE

FLORENCE TERRACE

ANTIOCH ST

INVERLEITH TER

LAKE SHORE AVE

ARDEN PL

COCHRANE AVE

WOOD CT

SAN LUIS AVE

MARSH PL

HARDWICK AVE

REQUA PL

POPLAR WAY

GLENDOME CIRCLE

WALLACE RD

EDGE DR

PARKSIDE DR

CAMBRIAN AVE

HAMPTON CT

HIGHLAND WAY

ANDREWS ST

KROHN LANE

TRUITT LANE
40TH STREET WAY

VIONA AVE

MIDCREST RD

DRAKE PL

ELSINORE AVE

DUDLEY CT

PLEASANT VALLEY CT

LA SALLE CT

SHEPHERD CANYON RD

LITTLEWOOD DR

DOWNEY PL

JULIA ST

RICHARDSON WAY

ALTA VISTA AVE

GALVIN ST

HARBORD CT STARK KNOLL PL

KEEFER CT

PIEDMONT CT

DIAZ PL
ST. JAMES PL

SHERIDAN RD

ECHO LN

WILDA AVE

PANAMA CT

TYSON CIR

INDIAN GULCH RD

VALANT PL

GUILFORD RD

MASONIC PL

ANTIOCH CT

HILLWOOD PL

HUMPHREY PL

SHARON CT

ST JAMES CIR

SANDRINGHAM PL

MARLBOROUGH CT

NELLIE AVE

MOYER PL

LARMER CT

LANGDON CT

MANDANA CIRCLE

GLENWOOD AVE

MACKINNON PL

HILLSIDE CT

KELTON CT

PROSPECT CT

CAVANAUGH CT

VAN SICKLEN PL

CROYDON CIRCLE
MEDIAN

MIDCREST

BRENTWOOD PL

ARROYUELO AVE

WALAVISTA AVE

FLFORENCE AVE

YORK ST

PRIVATE
I 580 OFF.

CHETWOOD ST

LAKESHORE AVE

LA SALLE AVE

MOUNTAIN BLVD

OAKMORE RD
HWY 13 OFF.

ERIE ST

MACARTHUR BLVD

WALA VISTA AVE

WARFIELD AVE

LAKE SHORE AVE

RONADA AVE

EL CERRITO AVE

SNAKE RD

EL CERRITO AVE

MOUNTAIN BLVD

MACARTHUR BLVD

JEAN ST

PARK BLVD

SANTA RAY AVE
HWY 13 OFF.

BLAIR AVE

CARLSTON AVE

ARBOR DR

BALFOUR AVE

RAMONA AVE
HWY 13 OFF.

SAN CARLOS AVE

POPLAR WAY

FLORENCE TERRACE

PROCTOR AVE

GRAND AVE
MEDIAN

FLORENCE AVE

ALTA AVE

PRIVATE

WINSOR AVE

LA SALLE AVE

SEA VIEW AVE

CAMBRIDGE WAY
HWY 13 ON.R

ASHMOUNT AVE

CLEMENS RD

CAPERTON AVE

BLAIR AVE

LA SALLE AVE
HWY 13 FWY

WARFIELD AVE
I 580 FWY

PALOMA AVE
I 580 ON.R HARRISON ST
HWY 13 ON.R

CALMAR AVE

SAN CARLOS AVE

GLEN AVE
HWY 13 ON.R

SUNNYSIDE AVE

ESTATES DR

LEIMERT BLVD

PALM DR

WARFIELD AVE

GREENBANK AVE
HWY 13 ON.R
40TH ST

JEROME AVE

MONTGOMERY ST

ROSAL AVE

LAKE AVE

GLEN AVE

ST JAMES DR

MANDANA BLVD

WELDON AVE

PRIVATE
HWY 13 FWY

OAKLAND AVE

HOWE ST

PARK BLVD

MOUNTAIN BLVD

LA SALLE AVE

GRAND AVE

LINDA AVE

WILDWOOD AVE

MORAGA AVE

PIEDMONT AVE

PARK WAY

KING AVE
I 580 FWY

BONITA AVE

HARBORD DR

MAGNOLIA AVE

HAMPTON RD

JEAN ST

CALMAR AVE

MANDANA BLVD

SNAKE RD

WOOD DR

WALKER AVE
HWY 13
AMY DR

MAGELLAN DR

ROSE AVE

BLAIR AVE

CROCKER AVE

ESTATES DR

HIGHLAND AVE

SUNNYHILLS RD

MOSS AVE

MELVIN RD

HILLSIDE AVE

RAMONA AVE

PALA AVE

LEIMERT BLVD

TRESTLE GLEN RD

MASONIC AVE

CREST RD

SCENIC AVE

BALFOUR AVE

BYWOOD DR

KINGSTON AVE

YORK DR

MONTE VISTA AVE

INDIAN RD

SEA VIEW AVE

BOULEVARD WAY

TRAFALGAR PL

CLAREWOOD DR

NOVA DR

SOMERSET RD
41ST ST

LIGGETT DR
I 580 OFF.

JEROME AVE

MOUNTAIN AVE

WALA VISTA AVE

VERNON ST

MONTGOMERY ST

HARRISON ST
I 580 ON.R

MANOR DR

OLIVE AVE

JOHN ST

ARIMO AVE

PALM DR

VERMONT ST

CABOT DR

BULLARD DR

DUDLEY AVE

PRINCE ST

PACIFIC AVE

LAKE AVE

MACARTHUR BLVD

SANTA CLARA AVE

ECHO AVE

GLEN ALPINE RD

SOTELO AVE

LAKESHORE AVE

FAIRVIEW AVE

MONTEREY BLVD

UNDERHILLS RD

ZINN DR

SANTA RAY AVE

WARFIELD AVE

FAIRMOUNT AVE

FERNWOOD DR

JOHNSTON DR

RICARDO AVE

PLEASANT VALLEY AVE

GLEN AVE

MAXWELTON RD

REQUA RD

ASHMOUNT AVE

FAIRBANKS AVE

HARVARD RD

BRANDON ST

DAWES ST

ARBOR DR

VISTA AVE

THORNHILL DR

MESA AVE
HWY 13 ON.R

SANTA ROSA AVE

WINSOR AVE

EL CENTRO AVE

KENMORE AVE

SYLVAN WAY

MONTE AVE

GREENBANK AVE

ARROYO AVE

COLTON BLVD

CALVERT CT

ERIE ST

CLARENDON CREST

LINCOLN AVE

WRENN ST

HOWARD AVE ROSAL AVE

SANDRINGHAM RD

RONADA AVE

BELL AVE

EDGEWOOD AVE

MCANDREW DR
HWY 13 OFF.

YORK ST

LEXFORD RD

LONGRIDGE RD

ELWOOD AVE

EL CERRITO AVE

ARCADIA AVE

PORTAL AVE

PARAMOUNT RD

MONTICELLO AVE

SHERIDAN AVE

CARTER ST

GASPER DR

ARDMORE AVE

HILLTOP CREST

CRAIG AVE

LAKEVIEW AVE

BRUNS CT

RIDGEWAY AVE

DUNCAN WAY

CROFTON AVE

CARLSTON AVE

SCOUT RD

PARK LANE

MONTELL ST

FLORENCE AVE

PERSHING DR

HUNTLEIGH RD

MUIR AVE

LOWER GRAND AVE

OAKVIEW DR

HAGAR AVE

HUBERT RD

BELLVUE AVE

DRACENA AVE

WILDWOOD GARDENS

GILBERT ST

HERON DR

BAYO VISTA AVE

ANNERLY RD

ST JAMES DR
41RST ST

SELBORNE DR

LUCAS AVE

PALOMA AVE

GLENEDEN AVE

MEDAU PL

NACE AVE

SIMS DR

HAZEL LN

HOLLYWOOD AVE

SIERRA AVE

CAVENDISH LN

LANE CT

ENTRADA AVE

SONIA ST

EL DORADO AVE

PORTSMOUTH RD

HILL LN

WELDON AVE

GRISBORN AVE

WOODLAND WAY

RINCON DR

YOSEMITE AVE

RIO VISTA AVE

RED ROCK RD

BRIDGEVIEW DR

ESTRELLA AVE

SAN CARLOS AVE
40TH ST

ALTA AVE

LATHAM ST

ELBERT ST

DOLORES AVE

OAKMONT AVE

SHARON AVE
OAK RD

PROSPECT RD

ORANGE ST

LAFAYETTE AVE

WALDO AVE

RANLEIGH WAY

MARIPOSA AVE

CHETWOOD ST

VIEW PL

MARR AVE

PROCTOR AVE

SUNNYSIDE AVE

FARRAGUT AVE

HOLLY PL

WAWONA AVE

VALLE VISTA AVE

GLENDORA AVE

MOSS WAY

OAKMORE RD

PRIVATE DR

CARMEL AVE

MERCED AVE

SAINT PAUL CT

MONTE CRESTA AVE

BRAEMAR RD

CAMBRIDGE WAY

BLAIR PL

SAN SEBASTIAN AVE

LEIMERT PL

OAK CREST DR

TEMPLAR PL

DALE AVE

CAPERTON AVE

INDIAN CT

PRIVATE

DORMIDERA AVE

ABBOTT WAY

ARTUNA AVE

FLORADA AVE

ROSECREST DR

MODOC AVE

MIRA VISTA AVE

PARKVIEW AVE

WYNGAARD AVE

HOOVER AVE

CORTEREAL AVE

LORITA AVE

MATHER ST

SCOTT ST

BRENTWOOD RD

SUNNYSLOPE AVE

BOWLES PL

CLEMENS RD

GLENWOOD GLADE

FLORENCE TERRACE

ANTIOCH ST

INVERLEITH TER

LAKE SHORE AVE

ARDEN PL

COCHRANE AVE

WOOD CT

SAN LUIS AVE

MARSH PL

HARDWICK AVE

REQUA PL

POPLAR WAY

GLENDOME CIRCLE

WALLACE RD

EDGE DR

PARKSIDE DR

CAMBRIAN AVE

HAMPTON CT

HIGHLAND WAY

ANDREWS ST

KROHN LANE

TRUITT LANE
40TH STREET WAY

VIONA AVE

MIDCREST RD

DRAKE PL

ELSINORE AVE

DUDLEY CT

PLEASANT VALLEY CT

LA SALLE CT

SHEPHERD CANYON RD

LITTLEWOOD DR

DOWNEY PL

JULIA ST

RICHARDSON WAY

ALTA VISTA AVE

GALVIN ST

HARBORD CT STARK KNOLL PL

KEEFER CT

PIEDMONT CT

DIAZ PL
ST. JAMES PL

SHERIDAN RD

ECHO LN

WILDA AVE

PANAMA CT

TYSON CIR

INDIAN GULCH RD

VALANT PL

GUILFORD RD

MASONIC PL

ANTIOCH CT

HILLWOOD PL

HUMPHREY PL

SHARON CT

ST JAMES CIR

SANDRINGHAM PL

MARLBOROUGH CT

NELLIE AVE

MOYER PL

LARMER CT

LANGDON CT

MANDANA CIRCLE

GLENWOOD AVE

MACKINNON PL

HILLSIDE CT

KELTON CT

PROSPECT CT

CAVANAUGH CT

VAN SICKLEN PL

CROYDON CIRCLE
MEDIAN

MIDCREST

BRENTWOOD PL

ARROYUELO AVE

WALAVISTA AVE

FLFORENCE AVE

YORK ST

PRIVATE
I 580 OFF.

CHETWOOD ST

LAKESHORE AVE

LA SALLE AVE

MOUNTAIN BLVD

OAKMORE RD
HWY 13 OFF.

ERIE ST

MACARTHUR BLVD

WALA VISTA AVE

WARFIELD AVE

LAKE SHORE AVE

RONADA AVE

EL CERRITO AVE

SNAKE RD

EL CERRITO AVE

MOUNTAIN BLVD

MACARTHUR BLVD

JEAN ST

PARK BLVD

SANTA RAY AVE
HWY 13 OFF.

BLAIR AVE

CARLSTON AVE

ARBOR DR

BALFOUR AVE

RAMONA AVE
HWY 13 OFF.

SAN CARLOS AVE

POPLAR WAY

FLORENCE TERRACE

PROCTOR AVE

GRAND AVE
MEDIAN

FLORENCE AVE

ALTA AVE

PRIVATE

WINSOR AVE

LA SALLE AVE

SEA VIEW AVE

CAMBRIDGE WAY
HWY 13 ON.R

ASHMOUNT AVE

CLEMENS RD

CAPERTON AVE

BLAIR AVE

LA SALLE AVE
HWY 13 FWY

WARFIELD AVE
I 580 FWY

PALOMA AVE
I 580 ON.R HARRISON ST
HWY 13 ON.R

CALMAR AVE

SAN CARLOS AVE

GLEN AVE
HWY 13 ON.R

SUNNYSIDE AVE

ESTATES DR

LEIMERT BLVD

PALM DR

WARFIELD AVE

GREENBANK AVE
HWY 13 ON.R
40TH ST

JEROME AVE

MONTGOMERY ST

ROSAL AVE

LAKE AVE

GLEN AVE

ST JAMES DR

MANDANA BLVD

WELDON AVE

PRIVATE
HWY 13 FWY

OAKLAND AVE

HOWE ST

PARK BLVD

MOUNTAIN BLVD

LA SALLE AVE

GRAND AVE

LINDA AVE

WILDWOOD AVE

MORAGA AVE

PIEDMONT AVE

PARK WAY

KING AVE
I 580 FWY

BONITA AVE

HARBORD DR

MAGNOLIA AVE

HAMPTON RD

JEAN ST

CALMAR AVE

MANDANA BLVD

SNAKE RD

WOOD DR

WALKER AVE
HWY 13
AMY DR

MAGELLAN DR

ROSE AVE

BLAIR AVE

CROCKER AVE

ESTATES DR

HIGHLAND AVE

SUNNYHILLS RD

MOSS AVE

MELVIN RD

HILLSIDE AVE

RAMONA AVE

PALA AVE

LEIMERT BLVD

TRESTLE GLEN RD

MASONIC AVE

CREST RD

SCENIC AVE

BALFOUR AVE

BYWOOD DR

KINGSTON AVE

YORK DR

MONTE VISTA AVE

INDIAN RD

SEA VIEW AVE

BOULEVARD WAY

TRAFALGAR PL

CLAREWOOD DR

NOVA DR

SOMERSET RD
41ST ST

LIGGETT DR
I 580 OFF.

JEROME AVE

MOUNTAIN AVE

WALA VISTA AVE

VERNON ST

MONTGOMERY ST

HARRISON ST
I 580 ON.R

MANOR DR

OLIVE AVE

JOHN ST

ARIMO AVE

PALM DR

VERMONT ST

CABOT DR

BULLARD DR

DUDLEY AVE

PRINCE ST

PACIFIC AVE

LAKE AVE

MACARTHUR BLVD

SANTA CLARA AVE

ECHO AVE

GLEN ALPINE RD

SOTELO AVE

LAKESHORE AVE

FAIRVIEW AVE

MONTEREY BLVD

UNDERHILLS RD

ZINN DR

SANTA RAY AVE

WARFIELD AVE

FAIRMOUNT AVE

FERNWOOD DR

JOHNSTON DR

RICARDO AVE

PLEASANT VALLEY AVE

GLEN AVE

MAXWELTON RD

REQUA RD

ASHMOUNT AVE

FAIRBANKS AVE

HARVARD RD

BRANDON ST

DAWES ST

ARBOR DR

VISTA AVE

THORNHILL DR

MESA AVE
HWY 13 ON.R

SANTA ROSA AVE

WINSOR AVE

EL CENTRO AVE

KENMORE AVE

SYLVAN WAY

MONTE AVE

GREENBANK AVE

ARROYO AVE

COLTON BLVD

CALVERT CT

ERIE ST

CLARENDON CREST

LINCOLN AVE

WRENN ST

HOWARD AVE ROSAL AVE

SANDRINGHAM RD

RONADA AVE

BELL AVE

EDGEWOOD AVE

MCANDREW DR
HWY 13 OFF.

YORK ST

LEXFORD RD

LONGRIDGE RD

ELWOOD AVE

EL CERRITO AVE

ARCADIA AVE

PORTAL AVE

PARAMOUNT RD

MONTICELLO AVE

SHERIDAN AVE

CARTER ST

GASPER DR

ARDMORE AVE

HILLTOP CREST

CRAIG AVE

LAKEVIEW AVE

BRUNS CT

RIDGEWAY AVE

DUNCAN WAY

CROFTON AVE

CARLSTON AVE

SCOUT RD

PARK LANE

MONTELL ST

FLORENCE AVE

PERSHING DR

HUNTLEIGH RD

MUIR AVE

LOWER GRAND AVE

OAKVIEW DR

HAGAR AVE

HUBERT RD

BELLVUE AVE

DRACENA AVE

WILDWOOD GARDENS

GILBERT ST

HERON DR

BAYO VISTA AVE

ANNERLY RD

ST JAMES DR
41RST ST

SELBORNE DR

LUCAS AVE

PALOMA AVE

GLENEDEN AVE

MEDAU PL

NACE AVE

SIMS DR

HAZEL LN

HOLLYWOOD AVE

SIERRA AVE

CAVENDISH LN

LANE CT

ENTRADA AVE

SONIA ST

EL DORADO AVE

PORTSMOUTH RD

HILL LN

WELDON AVE

GRISBORN AVE

WOODLAND WAY

RINCON DR

YOSEMITE AVE

RIO VISTA AVE

RED ROCK RD

BRIDGEVIEW DR

ESTRELLA AVE

SAN CARLOS AVE
40TH ST

ALTA AVE

LATHAM ST

ELBERT ST

DOLORES AVE

OAKMONT AVE

SHARON AVE
OAK RD

PROSPECT RD

ORANGE ST

LAFAYETTE AVE

WALDO AVE

RANLEIGH WAY

MARIPOSA AVE

CHETWOOD ST

VIEW PL

MARR AVE

PROCTOR AVE

SUNNYSIDE AVE

FARRAGUT AVE

HOLLY PL

WAWONA AVE

VALLE VISTA AVE

GLENDORA AVE

MOSS WAY

OAKMORE RD

PRIVATE DR

CARMEL AVE

MERCED AVE

SAINT PAUL CT

MONTE CRESTA AVE

BRAEMAR RD

CAMBRIDGE WAY

BLAIR PL

SAN SEBASTIAN AVE

LEIMERT PL

OAK CREST DR

TEMPLAR PL

DALE AVE

CAPERTON AVE

INDIAN CT

PRIVATE

DORMIDERA AVE

ABBOTT WAY

ARTUNA AVE

FLORADA AVE

ROSECREST DR

MODOC AVE

MIRA VISTA AVE

PARKVIEW AVE

WYNGAARD AVE

HOOVER AVE

CORTEREAL AVE

LORITA AVE

MATHER ST

SCOTT ST

BRENTWOOD RD

SUNNYSLOPE AVE

BOWLES PL

CLEMENS RD

GLENWOOD GLADE

FLORENCE TERRACE

ANTIOCH ST

INVERLEITH TER

LAKE SHORE AVE

ARDEN PL

COCHRANE AVE

WOOD CT

SAN LUIS AVE

MARSH PL

HARDWICK AVE

REQUA PL

POPLAR WAY

GLENDOME CIRCLE

WALLACE RD

EDGE DR

PARKSIDE DR

CAMBRIAN AVE

HAMPTON CT

HIGHLAND WAY

ANDREWS ST

KROHN LANE

TRUITT LANE
40TH STREET WAY

VIONA AVE

MIDCREST RD

DRAKE PL

ELSINORE AVE

DUDLEY CT

PLEASANT VALLEY CT

LA SALLE CT

SHEPHERD CANYON RD

LITTLEWOOD DR

DOWNEY PL

JULIA ST

RICHARDSON WAY

ALTA VISTA AVE

GALVIN ST

HARBORD CT STARK KNOLL PL

KEEFER CT

PIEDMONT CT

DIAZ PL
ST. JAMES PL

SHERIDAN RD

ECHO LN

WILDA AVE

PANAMA CT

TYSON CIR

INDIAN GULCH RD

VALANT PL

GUILFORD RD

MASONIC PL

ANTIOCH CT

HILLWOOD PL

HUMPHREY PL

SHARON CT

ST JAMES CIR

SANDRINGHAM PL

MARLBOROUGH CT

NELLIE AVE

MOYER PL

LARMER CT

LANGDON CT

MANDANA CIRCLE

GLENWOOD AVE

MACKINNON PL

HILLSIDE CT

KELTON CT

PROSPECT CT

CAVANAUGH CT

VAN SICKLEN PL

CROYDON CIRCLE
MEDIAN

MIDCREST

BRENTWOOD PL

ARROYUELO AVE

WALAVISTA AVE

FLFORENCE AVE

YORK ST

PRIVATE
I 580 OFF.

CHETWOOD ST

LAKESHORE AVE

LA SALLE AVE

MOUNTAIN BLVD

OAKMORE RD
HWY 13 OFF.

ERIE ST

MACARTHUR BLVD

WALA VISTA AVE

WARFIELD AVE

LAKE SHORE AVE

RONADA AVE

EL CERRITO AVE

SNAKE RD

EL CERRITO AVE

MOUNTAIN BLVD

MACARTHUR BLVD

JEAN ST

PARK BLVD

SANTA RAY AVE
HWY 13 OFF.

BLAIR AVE

CARLSTON AVE

ARBOR DR

BALFOUR AVE

RAMONA AVE
HWY 13 OFF.

SAN CARLOS AVE

POPLAR WAY

FLORENCE TERRACE

PROCTOR AVE

GRAND AVE
MEDIAN

FLORENCE AVE

ALTA AVE

PRIVATE

WINSOR AVE

LA SALLE AVE

SEA VIEW AVE

CAMBRIDGE WAY
HWY 13 ON.R

ASHMOUNT AVE

CLEMENS RD

CAPERTON AVE

BLAIR AVE

LA SALLE AVE
HWY 13 FWY

WARFIELD AVE
I 580 FWY

PALOMA AVE
I 580 ON.R HARRISON ST
HWY 13 ON.R

CALMAR AVE

SAN CARLOS AVE

GLEN AVE
HWY 13 ON.R

SUNNYSIDE AVE

ESTATES DR

LEIMERT BLVD

PALM DR

WARFIELD AVE

GREENBANK AVE
HWY 13 ON.R
40TH ST

JEROME AVE

MONTGOMERY ST

ROSAL AVE

LAKE AVE

GLEN AVE

ST JAMES DR

MANDANA BLVD

WELDON AVE

PRIVATE
June 2006
City of Piedmont
Zoning Map µ
City Limit
Zone A - Single Family Residential
Zone B - Public Facilities
Zone C - Multi-Family Residential
Zone D - Mixed Use and Commerical
Zone E - Estate Residential 0 650 1,300 2,600 3,900 5,200 Feet
Attachment 2 ATTACHMENT C Agenda Report Page 37 Agenda Report Page 45 1 Published September 25, 2025
Inclusionary Zoning
Inclusionary zoning requires new residential construction projects to contribute to a jurisdiction’s affordable
housing stock. Inclusionary zoning can enable jurisdictions to leverage private dollars for affordable housing, bringing affordable units online faster and in greater numbers than relying exclusively on public funding streams. Inclusionary zoning can also help ensure new affordable housing units are developed in the same neighborhoods as new marketrate development, which has the potential to further economic integration and reduce historic patterns of
exclusion and segregation.

Legal Context
What Does State Law Require?
AB 1505 (2017) outlines state requirements for a jurisdiction’s inclusionary zoning ordinance. The law requires jurisdictions to allow alternative means to comply with requirements, such as in-lieu fees, building affordable units off-site or dedicating land for the construction of affordable housing.

Under certain circumstances, the law also allows HCD
to review a local ordinance that requires more than 15% affordable units.

Program Design, Implementation and
Evaluation Considerations
The callout box below labeled “TOC Policy Requirements” describes the policy features necessary for a jurisdiction to receive credit toward TOC Policy compliance. All other policy features discussed in this document represent
details found in existing policies on the subject and a jurisdiction may want to consider them when adopting or implementing a policy, but nothing is required for TOC Policy compliance unless noted as a requirement in the “TOC Policy Requirements” callout box or the TOC Policy Administrative Guidance.

At-A-Glance

RELEVANT STATE LAWS
AB 1505 (2017)

POTENTIAL FUNDING SOURCE
• Revenue from in-lieu fees
• Annual monitoring fees
• General Funds
COST
Low. May require a feasibility
analysis or other studies.

Operations can be cost-neutral
as they can be funded by
monitoring fees assessed on
properties.

ADMINISTRATIVE BURDEN
Medium
Staff capacity needed to
develop program, conduct
feasibility studies if needed
and lead public and legislative
processes. The feasibility
study and oversight of ongoing
operations can be contracted
out.

EXTRA CONSIDERATIONS
Highly effective
WHICH P?
Production

POTENTIAL PARTNERS
• Community Based
Organizations

OPTION FOR TOC POLICY
COMPLIANCE?
Yes!
Attachment 3 Agenda Report Page 46
Inclusionary Zoning 2
Elements of the Program
• Required percentage of affordable units
• Affordability requirements
• Period of affordability
• Building type and tenure that ordinance
applies to
• Alternative means of compliance
• In-lieu fees
• Tenant selection process
• Ongoing monitoring
TOC Policy Requirements: To comply with
the TOC policy, inclusionary zoning
ordinances must require at least 15% of
units be deed-restricted affordable units.

Jurisdictions may elect to set requirements
higher than 15%. If the inclusionary zoning
policy requires less than 15% affordable
units, the jurisdiction must provide an
analysis showing economic equivalency of
the alternative standard (e.g., fewer units
at deeper levels of affordability) or a
financial feasibility analysis showing that a
15% requirement is not feasible for the
jurisdiction’s local market conditions. MTC
has developed a spreadsheet to help
determine if an alternative standard is
economically equivalent to the TOC Policy
requirement.

The policy must apply to both rental and
ownership units. For rental units, the
policy’s affordability requirements must
require the income mix of affordable
units to average out to 80% of AMI or less,
with no affordable rental units available
to households above 120% of AMI. For
ownership units, the policy’s affordability
requirements must require the income mix
of affordable units to average out to 120%
of AMI or less, with no affordable ownership
units available to households above 150%
of AMI. Jurisdictions should require deeper
levels of affordability where feasible or
by offering additional incentives. The
affordability deed restriction must be at
least 55 years for rental housing and at least
45 years for ownership housing.

The policy must apply to newly constructed
residential or mixed-use residential
projects.

The policy may exempt properties with
fewer than 11 units, student housing, 100%
affordable housing, senior housing or other
special housing types.

Per state law, inclusionary zoning must allow
for alternative means of compliance (e.g.,
paying in-lieu fees to support affordable
housing development, building affordable
units off-site or dedicating land for the
construction of affordable housing).

A jurisdiction with an in-lieu fee that
typically results in less than $100,000 per
required onsite affordable unit must provide
justification for how the fee will result in at
least as many restricted affordable housing
units as would be required of a project
providing on-site units. MTC has developed
a spreadsheet to help determine whether an
in-lieu fee is equivalent to at least $100,000
per required onsite affordable unit.

Jurisdictions must establish a management
plan for monitoring and implementation that
outlines procedures for annual monitoring to
ensure that residents are income-eligible,
and rents are consistent with program
guidelines.

Program Design Considerations
Jurisdictions may want to consider the
following:

FEASIBILITY STUDY: Conducting an
economic feasibility study to ensure that
the requirements do not pose a barrier to
new construction. Feasibility studies look at
market rents, prices and construction costs to
evaluate whether projects that face a given
Attachment 3 Agenda Report Page 47
Inclusionary Zoning 3
affordable housing requirement are likely to be
financially feasible. They can allow jurisdictions
to recalibrate the affordability requirements of
inclusionary zoning to match changing market
conditions. Additionally, HCD may request a
feasibility study for requirements greater than
15%.

MANDATORY OR VOLUNTARY: While most
inclusionary zoning ordinances are mandatory,
some are voluntary, providing valuable
incentives to developers to include affordable
units in their projects.

AFFORDABILITY REQUIREMENTS: Setting the
required percentage of affordable units. This
percentage may vary by construction type or
geography within the jurisdiction.

INCOME TARGETS: Developing inclusionary
housing affordability requirements in response
to housing needs identified in the jurisdiction’s
Housing Element or related affordable housing
plan. Jurisdictions can encourage deeper levels
of affordability where feasible or by offering
additional incentives. Some jurisdictions
provide incentives for projects to elect to serve
lower-income households.

HOMEOWNERSHIP: Applying inclusionary
requirements to for-sale projects, typically at
a higher AMI than rental units. Programs can
specify what happens to an ownership unit at
resale if the resale is prior to the expiration of
the term of affordability, keeping in mind how
the sales proceeds are divided between the
city and seller and whether a new affordable
term begins upon sale to the new owner. Many
jurisdictions renew the affordability term upon
sale to the new owner.

BUILDING TYPE: Defining the types of
projects that are subject to the inclusionary
requirements – usually this includes setting a
minimum project size in terms of units or gross
square feet.

GEOGRAPHY: Most inclusionary policies apply
city-wide. However, some jurisdictions apply
different inclusionary rates to distinct parts
of their cities, for example higher rates in the
downtown core.

ALTERNATIVE MEANS OF COMPLIANCE:

Offering additional compliance alternatives
such as building affordable units off-site
and dedicating land for the construction of
affordable housing. Some jurisdictions with
an off-site alternative require that off-site
affordable units be completed prior to, or
alongside, the primary development and/or
near the market rate project when feasible
to foster mixed-income neighborhoods and
reduce segregation. These alternative means
of compliance provide valuable flexibility for
developers, allowing them to be more costeffective and ensuring units come online more quickly.

IN-LIEU FEES: Structuring fees to lead to
outcomes that are at least equivalent to the
inclusionary requirement. Jurisdictions can
include the formula used to calculate the fee in
the ordinance, thus enabling annual fee updates
to reflect the changing costs of construction.

Many jurisdictions include their inclusionary
fees in their annual fee schedules.

TIMING OF IN-LIEU FEES: Identifying a specific
time in the development process to collect
in-lieu fees. Later fee collection can improve
the financial feasibility of an in-lieu fee,
while earlier fee collection enables affordable
housing development to closely trail market
rate development.

PERIOD OF AFFORDABILITY: Requiring income
restrictions for 55 years, 99 years or for the
life of the project. Affordability terms also
sometimes vary by housing tenure.

INCENTIVES: Providing meaningful incentives
to provide inclusionary units rather than paying
fees. Most jurisdictions offer a density bonus
to allow developers to build additional marketAttachment 3 Agenda Report Page 48 Inclusionary Zoning 4
rate units to offset reduced revenue. Density
bonuses are typically given as an increase in
allowed dwelling units per acre (DU/A) or floor
area ratio (FAR).

TENANT SELECTION: Establishing a fair and
transparent tenant selection process, such as
random lotteries. Some jurisdictions develop
a master waitlist for inclusionary rental
units in the city. When a vacancy occurs, the
jurisdiction provides the property manager with
the names on the waitlist.

TENANT PREFERENCE POLICY: Giving priority
to certain applicants in the lottery process (for
example, households displaced by disasters
or eviction). Preferences add significant
complexity to the screening and selection
process and should be used only when they
support clear and important public policy goals.

Preference policies should be designed with
careful attention to fair housing goals. Policies
that offer a preference based on local residency
are often adopted only after completion of
a fair housing analysis that ensures that the
policy will not have a ‘disparate impact’ on any
racial group.

REGULATORY AGREEMENTS: To ensure longterm affordability of inclusionary units, regulatory agreements can be recorded on the
property title. These agreements may include
the following elements:
• Recitals outlining the basis for affordability
requirements, such as inclusionary zoning
provisions, density bonus terms, or other
relevant entitlements, along with the legal
description of the property.
• Identification of affordable units, including
the number of units, unit sizes, and
bedroom counts.
• Affordability period and detailed rent
calculation methodology, including
provisions for annual rent increases, income
certification requirements, and policies for
over-income tenants.
• Required lease terms, with a focus on fair
housing compliance
• Property management requirements, such as
marketing, maintenance responsibilities and
record-keeping standards.
• Procedures for managing changes, including
the expiration of affordability terms,
condominium conversions, or defaults.
• Process of amending the agreement, if
necessary.

DESIGN AND LOCATION: Requiring that
inclusionary units are comparable to market
rate units in terms of unit size, number of
bedrooms, amenities and other key features.

Generally, jurisdictions require that inclusionary
units be evenly distributed throughout the
project. Jurisdictions can avoid exacerbating
any existing segregation patterns by requiring
that offsite units are located near a project’s
market-rate units and meet similar design
standards.

MARKETING: Requiring a marketing plan that
describes how the units will be marketed to
tenants or buyers and how tenant and buyer
qualifications will be verified. Jurisdictions
can define a review and approval process for
marketing plans. Policies can also require
developers of inclusionary units to list all
vacancies on the Bay Area Housing Finance
Authority (BAHFA)’s Doorway Housing Portal
to ease the burden of finding openings for
potential applicants. Jurisdictions can require
developers to affirmatively further fair housing
goals by marketing units to diverse racial
and ethnic groups by sharing listings in the
jurisdiction’s commonly spoken languages, and
by multiple methods of publication, such as
websites, social media and flyers.

Attachment 3 Agenda Report Page 49
Inclusionary Zoning 5
Program Implementation,
Administration and Enforcement
Inclusionary zoning policies are generally
implemented via ordinance. Before and after
policy adoption, jurisdictions can conduct
outreach about the importance of investing
in affordable housing and mixed-income
communities and engage community partners,
such as real estate developers, in the process.

Jurisdictions may entrust property managers
with the responsibility of performing annual
income verification and providing explanations
when individuals on the waitlist are not
selected. Alternatively, jurisdictions may
partner with a third-party administering
agent, who can market units, ensure tenants
are eligible and support/monitor property
management companies. By working with
a nonprofit or other third-party partner,
jurisdiction staff will have more capacity to
focus on other responsibilities. For instance,
the nonprofit Housing Land Trust of Sonoma
County manages the inclusionary ownership
housing for many Sonoma County jurisdictions.

Through this partnership, inclusionary units go
directly into the land trust’s portfolio, making
the units permanently affordable. Jurisdictions
can identify which tasks could be accomplished
in-house, which tasks can be delegated
to property managers, and which can be
contracted to a third-party administering agent
or nonprofit.

Jurisdictions can collect annual monitoring
fees from rental and ownership projects to
ensure that the jurisdiction maintains and
grows capacity to effectively monitor long-term
affordability as the portfolio of below market
rate units grows.

Program Evaluation
To evaluate the effectiveness of inclusionary
zoning programs, jurisdictions can consider the
following questions:
• How many affordable units have been
created and are they onsite or offsite?
• How much money has been collected in
fees? How has that money been spent?
• If the program is producing BMR
homeownership units, do those units remain
affordable to the same income groups over
time?
• Does the pool of applicants reflect the full
racial diversity of the broader local housing
market?
• Do the demographics of the residents of
inclusionary units reflect the diversity of the
applicant pool?
• What percent of projects are selecting the
fee option compared to onsite?
• Is the current fee enough to allow the
jurisdiction to fund at least one affordable
unit for each unit that would otherwise have
been provided onsite?
Complementary Policies
AFFORDABLE HOUSING OVERLAY ZONE:

Affordable housing overlay zones provide
additional incentives for affordable housing
development in specified geographic areas.

Attachment 3 Agenda Report Page 50
Inclusionary Zoning 6
Other Resources
EXAMPLES*
City of San Mateo - BMR (Inclusionary)
Ordinance
City of Belmont - Inclusionary Zoning
Ordinance
City of Hayward - Affordable Housing
Ordinance
City of Richmond - Inclusionary Zoning and
Affordable Housing Linkage Fees

SAMPLE RFPS
City of Alameda - Rental and Ownership
Program RFP
City of Emeryville - Affordable Housing
Program RFP

NEXUS AND FEASIBILITY STUDIES
City of Hayward - Analysis and Feasibility Study
City of Santa Rosa - Residential Impact Fee
Nexus and Feasibility Study
City of Hayward - Inclusionary Zoning
Feasibility Study
City of Santa Cruz - Inclusionary Zoning
Feasibility Study

OTHER RESOURCES
Grounded Solutions Network - Inclusionary
Zoning Design Worksheet
Grounded Solutions Network - Program
Assessment for Inclusionary Housing Policies
Lincoln Land Institute - Inclusionary
Zoning: Creating and Maintaining Equitable
Communities
Inclusionary Housing.org, powered by
Grounded Solutions Network
Local Government Commission - Meeting
California’s Housing Needs: Best Practices for
Inclusionary Housing
Association of Bay Area Governments -
Inclusionary Housing: Designing a Policy
Metropolitan Transportation Commission -
Survey of Existing Policies
Metropolitan Transportation Commission -
Production Policy 1: Inclusionary Zoning
Metropolitan Transportation Commission - TOC
Inclusionary Zoning Resources
*Note that examples have not been vetted for
full TOC Compliance.

This document is intended to provide general information and does not constitute legal advice.

Additional facts, facts specific to a particular situation, or future developments may affect the subjects discussed in this document. Seek the advice of your jurisdiction’s legal counsel before acting or relying upon this information. For specific questions regarding TOC compliance, please reach out to [email protected].

Attachment 3 Agenda Report Page 51
I
nclusionary housing is used in hundreds of communities across the country to create units that are affordable to lower-income households in new market-rate residential developments. More than 170 cities and counties in California have used inclusionary-housing policies to help address affordable-housing needs while advancing equitable-development goals.

Inclusionary policies capture some of the value of rising real-estate prices to provide community benefits by using local land-use controls to ensure that muchneeded affordable-housing units are produced along with market-rate units and that the limited supply of developable land is put to work in a way that serves households at all income levels.

Inclusionary housing – also referred to as “inclusionary zoning”– is a flexible tool that can be tailored to local circumstances. There is no one “model” inclusionary-housing policy, but rather a number of best practices to consider when adopting or amending an ordinance.

This factsheet explores the range of policy options to consider when designing a local inclusionary ordinance and highlights best practices that maximize community benefits and fulfill policy goals.

An inclusionary-housing ordinance is one part of an equitable-development strategy, and should not be viewed as the sole way to address affordable-housing needs. In most communities, building the needed amount of housing for lower-income families will still require public subsidies and must be integrated with other strategies.

Following a period of legal
uncertainty around inclusionary
ordinances, a 2015 Supreme
Court decision affirmed city
and county authority to impose
inclusionary requirements
based on local government’s
broad police powers.

And passage of Assembly Bill
1505 in 2017 reinstated the
authority to apply inclusionary
policies for rental housing.

Meeting California’s Housing Needs:

Best Practices for Inclusionary Housing
■ November 2018
Produced by Local Government Commission,
Western Center on Law and Poverty and
California Rural Legal Assistance Foundation,
with funding from the Climate, Land Use,
and Transportation program of
the Resources Legacy Fund.

Attachment 4 Agenda Report Page 52
2 MEETING CALIFORNIA’S HOUSING NEEDS: BEST PRACTICES FOR INCLUSIONARY HOUSING Awell-designed ordinance can generate numerous benefits for communities seeking to increase housing affordability and develop diverse, inclusive neighborhoods. These include:
✦ More choices for lower-income households about where to live. ✦ Reduced opposition to affordable housing by producing affordable units within communities as they develop, not after.
✦ Support for compact infill development, reduced sprawl and achievement of local Regional Housing Needs Assessment
(RHNA) targets for all income levels.
✦ Reduced vehicle miles traveled (VMT) and greenhouse gas emissions by providing people at all income levels more opportunities to live closer to work and in transit-rich areas.
✦ Ensuring that the entire community benefits from a growing economy.

Public and private investments help create economic growth that raises property values. Inclusionary housing helps capture some of the value created by these investments to ensure that the benefits do not accrue solely to property owners and helps buffer against displacement pressures by ensuring that lower-income residents can remain in the community. ✦ Reduced segregation and concentration of poverty.

Benefits of an Inclusionary Housing Ordinance
Keys to a Successful Ordinance
Adopting a detailed inclusionary ordinance with input from a wide range of community stakeholders is the best method for implementing effective and legally defensible inclusionary requirements.

The ordinance’s language should provide clarity and certainty for the development community, and be structured to realistically achieve its goals. It should be backed by data and research that establishes both the need for the policy and the feasibility of the requirement.

The key elements of a well-crafted inclusionary ordinance include:

1. State the need.

Local governments have broad discretion under the police powergranted by the state constitution to regulate the use of land within their borders, so long as the regulation is reasonably related to advancing the general welfare.

A local inclusionary ordinance, then, should start with a statement of findings related to the need for the policy to improve the community’s well-being.

Most California jurisdictions have a severe shortage of housing units affordable to low- and very low-income households.The need to address that shortage provides a strong basis for inclusionary zoning, as does the need to meet the jurisdiction’s share of the region’s ongoing housing need at the lower-income levels (which is nearly impossible to do with subsidy alone).

Jurisdictions also frequently point to the need to address past patterns of racial and economic segregation in their community,ensure the preservation and development of diverse neighborhoods, meet fair-housing mandates, and make the best use of a limited supply of developable land.

The ordinance should be directly tied to the findings establishing the need for the policy. For example, if the findings cite the shortage of low- and very low-income housing units in the community, then one of the policy’s goals should be to ensure that those units get produced. A well-crafted ordinance will start with findings that support the policy choices reflected in the design of the ordinance.
“Lower-income” households refers to those making 80% or less of area median income (AMI). The term encompasses households that are “low-income” (those making 50-80% of AMI) and “very low-income” (those making less than 50% of AMI).

Mogavero Architects
Attachment 4 Agenda Report Page 53

2. Get the numbers right: how many, where,
when and for how long?
How many affordable units should be required
and to whom should they be affordable?
An inclusionary ordinance should clearly define how many affordable units must be included in a project and at which income levels. The vast majority of ordinances set the requirement as a percentage of the total number of units in the project, while a few communities use a square-footage metric.

LOW AND VERY-LOW: The requirement will typically be split between lowand very low-income households (for example, 15% of the total are affordable units, with 10% low and 5% very low). Some laws also include a target for extremely low-income households.

MODERATE: Some communities also require moderate-income units, but this should be based on a careful analysis of the market and its ability to serve moderate-income households. If the market is producing moderate-income units on its own, there would be no rationale for having a inclusionary requirement for moderate-income units.

What percentage a community establishes will be dependent on its affordable housing needs, local market conditions, the financial incentives available to developers, and the mix of affordability levels required.

FIXED: Some communities require fixed percentages at each designated income level, whereas others may provide some flexibility (for example, allowing for a lower percentage of inclusionary units overall when the units are provided at a deeper affordability level).

FLEXIBLE: Some jurisdictions structure their inclusionary policies to involve a sliding scale, so that projects that include higher percentages of affordable units also qualify for more incentives, such as greater density increases.

While there may be reasons to build flexibility for the required number of affordable units into an ordinance,too much flexibility can undermine the creation of new housing at the income levels needed most and cannot be produced by the market alone.

Which projects should have to comply with
the inclusionary requirement?
While it may be tempting to carve out various exceptions to an inclusionary requirement, the best practice is to apply the requirement to all housingdevelopment projects throughout a community or the geographic area covered by the policy. This is the best way to ensure that the policy is In California, the requirements in most inclusionary policies adopted so far have fallen within the 10-20% range –
15% being the most common.

MEETING CALIFORNIA’S HOUSING NEEDS: BEST PRACTICES FOR INCLUSIONARY HOUSING 3 implemented equitably and serves the overall goal of ensuring that all neighborhoods – single-family and multi-family, lower-density and higherdensity – incorporate housing options at a range of income levels.

SMALL PROJECTS: Many jurisdictions choose to exempt small projects from complying with an inclusionary requirement. The rationale is often to ensure that smaller development projects are financially feasible. While a smallproject exemption may be well-intended, it can be difficult to reconcile an exemption with the ordinance’s overall goals and create potential legal issues.

It can also be a challenge to settle on a definition of “small”that doesn’t simply encourage projects that come in just under the threshold, thus frustrating the goal of ensuring that all new housing development contributes to meeting the community’s affordable-housing needs.

Rather exempting these projects altogether,a better practice is to provide small projects with the option to pay an in-lieu fee as an alternative to compliance with on-site production requirements. This is particularly true in areas where a high proportion of development activity occurs on smaller projects.

Should inclusionary requirements be different for
for-sale projects and rental projects?
In most jurisdictions, the most defensible ordinance will be one that imposes an inclusionary requirement equally on rental and for-sale housing. Requirements that treat the two differently may have fairhousing implications and, much like exemptions for small projects, can be challenging to reconcile with the ordinance’s goals.

For example, an ordinance that requires the inclusion of low- and very lowincome units in rental developments, but only moderate-income units in for-sale developments, could run counter to the goal of ensuring that all neighborhoods have a mix of housing at all income levels in cities where rental and for-sale development generally happen in different neighborhoods.

Furthermore,depending on local demographics, such policies may lead to disparate impacts on certain protected classes,potentially violating legal requirements. In weighing whether to impose the same or different requirements on rental and for-sale housing, it’s crucial to consult with an attorney with expertise in fair-housing laws.

RENTAL/FOR-SALE MIX: One way to maximize the production of affordable units and increase flexibility is to allow developers of single-family projects the option of meeting the inclusionary requirement by including affordable multi-family rental units within the development rather than affordable for-sale, single-family homes.

However, this option should be crafted carefully to ensure consistency with the ordinance’s overall goals and fair-housing obligations. Rental units can generally be produced more cost-effectively than for-sale units, so this option should reflect that by requiring that a higher percentage of rental units be produced.

Attachment 4 Agenda Report Page 54
4 MEETING CALIFORNIA’S HOUSING NEEDS: BEST PRACTICES FOR INCLUSIONARY HOUSING Under California law, if the inclusionary requirement is adopted through a program in the jurisdiction’s housing element, the program must provide developers with this option. However, nothing requires a jurisdiction to adopt an inclusionary requirement through its housing element, and this approach is not ideal.

Should inclusionary requirements be structured
differently in different neighborhoods?
Inclusionary requirements most typically apply jurisdiction-wide. While different neighborhoods within a city may have differing development markets, a well-designed policy already adjusts for those differences.

For example, in a neighborhood where the development market is especially hot and land costs are high, the value of an increase in allowable density is also much higher, making a higher inclusionary requirement feasible.

SPECIFIC PLANS: However, in large cities, it may make sense to consider areaspecific increases in an inclusionary requirement because some parts of town may be much hotter development markets than others. An effective way to accomplish this is through the adoption of a specific plan that lays out the land-use controls that apply within a designated geographic area.

TRANSIT AREAS: Some jurisdictions have also crafted specific inclusionary policies that apply to areas adjacent to transit stations, recognizing the wide body of research demonstrating how crucial it is to build affordability into transit-oriented development and the resulting benefits that increase transit ridership, reduce greenhouse gas emissions, and strengthen community stability.

How long should inclusionary units remain
affordable?
Given the time and resources that go into developing housing, an inclusionary ordinance should aim to set the affordability term – how many years a unit must remain “affordable”– for the longest period of time that is feasible.

One important thing to consider in determining the affordability term is the cost of maintaining a unit’s affordability over time compared to the cost of having to provide a new affordable unit to replace it when the deed-restriction period ends. In most cases, the former will be far more cost-effective than the latter.

BUILDING WEALTH: One advantage of homeownership is the ability to build wealth through the ownership of an appreciable asset. Strict resale controls that require the home to be resold at an affordable price to another lowincome homeowner significantly restrict the wealth-building advantages of homeownership.On the other hand, the program should protect against the owner of a for-sale inclusionary home quickly reselling the home at a significant profit.

SHARING EQUITY: The most common way of balancing these interests is an equity-sharing policy in which any appreciation is split between the selling homeowner and the jurisdiction. The jurisdiction then uses its share to assist in future homeownership opportunities for low-income buyers.

Some policies have initial limits on resale (such as 10 years) that require the home to be resold only to a low-income buyer at an affordable price during that period.

Other ordinances have a sliding-scale, equity-sharing provision that states that no proceeds to a homeowner who sells during the initial years, but provides a greater share of the proceeds to the homeowner closer toward the end of the 45-year term.

Should the inclusionary requirement change
over time?
Housing markets are constantly changing, and it would be a challenge to amend an inclusionary requirement in response to every rise and dip in local conditions. However, building in a set review period can be useful for a number of reasons. Periodic review can help determine whether the percentage of units required remains appropriate for local conditions so that the community is not losing out on affordable units that could feasibly be achieved with a higher inclusionary requirement.

It can also help in assessing whether changes to income targeting are necessary. For example, if a community has steadily produced low-income units but not very low-income units, it may be necessary to increase the percentage of very low-income units required by the ordinance and adjust available incentives accordingly to account for the higher cost of providing these units. Every five years is a reasonable review period.

SYNC WITH HOUSING ELEMENT: Another option is to review the ordinance concurrent with the housing-element adoption process every eight years. (While most local jurisdictions in California must update their housing element every eight years, some rural jurisdictions remain on a five-year cycle.) For rental units, 55 years is a common affordability term required by many affordable-housing funding programs in California. An inclusionary ordinance should require at least as long a period, although it’s not uncommon for jurisdictions to require longer periods – or even to mandate that inclusionary rental units be deed restricted in perpetuity, as West Hollywood does.

The typical term with for-sale units is 45 years. Affordability restrictions for these units present some additional policy considerations about the sale of the home during the affordability term.

Attachment 4 Agenda Report Page 55
MEETING CALIFORNIA’S HOUSING NEEDS: BEST PRACTICES FOR INCLUSIONARY HOUSING 5

3. Couple with incentives and concessions.

From both a legal and a practical standpoint, an inclusionary-housing policy should include incentives and concessions for developers to help offset the cost of providing the affordable units. Common concessions and incentives include:
✦ Density increases, including the option of greater density increases in exchange for higher percentages of affordable units. ✦ Waivers of development standards, such as height and setback requirements.
✦ Reduction in or a waiver of minimum parking requirements, especially for projects located in transit areas.
✦ Expedited permit processing or ministerial approval.
✦ Waiver, reduction or deferral of development fees, either on the inclusionary units or the entire project.
✦ Direct financial subsidies.

California law requires that developers who comply with an on-site inclusionary requirement that meets the affordable-housing requirements of the state Density Bonus Law must receive all of the benefits to which they are entitled under that law. These benefits include a density increase, concessions and incentives, waivers of development standards and reduced parking requirements. For example, a project that includes 20% of units affordable to low-income households is entitled to a 35% density bonus, two concessions or incentives and various other benefits provided under the state law.

4. Establish clear development standards.

In addition to specifying the percentage of affordable units and at which income levels, an ordinance should establish clear standards for the inclusionary units. Among such best practices:
✦ The affordable units must be indistinguishable from the market-rate units in the development, at least outwardly.
✦ The project includes a similar mix of unit types. For example, if a multifamily rental development will have an equal number of 1-, 2- and 3-bedroom units, the affordable units should also incorporate an equal mix of 1-, 2- and 3-bedroom units. Many ordinances also require that inclusionary units be the same square footage as the market-rate units, although in some cases jurisdictions have built in flexibility to reduce square footage while including the same number of bedrooms to reduce project costs.
✦ Inclusionary units must be located throughout the development rather than clustered in one area.
✦ Residents of the affordable units must have access to all amenities – such as a pool, a fitness center and parking – that market-rate residents have.
✦ The affordable units must be completed either prior to or concurrent with the market-rate units, and prior to issuance of a certificate of occupancy.

ACCESSORY DWELLING UNITS: For single-family for-sale developments, some jurisdictions have allowed accessory dwelling units (ADUs) as a way to fulfill an inclusionary requirement. This is not considered a best practice and should be avoided. While cities and counties should encourage the construction of ADUs, which can be a land- and cost-efficient way of expanding a community’s housing supply, they are problematic from an inclusionary standpoint.

ADUs are readily distinguishable from the other units in a for-sale development, and may raise equity and fair-housing concerns if used as the means for achieving compliance with an inclusionary policy.

ADUs are also typically studios or 1-bedrooms rather than a match of the bedroom mix of the primary development, and are often designed as “micro” or “efficiency” units without similar amenities as the primary development.

They are challenging to deed-restrict and monitor, and are unlikely to provide the long-term affordability that an inclusionary ordinance should require.

Mogavero Architects
Attachment 4 Agenda Report Page 56
6 MEETING CALIFORNIA’S HOUSING NEEDS: BEST PRACTICES FOR INCLUSIONARY HOUSING If properly designed, an in-lieu fee option can have advantages in certain jurisdictions. In-lieu fees can enable a jurisdiction to leverage state and federal funds that may not have otherwise been available, allowing for more affordable units to be built than would have been created on-site.

IN-LIEU ADVANTAGES: It can also provide flexibility to produce needed units that the inclusionary requirement is not producing, such as extremely lowincome units; use funds to preserve existing affordable housing with expiring deed restrictions; produce rental units in places where the inclusionary requirement is primarily creating for-sale units (or vice versa); or develop affordable units in parts of the city where development isn’t happening and thus the inclusionary requirement is having no impact.

If allowed, the fee amount should be set at a level comparable to the cost of producing a similar unit to the one that otherwise would have been provided on-site. One of the most common methods for determining the fee amount is to base it on the gap between the affordable-housing and market-rate costs. For example, if it costs $300,000 to produce a low-income unit but the rent only covers the financing on $230,000, then the in-lieu fee would be set at $70,000 to cover the difference.

The amount of an in-lieu fee will need to change over time to reflect changes in construction costs, inflation and other market factors. Therefore, it is better to put the formula for determining the fee amount into an ordinance rather than state the amount itself,since amending an ordinance on a regular basis can be time-consuming, costly and potentially controversial.

ADJUSTING THE FEE: The ordinance should specify the mechanism for adjusting the fee over time, such as tying it to increases in the local Construction Cost Index, as San Francisco does. If an ordinance distinguishes between rental and for-sale units in its inclusionary requirements, in-lieu fees should also be distinguished in the same manner to ensure they are an adequate substitute for the provision of on-site units.

Off-site construction
Allowing construction of inclusionary units off-site can have advantages.

For example, a developer may be able to build affordable units more costeffectively off-site, thus enabling more units to be produced. However, there are also pitfalls that jurisdictions should work to avoid.

5. Provide alternative methods of compliance.

Because one of the primary goals of an inclusionary requirement is to make affordable units available in all housing developments, ordinances should require on-site construction of the inclusionary units to the maximum extent possible. However, most jurisdictions have chosen to allow alternatives to on-site production of inclusionary units under certain circumstances.

In California,state law requires that alternative methods of compliance be provided to developers of inclusionary rental housing,although what those alternatives are, and when each alternative is available, is left up to individual jurisdictions. The law doesn’t require alternatives for developers of forsale housing. Common alternatives include in-lieu fees, off-site construction, land donation, and the acquisition and rehabilitation of existing units.

When weighing how to offer to provide some flexibility, alternatives should be appropriately limited to maximize on-site construction. Alternatives should be available where on-site production of units is less feasible, rather than as a default option for all developments. Common mistakes that can lead to inadequate production of actual housing units include setting in-lieu fees too low and failing to establish adequate standards for land donation.

Timing is also a crucial factor in the structure of alternatives. For example, some jurisdictions have required that off-site inclusionary units be completed concurrent with or prior to the development that triggered the inclusionary requirement, or before a certificate of occupancy for that development is issued. Ideally, alternatives should be used only when they will lead to the production of more affordable units than would otherwise be provided on-site, while still being consistent with the ordinance’s other goals.

In-lieu fees
One common alternative is in-lieu fees, which are paid instead of constructing the required affordable units. In-lieu fees are generally paid into a local affordable-housing trust fund that finances the construction of affordable housing at other locations within the community. Of all the alternatives, in-lieu fees provide the greatest challenge to achieving inclusionary goals and therefore should be considered carefully and sparingly.

Unlike off-site construction and land-dedication alternatives, in-lieu fees don’t guarantee a site for the construction of the affordable units. If the amount of the fee is not sufficiently high, the payment may also not produce enough revenue to help produce new affordable units. Without adequate funding and identified locations for their use, the fee revenue could sit unused.

TRUE COST: Furthermore, if in-lieu fees don’t reflect the true cost of producing on-site units, this may drive most developers to opt for paying the fee rather than producing an affordable unit on-site. Over time, this can frustrate the policy and lead to an insufficient proportion of affordable units being developed.

Attachment 4 Agenda Report Page 57
MEETING CALIFORNIA’S HOUSING NEEDS: BEST PRACTICES FOR INCLUSIONARY HOUSING 7 One important consideration with off-site construction is the allowable geography – how far from the development site. Given that the inclusionary requirement seeks to foster mixed-income neighborhoods and reduce segregation, even if inclusionary units can’t be produced on-site in a new development, they should be produced nearby. In cases where that isn’t possible, the jurisdiction should ensure that they are dispersed equitably throughout the community and not clustered in lower-income neighborhoods.

Jurisdictions also typically require more units to be built off-site than would be required on-site. This means the value of the cost savings over on-site construction is captured and translated into a community benefit, and that the policy properly expresses an appropriate preference for on-site units.

Ensuring on-site and off-site construction have similar costs incentivizes on-site construction (which should be the norm), while still providing a meaningful alternative for those projects that can’t feasibly accommodate on-site affordable units.

Another best practice is to require that the off-site units be constructed before or concurrent with the market-rate units,which can be achieved by having the off-site units finished before building permits are issued for the market-rate development site. That way an off-site alternative doesn’t simply become an escape hatch to avoid complying with the site’s inclusionary requirement.

Land donation
Land donation can be a useful option where affordable-housing developers have difficulty finding building sites. Paired with in-lieu fees or other sources of affordable-housing funding,dedicated land can be used to produce needed types of housing that might not otherwise get built,such as homes for people with special needs or permanent supportive housing.

However, jurisdictions must establish clear parameters for exercising this alternative. Donated land should be equivalent or greater in value to the affordable units that otherwise would have been produced on-site, and should be ready for development at the time it is donated. It is also important here to consider the allowable geography to make sure that the required affordable units are not concentrated in certain neighborhoods.

6. Include procedure for requesting waivers
or reductions.

An inclusionary requirement may not withstand legal scrutiny if it doesn’t include a process by which a developer can request a waiver or reduction of the requirement. Much like the inclusionary requirement itself,the waiver process should be as clear and specific as possible,detailing both the procedures for requesting the waiver – process, timeline, appeal procedure – and the standards by which the request will be evaluated.

The waiver or reduction process should be carefully structured so that it functions as the exception and not the rule, and is only used in rare cases.

The City of Napa’s inclusionary requirement withstood a constitutional challenge in part because it included a waiver-request provision. The City used a constitutional test to determine whether a waiver would be approved, under which the developer had to show that the requirement as applied would be unconstitutional.

Other jurisdictions apply a hardship standard,allowing for a waiver or reduction if the developer can show that the requirement would deprive them of all economically viable use of the land. An economic-hardship standard should not be about the level of profit, but about whether any profit can be made.

Feasibility Studies
While not required by state law in California, preparing a feasibility study in support of an inclusionary requirement helps ensure that the requirement is right-sized for local conditions. It’s important not to set an inclusionary requirement so high that it stops development, and equally crucial not to set it too low and miss out on affordable units.

A feasibility study is an opportunity to analyze local market conditions and the economics and tradeoffs of various policy options – affordability percentages and levels, incentives – to make sure the ordinance delivers the number and type of affordable units that a community needs.

It also provides a data-driven foundation for the requirement, which can help overcome opposition by showing that it can be implemented without impeding the developers’ability to earn a profit.

The California Department of Housing and Community Development generally requires local jurisdictions to analyze inclusionary requirements as a potential constraint on development in their housing elements. A feasibility study can help demonstrate that the requirement isn’t a barrier.

NEXUS STUDIES: Feasibility studies should not be confused with nexus studies. A jurisdiction must prepare a nexus study to impose an exaction.

A nexus study would be required if a jurisdiction wanted to adopt a commercial linkage fee, for example, where it must show that the amount of the fee is roughly proportional to the need for affordable housing generated by new commercial development.

An inclusionary requirement is not an exaction but rather a land-use regulation, much like a density requirement or a height restriction, and need only be related to advancing a legitimate purpose. A nexus study is not required when adopting a traditional inclusionary ordinance.

For more information about the preparation of feasibility studies for inclusionary studies: inclusionaryhousing.org/resources/#feasibility Attachment 4 Agenda Report Page 58
8 MEETING CALIFORNIA’S HOUSING NEEDS: BEST PRACTICES FOR INCLUSIONARY HOUSING Some jurisdictions require that tenants move at the end of the lease term as soon as their household income exceeds the income limit for the unit. Others allow a tenant to remain until their household income exceeds the income limit by a set amount or percentage.

The policy should be tied to the cost of market-rate housing in the community and ensure that tenants are aware of requirements and receive adequate notice when they exceed income limits and must vacate the unit. To avoid displacement, consider allowing tenants to stay in a unit after their income exceeds allowable limits but convert that unit rent to market rate. The next comparable unit in the development that becomes vacant would then be offered as affordable to replace that “lost”unit. ✦ State how sales of for-sale units will be handled, including the referral of potential buyers and how funds derived from equity-sharing agreements will be used. Also, if the jurisdiction has an option to purchase a unit upon resale or at the end of the regulatory period, it should have a mechanism in place for handling those options.

A strong monitoring program can have the added benefit of providing clear data about the success of the ordinance. This information can then be used to establish that the inclusionary requirement is not a constraint on development for purposes of the housing-element review process,and for potential future discussions about amendments to the inclusionary requirement.

MORE RESOURCES
✦ inclusionaryhousing.org
✦ lgc.org/advancing-inclusionary-housing-policy
While “inclusionary housing”usually refers to mandatory land-use policies designed to construct affordable housing within market-rate developments, other tools can also capture land value to produce needed affordable units.

Voluntary inclusionary requirements
California has a statewide, voluntary inclusionary method in the form of Density Bonus Law, with which all cities and counties must comply.

Under this law, developers who include affordable units in their projects are entitled to a density increase and other incentives.

Local governments can offer density increases above those specified in the state law in exchange for higher levels of affordability (units for households at the lower AMI levels).

Linkage fees
A linkage fee can be imposed on commercial and residential development to generate funds for affordable housing. The amount of this fee is set based on the community’s need for affordable housing generated by new development. A growing number of California cities have adopted commercial linkage fees, including Los Angeles, Oakland, Sacramento and San Diego.

While linkage fees can be a crucial revenue source, a linkage fee for affordable housing doesn’t produce the other community-wide benefits of a traditional inclusionary requirement, such as economically integrated neighborhoods, and may also not be as economically valuable. Pairing a commercial linkage fee with a traditional inclusionary requirement is one way for a community to maximize the production of affordable housing while also advancing other important policy goals.

Ad hoc inclusionary requirements
Some jurisdictions have tried to negotiate inclusionary requirements on a project-by-project basis, often on larger projects. These ad hoc requirements are problematic from a legal standpoint and don’t ensure that all new residential development includes housing affordable at a range of income levels.

Other Value-Capture Tools to Produce Affordable Housing in Development

7. Monitor implementation and compliance.

A jurisdiction that chooses to adopt an inclusionary ordinance should be prepared to devote staff time and resources to ongoing monitoring and other administrative tasks needed to implement the ordinance effectively.

In addition to ensuring that deed restrictions and covenants are recorded in time and that affordability is maintained for the required time period, it is important to ensure that units are occupied by households at the appropriate income levels over time and that resale provisions are enforced.

To maximize the program’s effectiveness, a jurisdiction should adopt procedures that:
✦ Establish whether the jurisdiction, property managers or a designated third party will be responsible for verifying tenant or homebuyer eligibility, income recertification and other occupancy factors.

The best practice is to have the jurisdiction perform these tasks, although smaller jurisdictions may find it more cost-effective to pool resources with other neighboring jurisdictions and contract with a third party. Having property managers perform these tasks can prove overly burdensome due to the training required. ✦ Ensure that a list of available units is up-to-date and readily accessible to households in the targeted income categories, and that the list is maintained in a way that ensures compliance with fair-housing obligations. ✦ Determine which qualified applicants (those meeting household-income restrictions) are chosen to rent or buy inclusionary units. ✦ Recertify tenant income annually and determine when a tenant household no longer qualifies for residency in the inclusionary unit.

Attachment 4 Agenda Report Page 59
1 2 3 4
Acutely Low Income $ 16,750 $ 19,150 $ 21,550 $ 23,950
Extremely Low Income $ 33,600 $ 38,400 $ 43,200 $ 47,950 Very Low Income $ 55,950 $ 63,950 $ 71,950 $ 79,900
Low Income $ 87,550 $ 100,050 $ 112,550 $ 125,050
Median Income $ 111,850 $ 127,850 $ 143,800 $ 159,800
Moderate Income $ 134,250 $ 153,400 $ 172,600 $ 191,750 https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/income-limits-2025.pdf Number of Persons in Household
2025 Income Limits - Alameda County
Source: California Department of Housing and Community Development, April 23, 2025 Attachment 5 Agenda Report Page 60

Piedmont City CouncilMay 18, 2026

Piedmont City Council
May 18, 2026