Pleasanton City Council
October 15, 2024

October 4, 2024
10011.22
Gerry Parco, PE
Senior Civil Engineer - CIP Manager
Public Works Department, Engineering Division
City of Pleasanton
200 Old Bernal Ave.,
Pleasanton, CA 94566

Subject: Proposal for Continued As-Needed Project/Construction Management Services – City of Pleasanton

Dear Mr. Parco,

Per the City’s request, Pakpour Consulting Group (PCG) is providing a proposal for continued as- needed Project/Construction Management Services for the City of Pleasanton. PCG proposes David Lau, PE as the Senior Engineer role as the City’s representative for the various projects and programs. Steven Yee, Principal Engineer, will be available to support David for as-needed tasks.

The project/construction management services will be performed under the 2021 on -call engineering services for the City of Pleasanton and include the following general scope of work:

Scope of Work – Project Management Services

● Provide project/construction management services as the City’s representative.

● Coordinate construction administration with the project construction management team.

● Attend project meetings and site visits.

● Review and evaluate proposed change orders and estimate, negotiate, and make recommendations to the City for approval.

● Review construction claims and make recommendations to the City for review and approval to resolve.

● Review and recommend approval of contractor’s monthly payment requests.

● Coordinate and expedite functions connected with the contractor’s obligation to document as-built information.

● Monitor punch list items and project closeout.

Docusign Envelope ID: 2D2F415D-9B7E-46D7-A161-A20DAC1CD49A

October 04, 2024 – Page 2
Parco – As-Needed Project/Construction Management Services Proposal

● Make recommendations for final acceptance and payment.

● Review current project and construction management procedures and p rovide coaching , training and share information with the City staff.

● Provide as-needed services related to the delivery of the City’s CIP program.

Budget

Based on the City’s request, PCG proposes a time and materials budget of approximately 864 hours for an 8-month duration, for continued project/construction management services. PCG will only bill for actual time spent on the projects. The billing rate used for this proposal is from the current on-call engineering services contract.

October 16, 2024 to June 30, 2025 – 864 hours x $216 per hour = $186,624.00

Total Budget = $186,624.00

Thank you once again for considering Pakpour Consulting Group for continued project/construction management services. Should you have any questions, please do not hesitate to contact Steven Yee, Principal Engineer, or me at (925) 224-7717.

Very truly yours,

Pakpour Consulting Group, Inc.

Joubin Pakpour, PE
President

J:\Projects\Pleasanton - 10011.00\22-Project Management Services\Contract\Agency\22-PLS-Gerry-24.10.04-Proposal for Continued As-Needed Project Management Services.docx Docusign Envelope ID: 2D2F415D-9B7E-46D7-A161-A20DAC1CD49A

Item #11

CITY COUNCIL AGENDA REPORT

October 15, 2024
Public Works - Utilities Division

TITLE: RECEIVE AN UPDATE ON WATER SYSTEM ACTIVITIES

SUMMARY
Maintaining and improving the City's water system is a top priority of the City Council, as noted in the City's ONE Pleasanton Strategic Plan. The City Council's priority strategies related to the City's water system include Funding our Future Strategy 1 to develop a long-term strategy for funding operations and maintenance needs to ensure the reliability of community-owned facilities and infrastructure and continuity of City services; Investing in Our Environment Strategy 2 to develop an Asset Management Plan to address comprehensive long-term planning for maintenance, renovation, repair and/or replacement of infrastructure and public facilities to meet current and future needs; and Investing in Our Environment Strategy 3 to identify funding and implement the recommendations from the Water Supply Alternative Study to resolve PFAS water quality issues. This quarterly report provides an update on programs and projects related to the City's water system from July 2024 to September 2024, and includes updates on capital projects, the Water System Management Plan, regulatory requirements, and the water enterprise bond issuance.

RECOMMENDATION
Receive an update on Water System Activities.

BACKGROUND
The City distributes approximately 14,000 acre-feet of safe, reliable drinking water annually to over 22,000 customers. The City has traditionally had two sources of water supply: treated surface water and groundwater, purchased from Zone 7 Water Agency (Zone 7), and groundwater from City-owned and operated wells with a total pumping allotment of 3,500 acre- feet per year (currently not in use). The City’s distribution system consists of 20 storage tanks, 14 pump stations, and over 300 miles of primarily underground piping. The annual operating budget for the water system program is currently approximately $29 million (Capital Improvement Program (CIP) expenditures not included).

The City has undertaken numerous water-related initiatives to ensure a reliable and sustainable water supply for residents and businesses. The City’s current efforts include:
• Compliance with State mandates: The City has myriad obligations under drinking water regulations promulgated by the State, and prepares an annual water quality report.

These requirements are summarized in the Discussion section of this report. • Water conservation programs: Encourage residents and businesses to reduce water usage. These programs include promoting water-efficient landscaping, offering rebates for water-saving appliances, and providing educational resources on water conservation.
• Water supply: Utilize local groundwater and surface water delivered from regional

wholesaler Zone 7 to reduce dependence on a single source. Infrastructure improvements to repair and maintain its water infrastructure to ensure the efficient delivery of water and reduce the risk of leaks and system failures. • Recycled water: Reuse treated wastewater for non-potable purposes, such as irrigation at the City’s largest parks, to conserve potable water for drinking and other essential uses.
• Drought preparedness: Manage water resources during periods of drought, including implementing water use restrictions, increasing public awareness, and exploring additional water sources.

This work demonstrates the City's commitment to ensuring a reliable and sustainable water supply for the community while promoting water conservation and environmental stewardship that prepare the city for the future.

As part of a future quarterly water systems activities update, staff will make a presentation to accompany the agenda report to provide an opportunity for additional discussion; this is planned for an update in early 2025.

DISCUSSION
Water Enterprise Fund Financials
Financing
The City’s Joint Powers Financing Authority (JPFA) recently received an AA credit rating with a positive outlook for its series 2024 water revenue bonds, reflecting the City’s continued commitment to financial stability and responsible governance. Key highlights contributing to the ‘AA’ rating include:
• Updated Policies: Pleasanton has committed to practices such as regular rate studies and public rate hearings every two years, demonstrating a proactive approach to financial management.
• Revised Rate Structure: The City’s updated rate structure, initiated with the Phase I water rate increase, ensures full recovery of fixed wholesale costs, providing the foundation for improved coverage and reserves.
• Water Supply Stability: Despite challenges such as drought and emerging contaminants, Pleasanton maintains a reliable water supply. 100% of the city's water is currently sourced from the Zone 7 Water Agency.
• Local Economic Strength: Pleasanton benefits from a diverse and affluent service area, coupled with the presence of major local employers.

The JPFA completed its sale of the 2024 Water Revenue Bonds on June 4, 2024, for a total of $19,164,268, including funds for issuance costs. The bond provides $19 million with a 4.11% true interest cost. The bond proceeds are being used to pay for the necessary near-term water infrastructure improvements and anticipated design costs for the regional groundwater wells project. The City has three years to complete the projects approved by the City Council as the Near-Term Improvements project.

The City has invested 68% of the total bond proceeding in four major water projects; the project budget and fund balance are summarized in the table below. The status of the projects

is described in Attachment 1-Water Projects and Capital Improvement Program (CIP) Projects.

The total encumbered amount does not include the project contingency authorized by the City Council until a change order is issued to a contract.

Water Rate and Connection Fee Studies
In June 2024, the City advertised a request for qualifications (RFQ) for water and sewer rate and connection fee studies consulting services; three statements of qualifications (SOQs) were received and in August, staff reviewed the proposals and invited two firms for interviews.

Water Resources Economics, LLC (WRE) was selected as the firm most well-suited and qualified for the City’s needs in response to the SOQ. On September 3, the City Council approved a professional services agreement with WRE. The studies will begin in October 2024 and conclude in May 2025, with Proposition 218 notice activities occurring in June and July. A public hearing for the City Council to adopt the rate increases is planned for September.

Also underway, staff is presenting the draft nexus studies for developer impact fees to the City Council in November, with public hearings to adopt the fees in late 2024/early 2025. The sewer and water connection fees support the City’s enterprise funds and cover the developer’s share of the cost of infrastructure improvements to the systems to meet future demands based on population growth.

Water Planning
Since 2022, the City has developed several components of the Water System Management Plan (WSMP), which is the guiding document for properly managing administration, planning, operations and maintenance, capital improvements, resources, and financing. The agenda report titled Receive an Update on the Development of a Water System Management Plan (pages 234-239) presented to the City Council on December 19, 2023, provides more detailed information about specific elements of the WSMP, and is available here.

Water System Management Plan
The City has contracted with Carollo Engineers to prepare the Water System Management Plan (WSMP). The purpose of this WSMP is to develop a prioritized list of recommended Capital Improvement Program (CIP) projects and operations and maintenance (O&M) programs to improve the City’s water system, and then serves as a basis for determining future funding needs. Carollo submitted a preliminary draft of the WSMP for staff review in June 2024 and presented a high-level overview to the Water Advisory Group in August 2024.

Carollo is currently incorporating comments and feedback into the WSMP for final review by staff, followed by City Council review for adoption by the end of 2024. As part of the WSMP, Carollo is developing alternative strategies for implementing the recommendations contained within the WSMP. These alternative strategies vary based on the timing of implementation, resource needs, and risks to the water program. Completion of the alternative strategies will be incorporated and evaluated as part of the upcoming water rate study to develop a capital improvement plan that is suitable for ratepayers but sufficient to support a reliably performing water system.

Water Advisory Group
A Water Advisory Group was formed to advise City staff on implementing future programs and projects related to developing a comprehensive water program that meets Pleasanton’s needs, addresses regulatory requirements, and keeps the water enterprise financially sustainable. Advisory group members represent different perspectives on water issues, including community group/HOA, financial, business, resident, environmental organization, community members with sciences/water issues professional background, and a recent Pleasanton Community Academy member. The seven-member group meets monthly to review and discuss several key City efforts in water system management. In this quarter, the water advisory group met in July, August and September. The group toured the Public Works Utilities Division and now has a deeper understanding of the operation and maintenance of the City’s water system, and received presentations on the Regional Groundwater Facilities Project, the Water System Management Plan (WSMP), the upcoming water rate study, and the new customer service portal for water customers.

Annual Water Quality Report
The State-mandated water quality report, also called the Consumer Confidence Report (CCR), was completed in May. The technical and analytical water quality information presented in this Consumer Confidence Report (CCR) is required by State health regulations. These regulations require water suppliers to inform customers about where their water comes from, what is in their water, and any violation of safe drinking water standards that may have occurred during this past reporting period. This report provides the results of all tests required to be performed on Pleasanton’s water supplies during 2023. The CCR reports that all 2023 water quality tests confirmed that the water delivered to the Pleasanton community met all applicable federal and state drinking water standards without any violations. The report is

posted online at www.PleasantonWater.com, and copies are available for residents at the Public Works Department/Operations Service Center at 3333 Busch Road.

Water Regulations
In addition to PFAS, a host of regulatory mandates are on the horizon that directly impact the water system, including Making Water Conservation a California Way of Life, Nonfunctional Turf Ban, Cross-Connection Control, and Lead and Copper Guideline regulations. These California State mandates are summarized below.

PFAS Regulatory Update
On April 10, 2024, the U.S. Environmental Protection Agency (EPA) announced the final National Primary Drinking Water Regulation (NPDWR) for six PFAS. Per the EPA regulation, public water systems must initially monitor for these PFAS by 2027. Note that the City is already monitoring Wells 5, 6, and 8 based on previous orders issued by the Division of Drinking Water (DDW) at the State level. Test data has exceeded the new MCLs for PFOS, PFOA, and/or PFHxS at all three wells. Per the EPA regulation, public water systems must comply with the new PFAS MCLs by 2029. Although the City is not required to meet these MCLs for five years, the City is continuing to keep all wells offline and offsetting the supply with additional wholesale water purchases from Zone 7.

Zone 7 presented a workshop in collaboration with the State Waterboard on PFAs Management Updates on September 4, 2024. A copy of the presentation is available on Zone 7's website here.

The Quarter 3 Test Results of the Pleasanton’s three wells identified no significant changes:
• Well 5 – remains below response level and above notification level for PFOS and PFHxS, and below notification level for PFBS and PFOA
• Well 6 – remains below response level and above notification level for PFOS and PFHxS, and below notification level for PFBS and PFOA
• Well 8 – remains below response level and above notification level for PFOS, below notification level for PFBS and PFOA, and is above the response level for PFHxS at 25 ng/L.

PFAS information and current test results are provided at www.PleasantonWater.com under the PFAS Information section. Click on "Where can I find PFAS test results for Pleasanton's water?"

Making Conservation a California Way of Life Regulation The State Water Resources Control Board adopted the Making Water Conservation a California Way of Life regulation. Under this new regulation, urban water suppliers must comply with their annual “urban water use objective” (UWUO), which is the sum of standard- based budgets for an aggregate set of water uses, by January 2027. Critical data necessary to accurately analyze implications to the city, compared to current usage, is not yet available.

Staff planning is underway to advance an assessment of impacts. There are no immediate impacts on residents and business owners. The water use budget will be set for Pleasanton’s entire service area, not individual households or businesses. Pleasanton will continue to work with customers to achieve water savings that may be needed to meet the new regulation.

Currently, however, water conservation remains an integral part of the Tri-Valley’s water program. For the calendar year 2024, water customers’ conservation efforts fluctuated, as shown in the summary chart below. For the eight months shown, water consumption was reduced by an average of 11 percent. February, March and May were higher conservation months due to the wet weather. These are significant reductions, demonstrating that city water users are focusing on conservation.

AB1572 Nonfunctional Turf Ban
AB 1572 is a new law systematically prohibiting the watering of “nonfunctional turf” with potable water (single family homes are exempt). Nonfunctional turf is considered areas of grass that are not located in recreational-use areas or community spaces with open access for assembly. Exceptions exist for watering to the extent necessary to ensure the health of trees and other perennial plants. No restrictions exist on residential yards, cemeteries, parks, sports fields, or golf courses.

The prohibition on the use of potable water to irrigate nonfunctional turf phaseout goes into effect as follows across the selected property types:
• January 1, 2027 – All properties owned by the City [staff has already facilitated a study to identify underutilized turf at selected City-owned properties with logical opportunities for water reduction through the replacement of turf area.] • January 1, 2028 – All other institutional properties and all commercial and industrial properties
• January 1, 2029 – All common areas of homeowners’ associations, common interest developments, and community service organizations or similar entities • January 1, 2031 – All government facilities in disadvantaged communities (or the date at which State funding is available).

To meet the requirements, the City must revise its municipal code to include the prohibition of potable water use among the AB 1572 specified potable water customer categories, and must communicate the new requirements to customers on or before January 1, 2027. Staff recommends adding this to Pleasanton Municipal Code (PMC) Section 14.04.060(G), which lists the City's current definitions of water "waste" as prohibited uses of water, and will present this revision to the City Council before fall 2025.

Staff will engage in public outreach through outreach to stakeholders and customer classes that will be impacted by the new prohibition, and by addressing public calls, inquiries, and water-waste reports. Proactively, staff will develop outreach content to educate customer classes about the new prohibition when it goes into effect and provide guidance on alternatives to turf. Additionally, staff anticipates an increase in customer calls with concerns and questions regarding the new requirements as more media coverage focuses on this regulation, as well as an increase in water waste reports to both the State Water Board reporting portal and directly to the City, as members of the public report watered turf areas as nonfunctional turf violation concerns.

Addressing the new AB 1572 requirements has been incorporated into the Public Works FY 2024/2025 work plan, which has the added benefit of supporting the City's efforts in achieving its obligations under the new Making Water Conservation a California Way of Life regulation.

Cross-Connection Control Regulations
The goal of the new Cross-Connection Control Policy Handbook (CCCPH), which went into effect July 1, 2024, is the protection of public health through the establishment of standards to protect public water systems’ drinking water distribution systems through the prevention of backflow of water from end-user sources back into the potable distribution system. Under these new regulations, the City is required to develop a Cross-Connection Control Plan (CCCP) by July 1, 2025, and complete a hazard assessment of the potable distribution system. Through a competitive RFP process, staff selected a specialized consultant to assist the City in complying with these regulations (this proposal was approved the the City Council on October 1, 2024).

Additionally, staff has been conducting hazard assessments of City-owned facilities, which has advanced the hazard assessment requirement. As well, a technical workgroup has been created to share information and ideas about the implementation of this regulation. The workgroup comprises staff members of all water agencies represented in the Tri-Valley area:
the cities of Pleasanton and Livermore, Dublin San Ramon Services District, Zone 7, East Bay Municipal Utility District, Cal Water, and Contra Costa Water District.

Lead and Copper Guidelines
The State Division of Drinking Water developed new guidelines for lead and copper, which require water agencies to inspect all service lines for lead and copper within their respective service area. To meet the requirement, staff completed visual inspections of 750 residential, commercial, and industrial buildings which necessitated that staff visit each identified location, pull the meter box lid, verify pipe material on both the customer's and the City's sides of the water meter, and take a picture for verification purposes. This data was then sent to the State for completion signoff. This was a significant project that needed to be completed in a short amount of time, and was completed by the October 16, 2024, deadline. No lead was found in Pleasanton's drinking water system.

Water Projects and CIP
The City has recently undertaken several near-term water improvement projects aimed at ensuring a reliable, safe, and sustainable water supply; a review of key projects are included in Attachment 1. These projects focus on maintaining sufficient water supply and expanding infrastructure capacity and include four projects funded by the 2024 Water bond to address PFAS and include:
• Bernal Avenue Water Line & Turnout No. 1 – Under Construction near Completion • Stoneridge and Sunol Water Lines & Turnout No. 4 – Under Construction • Turnout No. 4 Booster Station Procurement – Under Award • Regional Groundwater Facilities Project – Phase I Award of exploratory test wells

Using the 2024 Bond proceeds, the City has awarded $12.46 million in contracts and expended $3.25 million to date, with construction now finishing on the Bernal Avenue Water Line & Turnout No. 1, and major pipe installation on Stoneridge Drive scheduled to resume in October. Collectively, these initiatives reflect the City's proactive approach to managing its water resources, focusing on sustainability, reliability, and quality improvements to meet the needs of the Pleasanton community.

To keep the community updated, information about these projects is available on the City's website on the Near-Term Water Improvement Projects webpage and the Joint Groundwater Wells Study webpage.

EQUITY AND SUSTAINABILITY
The water system improvements and planning advance the City's Climate Action Plan 2.0 (CAP) - Water Resources - Reduce GHG emissions from water usage (including conveyance) and prepare community water resources for a changing climate, which will result in cost savings, enhance water quality and availability, improve infrastructure, and increase resiliency.

OUTREACH
The City has created a special edition e-newsletter series, the Pleasanton Pipeline, to share information about water projects and initiatives. The series is sent via direct email and the City's social media platforms. As of the date of this report, seven issues of the Pleasanton Pipeline have been distributed. Additionally, updates about specific water-related projects and programs are regularly shared across the City's media platforms.

STRATEGIC PLAN ALIGNMENT
Approval of this action advances the ONE Pleasanton Strategic Plan goals of Funding our Future - Strategy 1 Develop a long-term strategy for funding operations and maintenance needs to ensure the reliability of community-owned facilities and infrastructure and continuity of City services; Investing in Our Environment - Strategy 2 Develop an Asset Management Plan to address comprehensive long-term planning for maintenance, renovation, repair and/or replacement of infrastructure and public facilities to meet current and future needs; and Investing in Our Environment - Strategy 3 Identify funding and implement the recommendations from the Water Supply Alternative Study to resolve PFAS water quality issues.

These efforts also advance the goals of Funding our Future, Strategy 3 - Evaluate and update enterprise revenue sources, including utility rates and connection and user fees, to address growth and meet current needs; and Investing in our Environment Strategy 1 - Implement the four-year Capital Improvement Program (CIP) to complete the design and construction of budgeted capital projects and Strategy 4 – Complete the Water System Master Plan to reflect current and future operations and identify system improvements and necessary maintenance.

FISCAL IMPACT
There is no fiscal impact associated with this update. The City Council previously approved funding for these projects under separate actions and will similarly consider any future noted expenditures as they are ready to be presented.

Prepared by: Submitted by: Approved by:

Ryan Smith, Assistant Dir. of
Public Works - Utilities
Siew-Chin Yeong, Director of Public
Works

Gerry Beaudin, City
Manager

Attachments:

1. Water Projects and Capital Improvement Program (CIP) Projects

Water Projects and Capital Improvement Program (CIP) Projects (1) Near-Term Water Improvements
Bernal Avenue Water Line & Turnout No. 1 – Under Construction The Bernal Avenue 18-Inch Potable Water Main (F- 4 Line) & Turnout No. 1 Project, CIP 24172, was awarded to Golden State Construction on January 16, 2024, for a total project cost of $2.2 million. The project installed a new 18-inch water line parallel to the existing 12-inch line from Turnout No. 5 at the corner of Nevada Street to the Vineyard Booster Station at the intersection of Vineyard and Bernal Avenues. The project also includes improvements at Turnout No. 1 on Santa Rita Road that replaced the interior piping and equipment to Zone 7’s current standards and include a motorized control valve, flow meter, fluoride injection, and instrumentation.

The water line work on Bernal Avenue has been completed and put in service. Final restoration has been completed. Only some remaining landscaping trees and irrigation remain. The contractor damaged the vault during soil stabilization at Turnout No. 1, which has delayed the completion of the exterior piping work while repairs to the vault are completed. Commencement of the vault repair is scheduled for late September 2024. The project is anticipated to be completed by the end of October 2024.

Expended 79.6 % to date, $1,755,235 of the $2,205,420 total project budget.

Installing water line at bridge
12” Water line in Bernal Avenue

Stoneridge and Sunol Water Lines & Turnout No. 4 – Under Construction Turnout No. 4 Replacement and Booster Station and Stoneridge Drive 24-Inch Potable Water Main (F-1 Line), CIP No. 24171, and the Sunol Boulevard 20-Inch Water Main (F-7 Line), CIP No. 24173, were packaged together as Near-Term Water Improvements. The contract was awarded to JMB Construction on March 19, 2024, for a total project cost of $10.6 million. Work on Stoneridge Drive takes place from Johnson Drive to Hopyard Road and includes installation of approximately 3,200 linear feet of 24-inch fusible PVC water main; 450 linear feet of ductile iron pipe ranging in diameter from 18-inch to 24-inch; site preparation for installation of a new prefabricated booster station which is being procured separately; and installation of the prefabricated booster station with new Zone 7 connection once fabrication is complete. Work on Sunol Boulevard will extend from Sycamore Road to Bernal Avenue and includes the installation of 4,500 linear feet of 20-inch ductile iron pipe connecting to the existing City system at each end. The project will construct a larger turnout and booster station that will increase the firm capacity and reliability of the turnout from 1,000 gallons per minute (gpm) to 5,200 gpm.

Construction of the project started in late May, with work on Hopyard Road completed in advance of the street resurfacing. Critical tie-in work was completed prior to the peak summer water demands as scheduled. Work has resumed on Stoneridge Drive to install the water pipeline and piping for the new Turnout No. 4. Expended 13.9% to date, $1,494,576 of the $10,741,025 total project budget.

Water line work near Hopyard Road Intersection

Turnout No. 4 Booster Station - Under Award
Given the limited site conditions, a prepackaged booster station will be built off-site, similar to the Recycled Water Booster Station in Ken Mercer Sports Park. A Request for Proposal (RFP) was developed, and proposals were received on January 19, 2024.

The proposals ranged from $1.7 - $1.8 million, compared to the engineer’s estimate of $850,000. Further analysis and updates to reduce costs were incorporated into a revised RFP that was issued for re-bid in June. The award of the booster station is scheduled for November. The booster station is expected to be installed in the fall of 2025; with the new increased turnout capacity and pipeline, the current temporary booster pump will not be needed for next summer. No expenditures to date, design work was completed under CIP 24171.

Turnout #4 Booster Station Concept Plan
Regional Groundwater Facilities Project/Partnership (Water Supply Alternative–New Wells) CIP 24174
Overview
Based on the findings and recommendations from the Brown and Caldwell 2023 Water Supply Alternatives Study, on October 17, 2023, the City Council approved proceeding with the planning and developing of new groundwater wells in the Bernal subbasin to recover the use of its Groundwater Production Quota (GPQ) of 3,500 acre-feet per year. Planning efforts include evaluating the feasibility of collaborating with Zone 7 Water Agency (Zone 7) on a joint project. On February 15, 2024, Zone 7 and City staff completed a process that outlined the terms of collaboration for a joint project with the goal to increase Zone 7’s groundwater production capacity for the Tri-Valley region, recover the use of the City’s GPQ, and produce water supply that meets and exceeds

all State and federal water quality standards including current and anticipated regulations for PFAS. The joint project is titled Regional Groundwater Facilities Project.

This project is envisioned to include new groundwater well(s) that are tied to Zone 7’s water supply system; an increase in capacity of Zone 7’s existing Hopyard Treatment Facility to treat groundwater from the new well(s); new pipelines to tie the new well(s) to the Hopyard Treatment Facility and Zone 7’s transmission system; and delivery of the City’s GPQ by Zone 7 through Zone 7’s transmission system to City turnouts.

Additional improvements to the City’s distribution system will be required to receive its GPQ from turnouts rather than directly from City-operated wells. The City will evaluate and construct these improvements outside of the joint activities with Zone 7.

The project will be divided into three phases. Phase I evaluates the feasibility and provides a basis for design. The target completion date for Phase I is Spring 2025. If the project is feasible, the City Council and the Zone 7 Board would consider authorizing it to proceed. Phase II involves designing and constructing the project according to the design developed in Phase I. The target completion date for Phase II is the end of 2028. Phase III is for the operations and maintenance (O&M) of the project. This phase would start after the completion of Phase II and when required permits to operate are in place. Zone 7 would be the lead agency in the project’s evaluation, permitting, design, construction, and O&M. The City would support Zone 7 by providing necessary land rights, participating in the project team, managing community outreach within the city, and sharing its fair share of costs.

An agreement between the City and Zone 7 to perform Phase I was approved by the City Council on June 18, 2024, and the Zone 7 Board of Directors on July 17, 2024.

The scope of work includes well siting analysis, exploratory test drilling, a technical feasibility evaluation, developing an environmental compliance strategy, and negotiating draft terms for Phase II and III of the project. The City and Zone 7 will contribute staff time and resources for self-performing tasks and activities. The contractor and consultant services cost will be equally shared, with a combined not-to- exceed limit of $2 million.

Status Update
A well siting analysis was completed in June 2024, which identified the top three locations for potential installation of production well facilities: Pleasanton Tennis and Community Park, Del Prado Park, and Hansen Park. Exploratory test wells will be installed at these locations to evaluate water quality and yields. Zone 7 is currently in the bid period for hiring a contractor to construct the test wells and anticipates awarding the contract at the October 14, 2024, Zone 7 Board Meeting. Construction activities are anticipated to occur between November 2024 and February 2025. Public outreach related to construction activities will include frequently asked questions, informational booths, and notification cards targeted at nearby residents and park users.

To evaluate the technical feasibility of the project, a consultant will be hired whose

scope includes overseeing the test well construction, analyzing water quality and yield data, assisting Zone 7 in groundwater modeling to analyze groundwater basin sustainability, and preparing a feasibility and basis of design report. Zone 7 is currently in the consultant selection process and anticipates awarding a contract at the October 14, 2024, Zone 7 Board Meeting.

Overall public outreach efforts have been ongoing, including updates through the Pleasanton Pipeline e-newsletter and the Regional Groundwater Facilities Project webpage, and will continue as the project progresses.

Expended 0.07% to date, $2,700 of the $1 million total project budget City share for Phase 1.
(2) Other Capital Improvement Program (CIP) Projects in Water System Annual Water Distribution Project (CIP 23183)
Work completed included emergency work for Turnout No. 1 and a temporary booster pump at Turnout No. 4. Accepted by the City Council on December 5, 2023. Total Expenditures $783,366.

T-4 Temporary Booster Pump Kilkare Water Bridge Crossing Annual Water Distribution Project (CIP 24183) - Funding re-allocated to Near-Term Water Improvements to fund design work.

Water Capacity Evaluation (CIP 18134): Akel Engineering completed the Hydraulic Model Master Plan in May 2024. Total Expenditures $271,104.

Lemoine Bypass Pipeline Project (CIP 22199) - Working on procurement of an easement from East Bay Regional Parks District. Additional funding will be required to complete construction. Total to date expended $80,694 of $185,552.

Recycled Water System Management Plan (CIP 23180) - Staff is preparing an update on the recently released DERWA Management Plan and its near- and long- term potential impacts to the City. No expenditures to date of $300,000 budget for consultant support.
2023 Recycled Water Repair (CIP 2133) - No projects have been identified at this time.

Funding is set aside for urgent repairs or major maintenance. No expenditures to date of the $493,050 budget
Collectively, these initiatives reflect the City's proactive approach to managing its water resources, focusing on sustainability, reliability, and quality improvements to meet the needs of the Pleasanton community.

Item #17

CITY COUNCIL AGENDA REPORT

October 15, 2024
Community Development

TITLE: RECEIVE A PRESENTATION AND PROVIDE INPUT ON DRAFT AMENDMENTS TO PLEASANTON MUNICIPAL CODE (PMC) CHAPTER 17.44 - INCLUSIONARY

ZONING AMENDMENTS AND RELATED AMENDMENTS TO PMC CHAPTER

17.40 - AFFORDABLE HOUSING FEE, CHAPTER 18.38 - HOUSING

OPPORTUNITY ZONE DISTRICT, AND THE OBJECTIVE DESIGN STANDARDS

FOR HOUSING ELEMENT SITES

SUMMARY
This study session is to present draft revisions to the Inclusionary Zoning Ordinance (IZO), Chapter 17.44 of the Pleasanton Municipal Code, and related chapters of the Municipal Code (PMC 17.40, 18.48), and the Objective Design Standards for Housing Element Sites, for initial City Council review and input. The draft revisions reflect input from the two study sessions held with City Council in May and August 2024, and the recommendation of the Planning Commission for adoption of the amendments, which was provided on September 11, 2024. In addition to updating the IZO with respect to the inclusionary rate, and target affordability levels, the amendments provide much greater specificity and increased objectivity related to design and development standards for inclusionary units, and also clarify and improve the procedures, findings and requirements for projects seeking approval of alternative means to comply with the IZO. Following City Council's input and direction, the various PMC and ODS amendments would be presented to the City Council for adoption in November. Also in November, staff will provide an update and introduction to the Draft Nexus Fee studies, including the Affordable Housing In-Lieu Fee, for City Council review and input.

RECOMMENDATION
Receive a presentation and provide input on Draft Amendments to Pleasanton Municipal Code (PMC) Chapter 17.44 - Inclusionary Zoning Amendments and Related Amendments to PMC Chapter 17.40 - Affordable Housing Fee, Chapter 18.38 - Housing Opportunity Zone District, and the Objective Design Standards for Housing Element Sites.

BACKGROUND
Since early 2024, City staff and a professional services team led by Economic & Planning Systems (EPS) have undertaken work to update the City’s Development Impact Fees and Affordable Housing Fees, and to update the existing Inclusionary Zoning Ordinance (IZO).

The process to update the City's Affordable Housing fee has to date been conducted in tandem with discussion of potential changes to the IZO. In particular, these discussions have focused on the inclusionary rate reflected in the IZO (i.e., the proportion of affordable units required as part of market-rate projects), and the required minimum affordability levels for inclusionary units, since those factors influence the recommended affordable housing fee amount. Amendments are also proposed to PMC Chapter 17.40 - Affordable Housing Fee, Chapter 18.38 – Housing Opportunity Zone District, and the Objective Design Standards for

Housing Element Sites, to align with the amendments to the IZO and make other clarifying changes.

The City Council held workshops in May and August as part of the study process.

May 7, 2024 Workshop
At an introductory workshop on May 7, 2024, City Council reviewed and discussed the results of EPS' initial analysis, including an evaluation of potential changes to the affordable housing inclusionary rate, along with other initial findings and recommendations with respect to impact fees more generally. The latter discussion focused on seeking a balance between establishing fees at a rate that would appropriately mitigate development impacts, while being mindful of potentially negative impacts on development feasibility that could impede other City financial and policy goals. EPS evaluated various inclusionary scenarios, including some scenarios that would increase the current inclusionary rate, and others that would retain or reduce those rates. EPS also looked at the resultant equivalent in-lieu fee, if set at a level reflecting the equivalent cost to subsidize those same affordable units constructed elsewhere, and the overall feasibility of setting fees at those equivalent rates. Based on the analysis, staff’s initial recommendation was to set the inclusionary rate for all types of residential projects at 15% (i.e., decrease the current single-family/ownership rate and retain the existing multi-family rate). Additional detail and supporting analysis is provided in the May 7, 2024 Agenda Report and attachments; minutes of the May 7 workshop are included in Attachment 2 to this report.

August 20, 2024 Workshop
The City Council held a follow-up workshop on August 20, 2024, focused on the Inclusionary Zoning Ordinance. At this meeting, EPS provided additional analysis and refined scenarios for the inclusionary rate and in-lieu affordable housing fee; staff also provided analysis and requested City Council direction on several key policy questions for the update of the IZO.

Consensus direction was provided based on a straw-poll vote by a majority of the City Council on each of the policy items, although it is noted there was not unanimity on every point. (See Attachment 2, Minutes from the May 7 and August 20, 2024 City Council Workshops). The outcomes and recommendations made by the City Council are outlined further in the analysis and discussion of the amendments to the IZO, in the Disucssion section below. With respect to the inclusionary rate and affordability levels, the City Council supported staff's recommendation to establish the rate at 15% for both rental and ownership projects, with a moderate-income target affordability for ownership units, and lower-income affordability for rental units.

Additional detail and supporting analysis is provided in the August 20, 2024 Agenda Report and attachments.

PLANNING COMMISSION ACTION
The Planning Commission held a public hearing on September 11, 2024, to review and provide a recommendation to City Council for adoption of the updated IZO and related amendments to PMC 17.40, 18.38, and the 2023 Objective Design Standards for Housing Element Sites. By a 4-1 vote (Mohan voting “no”) the Planning Commission recommended the City Council approve the amendments as recommended by staff. As described below, the Planning Commission suggested more information be provided to City Council to support recommendations concerning minimum unit sizes.

DISCUSSION

As noted, staff has incorporated the various points of City Council direction at the August 20 workshop into a comprehensively revised and updated IZO. Attachment 1 includes the text of the draft IZO Amendments (Chapter 17.44, starting on page 8 of Attachment 1) in redline/strikeout format. In addition to items on which the City Council provided specific direction, the proposed revisions include various other updates, clarifications and improvements to the IZO, principally intended to provide more clear and objective standards, clarify procedures, and align the ordinance with more standard language in definitions and other terms. Substantive changes to the IZO are outlined below.

Inclusionary Rate and Affordability Levels (17.44.040.B. and C.) The amended IZO establishes the inclusionary rate and affordability levels for ownership and rental projects. As described above, consistent with majority City Council direction, it includes:
• For-Sale Projects (attached and detached): 15% inclusionary; units affordable to households making up to a maximum of 120% Area Median Income (AMI) – i.e., moderate income
• Rental Projects: 15% inclusionary; units affordable to households making a maximum of 50% and 60% Area Median Income (AMI) – i.e., very-low and low-income. (This split affordability is recommended, based on further analysis by EPS, in support of a City Council request to study this option).

The proposed 15% rate and recommended affordability levels provide an appropriate balance between achieving the City's affordable housing goals, while representing a more feasible rate for attached and detached single-family projects. While there is potentially a significant developer cost to subsidize inclusionary for-sale units due to the large gap between affordable and market sales prices, other proposed amendments to the IZO would provide projects with significantly more flexibility to meet the requirements of the IZO on-site, and thus improve feasibility. Furthermore, staff's analysis found there would be a minimal future number of large, single-family detached projects subject to the IZO, and the change from a 20% inclusionary rate to a 15% rate will not meaningfully affect inclusionary unit production.

With respect to multi-family projects, as previously presented to City Council, it is currently an extremely challenging environment for multi-family construction, and few, if any, projects are likely to be feasible under current economic conditions, even if the inclusionary rate were to be substantially reduced. However, since the current 15% rate has been feasible in the past, and anticipating there will be improvement in the multi-family construction market over time, staff recommended, and City Council supported, retaining the multi-family rental inclusionary rate at 15%, which will also help the City meet it's affordable housing goals.

The August 20 report also suggested the City Council could consider other near-term tools to help stimulate multi-family rental housing production, which comprises the largest share of the remaining units that could be zoned and built under the Housing Element, such as temporarily permitting projects to “fee out” of up to a third of their inclusionary requirement. The City Council will have the opportunity to consider this concept as part of the discussion and adoption of the Affordable Housing fee.

Threshold Project Size
As recommended by City Council, the IZO has been amended to reduce the minimum project

size subject to inclusionary requirements (i.e., required to provide units on site) from 15 to 10 units.

Inclusionary Unit Standards (Section 17.44.040)
Numerous changes are proposed to Section 17.44.040, principally to create more objective standards for the evaluation of inclusionary housing proposals, and in some instances to provide more flexibility in how the inclusionary requirements can be met. Major changes include:
• Clustering and dispersal of units (17.44.050.A): The revisions include additional,l but limited, exceptions to permit clustering of units. For example, within single-family detached developments the IZO would have provisions to allow attached units such as duets or townhomes, or where a project is able to use Lower Income Housing Tax Credits (LIHTC) to achieve a multi-family project that would satisfy its inclusionary requirements for those units to be clustered, as a practical matter. The amended IZO allows other exceptions to the clustering/dispersal requirements to be allowed, subject to City Council allowance through an “alternative compliance” approval (see below) and subject to specific findings.

• ADUs and JADUs disallowed from counting toward inclusionary requirements (17.44.050.B): The revised IZO explicitly states that ADUs and JADUs may not count toward the IZO. This new requirement is staff’s recommendation, as legally (pursuant to the Ellis Act) the City cannot require a homeowner to rent an ADU (at all), and even if rented, there are significant practical challenges to monitoring and ensuring the unit is rented to an income-qualified household. This provision is not intended to construe that the City does not support or encourage ADUs in general, which could still be used to provide an increment of housing above and beyond the IZO, that is “affordable by design.” Language has been included in the draft amended IZO to that effect.

The City Council unanimously supported not allowing JADUs to count toward meeting the IZO but requested additional analysis regarding ADUs. In addition to the above- stated reasons, there are negative reports from staff of cities whose ordinances have allowed ADUs to satisfy their respective IZO only to see virtually all single-family projects elect this option and then face significant challenges with monitoring and enforcement. As such, staff continues to strongly recommend against allowing for ADUs to be used to satisfy the IZO requirements. In particular, it is the intent of the IZO and numerous policies of the Housing Element to secure units that provide housing opportunities for lower-income households in need of those units. The lack of certainty that the unit will actually provide the affordable housing opportunity intended to be secured by the IZO is a compelling reason in support of the staff and Planning Commission recommendation, consistent with the City's stated policy goals.

• Unit Size. The proposed amendments allow for:
o For-sale inclusionary units: Living area to be up to 50 percent of the size of the average of the market-rate units.
o Rental inclusionary units: Minimum unit sizes are specified based on number of bedrooms. (1) a studio shall be at least 450 net square feet; (2) a one-bedroom

unit shall be at least 550 net square feet; (3) a two-bedroom unit shall be at least 750 net square feet; (4) a three bedroom unit shall be at least 1,000 net square feet; and (5) for units with more than three bedrooms an additional 200 net square feet for each additional bedroom.

Regarding the size of inclusionary rental units, in response to Planning Commission comments, the above recommendations include some minor adjustments to the minimum square footage, reducing them slightly from the initially proposed unit sizes by 50-100 square feet, to help improve the feasibility of these units for new development. The revisions also now specify that unit sizes are net (i.e., "paint to paint") so that the thickness of walls is not included in the unit size calculation. In developing the recommendations, staff consulted with Van Meter Williams Pollack (VMWP), the City's consultant who has extensive experience developing both market-rate and affordable projects throughout the Bay Area. The recommended unit sizes are based on considerations of livability (adequate living space for the typical household size that would be occupying a unit) and ability to include features such as storage and additional bathrooms as bedroom counts increase. VMWP noted that in Pleasanton, market-rate unit sizes tend to be larger than in more urban areas such as Oakland and San Francisco, so ensuring relative equity between the affordable and market-rate units means that affordable units should also be somewhat larger than in those other locations. • Bedroom Mix (17.44.050.G.) The IZO has been amended to include new requirements for the bedroom mix (i.e., the number of units that are studios, one-, two-, or three- bedrooms) of the affordable units.
o For-sale projects inclusionary units must reflect a similar average number of bedrooms as the market-rate units
o In rental projects, a mix that includes at least 10% three-bedroom units is required, with a limitation set on studio units (no more than 10% studio units are allowed), and the remainder one- and two-bedroom units.

This mix is the same as that included and approved in the ODS, and matching average bedroom counts in for-sale projects is a commonly used approach that retains equivalency between the market-rate and affordable units.

Alternative Means of Compliance (17.44.040.080)
Consistent with direction provided by City Council on August 20, recommended amendments to the alternative compliance section (17.44.080) include:
• More detailed findings for approval of alternative compliance proposals, and clearly placing the burden of proof to support the basis of requests on the applicant. • Establishing the City Council as the approving body for all alternative compliance requests.
• Establishing a clear priority among acceptable forms of alternative compliance, with (from most to least preferred): 1) Alternative configurations, unit types or clustering of units on site; 2) Constructing units off-site; 3) Dedicating land for an affordable housing project; and 4) Paying the Affordable Housing fee. As proposed in the text amendments, applicants are required to demonstrate that a higher-priority option is infeasible, before consideration is made of a lower-priority option.

• Strengthened, and where possible, objective criteria for each of the alternative compliance options to ensure that the alternative will continue to meet the purpose of the IZO and policy priorities of the City.

In addition, the amendments would remove the option to allow transfer of excess units as credits to help maximize the production of affordable units and avoid administrative complexities in terms of the timing, coordination and approvals required between the “sending” and “receiving” sites.

Procedures for Review
Among other clarifying provisions, the proposed IZO amendments would allow for affordable housing proposals/agreements in full compliance with the Ordinance (i.e., not requesting alternative compliance or otherwise deviating from the standard) to be approved by the same body responsible for approval of the underlying project. For example, if the project was subject to Planning Commission approval, then a fully compliant affordable housing agreement could also be reviewed and approved by the Planning Commission. Such actions would be subject to the typical appeal or “call-up” procedures allowed by the municipal code. Any affordable housing agreement proposal involving an alternative compliance request would be subject to City Council review and approval.

Other Revisions
Other more minor revisions are included throughout the Ordinance and reflected in the redline draft in Attachment 1. These generally aim to improve or clarify the language of the ordinance, reduce ambiguity, and/or create more objectivity. Additional revisions beyond those noted in the prior section include:
• 17.44.020 – Purpose: Revisions to remove reference to regulatory provisions more appropriately stated elsewhere in the Ordinance.
• 17.44.030 – Definitions: Revisions to the definitions section to align and update the definitions to terms used in the Ordinance, current practices, and other related regulatory requirements.
• 17.44.050 – Inclusionary Unit Provisions and Specifications: In addition to the changes described above, other revisions in this section would add more specificity or measurable standards.
• 17.44.060 – Affordable Housing Agreement: Clarifying that where a project is permitted by City Council to pay affordable housing fees such project does not require a separate affordable housing agreement, and the requirement would instead be memorialized in a City Council resolution for approval.
• 17.44.070 – Incentives to Encourage On-Site Construction of Inclusionary Units:

Deletion of the incentive for “priority processing” since this requirement may conflict with project review timelines mandated by State law.
• 17.44.080 – Alternative Means of Compliance. Other minor revisions to clarify/strengthen requirements and criteria for approval of alternative compliance requests.
• 17.44.090 – Administration. Addition of a provision regarding amendment of affordable housing agreements to allow administrative approval of minor, non-substantive changes, with other amendments subject to approval by the original approving body.

Related Amendments to PMC Chapters 17.40, 18.38, and Objective Design Standards In addition to the various amendments to Chapter 17.44, various amendments are proposed to other chapters of the PMC and to the 2023 Objective Design Standards to align with the IZO amendments and to make other limited updates to align with State law. In summary, these include:

Chapter 17.40 – Affordable Housing Fee
Minor revisions have been made to this chapter, including:
• Clarification of the purposes for which affordable housing funds may be used, to include affordable housing programs as well as construction of affordable housing units. • Modernizing/update terminology (e.g., referencing facilities for religious purposes as being exempt from the affordable housing fee) and/or align it to existing regulations (e.g., adding a reference to Junior ADUs, as well as ADUs as being exempt from the affordable housing fee.) Since the Planning Commission review, an additional update has been made to definitions of Lower- and Moderate-Income Housing Units, to align them with the definitions used in the IZO.
• Amending the method by which annual increases to the fee are made to be indexed to the Construction Cost Index (CCI), rather than the Consumer Price Index (CPI), since provision of affordable/inclusionary housing is a construction-related cost. • Deletion of references to annual reporting and other requirements pursuant to AB1600 (Mitigation Fee Act) since the affordable housing fee is not considered an impact fee subject to AB1600.

Chapter 18.38 – Housing Opportunity Zone District
As part of implementation of the 2023-2031 (6th Cycle) Housing Element, the City rezoned sites and created the Housing Opportunity Zone District. Since the IZO was pending update, some more detailed standards for inclusionary housing were included in this chapter. Because those provisions would be redundant with the updated IZO, this chapter of the PMC would be amended to delete them.

Objective Design Standards for Housing Element Sites
Similar to Chapter 18.38, the ODS were adopted prior to this update of the IZO, and so detailed standards were included in the ODS for required affordable housing units. Similarly, those standards are proposed to be deleted from the ODS, and instead the ODS would defer to the IZO for affordable housing requirements.

EQUITY AND SUSTAINABILITY
Adopting the updated Inclusionary Zoning Ordinance and related PMC amendments helps to advance equity and sustainability goals, by improving and strengthening the ordinance and its implementing procedures to encourage the maximum production of affordable housing units, and ensure that the housing needs of Pleasanton's lower-income households are met.

OUTREACH
Notice of this meeting was placed in The Valley Times, and interested parties requesting notification were also sent notices. Following this meeting and with direction from City Council,

staff is scheduled to present the key findings and recommendations to meetings of the Chamber of Commerce Economic Development and Government Relations (EDGR) Committee; the Business Organization Partners (BOP), and the Economic Vitality Committee (EVC).

STRATEGIC PLAN ALIGNMENT
Completion of these updates is consistent with the ONE Pleasanton Strategic Plan goal of Building a Community Where Everyone Belongs, Strategy – Implement the Housing Element and develop a plan to end homelessness, and the 6th Cycle Housing Element Program 2.1 – Continue to implement the Inclusionary Zoning Ordinance and actively pursue strategies to improve its effectiveness in producing affordable housing units in conjunction with new development.

FISCAL IMPACT
Adopting the IZO and related Code amendments would not have a direct fiscal impact, since its provisions are intended to better align the City's requirements and standards with respect to provision of affordable housing with the City's broader housing policy goals, while ensuring those requirements are not an impediment to overall residential development that may contribute future property tax and other revenues.

Prepared by: Submitted by: Approved by:

Ellen Clark, Director of
Community Development
Ellen Clark, Director of Community
Development

Gerry Beaudin, City
Manager

Attachments:

1. Redline Amendments, PMC Chapters 17.40, 17.44, 18.38 and Objective Design Standards

2. May 7 and August 20, 2024 City Council Workshop Minutes

3. Presentation

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ATTACHMENT 1

TITLE 17

PLANNING AND RELATED MATTERS

Chapter 17.40

AFFORDABLE HOUSING FEES
§ 17.40.010. Purpose.

An affordable housing fee (previously known as the lower -income housing fee) is established as set forth in this chapter in order to assist in meeting the affordable and moderate -income housing goals as established in the general plan.
(Ord. 1488 § 1, 1990; Ord. 2192 § 2, 2019)
§ 17.40.020. Definitions.

As used in this chapter:
"Commercial office or industrial development project" means any construction of a new commercial, office or industrial structure, the addition to any existing commercial, office or industrial structure, or the conversion of an existing commercial, office or industrial structure to a use classification capable of employing additional employees. "Household of moderate-income" means a household comprised of those individual or families with incomes greater than 80 percent, but less than 120 percent, of the median family income for the Standard Metropolitan Statistical Area, defined as Alameda and Contra Costa Counties for a family of four persons, adjusted up or down for larger or smaller household sizes (PMSA Median).
"Household of lower-income" means a household composed of those individuals or families with incomes no greater than 80 percent of the median family income for the Standard Metropolitan Statistical Area, defined as Alameda and Contra Costa Counties for a family of four persons, adjusted up or down for larger or smaller household sizes (PMSA Median). "Lower-income housing units" means new or rehabilitated units to be used by households of lower-income for at least 25 years and the total housing cost for each unit shall not exceed 30 percent of household income.
"Moderate-income housing units" means new or rehabilitated units to be used by households of moderate-income for at least 25 years and the total housing cost for each unit shall not exceed 30 percent of household income.
“Housing Unit, Lower-Income” means a new or rehabilitated unit to be made available at a sales price or rental cost affordable to a household whose income does not exceed 80 percent of the Area Median Income, as those terms are defined in Chapter 17.44.

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“Housing Unit, Moderate-Income” means a new or rehabilitated unit to be made available at a sales price or rental cost affordable to a household whose income is more than 80 percent of the Area Median Income, but does not exceed 120 percent of the Area Median Income, as those terms are defined in Chapter 17.44.
"Rehabilitated unit" means any housing unit not meeting Uniform Building Code requirements for occupancy which is improved so as to meet those requirements. "Residential development project" means the construction of a new housing unit. (Ord. 1488 § 1, 1990; Ord. 2192 § 2, 2019)
§ 17.40.030. Affordable housing fee required.

A. All residential and commercial office or industrial development projects not otherwise exempt shall pay a n affordable housing fee as established by separate city council resolution and which fee shall be set forth in the city's fees and charges appendix, master fee schedule, as amended.

If additional floor area is constructed for, or converted to, commercial, industrial or office use, the fee shall be applicable only to the square footage of the floor area added or to that portion of the square footage of the floor area converted for whic h the fee has not been paid.

B. The city council may adjust the fee in consideration of on-site programs promoting lower- income housing such as the dedication of land suitable for lower -income housing, or in conjunction with an alternative compliance proposal made as part of an affordable housing proposal in accordance with Chapter 17.44.
(Ord. 1488 § 1, 1990; Ord. 2192 § 2, 2019)
§ 17.40.040. Exemptions.

A. The following are exempt from the affordable housing fee:

1. All units within a residential development project when the project has a minimum of 15 percent deed-restricted lower-income housing units;

2. Those lower-income housing units in a residential development project with less than 15 percent deed-restricted lower-income housing units;

3. Deed-restricted Moderate moderate-income housing units in residential development projects;

4. Second units and accessory dwelling units and junior accessory dwelling units as those terms are used in Section 65852.2 of the Government Code and Chapter 18.106;

5. Reconstruction or other new development on a site when such reconstruction replaces an equal number of square feet of floor area, as defined in the Uniform Building Code, when the use is similar, and when such reconstruction occurs within two years from the time the previous structure on the site was demolished;

6. Churches Facilities used exclusively for religious purposes as defined in California Revenue and Taxation Code Section 207.

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B. The project developer shall enter into a regulatory agreement with the city in order for a project to qualify for an exemption by the inclusion of lower -income or moderate-income housing units.
(Ord. 1488 § 1, 1990; Ord. 2192 § 2, 2019)
§ 17.40.050. Reduction of fee—Commercial, office or industrial project.

A. The city council may reduce the required fee for a commercial, office or industrial development project when the project developer can demonstrate: (1) that the proposed use will generate substantially fewer workers than the uses which have established the fee; and (2) that the building design is unable to house another use without substantial renovation.

Examples of such uses are public utility facilities, exclusive storage buildings, etc.

B. In the event such buildings are renovated to house another use, the fee then applicable shall be due at that time.
§ 17.40.060. Commercial, office or industrial projects—Construction of lower-income housing.

Commercial, office or industrial development projects may construct lower-income housing to fulfill the requirements of this chapter in accordance with this section, and with the applicable provisions of Section 17.44.030.

A. Lower-income housing proposed to offset the requirements of this chapter must be proposed in conjunction with the commercial, office or industrial development project which would give rise to the fee and must be approved by the city council in offsetting otherwise required
affordable housing fees.

B. For lower -income housing constructed on lands designated for other than residential development in the general plan as of the effective date of the ordinance codified in this chapter, the project developer shall be given a credit, for purposes of offsetting the affordable housing fee otherwise required, in an amount established by separate city council resolution and which credit amount shall be set forth in the city's fees and charges appendix.

C. For lower-income housing constructed on lands designated for residential development in the general plan as of the effective date of the ordinance codified in this chapter, for each lower- income housing unit constructed beyond 15 percent of the residentia l development project, the project developer shall be given a credit for purposes of off -setting the affordable housing fee otherwise required, in an amount established by separate city council resolution and which credit amount shall be set forth in the city's fees and charges appendix.

D. In the event the lower-income housing constructed by the developer of a commercial, office or industrial development project creates an offset of the affordable housing fee greater than the total fee required by the development project, the developer may a pply the difference to other sites then owned by the developer. This transfer shall be so noted in the regulatory agreement accompanying the project.
(Ord. 1488 § 1, 1990; Ord. 2192 § 2, 2019)

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§ 17.40.070. Annual adjustment of the fee.

The affordable housing fee shall annually be revised effective January 1st of each year, commencing on January 1, 1992, by the percentage increase or decrease in the Engineering News Record Consumer Construction Price Cost Index for the San Francisco San Francisco/Oakland region Bay Area.
(Ord. 1488 § 1, 1990; Ord. 2192 § 2, 2019)
§ 17.40.080. Establishment of affordable housing fund.

A. All fees generated pursuant to this chapter shall be deposited into the affordable housing fund, and any property interest or other value contributed, including interest earned by the fund, shall be segregated and used exclusively for the purposes provided for herein.

B. The city manager shall make a written annual report to the city council regarding the administration of the affordable housing fund, and shall present such annual report at a regular meeting of the city council.

C. Pursuant to Government Code Section 66000, et seq., the city shall make findings once each fiscal year with respect to any portion of the fees remaining unexpended or uncommitted in its account five or more years after the deposit of the fees to identify t he purpose to which the fee is to be put and to demonstrate a reasonable relationship between the fee and the purpose for which it was charged. The findings required by this section need only be made for moneys in the possession of the city and need not be made with respect to letters of credit, bonds or other instruments taken to secure payment of the fee at a future date.

D. Any refunds shall be made pursuant to Government Code Section 66001. (Ord. 1488 § 1, 1990; Ord. 2192 § 2, 2019)

§ 17.40.090. Use of affordable housing fund.

A. Any moneys monies generated by this chapter shall be used in accordance with and in support of activities to administer and implement the city's adopted housing element and other policies and programs specifically related to affordable housing as may be approved or authorized by the city council . Activities may include, but are not limited to, land acquisition, construction, rehabilitation, subsidization, and counseling or assistance to other governmental entities, private organizations, or individuals to expand housing opportunities to lower-income households.

B. Moneys Monies in the affordable housing fund may be disbursed, hypothecated, collateralized, or otherwise employed for the purposes set forth herein. These purposes include, but are not limited to, assistance to housing development corporations, equity participation loans, grants, development loan funds, participation leases, loans to develop affordable housing or other public/private partnership arrangements. The affordable housing fund may be used for the benefit of both rental or owner-occupied housing.

C. When the city uses affordable housing fund moneys to construct or assist in the construction of lower-income units, the city may establish the rules which will apply to occupancy of said units. It is the intention of this chapter and the general plan that such units be made available on a priority basis to Pleasanton residents and workers.

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D. The city council may use affordable housing fund moneys monies for moderate-income housing as determined necessary and desirable to meet general plan goals and policies. (Ord. 1488 § 1, 1990; Ord. 2192 § 2, 2019)

§ 17.40.100. Time of payment.

Affordable housing fees shall be paid at the time of issuance of a building permit for the residential unit and/or for the commercial, office or industrial development project giving rise to the fee, unless otherwise determined by the city.
(Ord. 1488 § 1, 1990; Ord. 2192 § 2, 2019)

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Chapter 17.44

INCLUSIONARY ZONING

Article I
General Provisions
§ 17.44.010. Title.

This chapter shall be called the "Inclusionary Zoning Ordinance of the City of Pleasanton." (Ord. 1818 § 1, 2000)
§ 17.44.020. Purpose.

The purpose of this chapter is to enhance the public welfare, to and assure that market-rate further housing development mitigates its impacts on the demand for affordable housing, and to attain attains the city's affordable housing goals by increasing the production of residential units affordable to households of very low, low, and moderate income, and by providing funds for the development of very low, low, and moderate income ownership and/or rental housing and for housing-related programs that benefit very-low, low, and moderate income households. In order to assure that the remaining developable land is utilized in a manner consistent with the city's housing policies and needs, 15 percent of the total number of units of all new multiple-family residential projects containing 15 or more units, constructed within the city as it now exists and as may be altered by annexation, shall be affordable to very low and low income households. For all new single-family residential projects of 15 units or more, at least 20 percent of the project's dwelling units shall be affordable to very low, low, and/or moderate income households. These requirements shall apply to both ownership and rental projects.
(Ord. 1818 § 1, 2000)
§ 17.44.030. Definitions.

For the purposes of this chapter, certain words and phrases shall be interpreted as set forth in this section unless it is apparent from the context that a different meaning is intended. “Affordable Housing Fee.” A fee paid to the city by an applicant for a project in the city, in lieu of providing the inclusionary units required by this chapter. "Affordable housing proposal." A proposal submitted by the project owner as part of the city development application (e.g., design review, planned unit development, etc.) stating the method by which the requirements of this chapter are proposed to be met. "Affordable rent." A monthly rent (including utilities as determined by a schedule prepared by the city) which does not exceed one-twelfth of 30 percent of the maximum annual income for a household of the applicable income level.
"Affordable sales price." A sales price that which results in a monthly housing costs, mortgage payment (including principal and interest) which may include taxes, insurance, homeowners association dues (if any), and utility costs as determined by the city, which does not exceed

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one-twelfth of 35 percent of the maximum annual income for a household of the applicable income level.
"Amenities, Interior." Interior features which are not essential to the health and safety of the resident, but provide visual or aesthetic appeal, or are provided as conveniences rather than as necessities. Interior amenities may include, but are not limited to, fireplaces, garbage disposals, dishwashers, cabinet and storage space and bathrooms in excess of one. Amenities shall in no way include items required by city building codes or other ordinances that are necessary to ensure the safety of the building and its residents. “Amenities, Shared.” Facilities and amenities within the project that are available for the shared and/or general use of residents of the project, including but not limited to shared recreation and other facilities (e.g. gym or pool, clubhouse, meeting room, co-working space, laundry, barbeque area, etc.).
."Applicant." Any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities which seeks city permits and approvals for a project. “Area Median Income (AMI).” Median income for Alameda County, adjusted for household size, as published pursuant to California Code of Regulations, Title 25, Section 6932 and California Health and Safety Code section 50093 as may be amended. "City." The city of Pleasanton or its designee or any entity with which the city contracts to administer this chapter.
"Commercial, office, and industrial project." For the purposes of this chapter, any new nonresidential (commercial, office, or industrial) development or redevelopment greater than 10 gross acres or 250,000 square feet of gross building area, whichever is less. "Dwelling unit." A dwelling designed for occupancy by one household. "HUD." The United States department of housing and urban development or its successor. "Household." One person living alone; or two or more persons sharing residency whose income is considered for housing payments.
"Household, low income." A household whose annual income is more than 50 percent but does not exceed 80 percent of the AMI annual median income for Alameda County, based upon the annual income figures provided by the U.S. department of housing and urban development (HUD), as defined by this chapter. adjusted for household size. "Household, moderate income." A household whose annual income is more than 80 percent but does notnote exceed 120 percent of the AMIannual median income for Alameda County, based upon the annual income figures provided by HUD, as defined by this chapter. "Household, very low income." A household whose annual income does not exceed 50 percent of the AMI annual median income for Alameda County, based upon the annual income figures provided by HUD, as defined by this chapter.
"Inclusionary unit." A dwelling unit as required by this chapter which is rented or sold at affordable rents and/or affordable sales prices (as defined by this chapter) to very low, low, or moderate income households.

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"Inclusionary unit credits." Credits approved by the city council in the event a project exceeds the total number of inclusionary units required in this chapter. Inclusionary unit credits may be used by the project owner to meet the affordable housing requirements of another project subject to approval by the city council.
"Income." The gross annual household income as defined by HUD. "Life of the inclusionary unit." The term during which the affordability provisions for inclusionary units shall remain applicable. The affordability provisions for inclusionary units shall apply in perpetuity from the date of occupancy, which shall be the date the city of Pleasanton performs final inspection for the building permit. "Lower income housing fee." A fee paid to the city by an applicant for a project in the city, in lieu of providing the inclusionary units required by this chapter. “Market-rate units.” means new living units in residential projects which are not rented or sold at affordable rents or affordable sales prices, as defined in this chapter. "Median income for Alameda County." The median gross annual income in Alameda County as determined by HUD, adjusted for household size.
"Off-site inclusionary units." Inclusionary units constructed within the city of Pleasanton on a site other than the site where the applicant intends to construct market rate units. "Ownership units." Inclusionary units developed as part of a residential development which the applicant intends will be sold, or which are customarily offered for individual sale. "Project." A residential housing development at one location or site including all dwelling units for which permits have been applied for or approved. "Project owner." Any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities which holds fee title to the land on which the project is located.
"Property owner." The owner of an inclusionary unit, excepting a "project owner." "Recapture mechanisms." Legal programs and restrictions by which subsidies provided to inclusionary units will be controlled and repaid to the city and/or other entity upon resale, to ensure the ongoing preservation of affordability of inclusionary units or to ensure funds for inclusionary units remain within the city's affordable housing program. "Rental units." Inclusionary units which the applicant intends will be rented or leased, or which are customarily offered for lease or rent.
“Residential project, rental.” A residential project or portion thereof, that creates one or more units that cannot be sold individually, except that construction of any accessory dwelling unit shall not be considered a rental project.
“Residential project, for sale.” A residential project, or portion thereof, that includes the creation of one or more residential living units that may be sold individually, including a condominium, stock cooperative, community apartment, or attached or detached single-family home. A for-sale project also includes a residential condominium conversion project and the

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creation of residential living units that may be sold individually, but are initially rented rather than sold.
"Resale restrictions." Legal restrictions which restrict the price of inclusionary units to ensure that they remain affordable to very low, low, and moderate income households on resale. "Residential project, multiple-family." A residential project consisting of condominiums, apartments, and similar dwellings attached in groups of four or more units per structure and including multiple units located on a single parcel of land under common ownership. "Residential project, single-family." A residential project consisting of detached and attached single-family homes, including paired single-family, duets, duplexes, townhomes, and similar unit types where each unit is located on a separate parcel of land. "Unit type." Various dwelling units within a project which are distinguished by number of bedrooms and/or the type of construction (e.g., detached single-family, duets, townhomes, condominiums, apartments).
(Ord. 1818 § 1, 2000)

Article II
Zoning Requirements
§ 17.44.040. General requirements/applicability.

A. Applicability. The Inclusionary Housing Requirements of this chapter shall apply to all new residential for-sale and rental projects, including mixed residential and non-residential projects, consisting of ten (10) or more residential units or parcels. The project unit count used to determine applicability of this chapter shall be exclusive of any Accessory Dwelling Units or Junior Accessory Dwelling Units.

A. Residential Development. For all new multiple-family residential projects of 15 units or more, at least 15 percent of the project's dwelling units shall be affordable to very low, and/ or low income households. For all new single- family residential projects of 15 units or more, at least 20 percent of the project's dwelling units shall be affordable to very low, low, and/or moderate income households. These dwelling units shall be referred to as "Inclusionary Units".

Special consideration will be given to projects in which a significant percentage of the inclusionary units are for very low and low income households. The specific mix of units within the three affordability categories shall be subject to approval by the city.

The inclusionary units shall be reserved for rent or purchase by eligible very low, low, and moderate income households, as applicable. Projects subject to these requirements include, but are not limited to, single-family detached dwellings, townhomes, apartments, condominiums, or cooperatives provided through new construction projects, and/or through conversion of rentals to ownership units.

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The percentage of inclusionary units required for a particular project shall be determined only once on a given project, at the time of tentative map approval, or, for projects not processing a map, prior to issuance of building permit. If the projectsubdivision design changes, which results in a change in the number of inclusionary unitsunit types required, the number of inclusionary units required shall be recalculated to coincide with the final approved project. In applying and calculating the number of inclusionary units required based on the specified percentage15 percent requirement, any decimal fraction less than or equal to

0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be construed as one unit.

B. Residential For-Sale Projects. For all new for-sale residential project, and where the project would include 10 residential units or more, at least fifteen (15) percent of the project's dwelling units shall be affordable to very-low, low- or moderate- income households as specified. These units shall be referred to as “Inclusionary Units.” The Inclusionary Units shall be reserved for purchase by eligible households, in the following proportions. The applicant shall not be prohibited from deepening the level of affordability in the project:
• 100 percent of the inclusionary units at a sales price affordable to a household whose income is no more than 120% of the Area Median Income.

C. Residential Rental Projects. For all new residential rental projects, including where the rental units are part of a mixed use projects, and where the project would include 10 residential units or more, at least 15 percent of the project’s dwelling units shall be affordable to very-low [and/] or low-income households as specified. These units shall be referred to as “Inclusionary Units.” The Inclusionary Units shall be reserved for rent to eligible households within each income category as specified, in the following proportions. The applicant is not precluded from deepening the level of affordability in the project:
• 50 percent of the inclusionary units at a sales price affordable to a household whose income is no more than 50% of the Area Median Income.
• 50 percent of the inclusionary units at a sales price affordable to a household whose income is no more than 60% of the Area Median Income
D. Commercial, Office, and Industrial (COI) Development. COI projects shall be subject to the affordable housing In lieu of paying the lower income fee as set forth in Chapter 17.40. In lieu of paying the affordable housing fee COI developments as defined in this chapter city Ordinance No. 1488, COI development may provide rental or for-sale affordable housing consistent with this chapter, and with the requirements of Section 17.40.060. A COI development proposing to provide affordable housing in lieu of paying the fee shall . As a result, new COI developments are strongly encouraged to submit an affordable housing proposal as set forth in Section 17.44.090 of this chapter.

Upon submittal of the affordable housing proposal, city staff will meet with the

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developer to discuss the potential for providing incentives to encourage on-site construction of affordable housing units and alternatives to constructing affordable units as set forth in this chapter. In the event a developer requests incentives or alternatives as a means of providing affordable housing in connection with a COI development, the affordable housing proposal will be reviewed as set forth in Section 17.44.090 of this chapter. COI development not pursuing the inclusion of affordable housing shall be subject to the lower income fees as set forth in city ordinance 1488.

E. Residential projects with fewer than ten (10) Dwelling units shall be subject to the affordable housing fee as set forth in Chapter 17.40. (Ord. 1818 § 1, 2000)
§ 17.44.050. Inclusionary unit provisions and specifications.

A. For those projects with both market-rate and inclusionary units, the inclusionary units shall be dispersed throughout the project so as not to concentrate inclusionary units in a specific geographic area (including a floor) of the project, except as provided in this section. The inclusionary units shall be located in comparable locations to the market- rate units, and shall be located on each floor, and throughout the site such that a) a proportionate number of inclusionary units are located on each floor of a multi-story apartment or condominium building, and that within such buildings no more than 20 percent of units are located adjacent to one another; b) no more than 20 percent of the units are located adjacent to one another in a single-family detached project and c) in developments containing more than one multi-unit structure, including groups of attached townhomes, condominiums or apartments, no more than 50 percent of the proposed inclusionary units are consolidated into one structure.

1. For a project where the market rate units are proposed to be detached single- family homes, it is permitted for the inclusionary units to be paired single-family, duets, duplexes, or townhomes. In such case, the townhomes, duets, or duplexes shall be dispersed throughout the project.

2. For a project where the market rate units are proposed to be attached or detached single-family homes, duets, or duplexes (or a combination thereof), it is permitted for the inclusionary units to be ownership condominiums or rental apartments, with such units also dispersed throughout the project. This provision shall not apply to affordable units that are financed with low-income tax credits.

3. Clustering of inclusionary units in a manner other than that specified in this section may be allowed subject to City Council approval, as specified in Section

17.44.080, Alternative Means of Compliance.

B. Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs) shall not be permitted to satisfy the requirements of this Inclusionary Zoning Ordinance. This provision shall not be construed to discourage, prohibit or disallow the provision of ADUs and JADUs as a component of a market-rate residential project, in addition to any required inclusionary units.

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C. Inclusionary units shall be equivalent in exterior appearance and overall quality of construction to market-rate units in the housing development.

A. Inclusionary units shall be dispersed throughout the project unless otherwise approved by the city.

B. Inclusionary units shall be constructed with identical exterior materials and an exterior architectural design that is consistent with the market rate units in the project.

D. Inclusionary units may be of smaller size than the market-rate units in the project, subject to the following limitations:

1. For for-sale units, the living area of each inclusionary units may be up to 50 percent smaller than the size of the average market rate unit in the project.

2. For rental units, the living area of each inclusionary unit shall be as follows: (1) a studio shall be at least 450 net square feet; (2) a one-bedroom unit shall be at least 550 net square feet; (3) a two-bedroom unit shall be at least 750 net square feet; (4) a three bedroom unit shall be at least 1,000 net square feet; and (5) for units with more than three bedrooms an additional 200 net square feet for each additional bedroom.

E. Inclusionary units . In addition, inclusionary units may have fewer interior amenities than the market rate units in the project, except that inclusionary units shall have air- conditioning, enclosed garages, and laundry facilities to the extent the market-rate units have those amenities. Interior finishes and amenities must be equivalent to those provided in the base model market-rate units.

F. The residents of the inclusionary units shall have the same access to shared common areas, open space, parking, storage and other amenities as the market-rate residents when located in the same building or on the same site.

G. Bedroom Mix:

H. The project shall comply with the following . However, the city may require that the inclusionary units meet certain minimum standards with respect to the bedroom mix of . These standards shall be set forth in the affordable/inclusionary units: housing agreement for the project.
i. For for-sale projects, the average number of bedrooms per unit for all affordable units in the project shall equal the average number of bedrooms for all other units in the project, up to a limit of three bedrooms per unit; ii. For rental projects, a minimum of 10 percent of the total affordable units shall be three-bedroom units; a minimum of 40 percent of the total affordable units shall be two-bedroom units; and the remaining affordable units shall be studio or one-bedroom units except that no more than 10% of units may be studios. Age-restricted projects shall not be required to provide three-bedroom units, and may instead provide additional studio, one- or two-bedroom units in lieu of the required three-bedroom units.

This provision shall not apply to affordable units that are financed with low-income tax credits. The director of community development may approve deviations from the specified bedroom mix for projects with 10 or fewer inclusionary units, except that at least 50 percent of units shall have at least two bedrooms if the market rate project also provides units of that size.

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I. Inclusionary units shall remain affordable in perpetuity from the date of occupancy, which shall be the date the city of Pleasanton performs final inspection for the building permit, through recordation of an affordable housing agreement as described in Section 17.44.060 of this chapter.

J. All inclusionary units in a project shall be constructed concurrently withwithin or prior to the construction of the project's market rate units, unless an alternative schedule for construction is approved by the city council. “Concurrently” means that all inclusionary units shall be built prior to the full build-out of market rate units in the same residential development project. In phased developments, inclusionary units shall be constructed and occupied in proportion to the number of market rate units constructed and occupied in each phase. .

1. A building permit may not be issued for any market rate unit unless a proportional number of building permits has been issued for inclusionary units; and

2. A certificate of occupancy or final inspection may not be issued for market rate units unless a proportional number of certificates of occupancy or final inspections have been issued for inclusionary units.

K. For purposes of calculating the affordable rent or affordable sales price of an inclusionary unit, the following household size assumptions shall be used for each applicable dwelling unit type:

Unit Size
HUD Income Category by
Household Size
Studio unit 1 person
1 bedroom unit 2 persons
2 bedroom unit 3 persons
3 bedroom unit 4 persons
4 or more bedroom unit 5 or more persons
L. The city's adopted preference and priority system shall be used for determining eligibility among prospective beneficiaries for affordable housing units created through this inclusionary zoning ordinance.
(Ord. 1818 § 1, 2000)
§ 17.44.060. Affordable housing agreement.

An affordable housing agreement shall be entered into by the city and the project owner. The agreement shall record the method and terms by which a project owner shall comply with the requirements of this chapter. The approval and/or recordation of this agreement shall take place prior to final map approval or, where a map is not being processed, prior to the issuance of building permits for such lots or units.

The affordable housing agreement shall state the methodology for determining a unit's initial and ongoing rent or sales and resale price(s), any resale restrictions, occupancy requirements, eligibility requirements, city incentives including second mortgages, recapture mechanisms,

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the administrative process for monitoring unit management to assure ongoing affordability and other matters related to the development and retention of the inclusionary units.

In addition to the above, the affordable housing agreement shall set forth any waiver of the affordable lower income housing fee. For projects which meet the affordability threshold with very low and/or low-income units, all units in the project shall be eligible for a waiver of the affordablelower income housing fee. For single-family ownership residential projects which meet the affordability threshold with moderate income units, or multiple-family residential projects which do not meet the affordability threshold, only the inclusionary units shall be eligible for a waiver of the affordable lower income housing fee except as otherwise approved by the city council.

To assure affordability in accordance with the terms of this chapter and over the life of the unit (i.e. in perpetuity), the affordable housing agreement shall be recorded with the property deed or other method approved by the city attorney. In the event an inclusionary unit is affordable by design the affordable housing agreement shall stipulate the method for assuring that the units retain their affordability as the housing market changes.

The community development director may waive the requirement for an affordable housing agreement for projects approved prior to the effective hereof and/or for projects that have their affordable housing requirements included in a development agreement or other city document. (Ord. 1818 § 1, 2000; Ord. 2000 § 1, 2009)
If a project is permitted to pay the affordable housing fee to meet the requirements of this Chapter, pursuant to Sections 17.44.040.D, 17.44.040.E, or Section 17.44.080, an affordable housing agreement shall not be required. In the case of approval pursuant to Section 17.44.080, such provision shall be reflected in a resolution for approval adopted by city council. (Ord. 1818 § 1, 2000; Ord. 2000 § 1, 2009)
§ 17.44.070. Incentives to encourage on-site construction of inclusionary units.

The city shall consider making available to the applicant incentives to increase the feasibility of residential projects to provide inclusionary units. Incentives or financial assistance will be offered only to the extent resources for this purpose are available and approved for such use by the city council or city manager, as defined below, and to the extent that the project, with the use of incentives or financial assistance, assists in achieving the city's housing goals. However, nothing in this chapter establishes, directly or through implication, a right of an applicant to receive any assistance or incentive from the city.

Any incentives provided by the city shall be set out in the affordable housing agreement pursuant to Section 17.44.060 of this chapter. The granting of the additional incentives shall require demonstration of exceptional circumstances that necessitate assistance from the city, as well as documentation of how such incentives increase the feasibility of providing affordable housing.

The following incentives may be approved for applicants who construct inclusionary units on- site:

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A. Fee Waiver or Deferral. The city council, by resolution, may waive or defer payment of city development impact fees and/or building permit fees applicable to the inclusionary units or the project of which they are a part. Fee waivers shall meet the criteria included in the city's adopted policy for evaluating waivers of city fees for affordable housing projects. The affordable housing agreement shall include the terms of the fee waiver.

B. Design Modifications. The granting of design modifications relative to the inclusionary requirement shall require the approval of the city council and shall meet all applicable zoning requirements of the city of Pleasanton. Modifications to typical design standards may include the following:

Reduced setbacks;
Reduction in infrastructure
requirements; Reduced open space
requirements; Reduced landscaping
requirements; Reduced interior or
exterior amenities;
Reduction in parking
requirements; Height restriction
waivers.

C. Second Mortgages. The city may utilize available affordable lower income housing funds for the purpose of providing second mortgages to prospective unit owners or to subsidize the cost of a unit to establish an affordable rent or an affordable sales price. Terms of the second mortgage or subsidy shall be stated in the affordable housing agreement. The utilization of these incentives shall not be the sole source of providing the inclusionary units and they are intended to augment the developer's proposal.

D. Priority Processing. After receiving its discretionary approvals, a project that provides inclusionary units may be entitled to priority processing of building and engineering approvals subject to the approval of the city manager. A project eligible for priority processing shall be assigned to city engineering and/or building staff and processed in advance of all nonpriority items.
(Ord. 1818 § 1, 2000)

§ 17.44.080. Alternative Means of Compliance Alternatives to constructing inclusionary units on-site.

In general, and where specified by this chapter, projects shall be required to construct inclusionary units on-site andThe primary emphasis of this inclusionary zoning ordinance is to achieve the inclusion of affordable housing units to be constructed in conjunction with market rate units within the same project in all new residential projects. However, pursuant to state law

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and in the interests of avoiding undue impediments to housing production, the city acknowledges that it may be beneficial to provide alternative means of compliance with this chapter. not always be practical to require that every project satisfy its affordable housing requirement through

A. Provisions Applicable to All Alternatives

1. Approval of any alternative proposal is subject to city council review and approval, based on the criteria and findings set forth in subsections B through H as applicable.

2. The applicant shall bear the burden of providing substantial evidence to support the findings set forth in this section, and to support the feasibility of any proposed alternative. The applicant shall set forth the factual and legal basis for any request under this section.

3. Any request under this section shall be submitted to the director of community development together with an economic analysis, if required, or other supporting documentation.

4. The city council may approve or conditionally approve any alternative set forth in this section if it makes all of the following findings and any additional findings required for the selected alternative:
a. It is not feasible or desirable to accommodate the inclusionary units on site, or to otherwise construct the units in strict accordance with the requirements of this chapter, due to specific site conditions or constraints, project location, or other unique characteristics of the project or project site. b. The number of affordable units provided by the alternative equals or exceeds that provided by the on-site units or by the payment of the Affordable Housing Fee, as applicable to the project;
c. The level of affordability provided by the alternative is the same or lower (i.e. has “deeper” affordability) as provided by on-site units or the payment of fees, as applicable;
d. The alternative is consistent with the general plan and housing element, and the provisions of this chapter.

B. Alternative Proposals
If the provision of on-site affordable units under Section 17.44.040.B. or C. is financially or otherwise infeasible, an applicant for a residential project may request, in order of priority: 1) alternative on-site unit type, size, configuration or clustering of units in a manner other than that specified in subsection 17.44.050, as provided in Subsection C; 2) provide off-site units as provided in subsection D, below; 3) dedicate land for affordable housing as provided in subsection E, below; 4) pay the affordable housing fee as set forth in Chapter 17.40 and in Subsection F, below. The applicant must demonstrate, through provision of substantial evidence as described in Section A, above, that each of the higher priority options is infeasible before the city will consider a lower-priority option.

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1. Notwithstanding Section 17.44.080 A.4., the city council may accept fees in lieu of the alternatives in Subsection B., above, provided it makes a finding that special circumstances justify payment of fees over provision of units.

C. Alternative unit type, size, configuration or clustering of units.

1. An applicant may propose alternatives for the on-site units that deviate from the strict standards of this chapter with respect to unit size, bedroom mix, clustering, unit type, and interior amenities of the affordable units.

2. Proposed units shall comply with requirements of the Building Code and Fire Code, and in no circumstance shall otherwise required amenities be waived that are necessary to ensure the health, safety and welfare of the building and its residents.

3. Alternative on-site locations or clustering of affordable units shall provide equivalent access to shared amenities within the project, unless the affordable units would have suitable alternative shared amenities available for the exclusive use of the residents of the affordable units.

D. Off-Site Projects. Upon approval by the city council, Inclusionary inclusionary units required pursuant to this chapter may be permitted to be constructed at a location within the city other than the project site. Any off-site inclusionary units must meet the following criteria:

1. The off-site inclusionary units must be determined to be consistent with the city's goal of creating, preserving, maintaining, and protecting housing for very low, low, and moderate income households.

1. The off-site inclusionary units must not result in a significant concentration of inclusionary units in any one particular neighborhood or tend to cause residential segregation.

2. The off-site location is suitable for the proposed affordable housing, and the off-site inclusionary units shall conform to the requirements of all applicable city ordinances and standards, and the provisions of this chapter.

2. The occupancy and rents of the off-site inclusionary units shall be governed by the terms of a deed restriction, and if applicable, a declaration of covenants, conditions and restrictions similar to that used for the on-site inclusionary units.

3. The affordable housing agreement shall stipulate the terms by whichof the off-site inclusionary units will be built. Construction of the off-site affordable units shall occur concurrently with construction of the market-rate units in the residential project, unless otherwise approved by the city council. If the construction does not take place at the same time as construction of the market-rate unitsproject development, the agreement shall require the units to be produced constructed within a specified time frame, but in no event longer than fivetwo years after the first building permit is issued for the market-rate project. A cash deposit, or bond or other financial security may be required by the city, refundable upon construction, as assurance that the units will be built.

5. Off-site construction of affordable units does not qualify the residential project for a density bonus or other regulatory incentives allowed by Government Code Section 65915 unless the off-site development includes the dedication of land conforming to the provisions of Section 65915(g). No off-site alternative may be approved by the city

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if a density bonus or other regulatory incentive is requested for the site on which the affordable housing is to be built. Any off-site alternative must comply with the density, intensity and other development standards that are permitted under the zone for the site.

E. Land Dedication. Upon approval by the city council An, an applicant may dedicate land to the city or a qualifiedlocal nonprofit housing developer in place of actual construction of inclusionary units upon approval of the city council. The intent of allowing a land dedication option is to provide the city or a local nonprofit housing developer the free land needed to make an inclusionary unit development feasible, thus furthering the intent of this chapter. The following criteria shall be met for any dedication of land:

1. The dedicated land must be appropriately zoned, buildable, free of toxic substances, and contaminated soils, or geologic or other physical constraints that make it unsuitable for residential development.

2. The developable area of the site isand large enough to accommodate the number of inclusionary units required for the project. The city's acceptance of land dedication shall require that the lots be fully improved, with infrastructure, adjacent utilities, grading, and fees paid.

3. The land is appraised by the City at a value equal to or greater than the in-lieu-fee in place at time of the market-rate project application, multiplied by the number of required inclusionary units that would be satisfied by construction of units on the land to be dedicated. If the appraised value is less than the in-lieu fee, the developer shall be subject to payment of the difference as a cash contribution to the Affordable Housing Fund.

F. Affordable Housing Fee. In lieu of providing inclusionary units in a project, the city council may approve payment of the city's affordable housing fee, as set forth in Chapter

17.40 of this title. Such alternative shall only be approved if the city council determines that:

1. The proposal would be consistent with and further the purpose of this chapter, as set forth in Section 17.44.020.

2. Greater benefit would accrue to the City’s with respect to furthering affordable housing and the ability to provide housing affordable to all segments of the community through payment of the fee, versus requiring construction of the units on-site.

3. Projects requesting a density bonus, incentive or concession, waiver, or parking ratio under Government Code Section 65915 or Chapter 17.38 of the Pleasanton Municipal Code shall not be permitted to pay in-lieu fees as an alternative to satisfying the affordable housing requirements of this Chapter. Payment of fees in lieu of providing affordable units under Chapter 17.44 of the Code does not qualify a housing development for a density bonus.

G. Credit Transfers. In the event a project exceeds the total number of inclusionary units required in this chapter, the project owner may request inclusionary unit credits which may be used to meet the affordable housing requirements of another project. Inclusionary unit credits are issued to and become the possession of the project owner and may not be transferred to another project owner without approval by the city council. The number of

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inclusionary unit credits awarded for any project is subject to approval by the city council.

H. Other Alternate Methods of Compliance. Applicants may propose other creative concepts for meeting the requirements of this chapter, in order to bring down the cost of providing inclusionary units, whether on- or off-site. The city council may approve such alternate methods of compliance with this chapter if the applicant demonstrates that such alternate method meets the purpose of this chapter (as set forth in Section 17.44.020 of this chapter).

I. Lower Income Housing Fee Option. In lieu of providing inclusionary units in a project, an applicant may pay the city's lower income housing fee as set forth in Chapter 17.40 of this title.
(Ord. 1818 § 1, 2000)

Article III
Miscellaneous
§ 17.44.090. Administration.

An applicant of a project subject to this chapter shall submit an affordable housing proposal stating the method by which it will meet the requirements of this chapter. The affordable housing proposal shall be submitted as part of the applicant's city development application (e.g., design review, planned unit development, etc.) to the planning division in a form approved by the city manager. The community development director may waive the requirement for submittal of an affordable housing proposal for projects approved prior to the effective date hereof and/or for projects that have undergone considerable public review during which affordable housing issues were addressed.

A. Review and approval of the affordable housing proposal shall occur as follows: A proposal that is fully compliant with the requirements of this chapter, and does not include any request for alternative compliance, shall be subject to review and approval by the body responsible for review and approval of the related residential development application. Where zoning administrator or planning commission are the approving body, such action shall be subject to appeal in accordance with the provisions of Chapter

18.144.

B. Any affordable housing proposal that includes an alternative compliance method, or that deviates from the standards set forth in this chapter, shall be subject to city council review and approval. In such cases tThe affordable housing proposal shall be reviewed by the city's planninghousing commission at a properly noticed meeting open to the public. The planninghousing commission shall make recommendations to the city council either accepting, rejecting or modifying the developer's proposal and/or the utilization of any incentives as outlined in this chapter. The planninghousing commission may also make recommendations to the city council planning commission regarding the proposalproject as necessary to assure conformance with this chapter.

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C. The approving body, as applicable,Acceptance of the applicant's affordable housing proposal is subject to approval by the city council, which may direct the city manager to execute an affordable housing agreement in a form approved by the city attorney. The city manager or his or her designee shall be responsible for monitoring the sale, occupancy and resale of inclusionary units.

D. Amendment. Minor modifications to an approved affordable housing agreement may be granted by the director of community development, if the modifications substantially comply with the original affordable housing agreement. Other modifications to the affordable housing agreement shall be processed in the same manner as the original affordable housing proposal.
(Ord. 1818 § 1, 2000; Ord. 2000 § 1, 2009)
§ 17.44.100. Conflict of interest.

The following individuals are ineligible to purchase or rent an inclusionary unit: (a) city employees and officials (and their immediate family members) who have policymaking authority or influence regarding city housing programs; (b) the project applicant and its officers and employees (and their immediate family members); and (c) the project owner and its officers and employees (and their immediate family members). (Ord. 1818 § 1, 2000)
§ 17.44.110. Enforcement.

The city manager is designated as the enforcing authority. The city manager may suspend or revoke any building permit or approval upon finding a violation of any provision of this chapter. The provisions of this chapter shall apply to all agents, successors and assigns of an applicant. No building permit or final inspection shall be issued, nor any development approval be granted which does not meet the requirements of this chapter. In the event that it is determined that rents in excess of those allowed by operation of this chapter have been charged to a tenant residing in an inclusionary unit, the city may take appropriate legal action to recover, and the project owner shall be obligated to pay to the tenant, or to the city in the event the tenant cannot be located, any excess rents charged. (Ord. 1818 § 1, 2000)

§ 17.44.120. Appeals.

Any person aggrieved by any action or determination of the city manager under this chapter, may appeal such action or determination to the city council in the manner provided in Chapter

18.144 of this code.
(Ord. 1818 § 1, 2000)

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TITLE 18
ZONING

CHAPTER 18.38 HOZ HOUSING OPPORTUNITY ZONE DISTRICT

Article I General Provisions
§ 18.38.010 Title.
§ 18.38.020 Purpose.
§ 18.38.030 Definitions.

Article II Requirements
§ 18.38.040030 General applicability and development standards. § 18.38.045 Inclusionary unit provisions and specifications. § 18.38.050 Affordable housing agreement.

Article III Miscellaneous
§ 18.38.060 Administration.
§ 18.38.070 Enforcement.
§ 18.38.080040 Appeals.

Article I
General Provisions

§ 18.38.010. Title.

This chapter shall be called the "Housing Opportunity Zone (HOZ) District" ordinance of the city of Pleasanton.
(Ord. 2272, 12/19/2023)
§ 18.38.020. Purpose.

The purpose of this chapter is to enhance the public welfare and ensure further housing development attains the city's housing goals, including affordable housing, by increasing the production of residential units for all income levels. To ensure the remai ning developable land is utilized in a manner consistent with the city's housing policies and needs, this HOZ district is created to allow new or expanded affordable housing development opportunities to all applicable parcels as specified in the city's Housing Element of the General Plan. These new or expanded opportunities shall apply to both ownership and rental projects. (Ord. 2272, 12/19/2023)

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§ 18.38.030. Definitions.

For the purposes of this chapter, certain words and phrases shall be interpreted as set forth in this section unless it is apparent from the context that a different meaning is intended. "Affordable housing fee" means the fee set forth in Chapter 17.40 paid to the city by an applicant for a project in lieu of providing the inclusionary units required by this chapter. "Affordable housing proposal" means a proposal submitted by the project owner as part of the city development application (e.g., housing site compliance review, design review, planned unit development, etc.) stating the method by which the requirements of this chapter are proposed to be met. This information may be provided as part of an affordable housing agreement as provided in Section 18.38.050.
"Applicant" means any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities which seeks city permits and approvals for a project. "City" means the city of Pleasanton or its designee or any entity with which the city contracts to administer this chapter.
"HUD" means the United States Department of Housing and Urban Development or its successor. "Household" means one person living alone, or two or more persons sharing residency whose income is considered for housing payments.
"Inclusionary unit" means a dwelling unit as required by this chapter which is rented or sold at affordable rents and/or affordable sales prices (as defined by this chapter) to very low-, low-, or moderate-income households.

"Income" means the gross annual household income as defined by HUD.

Income Levels.

1. "Household, low income" means a household whose annual income is more than 50% but does not exceed 80% of the area median income (AMI) for San Francisco - Oakland- Fremont Metropolitan Statistical Area, based upon the annual income figures provided by HUD, as adjusted for household size.

2. "Household, moderate income" means a household whose annual income is more than 80% but does not exceed 120% of the area median income (AMI) for San Francisco- Oakland-Fremont Metropolitan Statistical Area, based upon the annual income figures provided by HUD, as adjusted for household size.

3. "Household, very low income" means a household whose annual income does not exceed 50% of the area median income (AMI) for San Francisco -Oakland-Fremont Metropolitan Statistical Area, based upon the annual income figures provided by HUD, as adjusted for household size.
"Life of the inclusionary unit" means the term during which the affordability provisions for inclusionary units shall remain applicable. The affordability provisions for inclusionary units shall apply in perpetuity from the date of occupancy, which shall be the date the city performs final inspection for the building permit.

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"Living area" means the gross area of all floors of a residential structure excluding: basement or cellar areas used for storage only; space used for off -street parking (i.e., garages) or loading, steps, patios, decks, terraces, porches, and exterior balconies, if not enclosed on more than three sides.
"Median income for San Francisco-Oakland-Fremont Metropolitan Statistical Area" means the median gross annual income in San Francisco -Oakland-Fremont Metropolitan Statistical Area as determined by HUD, adjusted for household size.
"Ownership units" means inclusionary units developed as part of a residential development which the applicant intends to be sold, or which are customarily offered for individual sale. "Project" means a residential housing development at one location or site including all dwelling units for which permits have been applied for or approved. "Project owner" means any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities which holds fee title to the land on which the project is located.
"Property owner" means the owner of an inclusionary unit, excepting a "project owner." "Rental units" means inclusionary units which the applicant intends to be rented or leased, or which are customarily offered for lease or rent.
"Resale restrictions" means legal restrictions which restrict the price of inclusionary units to ensure that they remain affordable to very low -, low -, and moderate- income households on resale.
"Residential project, multiple-family" means a residential project consisting of condominiums, apartments, and similar dwellings attached in groups of four or more units per structure and including multiple units located on a single parcel of land under common ownership.

"Residential project, single -family" means a residential project consisting of detached and attached single-family homes, including paired single-family, duets, duplexes, townhomes, and similar unit types where each unit is located on a separate parcel of land. "Unit type" means various dwelling units within a project which are distinguished by number of bedrooms and/or the type of construction (e.g., detached single -family, duets, townhomes, condominiums).
(Ord. 2272, 12/19/2023)

Article II
Requirements
§ 18.38.040030. General applicability and development standards.

A. General Applicability.

1. Parcels shall be identified in the city's Housing Element as a housing opportunity site, meaning sites designated in the Housing Element to be zoned to allow residential development or mixed-use (i.e., mixed residential and nonresidential use, whether in

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the same building or on the same site) and designated in the General Plan Land Use Map as Housing Element Overlay.

2. Parcels identified in the Housing Element as accommodating the city's share of the lower income Regional Housing Needs Allocation, including the following housing opportunity sites, identified with reference to the 2023- 2031 6th Cycle Housing Element, as follows: Site 2 - Stoneridge Shopping Center; Site 5 - Laborer's Council; Site 6 - Signature Center; Site 7 - Hacienda Terrace; Site 9 - Metro 580; Site 12 - Pimlico Area (North Side); Site 20 - Boulder Street; Site 21a (Kiewit High Density); Site 23 - Sunol Boulevard; Site 29 - Oracle; and the Dublin/Pleasanton BART Station parking lot. These sites shall:
a. Permit owner-occupied and/or rental single -family and/or multi-family uses by right pursuant to California Government Code Section 65583.2(h) and (i) for projects with affordable housing proposals in which 20% or more of the units are affordable to lower-income households.
b. Be allowed 100% residential uses regardless of any other applicable zoning district's permitted and conditionally permitted uses for the site; and c. Have all residential uses either: (i) occupy at least 50% of the floor area for a new construction mixed-use project; or (ii) occupy at least 50% of the new floor area proposed on a housing opportunity site with pre-existing commercial/office floor area to be preserved as part of the project. In no case shall the provisions of this district preclude a commercial/office project with no residential uses, assuming those uses are allowed by the base zoning, to be proposed on a housing opportunity site.

B. Development Standards.

1. Nonresidential uses, including modification and expansion of existing uses, shall be permitted and conditionally permitted as specified in the underlying zoning district, the city's Objective Design Standards (ODS) and/or applicable provisions of this title thereto.

2. Residential uses shall be allowed consistent with the densities set forth on a site - specific basis in the Housing Element and the city's Objective Design Standards, and the applicable development standards as specified in the city's Objective Design Standards and/or applicable provisions of this title , and the requirements of Chapter

17.44 (Inclusionary Zoning) and other applicable provisions of Title 17, thereto.

(Ord. 2272, 12/19/2023)
§ 18.38.045. Inclusionary unit provisions and specifications.

A. Required Inclusionary Units.

1. For all new multiple -family residential projects of 15 units or more, at least 15% of the project's dwelling units shall be affordable as provided in this chapter.

2. For all new single-family residential projects of 15 units or more, at least 20% of the project's dwelling units shall be affordable as provided in this chapter.

3. For all new mixed-use projects with 15 residential units or more, at least 15% of the project's dwelling units shall be affordable as provided in this chapter.

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4. Any commercial, office or industrial development will be subject to the affordable housing fee set forth in Chapter 17.40 or may provide inclusionary housing as provided in Section 17.44.040.B.

5. The percentage of inclusionary units required for a particular project shall be determined only once on a given project, at the time of tentative map approval, or, for projects not processing a map, prior to issuance of building permit. If the subdivision design changes, which results in a change in the number of unit types required, the number of inclusionary units required shall be recalculated to coincide with the final approved project. In applying and calculating the 15% requirement, any decimal fraction less than or equal to 0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be construed as one unit.

B. Rental Units. For rental units, the following affordability mix shall be met among the required inclusionary units:

1. A minimum of 25% of inclusionary units shall have rents set at no more than 30% of 50% area median income (AMI) for households with incomes up to 50% AMI (very low-income units).

2. A minimum of 25% of inclusionary units shall have rent set at no more than 30% of 60% AMI for households with incomes of 51% to 60% AMI (low-income units).

3. No more than 50% of inclusionary units shall have rent set at no more than 30% of 80% AMI for households with incomes of 61% to 80% AMI (low-income units).

C. Ownership Units. For affordable ownership units, initial sales prices shall be set at the following limits to result in a monthly mortgage payment (principal and interest) which does not exceed one-twelfth of 35% of the stated AMI, for household size per s ubsection F, below:

1. One bedroom units to be restricted at 100% AMI.

2. Two bedroom condominium units to be restricted at 100% AMI.

3. Two bedroom townhome units/single -family units AND three bedroom and larger units to be restricted at 120% AMI.

D. Bedroom Mix. For each project, a minimum of 10% of the total inclusionary units will be three-bedroom units; a minimum of 45% of the total inclusionary units will be two - bedroom units; and the remaining inclusionary units will be studio or one -bedroom units except that no more than 10% of the units may be studios. This requirement shall not apply to age-restricted senior housing or single-family projects.

E. Minimum Size. Inclusionary units may be of smaller size than the market rate units in the project, subject to the following limitations: the living area of ownership units may be up to 50% smaller than the size of the average market rate unit in the project; for rental units the living area of each unit shall be as follows: (1) a studio shall be at least 700 square feet; (2) a one-bedroom unit shall be at least 850 square feet; (3) a two-bedroom unit shall be at least 1,000 square feet; (4) a three bedroom unit shall be at least 1,250 square feet; and (5) for units with more than three bedrooms an additional 250 square feet for each additional bedroom.

F. Household Size. For the purposes of calculating affordable rental or affordable sales price of an inclusionary units, the following household size assumptions shall be used for each applicable dwelling unit types:

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Unit Size HUD Household Size
Studio units 1 person
1 bedroom unit 2 persons
2 bedroom unit 3 persons
3 bedroom unit 4 persons
4 or more bedroom unit 5 or more persons
G. Materials. Inclusionary units shall be constructed with identical exterior materials and an exterior architectural design that is consistent with the market rate units in the project.

H. Construction Timing. All inclusionary units in a project shall be constructed concurrently with or prior to the construction of the project's market rate units.

I. Accessory Units. Accessory dwelling units and junior accessory dwelling units shall not count towards meeting inclusionary requirements.

J. Projects with Different Unit Types. For those projects with both market rate units and inclusionary units:

1. Inclusionary units shall be dispersed throughout the project so as not to concentrate inclusionary units in a specific geographic area (including a floor) of the project. a. For a project where the market rate units are proposed to be detached single- family homes, it is permitted for the inclusionary units be paired single -family, duets, duplexes, or townhomes. In such case, the townhomes can be concentrated in one or more areas of the project. The residents of both the market rate and the inclusionary units must be provided equivalent project amenities. b. For a project where the market rate units are proposed to be attached or detached single-family homes, duets, or duplexes, it is permitted for the inclusionary units to be ownership condominiums or rental apartments. In such case, and where the number of i nclusionary unis exceed 15 units, the condominiums or apartments can be concentrated in an area of the project. The residents of both the market rate and the inclusionary units must be provided equivalent project amenities.

K. Requirements. The affordability requirements are as set forth in this chapter and the applicable Objective Design Standards (ODS); and for sites for which there are no ODS, then the requirements in Chapter 17.44. In the event of any conflict, the more rest rictive provisions that provide more inclusionary units and deeper affordability shall apply.

L. Perpetuity. Inclusionary units shall remain affordable in perpetuity through the recordation of an affordable housing agreement described in Section 18.38.050 of this chapter.

M. Eligibility. The city's adopted preference and priority system shall be used for determining eligibility among prospective beneficiaries for affordable housing units created by this chapter, unless superseded by federal or state law.
(Ord. 2272, 12/19/2023)
§ 18.38.050. Affordable housing agreement.

All projects subject to this chapter shall enter into an affordable housing agreement. The agreement shall record the method and terms by which a project owner shall comply with the requirements of this chapter or by alternatives as generally provided in C alifornia Government Code Section 65850(g) acceptable in the determination of the city based on analysis of

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equivalent financial value; which analysis may be required by the city to be done by a third party at the owner's expense. The approval and/or recordation of this agreement shall take place prior to final map approval or, where a map is not being processed, prior to the issuance of building permits for such lots or units.

The affordable housing agreement shall state the methodology for determining a unit's initial and ongoing rent or sales and resale price(s), any resale restrictions, occupancy requirements, eligibility requirements, city incentives including second mortgages, recapture mechanisms, the administrative process for monitoring unit management to ensure ongoing affordability and other matters related to the development and retention of the inclusionary units.

In addition to the above, the affordable housing agreement shall set forth any waiver of the affordable housing fee. For projects which meet the affordability threshold with very low- and/or low-income units, all units in the project shall be eligible for a waiver of the affordable housing fee. For single-family residential projects which meet the affordability threshold with moderate income units, or multiple -family residential projects which do not meet the affordability threshold, only the inclusionary units shall be eligible for a waiver of the affordable housing fee.

To ensure affordability of the unit in perpetuity, the affordable housing agreement shall be recorded with the property deed or other method approved by the city attorney. (Ord. 2272, 12/19/2023)

Article III
Miscellaneous
§ 18.38.060. Administration.

Approval of residential projects within the district shall be as specified in this title, which may include, but is not limited to, a housing site compliance review pursuant to Chapter 18.22, subdivision map, etc. An applicant of a project subject to this chapter shall submit an affordable housing proposal stating the method by which it will meet the requirements of this chapter. The affordable housing proposal shall be submitted as part of the applicant's city development application to the planning divisi on in a form approved by the director of community development or designee.

The affordable housing proposal shall be reviewed by the city's commission with purview over affordable housing agreements at a properly noticed meeting open to the public. The commission shall make recommendations to the city council either accepting, rejecting or modifying the developer's proposal and the utilization of any incentives described in Section

17.44.070 and Housing Element Policy 2.6. The commission may also make recommendations to the city council regarding the project as necessary to ensure conformance with this chapter.

Acceptance of the applicant's affordable housing proposal is subject to approval by the city council, which may direct the city manager to execute an affordable housing agreement in a form approved by the city attorney. The city manager or his or her designee shall be responsible for monitoring the sale, occupancy and resale of inclusionary units. (Ord. 2272, 12/19/2023)

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§ 18.38.070. Enforcement.

A. In the event of conflict between this chapter and Chapter 17.40 or 17.44, or other adopted city requirement, the more specific provision shall prevail.

B. The city manager is designated as the enforcing authority. The city manager may suspend or revoke any building permit or approval upon finding a violation of any provision of this chapter. The provisions of this chapter shall apply to all agents, successor s and assigns of an applicant. No building permit or final inspection shall be issued, nor any development approval be granted which does not meet the requirements of this chapter. (Ord. 2272, 12/19/2023)
§ 18.38.080040. Appeals.

Any person aggrieved by any action or determination of the city manager under this chapter, may appeal such action or determination to the city council in the manner provided in Chapter

18.144 of this code.
(Ord. 2272, 12/19/2023)

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OBJECTIVE DESIGN STANDARDS

OBJECTIVE DESIGN STANDARDS

CITY OF PLEASANTON

Objective Design Standards for Housing Sites

Adopted January 26, 2023, Revised May 2, 2023, and
______, 2024

COMMUNITY DEVELOPMENT DEPARTMENT

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PART 2

DEVELOPMENT STANDARDS

The following regulations establish quantitative standards in order to realize the desired building, open space, and street character contained in the Design Standards.

In addition to the Design Standards described below; all multifamily residential development shall satisfy other standards in this document relating to:
• The provision of pedestrian and bicycle connections (both private and public)
• Group Usable Open Space (Development Standards)
• Landscaped Paseos (A.6)
• Open Space, Landscaping and Lighting (A8, A9, and A10) And shall also incorporate residential amenities such as play/activity areas, pools, water features, fitness facilities, and community rooms.

Density: Each site has been identified for a range of density expressed in units per acre (see Table 2.1 Housing Sites, for details). These densities are in addition to the on-site retail or service uses that the City may approve as part of a mixed-use project, if such additional development was anticipated in the 2012 Housing Element and Climate Action Plan General Plan Amendment and Rezonings Supplemental EIR, or the 2023-2031 (6th Cycle) Housing Element Update Program EIR, or as approved through any subsequent tiered environmental review.

Note: The City interprets the minimum residential density to be an average minimum density to be met over the entirety of the project site (i.e., different portions of the site may have densities that are either higher or lower, but the minimum density is met cumulatively across the entire site).

Permitted and Conditionally Permitted Uses: In addition to residential uses at the densities assigned in Table 2.1, mixed-use development (commercial uses in conjunction with residential uses) is allowed as follows on sites where such additional development was anticipated in the 2012 Housing Element and Climate Action Plan General Plan Amendment and Rezonings Supplemental EIR, or the 2023-2031 (6
th Cycle) Housing Element Update Program EIR, or as
approved through any subsequent tiered environmental review. • Appendix C lists permitted and conditionally permitted uses for designated 5
th Cycle (Carryover Sites)
• 6th Cycle Housing Element Sites 18 (Valley Plaza) and Site 2 (Stoneridge Shopping Center), permitted and conditionally permitted uses shall be allowed as specified by their underlying zoning, within mixed use projects on these sites. Vertical mixed use (mixed uses within

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the same building) or horizontal mixed use (mixed uses within different buildings on the same site) is allowed.

Affordability: All development shall comply with the City’s Inclusionary Zoning Ordinance (IZO), Chapter 17.44 of the Pleasanton Municipal Code.. through Affordable Housing Agreements entered into between the City and each developer; the agreements will be recorded and will run with the land.

Inclusionary units shall be deed-restricted to be affordable in perpetuity.

Accessory Dwelling Units or Junior Accessory Dwelling Units shall not be permitted to count towards meeting the IZO’s minimum inclusionary requirements.

For rental units, the following affordability mix shall be met, reflecting the rent maximums that may be set among any required inclusionary units:
• A minimum of 25 percent of inclusionary units shall have rents set at no more than 30% of 50% Area Median Income (AMI) for
households with incomes up to 50% AMI (Very Low Income Units) • A minimum of 25 percent of inclusionary units shall have rent set at no more than 30% of 60% AMI for households with incomes of 51% to 60% AMI (Low-Income Units)
• No more than 50 percent of inclusionary units shall have rent set at no more than 30% of 80% AMI for households with incomes of 61% to 80% AMI (Low-Income units)
Actual rents charged shall follow the published schedule of maximum monthly rents, by size and type of units, as provided and updated annually by the City.

Qualifying incomes shall be set at the same levels as those described above (i.e., a qualifying household for a 50% AMI rent-restricted unit shall have a maximum annual income of no more than 50% AMI), with such income limits based on the schedule of income limits based on household size published annually by the City and consistent with the U.S. Department of Housing and Urban Development (HUD) annual adjustment in the AMI for the San Francisco-Oakland-Fremont Metropolitan Statistical Area.

In instances where a project proposes to make use of State or Federal programs (e.g., State Housing Density Bonus Law, Low-Income Tax Credits, etc.) then the most restrictive requirements of any applicable income and rent limits established by such programs shall prevail; and for purposes of Density Bonus Law, for low-income households earning 61-80% AMI, the City shall allow, at the applicant’s request, rents to be set at 30% of actual income of such qualifying low-income households.

For ownership units, prices shall be set at the following limits to result in a monthly mortgage payment (principal and interest) which does not exceed one- twelfth of 35% of the stated AMI, per Municipal Code Section 17.44.050.F:

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• 1 bedroom units to be restricted at 100% AMI
• 2 bedroom condominium units to be restricted at 100% AMI • 2 bedroom townhome units/single-family units AND 3 bedroom and larger units to be restricted at 120% AMI[1]

Section 8 Rental Assistance Vouchers: Through the affordable housing agreements entered into between the City and each developer, the developments will generally be required to accept HUD Section 8 Rental Vouchers as a means of assisting qualified applicants.

Bedroom Mix of Affordable Units: For each project, a minimum of 10% of the total affordable units will be three-bedroom units; a minimum of 45% of the total affordable units will be two-bedroom units; and the remaining affordable units will be studio or one-bedroom units except that no more than 10% of units may be studios. This requirement shall not apply to age-restricted senior housing or single-family projects.

[1] Household sizes for units shall be calculated based upon two persons in the case of a one-bedroom unit, three persons in the case of a two-bedroom unit, four persons in the case of a three-bedroom unit, as generally set forth in Cal. Health and Safety Code section 50052.5(h).

City Council Minutes Page 1 of 2 May 7, 2024

CITY OF PLEASANTON

CITY COUNCIL

MINUTES
Tuesday, May 7, 2024
5:00 PM

CALL TO ORDER
Mayor Brown called the Special Meeting Workshop of the City Council to order at the hour of 5:00 p.m. from the Council Chamber located at 200 Old Bernal Avenue.

ROLL CALL

Present: Councilmembers Arkin, Balch, Nibert, Testa, Mayor Brown

Absent: None

PUBLIC COMMENT
Mayor Brown opened public comment. There being no speakers, Mayor Brown closed the public comment

WORKSHOP

1. Present initial findings and receive policy direction on Development Impact Fees, inclusionary housing requirements and Lower- Income Housing Fees, and City water and sewer connection fees
Recommendation: Present initial findings and receive policy direction on Development Impact Fees, inclusionary housing requirements and Lower- Income Housing Fees, and City water and sewer connection fees

1. Set Sewer and Water Connection Fees at, or close to, the maximum.

2. Set inclusionary rate at 15% for all projects; set in-lieu Affordable Housing Fee as close to cost to construct as feasible.

3. Set CFF and TIF fees at a financially feasible level.

The City Council provided direction regarding the recommendations as follows:

1. Council agreed to the recommendation with the clarification that connection fees for residential is calculated per unit, but other categories are calculated by square foot.

2. Council requested this item be revisited for future discussion, with the percentage to e somewhere between 15-20%. Staff will provide additional ATTACHMENT 2

City Council Minutes Page 2 of 2 May 7, 2024
scenarios for square foot versus per unit charge.

3. Council requested a recommended range for consideration.

ADJOURNMENT
Mayor Brown adjourned the meeting at 6:39 p.m.

Jocelyn Kwong, City Clerk

CITY OF PLEASANTON

CITY COUNCIL
PLEASANTON.

MINUTES
Tuesday, August 20, 2024
5: 00 PM

CALL TO ORDER/ ROLL CALL
MayorBrowncalledtheWorkshopoftheCityCouncilto orderat thehourof 5:00p.m from the Council Chamber located at 200 Old Bernal Avenue.

ROLL CALL

Present: Councilmembers Arkin, Balch, Testa, Mayor Brown

Absent: Councilmember Nibert
Mayor Brown amended the order of items on the agenda with item 1b to be heard before item 1 a.

PUBLIC COMMENT
Mayor Brownopened publiccommentfor each itemseparately.

WORKSHOP

1. Reviewand providedirectionon the followingitems:
b. Provide direction regarding a public art fee and program Recommendation: DevelopandpresentforCivicArtsCommissionandCity Council consideration:

A " percent for art" program for Pleasanton based on best practices from neighboring cities
Updates to the City's Municipal Code to provide for a "percent for art" and better clarify the public art process and responsibilities A public art plan to guide the expansion of the public art program throughout the city
Presentationby Heidi Murphy, Directorof Libraryand Recreation.

City Council Minutes Page 1 of 3 August 20, 2024

Mayor Brown opened public comment. The following individuals provided comment: Jan Coleman - Knight, Kellene Cousins.

Mayor Brown closed the public comment.

The City Councilprovideddirectionto proceedwith the recommendationand to make the program broad enough in scope to include potential use of the fund for art -basedcommunityprogramsand art grants, andto prioritizeinstallation, maintenance, and acquisition of public art.
a. Providedirectionon key policyconsiderationsfor an updateof the Inclusionary ZoningOrdinanceand affordablehousingfee
Presentationby EllenClark, Directorof CommunityDevelopmentand consultant Megan Gregory with Economic and Planning Systems.

Mayor Brown opened public comment. There being no speakers, Mayor Brown closed the public comment.

Mayor Brown recessed the workshop at 6:40 p.m. with the meeting to resume after the conclusion of the regular meeting in order to finalize the City Council' s direction regarding item 1a.

The workshop reconvened at 9:50 p.m.

The City Council provided direction as follows:

1. Inclusionary rate for for -sale and rental projects
Establish a 15% inclusionary rate for both rental and for -sale projects (all unit types), with rental units at 60% Area Median Income ( low- income) and for - sale projects at 120% AMI ( moderate income).

Reduce " threshold" project size for residential developments subject to IZO from 15 to 10 units.

Bringbackfor City Councilconsideration, as part of the future affordable housing fee rate discussion:
o Consideration of an interim measure to stimulate multi -family housingproduction, allow rentalapartmentprojectsto payfees in lieu of constructing on-site housing for up to 30% of the required units, for up to two years.
o An option for rental projects that includes units at 50% and 60% AMI

2. Amount of the affordable housing fee
Establish an affordable housing in -lieu fee for projects not subject to inclusionaryrequirements, or otherwisepermittedto pay in -lieufees, of up to City Council Minutes Page 2 of 3 August 20, 2024

45.57 per squarefoot for single-family and townhomeprojects, and up to 20- 25per squarefoot for multi -family projects, with these preliminary recommendations subject to refinement as part of the broader consideration of the overall fee program.

3. Modificationsand refinementsto the existing IZO
Make proposals fully compliant with the IZO subject to approval at the same level as the underlying project
Makeall alternativecomplianceproposalssubjectto City Council reviewand approval, and subject to findings
Continueto includea rangeof alternativecomplianceoptions, including payment of in -lieu fees, also subject to City Council review and approval, subject to specific findings and structured to encourage use of options other than payment of the in - lieu fee.

Disallow JADUs to count toward meeting the IZO requirement and return with more information regarding ADUs.

Improvefeasibilityfor on-site inclusionaryunits by providingadditional flexibilityas to smallerunit sizes/types, and clusteringof inclusionaryunits in some circumstances
Add quantitative standards to ensure minimum unit sizes and other standards are met

ADJOURNMENT
Mayor Brown adjourned the meeting at 10: 14p.m
J c lyn K ong ity Clerk
City Council Minutes Page 3 of 3 August 20, 2024

10/6/2024
1 Inclusionary Zoning Ordinance and Related Code AmendmentsCity Council WorkshopOctober 15, 2024 Meeting Purpose•Present draft revisions to PMC Chapter 17.44: Inclusionary Zoning Ordinance (IZO)•Related amendments to PMC Chapters 17.40, 18.38 and Objective Design Standards for Housing Element Sites•City Council feedback and direction, prior to hearings for adoption in November1 2

10/6/2024
2 Background•Inclusionary Zoning Ordinance Update:•Revisit/study potential changes to inclusionary rate and target affordability•Create/strengthen objective standards for inclusionary units•Improve process and findings for approval of alternative compliance•Clarify and update procedures •Modifications to IZO studied in parallel with impact fee update•City Council Workshops: May and August 2024:•Recommendations for inclusionary rate, and direction on key policy items for IZO update•Planning Commission Recommendation to Adopt Amendments:September 11, 2024 City Council Workshops•May 7, 2024•Initial findings for impact fee update•Various scenarios for inclusionary rate and affordability levels•Key finding: Increased fees can be justified based on nexus and other analysis, but need to balance feasibility concerns, effect on City’s longer-term fiscal and housing policy goals•Staff recommendation to set inclusionary rate at 15% for all residential projects•August 20, 2024•Focused discussion for IZO Update•Additional/refined scenarios for inclusionary rate and fee•City Council supported 15% inclusionary rate •Consensus direction on key policy items 3 4

10/6/2024
3 Summary of IZO Amendments
IZO Amendments: Summary•Inclusionary Rate and Affordability Levels•Threshold Project Size•Inclusionary Unit Standards•Clustering•ADUs/JADUs•Unit Size Minimums•Bedroom Mix•Alternative Compliance•Review Procedures•Other Revisions 5 6

10/6/2024
4 Inclusionary Rate/Affordability Levels §17.44.040 B. and C.•For Sale Projects (attached and detached)•15% Inclusionary, at 120% AMI (moderate income)•Rental Projects •15% Inclusionary, at 50% and 60% AMI (low-income) Inclusionary Rate/Affordability Levels§17.44.040 B. and C.•Reducing for-sale inclusionary rate has negligible effect on AH production, but improves project feasibility•Rates similar to peer cities surveyed•Inclusionary rate supports an in-lieu fee that is higher than today, and more commensurate with cost to construct•Concurrent recommendation to reduce threshold project size subject to IZO from 15 to 10 units•City Council will discuss Affordable Housing Fee (and other fee rates) on 11/19 7 8

10/6/2024
5 Inclusionary Unit Standards: Clustering §17.44.050.A.•Existing ordinance requires “dispersal”, but no objective definition•Limited flexibility around clustering – may impede feasible options to provide on-site affordable •Revised IZO:•Establishes objective standards for acceptable degree of clustering•Additional flexibility for clustering in single-family projects•Attached duets, townhomes or apartments (still dispersed)•Permits tax-credit funded units to be completely clustered•Clustering beyond these standards requires City Councilapproval Inclusionary Unit Standards: ADU/JADU §17.44.050.B•ADUs/JADUs explicitly prohibited from “counting” towards IZO requirements•City cannot legally require units to be rented at at all (per Ellis Act)•Monitoring/enforcement extremely challenging•Does not prohibit or preclude ADUs from being provided – but they are “over and above” IZO•City Council supported disallowing JADUs to “count” – requested additional information on ADUs•Staff and Planning Commission supported recommendation to disallow both ADUs/JADUs from meeting IZO requirement 9 10

10/6/2024
6 Inclusionary Unit Standards: Unit Size§17.44.050.D•For Sale Units: Living Area may be up to 50% of size of average market-rate unit•Rental Units:•Guidance from City consultant (VMWP) experience developing market-rate and affordable residential – minor adjustments based on PC comments•Affordable units are typically smaller than market-rate to improve feasibility but remain livable •Pleasanton “typical” unit larger than more urban locations- 3 Bedroom: Minimum 1,000 net sq. ft.- 4 Bedroom and Up: + 200 net sq. ft / bedroom- Studio: Minimum 450 net sq. ft.- 1 Bedroom: Minimum 550 net sq. ft.- 2 Bedroom: Minimum 750 net sq. ft.

Inclusionary Unit Standards: Bedroom Mix§17.44.050.G•For-Sale Projects•Same average number of bedrooms as market-rate units, up to 3 bedrooms•Rental Projects: •At least 10% Three-Bedroom units•No more than 10% Studio Units•Remainder One-Bedroom and Two-Bedroom Units 11 12

10/6/2024
7 Alternative Compliance §17.44.080•Continue to allow several means of alternative compliance:1.Alternative on-site unit configuration or clustering2.Off-Site Construction3.Dedication of Land4.Payment of Affordable Housing FeePlus: Other “creative concepts”•All alternative compliance options subject to Council approval•Burden of proof on applicant to demonstrate infeasibility of basic compliance•Incorporation of preference/ranking for alternative compliance•Strengthened approval criteria and findings Procedures for Review §17.44.090•Proposals in full compliance with IZO subject to approval by same body approving project as a whole•Approval may be appealed or “called up” per typical PMC procedures•Alternative compliance proposals subject to City Council approval, with recommendation from Planning Commission13 14

10/6/2024
8 Other Revisions to IZO•Definitions revised and updated to match terms of updated IZO, current practice and regulatory requirements (e.g. definition of “AMI”)•Clarification of design standards to be more specific, objective•Projects permitted to pay fees don’t require approval of a detailed Affordable Housing Agreement (approval by Council Resolution)•Delete “priority processing” as an incentive – potential to cause conflicts with permit processing requirements under State law•Add AHA amendment procedures, including administrative approval of non-substantive amendments Amendments to PMC 17.40, 18.38, and ODS•Chapter 17.40: Affordable Housing Fee•Clarify purposes for which AH Fee may be used (e.g. housing-related programs)•Modernize language: e.g. exemption from fee for religious facilities, vs. “churches”•Annual adjustment to fee based on Construction Cost Index, vs. Consumer Price Index•Delete obsolete references to AB1600•Chapter 18.38 – Housing Opportunity Zone District, and Objective Design Standards for Housing Sites•Delete detailed standards for inclusionary units: superseded by updated IZO 15 16

10/6/2024
9 Next Steps•Presentations to Business Organization Partners, Chamber of Commerce, and Economic Vitality Committee•November 19 City Council•Introduce Ordinance to Amend IZO and Related Code Amendments•Study Session: Impact Fee Studies and Fee Rate Recommendations•December/January: Adopt Ordinance to Adopt Impact Fee Studies and Updated Fees•Fees effective 60 days after Second Reading (~early March, 2025) City Council Questions and Discussion17
18

Item #18

CITY COUNCIL AGENDA REPORT

October 15, 2024
City Manager

TITLE: RECEIVE ECONOMIC DEVELOPMENT STRATEGIC PLAN IMPLEMENTATION UPDATE

SUMMARY
To recalibrate the City's economic development policies, programs, and strategies to proactively meet today's market opportunities and challenges, the City Council adopted an updated five-year Economic Development Strategic Plan (EDSP). The EDSP serves as a tactical roadmap for the City's economic development activities, which make tangible progress in strengthening the City's fiscal health. This report provides a summary of tasks initiated or completed for the five Implementation Plan Priorities identified in the EDSP for FY 2023/24 and identifies the progress toward implementation of these priorities in the current FY 2024/25.

RECOMMENDATION
Receive Economic Development Strategic Plan implementation update.

BACKGROUND
In August 2023, the City Council adopted the updated Economic Development Strategic Plan (EDSP) which the Economic Vitality Committee (EVC) and staff use as the foundation for their work. The strategic plan defines the City’s economic development goals, strategies, and implementation actions over five years from FY 2023/24 to FY 27/28. The EDSP is available on the City’s Economic Development webpage.

The EDSP is composed of five Implementation Plan Priorities:
• Economic Development Capacity Building
• Business Retention, Expansion & Attraction
• Local Revenue Growth
• Entrepreneurship & Innovation Outreach
• Major Projects Accelerator Program

Each plan priority includes key initiatives outlining specific programs and tasks proposed to advance the plan priorities which are assigned to anticipated fiscal years for implementation.

An EDSP implementation update was most recently provided to the Economic Vitality Committee meeting at its June 20, 2024, meeting; similarly, this report will be provided to the EVC.

DISCUSSION
The following is a summary of implementation activities initiated or completed in FY 2023/24 and continued into FY 2024/25 for each of the five EDSP priorities, as the framework for the City's economic development efforts.

1. Economic Development Capacity Building
Shortly after the EDSP was adopted in August 2023, an evaluation of priorities was conducted to accommodate the Economic Development division’s capacity to accomplish the key initiatives within each priority given that the Office Assistant position, which also supports the Communications Division, is currently unfilled/frozen. To support business promotion activities, as-needed marketing and communications professional services were retained for FY 2023/24 and FY 2024/25. In August 2024, a part-time, temporary Program Specialist was hired to provide support in the Economic Development Division and is budgeted for FY 2024/25.

Adopt and Incorporate DEI Best Practices in Economic Development An update to the Business License application to gather demographic data was initiated with Business License staff in FY 2023/24 and will be implemented with the upcoming 2025 business license renewal process. Three optional supplemental questions will collect information to identify minority-, women-, veteran-owned businesses and ethnicity to provide connection to federal, state, or regional resources available for these groups. Resource guides have been added to the City’s website.

Formulate Community & Business Partnerships
Agreements with the Pleasanton Chamber of Commerce, Pleasanton Downtown Association, and i-Gate Innovation Hub were executed or continued in FY 2023/24. Generally, these agreements define the partnership roles and responsibilities, areas of collaboration, and identify funding commitments where applicable.

City staff holds bi-monthly City Business Organization Partner meetings to share information relating to economic development with business leaders from the Pleasanton Downtown Association, Pleasanton Chamber of Commerce, Hacienda, Stoneridge Shopping Center, Visit Tri-Valley, and Alameda County Fair Association. The City’s Economic Development Manager and the Deputy Director of Community Development/Planning and Permit Center Manager facilitate the meetings.

Economic Development Work Plan Activities
The following activities are assigned to the Economic Development division, which are intended to support economic development on a broad scale:
• Liaise with the Economic Vitality Committee which had six meetings in FY 2023/24, and one meeting to date this current fiscal year. The EVC meets bi-monthly. • Publish a business e-newsletter to share relevant information with the business community to over 4,280 business contacts including businesses that have an active business license in Pleasanton. There were 12 e-newsletters published in FY 2023/24 which had an average open rate of 47.7%.
• Represent the City with economic development-related organizations by attending meetings and events: East Bay Economic Development Alliance Economic Development Council, Innovation Tri-Valley Leadership Group and Business Innovation Committee, i-Gate Innovation Hub Board of Directors City staff representative, Visit Tri- Valley Board of Directors City representative for FY 2023/24, Pleasanton Downtown Association Board of Directors City representative, and Pleasanton Chamber of

Commerce Economic Development and Government Relations Committee.

2. Business Retention, Attraction & Expansion Program
Enhance Visibility, Marketing and Branding Strategy
Digital and print collateral to define Pleasanton’s value proposition are currently being designed in coordination with the Retail Attraction and Business Roadmap to Provide a Clear Pathway for Zoning and Permitting initiatives; this will include expanded Economic Development webpages on the City’s website. Completion is planned in FY 2024/25.

Economic Development success stories are compiled and shared with the City Council, Economic Vitality Committee and on the City’s social media platforms. Some significant news in FY 2023/24 included:
• Tarlton Properties began plans to build out Pleasanton Labs, a total of 291,000 square feet of office space on Hopyard Road slated for conversion to life sciences, biotech, or medical device R&D lab and office space. Tarlton Properties is a leader in commercial property development specifically focused on life sciences in the Bay Area, which aligns with Pleasanton’s priorities to grow its life sciences sector. • Stanford Health Care Tri-Valley purchased a five-building office complex at Hacienda Lakes to provide expanded high-quality services, confirming Stanford’s commitment to its patients in the Tri-Valley with a second surgical center, additional clinic space and multidisciplinary clinics.
• Unchained Labs relocated its headquarters within Pleasanton, moving into its 124,000 square foot headquarters, nearly 2.5 times its previous footprint at Bernal Corporate Park.
• Two new hotels opened in the Johnson Drive Economic Development Zone along Johnson Drive and I-680: Springhill Suites and Town Place Suites, both by Marriott, adding 231 suite-type rooms to Pleasanton’s hotel room supply, which is the largest in the Tri-Valley at over 2,100 rooms.
• Villa Sport Fitness opens its newest Bay Area location featuring a state-of-the-art facility, expert trainers, and specialized recovery services including compression, cryo, cold, float, and infrared therapies in Hacienda.
• Denica’s Real Food Kitchen opened its doors in the former Red Robin location at the 580 Metro Shopping Center, making this its third location in the Tri-Valley. Another notable dining addition includes Pleasanton’s second Chick-fil-A, a non-drive-thru location on Hopyard Road which features a special carry-out section in the restaurant to serve the nearby residents and business employees.
• Kaiser Permanente began transitioning over 1,000 employees in March 2024 to its existing Pleasanton campus from its headquarters in Oakland. Kaiser owns six office buildings in Hacienda on Owens Drive and Hacienda Drive. The transition represents 10% of its administrative staff including executive leadership.

Support marketing events through partnerships:
• Sponsored i-Gate/Startup Tri-Valley’s 2023 Tri-Valley Life Sciences Summit event.

Partnering in the 2024 event as a sponsor, participating on the planning committee and was instrumental in acquiring Kaiser Permanente as the primary Host and Presenting

Sponsor.
• Sponsored the 2023 Innovation Tri-Valley #GameChangers event which recognized Tri-Valley innovators including Pleasanton-based Vector Atomic. • Co-hosted the 2023 Economic Drivers: Destination for Successful Innovation luncheon with the Pleasanton Chamber of Commerce to recognize four outstanding Pleasanton companies: Blume Global, ZF, Cowbell Cyber and Vector Atomic.

Formulate Recurring Employer/Business Meetings to Create Touchpoints with City A contact list of key business types has been created and is periodically updated. Connections in FY 2023/24 included Tarlton Properties/Pleasanton Labs, Kaiser Permanente, The Clorox Company, and Villa Sport Fitness. Conducted joint Community Development and Economic Development pre-applicant meetings with the following businesses interested in Pleasanton:

Natera, School of Rock, and Park Lab.

In conjunction with the 2024 Tri-Valley Life Sciences Summit, an Executive Roundtable is planned with business leaders to learn how the City can support continued success, identify challenges and hear insights on attracting more life sciences, biotech, and innovation-based companies to Pleasanton.

Assess and Strengthen Talent/Workforce Development Offerings A partnership with Pleasanton Unified School District was formed in FY 2023/24 to leverage PUSD’s Workforce Development programming. A presentation was made at its April 18, 2024, Economic Vitality Committee meeting to provide an overview of PUSD’s Career Technical Education programs. An invitation for Pleasanton businesses to participate was sent via a survey in the City’s September 2024 business e-newsletter. Additional outreach is planned throughout FY 2024/25 to increase program awareness.

3. Local Revenue Growth
Expand Citywide Retail & Tenant Support Program
Pleasanton's retail centers, employment centers, and hotel properties are primary drivers of the City's economic resilience. With increasing competition for new commercial development and possible reinvestment in dated retail inventory, staff is advancing a new retail attraction initiative to focus on strategies that lead to local revenue growth and future provisions of high quality public services and amenities. The initiative will produce three critical pieces of research and analysis:
• An inventory and assessment of vacant retail opportunity sites in all major shopping centers and commercial districts in the city.
• A preliminary assessment of retail attraction opportunities, using the “void analysis” methodology. As a result of the void analysis, staff identified 18 specific retail categories that have the greatest potential for retail attraction (e.g., home improvement, home furnishings, personal care, restaurants, automotive, health & fitness, etc.). Based on the analysis, a list of specific tenants was compiled within each retail category that can be targeted for retail marketing and attraction efforts during the coming year. • A scan of regional economic and market trends that impact Pleasanton’s position in the retail market and that help shape short- and long-term retail attraction goals.

The chart below, provided by HdL, the City's sales tax consultant, illustrates sales tax revenue by major business group for the 1st quarter of 2024. Considerations for retail attraction initiative activities will take into account sales tax trends in order for the City to identify those business groups or industries that enhance job growth and generate sales tax revenue in Pleasanton.

Provided by HdL Companies, 1Q 2024 (January-March) Sales Tax Update for the City of Pleasanton

An overview of the initiative was presented to the Economic Vitality Committee at its June 20, 2024, meeting for feedback. As this initial research has been completed, staff will:
• Continue outreach to retail brokers, property owners, and other members of the local retail development community; for example, staff met with Retail West regarding a future tenant(s) the former Bank of America building at 337 Main Street; • Refine and complete the analysis of Pleasanton’s retail sector; • Develop brochures and other collateral materials to use in retail attraction meetings; • Begin outreach to the target retail tenants, culminating in meetings with the retail tenants at the upcoming ICSC retail conference in March 2025.

COVID Business Support Programs
Economic Development and Finance staff continue to oversee repayment activity for the Business Support Loan Program which provided $1,335,700 to 115 Pleasanton businesses during the pandemic as part of the City’s Business Assistance Program. Loans were provided with zero percent interest and up to 3-year repayment terms with amounts ranging between $2,500 to $21,600 depending on business location (downtown or non-downtown) and employee count. Repayment began on April 1, 2023, after the local state of emergency was

lifted by the City Council. Six businesses requested an extended repayment period of up to 72 months, which the City granted. To date, $643,066.12 has been received, including a total of $110,700 from 16 businesses which have paid loans in full. It is anticipated that approximately $652,488.44 will be paid by April 2026 under the original repayment period of up to 36 months. There are 15 businesses that are in arrears of approximately $73,587.94; staff is invoicing and taking further steps to collect payments. The remaining balance of $40,945.44 is anticipated to be paid by 2029 for loans with a repayment period of up to 72 months.

The Downtown Parklet and Outdoor Dining Installation Grant Programs ended on June 30, 2024. These programs were also part of the City’s Business Assistance Program during the pandemic. The programs provided reimbursements of 50% of eligible parklet-related or outdoor dining installation expenses up to $10,000. Nine downtown businesses received parklet grants for a total of $75,292: four of which were approved in FY 2022/23 and five were approved in FY 2023/24. One business received a grant of $10,000 for an outdoor dining installation in FY 2022/23. No grant applications were submitted in the latter half of FY 2023/24.

Evaluate the Downtown Business Improvement District Structure For several years, the City Council included in its Work Plan Priorities an evaluation of the current Downtown Pleasanton Business Improvement District structure which has been in place since 1989. To enhance economic vitality and create a sustainable funding mechanism for programs and services within the Downtown district, the formation of a Property and Business Improvement District (PBID) is currently being explored; the proposed PBID is a property owner-based district, designed with the goal of adding additional investment toward enhancing and improving the downtown. Civitas Advisors is working with staff on the feasibility and formation processes. As part of the process, a steering committee comprised of downtown property owners has been formed to develop consensus around key issues, guide the development of the PBID service plan, and assist staff in seeking support for the PBID.

Outreach and consensus building efforts for property owners will include a survey and open house. The PBID formation recommendation will be presented to the City Council in early 2025.

Implement City’s “Support Local” Marketing Plan Strategies • Transition the City’s inPleasanton.com support local website to the recently redesigned City website within an expanded Visit Pleasanton page. New shopping and dining pages will be added to highlight Pleasanton businesses through featured videos and photos.
• Continue marketing and communication efforts to support and promote Pleasanton businesses using the City’s inPleasanton social media platforms including LinkedIn, Facebook and Instagram.
• Executed the 2023 Business Anniversary Recognition Program by honoring 169 businesses celebrating 15, 20, 25, 30, and 40 years as a Pleasanton business at the December 5, 2023, City Council meeting and with a social media campaign. In 2024, there are 164 businesses celebrating 15, 20, 25, 30, 40, and 50 years as a Pleasanton business. These businesses are invited to receive recognition at the October 15, 2024, City Council meeting.
• A new Holiday Gift Guide was prepared to promote local businesses for the 2023 holiday season. Over 60 Pleasanton businesses participated in the gift guide which was

mailed to 34,000 households in the Tri-Valley. Printed copies were available at public facilities, Museum on Main, Visit Tri-Valley and the Pleasanton Chamber of Commerce offices as well as several Pleasanton hotels. The City contributed to the overall design and circulation of the guide while businesses paid for advertising space. A similar guide is planned for the 2024 holiday season.
• To encourage local spending during the 2023 holiday season, a special promotion was held with Gift Pleasanton, Pleasanton’s e-gift card program which provided a bonus card with purchase. Over $14,000 worth of e-gift cards were sold from late November through December. There are 48 Pleasanton businesses that accept Gift Pleasanton e- gift cards. A similar holiday promotion is planned for the 2024 holiday season to keep holiday spending in Pleasanton. A corporate sponsorship program for Gift Pleasanton will be planned in FY 2024/25.
• Update the Pleasanton Dining Guide on an annual basis to promote local dining and food-related retail shopping. View the 2024 Pleasanton Dining Guide.

Formalize Partnerships with Community and Business Organizations for events and campaigns
• Partnered with Pleasanton Downtown Association to promote Small Business Saturday.
• Pleasanton Downtown Association is a new partner for Gift Pleasanton and will discontinue the downtown gift card program.
• Partnered with Visit Tri-Valley (VTV) to promote Taste Tri-Valley Restaurant Week.

Tourism & Hospitality Program
• Sponsored Visit Tri-Valley’s the VIBE online event platform to promote civic arts performances, events, and activities in Pleasanton. Sponsorship was shared between Economic Development and Library and Recreation Department’s Civic Arts program. • Staff is actively involved in Visit Tri-Valley’s proposed multi-use facility development process which is included in VTV’s 5-year Destination Strategic Plan. The proposed multi-use facility will feature approximately 100,000 square feet of flexible space for sporting events, conferences, concerts, and trade shows. VTV and its consultants are considering sites in Dublin, Livermore and Pleasanton. Since March, staff has met regularly with VTV and its consultants to provide information to best position Pleasanton as a top contender for the multi-use venue location.

4. Entrepreneurship & Innovation Outreach
Staff is leveraging existing outreach activities by enhancing regional partnerships with East Bay Economic Development Alliance, Innovation Tri-Valley, i-Gate Innovation Hub/Startup Tri- Valley, and East Bay Small Business Development Center. Some planned initiatives for FY 2024/25 include:
• A Life Sciences and Biotech Series with i-Gate/Startup Tri-Valley to highlight entrepreneurship and new founders in the Tri-Valley life sciences and biotech ecosystem, ultimately to attract these companies to a future Pleasanton location.

• A partnership with East Bay Small Business Development Center to provide resources for entrepreneurs. Planned events may include “Your Restaurant Business Plan” to craft new or update business plans and “Meet the Lenders” to match entrepreneurs with financial institutions. The Pleasanton Chamber of Commerce may be a potential partner in this programming for the latter half of FY 2024/25.

5. Major Projects Accelerator Program
Create Business Roadmap to Provide a Clear Pathway for Zoning and Permitting This initiative began in FY 2023/24 to identify opportunities in the zoning and permitting processes to support attraction of target sectors. Supported by professional services support with experience with the development of biotechnology and other innovation-based industrial uses, implementation of this initiative primarily involves Economic Development and Community Development staff which have had a series of meetings to explore ways to streamline zoning for biotechnology and other innovation-based businesses. Additional staff involved in the permitting process, including Building, Engineering and Livermore Pleasanton Fire Department, will be involved in evaluating recommended updates. Current efforts are focusing on:
• Reviewing how other cities handle the zoning approvals for biotech businesses. • Reviewing the specific real estate and facility needs of biotech businesses – and how those needs may align or diverge from what current Pleasanton zoning allows. • Reviewing existing zoning language – including the zoning use definitions, permitted uses, approval process, and development standards – and developing proposed minor modifications to facilitate the approval of biotechnology and other innovation-based businesses.

An overview of the initiative was presented at the Economic Vitality Committee at its August 15, 2024, meeting for discussion and input. Any proposed changes to the City’s zoning will be focused on the ability to make Pleasanton more conducive to attracting biotechnology and other innovation-based businesses; proposed changes would be presented to the Economic Vitality Committee and Planning Commission for discussion prior to City Council consideration as needed.

EQUITY AND SUSTAINABILITY
Not applicable, as this item is a routine matter of City business.

OUTREACH
No outreach was conducted, as this item is a routine matter of City business.

STRATEGIC PLAN ALIGNMENT
Approval of this action advances the ONE Pleasanton Strategic Plan goal of Building a Community Where Everyone Belongs: Livability and Community Development Strategy 4 – Implement the updated 2024-2028 Economic Development Strategic Plan initiatives, including retail revitalization, ensuring the vibrancy of Pleasanton’s downtown, business retention and expansion, and workforce development.

FISCAL IMPACT
There is no fiscal impact associated with this action.

Prepared by: Submitted by: Approved by:

Lisa Adamos, Economic
Development Manager
Pamela Ott, Assistant City Manager

Gerry Beaudin, City
Manager

Attachments:

1. EDSP Strategic Plan Implementation Update Presentation Slides

Economic Development Strategic Plan Update
City Manager’s Department – Economic Development
City Council Meeting, October 15, 2024
5-year Economic Development Strategic Plan
To recalibrate the City of
Pleasanton's economic
development policies, programs,
and strategies to proactively meet
today's market opportunities and
challenges
FY 23/24 to FY 27/28

Implementation
Plan Priorities

1.0 Organizational Capacity Building
Economic Development Division consists of:
(1) full-time Economic Development Manager
and (1) part-time, temporary Program Specialist

1.3 Adopt and Incorporate DEI Best Practices
• Update Business License application to
gather demographic data

1.4 Formalize Community & Business
Partnerships
• Formal Agreements
• Bi-monthly Business Organization
Partners Meetings

Pleasanton
Success Stories
• Tarlton Properties to build out
Pleasanton Labs offering office
conversion for life sciences
• Stanford Health Care Tri-Valley
purchases 5-building complex
• Unchained Labs expands to
124,000 sq. ft.
• Villa Sports Fitness, Denica’s
Real Food Kitchen, and
Pleasanton’s 2nd Chick-fil-A open
• Kaiser Permanente shifts more
than 1,000 employees

2.0 Business Retention, Attraction & Expansion

2.1 Enhance Visibility, Marketing and
Branding Strategy
• “Why Pleasanton” – webpage and
brochures
• Event Support – Economic Drivers
Awards, #GameChangers, and Tri-
Valley Life Sciences Summit

3.0 Local Revenue Growth

3.1 Citywide Retail and Tenant Support Program – Retail Attraction Initiative • Inventory and assessment of vacant opportunity sites
• Void analysis of retail attraction opportunities
• Regional economic and market trends
Initial Findings for Most Promising Retail Categories include:

Apparel & Footware Home Improvement & Building Materials Auto Parts & Automotive Housewares & Home Furnishings
Convenience Stores & Gas Stations Personal Care & Beauty Discount Department Stores Restaurants & Specialty Food Health & Fitness Sporting Goods & Apparel
Healthcare & Clinics

3.0 Local Revenue Growth

3.1 Citywide Retail and Tenant
Support Program – Business
Support Loan Program
• To date, $643,066
received, including
$110,700 paid in full
• Approximately, $652,488
to be paid by 2026
• Remaining balance of
$40,945 by 2029
115

BUSINESSES
HELPED
$1.3M

IN LOANS

PROVIDED

BUSINESS TYPES
10 $79,100

AUTO, COMPUTER,

CONSTRUCTION
16 $166,600

RECREATION/

INSTRUCTION
15 $168,100

PERSONAL

SERVICES
4 $70,000

DAYCARE/HOMECARE
38 $533,900

RESTAURANTS
10 $98,600
RETAIL
9 $94,500

FITNESS
13 $124,900

PROFESSIONAL

SERVICES

3.0 Local Revenue Growth

3.1 Citywide Retail and Tenant Support Program – Downtown Parklets and Outdoor Dining Installation Grant Programs
• $75,292 provided for nine downtown parklets
• $10,000 provided for one outdoor dining installation
• Programs concluded on June 30, 2024

3.0 Local Revenue Growth

3.3 Support Local Marketing Plan Strategies – to keep spending local 2023
2024

5.0 Major Projects Accelerator Program

5.1 Create Business Roadmap to Provide a
Clear Pathway for Zoning and Permitting –
to help bring target sectors to Pleasanton
• Review other cities’ zoning
• Explore specific real estate and facility
needs
• Review existing zoning use
definitions, permitted uses, approval
process, and development standards
– and develop proposed minor
modifications to facilitate the approval
of biotechnology and other innovation-
based businesses
Thank you!
Questions, Comments & Feedback