Agenda packet — Redlands City Council, June 20, 2023 (part 2 of 5)

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City Council Meeting H. 23.

DATE: 06/20/2023
TO: Honorable Mayor and City Council Members
SUBJECT: Adopt ORDINANCE No. 2922 (Second Reading), AN ORDINANCE OF THE CITY OF REDLANDS ADDING CHAPTER 12.45 AND
AMENDING CHAPTER 12.44 TO THE REDLANDS MUNICIPAL

CODE TO ESTABLISH REGULATIONS GOVERNING SIDEWALK
VENDING (Facilities and Community Services Assistant Director Crocker)
MOTION(S):

If the City Council determines that staff’s recommendation is appropriate, the following motion is provided:

I move to adopt Ordinance No. 2922.

RECOMMENDATION:

It is recommended the City Council consider adoption of Ordinance No. 2922, adding Chapter 12.45 and amending Chapter 12.44 to the Redlands Municipal Code to establish regulations governing sidewalk vendors within City limits.

DISCUSSION:

The proposed ordinance and staff report prepared for the introduction of this ordinance are available in the City Clerk's office.

ALTERNATIVES:

The Council may continue this matter in order to allow additional time to review Ordinance No. 2922 or the Council may reject adoption of Ordinance No. 2922.

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STRATEGIC PLAN:

Not Applicable
SUBMITTED BY:

Jeanne Donaldson, City Clerk
RECOMMENDED BY:

Charles M. Duggan Jr., City Manager
REVIEWED BY:

Yvette M. Abich Garcia, City Attorney
Janice McConnell, Assistant City Manager
PREPARED BY:

Jeanne Donaldson, City Clerk
Fiscal Impact
Discussion:

Codification: $22/per page affected by the change
Legal Publication: $285
Attachments
Ordinance 2922-Clean
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1 I:\cmo\Ordinances\4902-2922_Sidewalk_Vending CLEAN.6.20.23 FINAL.docx ORDINANCE NO. 2922
AN ORDINANCE OF THE CITY OF REDLANDS ADDING CHAPTER 12.45 AND AMENDING CHAPTER 12.44 TO THE REDLANDS MUNICIPAL CODE

TO ESTABLISH REGULATIONS GOVERNING SIDEWALK VENDING
WHEREAS, the City of Redlands (“City”) is a municipal corporation and general law city, duly organized under the California Constitution and laws of the State of California; and WHEREAS, Article XI, section 7, of the California Constitution grants the City broad discretionary power to "make and enforce within its limits all local police, sanitary, and other ordinances and regulations not in conflict with general laws;” and WHEREAS, in 2018, the California Legislature passed Senate Bill 946 (California Government Code Section 51036, et seq.) (“SB 946”), which prohibits cities from regulating sidewalk vendors, except in accordance with the provisions of SB 946; and WHEREAS, SB 946 authorizes the implementation of regulations that are directly related to objective health, safety, or welfare concerns, and that do not restrict sidewalk vendors to operate only in a designated neighborhood or area, except as specified; and WHEREAS, the standards imposed on sidewalk vendors requiring a minimum path of accessible travel are necessary to comply with the Americans with Disabilities Act (“ADA”) and maintain minimum safe access along public sidewalks; and WHEREAS, the standards for maintaining access to building entrances, and not blocking driveways, parking areas and building storefront exits and windows are necessary to guard the health and safety of patrons, drivers, vendors and existing business owners and promote law enforcement practices that allow the City's Police personnel to observe within buildings; and WHEREAS, the City Council of the City of Redlands (“City Council”) finds and determines that the installation, repair, maintenance, and removal of encroachments in the public way must be regulated in order to protect the public health, safety and welfare and to provide for the orderly administration and maintenance of the public way for the benefit of the community, while at the same time allowing reasonable accommodation and cooperative flexibility for providing necessary utility and other convenience services to the community; and WHEREAS, the City Council finds that public and private persons who install encroachments in the public rights-of-way bear a responsibility to help preserve the public rightsof-way and to contribute to the administrative costs incurred by the community because of such encroachments; and
WHEREAS, this City Council further finds that, unless properly regulated, sidewalk vending poses a unique risk to the health, safety, and welfare of the public, including, but not limited to, impacts to pedestrian and vehicular traffic, pedestrian safety and mobility, ADA accessibility to public sidewalk and rights -of-way, unsanitary conditions involving food Redlands Regular Meeting of 06-20-2023 410 of 1523
2 I:\cmo\Ordinances\4902-2922_Sidewalk_Vending CLEAN.6.20.23 FINAL.docx preparation and disposal which may harm consumers and adversely impact the local environment, pose risks to children, and adversely impacts consumer protection; and WHEREAS, the City Council finds that vendors have disposed of food byproducts such as oil, grease, and other contaminants into the City’s storm drains in violation of State and Local laws and additional regulations on vending activities are necessary to protect the City’s storm drains and storm water from hazardous environmental contaminants; and WHEREAS, imposing a distance requirement for sidewalk vending activities from popular local tourist attractions; city-sponsored and co-sponsored events and Certified Farmers’ Market events; schools; the Redlands Municipal Airport; the Redlands Sports Park, and other sports venues on event days; will alleviate pedestrian, tourist, and vendor safety concerns of overcrowding on sidewalks, and pedestrians walking in the street and along the sidewalk to keep moving forward; and
WHEREAS, these venues also experience a high amount of traffic, affecting the safety of pedestrians and motorists and the accessibility needs of persons with disabilities, due to a high concentration of visitors at one time; and
WHEREAS, imposing distance requirements for sidewalk vending activities near sensitive uses such as schools, churches, public utilities and at bus and train stops where riders embark and disembark are necessary to protect the public health, safety, and welfare; and WHEREAS, the inherent nature of sidewalk vending and the ability of such vendors to be located on private property and public streets and move quickly from place to place in the community, including near parks, schools, and other places frequented by children, warrants imposing certain regulatory measures to protect the health, safety, and welfare of the community and local environment; and
WHEREAS, vending in a manner that creates a public nuisance or constitutes a danger to the public constitutes an objective harm to the health, safety, and welfare of the City's residents and visitors.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF REDLANDS DOES ORDAIN AS FOLLOWS:

Section 1. Chapter 12.45, titled “Sidewalk Vending,” is hereby added to the Redlands Municipal Code to read as follows:
“12.45 SIDEWALK VENDING
SECTIONS:

12.45.010 Purpose

12.45.020 Definitions

12.45.030 Stationary Sidewalk Vending Locations and Standards

12.45.040 Standards for Sidewalk Vending in Parks
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12.45.050 Standards for Roaming Sidewalk Vending

12.45.060 Administrative Fines

12.45.010 PURPOSE: The City finds that the vending of prepared or pre-packaged foods, goods, and/or wares at semi-permanent locations on public sidewalks and rights-of-way may pose unsafe conditions and special dangers to the public health, safety, and welfare of residents and visitors and the local environment. The purpose of this Chapter is to implement regulations on both roaming and stationary sidewalk vending that protect the public health, safety, and welfare of the community and the local environment while complying with the requirements of general state law, as amended from time to time, to promote safe vending practices, prevent safety, traffic, and health hazards, and preserve the public peace, safety, and welfare of the community and the local environment.

12.45.020 DEFINITIONS: For purposes of this Chapter, the following words shall have the meanings ascribed to them:

A. “Certified Famers’ Market” means a location operated in accordance with Chapter 10.5 (commencing with Section 47000) of Division 17 of the Food and Agricultural Code and any regulations adopted pursuant to that chapter.

B. “City” means the City of Redlands.

C. “Park” means a public park owned by the City.

D. “Roaming sidewalk vendor or vending” means a sidewalk vendor who moves from place to place and stops only to complete a transaction.

E. “Sidewalk vendor or vending” means a person who sells, offers to sell, operates, engages in, or carries on a food or merchandise vending business from a pushcart, stand, display, pedaldriven cart, wagon, showcase, rack, or other non-motorized conveyance, or from one's person, upon a public sidewalk or other pedestrian path.

F. “Stationary sidewalk vendor or vending” means a sidewalk vendor who engages in sidewalk vending from a fixed location.

G. “City Event Permit” means a permit issued by the City for temporary uses (i.e. special event permits, temporary use permits, film permits, or park reservations).

H. “Event Day” means the calendar day of any concert, trade show, conference, sporting event, or any other event potentially attracting large numbers of persons and vehicles to the venue.

I. “Solicitor” or “canvasser” shall mean any individual, whether a resident of the City or not, using telephone service or other communication, or traveling by foot, wagon, automobile, motor truck, or any other type of conveyance from place to place, from house to house, or from street to street taking, or attempting to take, orders for the sale of goods, wares, merchandise, or personal property of any nature whatsoever for future delivery, or for services to be furnished or performed in the future, whether or not such individual has, carries, or exposes Redlands Regular Meeting of 06-20-2023 412 of 1523
4 I:\cmo\Ordinances\4902-2922_Sidewalk_Vending CLEAN.6.20.23 FINAL.docx for sale a sample of the subject of such sale or whether the individual is collecting advance payments on such sales or not.

1. “Solicitor” or “canvasser” shall include any person who, for such person, or for another person, firm, or corporation, hires, leases, uses, or occupies any building, structure, tent, vehicle, hotel room, lodging house, apartment, shop, or any other place in the City for the sole purpose of exhibiting samples and taking orders for future delivery.

2. Such definition shall not include solicitors or canvassers taking orders or displaying merchandise exclusively from a public sidewalk or public pedestrian path in compliance with Chapter 5.60 of this Code.

12.45.030 STATIONARY SIDEWALK VENDING LOCATIONS AND STANDARDS:

A. Stationery sidewalk vendors are prohibited from operating in the City unless they have obtained a valid business license. As part of the application for a business license, the stationary sidewalk vendor shall submit proof of general liability insurance naming the City of Redlands as an additional insured in the amount of one million dollars ($1,000,000) and, if the vendor is preparing and/or selling food, a copy of a current San Bernardino County Department of Environmental Health Services permit issued to the vendor. The permits and proof of insurance shall be posted for public view during vending activities.

B. Stationary sidewalk vendors are prohibited from operating or establishing in any residential zone of the City.

C. Stationary sidewalk vendors may operate in non-residential zones of the City, including mixed use zones, 7:00 a.m. to 2:00 a.m. Monday through Sunday provided they meet the following:

1. The sidewalk vendor can set up vending operations while still leaving a minimum of thirtysix inches (36") of accessible path of travel, without obstruction, along the public sidewalk or public pathway; and

2. The sidewalk vendor maintains the vending area in a clean, orderly, and sanitary condition; and

3. The sidewalk vendor does not block entrances to buildings, driveways, parking spaces or building windows; and

4. No vending shall occur within fifteen (15) feet of a fire hydrant, fire escape, loading zone, handicapped parking space or access ramp, fire station driveway, or police station driveway; and

5. In order to achieve the minimum accessible path of travel set forth in subsection C.1, only one (1) table, two (2) chairs and one (1) umbrella shall be permitted in conjunction with the vendor’s vending activities. No fences, shade structures, other site furniture, or any freestanding signs are permitted; and
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6. The vendor shall not attach or use any water lines, electrical lines, gas lines or power generators during vending operations; and

7. Exterior storage or display of refuse, equipment, materials, goods, wares, or merchandise associated with the vendor is prohibited; and

8. No vending shall occur within two hundred (200) feet of any City-sponsored or cosponsored events, the Certified Farmers' Market, construction-related street or lane closure, filming location, the Redlands Municipal Airport, Event Day, or an event held pursuant to a City Event Permit; and

9. No vending shall occur within a corner cutoff area. A corner cutoff area is that area at all intersecting and intercepting streets or highways. The cutoff line shall be in a horizontal plane, making an angle of 45 degrees with the side, front, or rear property line, as the case may be. It shall pass through the points located on both sides and front or rear property lines at a distance of thirty (30) feet from the intersection of such lines at the corner of a street or highway; and

10. No vending shall occur within one hundred (100) feet of the property line of any school; any postsecondary educational facility attended by secondary pupils; or any private kindergarten, elementary, or secondary school facility; and

11. No vending shall occur within three (3) feet of any street lights, edges of tree wells, parking meters, or above-ground utility structures; and

12. No vending shall occur within three (3) feet of any existing subsurface utility box, valve, or vault; and

13. No vending shall occur within thirty (30) feet of another vendor; and

14. No vending shall occur within three (3) feet of bus stop locations, red curbs, or at locations where there are existing above-ground amenities such as newsstands or street furniture, including but not limited to benches and bike racks; and

15. No vending shall occur within 50 feet from the centerline of a rail line.

16. No vending shall occur in public streets, roadways, medians, pedestrian islands, parking lots, alleys, or bikeways; and

17. No vending shall occur within thirty (30) feet of the entrance way to any building, store, theater, movie house, house of worship, or place of public assembly; and

18. Open burning or open flame devices are not permitted to be utilized.

12.45.040 STANDARDS FOR SIDEWALK VENDING IN PARKS:

A. Sidewalk vending of food or merchandise by roaming or stationary vendors shall be prohibited Redlands Regular Meeting of 06-20-2023 414 of 1523
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B. Sidewalk vendors may operate in Parks provided they meet the following:

1. For stationary sidewalk vending, the sidewalk vendor can set up vending operations while still leaving a minimum of thirty-six inches (36") of accessible path of travel, without obstruction, along the public sidewalk or public pathway; and

2. The sidewalk vendor shall cease operations one (1) hour prior to the close of the park; and

3. The sidewalk vendor maintains the vending area in a clean, orderly, and sanitary condition; and

4. The sidewalk vendor location does not block entrances to buildings, driveways, parking spaces, or building windows; and

5. No vending shall occur within five hundred (500) feet of an Event Day or event held pursuant to a City Event Permit; and

6. No vending shall occur within a corner cutoff area. A corner cutoff area is that area at all intersecting and intercepting streets or highways. The cutoff line shall be in a horizontal plane, making an angle of 45 degrees with the side, front, or rear property line, as the case may be. It shall pass through the points located on both sides and front or rear property lines at a distance of thirty (30) feet from the intersection of such lines at the corner of a street or highway; and

7. The sidewalk vendor does not cause an undue concentration of commercial activity that unreasonably interferes with the scenic and natural character of the park or the public's use and enjoyment of natural resources, including the accessibility of such natural resources by persons with disabilities, and recreational opportunities or regulations directly related to objective health, safety or wellness concerns; and

8. No vending shall occur in public streets, roadways, medians, pedestrian islands, parking lots, alleys, or bikeways; and

9. Open burning or open flame devices are not permitted to be utilized.

12.45.50. STANDARDS FOR ROAMING SIDEWALK VENDING:

Roaming sidewalk vendors shall meet the following:

1. Roaming sidewalk vendors are prohibited from operating in the City unless they have obtained a valid business license. As part of the application for a business license, the roaming sidewalk vendor shall submit proof of general liability insurance naming the City as an additional insured in the amount of one million dollars ($1,000,000) and, if the vendor is Redlands Regular Meeting of 06-20-2023 415 of 1523
7 I:\cmo\Ordinances\4902-2922_Sidewalk_Vending CLEAN.6.20.23 FINAL.docx preparing and/or selling food, a copy of a current San Bernardino County Department of Environmental Health Services permit issued to the vendor. The permits and proof of insurance shall be available for inspection during vending activities upon request; and

2. Sidewalk vending hours for residential zones shall be conducted from sunrise to sunset Sunday through Saturday; and

3. The sidewalk vendors shall maintain their temporary vending area in a clean, orderly, and sanitary condition; and

4. The sidewalk vendor does not block entrances to buildings, driveways, parking spaces, or building windows; and

5. The sidewalk vendor does not conduct sales from a public street; and

7. No vending shall occur within two hundred (200) feet of a city-sponsored or co-sponsored event, the Certified Farmers' Market, construction-related street or lane closure, filming location, the Redlands Municipal Airport, an Event Day or an event held pursuant to a City Event Permit; andNo vending shall occur within one hundred (100) feet from the property line of any school; any postsecondary educational facility attended by secondary pupils; or any private kindergarten, elementary, or secondary school facility; and

8. No vending shall occur within three (3) feet of any street lights, edges of tree wells, parking meters, or above-ground utility structures; and

9. No vending shall occur within three (3) feet of any existing subsurface utility box, valve, or vault; and

10. No vending shall occur within thirty (30) feet of another vendor; and

11. No vending shall occur within three (3) feet of bus stop locations, red curbs, or at locations where there are existing above-ground amenities such as newsstands or street furniture, including but not limited to benches and bike racks; and

12. No vending shall occur within 50 feet from the centerline of a rail line; and

13. No vending shall occur in public streets, roadways, medians, pedestrian islands, parking lots, alleys, or bikeways; and

14. No vending shall occur within thirty (30) feet of the entrance way to any building, store, Redlands Regular Meeting of 06-20-2023 416 of 1523
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12.45.60 ADMINISTRATIVE FINES:

A. It is unlawful for any person to violate any provision, or fail to comply with any requirements, of this Chapter. A violation of this Chapter shall by punished by:

1. A Notice of Violation shall be issued for a first violation.

2. An administrative fine not exceeding fifty dollars ($50) for a second violation within one (1) year of the first violation.

3. An administrative fine not exceeding one hundred dollars ($100) for a third violation within one (1) year of the first violation.

4. An administrative fine not exceeding five hundred dollars ($500) for each additional violation within one (1) year of the first violation.

B. Any violation of this Chapter shall not be punishable as an infraction or misdemeanor, and any person alleged to have violated any provisions of this Chapter shall not be subject to arrest except when otherwise permitted under law.

C. When assessing an administrative fine pursuant to this Chapter, the adjudicator shall take into consideration the person's ability to pay the fine. The City shall provide the person with notice of his or her right to request an ability-to-pay determination and shall make available instructions or othermaterialsforrequesting an ability-to-pay determination. The person may request an ability-to-pay determination at adjudication or while the judgment remains unpaid, including when a case is delinquent or has been referred to a comprehensive collection program.

1. If the person meets the criteria described in subdivision (a) or (b) of Government Code section 68632, the City shall accept, in full satisfaction, twenty percent (20%) of the administrative fine imposed pursuant to this Chapter.

2. The City may allow the person to complete community service in lieu of paying the total administrative fine, may waive the administrative fine, or may offer an alternative disposition.

D. A sidewalk vendor that is preparing and/or selling food without a valid San Bernardino County Department of Environmental Health Services permit may have their food discarded when it is determined by the City’s enforcement officer that there is an immediate threat to the public health and safety.

E. Nothing contained herein shall be construed to impede the City's or the County's ability to enforce San Bernardino County Health Department codes and regulations.” Section 2. Section 12.44.050, titled “Solicitation Prohibited” is hereby amended as follows:

Redlands Regular Meeting of 06-20-2023 417 of 1523
9 I:\cmo\Ordinances\4902-2922_Sidewalk_Vending CLEAN.6.20.23 FINAL.docx “Except as provided in Chapter 12.45 of this Code, no person shall practice, carry on, conduct or solicit for any occupation, business, or profession in any city park or building, or sell or offer for sale any merchandise, article, or anything whatsoever, unless such person is acting pursuant to a contract with the city, or pursuant to a permit granted by the director or approved by the city council.”
Section 3. Section 12.44.240, titled “Commercial Activity Prohibited” is hereby amended as follows:
“Except as provided in Chapter 12.45 of this Code, no person shall practice, carry on, conduct, or solicit for any trade, occupation, business or profession except upon application to and as may be permitted by the director; provided, however, in the director's discretion, the director may forward any such application to the city council for consideration. In the event the director or city council determines that commercial activity may be permitted, a concessionaire fee may be imposed as a condition of the issuance of such permit.”
Section 4. Severability. If any section, sentence, clause or phrase of this ordinance or the application thereof to any entity, person or circumstance is held for any reason to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect other provisions or applications of this ordinance which can be given effect without the invalid provisions or application, and to this end the provisions of this ordinance are severable. The City Council of the City of Redlands hereby declares that it would have adopted this ordinance and each section, sentence, clause or phrase thereof, irrespective of the fact that any one or more section,subsections, sentences, clauses or phrases be declared invalid or unconstitutional.

Section 5. This ordinance is exempt from the requirements of the California Environmental Quality Act (“CEQA”) pursuant to the State CEQA Guidelines, as it is not a "project" and has no potential to result in a direct or reasonably foreseeable indirect physical change to the environment. 14 Cal. Code Regs. § 15378(a). Further, this ordinance is exempt from CEQA as there is no possibility that this Ordinance or its implementation would have a significant negative effect on the environment. 14 Cal. Code Regs. § 15061(b)(3). The City Clerk shall cause a Notice of Exemption to be filed as authorized by CEQA and the State CEQA Guidelines.

Section 6. The Mayor shall sign this ordinance and the City Clerk shall certify to the adoption of this ordinance and shall cause it, or a summary of it, to be published once in a newspaper of general circulation within the City and thereafter this ordinance shall take effect as provided by law.
_________________________________________
ATTEST: Eddie Tejeda, Mayor
___________________________________
Jeanne Donaldson, City Clerk
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10 I:\cmo\Ordinances\4902-2922_Sidewalk_Vending CLEAN.6.20.23 FINAL.docx I, Jeanne Donaldson, City Clerk of the City of Redlands, hereby certify that the foregoing ordinance was duly adopted by the City Council at a regular meeting thereof held on the 20th day of June, 2023, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

Jeanne Donaldson, City Clerk
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City Council Meeting H. 24.

DATE: 06/20/2023
TO: Honorable Mayor and City Council Members
SUBJECT: Authorize issuance of proclamation declaring June 19, 2023, as Juneteenth (Mayor Tejeda and Councilmember Davis)
MOTION:

I move to authorize issuance of proclamation declaring June 19, 2023, as Juneteenth.

Attachments
Juneteenth Proclamation 2023
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City Council Meeting I. 1.

DATE: 06/20/2023
TO: Honorable Mayor and City Council Members
SUBJECT: Discussion and possible action relating to the appointment to fill the City Treasurer vacancy (Mayor Tejeda)
DISCUSSION:

As of April 29, 2023, a vacancy of City Treasurer exists due to the untimely passing of Treasurer Robert Dawes. Pursuant to Government Code Section 36512(b), the City Council will have 60 days from the occurrence of the vacancy to either fill the vacancy by appointment or hold a special election. The 60-day period ends on June 28, 2023. The appointee must be 18 years of age, a Redlands resident, and a registered voter in the City. The appointment must be made by a majority of the Council. In accordance with Government Code Subsection 36512(b)(2), any person appointed would hold office until the next general municipal election.

Per the timeline established at the May 16, 2023, meeting, the City issued a Notice of Intention to Fill by Appointment on May 22, 2023. The application period ended on June 5, 2023. One application was received and verified by the Office of the City Clerk. As only one application was received, a special meeting to interview and hear applicant presentations was deemed unnecessary.

Instead, Phillip Doolittle was invited to the June 20, 2023, meeting to provide a brief presentation of his qualifications and be interviewed by Councilmembers.

PROCESS FOR CITY TREASURER APPOINTMENT
Applicant Interview (Mayor Tejeda)
Mayor invites applicant, Phillip Doolittle, to the podium to provide a brief presentation regarding his qualifications and background as it relates to the City Treasurer position (3 minutes)

1. Mayor calls upon individual Council Members to ask questions of the applicant.

2. 3. Mayor calls upon the applicant for closing comments (2 minutes) A.

B. Discussion and possible action relating to the appointment of the City Redlands Regular Meeting of 06-20-2023 422 of 1523
Discussion and possible action relating to the appointment of the City Treasurer (Mayor Tejeda)
The City Council may choose to appoint the applicant to fill the vacant City Treasurer position; or provide alternate direction to staff.

1. If the City Council moves to appoint the applicant, the City Clerk may administer the Oath of Office to the newly appointed City Treasurer.

2. 3. Mayor calls upon the newly appointed City Treasurer for comments.

SUBMITTED BY:

Janice McConnell, Assistant City Manager
REVIEWED BY:

Charles M. Duggan, Jr.

Yvette M. Abich Garcia, City Attorney
Attachments
Phillip Doolittle Application
Notice of Intention to Fill Vacancy by Appointment
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City Treasurer Vacancy
Notice of Intention to Fill a Vacancy for
the City Treasurer by Appointment
Notice is hereby given that the City of Redlands is accepting applications for appointment as the City Treasurer to fill a vacancy.

The appointee will hold office until the next General Municipal Election being held in November 2024.

Therefore, the term of the City Treasurer seat is from the date of appointment to the date of the swearing- in of a newly elected City Treasurer, which will occur in December 2024.

Applicants must reside in Redlands, be 18 years of age and a registered voter of the City of Redlands and otherwise qualified to vote for this office at the time of appointment.

Applicants may obtain application packets online at www.cityofredlands.org or at the office of the City Clerk.

Original application must be received by 5:00 PM, Monday, June 5, 2023. No postmarks or faxes will be accepted. Only fully completed application packets will be accepted.

To be considered for the appointment, all applicants must attend a City Council meeting anticipated to be held on Thursday, June 8, 2023, at 6:00 p.m. in the City Council Chambers, 35 Cajon Street, Redlands, California. This date is subject to change. Applicants will be notified of any date change.

Applicants will be allowed five (5) minutes each to make a presentation to the City Council regarding his/her interest, background and qualifications for serving as the City of Redlands Treasurer. Upon completion of their presentations, applicants may receive questions from members of the City Council.

Please note that all deliberations will be conducted in open session and will comply with the requirements of the Brown Act.

It is the City Council’s intent to make an appointment at a Special City Council meeting to be held on Thursday, June 8, 2023, at 6:00 p.m. However, as noted above, this date is subject to change. • Application Period: 12 Noon on Monday, May 22
Through 5:00 PM Monday, June 5, 2023
• Application packets are available from: City Clerk’s Office City of Redlands
35 Cajon St., Suite 4
Redlands, CA 92373
Or on the City website: www.cityofredlands.org

• Completed original application City Clerk’s Office
packet must be returned to: City of Redlands
(no postmarks or faxes accepted): 35 Cajon St., Suite 4 Mailing address: P.O. Box 3005
Redlands, CA 92373-1505
• Application Deadline: 5:00 PM on Monday, June 5, 2023 • The City takes no responsibility for application materials sent but not received by the stated deadline. • All applications and accompanying materials are considered public information.

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Statutory duties of the City Treasurer as defined by California Government Code Section 41001-41007 are as follows:
• The City Treasurer shall receive and safely keep all money the treasurer receives. • The City Treasurer shall comply with all laws governing the deposit and securing of public funds and the handling of trust funds in his possession.
• The City Treasurer shall pay out money only on warrants signed by legally designated persons. • Regularly, at least once each month, the City Treasurer shall submit to the City Clerk a written report and accounting of all receipts, disbursements, and fund balances. He shall file a copy with the legislative body.
• The City Treasurer shall perform such duties relative to the collection of City taxes and license fees as are prescribed by ordinance.
• The City Treasurer may appoint deputies.
• The deputies shall hold office at the pleasure of the City Treasurer and receive such compensation as is provided by the legislative body.

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City Council Meeting I. 2.

DATE: 06/20/2023
TO: Honorable Mayor and City Council Members
SUBJECT: Discussion and possible action relating to the cancellation of the August 1 and August 15, 2023, regular meetings of the City Council (Mayor Tejeda)
MOTION:

I move to approve the cancellation of the August 1 and August 15, 2023, regular meetings of the City Council.

DISCUSSION:

With City Council concurrence, I recommend the cancellation of the August 1 and August 15, 2023, regular meetings of the City Council. As the Council is aware, regular meetings in August have been canceled to allow Council Members and staff the opportunity to vacation or take time off with their families. Staff will work diligently to bring forward the necessary agenda reports to the meeting of July 18, 2023; therefore, staff believes there will be no impact or delay in City matters by the cancellation of the August 1 and August 15, 2023, regular meetings of the City Council.

The next regular meeting will be held on September 5, 2023.

SUBMITTED BY:

Mayor Eddie Tejeda
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City Council Meeting J. 1.

DATE: 06/20/2023
TO: Honorable Mayor and City Council Members
SUBJECT: ORDINANCE NO. 2959 - ORDINANCE OF THE CITY OF
REDLANDS AMENDING TITLE 18 (ZONING REGULATIONS) OF

THE REDLANDS MUNICIPAL CODE BY ADDING CHAPTER

18.230 FOR AN INCLUSIONARY HOUSING PROGRAM FOR THE
CITY OF REDLANDS.
(Mayor to declare meeting open as a public hearing)
Consideration of a determination of exemption pursuant to Sections 15061(b)(3) of the California Environmental Quality Act Guidelines.
a.

Public Hearing to consider Ordinance No. 2959 for Ordinance Text Amendment No. 367 to amend Title 18 (Zoning
Regulations) of the Redlands Municipal Code by adding
Chapter 18.230 for an Inclusionary Housing Program.
b.
(Development Services Director Desatnik)
PROCEDURE FOR PUBLIC HEARING:

1. Mayor declares the meeting open as a public hearing.

2. Mayor calls upon Department Director for report.

3. Mayor calls for questions/comments from members of the City Council.

Mayor calls for comments/questions/testimony from members of the public (3 minutes per speaker).

4. 5. Mayor calls upon City Clerk to note any written comments received.

6. Mayor closes the public hearing.

7. City Council considers the motion and votes.

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MOTION(S):

I move to introduce Ordinance No. 2959, and find that the Ordinance is exempt from the California Environmental Quality Act pursuant to Section 15061(b)(3) of the California Environmental Quality Act Guidelines.

RECOMMENDATION:

On April 25, 2023, the Planning Commission unanimously adopted Resolution No. 1601 recommending that the City Council approve the proposed Inclusionary Housing Ordinance by adding Chapter 18.230 to the Redlands Municipal Code.

DISCUSSION:

Background
The City's recently adopted Housing Element includes a program calling for the City to evaluate and consider adopting an Inclusionary Housing Ordinance.

Through the Housing Element, the City is required to plan for the provision of its share of the Regional Housing Needs Assessment (RHNA) as determined by the Southern California Association of Governments (SCAG). For the current 2021-2029 Housing Element period, the City's RHNA allocation numbers consist of the following household income levels: 967 very-low income units; 615 low-income units; 652 moderate-income units; and 1,282 above-moderate income units. While there are programs to encourage developers to include affordable units in their developments, such as the Density Bonus Program, most developers opt not to do so. Approximately 170 cities in California have adopted Inclusionary Housing Ordinances that require a certain percentage of affordable housing units be provided (or an in-lieu fee to be deposited into an affordable housing fund) in every new residential development. This percentage is usually somewhere between 5 and 15 percent.

It is important to note that the State density bonus law, which is described in Attachment C to this report, would apply to all projects subject to an inclusionary housing ordinance. That is, the affordable housing units that a developer would build pursuant to an inclusionary ordinance would entitle the developer to the benefits of the density bonus law, including the density bonus, mandated parking standards, other incentives, and waiver of standards necessary to achieve increased density.

Staff made an introductory presentation on Inclusionary Housing to the City Council at its October 4, 2022 meeting. At the October 4 meeting, the City Council also approved a contract with Keyser Marston Associates, Inc. (KMA) to prepare a financial evaluation that tests the impacts created by the imposition of Redlands Regular Meeting of 06-20-2023 436 of 1523
income and affordability restrictions on new residential development and recommends policies to be incorporated into an Inclusionary Housing program. The financial evaluation and policy recommendations are provided as separate documents attached to this staff report (see Attachments D and E).

Staff presented a proposed ordinance to the Planning Commission at its February 14, 2023 meeting. The Committee reviewed the ordinance, took public comment, and appointed an ad-hoc sub-committee to work with staff on refining the ordinance.

After hearing some of the comments made at the February 14 Planning Commission meeting and a meeting with representatives from the Building Industry Association, staff asked KMA to revise the in-lieu fee analysis by modifying some of the price assumptions for new housing (Attachment F -- Supplemental In-lieu Fee Analysis). This analysis resulted in a reduction in the proposed in-lieu fee for single-family homes from $15/square foot to $8.80/square foot. The amount of the in-lieu fee is not part of the ordinance or the action to be taken by the City Council tonight; it will be adopted at a future public hearing by resolution of the City Council.

At its April 25, 2023 meeting, the full Planning Commission considered the ordinance and by unanimous vote recommended its approval to the City Council. The Planning Commission made several other recommendations that staff will incorporate into the administrative guidelines for administering the program; these are further described below.

Proposed Ordinance
Applicability Threshold: The provisions of the ordinance would apply to residential developments of 10 units or greater. Inclusionary requirements impact smaller projects disproportionately and most cities establish a threshold to which the inclusionary requirements would apply.

Inclusionary Requirements for For-Sale Housing: Five (5) percent of the total number of dwelling units must be made affordable to Moderate Income households. This would apply to single-family detached homes, townhomes, and condominiums. Inclusionary housing programs generally set the affordability requirements for ownership housing development at the moderate income level.

This is done as a reflection of the fact that higher income households are likely to have more discretionary income to devote to the ongoing costs associated with home ownership than that of lower income households.

Inclusionary Requirements for Rental Housing: The original draft of the Inclusionary Ordinance set the inclusionary requirement at nine (9) percent of the total number dwelling units affordable to Low Income households. In its review of the ordinance, the Planning Commission recommended that there be an option for a developer to target some Moderate Income households as well.

Staff has thus revised the proposed ordinance to require one of the following Redlands Regular Meeting of 06-20-2023 437 of 1523
percentages of the total number of dwelling units:
5% Low income units and 7% moderate income units; or
5% Very low income units and 5% moderate income units; or 9% Low income units
A table showing the affordable income categories and assisted affordable rents is Attachment G to this report. A developer may, at its discretion, choose to provide more affordable units than required by the above percentages which would entitle the developer to a greater density bonus pursuant to State density bonus law.

Duration of Affordability Covenants: For-sale units would have an affordability period of 55 years. During this time, sales of designated affordable units would have to be made to income qualified buyers. Rental inclusionary units would be restricted for a period of 55 years, after which the affordability restrictions would only be removed if the land is rezoned or put to another use.

Development Standards for Inclusionary Units:

Dispersed throughout the development
Rental inclusionary units must be designated before issuance of building permits
Built concurrently with market rate units
Comparable in construction quality to market rate units Bedroom mix proportional to bedroom mix of market rate units
Interior finishes and features comparable to base unit finishes of market rate units
Alternatives: The proposed ordinance provides several alternative means of fulfilling the inclusionary housing obligations beyond proving the actual units in the development. These are described below.

Payment of In-lieu Fee: For-sale developments and rental developments of less than 23 units will have the option of paying an in-lieu fee by-right.

Rental projects with 23 or more units will be able to pay an in-lieu fee subject to approval by the City Council and upon a demonstration that providing affordable units in the project would create an unreasonable economic hardship. KMA recommends that the In-lieu Fee be set at $8.80 per square foot for detached single-family/townhome developments and $19.80 per square foot for apartment developments. The amount of the in-lieu fee is not part of the ordinance; it will be adopted at a future public hearing by resolution of the City Council.

Off-site Development of Affordable Units: This is only an option for for-sale housing developments. Such developments can fulfill their requirements by providing off-site affordable rental units.

Land Dedication: Dedicate real property to the City for the purpose of developing affordable housing.

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Owner Occupancy Required for For-sale Units: Inclusionary For-sale units must be owner-occupied and used as a principal residence.

Inclusionary Housing Plan: All projects subject to this ordinance will be required to prepare an Inclusionary Housing Plan, that will be reviewed and approved with the project entitlements, that demonstrates how the project will comply with the ordinance.

Current Development Applications: Projects for which the City has received a development application on or before March 1, 2023 may fulfill the inclusionary requirements by providing 5% very low income rental units. This provision has been included to accommodate the two projects that have current applications with the City, both of which are far along into the entitlement process and had planned to provide 5% very low income units.

Additional Planning Commission Recommendations
The Planning Commission made several recommendations that staff proposes to incorporate into the administrative guidelines for the Inclusionary Housing program. These are summarized below.

Home Buyer down payments: The KMA recommendation was to require a minimum of 5% down payment with at least 1% coming from homebuyers' personal funds. The Commission felt that the 1% requirement was not necessary because the conventional lenders that will provide the primary mortgages would have more stringent requirements. Staff will reflect the Commission's recommendation in drafting the administrative procedures.

1. The subcommittee recommended that part of the inclusionary requirement be targeted at moderate-income households. Staff added options for moderate income targeting in rental developments to the Inclusionary Ordinance. For reference, attached to this report is a document showing the affordable rents for the very low, low and moderate income categories and how these rents are calculated (Attachment E).

2. The City should establish an oversight committee (or designate a Commission) to review and provide recommendations on how funds in the Inclusionary Housing Fund, received from payment of in-lieu fees, are utilized. Staff supports this recommendation and recommends that the Planning Commission initially serve as the oversight body for the program.

The proposed ordinance states that "monies in the inclusionary housing fund and all earnings from investment of the monies in the inclusionary housing fund shall be expended exclusively to provide housing affordable for very low-income, low-income, and moderate-income households."

3. There should be an annual status report provided to the Planning Commission on program activity, including the use of funds in the Inclusionary fund. Staff will include this in the Administrative Procedures that will be developed for implementation of the program.

4. Households in affordable rental units are provided with 12 months notice when they will be required to relocate if their annual income certification

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when they will be required to relocate if their annual income certification shows that they no longer qualify for the income restricted unit in which they reside. Staff will incorporate this into the administrative procedures.

Next Steps
If the City Council approves the proposed ordinance, staff will begin the preparation of the Administrative Procedures for the program. The in-lieu fee will be brought back at a future public hearing for adoption by resolution of the City Council.

Environmental Review
The proposed Ordinance Text Amendment No. 367 qualifies for exemption from environmental review and the requirements of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15061(b)(3). Under section 15061(b)(3), the activity is covered by the general rule that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the project is exempt from CEQA. This Ordinance Text Amendment will not affect the physical environment by permitting a new use or intensifying an existing use.

Instead, the Ordinance Text Amendment establishes affordable housing requirements through a range of means for individual projects. There is no potential for the proposed code amendment to result in a significant effect on the environment.

ALTERNATIVES:

1. The City Council can request changes to the proposed ordinance.

2. The City Council can continue this item and request additional ordinance.

The City Council can choose not to adopt an Inclusionary Housing Ordinance.

3. STRATEGIC PLAN:

Priority A - Quality of Life, Strategic Objective 2. Economic Vitality SUBMITTED BY:

Brian Desatnik, Development Services Director
RECOMMENDED BY:

Charles M. Duggan Jr., City Manager
REVIEWED BY:

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REVIEWED BY:

Yvette M. Abich Garcia, City Attorney
Janice McConnell, Assistant City Manager
Danielle Garcia, Management Services/Finance Director
PREPARED BY:

Brian Desatnik, Development Services Director
Fiscal Impact
Revenue Generating: Yes
Appropriation Required Y/N: N
Discussion:

If the City Council approves this ordinance, staff will bring back an amendment to the KMA contract for the preparation of the Administrative Procedures, including application materials. There will be an on-going administrative cost to this program which can be charged to the Inclusionary Housing Fund that will be established and funding by in-lieu fees.

Attachments
Attachment A: Inclusionary Housing Ordinance (Ord. No. 2959) Attachment B: Summary of Density Bonus Law
Attachment C: KMA Financial Evaluation
Attachment D: KMA Policy Recommendations
Attachment E: KMA Supplemental In-lieu Fee Memorandum
Attachment F: Affordable Rent Calculations
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ORDINANCE NO. 2959
AN ORDINANCE OF THE CITY OF REDLANDS AMENDING TITLE 18
(ZONING REGULATIONS) OF THE REDLANDS MUNICIPAL CODE BY
ADDING CHAPTER 18.230 FOR AN INCLUSIONARY HOUSING PROGRAM FOR THE CITY OF REDLANDS.

WHEREAS, the City has initiated Ordinance Text Amendment No. 367 in accordance with Chapter 18.204 of the Redlands Municipal Code; and
WHEREAS, the Planning Commission finds that the City of Redlands faces a serious housing problem and the lack of access to affordable housing has a direct impact upon the health, safety, and welfare of the residents of the City; and
WHEREAS, the California Legislature has consistently recognized the continuing need for affordable housing in California, stating in Government Code Section 65580, that "the availability of housing is of vital statewide importance, and the early attainment of decent housing… is a priority of the highest order" and, further, that, "local… governments have a responsibility to use the powers vested in them to facilitate the improvement and development of housing to make adequate provision for the housing needs of all economic segments of the community"; and WHEREAS, affordable housing is regulated by a variety of state and local laws, ordinances, and policies, and the Regional Housing Needs Assessment (RHNA) requires the City to provide for the development of a specified number of housing units. The City’s Housing Production allocation for the 2021-2029 allocation cycle calls for the development of 2,234 new affordable housing units as follows: 652 units are needed for moderate-income households; 615 units are needed for low-income households and 967 units are needed for very low and extremely low-income households; and
WHEREAS, the City desires to explore and, to the extent feasible, use all available tools to meet its mandated regional housing goals; and
WHEREAS, a lack of new units affordable to very-low, low and moderate-income households within the City will have a substantially negative impact because: (1) housing will have to be built far from employment centers, which will increase commuting and negatively impact traffic, air and noise pollution, and (2) the City and employers within the City will find it difficult to recruit and retain employees; and
WHEREAS, the City Council considered the findings, recommendations, and analysis contained in the report entitled Inclusionary Housing: Policy Recommendations (dated January 23, 2023) and the report entitled Inclusionary Housing: Financial Evaluation (dated January 23, 2023), both prepared by Keyser Marston Associates, and has determined that it is in the furtherance of the public health, safety, and welfare to require new Residential Development to incorporate affordable housing units within their development or otherwise take measure to further the development of affordable housing within the City; and
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WHEREAS, the State of California requires each city to develop a general plan establishing policies for future development. As specified in the Government Code, the general plan must: (i) encourage the development of a variety of housing types for all income levels; (ii) assist in the development of adequate housing to meet the needs of low and moderate-income households; and (iii) conserve and improve the condition of the existing affordable housing stock, which may include addressing ways to mitigate the loss of dwelling units demolished by public or private action; and
WHEREAS, the City has authority under its police power to protect the public health, safety, and welfare, by imposing land use regulations that that will provide additional housing that is affordable to all income levels that is dispersed throughout the City; and WHEREAS, the implementation of an inclusionary housing requirement in accordance with this proposed ordinance will provide a mechanism for all Residential Development containing ten (10) or more units to provide a contribution to affordable housing consistent with the goals of the City's adopted Housing Element; and the implementation of the ordinance will aid the City in achieving the goal of making affordable housing diverse, dispersed, and inclusionary; and WHEREAS, an affordable inclusionary housing requirement for all new developments containing ten (10) or more residential units, in the City of Redlands will serve to contribute to meeting the City's overall future need of affordable housing and to help meet its RHNA allocations; and
WHEREAS, on February 14, 2023, the Planning Commission held a noticed public hearing and considered the staff report, oral report, the testimony and written evidence submitted by City staff; and
WHEREAS, on February 14, 2023, the Planning Commission held a noticed public hearing and considered the testimony and any written evidence submitted by the public; and WHEREAS, on April 25, 2023, the Planning Commission held a noticed public hearing and considered the staff report, oral report, the testimony and written evidence submitted by City staff; and
WHEREAS, on April 25, 2023, the Planning Commission held a noticed public hearing and considered the testimony and any written evidence submitted by the public; and WHEREAS, on April 25, 2023, the Planning Commission unanimously recommended to the City Council that Ordinance Text Amendment No. 367 be approved; and WHEREAS, in accordance with Government Code section 65090, on or about May 26, 2023, the City Clerk gave notice by publication in a newspaper of general circulation of the holding of a public hearing at which Ordinance No. 2959 would be considered by City Council; and WHEREAS, on June 20, 2023, the City Council held a noticed public hearing at which interested persons had an opportunity to testify in support of, or opposition to, Ordinance No. 2959; and
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WHEREAS, adoption of the proposed ordinance is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Sections 15061(b)(3) of the California Environmental Quality Act Guidelines; and
WHEREAS, after closing the public hearing and deliberating upon the matter, the City Council finds that approval of the proposed amendment to Title 18 (Zoning Regulations) of the Redlands Municipal Code will be in the best interests of the public health, safety, and general welfare.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF REDLANDS DOES ORDAIN AS FOLLOWS:

SECTION 1. California Environmental Quality Act. The proposed Ordinance Text Amendment No. 367 qualifies for exemption from environmental review and the requirements of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15061(b)(3). Under section 15061(b)(3), the activity is covered by the general rule that CEQA applies only to projects that have the potential for causing a significant effect on the environment.

Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the project is exempt from CEQA. This Ordinance Text Amendment will not affect the physical environment by permitting a new use or intensifying an existing use. Instead, the Ordinance Text Amendment establishes affordable housing requirements through a range of means for individual projects. There is no potential for the changes to result in a significant effect on the environment.

SECTION 2. APPROVAL OF ORDINANCE TEXT AMENDMENT NO. 367. The proposed amendment to Title 18 (Zoning Regulations) of the Redlands Municipal Code is hereby adopted to add Chapter 18.230, entitled “Inclusionary Housing,” which shall read as follows:
“CHAPTER 18.230 INCLUSIONARY HOUSING”

18.230.010: PURPOSE:

The City’s purpose in enacting this title are as follows:
(a) To ensure the development and availability of decent, affordable housing to a broad range of households with varying income levels throughout the City. (b) To promote the City's goal to add affordable housing units to the City's housing stock. (c) To ensure the long-term affordability of units and availability for income-eligible households in years to come.
(d) To ensure that the private sector, in addition to public sector, participates in the provision of affordable housing for current and future residents of the City of Redlands. (e) To ensure that affordable housing will be dispersed throughout the City and not be segregated from market-rate housing.

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18.230.020: DEFINITIONS:

The following words, terms and phrases, when used in this chapter, shall have the meanings ascribed to them in this title, except where the context clearly indicates a different meaning:
“Affordable Housing Cost” means the housing cost for for-sale Inclusionary Units as defined by California Health & Safety Code section 50052.5 for owner occupied housing, as applicable to the moderate-income households.
“Affordable Housing Agreement” means a legally binding agreement between an applicant and the City, in a form and substance satisfactory to the City Manager and City Attorney and suitable for recording, setting forth those provisions necessary to ensure that the requirements of this chapter are, and will continue to be, satisfied.
“Affordable Rent” means the affordable rent for rental dwelling units as defined in California Health and Safety Code Section 50053.
“Affordable Sales Price” means the maximum sales price for which a for-sale Inclusionary Unit may be sold, that will result in the purchaser paying an Affordable Housing Cost for the for-sale Inclusionary Unit, assuming a benchmark mortgage interest rate and minimum down payment as may be established by the City from time to time.
“Applicant” or “developer” means a person, persons, or entity that applies to the City for one or more discretionary or residential permits required for the development of a Residential Development and also includes the owner or owners of the property if the Applicant does not own the property on which the development is proposed.
“Area Median Income” means the annual median household for San Bernardino County, adjusted for household size, as published periodically in the California Code of Regulations, Title 25, Section 6932, or its successor provision.
“Building Permit” means full structural building permits as well as partial permits such as foundation-only permits.
“Certificate of Occupancy” means the permit issued by the City of Redlands building division authorizing the initial occupancy of a residential unit, including a temporary certificate of occupancy.
“City Manager” means the City of Redlands City Manager or designee.

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“Density Bonus Units” mean dwelling units approved in a Residential Development pursuant to California Government Code section 65915 et seq. and the City Density Bonus Ordinance (Redlands Municipal Code chapter 18.228) that are in excess of the maximum residential density otherwise permitted by the City of Redlands General Plan or Zoning Ordinance, and any applicable Specific Plan.
“Dwelling Unit” shall have the definition given for dwelling unit in subsection 18.08.225 of the Redlands Municipal Code.
“For-Sale” means any dwelling unit, including but not limited to a condominium, townhome, other attached or detached single family dwelling unit, for which a parcel or tentative and final map is required for the lawful subdivision of the parcel upon which the dwelling unit is located for the creation of the unit in accordance with the Subdivision Map Act (California Government Code section 66410 et seq.).
“Household” means one person living alone or two or more persons sharing residency. “Inclusionary Housing Fund” means the fund established pursuant to subsection 18.230.170(B) of this chapter, which is designated by the City to maintain and account for all funds received pursuant to this title, including but not limited to, all In-lieu Fees. “Inclusionary Housing Plan” means a plan containing all the information specified in and submitted in conformance with subsection 18.230.140 of this chapter specifying the manner in which Inclusionary Units will be provided in conformance with this chapter. “Inclusionary Unit” means a dwelling unit that is designated to meet the requirements set forth in this chapter, and that must be made available at an Affordable Housing Cost or an affordable rent to eligible moderate-, low- or very low-income households, as applicable to the unit. “In-lieu Fee” means a fee paid by an applicant into the City’s Inclusionary housing fund in-lieu of constructing Inclusionary Units pursuant to this chapter. Payment of In-lieu Fees shall be allowed as an option in accordance with subsection 18.230.120(A) of this title. “Low-Income Household” means a household whose income does not exceed the qualifying limits for lower income families as established and amended from time to time for San Bernardino County pursuant to Section 8 of the United States Housing Act of 1937. The income limit for lowincome households, adjusted for family size, is published periodically in the California Code of Regulations, Title 25, Section 6932.
“Low-income Unit” means a dwelling unit that is required to be sold or rented to a low-income household at an Affordable Sales Price or an affordable rent, as applicable. “Market-Rate Unit” means a dwelling unit in a Residential Development that is not an Inclusionary Unit.

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Moderate-Income Household shall have the same definition of “persons and families of low or moderate-income as set forth in California Health & Safety Code Section 50093. The income limit for moderate-income households, adjusted for family size, is published periodically in the California Code of Regulations, Title 25, Section 6932. “Moderate-Income Unit” means a dwelling unit that is required to be sold or rented to a moderateincome household, or a low-income unit that is able to qualify to rent or purchase the moderateincome unit. “Rental” means a dwelling unit that is not a for-sale dwelling unit, and does not include any dwelling unit, whether offered for rental or sale, that may be sold as a result of the lawful subdivision of the parcel upon which the dwelling unit is located or creation of the unit in accordance with the Subdivision Map Act (Government Code section 66410 et seq.). “Resale Restriction Agreement” means a legally binding agreement between the City and the purchaser of a for-sale Inclusionary Unit, in a form as approved by the City Attorney, which requires that the Inclusionary Unit to be occupied by the purchaser for the term of the agreement or sold to another Moderate-Income Household at an Affordable Sales Price. “Residential Development” means any development project for which an application for any ministerial or discretionary permit has been submitted to the City, and where the development would create new or additional dwelling units by the construction or alteration of structures, the conversion of a use to residential from any other use, or the conversion of a use to for-sale residential from rental residential use.
“Utilities” means garbage collection, sewer, water, electricity, gas and other heating, cooling, cooking and refrigeration fuels.
“Very Low-income Household” means a household whose income does not exceed the qualifying limits for very low-income families as established and amended from time to time for San Bernardino County pursuant to Section 8 of the United States Housing Act of 1937. The income limits for very low-income households, adjusted for family size, is published periodically in the California Code of Regulations, Title 25, Section 6932. “Very Low-income Unit” that is required to be rented to a very low-income household at an affordable rent.

18.230.030: INCLUSIONARY HOUSING REQUIREMENTS:

A Residential Development that includes ten (10) or more Dwelling Units shall be subject to the provisions of this chapter.

A. Inclusionary Requirements for For-Sale Dwelling Units: Residential developments that include for-sale single-family detached dwelling units, townhomes, and condominiums shall Redlands Regular Meeting of 06-20-2023 447 of 1523
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include for-sale moderate-income units equal to five percent (5%) of the total number of dwelling units in the Residential Development. If a residential condominium development is developed with the intent to initially rent the dwelling units, the Residential Development shall comply with the inclusionary requirements for rental dwelling units set forth in subsection B below, and any future sale of the Inclusionary Units shall be addressed in the Affordable Housing Agreement for the Inclusionary Units for-sale dwelling units shall provide Inclusionary Units through one of the following means:

B. Inclusionary Requirements for Rental Dwelling Units: Residential Developments that are comprised of Rental dwelling units shall include, within the residential development, one of the following as a percentage of the total number of Dwelling Units:

1. 5% Low Income Units and 7% Moderate Income Units; or

2. 5% Very Low Income Units and 5% Moderate Income Units; or

3. 9% Low Income Units
C. Notwithstanding the requirements contained in 18.230.030(A) and (B), projects for which the City has received a development application on or before March 1, 2023 may fulfill the requirements of this title by providing 5% Very Low-Income rental units.

D. Density Bonus Units: For purposes of calculating the number of Inclusionary Units required, any additional units authorized as density bonus units will not be counted in determining the required number of Inclusionary Units.

E. Fractional Units: If, in computing the total number of Inclusionary Units required in a Residential Development, there is a fractional unit required, the Applicant shall pay an In-lieu Fee in the amount determined pursuant to subsection 18.230.120(A)(4) of this title, equal to the amount calculated for that fractional unit on a per Dwelling Unit basis.

F. Residential Development with a Combination of For-sale and Rental Dwelling Units:

When a Residential Development includes a combination of for-sale and rental Dwelling Units, the number and income levels for Inclusionary Units required for the Residential Development shall be calculated for each category of dwelling units (i.e., for-sale and rental) individually, and combined to comprise the Residential Development’s total inclusionary housing requirement pursuant to this title.

18.230.040: DURATION OF AFFORDABILITY COVENANTS:

A. For-sale Inclusionary Units produced pursuant to this chapter must be legally restricted to sale to and occupancy by households of the income levels for which the units were designated for a single cumulative term of 55 years. During that term, the for-sale Inclusionary Units may only be sold and resold to Moderate or Low-Income Households at an Affordable Sales Price for Moderate-Income Households.

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B. Rental units produced pursuant to this chapter must be legally restricted to rental to and occupancy by households in the income level for which the Inclusionary Units are developed for a term of not less than fifty-five (55) years. At the end of the fifty-five-year term, the restrictions on rental of the Inclusionary Units may only be removed in the event that the property upon which the rental Inclusionary Unit or units are located is rezoned and used for non-residential use.

C. To ensure compliance with the durational requirement, Affordable Housing Agreements, and resale restriction agreements for For-sale Inclusionary Units, shall be recorded in the chain of title for every Inclusionary Unit as provided in subsection 18.230.140(E) of this title.

18.230.050: DEVELOPMENT STANDARDS FOR FOR-SALE INCLUSIONARY UNITS:

Unless otherwise specified by the City Council, Inclusionary Units shall be developed and incorporated into the applicable Residential Development in a manner consistent with the following requirements:

A. For-sale Inclusionary Units shall be reasonably dispersed throughout a Residential Development and not clustered in a specific portion of the development, and the location of the for-sale Inclusionary Units within a Residential Development shall be designated before issuance of building permits for the development.

B. The for-sale Inclusionary Units shall be built concurrently with the market rate units in the Residential Development. The Inclusionary Units may be constructed in phases if the market rate units are constructed in phases, provided that the percentage of Inclusionary Units developed in each phase shall be equivalent to or greater than the total percentage of Inclusionary Units to be developed as part of the Residential Development until such time that all the Inclusionary Units have been built.

C. For-sale Inclusionary Units shall be comparable in infrastructure (including sewer, water and other utilities), construction quality and exterior design to the market-rate units.

D. The bedroom mix for the for-sale Inclusionary Units must be proportional to the bedroom mix of the market rate units, but the for-sale Inclusionary Units may be smaller in square footage than the market rate units.

E. The interior finishes and features for the Inclusionary Units must be comparable to the base level interior finishes for the market-rate units, and the appliance packages in the for-sale Inclusionary Units must be the same as the appliance packages provided in the base level market rate units.

18.230.060: DEVELOPMENT STANDARDS FOR RENTAL INCLUSIONARY UNITS:

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A. The rental Inclusionary Units developed in a rental Residential Development shall be designated before issuance of building permits for the development and shall be reasonably dispersed throughout the Residential Development.

B. The rental Inclusionary Units shall be built concurrently with the market rate units in the rental Residential Development.

C. The bedroom mix for the rental Inclusionary Units in a rental Residential Development must be proportional to the bedroom mix of the market rate units, but the Inclusionary Units may be smaller in square footage than the market rate units.

D. The interior improvements for the rental Inclusionary Units must be consistent with defined housing quality standards as established for Inclusionary Units by the City. If no such housing quality standards have been established by the City, the improvements shall comply with the standards established or approved by the California Tax Credit Allocation Committee for residential units developed pursuant to the federal low-income housing tax credit program. The market rate units can include enhanced interior improvements.

18.230.070: DEVELOPMENT STANDARDS FOR OFF-SITE INCLUSIONARY UNITS:

Inclusionary units that are constructed to satisfy this title that are outside the boundaries of the market-rate Residential Development shall comply with the following requirements:

A. The Inclusionary Units constructed must be rental dwelling units.

B. The parcel upon which the rental Inclusionary Units are constructed must be constructed within one mile of the boundary of the market rate Residential Development that is subject to the requirements of this title.

C. The Inclusionary Units shall not create an over concentration of deed restricted affordable housing units in any specific neighborhood. For purposes of this title, “over concentration” is defined as more than fifty (50) deed restricted very low or low-income dwelling units within ¼ mile of the site of the proposed Inclusionary Units, or more than two hundred (200) of such units within one-half (½) mile of the site of the proposed Inclusionary Units.

D. The developer of the for-sale Residential Development may enter into an agreement with a separate affordable housing developer to construct, own and operate the rental Inclusionary Units, subject to the following requirements:

1. The affordable housing developer must have relevant recent experience developing affordable housing and be approved by the City in its sole discretion; and

2. The affordable housing developer may not request any financial assistance from the City.

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3. The affordable housing developer may apply to use the density bonus, incentives and concessions available pursuant to Government Code section 65915 for the Residential Development based on the Inclusionary Units developed outside the boundaries of the Residential Development as provided in this subsection.

E Design, building quality and maintenance standards must be consistent with defined housing quality standards as established for Inclusionary Units by the City. If no such housing quality standards have been established by the City, the improvements shall comply with the standards established or approved by the California Tax Credit Allocation Committee for residential units developed pursuant to the federal low-income housing tax credit program.

F. The bedroom mix for the rental Inclusionary Units shall not be required to be proportionate to the for-sale residential units, provided that the rental Inclusionary Units shall be consistent with the following requirements:

1. No more than fifteen percent (15%) of the rental Inclusionary Units may be studio units.

2. At least forty percent (40%) of the rental Inclusionary Units must include two or more bedrooms.

3. The remaining units must be one or more bedrooms.

G. The rental Inclusionary Units shall be built prior to or concurrently with the market rate units in the Residential Development that triggered the requirements for the Inclusionary Units. If the market rate units are constructed in phases, the rental Inclusionary Units must be constructed prior to or concurrently with the first phase of the market rate Residential Development. The developer shall not commence construction on the second phase of the Residential Development until the required rental Inclusionary Units are completed.

18.230.080: ACCESS TO COMMON AMENITIES:

Residents and tenants of Inclusionary Units located within the Residential Development shall be provided the same rights and access to common amenities in the development project as residents and tenants occupying market-rate units.

18.230.090: INCLUSIONARY HOUSING POLICIES AND PROCEDURES:

The City will prepare manuals that detail the Inclusionary Housing policies and procedures that will be applied to residential projects that are subject to the Inclusionary Housing program requirements. Separate manuals will be prepared for For-sale and Rental housing developments.

18.230.100: MARKETING OF INCLUSIONARY UNITS:

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Developer shall use commercially reasonable efforts to market the Inclusionary Units to eligible residents of the City of Redlands, consistent with the City’s Inclusionary Housing Policies and Procedures.

18.230.110: ALTERNATIVE MEANS OF FULFILLING INCLUSIONARY HOUSING OBLIGATIONS:

A. Payment of In-lieu Fee
As an alternative to constructing Inclusionary Units as required by this title, all or a portion of the inclusionary housing requirement may be fulfilled through the payment of an In-lieu Fee pursuant to an In-lieu Fee schedule adopted by the City pursuant to this title, subject to the following:

1. For-sale Residential Developments of any size may pay an In-lieu Fee by-right.

2. Rental Residential Developments with twenty two (22) or fewer units may pay an In-lieu Fee by-right.

3. Rental Residential Developments with twenty three (23) or greater units may pay an In-lieu Fee, subject to approval by the City Council, upon a demonstration that providing the affordable units in the Residential Development would create an unreasonable economic hardship due to such factors as project size, site constraints, and/or excessively large affordability gaps.

4. Prior to the effective date of this title, and from time to time thereafter, the City Council shall adopt by resolution a schedule of In-lieu Fees that shall be levied based on the square footage of the saleable area of For-sale Residential Developments or leasable area of Rental Residential Developments, but excluding the affordable units in a project that received a density bonus in accordance with Government Code section 65915.1. The amount of In-lieu Fees shall be established by resolution of the City Council. The In-lieu Fee schedule shall be updated periodically by the City Council.

5. The required In-lieu Fees shall be paid at the time that the first building permit is obtained for the Residential Development, except that, for phased projects, the developer may pay a pro rata share of the In-lieu Fee, based on the number and size of phases in the development, concurrently with the issuance of the first building permit for each phase of the Residential Development.

6. All In-lieu Fees collected under this title shall be deposited in the Inclusionary Housing fund established by the City pursuant to subsection 18.230.170(B) of this title.

B. Off-site Development of Affordable Units
Off-site development of affordable units is not an option for Rental Residential Developments.

For-sale Residential Developments can fulfill Inclusionary Housing requirements by renting 9% Redlands Regular Meeting of 06-20-2023 452 of 1523
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of the total number of units in the development at the Low-income standard in one of the following ways:

1. Off-site production of affordable rental units; or

2. Creation of a parcel within a For-sale Housing Development site on which affordable rental units are constructed.

C. Land Dedication
As an alternative to constructing the required inclusionary units in accordance with this title, the City Council may, in its discretion, allow an applicant to dedicate real property to the City for the purpose of developing affordable housing, provided that the real property dedicated to the City must satisfy all of the following requirements:

1. The real property must be conveyed to the City at no cost.

2. At the time the applicant submits a proposal to dedicate real property to the City pursuant to this title, the applicant must provide evidence satisfactory to the City that the property meets the following requirements:
a. The applicant has control over the property through fee ownership, an option to purchase the property, or other property interest demonstrating site control satisfactory to the City, and the real property is free of any monetary liens. In the event that there are any encumbrances or easements that adversely impact title to the property, those encumbrances or easements must be disclosed and factored into the estimated value of the real property interest to be conveyed to the City.
b. The applicant must provide evidence satisfactory to the City that the property does not contain any hazardous materials at the time of conveyance; must disclose whether any hazardous materials were previously found on the property; and if hazardous materials were previously remediated from the property, the applicant must provide evidence satisfactory to the City that such hazardous materials were remediated in accordable with all applicable laws and regulations.
c. The property cannot have been improved with any residential use for at least five years prior to the submission of the proposal for dedication of the property to the City pursuant to this title.
d. The property must be located within one mile of the property upon with the applicant proposes to develop the market rate residential development that has triggered the requirements of this title.

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e. The property must have a general plan designation that authorizes residential uses and is zoned for residential development at a density to accommodate at least a number of dwelling units equal to at least 10% of the number of dwelling units proposed in the Applicant’s residential development. f. The property must be suitable for development of inclusionary units equal to at least 10% of the number of dwelling units proposed in the applicant’s residential development, in terms of configuration, physical characteristics, location, access, adjacent uses, and other relevant planning and development criteria including, but not limited to, factors such as the cost of construction or development arising from the nature, condition, or location of the property. g. Infrastructure to serve the property, including but not limited to streets and public utilities, must be available at the property line and have adequate capacity to serve the maximum allowable residential development pursuant to zoning regulations.

3. In order to assist the City in evaluating a proposal by an applicant to dedicate property pursuant to this title, the applicant shall submit the following documents:
a. A conceptual site plan and narrative description of a residential development that could be developed on the property.
b. An identification of the income and affordability restrictions proposed to be imposed on the property.
c. A pro forma analysis that quantifies any financial gap associated with the identified development scope and describes how this financial gap will be filled. d. If the applicant believes a density bonus would be required pursuant to Government Code Section 65915, the terms of the requested density bonus; and the incentives, concessions, and development waivers that applicant anticipates will be requested for the development of the property.

4. Prior to scheduling a proposal for dedication of property pursuant to this title for consideration by the City Council, City staff will independently evaluate the applicant’s proposal and provide the City Council with an analysis of whether the proposal meets the required standards set forth in this title.

D. The alternative means of compliance set forth herein are intended to implement the City’s authority to promote the development of affordable housing, in accordance with California Government Code § 65850, subdivision (g), and shall not be considered or construed as an ad hoc exaction, a mandated fee required to develop a specific property, or a fee imposed to offset the development impacts of a specific project.

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18.230.120: EXEMPTIONS:

The requirements of this chapter do not apply to:

A. Residential developments of nine (9) or fewer housing units.

B. The reconstruction of any structures that have been destroyed by fire, flood, earthquake, or other act of nature provided that the reconstruction of the site does not increase the number of residential units by three or more.

C. Residential building additions, repairs or remodels, provided that such work does not increase the number of existing units by three or more.

D. Residential developments that have been deemed complete by the City pursuant to Government Code Section 65589.5 or 65943 as of the effective date of this title. Further, for Residential Developments that have been deemed complete by the City pursuant to Government Code Section 65589.5 or 65943 within forty-five (45) days of the effective date of this title, the inclusionary housing requirement imposed pursuant to this chapter shall be reduced by fifty percent (50%).

18.230.130: COMPLIANCE PROCEDURES:

A. No Residential Development subject to this title shall be approved or deemed approved without approval of an Inclusionary Housing Plan as provided herein.

B. Submittal of Inclusionary Housing Plan: The applicant for a residential project subject to this title shall submit an Inclusionary Housing Plan in conjunction with its application for discretionary approvals required of the City for the Residential Development, or if no discretionary approvals are required, in conjunction with the application for the first ministerial permit or approval required for the Residential Development. The Inclusionary Housing Plan shall be in a form as required by the City and must include the following information as applicable based on the applicant’s method of compliance with this title:

1. Whether the Residential Development is For-sale or Rental;

2. How the inclusionary housing requirement will be satisfied pursuant to this title;

3. The number, unit type, tenure, number of bedrooms, approximate location, size and design, construction and completion schedule of all Inclusionary Units;

4. For off-site development of Inclusionary Units, such information as is required to demonstrate compliance with subsection 18.230.120(B);

5. Phasing of Inclusionary Units in relation to market rate units;

6. The amount of In-lieu Fees to be paid by applicant, if applicable.

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7. Any other information reasonably requested by the City Manager to assist with evaluation of the plan under the requirements of this ordinance.

8. Acknowledgement that an instrument as specified by the City restricting the Inclusionary Unit(s) as affordable shall be recorded against every Inclusionary Unit and that a recordable Affordable Housing Agreement shall be entered into by the applicant and any other necessary party, and/or that all required In-lieu Fees shall be paid at the time set forth in subsection 18.230(A)(5).

C. Approval of Inclusionary Housing Plan.

1. In the event that the Residential Development requires discretionary approvals in order to be developed, the Inclusionary Housing Plan shall be considered with the application for such inclusionary approvals by the entity responsible for reviewing such discretionary approvals and may be appealed in accordance with the appeals procedures established for such approvals.

2. In the event that the Residential Development does not require discretionary approvals in order to be developed, the Inclusionary Housing Plan shall be considered by the City Manager and must be approved prior to the issuance of any ministerial permits required for the Residential Development. The City Manager’s decision is final unless a written appeal is filed with the City Clerk’s office within ten days from the date of issuance of the City Manager’s decision under this title. The City Council’s decision on appeal shall be final.

3. Notwithstanding the foregoing, in the event the applicant desires to comply with this title by means of a method that specifically requires City Council approval pursuant to this title, the Inclusionary Housing Plan shall be considered by the City Council either prior to or concurrently with consideration by the required decision-making body for the approvals required for the Residential Development.

D. Form of restrictions: The forms of the Affordable Housing Agreement and any related declarations, resale restrictions, deeds of trust, and other documents authorized by this title shall be in a general form as prescribed by the City and shall be approved by the City Manager and approved as to form by the City Attorney prior to being executed with respect to any Residential Development subject to this program.

E. Recording of Affordable Housing Agreements.

1. An Affordable Housing Agreement in a form approved by the City must be recorded against Inclusionary Units or the Residential Development in its entirety, as deemed appropriate by the City Manager in consultation with the City Attorney, prior to the issuance of any building permit for the Residential Development. The Affordable Redlands Regular Meeting of 06-20-2023 456 of 1523
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Housing Agreement shall ensure that the applicant develops the required Inclusionary Housing Units and complies with all other terms of the approved Inclusionary Housing Plan and this title.

2. Resale restrictions, deeds of trust, and/or other documents as deemed necessary or appropriate by the City Manager shall be recorded against For-Sale Inclusionary Units to ensure the continued affordability of the For-Sale Inclusionary Units in compliance with this title.

F. Building permits: The City shall not issue a building permit for a Residential Development subject to the requirements of this title without an Affordable Housing Agreement executed by the owner, the applicant (if not the owner) and the City Manager, and approved as to form by the City Attorney, and recorded against the property, or payment of In-lieu Fees in accordance with this title.

18.230.140: REQUIREMENTS FOR FOR-SALE INCLUSIONARY UNITS:

A. Initial sales price and resale: The initial sales price and resale price of the For-sale Inclusionary Unit will be at an Affordable Sales Price that will ensure that the purchaser of the Inclusionary Unit will pay an Affordable Housing Cost for the unit. The City shall, from time to time, set a benchmark mortgage interest rate and an assumed home buyer down payment amount to be used to calculate the Affordable Sales Price. The City Manager may establish and adjust such benchmark mortgage interest rates, establish an assumed home buyer down payment amount, along with a range of allowable home buyer down payments pursuant to the delegated authority set forth in 18.230.170(A). Such standards shall be in writing and available to the public upon request.

B. Transfer: A resale restriction agreement will be entered into on each change of ownership of For-sale Inclusionary Units, to maintain the household income restriction on the Inclusionary Unit prior to the expiration of the affordability period established pursuant to subsection 18.230.040.

C. Owner occupancy required: All for-sale Inclusionary Units are subject to the following regulations:

1. Principal residence. The purchaser of the Inclusionary Unit shall use and occupy the Inclusionary Unit as purchaser’s principal place of residence.

2. No rental. Owner is expressly prohibited from leasing or renting the Inclusionary Unit unless the City has given its prior written consent to such lease or rental on the basis of a demonstrated hardship by the owner.

3. Annual report. The City from time to time may require certification of continuing occupancy of the Inclusionary Unit by owner, which shall be verified by owner to the Redlands Regular Meeting of 06-20-2023 457 of 1523
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reasonable satisfaction of the City by means of a written report by owner to the City setting forth the income and family size of the occupants of the Inclusionary Unit. Such report shall be submitted to the City annually. Owner shall not be deemed to be in default of the affordable agreement and this program for any failure to deliver such annual report until 30 days after receipt by owner of written notice from the City requesting such report. The City shall have the option of establishing the type of form to be used for the report.

18.230.150: OCCUPANCY OF RENTAL UNITS:

A. Occupancy of Rental Units: Unless determined otherwise by the City Council, all rental Inclusionary Units required by this title shall be only rented to households in the appropriate income category for the Inclusionary Units, as set forth in this title.

B. Use and occupancy of rental Inclusionary Units: The applicant shall designate and offer rental Inclusionary Units for rent to households in the appropriate income category, based on the approved Inclusionary Housing Plan.

C. Establishment of rental rates: The maximum allowable rent of Inclusionary Units will be the Affordable Rent as defined herein, based on the applicable income levels for the Inclusionary Units, and shall be confirmed by the City on an annual basis.

D. Annual report: The owner shall submit an annual report summarizing the occupancy of each Rental Inclusionary Unit for the year. The City may require additional information if deemed necessary. The owner must obtain and review documents that demonstrate the prospective renter's total income, such as income tax returns or W-2s for the previous calendar year, and submit such information on a form approved by the City.

18.230.160: ADJUSTMENTS, WAIVERS:

The requirements of this ordinance may be adjusted or waived if the applicant demonstrates to the City Manager that applying the requirement of this ordinance would take property in violation of the United States or California Constitutions.

A. Timing: For an adjustment or waiver to be considered, the applicant must apply for the same at the time of an application for the Residential Development.

B. Adjustment or waivers: If the City Manager determines that applying the requirement of this program, considered together with any variances, or regulatory concessions or incentives that may be applied to the proposed residential project, would take property in violation of the United States or California Constitutions, the requirements of this program shall be modified, adjusted or waived to reduce the obligations but only to the extent necessary to avoid an unconstitutional result. If the City Manager determines no violation of the United States or California Constitutions would occur through application of this ordinance, the requirements of this ordinance remain applicable.

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18 I:\cmo\Ordinances\2959 Inclusionary Housing.docx - AE C. Decision and further appeal: The City Manager will determine the adjustment or waiver application and issue a written decision. The City Manager’s decision may be appealed to the City Council in the manner and within ten days of issuance of the written decision by the City Manager.

In making the (adjustment or waiver) determination, the City Manager or City Council, as applicable shall assume each of the following:

1. Application of the inclusionary housing requirement to the Residential Development;

2. Application of any applicable inclusionary or density bonus concessions, incentives or waivers;

3. Utilization of the most cost-efficient product type for the Inclusionary Units; and

4. The potential for the external funding, including but not limited to, governmental grants, loans, or subsidies of any nature where reasonably likely to occur.

18.230.170: ADMINISTRATION AND ENFORCEMENT:

A. Program administration: The City Manager is hereby given authority to initiate any administrative procedures or implementation guidelines as may be necessary to implement and carry out the purpose and intent of this title. Further, the City Manager may, in the implementation of this program, develop application forms and submittal requirements reasonably related to the implementation of this title.

Forms or materials needed for implementation of this title may be introduced and utilized by the City as the City Manager deems may be necessary or desirable. All form changes or administrative procedures initiated by the City Manager, and all administrative determinations or exercises of delegated authority by the City Manager, shall be carried out in a manner consistent with, and reasonably related to, the purposes and intent of this title, the housing element and all other elements of the City's General Plan, and the furtherance of state and local housing policies and goals, while respecting at all times the rights of property owners and applicants.

B. Inclusionary Housing Fund:

1. Unless otherwise required by law, all In-lieu Fees and any other funds collected under this title shall be deposited into a separate account to be designated as the City of Redlands Inclusionary Housing Fund.

2. The moneys in the inclusionary housing fund and all earnings from investment of the moneys in the inclusionary housing fund shall be expended exclusively to provide housing affordable to Very Low-income, Low-income, and Moderate-income households in the City of Redlands leveraging funds, and administration and compliance monitoring of the Inclusionary Housing Program.

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19 I:\cmo\Ordinances\2959 Inclusionary Housing.docx - AE C. Enforcement:

1. The City Attorney shall be authorized to enforce the provisions of this title and all Affordable Housing Agreements, resale restrictions, deed of trust, and other requirements placed on Inclusionary Units by civil action and any other proceeding or method permitted by law. The City may, at its discretion, take such enforcement action as is authorized under this code and/or any other action authorized by law or by any regulatory document, restriction, or agreement executed under this title.

2. Failure of any official or agency to fulfill the requirements of this title shall not excuse any applicant or owner from the requirements of this title. No permit, license, map, or other approval or entitlement for a Residential Development shall be issued, including without limitation a final inspection or certificate of occupancy, until all applicable requirements of this title have been satisfied.

3. The remedies provided for herein shall be cumulative and not exclusive and shall not preclude the city from any other remedy or relief to which it otherwise would be entitled under law or equity.”
SECTION 3. If any section, sentence, clause or phrase of this ordinance or the application thereof to any entity, person or circumstance is held for any reason to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect other provisions or applications of this ordinance which can be given effect without the invalid provisions or application, and to this end the provisions of this ordinance are severable. The City Council of the City of Redlands hereby declares that it would have adopted this ordinance and each section, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsections, sentences, clauses or phrases be declared invalid or unconstitutional.

SECTION 4. The Mayor shall sign this ordinance and the City Clerk shall certify to the adoption of this ordinance and shall cause it, or a summary of it, to be published once in a newspaper of general circulation within the City, and thereafter, this ordinance shall take effect as provided by law.
_________________________________
Eddie Tejeda, Mayor
ATTEST:
____________________________________
Jeanne Donaldson, City Clerk
Redlands Regular Meeting of 06-20-2023 460 of 1523
20 I:\cmo\Ordinances\2959 Inclusionary Housing.docx - AE I, Jeanne Donaldson, City Clerk, City of Redlands, hereby certify that the foregoing Ordinance was duly adopted by the City Council at the regular meeting thereof, held on the __ day of July, 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
__________________________________
Jeanne Donaldson, City Clerk
Redlands Regular Meeting of 06-20-2023 461 of 1523
Density Bonus Law
California’s Density Bonus Law is found in California Government Code Sections 65915 – 65918.

It provides developers with density increases up to 50% in exchange for providing affordable housing units, depending on the amount of affordable housing provided, and an 80% increase in density for projects which are completely affordable. The Density Bonus Law also requires that Cities provide additional incentives, such as reduced setbacks and minimum square footage requirements, as well as reduced parking requirements.

Cities and counties are required to grant a density bonus and other incentives or concessions to housing projects which contain one of the following:
• At least 5% of the housing units are restricted to very low income households • At least 10% of the housing units are restricted to low income households • At least 10% of the housing units in a for-sale development are restricted to moderate income households
The amount of the density bonus is set on a sliding scale, based upon the percentage of affordable units at each income level, as shown in the table below.

Income Level Affordable Units Provided Density Bonus
Very low
5%
6%
7%
.
.
15%
100%
20%

22.5%
25%
.
.
50%
80%
Low
10%
11%
12%
.
.
24%
100%
20%

21.5%
23%
.
.
50%
80%
Moderate
10%
11%
12%
.
.
44%
100%
5%
6%
7%
.
.
50%
80%
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Parking Standards
If a project qualifies for a density bonus, regardless of the size of the bonus, then the developer is entitled to use the state-mandated parking standards shown in the table below:

These numbers are inclusive of guest parking and handicapped parking. The spaces can be tandem and uncovered, as such spaces are also less expensive to build and do not use as much land area. The above parking standards apply to both the affordable and market rate units, regardless of the amount of density bonus that the project receives.

Additional Incentives
A project requesting a density bonus is entitled to between one and three additional incentives, over and above the density bonus, depending on the percentage of affordability in the project.

These incentives can be reduction in zoning standards (e.g. setbacks, minimum square footage of living space, open space requirements), design requirements, fee waivers, and any other incentive that would reduce the cost for the developer. The table below summarizes the number of incentives that must be provided.

The city is required to grant the concession or incentive proposed by the developer unless it finds that the proposed concession or incentive does not result in identifiable and actual cost reductions, would cause a public health or safety problem, would cause an environmental problem, would harm historical property, or would be contrary to law.

Studio 1 space
1 Bedroom 1 space
2 Bedroom 1.5 spaces
3 Bedroom 1.5 spaces
4 Bedroom 2.5 spaces
Percent Affordable Incentives
5% Very low / 10% Low / 10% Moderate 1
10% Very low / 17% Low / 20% Moderate 2
15% Very low / 24% Low / 30% Moderate 3
Redlands Regular Meeting of 06-20-2023 463 of 1523
Waivers and Modifications of Development Standards
Beyond the requirement for additional incentives, the state density bonus law states that a City cannot impose a development standard that makes it infeasible to construct the housing development with the proposed density bonus. The two zoning standards that typically make it difficult to achieve higher density residential development are parking and open space. As described above, the law already limits the amount of parking that can be required. In order to achieve increased density, it is often necessary to reduce a City’s open space requirements and such a reduction would not count as one of the incentives described above.

Redlands Regular Meeting of 06-20-2023 464 of 1523
INCLUSIONARY HOUSING:

FINANCIAL EVALUATION
Prepared for:

City of Redlands
Prepared by:

Keyser Marston Associates, Inc.

January 23, 2023
Redlands Regular Meeting of 06-20-2023 465 of 1523

TABLE OF CONTENTS
Inclusionary Housing: Financial Evaluation Page i
Keyser Marston Associates, Inc. 2212022.RED / 18500.004.001 January 23, 2023 I. EXECUTIVE SUMMARY................................................................................................................. 1 A. BACKGROUND ................................................................................................................................... 1 B. PUBLIC POLICY OBJECTIVES .................................................................................................................. 1 C. INCLUSIONARY HOUSING PROGRAM DESIGN ............................................................................................ 1 D. FINANCIAL ANALYSES .......................................................................................................................... 2 E. FINDINGS ......................................................................................................................................... 3 II. KEY COURT CASES AND STATE LEGISLATION................................................................................ 9 A. COURT CASES.................................................................................................................................... 9 B. STATE LEGISLATION ..........................................................................................................................10 III. INCLUSIONARY HOUSING PROGRAM CHARACTERISTICS ........................................................... 12 A. SURVEY OF EXISTING INCLUSIONARY HOUSING PROGRAMS........................................................................12 B. PROGRAM REQUIREMENTS.................................................................................................................13 IV. METHODOLOGY......................................................................................................................... 16 A. PARAMETERS ..................................................................................................................................16 B. FINANCIAL EVALUATION APPROACH .....................................................................................................17 C. FINANCIAL EVALUATION STRUCTURE ....................................................................................................19 D. FINANCIAL EVALUATION ORGANIZATION ...............................................................................................19 V. APARTMENT DEVELOPMENT ANALYSIS ..................................................................................... 21 A. PRO FORMA ANALYSIS ORGANIZATION AND ASSUMPTIONS .......................................................................21 B. PRO FORMA ANALYSES......................................................................................................................24 C. SUMMARY: APARTMENT DEVELOPMENT ANALYSES .................................................................................29 VI. OWNERSHIP HOUSING ANALYSIS .............................................................................................. 31 A. PRO FORMA ANALYSIS ORGANIZATION ................................................................................................. 31 B. PRO FORMA ANALYSES......................................................................................................................33 C. SUMMARY: OWNERSHIP HOUSING DEVELOPMENT ANALYSES ....................................................................37 VII. IN-LIEU FEE ANALYSES ............................................................................................................... 39 A. APARTMENT DEVELOPMENT ...............................................................................................................39 B. OWNERSHIP HOUSING DEVELOPMENT ..................................................................................................40 VIII. SUMMARY................................................................................................................................. 42 A. SUPPORTABLE INCLUSIONARY HOUSING PRODUCTION REQUIREMENTS ........................................................42 B. SUPPORTABLE IN-LIEU FEES................................................................................................................43 C. NEXT STEPS ....................................................................................................................................44 Redlands Regular Meeting of 06-20-2023 466 of 1523

ATTACHMENTS
Inclusionary Housing: Financial Evaluation Page ii
Keyser Marston Associates, Inc. 2212022.RED/ 18500.004.001 January 23, 2023 Attachment 1: Inclusionary Housing Program Surveys
Attachment 2: Affordable Housing Cost Calculation Methodologies Appendix A: Affordable Rent Calculation Methodology
Appendix B: Affordable Sales Price Calculation Methodology Attachment 3: Apartment Development
Appendix A: Rent Survey: 4+ Star Properties
Appendix B: Affordable Rent Calculations
Appendix C: Pro Forma Analyses – Transit Village 1 Apartment Development Prototypes Exhibit I Density @ 30 Units/Acre: 100% Market Rate Alternative Exhibit II Density @ 30 Units/Acre: Low Income Requirement Exhibit III Density @ 30 Units/Acre: Very Low Income Requirement Appendix D: Pro Forma Analyses – Transit Village 2 Apartment Development Prototypes Exhibit I Density @ 58 Units/Acre: 100% Market Rate Alternative Exhibit II Density @ 58 Units/Acre: Low Income Requirement Exhibit III Density @ 58 Units/Acre: Very Low Income Requirement Appendix E: Pro Forma Analyses – R-3 Apartment Development Prototypes Exhibit I Density @ 27 Units/Acre: 100% Market Rate Alternative Exhibit II Density @ 27 Units/Acre: Low Income Requirement Exhibit III Density @ 27 Units/Acre: Very Low Income Requirement Redlands Regular Meeting of 06-20-2023 467 of 1523

ATTACHMENTS
Inclusionary Housing: Financial Evaluation Page iii
Keyser Marston Associates, Inc. 2212022.RED/ 18500.004.001 January 23, 2023 Attachment 4: Ownership Housing Development
Appendix A: Home Sales Survey
Appendix B: Affordable Sales Price Calculations
Appendix C: Pro Forma Analyses –Citywide Townhome Prototype Exhibit I Market Rate Alternative
Exhibit II Moderate Income Requirement
Appendix D: Pro Forma Analyses –Citywide Detached Single Family Home Prototype Exhibit I Market Rate Alternative
Exhibit II Moderate Income Requirement
Attachment 5: In-Lieu Fee Analysis
Appendix A: Apartment Development
Appendix B: Ownership Housing Development
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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 I. EXECUTIVE SUMMARY
A. Background
Keyser Marston Associates, Inc. (KMA) was engaged by the City of Redlands (City) to assist the City in creating an Inclusionary Housing program. Over the past 20+ years, the KMA Los Angeles office has assisted 36 jurisdictions in the Inclusionary Housing program creation process. The KMA evaluation methodology has been continually evolving over this period, and it reflects a real world perspective based on the firm’s core experience in real estate development economics, real estate transactions, and developer negotiations services.

KMA was engaged to prepare an Inclusionary Housing: Financial Evaluation (Financial Evaluation) to identify the supportable Inclusionary Housing program requirements. While each evaluation KMA undertakes is tailored to reflect the specific characteristics of the jurisdiction being studied, the primary objective is always to identify requirements that balance the interests of property owners and developers against the City’s need for affordable housing.

B. Public Policy Objectives
Inclusionary Housing programs are subject to both statutory parameters imposed by the State Legislature and the rulings in the court cases that have challenged Inclusionary Housing programs over the past 30+ years. These court cases and statutes are described in Section II of this Financial Evaluation. It is important to understand the constraints and opportunities that are created by these statutes and court rulings.

C. Inclusionary Housing Program Design
In California Building Industry Association v. City of San Jose, 61 Cal 4th 435 (San Jose) the California Supreme Court found that the imposition of Inclusionary Housing requirements is a valid exercise of a jurisdiction’s zoning powers. However, the San Jose ruling also imposed the following limitations on the requirements that jurisdictions can impose:

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1. Inclusionary Housing requirements cannot be confiscatory; and

2. Inclusionary Housing requirements cannot deprive a property owner of a fair and reasonable return on their investment.

The California Supreme Court did not provide criteria under which jurisdictions can evaluate these limitations. As a result, each jurisdiction is left to create an evaluation methodology that balances the interests of property owners, developers and the jurisdiction’s need for affordable housing. It is KMA’s practice to take a conservative approach in establishing income and affordability obligations in order to comport with the court’s ruling.

The first step in designing an Inclusionary Housing program is to identify the factors that will be considered in defining the program’s goals. A common measurement is the unmet need for affordable housing in the jurisdiction. The findings presented in the City’s Sixth Cycle Housing Element (Housing Element), which was certified by the California Department of Housing and Community Development (HCD) on September 26, 2022, have been used for this purpose.

D. Financial Analyses
Each affordable housing unit that is required to be provided in a market rate residential project creates an impact on the project economics. This is called the “Affordability Gap,” which is defined as difference between the achievable market rate rent or sales price and the allowable rent or sales price for each “Inclusionary Unit.” This Financial Evaluation uses pro forma analyses to estimate the Affordability Gaps generated at varying income and affordability levels.

Prototype apartment and ownership housing developments were created for analysis purposes. The apartment development prototypes were created for projects at varying sizes and densities. The ownership housing development prototypes were varied by housing product type. The prototypes can be generally described as follows:

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Apartment and Ownership Development Prototypes
Apartment Development Ownership Housing Development
Transit Village 1 at 30 Units / Acre Townhomes
Transit Village 2 at 58 Units / Acre Detached Single Family Homes R-3 Zoning Standards
The prototype projects were created using the following resources:

1. The City’s Housing Element;

2. Specific Plans that have been adopted by the City;

3. Recently completed residential projects; and

4. Development plans for residential projects that have recently received entitlements and/or been submitted to the City’s Planning Division for review.

E. Findings

SUPPORTABLE INCLUSIONARY HOUSING REQUIREMENTS
KMA used pro forma analyses to estimate the Affordability Gaps created by the Inclusionary Housing alternatives being tested. The results were then evaluated to identify affordable housing requirements that balance the interests of the property owner, the developer, and the City’s unmet need for affordable housing.

Apartment Development
Rent Estimates
The rent estimates that were used as part of the Affordability Gap analyses are presented in the following tables:

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Projected Market Rate Rents
Apartment Development Prototypes
Number of
Bedrooms
Transit
Village 1
Transit
Village 2 R-3
Studio $2,090 $2,100
1 $2,240 $2,310 $2,250
2 $2,750 $2,880 $2,630
3 $2,990
Affordable Rents
Apartment Development Prototypes
Number of
Bedrooms Low Income
Very Low
Income
Studio $1,094 $635
1 $1,240 $716
2 $1,351 $761
3 $1,459 $804
Affordability Gap Estimates
The Affordability Gaps, per Inclusionary Unit, are estimated as follows for the apartment development prototypes:

Affordability Gap Estimates
Apartment Development Prototypes
Transit Village 1 $205,000
Transit Village 2 $198,000
R-3 $164,000
Weighted Average
Affordability Gap Per
Inclusionary Unit
$188,200
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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Supportable Inclusionary Housing Requirements – Apartment Development Based on the results of the pro forma analyses, KMA concluded that the following Inclusionary Housing requirements can be supported by apartment development projects:

Supportable Inclusionary Housing Requirement
Apartment Development Projects
Income Level
Transit
Village 1
Transit
Village 2 R-3
Low 9% 8% 9%
Very Low 5% 5% 4%
Based on all the factors considered in the apartment development evaluation, KMA has concluded that a 9% low income Inclusionary Housing obligation can be supported. Given the conservative approach taken by KMA, it is reasonable to conclude that a requirement of this magnitude is not confiscatory and that it will not deprive a property owner of a fair and reasonable return on their investment.

It is important to consider that some developers may wish to mitigate the financial impact created by the imposition of Inclusionary Housing requirements by using the density bonus provided under California Government Code Section 65915 et seq. (Section 65915). In many cases it will be advantageous for a developer to provide very low income units to fulfill the Density Bonus requirements. In those instances, the City’s low income Inclusionary Housing requirements would actually be fulfilled at a deeper affordability level.

Ownership Housing Development
Inclusionary Housing programs generally set the affordability requirements for ownership housing development at the moderate income level. This is done as a reflection of the fact that higher income households are likely to have more discretionary income to devote to the ongoing costs associated with home ownership than that of lower income households.

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Sales Price Estimates
The sales price estimates that were used as part of the Affordability Gap analyses are presented in the following tables:

Projected Market Rate Sales Prices
Ownership Housing Development Prototypes
Number of
Bedrooms Townhomes
Detached Single
Family Homes
2 $525,000
3 $564,000 $810,000
4 $986,000
5 $1,228,000
Estimated Affordable Sales Prices
Moderate Income Units
Ownership Housing Development
Number of
Bedrooms Townhomes
Detached Single
Family Homes
2 $272,000
3 $292,500 $262,800
4 $270,400
5 $278,100
Affordability Gap Estimates
The weighted average Affordability Gaps per Inclusionary Unit are estimated as follows for the ownership housing development prototypes:

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Affordability Gap Estimates
Moderate Income Units
Ownership Housing Development Prototypes
Townhomes $259,500
Detached Single Family Homes $735,400
Weighted Average
Affordability Gap Per
Inclusionary Unit
$463,500
Supportable Inclusionary Housing Requirements – Ownership Housing Development Based on the results of the pro forma analyses, KMA concluded that the following Inclusionary Housing requirements can be supported by ownership housing development projects:

Supportable Inclusionary Housing Requirements
Moderate Income Standard
Ownership Housing Development Projects
Townhomes 6%
Detached Single Family Homes 5%
Based on the results of the financial analysis, KMA has concluded that a 5% moderate income Inclusionary Housing requirement on ownership housing development can be supported. This will maximize the number of affordable ownership housing units that are produced, while minimizing the Affordability Gaps between the market rate sales prices and the Affordable Sales Prices.

SUPPORTABLE IN-LIEU FEES
KMA converted the Affordability Gaps associated with the supportable Inclusionary Housing obligations into the in-lieu fee payments that would be required to fulfill the affordable housing requirements on site within a proposed residential development. The resulting in lieu fee amounts are presented in the following table:

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Inclusionary Housing In-Lieu Fees
9% Low Income Inclusionary Housing Standard
Apartment Development
Per Inclusionary Unit $188,200
Per Market Rate Unit in a 100% Market Rate Project $16,750 Per Square Foot of Leasable Area in a 100% Market Rate Project $19.80 Inclusionary Housing In-Lieu Fees
5% Moderate Income Inclusionary Housing Standard
Ownership Housing Development
Townhome & Small
Lot Home
Development 1
Detached Single
Family Home
Development
Per Inclusionary Unit $259,500 $735,400
Per Market Rate Unit in a 100%
Market Rate Project $14,420 $36,770
Per Square Foot of Leasable Area
/Saleable Area in a 100% Market
Rate Project
$10.00 $15.50
Due to the fact that the in-lieu fee payment is an optional method of fulfilling the Inclusionary Housing obligation, the amount of the fee does not have to track with the Affordability Gap. The City may wish to consider applying a premium to the in-lieu fee payment amount to discourage its use, or they may wish to apply a discount to the in-lieu fee when the policy objective is to obtain funding sources for use in assisting dedicated affordable housing projects.
1 For the purposes of the proposed Inclusionary Housing program, “Small Lot Home Development” is defined as homes constructed on lots that are 4,500 square feet and smaller.

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 II. KEY COURT CASES AND STATE LEGISLATION
In structuring an Inclusionary Housing program, it is important to remember that the courts and the State Legislature have placed limitations on the income and affordability requirements imposed by Inclusionary Housing programs:

A. Court Cases

PALMER CASE
In 2009, the California Court of Appeal ruled in Palmer/Sixth Street Properties L.P. V. City of Los Angeles, 175 Cal. App. 4th 1396 (Palmer), that the affordable housing requirements being imposed by the City of Los Angeles violated the Costa-Hawkins Rental Housing Act (Costa-Hawkins). Specifically, Costa-Hawkins allows landlords of rent controlled units to set the initial monthly rent for a new unit, and then to increase the monthly rent to the market level each time a unit is vacated. The court found that the imposition of long-term income and affordability restrictions on apartment units is a violation of this provision.

It is commonly believed that the Palmer ruling prohibited jurisdictions from requiring developers to provide affordable apartment units as a part of an Inclusionary Housing program. In an effort to comply with Palmer, jurisdictions generally took one of the following actions:

1. The jurisdiction eliminated the requirement that market rate apartment projects provide affordable apartment units; or

2. The jurisdiction replaced the affordable housing production requirement with a linkage or impact fee program that comported with the AB 1600 nexus requirements imposed by California Government Code §66000 et seq (Mitigation Fee Act); or

3. The jurisdiction imposed affordable housing requirements as part of negotiated Development Agreements for apartment projects.

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SAN JOSE CASE
In the 2015 San Jose case the California Supreme Court found that Inclusionary Housing programs should be viewed as use restrictions that are a valid exercise of a jurisdiction’s zoning powers.

Specifically, the court found that Inclusionary Housing requirements are a planning tool rather than an exaction. This has been interpreted to mean that an in-lieu fee option included in an Inclusionary Housing program is not subject to the requirements imposed by the Mitigation Fee Act.

While Inclusionary Housing programs are not subject to the Mitigation Fee Act, these programs must comply with the following criteria:

1. The requirements cannot be confiscatory; and

2. The requirements cannot deprive a property owner of a fair and reasonable return on their investment.

The court did not provide criteria under which jurisdictions can determine whether proposed affordable housing requirements are confiscatory and/or they deprive a property owner of a fair and reasonable return. As a result, each jurisdiction is left to create an evaluation methodology that balances the interests of property owners, developers and the jurisdiction’s need for affordable housing. It is KMA’s practice to take a conservative approach in establishing affordable housing standards that comport with the court’s ruling.

B. State Legislation
ASSEMBLY BILL 1505
Assembly Bill (AB) 1505, which is otherwise known as the “Palmer Fix”, was signed into law on September 29, 2017. AB 1505 amended Section 65850 of the California Government Code and adds Section 65850.01. This legislation provides jurisdictions with the ability to adopt programs that impose Inclusionary Housing requirements on apartment projects.

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Section 65850.01 does not place a cap on the percentage of units that can be subject to income and affordability restrictions. However, Section 65850.01 (a) gives HCD the authority to review the affordable housing obligations imposed on apartment developments if more than 15% of the units are required to be restricted to households earning less than 80% of the area median income (AMI), and if one of the following conditions applies:

1. The jurisdiction has failed to meet at least 75% of its Regional Housing Needs Assessment (RHNA) allocation for above moderate income units. This test is measured on a pro-rated basis over the planning period, which is set at a minimum of five years; or

2. HCD finds that the jurisdiction has not submitted their Housing Element report for at least two consecutive years.

The City has fulfilled the requirements imposed by both of the standards identified above. As such, HCD does not have authority under Section 65850.01 (a) to review the Inclusionary Housing requirements the City proposes to impose on apartment development. However, in a technical guidance memorandum dated October 21, 2019, HCD reaffirmed its authority to review Inclusionary Housing ordinances as part of its review of a jurisdiction’s Housing Element.

CALIFORNIA GOVERNMENT CODE SECTION 65583 (A)
California Government Code Section 65583 (a) (Section 65583 (a)) requires the City to analyze potential and actual constraints being placed on the development of housing. If the City chooses to impose a greater than 15% affordability requirement and/or a deeper affordability standard than 80% of AMI on apartment development, HCD can require the City to demonstrate that the Inclusionary Housing requirement does not create a constraint to housing development.

Section 65583 (a) requires the City to analyze potential and actual constraints being placed on the development of housing. Within that context, it is important to recognize that the requirements imposed by an Inclusionary Housing program can only be expected to fulfill a small portion of the unmet need for affordable housing in Redlands.

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 III. INCLUSIONARY HOUSING PROGRAM CHARACTERISTICS
A. Survey of Existing Inclusionary Housing Programs
Over 170 jurisdictions in California currently include an Inclusionary Housing program as a component in their overall affordable housing strategy. While the unifying foundation of these programs is the objective to attract affordable housing development, the characteristics of these programs vary widely from jurisdiction-to-jurisdiction.

To assist the City in evaluating options for creating an Inclusionary Housing program it is useful to identify the elements that are typically included in Inclusionary Housing programs being implemented in California jurisdictions. To that end, KMA compiled information on 93 Inclusionary Housing programs being implemented across California. The survey information is presented in Attachment 1:

1. Table 1 presents survey results for the 93 jurisdictions; and

2. Table 2 provides more in-depth information for jurisdictions located in Los Angeles, Orange, San Diego, Ventura and Santa Barbara Counties.

The survey results can be summarized as follows:

1. In California, the majority of Inclusionary Housing programs include a threshold project size below which projects are not subject to the Inclusionary Housing requirements. Common thresholds fall between three and 10 units. In the KMA survey the median threshold is five units and the average threshold is seven units.

2. The income and affordability standards imposed by Inclusionary Housing programs vary widely throughout California. The majority of programs have established standards in the range of 10% to 20% of the units in projects that will be subject to the requirements. However, the following policy variations are commonly found:
a. The threshold standards are varied as a reflection of the depth of the affordability being required.

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 b. Inclusionary Housing requirements have a disproportionate impact on smaller projects, because there are fewer market rate units available to spread the impact created by the income and affordability standards. A sliding scale requirement is sometimes used to mitigate these impacts.
c. The length of the covenant period imposed on Inclusionary Units varies from jurisdiction-to-jurisdiction. California Health and Safety Code (H&SC) Section 33413 applies covenant periods of 45 years for ownership housing units and 55 years for apartment units. These standards are commonly used, but both shorter and longer covenant periods are imposed throughout Inclusionary Housing programs in California.

B. Program Requirements

FULFILLMENT OPTIONS
Inclusionary Housing programs focus on the production of affordable housing units by imposing specific affordable housing requirements on new development. To comply with the rulings in the San Jose case and the requirements imposed by Sections 65850 and 65850.01, Inclusionary Housing programs must offer developers a range of options for fulfilling the affordable housing requirements.

The most common options offered to developers are:

1. Construction of a defined percentage of Inclusionary Units within the new market rate residential project;

2. Construction of a defined percentage of Inclusionary Units in a project located in an off-site location;

3. Payment of a fee in lieu of producing Inclusionary Units that the jurisdiction will subsequently use to assist in the development of affordable housing units within the community;

4. The donation of land to the jurisdiction that is appropriate for the development of affordable housing; and
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5. The acquisition and rehabilitation of existing units.

The vast majority of Inclusionary Housing programs provide some form of an in-lieu fee payment option. The benefit provided by allowing in-lieu fee payments is that the Inclusionary Housing requirements can be transferred to developers that have experience in constructing affordable housing projects. This advantageous for the following reasons:

1. Affordable housing developers have specific expertise in the development and operation of affordable housing projects.

2. Dedicated affordable housing projects have access to state and federal funding sources that are not available to market rate projects. These funding sources provide a more cost-efficient way to achieve deeper affordability than can be supported by an Inclusionary Housing requirement.

A representative sample of programs targeted to dedicated affordable housing projects are:
a. The funds allocated to the City by HCD under the Permanent Local Housing Allocation (PLHA) for Senate Bill 2 (Chapter 364, Statutes of 2017); b. The federal and state Low-Income Housing Tax Credits (Tax Credits) offered under Internal Revenue Code Section 42;
c. State funding sources such as the Infill Infrastructure Grant (IIG), the Multifamily Housing Program (MHP) and Affordable Housing and Sustainable Communities (AHSC) Program; and
d. The Area Housing Authority of the County of San Bernardino assistance programs.

STRUCTURING ISSUES
As discussed previously, the court in the San Jose case found that the imposition of Inclusionary Housing requirements is a valid exercise of the City’s zoning powers rather than an exaction. Sections 65850 and 65850.01 amended the California Government Code to expressly allow Inclusionary Housing Redlands Regular Meeting of 06-20-2023 482 of 1523
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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 requirements to be imposed on apartment projects. However, it is important for the City to consider the following caveats as part of the Inclusionary Housing program adoption process:

1. Inclusionary Housing requirements cannot be confiscatory or deprive a property owner of a fair and reasonable return on their investment. Recognizing that the courts have not defined these terms, the City has some discretion in establishing evaluation parameters.

2. Section 65583 (a) requires the City to analyze potential and actual constraints being placed on the development of housing. Within that context, it is important to recognize that the requirements imposed by the Inclusionary Housing Ordinance can only be expected to fulfill a small portion of the unmet need for affordable housing in Redlands.

In designing an Inclusionary Housing program, it is important to understand that some form of the following sequence of events will likely occur when the City begins imposing Inclusionary Housing requirements on residential development:

1. The immediate response will be that the financial impacts created by the affordable housing requirements will largely be borne by developers that purchased property prior to the City implementing the Inclusionary Housing program.

2. After the requirements are put in place, developers that have not purchased property will attempt to bargain for a lower land price that reflects the impacts created by the Inclusionary Housing requirements.

3. If the Inclusionary Housing requirements are too stringent, a property owner may take one of the following actions:
a. The owner of an improved site may continue leasing/using the existing improvements on the site even if they represent an underutilization of the property; or b. The owner may choose to sell the site to the developer of a non-residential use.

4. If reasonable Inclusionary Housing requirements are imposed, it is likely that over time land prices will adjust to reflect the restrictions imposed on the property.

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 IV. METHODOLOGY
The purpose of this Financial Evaluation is to evaluate the financial feasibility of imposing Inclusionary Housing requirements on residential development in Redlands. The components of the financial feasibility analysis are described in this section of the Financial Evaluation.

A. Parameters

RHNA ALLOCATION
As the first step in the evaluation process, it is necessary to identify the parameters that will be applied in the analysis. One measurement is the RHNA, which is used as a tool in the Housing Element process.

The Sixth Cycle RHNA Allocation Plan covers the period between 2021 and 2029, and the Redlands allocations are detailed in the following table:

Sixth Cycle RHNA Allocation
October 2021 through October 2029
Income Category Total Obligation % of Total
Very Low 967 27.5%
Low 615 17.5%
Moderate 652 18.5%
Above Moderate 1,282 36.5%
Totals 3,516 100%

FACTORS FOR CONSIDERATION
The City should consider the following notable factors in creating an Inclusionary Housing program:

1. The largest identified unmet need for affordable housing falls in the above moderate income category. Based on historical development patterns it can be assumed that these units will be produced by market rate developers without City intervention.

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2. Outside financial assistance sources are widely available to affordable housing projects targeted to extremely low and very low income households. There are numerous nonprofit housing organizations in the region that have experience obtaining these funding sources.

3. There are a limited number of outside funding available to assist low income units and effectively no outside funding sources available to assist moderate income units.

As part of creating an Inclusionary Housing program it is important to evaluate the impact the restrictions will have on the developers of market rate housing projects to ensure that onerous requirements are not imposed. Based on current conditions, KMA recommends that the Inclusionary Housing program focus on attracting development that serves households at the low and moderate income levels.

B. Financial Evaluation Approach

BASIC PARAMETERS
The courts have held that affordable housing is a “public benefit,” and that locally imposed Inclusionary Housing programs are a legitimate means of providing this public benefit. The courts have tempered this with the requirement that the Inclusionary Housing obligations cannot be confiscatory, and they cannot deprive a property owner of a fair and reasonable return on their investment.

To date, the courts have not provided guidance for determining how these requirements should be measured. As a result, it has been necessary for KMA to create a methodology for testing the financial impacts associated with a proposed Inclusionary Housing program.

The KMA approach is based on pro forma analyses of prototype projects that reflect the residential development occurring within the jurisdiction. The KMA methodology has been continually evolving over the past 20+ years, and each financial evaluation is tailored to reflect the specific characteristics of the jurisdiction in which KMA is performing the evaluation.

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DEVELOPMENT PROTOTYPES
The KMA pro forma analyses are based on prototype residential developments. To assist in creating the development prototypes, KMA reviewed the following:

1. The City’s Housing Element;

2. Specific Plans that have been adopted by the City;

3. Recently completed residential projects; and

4. Development plans for residential projects that have recently received entitlements and/or been submitted to the City’s Planning Division for review.

It is important to understand that the prototypes used in the Financial Evaluation do not represent actual projects. Instead, the prototypes represent composites of projects that have recently been developed or proposed for development in Redlands, and the results of KMA market surveys.

PRO FORMA ANALYSIS THRESHOLDS
The KMA pro forma analyses test the following factors to assist in identifying Inclusionary Housing requirements that can reasonably be applied:

1. The reduction in property acquisition cost that would need to be achieved to offset the impact created by the proposed income and affordability requirements;

2. The reduction in the developer’s return on total investment on apartment development and profit on ownership housing development; and

3. The increase in market rate rents/sales prices that would be needed to offset the proposed requirements.

KMA evaluates the results of each of these tests in order to develop a comprehensive perspective on the financial impacts created by Inclusionary Housing requirements. These analyses collaboratively inform the KMA conclusion as to the Inclusionary Housing requirements that can be supported.

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 C. Financial Evaluation Structure
The analysis structure applied by KMA can be described as follows:

1. KMA prepared financial analyses to assist in creating recommended Inclusionary Housing requirements that balance the interests of property owners and developers against the public benefit created by the production of affordable housing units.

2. In general terms, the financial impact associated with fulfilling Inclusionary Housing requirements within market rate projects is equal to the Affordability Gap between the achievable market rate rents or sales prices and the allowable rents or sales prices for the Inclusionary Units.

3. The KMA financial analyses identify the range of Inclusionary Housing production requirements that can be supported.

D. Financial Evaluation Organization
The following sections of this Financial Evaluation describe the assumptions, analysis and findings related to ownership housing and apartment developments. The analyses are supported by the following Attachments and Appendices:

Attachment 2: Affordable Housing Cost Calculation Methodology Appendix A Affordable Rent Calculation Methodology
Appendix B Affordable Sales Price Calculation Methodology Attachment 3: Apartment Development
Appendix A Rent Survey
Appendix B Affordable Rent Calculations
Appendix C Pro Forma Analyses: Transit Village 1 Prototypes Appendix D Pro Forma Analyses: Transit Village 2 Prototypes Appendix E Pro Forma Analyses: R-3 Prototypes
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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Attachment 4: Ownership Housing Development
Appendix A Home Sales Surveys
Appendix B Affordable Sales Price Calculations
Appendix C Pro Forma Analyses: Citywide Townhome Prototype Appendix D Pro Forma Analyses: Citywide Detached Single Family Home Prototype Attachment 5: In-Lieu Fee Analyses
Appendix A Apartment Development
Appendix B Ownership Housing Development
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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 V. APARTMENT DEVELOPMENT ANALYSIS
The City adopted the Transit Villages Specific Plan in October 2022, and it is anticipated that the bulk of apartment development in Redlands will occur in this area. However, the Housing Element also identifies potential apartment development sites elsewhere in the community. To reflect this, the following prototype developments were evaluated:

1. A Transit Village prototype at a density of 30 units per acre;

2. A Transit Village prototype at a density of 58 units per acre; and

3. A prototype based on the City’s R-3 zoning standards.

A. Pro Forma Analysis Organization and Assumptions

MARKET RATE ALTERNATIVES
The 100% market rate unit apartment development prototypes provide baselines against which to measure the impacts created by affordable housing requirements. The pro forma analyses for the 100% market rate unit scenarios are organized as follows:

Pro Forma Analysis - 100% Market Rate Alternatives
Apartment Development Prototypes
Table 1: Estimated Development Costs
Table 2: Estimated Stabilized Net Operating Income
Table 3: Stabilized Return on Total Investment
The stabilized returns on investment generated by the 100% market rate alternatives are used as the benchmark returns for the purpose of estimating the impacts created by the imposition of Inclusionary Housing obligations. KMA measured the financial impacts created by the imposition of Inclusionary Housing requirements using the tools described previously in this Financial Evaluation. These tools were used to identify the income and affordability requirements that can be feasibly imposed on apartment developments.

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AFFORDABLE HOUSING ALTERNATIVES
To assist in establishing the Inclusionary Housing production requirements that can be supported, KMA created the following affordability alternatives:

1. A low income alternative; and

2. A very low income alternative.

The pro forma analyses for the affordable housing alternatives are organized as follows:

Pro Forma Analysis –
Affordable Housing Alternatives
Apartment Development Prototypes
Table 1: Estimated Development Costs
Table 2: Estimated Stabilized Net Operating Income
Table 3: Financial Impacts: Inclusionary Housing Requirements

KEY ASSUMPTIONS
Parking Standards
The parking standards applied in the analyses are detailed in the following tables:

Redlands Regular Meeting of 06-20-2023 490 of 1523
Inclusionary Housing: Financial Evaluation Page 23
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Parking Assumptions
Transit Village Apartment Prototypes
Parking Spaces Per Unit
Transit Village
Specific Plan
Section 65915
Density Bonus 2
Studio Units 1.0 0.5
One-Bedroom Units 1.0 0.5
Two-Bedroom Units 1.5 1.0
Three-Bedroom Units 2.0 1.5
Guest .25 0.0
Parking Assumptions
R-3 Apartment Prototype
Parking Spaces Per Unit
Municipal Code
Section 65915
Density Bonus 3
Studio Units 1.0 1.0
One-Bedroom Units 1.0 1.0
Two-Bedroom Units 1.5 2.0
Three-Bedroom Units 2.0 2.0
Guest .25 0.0
2 The parking ratios are based on the standards imposed by Section 65915 (p) for sites within ½ mile of a major transit stop, and then adjusted to reflect marketability issues. 3 The parking ratios are based on the default standards imposed by Section 65915 (p).

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Inclusionary Housing: Financial Evaluation Page 24
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Affordable Rent Assumptions
The Affordable Rent calculation methodology is described in Attachment 2: Appendix A, and the Affordable Rent calculations are detailed in Attachment 3: Appendix B. The results are presented in the following table:

Affordable Rents
Apartment Development Prototypes
Number of
Bedrooms Low Income
Very Low
Income
Studio $1,094 $635
1 $1,240 $716
2 $1,351 $761
3 $1,459 $804
B. Pro Forma Analyses
TRANSIT VILLAGE 1 APARTMENT DEVELOPMENT
The characteristics of the Transit Village 1 apartment development prototype are summarized in the following table:

Development Scope Summary
Transit Village 1 Apartment Development Prototype
Site Area (Acres) 2.0 Unit Mix
Total Number of Units 60 One-Bedroom Units 40%
Density (Units/Acre) 30 Two-Bedroom Units 50%
Parking Covered and enclosed spaces
for the units, and surface spaces
for the guest parking.

Three-Bedroom Units 5%
Redlands Regular Meeting of 06-20-2023 492 of 1523
Inclusionary Housing: Financial Evaluation Page 25
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 The pro forma analyses for the Transit Village 1 development prototype are provided in Attachment 3:

Appendix C. The results of the Transit Village 1 apartment development analyses are presented in the following sections of this Financial Evaluation.

Estimated Development Costs:

Transit Village 1 Prototype Apartment Development
The development costs for the Transit Village 1 prototype apartment development are estimated at $22.1 million.4 This equates to $369,000 per unit, or $379 per square foot of leasable area.

Projected Market Rate Rents:

Transit Village 1 Prototype Apartment Development
The market survey is presented in Attachment 3: Appendix A. The resulting market rents are summarized in the following table:

Projected Market Rate Rents
Transit Village 1
Apartment Development Prototype
One-Bedroom Units $2,240
Two-Bedroom Units $2,750
Three-Bedroom Units $2,990
Average Monthly Rent Per
Square Foot of Leasable Area $2.60
Findings:

Transit Village 1 Apartment Prototype Development
The results of the KMA analyses of the Transit Village 1 apartment development prototype are summarized in the following table:
4 There are minor variations in total development costs among the market rate and income restricted alternatives. The estimated development costs for the market rate alternative are presented throughout the report.

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Inclusionary Housing: Financial Evaluation Page 26
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Supportable Inclusionary Housing Requirements /
Financial Impacts: Inclusionary Housing Requirements
Transit Village 1 Apartment Development Prototype
Low Income
Very Low
Income
Supportable Inclusionary Housing Requirement 9% 5%
Reduction in Stabilized Return on Total Investment 4.7% 4.3% Market Rent Increase Required to Offset the Impact 4.5% 3.9% TRANSIT VILLAGE 2 APARTMENT DEVELOPMENT
The characteristics of the Transit Village 2 apartment development prototype are summarized in the following table:

Development Scope Summary
Transit Village 2 Apartment Development Prototype
Site Area (Acres) 4.0 Unit Mix
Total Number of Units 232 Studio Units 20%
Density (Units/Acre) 58 One-Bedroom Units 50%
Parking Semi-subterranean spaces for
the units, and surface spaces for
the guest parking.

Two-Bedroom Units 30%
The pro forma analyses for the Transit Village 2 development prototype are provided in Attachment 3:

Appendix D. The results of the Transit Village 2 apartment development analyses are presented in the following sections of this Financial Evaluation.

Estimated Development Costs:

Transit Village 2 Prototype Apartment Development
The development costs for the Transit Village 2 prototype apartment development are estimated at $81.2 million. This equates to $350,000 per unit, or $439 per square foot of leasable area.

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Inclusionary Housing: Financial Evaluation Page 27
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Projected Market Rate Rents:

Transit Village 2 Prototype Apartment Development
The market survey is presented in Attachment 3: Appendix A. The resulting market rents are summarized in the following table:

Projected Market Rate Rents
Transit Village 2
Apartment Development Prototype
Studio Units $2,090
One-Bedroom Units $2,310
Two-Bedroom Units $2,880
Average Monthly Rent Per
Square Foot of Leasable Area $3.06
Findings:

Transit Village 2 Apartment Prototype Development
The results of the KMA analyses of the Transit Village 2 apartment development prototype are summarized in the following table:

Supportable Inclusionary Housing Requirements /
Financial Impacts: Inclusionary Housing Requirements
Transit Village 2 Apartment Development Prototype
Low Income
Very Low
Income
Supportable Inclusionary Housing Requirement 8% 5%
Reduction in Stabilized Return on Total Investment 4.8% 4.4% Market Rent Increase Required to Offset the Impact 5.0% 4.5% Redlands Regular Meeting of 06-20-2023 495 of 1523
Inclusionary Housing: Financial Evaluation Page 28
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 R-3 APARTMENT DEVELOPMENT
The characteristics of the R-3 apartment development prototype are summarized in the following table:

Development Scope Summary
R-3 Apartment Development Prototype
Site Area (Acres) 5.0 Unit Mix
Total Number of Units 135 Studio Units 35%
Density (Units/Acre) 27 One-Bedroom Units 55%
Parking Covered and enclosed spaces
for the units, and surface spaces
for the guest parking.

Two-Bedroom Units 10%
The pro forma analyses for the R-3 development prototype are provided in Attachment 3: Appendix E.

The results of the R-3 apartment development analyses are presented in the following sections of this Financial Evaluation.

Estimated Development Costs:

R-3 Prototype Apartment Development
The development costs for the R-3 prototype apartment development are estimated at $46 million.

This equates to $341,000 per unit, or $392 per square foot of leasable area.

Projected Market Rate Rents:

R-3 Prototype Apartment Development
The market survey is presented in Attachment 3: Appendix A. The resulting market rents are summarized in the following table:

Redlands Regular Meeting of 06-20-2023 496 of 1523
Inclusionary Housing: Financial Evaluation Page 29
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Projected Market Rate Rents
R-3 Apartment Development Prototype
Studio Units $2,100
One-Bedroom Units $2,250
Two-Bedroom Units $2,630
Average Monthly Rent Per
Square Foot of Leasable Area $2.58
Findings:

R-3 Apartment Prototype Development
The results of the KMA analyses of the R-3 apartment development prototype are summarized in the following table:

Supportable Inclusionary Housing Requirements /
Financial Impacts: Inclusionary Housing Requirements
R-3 Apartment Development Prototype
Low Income
Very Low
Income
Supportable Inclusionary Housing Requirement 9% 6%
Reduction in Stabilized Return on Total Investment 4.3% 4.7% Market Rent Increase Required to Offset the Impact 4.4% 4.6% C. Summary: Apartment Development Analyses
The results of the KMA apartment development analyses indicate that the following Inclusionary Housing requirements can be supported.

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Inclusionary Housing: Financial Evaluation Page 30
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Supportable Inclusionary Housing Requirement
Apartment Development Projects
Income Level
Transit
Village 1
Transit
Village 2 R-3
Low 9% 8% 9%
Very Low 5% 5% 4%
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Inclusionary Housing: Financial Evaluation Page 31
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 VI. OWNERSHIP HOUSING ANALYSIS
Ownership housing development in Redlands is focused on detached single family homes and townhome developments. Stacked flat condominiums are not yet a factor in the ownership housing development inventory. In recognition of this, KMA created the following ownership housing development types:

1. Townhomes; and

2. Detached Single Family Homes.

As a general rule, Inclusionary Housing programs tend to set the affordability requirements for ownership housing development at the moderate income level. This is done as a reflection of the fact that higher income households are likely to have more discretionary income to devote to the ongoing costs associated with home ownership than that of lower income households.

To determine whether this is the case in Redlands, KMA prepared pro forma analyses of the townhome and single family home prototypes to identify the percentage of units in a market rate project could feasibly be required to be sold to low income households. In both prototypes the pro forma analyses found that the magnitude of the Affordability Gap associated with low income units creates a financial impact that could potentially deprive a property owner or developer of a fair and reasonable return on their investment.

The following ownership housing development analyses are based on the assumption that the Inclusionary Housing requirements will be set at the moderate income level. KMA estimated the supportable Inclusionary Housing production requirements based on this assumption.

A. Pro Forma Analysis Organization
Inclusionary Housing programs generally set the affordability requirements for ownership housing development at the moderate income level. This is done as a reflection of the fact that higher income households are likely to have more discretionary income to devote to the ongoing costs associated with home ownership than that of lower income households.

Redlands Regular Meeting of 06-20-2023 499 of 1523
Inclusionary Housing: Financial Evaluation Page 32
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 To assist in establishing the Inclusionary Housing production requirements that can be supported, KMA prepared the following pro forma analyses for each prototype ownership housing project:

1. A prototype in which 100% of the units are sold at unrestricted market rate sales prices; and

2. A prototype that includes a moderate income component.

MARKET RATE ALTERNATIVE
The 100% market rate unit ownership housing development scenarios provide baselines against which to measure the impacts created by affordable housing requirements. The pro forma analyses for the 100% market rate unit scenarios are organized as follows:

Pro Forma Analysis – Market Rate Scenario
Ownership Housing Development Prototypes
Table 1: Estimated Development Costs
Table 2: Projected Net Sales Revenue
Table 3: Projected Developer Profit

AFFORDABLE HOUSING ALTERNATIVES
The estimated developer profit for each of the 100% market rate scenarios is used as the benchmark profit percentage for the purpose of estimating the impacts created by the imposition of Inclusionary Housing obligations. The resulting financial gaps represent the impact created by the requirements being tested. The pro forma analyses for the affordable housing alternatives are organized as follows:

Pro Forma Analyses -
Affordable Housing Alternatives
Ownership Housing Development Prototypes
Table 1: Estimated Development Costs
Table 2: Projected Net Sales Revenue
Table 3: Financial Impacts: Inclusionary Housing Requirements Redlands Regular Meeting of 06-20-2023 500 of 1523
Inclusionary Housing: Financial Evaluation Page 33
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 KMA measured the financial impacts created by the imposition of Inclusionary Housing requirements using the tools described previously in this Financial Evaluation. These tools were used to identify the moderate income and low income requirements that can be feasibly imposed on ownership housing developments.

B. Pro Forma Analyses

TOWNHOME ANALYSIS
The characteristics of the townhome development prototype are summarized in the following table:

Development Scope Summary
Townhome Development Prototype
Site Area (Acres) 4.0 Unit Mix
Total Number of Units 72 Two-Bedroom Units 65%
Density (Units/Acre) 18 Three-Bedroom Units 35%
Parking 2-Car Attached Garages
The pro forma analyses for the townhome development prototype are provided in Attachment 4:

Appendix C. The results of the townhome development analyses are summarized in the following sections of this Financial Evaluation.

Estimated Development Costs:

Townhome Development Prototype
The total development cost for the Market Rate Alternative is estimated at $34 million. This equates to $472,000 per unit, or $328 per square foot of saleable area. 5 5 The development costs for the affordable housing alternatives vary slightly from the costs for the Market Rate Alternative.

This is attributable to minor interest cost savings and is the case for both ownership housing development prototypes.

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Inclusionary Housing: Financial Evaluation Page 34
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Projected Market Rate Sales Prices:

Townhome Development Prototype
To assist in projecting the achievable market rate sales prices, KMA compiled sales data for townhome projects located in Redlands. Based in part on this survey, the market rate sales prices that were applied in the townhome development prototype analysis are presented in the following table:

Projected Market Rate Sales Prices
Townhome Development Prototype
Two-Bedroom Units $525,000
Three-Bedroom Units $564,000
Average Price per Square Foot of Saleable Area $374
Affordable Sales Price Calculations:

Townhome Development Prototype
Based on the Affordable Sales Price calculation methodology described in Attachment 2: Appendix B, and the calculations presented in Attachment 4: Appendix B – Exhibit I, the Affordable Sales Prices for the townhome development prototype are:

Affordable Sales Price Estimates
Moderate Income Units
Townhome Development Prototype
Two-Bedroom Units $272,000
Three-Bedroom Units $292,500
Findings:

Townhome Development Prototype Analysis
The results of the KMA analyses of the townhome development prototype are summarized in the following table:

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Inclusionary Housing: Financial Evaluation Page 35
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Supportable Inclusionary Housing Requirements /
Fiscal Impacts: Moderate Income Inclusionary Housing Requirement Townhome Development Prototype
Supportable Inclusionary Housing Requirement 6%
Property Acquisition Cost Reduction Needed to Offset
the Impact Created by the Affordability Requirements 35% Market Price Increase Required to Offset the Impact 2.5%

DETACHED SINGLE FAMILY HOME ANALYSIS
The characteristics of the detached single family home development prototype are summarized in the following table:

Development Scope Summary
Detached Single Family Home Development Prototype
Site Area (Acres) 10 Unit Mix
Total Number of Units 60 Three-Bedroom Units 30%
Density (Units/Acre) 6 Four-Bedroom Units 40%
Parking 2-Car Attached Garages Five-Bedroom Units 30%
The pro forma analyses for the detached single family home development prototype are provided in Attachment 4: Appendix D. The results of the detached single family home development analyses are summarized in the following sections of this Financial Evaluation.

Estimated Development Costs:

Detached Single Family Home Development Prototype
The total development cost for the Market Rate Alternative is estimated at $53.4 million. This equates to $890,000 per unit, or $376 per square foot of saleable area.

Redlands Regular Meeting of 06-20-2023 503 of 1523
Inclusionary Housing: Financial Evaluation Page 36
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Projected Market Rate Sales Prices:

Detached Single Family Home Development Prototype
To assist in projecting the market rate sales prices, KMA compiled sales data for detached single family homes located in Redlands. Based in part on this survey, the market rate sales prices that were applied in the detached single family home prototype analysis are presented in the following table:

Projected Market Rate Sales Prices
Detached Single Family Home Development Prototype
Three-Bedroom Units $810,000
Four-Bedroom Units $986,000
Five-Bedroom Units $1,228,000
Average Price per Square Foot of Saleable Area $424
Affordable Sales Price Calculations:

Detached Single Family Home Development Prototype
Based on the Affordable Sales Price calculation methodology described in Attachment 2: Appendix B, and the calculations presented in Attachment 4: Appendix B – Exhibit II, the Affordable Sales Prices for the detached single family home development prototype are:

Affordable Sales Price Estimates
Moderate Income Units
Detached Single Family Home Development Prototype
Three-Bedroom Units $262,800
Four-Bedroom Units $270,400
Five-Bedroom Units $278,100
Redlands Regular Meeting of 06-20-2023 504 of 1523
Inclusionary Housing: Financial Evaluation Page 37
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Findings:

Detached Single Family Home Development Prototype Analysis The results of the KMA analyses of the detached single family home development prototype are summarized in the following table:

Supportable Inclusionary Housing Requirements /
Fiscal Impacts: Moderate Income Inclusionary Housing Requirement Detached Single Family Home Development Prototype
Supportable Inclusionary Housing Requirement 5%
Property Acquisition Cost Reduction Needed to Offset
the Impact Created by the Affordability Requirements 28% Market Price Increase Required to Offset the Impact 3.2% C. Summary: Ownership Housing Development Analyses
The preceding section of this Financial Evaluation used pro forma analyses of prototype ownership housing development projects to assist in identifying the Inclusionary Housing production requirements that can currently be supported. The ownership housing development types that were evaluated are:

1. Townhomes; and

2. Detached single family homes.

The results of the KMA ownership housing development analyses indicate that the following Inclusionary Housing requirements can be supported for ownership housing development projects.

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Inclusionary Housing: Financial Evaluation Page 38
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Supportable Inclusionary Housing Requirements
Moderate Income Standard
Ownership Housing Development Projects
Townhomes 6%
Detached Single Family Homes 5%
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Inclusionary Housing: Financial Evaluation Page 39
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 VII. IN-LIEU FEE ANALYSES
An option to pay a fee in lieu fee of producing affordable housing units is typically offered as part of an Inclusionary Housing program. For the purposes of this analysis, KMA calculated the in-lieu fee amounts based on the supportable Inclusionary Housing requirements identified in this Financial Evaluation.

A. Apartment Development
The in-lieu fee calculations for apartment development are presented in Attachment 5: Appendix A, and are based on the following methodology:

1. The differences between the estimated achievable market rate rents and the defined Affordable Rents were calculated.

2. KMA assumed that the property taxes for projects that include designated affordable housing units would be based on a lower assessed value than a 100% market rate project due to the reduction in net operating income that would be generated by the project. KMA deducted this lower property tax expense from the estimated rent difference.

3. The “Net Annual Rent Difference Per Inclusionary Unit” is equal to the “Annual Rent Difference Per Inclusionary Unit” minus the property tax savings.

4. The “Affordability Gap Per Inclusionary Unit” is equal to Annual Rent Difference Per Inclusionary Unit capitalized at the benchmark returns derived from the pro forma analyses of the market rate alternatives.

5. The Affordability Gaps Per Inclusionary Unit were translated into in-lieu fees per square foot of leasable area.

The KMA in-lieu fee estimates for apartment development projects is based on a 9% low income requirement. The results are presented in the following table:

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Inclusionary Housing: Financial Evaluation Page 40
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 In-Lieu Fee Payment Amounts
9% Low Income Inclusionary Housing Standard
Apartment Development Prototypes
In-Lieu Fee
Transit
Village 1
Transit
Village 2 R-3
Per Inclusionary Unit $205,000 $198,000 $164,000
Per Market Rate Unit in a 100%
Market Rate Project $17,080 $17,920 $14,580
Per Square Foot of Leasable Area
in a 100% Market Rate Project $17.60 $22.50 $16.80
The weighted average results of the three apartment development prototypes are:

Weighted Average In-Lieu Fee Payment Analysis
9% Low Income Inclusionary Housing Standard
Apartment Development Prototypes
Per Inclusionary Unit $188,200
Per Market Rate Unit in a 100% Market
Rate Project $16,750
Per Square Foot of Leasable Area in a
100% Market Rate Project $19.80
B. Ownership Housing Development
The KMA in-lieu fee estimates for ownership housing development projects is based on a 5% moderate income requirement. The calculations are presented in Attachment 5: Appendix B, and summarized in the following table:

Redlands Regular Meeting of 06-20-2023 508 of 1523
Inclusionary Housing: Financial Evaluation Page 41
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 In-Lieu Fee Payment Amounts
5% Moderate Income Inclusionary Housing Standard
Ownership Housing Development Prototypes
In-Lieu Fee
Townhome & Small
Lot Home
Development
Detached Single
Family Home
Development
Per Inclusionary Unit $259,500 $734,400
Per Market Rate Unit in a 100%
Market Rate Project $14,420 $36,770
Per Square Foot of Saleable Area
in a 100% Market Rate Project $10.00 $15.50
Recognizing that payment of a fee in lieu of producing affordable units is an optional method for fulfilling the Inclusionary Housing obligation, the amount of the fee is not required to track with the Affordability Gap. The City may wish to consider applying a premium to the in-lieu fee to discourage its use, or they may wish to apply a discount to the in-lieu fee when the policy objective is to obtain funding sources for use in assisting dedicated affordable housing projects.

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Inclusionary Housing: Financial Evaluation Page 42
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 VIII. SUMMARY
This section of the report summarizes the results of the Financial Evaluation. The analysis findings provide the first step towards developing a recommended package of requirements to be imposed by an Inclusionary Housing program.

A. Supportable Inclusionary Housing Production Requirements

APARTMENT DEVELOPMENT
KMA’s analyses of prototype apartment development projects that comport with a site’s base zoning requirements supports Inclusionary Housing requirements that fall within the following ranges:

Income Category
Inclusionary Housing
Requirement
Low 8% - 9%
Very Low 4% - 5%
Based on all the factors considered in the apartment development evaluation, KMA concluded that a 9% low income Inclusionary Housing obligation can be supported. Given the conservative approach taken by KMA, it is reasonable to conclude that a requirement of this magnitude is not confiscatory and that it will not deprive a property owner of a fair and reasonable return on their investment.

Some developers may wish to mitigate the financial impact created by the Inclusionary Housing requirements by using the density bonus provided by Section 65915. In many cases it will be advantageous for a developer to provide very low income units to fulfill the Density Bonus requirements. In those instances, the City’s low income requirements would actually be fulfilled at a deeper affordability level than required by the Inclusionary Housing program.

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Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023

OWNERSHIP HOUSING DEVELOPMENT
The results of the KMA ownership housing analysis indicate that Inclusionary Housing requirements that fall within the following ranges can be supported:

Supportable Inclusionary Housing Requirements
Moderate Income Standard
Ownership Housing Development Projects
Townhomes 6%
Detached Single Family Homes 5%
As discussed previously, KMA takes a conservative approach in setting benchmark impact standards for evaluating the impact created by income and affordability controls. Based on our financial analyses, KMA recommends that a 5% moderate income Inclusionary Housing requirement be imposed on ownership housing development. This will maximize the number of affordable ownership housing units that are produced while minimizing the Affordability Gaps between the market rate sales prices and the Affordable Sales Prices.

B. Supportable In-Lieu Fees
In this Financial Evaluation, KMA calculated the in-lieu fee amount based on the following standards:

Apartment Development 9% Low Income
Ownership Housing Development 5% Moderate Income
KMA applied the weighted averages of the in-lieu fee amounts that were supported by the prototypes being tested. The resulting in-lieu fee amounts are presented in the following tables:

Redlands Regular Meeting of 06-20-2023 511 of 1523
Inclusionary Housing: Financial Evaluation Page 44
Keyser Marston Associates, Inc. 22012022.RED / 18500.004.001 January 23, 2023 Weighted Average In-Lieu Fee Payment Analysis
9% Low Income Inclusionary Housing Standard
Apartment Development Prototypes
Per Inclusionary Unit $188,200
Per Market Rate Unit in a 100% Market
Rate Project $16,750
Per Square Foot of Leasable Area in a
100% Market Rate Project $19.80
In-Lieu Fee Payment Amounts
5% Moderate Income Inclusionary Housing Standard
Ownership Housing Development Prototypes
In-Lieu Fee
Townhome & Small
Lot Home
Development
Detached Single
Family Home
Development
Per Inclusionary Unit $259,500 $735,400
Per Market Rate Unit in a 100%
Market Rate Project $14,420 $36,770
Per Square Foot of Saleable Area
in a 100% Market Rate Project $10.00 $15.50
C. Next Steps
The preceding Financial Evaluation is meant to provide the City with the context under which to create an Inclusionary Housing program that is not confiscatory and that does not deprive property owners of a fair and reasonable return on their investment. In a separate memorandum, KMA has provided recommendations for specific requirements to be imposed if the City chooses to move forward to the adoption of an Inclusionary Housing Ordinance.

Redlands Regular Meeting of 06-20-2023 512 of 1523
ATTACHMENT 1

INCLUSIONARY HOUSING PROGRAM SURVEYS

REDLANDS, CALIFORNIA
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey Page 1 of 15
Redlands Regular Meeting of 06-20-2023 513 of 1523

APPENDIX A

INCLUSIONARY HOUSING PROGRAM SURVEYS - CALIFORNIA
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period
I. Inclusionary Requirements: Both Rental and Ownership Projects Agoura Hills
Create on-site units; pay an in-lieu fee for the required Low and/or Moderate Income Units. In-lieu fee cannot be paid to fulfill the very low income requirement.
15% No 10 7% @ VL + 4% @
Low + 4% @ mod 55 10 7% @ VL + 4% @ Low + 4% @ mod 45
Alameda Create on-site units; create off-site units; pay in-lieu fee 15% No 5 4% @ VL + 4% @ Low + 7% @ Mod 59 5 4% @ VL + 4% @ Low + 7% @ Mod 59
Albany Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land 15% Yes 5 Perpetual 5 Perpetual Alhambra Create on-site units; create off-site units; pay in-lieu fee; donate land 15% No 5 9% @ 120% + 6% @ 80%
5 9% at 120% + 6%
at 80%
Avalon Create on-site units; create off-site units; pay in-lieu fee 20% No 4 Decided per project
55 4 Decided per
project
55 Berkeley Create on-site units; pay in-lieu fee; 20% No 5 80% unless
subsidies are
available
Life of the
Building 5 80%
Life of the
Building
Brea Create on-site units; pay in-lieu fee; 10% No 20 Not defined 55 20 120% 45 Calabasas Create on-site units; create off-site units; convert market rate units; preserve or rehab existing housing; pay in-lieu fee 20% No 5 20% @ 110%; 15%
@ 90%; 10% @
75%; or 5% at 50%
5 20% @ 110%; 15%
@ 90%; 10% @
75%; or 5% at 50%
of AMI
Campbell Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land 15% No 10 6% @ VL + 9% @ Low 55 10 120% 45
Capitola Create on-site units; pay in-lieu fee 15% Yes 7 120% Life of Bldg Carlsbad
Create units; pay in-lieu fee. Reduced requirement is
provided if the affordable units are set at very low or extremely low income
15% No 1 Low 55 1 Low 30
Chula Vista
Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land. Excludes area west of I-805 identified as "Area of Low/Moderate Income Concentration".
10% No 50 5% @ Low + 5% @
Mod Life of Bldg 50 5% @ Low + 5% @ Mod Life of Bldg
Colma Create on-site units; pay in-lieu fee 20% No 5 5% @ VL + 5% @ Low + 10% @
55 5 5% @ VL + 5% @
Low + 10% @
45 Concord Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee 10% Yes 5 55 5 45
Rental Development Ownership Development
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; Incl Survey Page 2 of 15 Redlands Regular Meeting of 06-20-2023 514 of 1523

APPENDIX A

INCLUSIONARY HOUSING PROGRAM SURVEYS - CALIFORNIA
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period
Rental Development Ownership Development
Contra Costa County
Create on-site units; create off-site units; pay in-lieu fee; donate land. Program requirements are only applied in
designated areas.
15% No 5 3% @ VL + 12% @
Lower
5 3
Coronado Create units; pay in-lieu fee 20% No 2 Low 2 Mod Cupertino
1-7 units pays in-lieu fee. Create on-site units; create off-site units; pay impact/linkage fee; donate land 15% No 7 50% / 80% 99 7 50% /120% 99 Davis
Create on-site units; preserve or rehab existing housing; pay in-lieu fee; donate land 10% - 25% No 5-19 , 20+
5-19: 15% @ 80%
or 10% @ 50%.
20+: 25% @ 80%
or 10% @ 50%
Perpetual 5 120% Perpetual
Downey
Create on-site units; create off-site units; pay in-lieu fee in the case of extreme hardship for apartments 11%/10% No Mod >55 or as
long as
resid
Mod 45
Dublin Create on-site units; create off-site units; pay in-lieu fee; donate land 12.5% No 20
50% @ 120% +
20% @ 80% + 30%
@ 50%
55 20 5% @ 80% + 7.5%
@ 120%
55 Emeryville Create on-site units; pay impact/linkage fee 12%/20% No 4% @ VL + 8% @ Low
55 10 55
Encinitas
Create on-site units; create off-site units; create ADU's; preserve at-risk units; pay in-lieu fee; donate land 10%/15% No 7 10% @ VL or 15% @ Low Perpetual 7 10% VL or 15% @ Low Perpetual Fillmore Create on-site units; pay in-lieu fee; donate land 15% No 4 20+: 5% ELI or VL
& 10%; Low 17-
19: 2 low + one
ELI or VL; 10-16: 2
low; 5-9:: 1 low
55 4
20+: 5% ELI or VL
& 10%; Low 17-
19: 2 low + one
ELI or VL; 10-16: 2
low; 5-9:: 1 low
45 Fremont Has a production option, but the in-lieu fee option is more cost effective 15% No 2 10% @ Low 2 5% @ Mod + 10% @ Low Fort Bragg Create on-site units 10% to 20% 5 80% / 120% 5 100% /120% 15 Goleta
Create on-site units; create off-site units; donate land, pay inlieu fee; acquisition/rehabilitation. Income/Affordability trade off of extremley low and very low income units to low and moderate income units in demonstrated extreme
hardship.
25% -
reduced to
20% with
public
benefit
No 2

2.5% @ ELI + 2.5%
@ VL+ 5% @ Low
+ 5% @ Mod + 5%
at Above Mod
In general
45 to 55
years, but
not less
than 30
years
2 2.5% @ ELI + 2.5%
@ VL+ 5% @ Low
+ 5% @ Mod + 5%
at Above Mod
In general
45 to 55
years, but
not less
than 30
years
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; Incl Survey Page 3 of 15 Redlands Regular Meeting of 06-20-2023 515 of 1523

APPENDIX A

INCLUSIONARY HOUSING PROGRAM SURVEYS - CALIFORNIA
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period
Rental Development Ownership Development
Hayward Create on-site units; create off-site units; pay in-lieu fee; pay impact/linkage fee; donate land
6% / 7.5% -
10%
No 2 3% @ 50% + 3% @
60%
55 2 110% 45
Huntington Beach Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee 10% No 3 80% 55 3 120% 45 Irvine
Projects with fewer than 50 units can create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land. Projects with 50+ units must
produce the affordable units on site.
15% No 50 50%, 80% & 120%
Defined credits 30 50
50%, 80% & 120%
Defined credits 30
Laguna Woods Create on-site units; create off-site units; pay in-lieu fee; donate land 15% No 5 7.5% @ VL + 7.5% @ Low
45 5 10% @ Low + 5%
@ Mod 45
La Habra Create on-site units; create off-site units; pay in-lieu fee; acquisition/rehabilitation. 15% No 10 9% @ Mod + 6% @ VL & Low 55 10 110% 45 Long Beach Create on-site units; pay in-lieu fee; donate land 11%/10% No 10 50% >55 or as
long as
resid
10 110%
>55 or as
long as
resid
Los Altos Create on-site units; create off-site units. Program requirements are only imposed in designated areas.

Rental: 5-9
@ 15% &
10+ @ 30%.

Ownership
@ 15%
No 5
5-9: 15% @ Mod,
10+: 5% @ Low +
15% @ Mod
30 10 7.5% @ Mod,

7.5% @ Low
30 Los Angeles County Create on-site units; create off-site units. Program requirements vary by subarea.
5%-20%
depending
on project
size &
income
standard
No 5
Averages:
<40% AMI: 10% or
5% - sm proj
<65% AMI: 15% or
7% - sm proj
<80% AMI: 20% or
10% sm proj
55 or
Perpetual 5
Mod/Middle Inc:

Avg 135% AMI:

Coastal SLA, SLA
(exc condos), &
ELA: 20% or 10% -
sm proj
SG Valley: 15% or
7% - sm proj
Santa Clarita &
Antelope Valleys
(exc condos): 5%
Equity share
on first sale
Menlo Park Create on-site units; create off-site units; pay in-lieu fee 10% Yes 5 80% /120% 5 80% /120% Mill Valley Create on-site units 25% Yes 4 120% Perpetual 4 120% Perpetual Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; Incl Survey Page 4 of 15 Redlands Regular Meeting of 06-20-2023 516 of 1523

APPENDIX A

INCLUSIONARY HOUSING PROGRAM SURVEYS - CALIFORNIA
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period
Rental Development Ownership Development
Nevada County Create on-site units; create off-site units Program requirements are only applied in designated areas. No 20 30 20 30 Oceanside
Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land; purchase credits from another project.
10% No 3 Low (80%) 55 3 Mod (120%) 55
Oxnard Create on-site units; create off-site units; pay in-lieu fee in limited circumstances 10% No 10 5% @ VL + 5% Low
55 10 Low 20
Pacifica Create on-site units; create off-site units; pay in-lieu fee; donate land 15% No 8
6% @ VL + 4.5%
@ Low + 4.5% @
Mod
55 8 45
Palo Alto Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee 20% Yes 5
5% @ 35% + 10%
@ 50% + 5% @
60%
59 5 10% @ 80% + 10%
@ 120%
59 Pasadena Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land 20% No 1 5% @ 50% + 5% @
80% + 10% @
120%
Perpetual 1 110% 45
Petaluma Create on-site units; pay in-lieu fee; donate land 15% No 5 7.5% @ VL; 7.5% @ Low
45 5 7.5% @ Low +

7.5% @ Mod 55
Pleasanton
Create on-site units; create off-site units; pay in-lieu fee; donate land; credit transfers; other alternate methods of compliance
15% Yes 15 50% to 80% 15 50% to 120% Perpetual
Pomona Create on-site units; create off-site units; pay in-lieu fee; donate land
13% / 7%-
11%
Yes 3 120% Perpetual 3 120% 45
Poway Create on-site units; create off-site units; pay in-lieu fee 15% / 15%- 20%
No Very Low 55 15% @ Low or
20% @ Mod 45
Redondo Beach Create on-site units; create off-site units; pay in-lieu fee up to nine units. Fractional unit obligations are rounded down 10%-15% /
9%-15%
Yes 2 Moderate
>75 or as
long as
resid
2 Moderate 55
Redwood City Create on-site units; create off-site units; preserve or rehab units; pay impact/linkage fee; donate land 20% / 15% No 20 10% @ Mod + 5% @ Low + 5% @ VL 30 5 Moderate 30
Sacramento County Has a production option, but the in-lieu fee option is more cost effective 10% No 1 80% 1 80%
San Bruno Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land. Excludes area 15% No 10 6% VL + 4.5% Low
+ 4.5% Mod 55 10 6% Low + 9% Mod 45
San Buenaventura
(Proposed Update)
Create on-site units; create off-site units; pay in-lieu fee; preserve or rehab existing housing; donate land 15% / 10% No 7 Low 55 7 Mod 45 Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; Incl Survey Page 5 of 15 Redlands Regular Meeting of 06-20-2023 517 of 1523

APPENDIX A

INCLUSIONARY HOUSING PROGRAM SURVEYS - CALIFORNIA
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period
Rental Development Ownership Development
San Clemente
Create on-site units; pay in-lieu fee; donate land on- or offsite + development fees to a non-profit developer to construct at least as many units as required by the market rate project.
4% No 6 Very Low 30 6 Very Low 30
San Diego
Create on-site units; create off-site units; rehabilitate existing units, SRO hotel rooms, or conversion of guest rooms; pay in-lieu fee; donate land. The amended
requirements were approved in 2020 and are being phased in over five years.
10% to 15% No 10 10% @ 60% 55 10 10% @ 100% or
15% 120%
15 San Francisco
Create on-site units; create off-site units; pay in-lieu fee. Full schedule goes into effect in 2023 for rental and 2025 for ownership.
15% to 20%
/ 15% to
26%
Yes 10 55% to 110% 10 80% to 130%
San Jose
Create on-site units; create off-site units; preserve or rehab units; in-lieu fee; donate land; credit transfers; reduction for deeper affordability
15% Yes 10 5% @50% + 5% @
60% + 5% @ 100% Perpetual 10 120% Perpetual
San Juan Capistrano Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land 10% No 2 55 2 55 SLO County
Multiple subareas and requirements. Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land
15% Yes
1, 2 or 11
depending
on subarea
Coastal: 15% at
Low or 15% at
Mod
55 1, 2 or 11
depending
on subarea
Coastal A: 5% VL +
5% Low + 5% Mod
+ 5% 120-150%.

Coastal: 15% Low.

Inland: 2% VL +
2% Low + 2% Mod
+ 2% 120-150%.

Coastal: 45
Inland:

Perpetuity
San Mateo County Create on-site units, pay in-lieu fee 20% Yes 5 10% @ ELI + 10% @ Low Life of Bldg 11 10% @ Low + 10% @ Mod 45
San Rafael Create on-site units; pay in-lieu fee 10% No 2 2 120% Santa Ana
Only applies to changes in land use and zoning designations.

Create on-site units; off-site units; substantially rehab existing units; pay in-lieu fee
Rental: 5% -
15% & Own:
5%
No 5
15% @ Low or
10% @ VL or 5%
@ ELI or 5% Low +
3% VL +2% ELI
55 5 120% 55
Santa Barbara (City) Create on-site units; create off-site units; pay in-lieu fee for 1 to 9 & fractional units; donate land 10% / 15% No 5 Mod 90 1 120% to 200% 90 / restarts
on each
resale
Santa Cruz Create on-site units; create off-site units; pay in-lieu fee; donate land 15% Yes 2 80% Perpetual 2 120% Perpetual
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; Incl Survey Page 6 of 15 Redlands Regular Meeting of 06-20-2023 518 of 1523

APPENDIX A

INCLUSIONARY HOUSING PROGRAM SURVEYS - CALIFORNIA
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period
Rental Development Ownership Development
Santa Monica Create on-site units; create off-site units; pay in-lieu fee; donate land 5% to 30% Yes 2 50%, 80% & 120% Defined credits 55 2 50%, 80% & 120% Defined credits 55 Santa Paula Create on-site units; create off-site units; pay in-lieu fee 10% to 17% Yes 10 15% Low or 10%
VL
55 10
15% Low or 10%
VL
45 Santa Rosa Has a production option, but the in-lieu fee option is more cost effective
5% to 8% /
10%
No 1 5% @ 50% or 8%
@ 60%
2 110%
Sonoma Create on-site units 20% Yes 5 120% 55 5 120% 55 Sonoma County Create on-site units; create off-site units; pay in-lieu fee; donate land
10% or 15%
/ 20% Yes 1

7.5% @ VL + 7.5%
@ Low, or 5% @
ELI + 5% @ VL
55 1 10% @ Low + 10%
@ Mod 30
South San Francisco Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee 20% No 4 55 4 55
Sunnyvale Create on-site units; create off-site units; pay in-lieu fee; donate land, unit conversion, other proposals 15.0% No 7 5% @ 50% + 10% @ 60% 55 7 100% 30
Tiburon Create on-site units; create off-site units; pay in-lieu fee 15% 3 5% @ Low + 10% @ Mod Perpetual 3 5% @ Low + 10% @ Mod Perpetual
Union City Create on-site units; create off-site units; pay in-lieu fee 15% No 7 4.5% @ VL +

10.5% @ Low
7 1.5% @ Low +

4.5% @ 100% +
9% @ 120%
West Sacramento Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land 10% No 5 5% @ 50% + 5% @ 60% 55 5 70% 45
West Hollywood Create on-site units; create off-site units; pay in-lieu fee for 2- 10 unit projects 20% No 2 Low / Mod As long as resid 2 Low / Mod As long as resid Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; Incl Survey Page 7 of 15 Redlands Regular Meeting of 06-20-2023 519 of 1523

APPENDIX A

INCLUSIONARY HOUSING PROGRAM SURVEYS - CALIFORNIA
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period
Rental Development Ownership Development
II. Inclusionary Requirements: Ownership Projects Only
Carpinteria Create on-site units; pay in-lieu fee in limited circumstances 12% No 5 200% 30 Danville Create on-site units; pay in-lieu fee 10% Yes 7 110% 20 Folsom Create on-site units; create off-site units; pay in-lieu fee; donate land; acq/rehab; other proposals 10% No 10 3% @ VL + 7% @ Low Lafayette Create on-site units; create off-site units 15% No 2 9% @ Mod + 6% @ VL
45 Monterey Create on-site units; donate land 20% No 6 Perpetual Mountain View Create on-site units; pay in-lieu fee 15% No 3 100% 55 Rohnert Park Create on-site units; create off-site units; pay in-lieu fee 15% No 50 55 San Leandro Create on-site units; pay in-lieu fee 15% Yes 2 9% @ Mod + 6% @ Low
55 San Mateo County Create on-site units; create off-site units; pay in-lieu fee; donate land 20% No 5 10% @ Low + 10% @ Mod 55
5-19: 1 Mod. 20+:

South Coast: 2.5%
VL + 2.5% Low +
5% Mod + 5%
Workforce
45 - restarts
up to 90
Santa Ynez: No
Workforce
Santa Maria &
Lompoc: 2.5% VL
+ 2.5 Low
Thousand Oaks Create on-site units; create off-site rental units; pay in-lieu fee 10% No 5 Mod 45
Santa Barbara County Create on-site units; create off-site units in the coastal zone; pay in-lieu fee for certain unit types 5% - 15% Yes 5
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; Incl Survey Page 8 of 15 Redlands Regular Meeting of 06-20-2023 520 of 1523

APPENDIX A

INCLUSIONARY HOUSING PROGRAM SURVEYS - CALIFORNIA
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period
Rental Development Ownership Development
III. Inclusionary for Ownership Projects & Impact Fee for Rental Projects Fontana Create on-site units; pay in-lieu fee; develop a reduced percentage at deeper affordability 10% No 5 4% @ VL + 4% @ Low + 2% @ Mod 55 San Carlos Create on-site units; create off-site units; pay impact/linkage fee 15% Yes 55 2 10% @ Mod + 5% @ Low
45 Truckee
Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; pay impact/linkage fee; donate land. Requirements vary by zones, neighborhoods or districts.
15% No 7 Perpetual 7 Perpetual
IV. Mandatory Inclusionary for Ownership Projects & Voluntary Inclusionary for Rental Projects Pittsburg Create on-site units; pay in-lieu fee 15%/20% Yes 5 9% @ Mod + 6%
@ Low, or 20% @
Mod
Salinas Create on-site units; create off-site units; donate land 20% No 10 30 San Juan Bautista Create on-site units; pay impact/linkage fee 6% 6 80% San Luis Obispo Create on-site units; pay in-lieu fee; donate land 3% Yes 55 5 45 San Marcos Create on-site units; create off-site units; preserve or rehab existing housing; pay in-lieu fee; donate land 15% No 55 120% 55 Solana Beach Create on-site units; create off-site units; preserve or rehab existing housing; pay impact/linkage fee 15% No 5 55 5 45 V. Rental Projects Only
Fullerton Applies only to the Transportation Specific Plan area. Create on-site units 15% No 5% @ VL + 5% @ Low + 5% @ Mod 55
Glendale Create on-site units; create off-site units; pay in-lieu fee; donate land 15% No 8 60% 55
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; Incl Survey Page 9 of 15 Redlands Regular Meeting of 06-20-2023 521 of 1523

APPENDIX B

INCLUSIONARY HOUSING PROGRAM SURVEYS - LOS ANGELES, ORANGE, SAN DIEGO, VENTURA & SANTA BARBARA COUNTIES INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period In-Lieu Fee
I. Inclusionary Requirements: Both Rental and Ownership Projects Alhambra On-site or pay in-lieu fee. 15% No 7
9% at 120% &
6% at 80%
7 9% at 120% + 6%
at 80%
Fee Schedule: 5 -20 units.

Rental: $0.89 - $14.30/SF; Ownership:
$1.88 - $30.00/SF
Agoura Hills
Create on-site units; pay an inlieu fee for the required Low and/or Moderate Income
Units. In-lieu fee cannot be
paid to fulfill the very low
income requirement.
15% N/A 10
7% @ VL +
4% @ Low +
4% @ mod
55 10 7% @ VL + 4% @
Low + 4% @ mod 45
Set in 2018 to be consistent with the
Affordability gap. $285,336 per VL
apartment unit, $262,541 per low income
condominium unit, and $427,002 per
moderate income single family home.

Brea Create on-site units; pay inlieu fee 10% No 20 Not Defined 55 20 120% 10 Calculated per project. Based on the Affordability Gap
Carlsbad
Create units; pay in-lieu fee.

Reduced requirement is
provided if the affordable
units are set at very low or
extremely low income
15% No 1 Low 1 Low
Available up to 6 units. $8,529 for on SFH.
$15.00/SF for 2-6 unit projects.

Chula Vista
Create on-site units; create offsite units; preserve or rehab existing housing; pay in-lieu
fee; donate land. Excludes
area west of I-805 identified as
"Area of Low/Moderate
Income Concentration".
10% No 50 5% @ Low +
5% @ Mod Life of Bldg 50 5% @ Low + 5% @
Mod Life of Bldg In-lieu fee is based on the median home price minus the affordable home price
Coronado Create units; pay in-lieu fee 20% No 2 Low 2 Mod In-lieu fee paid by right. $7,000 per market rate unit
Downey Create on-site units; create offsite units; pay in-lieu fee 11%/10% No 10 Mod >55 or as long as resid 10 Mod 45
Rental: $23.50/SF - only allowed under
extreme hardship. Ownership: $15.90/SF
payable based on City Council criteria
Encinitas
Create on-site units; create offsite units; create ADU's; preserve at-risk units; pay inlieu fee; donate land
10%/15% No 7
10% VL or
15% Low Perpetual 7
10% VL or 15%
Low
45 One to 6 unit projects pay an in-lieu fee
based on a sliding scale. 7+ unit projects
pay $20 per sf in-lieu fee.

Rental Development Ownership Development
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; LA Orange SD Ven SB Page 10 of 15 Redlands Regular Meeting of 06-20-2023 522 of 1523

APPENDIX B

INCLUSIONARY HOUSING PROGRAM SURVEYS - LOS ANGELES, ORANGE, SAN DIEGO, VENTURA & SANTA BARBARA COUNTIES INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period In-Lieu Fee
Rental Development Ownership Development
Fillmore Create on-site units; pay inlieu fee; donate land 15% No 4 20+: 5% ELI
or VL & 10%;
Low 17-19: 2
low + one ELI
or VL; 10-16:
2 low; 5-9:: 1
low
55 4
20+: 5% ELI or VL
& 10%; Low 17-19:
2 low + one ELI or
VL; 10-16: 2 low; 5-
9:: 1 low
Goleta
Create on-site units; create offsite units; donate land, pay inlieu fee; acquisition/rehabilitation.

Income/Affordability trade off
of extremley low and very low
income units to low and
moderate income units in
demonstrated extreme
hardship.
25% -
reduced to
20% with
public
benefit
No 2

2.5% @ ELI +

2.5% @ VL+
5% @ Low +
5% @ Mod +
5% at Above
Mod
In general
45 to 55
years, but
not less
than 30
years
2 2.5% @ ELI + 2.5%
@ VL+ 5% @ Low
+ 5% @ Mod + 5%
at Above Mod
In general 45
to 55 years,
but not less
than 30 years
Equal to the Affordability Gap associated
with providing the requisite number of
affordable units on site within the market
rate project.

Huntington Beach
Create on-site units; create offsite units; preserve or rehab existing housing; pay in-lieu
fee
10% No 3 80% 55 3 120% 45
Sliding Scale: 3 to 30 units. In-Lieu Fee
allowed for projects up to 100 units.

Rental: $3.58 to $35.80/SF Ownership:
$2.54 to $25.36/SF. The per SF
measurement caps at 2,000 SF.

Irvine
Projects with fewer than 50
units can create on-site units;
create off-site units; preserve
or rehab existing housing; pay
in-lieu fee; donate land.

Projects with 50+ units must
produce the affordable units
on site.
15% No 50
50%, 80% &
120%
Defined
credits
30 50 50%, 80% & 120%
Defined credits 30 Calculated per project. Based on an
equivalent value calculation
La Habra
Create on-site units; create offsite units; pay in-lieu fee; acquisition/rehabilitation.
15% No 10
9% Mod + 6%
VL & Low 55 10 110% 45
Calculated per project. Based on the
estimated construction cost to produce the
unit.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; LA Orange SD Ven SB Page 11 of 15 Redlands Regular Meeting of 06-20-2023 523 of 1523

APPENDIX B

INCLUSIONARY HOUSING PROGRAM SURVEYS - LOS ANGELES, ORANGE, SAN DIEGO, VENTURA & SANTA BARBARA COUNTIES INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period In-Lieu Fee
Rental Development Ownership Development
Long Beach Create on-site units; pay inlieu fee; donate land 11%/10% No 10 50% > of 55 yrs
or as long as
resid
10 120%
> of 55 yrs or
as long as
resid
Rental @ $38.00/SF; Ownership @
$29.10/SF
Oceanside
Create on-site units; create offsite units; preserve or rehab existing housing; pay in-lieu
fee; donate land; purchase
credits from another project.
10% No 3 Low 55 3 Mod 55
In-lieu fee paid by right. The fee was set at
$15/SF on 1/1/23 and will increase to
$20/SF on 1/1/24.

Oxnard
Create on-site units; create offsite units; pay in-lieu fee in limited circumstances
10% No 10 5% @ VL +
5% Low
55 10 Low 20
Fee charged per total unit in the project. In
2022: SFH $36,000; MF Ownership
$35,000; Rental $28,000
Pasadena
Create on-site units; create offsite units; preserve or rehab existing housing; pay in-lieu
fee; donate land
20% No 1
5% @50% +
5% @ 80% +
10% @ 120%
1 110% 45 Sliding scale by sub-area & project size.

Low at $34.19/SF & High at $73.52/SF
Pomona
Create on-site units; create offsite units; pay in-lieu fee; donate land
13% / 7%-
11% Yes 3 120% Perpetual 3 120% 45 Rental @ $9.30/SF; SFH @ $11.40/SF Condominiums @ $9.30/SF
Poway Create on-site units; create offsite units; pay in-lieu fee 15% / 15%-
20% No Very Low 55 15% @ Low or 20% @ Mod 45
In-lieu fee is payable by right and is set at
$500 per unit for both rental and
ownership housing
Redondo Beach
Create on-site units; created
off-site units; pay in-lieu fee
up to nine units. Fractional
unit obligations are rounded
down
10%-15% /
9%-15%
Yes 2 Moderate >75 or as
long as resid 2 Mod 55
Sliding scale for 2 to 9 unit projects: Rental:
extrapolated from $34.20/SF of total
project area. Ownership: extrapolated
from $43.20/SF of total project area.

San Buenaventura
(Proposed Update)
Create on-site units; create offsite units; pay in-lieu fee; preserve or rehab existing
housing; donate land
15% / 10% No 7 Low 55 7 Mod 45 Ownership @ $29.80 - $66.30/SF; Apartments @ $20.30 - $48.90/SF
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; LA Orange SD Ven SB Page 12 of 15 Redlands Regular Meeting of 06-20-2023 524 of 1523

APPENDIX B

INCLUSIONARY HOUSING PROGRAM SURVEYS - LOS ANGELES, ORANGE, SAN DIEGO, VENTURA & SANTA BARBARA COUNTIES INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period In-Lieu Fee
Rental Development Ownership Development
San Clemente
Create on-site units; pay inlieu fee; donate land on- or offsite + development fees to a non-profit developer to
construct at least as many
units as required by the
market rate project.
4% No 6 Very Low 30 6 Very Low 30
Based on the greater of 1% of construction
costs as determined by the Building
Division or 2% of the affordability gap
determined by the formula in the Housing
Element.

San Diego
Create on-site units; create offsite units; pay in-lieu fee; donate land
10% to 15% No 10 50% or 80% 55 100% or 120% In 2024 the in-lieu fee will be set a $25/SF San Juan Capistrano
Create on-site units; create offsite units; preserve or rehab existing housing; pay in-lieu
fee; donate land
10% No 2 55 2 55
Based on 90% of the Affordability Gap,
which is updated monthly based on
benchmark market prices
Santa Ana
Only applies to changes in
land use and zoning
designations. Create on-site
units; off-site units; pay in-lieu
fee
Rental: 5% -
15% & Own:
5%
No 5
15% @ Low
or 10% @ VL
or 5% @ ELI
or 5% Low +
3% VL +2%
ELI
55 5 120% 55
Fee charged per sf of habitable area: 5-9:
$6.00; 10-14: $9.00; 15-19: $12; 20+: $15.

Discounts for use of skilled and trained
labor force
Santa Barbara (City)
Create on-site units; create offsite units; pay in-lieu fee for 1 to 9 & fractional units; donate
land
10% / 15% No 5 Mod 90 1 120% to 200%
90 / restarts
on each
resale
In 2020 the in-lieu fee for rental projects
was set at $25 per SF. Adjusted annually by
the Engineering News Record (ENR)
Building Cost Index for Los Angeles. In-lieu
fee for ownership units is calculated based
on the median price for 2-bedroom
condos, a low income standard, and the
estimated production cost (sales price -
15% profit). A discount schedule is
provided from small units.

Santa Monica
Create on-site units; create offsite units; pay in-lieu fee; donate land
5% to 30% Yes 2
50%, 80% &
120%
Defined
credits
55 2 50%, 80% & 120%
Defined credits 55 Rental @ $35.70/SF Ownership @
$41.70/SF
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; LA Orange SD Ven SB Page 13 of 15 Redlands Regular Meeting of 06-20-2023 525 of 1523

APPENDIX B

INCLUSIONARY HOUSING PROGRAM SURVEYS - LOS ANGELES, ORANGE, SAN DIEGO, VENTURA & SANTA BARBARA COUNTIES INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period In-Lieu Fee
Rental Development Ownership Development
Santa Paula Create on-site units; create offsite units; pay in-lieu fee 10% to 17% Yes 10 15% Low or
10% VL 55 10 45 In-Lieu Fee is set on a project-by-project basis.

West Hollywood
Create on-site units; create offsite units; pay in-lieu fee for 2- 10 units projects
20% No 2 Low / Mod As long as
resid 2 Low / Mod As long as resid
Sliding scale: 2 Units @ $13.63/SF - 10
Units @ $29.23/SF
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; LA Orange SD Ven SB Page 14 of 15 Redlands Regular Meeting of 06-20-2023 526 of 1523

APPENDIX B

INCLUSIONARY HOUSING PROGRAM SURVEYS - LOS ANGELES, ORANGE, SAN DIEGO, VENTURA & SANTA BARBARA COUNTIES INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Jurisdiction Compliance Options Set Aside %
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
Period
Threshold
Project Size % of AMI
Covenant
Period In-Lieu Fee
Rental Development Ownership Development
II. Inclusionary Requirements: Ownership Projects Only
Carpinteria
Create on-site units; pay inlieu fee in limited
circumstances
12% No 5 200% 30
In-lieu fee allowed if infeasibility can be
proved. The fee is based on the difference
between the median sales price of
condominiums and/or single family homes
and the affordable price at 121% of AMI
with 30% of income dedicated to housing
expenses
5-19: 1 Mod. 20+:

South Coast: 2.5%
VL + 2.5% Low +
5% Mod + 5%
Workforce
45 - restarts
up to 90
In-Lieu fee is measured per affordable
unit. Varies by HMA & income /
affordability level. Fee: Very Low & Low
are based on the estimated cost for the
County to subsidize very low & low income
units. Cost of Construction Fee: Moderate
& Workforce are based on the median
condo sales prices minus 15% of the
median price of condos.

Santa Ynez: No
Workforce
2020 Very Low & Low Fees: South Coast
$176,000; Santa Maria $96,600; Santa Ynez
$146,200; Lompoc $99,500
Santa Maria &
Lompoc: 2.5% VL
+ 2.5 Low
2020 Mod & Workforce Fees: South Coast
$658,000; Santa Maria $248,000; Santa
Ynez $431,600; Lompoc $227,600
III. Inclusionary Requirements: Rental Projects Only
Glendale
Create on-site units; create offsite units; pay in-lieu fee; donate land
15% No 8 60% 55 Sliding scale: 8 Units @ $28.71/SF - 21 Units @ $55/SF
Santa Barbara County
Create on-site units; create offsite units in the coastal zone; pay in-lieu fee for certain unit
types
5% - 15% Yes 5
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Inclusionary Survey; LA Orange SD Ven SB Page 15 of 15 Redlands Regular Meeting of 06-20-2023 527 of 1523
ATTACHMENT 2

AFFORDABLE HOUSING COST CALCULATION METHODOLOGIES
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Redlands Regular Meeting of 06-20-2023 528 of 1523
Affordable Housing Cost Calculation Methodologies Page 1 Inclusionary Housing: Financial Evaluation January 23, 2023

APPENDIX A

AFFORDABLE RENT CALCULATION METHODOLOGY
The Affordable Rent calculations used in the apartment development pro forma analyses are presented in Attachment 3 – Appendix A. The calculations are based on the following assumptions:

1. The household income information used in the calculations is based on 2022 income statistics for San Bernardino County as a whole. This information is published annually by the United States Department of Housing and Urban Development (HUD) and distributed by the California Department of Housing and Community Development (HCD).

2. The household size appropriate for the unit is based on the California Health and Safety Code (H&SC) §50052.5 standard of the number of bedrooms in the home plus one.1 H&SC §50052.5 refers to this as “the family size appropriate for the unit.” This is a benchmark that is used for calculation purposes only. It is neither an occupancy minimum nor a maximum.

3. The benchmark household incomes used in the Affordable Rent analyses are based on the following standards:
a. The low income rents are based on 80% of area median income (AMI). This percentage of AMI is based on the standard imposed in Assembly Bill 1505. b. The very low income rents are based on 50% of AMI, which is the standard imposed by H&SC §50053.
c. The affordable rents used in the California Government Code §65915 et seq. density bonus analyses are based on the household income standards imposed by H&SC §50053.

4. Thirty percent (30%) of defined household income is allocated to housing-related expenses.

5. The following monthly utilities allowances were applied in this analysis.2

1 For example, the imputed household size for a two-bedroom unit is three persons. 2 Utilities allowances are based on utilities costs comprised of electric heating, cooking and water heating; basic electric; and air conditioning. The allowances are based on the Housing Authority of the County of San Bernardino schedule effective as of December 1, 2022.

Redlands Regular Meeting of 06-20-2023 529 of 1523
Affordable Housing Cost Calculation Methodologies Page 2 Inclusionary Housing: Financial Evaluation January 23, 2023 Utilities Allowances
Apartment Development
Number of
Bedrooms
Monthly Utilities
Allowances
Studio $130
1 $158
2 $222
3 $289
Redlands Regular Meeting of 06-20-2023 530 of 1523
Affordable Housing Cost Calculation Methodologies Page 3 Inclusionary Housing: Financial Evaluation January 23, 2023

APPENDIX B

AFFORDABLE SALES PRICE CALCULATION METHODOLOGY
The Affordable Sales Price calculations used in the ownership housing development pro forma analyses are presented in Attachment 4 – Appendix A. The calculations are based on the following assumptions:

1. The household income information used in the calculations is based on 2022 income statistics for San Bernardino County as a whole. This information is published by produced and published by HCD annually.

2. The Affordable Sales Price estimates are based on the calculation methodology imposed by H&SC §50052.5.

The elements included in the Affordable Sales Price calculations are described in the following sections of this Attachment.

HOUSEHOLD SIZE
For the sole purposes of calculating Affordable Sales Prices, H&SC §50052.5 sets household sizes based on the number of bedrooms in the home plus one. As discussed previously, this is not an occupancy minimum or maximum. Rather, it is a benchmark that creates a consistent Affordable Sales Price calculation methodology.

HOUSEHOLD INCOME
For calculation purposes only, H&SC §50052.5 applies benchmark household incomes as the standard for determining the Affordable Sales Prices. For moderate income households the benchmark is based on 110% of the San Bernardino County AMI:

The identified benchmark percentage of AMI is not an income cap. The household income qualification standards are based on 120% of AMI for moderate income households and are based on the actual size of the home buyer’s household.

INCOME ALLOCATED TO HOUSING-RELATED EXPENSES
H&SC §50052.5 allocates 35% of the benchmark household incomes to the payment of housing-related expenses.

Redlands Regular Meeting of 06-20-2023 531 of 1523
Affordable Housing Cost Calculation Methodologies Page 4 Inclusionary Housing: Financial Evaluation January 23, 2023

HOUSING-RELATED EXPENSES
Based on research undertaken by KMA, the variable housing related expense assumptions used in this analysis are presented in the following table:

Variable Housing Related Expenses
Ownership Housing Development
Monthly HOA, Insurance &
Maintenance
Monthly
Utilities
Allowances 3 Townhomes
Single Family
Detached
Homes
Two-Bedroom Units $460 $230
Three-Bedroom Units $583 $250 $450
Four-Bedroom Units $706 $500
Five-Bedroom Units $829 $550
The property tax expense estimates are based on 1.15% of the defined Affordable Sales Prices. This assumes that the City will require the homes to be resold on an Affordable Sales Price throughout one cumulative 45-year covenant period.

SUPPORTABLE MORTGAGE AMOUNT
The mortgage amounts used in the Affordable Sales Price calculations are estimated using the income available after the other housing-related expenses are paid. The mortgage terms used in this Financial Evaluation were based on a 30-year fully amortizing loan at a 6.14% interest rate. 4

BENCHMARK DOWN PAYMENT
KMA set the benchmark down payment at 5% of the estimated Affordable Sales Price. A down payment of this magnitude is commonly allowed by affordable housing programs. 3 Utilities allowances are based on costs comprised of electric heating, cooking and water heating; basic electric; air conditioning; and water, sewer and trash services. The allowances are based on the Housing Authority of the County of San Bernardino schedule effective as of December 1, 2022.
4 Based on a 100 basis points premium applied to the Freddie Mac monthly average, between January 2022 and December 2022, for a fixed-interest rate loan with a 30-year amortization period.

Redlands Regular Meeting of 06-20-2023 532 of 1523
ATTACHMENT 3

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; Att 3 Apt Page 1 of 45 Redlands Regular Meeting of 06-20-2023 533 of 1523

APPENDIX A

RENT ANALYSES

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; App A RS Page 2 of 45
Redlands Regular Meeting of 06-20-2023 534 of 1523

APPENDIX A
RENT SURVEY 4+ STAR PROPERTIES 1

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Name # of Units
Unit Size
(SF) Total Per SF Year Built
I.

The Crossings at Redlands 26000 W Lugonia Ave Redlands 92374 44 452 $1,701 $3.76 2019 Redlands Lawn and Tennis 1400 Barton Rd Redlands 92373 32 510 $1,712 $3.36 1986 Minimum 452 $1,701 $3.36
Maximum 510 $1,712 $3.76
Weighted Average 476 $1,706 $3.59
II.

Redlands Park Apartments 1498 Brookside Ave Redlands 92373 62 675 $1,753 $2.60 1978 Parkview Terrace 1601 Barton Rd Redlands 92373 260 642 $1,893 $2.95 1987 Redlands Lawn and Tennis 1400 Barton Road Redlands 92373 136 656 $1,936 $2.95 The Crossings at Redlands 26000 W Lugonia Ave Redlands 92734 171 718 $2,018 $2.81 Barton Vineyard 26630 Barton Rd Redlands 92373 120 778 $2,045 $2.63 2006 The Summit 27431 San Bernardino Ave Redlands 92734 145 756 $2,122 $2.81 2019 Circa 2020 27000 W Lugonia Ave Redlands 92734 171 836 $2,157 $2.58 2015 Cypress Villas Apt Homes 301 E Cypress Ave Redlands 92373 14 610 $2,294 $3.76 2005 Minimum 610 $1,753 $2.58
Maximum 836 $2,294 $3.76
Weighted Average 718 $2,005 $2.80
Average Effective Rent
One-Bedroom Units
Studio Units
Address
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt Page 3 of 45
Redlands Regular Meeting of 06-20-2023 535 of 1523

APPENDIX A
RENT SURVEY 4+ STAR PROPERTIES 1

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Name # of Units
Unit Size
(SF) Total Per SF Year Built
Average Effective Rent
Address
III.

Redlands Park Apartments 1498 Brookside Ave Redlands 92373 84 955 $2,110 $2.21 Cypress Villas Apt Homes 301 E Cypress Ave Redlands 92373 61 833 $2,225 $2.67 Parkview Terrace 1601 Barton Rd Redlands 92373 298 934 $2,329 $2.49 The Village at Redlands 301 Wabash Ave Redlands 92734 40 1,400 $2,434 $1.74 2005 Redlands Lawn and Tennis 1400 Barton Road Redlands 92373 328 874 $2,482 $2.84 The Crossings at Redlands 26000 W Lugonia Ave Redlands 92374 128 1,177 $2,531 $2.15 Circa 2020 27000 W Lugonia Ave Redlands 92734 124 1,130 $2,534 $2.24 Barton Vineyard 26630 Barton Rd Redlands 92373 152 1,098 $2,553 $2.33 The Summit 27431 San Bernardino Ave Redlands 92734 124 1,019 $2,831 $2.78 Minimum 833 $2,110 $1.74
Maximum 1,400 $2,831 $2.84
Weighted Average 998 $2,461 $2.50
IV.

Cypress Villas Apt Homes 301 E Cypress Ave Redlands 92373 7 1,178 $2,598 $2.21 Barton Vineyard 26630 Barton Rd Redlands 92373 24 1,320 $2,973 $2.25 The Summit 27431 San Bernardino Ave Redlands 92734 12 1,257 $3,122 $2.48 Redlands Park Apartments 1498 Brookside Ave Redlands 92373 12 1,106 $3,128 $2.83 Circa 2020 27000 W Lugonia Ave Redlands 92734 11 1,412 $3,161 $2.24 Minimum 1,106 $2,598 $2.21
Maximum 1,412 $3,161 $2.83
Weighted Average 1,270 $3,020 $2.39
1 Source: CoStar, December 2022.

Two-Bedroom Units
Three-Bedroom Units
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt Page 4 of 45
Redlands Regular Meeting of 06-20-2023 536 of 1523

APPENDIX B

AFFORDABLE RENT CALCULATIONS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; App B Aff Rent Page 5 of 45 Redlands Regular Meeting of 06-20-2023 537 of 1523

APPENDIX B

AFFORDABLE RENT CALCULATIONS
2022 INCOME STANDARDS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Studio Units
One-Bedroom
Units
Two-Bedroom
Units
Three-Bedroom
Units
I. Household Income Assumptions
Area Median Income 1 $61,200 $69,900 $78,650 $87,400
% of AMI Used for Rent Setting Purposes 2 50% 50% 50% 50% Benchmark Annual Household Income $30,600 $34,950 $39,325 $43,700 II. % of Income Allotted to Housing Expenses 30% 30% 30% 30% III. Gross Affordable Rent
Annual $9,180 $10,485 $11,798 $13,110
Monthly $765 $874 $983 $1,093
(Less) Monthly Utilities Allowance 3 ($130) ($158) ($222) ($289) IV. Net Affordable Rent $635 $716 $761 $804
I. Household Income Assumptions
Area Median Income 1 $61,200 $69,900 $78,650 $87,400
% of AMI Used for Rent Setting Purposes 4 80% 80% 80% 80% Benchmark Annual Household Income $48,960 $55,920 $62,920 $69,920 II. % of Income Allotted to Housing Expenses 30% 30% 30% 30% III. Gross Affordable Rent
Annual $14,688 $16,776 $18,876 $20,976
Monthly $1,224 $1,398 $1,573 $1,748
(Less) Monthly Utilities Allowance 3 ($130) ($158) ($222) ($289) IV. Net Affordable Rent $1,094 $1,240 $1,351 $1,459
1 2 Based on 80% of AMI. This percentage of AMI is based on the standard identified in AB 1505. 3 4 Based on 50% of AMI. This percentage of AMI is based on the standard identified in California Health & Safety Code Section 50053.

Very Low Income
Low Income
Based on the median income for San Bernardino County published annually by the California Department of Housing & Community Development (HCD).

Utilities allowances are based on the Housing Authority of the County of San Bernardino utility allowance schedule for apartment development effective as of 12/1/22. Assumes: Electric Heating, Electric Cooking, and Electric Water Heater; Basic Electric; and Air Conditioning.

Prepared by: Keyser Marston Associates
File name: 1 23 23 Redlands Apt; Aff Rent Page 6 of 45
Redlands Regular Meeting of 06-20-2023 538 of 1523

APPENDIX C

PRO FORMA ANALYSES
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
TRANSIT VILLAGE 1 PROTOTYPES

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; App C TV1 Page 7 of 45 Redlands Regular Meeting of 06-20-2023 539 of 1523

APPENDIX C - EXHIBIT I
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
TRANSIT VILLAGE 1 PROTOTYPE

REDLANDS, CALIFORNIA

PRO FORMA ANALYSIS
DENSITY @ 30 UNITS/ACRE - MARKET RATE ALTERNATIVE
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 Mkt Page 8 of 45 Redlands Regular Meeting of 06-20-2023 540 of 1523
APPENDIX C - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS
DENSITY @ 30 UNITS/ACRE - MARKET RATE ALTERNATIVE
TRANSIT VILLAGE 1 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 87,120 Sf of Land $25 /Sf of Land $2,178,000 II. Direct Costs 2
On-Site Improvements/Landscaping 87,120 Sf of Land $20 /Sf of Land $1,742,000 Parking 3
At-Grade Spaces 15 Spaces $7,500 /Space 113,000
Covered & Enclosed Spaces 78 Spaces $15,000 /Space 1,170,000 Above-Grade Spaces 0 Spaces $20,000 /Space 0
Semi-Subterranean Spaces 0 Spaces $35,000 /Space 0
Building Costs 58,350 Sf of GLA $150 /Sf of GLA 8,753,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 2,356,000 Total Direct Costs 58,350 Sf of GLA $242 /Sf of GLA $14,134,000 III. Indirect Costs
Architecture, Engineering & Consulting 8% Direct Costs $1,131,000 Public Permits & Fees 5 60 Units $32,000 /Unit 1,920,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 283,000 Marketing 60 Units $5,000 /Unit 300,000
Developer Fee 5.0% Direct Costs 707,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 217,000 Total Indirect Costs $4,558,000
IV. Financing Costs
Interest During Construction
Land 6 $2,178,000 Cost 5.0% Avg Rate $163,000
Construction 7 $19,952,000 Cost 5.0% Avg Rate 898,000
Loan Origination Fees 60% Loan to Cost 1.5 Points 199,000 Total Financing Costs $1,260,000
V. Total Construction Cost 60 Units $333,000 /Unit $19,952,000 Total Development Cost 60 Units $369,000 /Unit $22,130,000 1 Estimated in part based on a sales survey of properties located in Redlands. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 4 Includes contractors' fees, general requirements, profit and builder's risk insurance. 5 Based on estimates presented in the City's adopted Housing Element for the period between 2021 and 2029. 6 Based on an 18 month construction period, after receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period, after receipt of entitlements, and a 60% average outstanding loan balance.

The parking ratios are based on the following standards imposed in the Specific Plan areas: studio units at 1.0 space; one-bedroom units at 1.0 space; two-bedroom units at 1.5 spaces; three-bedroom units at 2.0 spaces; and guest spaces at 0.25 spaces per unit.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 Mkt Page 9 of 45 Redlands Regular Meeting of 06-20-2023 541 of 1523
APPENDIX C - EXHIBIT I - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
DENSITY @ 30 UNITS/ACRE - MARKET RATE ALTERNATIVE
TRANSIT VILLAGE 1 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio Units 0 Units @ $0 /Unit/Month $0
One-Bedroom Units 27 Units @ $2,240 /Unit/Month 726,000 Two-Bedroom Units 30 Units @ $2,750 /Unit/Month 990,000 Three-Bedroom Units 3 Units @ $2,990 /Unit/Month 108,000 B. Laundry & Miscellaneous Income 60 Units @ $25 /Unit/Month 18,000 Total Gross Income $1,842,000
Vacancy & Collection Allowance 5% Gross Income (92,000) II. Effective Gross Income $1,750,000
III. Operating Expenses
General Operating Expenses 60 Units @ $4,500 /Unit $270,000 Property Taxes 2 60 Units @ $5,200 /Unit 313,000
Replacement Reserve Deposits 60 Units @ $150 /Unit 9,000 Total Operating Expenses ($592,000)
IV. Stabilized Net Operating Income $1,158,000
1 The weighted average monthly rent equates to $2.60 per square foot of leasable area. 2 The assessed value is estimated based on a 4.3% capitalization rate. The property tax rate is set at 1.15%.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 Mkt Page 10 of 45 Redlands Regular Meeting of 06-20-2023 542 of 1523
APPENDIX C - EXHIBIT I - TABLE 3

ESTIMATED DEVELOPER RETURN
DENSITY @ 30 UNITS/ACRE - MARKET RATE ALTERNATIVE
TRANSIT VILLAGE 1 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Stabilized Net Operating Income See APPENDIX C - EXHIBIT I - TABLE 2 $1,158,000 II. Total Development Cost See APPENDIX C - EXHIBIT I - TABLE 1 $22,130,000 III. Stabilized Return on Total Investment 5.2%
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 Mkt Page 11 of 45 Redlands Regular Meeting of 06-20-2023 543 of 1523

APPENDIX C - EXHIBIT II

PRO FORMA ANALYSIS
DENSITY @ 30 UNITS/ACRE - LOW INCOME REQUIREMENT
TRANSIT VILLAGE 1 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 Low Page 12 of 45 Redlands Regular Meeting of 06-20-2023 544 of 1523
APPENDIX C - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
DENSITY @ 30 UNITS/ACRE - LOW INCOME REQUIREMENT
TRANSIT VILLAGE 1 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 87,120 Sf of Land $25 /Sf of Land $2,178,000 II. Direct Costs 2
On-Site Improvements/Landscaping 87,120 Sf of Land $20 /Sf of Land $1,742,000 Parking 3
At-Grade Spaces 15 Spaces $7,500 /Space 113,000
Covered & Enclosed Spaces 78 Spaces $15,000 /Space 1,170,000 Above-Grade Spaces 0 Spaces $20,000 /Space 0
Semi-Subterranean Spaces 0 Spaces $35,000 /Space 0
Building Costs 58,350 Sf of GLA $150 /Sf of GLA 8,753,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 2,356,000 Total Direct Costs 58,350 Sf of GLA $242 /Sf of GLA $14,134,000 III. Indirect Costs
Architecture, Engineering & Consulting 8% Direct Costs $1,131,000 Public Permits & Fees 5 60 Units $32,000 /Unit 1,920,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 283,000 Marketing 60 Units $5,000 /Unit 300,000
Developer Fee 5% Direct Costs 707,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 217,000 Total Indirect Costs $4,558,000
IV. Financing Costs
Interest During Construction
Land 6 $2,099,600 Cost 5.0% Avg Rate $157,000
Construction 7 $19,945,000 Cost 5.0% Avg Rate 898,000
Loan Origination Fees 60% Loan to Cost 1.5 Points 199,000 Total Financing Costs $1,254,000
V. Total Construction Cost 60 Units $332,000 /Unit $19,946,000 Total Development Cost 60 Units $369,000 /Unit $22,124,000 1 Estimated in part based on a sales survey of properties located in Redlands. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 4 Includes contractors' fees, general requirements, profit and builder's risk insurance. 5 Based on estimates presented in the City's adopted Housing Element for the period between 2021 and 2029. 6 7 Based on an 18 month construction period, after receipt of entitlements, and a 60% average outstanding loan balance.

Based on am 18 month construction period after receipt of entitlements and a 100% average outstanding loan balance. Includes a $78,400 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 Low Page 13 of 45 Redlands Regular Meeting of 06-20-2023 545 of 1523
APPENDIX C - EXHIBIT II - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
DENSITY @ 30 UNITS/ACRE - LOW INCOME REQUIREMENT
TRANSIT VILLAGE 1 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio Units 0 Units @ $0 /Unit/Month $0
One-Bedroom Units 25 Units @ $2,240 /Unit/Month 672,000 Two-Bedroom Units 27 Units @ $2,750 /Unit/Month 891,000 Three-Bedroom Units 3 Units @ $2,990 /Unit/Month 108,000 B. Low Income 2
Studio Units 0 Units @ $1,094 /Unit/Month 0
One-Bedroom Units 2 Units @ $1,240 /Unit/Month 30,000
Two-Bedroom Units 3 Units @ $1,351 /Unit/Month 49,000
Three-Bedroom Units 0 Units @ $1,459 /Unit/Month 0
C. Laundry & Miscellaneous Income 60 Units @ $25 /Unit/Month 18,000 Total Gross Income $1,768,000
Vacancy & Collection Allowance 5% Gross Income (88,000) II. Effective Gross Income $1,680,000
III. Operating Expenses
General Operating Expenses 60 Units @ $4,500 /Unit $270,000 Property Taxes 3 60 Units @ $5,000 /Unit 298,000
Replacement Reserve Deposits 60 Units @ $150 /Unit 9,000 Total Operating Expenses 60 Units @ $9,617 /Unit ($577,000) IV. Stabilized Net Operating Income $1,103,000
1 The weighted average monthly rent equates to $2.60 per square foot of leasable area. 2 See APPENDIX B.
3 The assessed value is estimated based on a 4.3% capitalization rate. The property tax rate is set at 1.15%.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 Low Page 14 of 45 Redlands Regular Meeting of 06-20-2023 546 of 1523
APPENDIX C - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
DENSITY @ 30 UNITS/ACRE - LOW INCOME REQUIREMENT
TRANSIT VILLAGE 1 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX C - EXHIBIT II - TABLE 2 $1,103,000 Threshold Return on Total Investment 1 5.2%
Total Supportable Investment $21,079,000
II. Total Development Cost See APPENDIX C - EXHIBIT II - TABLE 1 $22,124,000 III. Total Financial Impact ($1,045,000)
Stabilized Return on Total Investment 5.0%
% Market Rent Increase to Offset Impact 4.5% Market Rate Units 1 Based on the Developer Return estimated to be generated by the MARKET RATE ALTERNATIVE.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 Low Page 15 of 45 Redlands Regular Meeting of 06-20-2023 547 of 1523

REDLANDS, CALIFORNIA

APPENDIX C - EXHIBIT III

PRO FORMA ANALYSIS
DENSITY @ 30 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
TRANSIT VILLAGE 1 PROTOTYPE
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 VL Page 16 of 45 Redlands Regular Meeting of 06-20-2023 548 of 1523
APPENDIX C - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS
DENSITY @ 30 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
TRANSIT VILLAGE 1 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 87,120 Sf of Land $25 /Sf of Land $2,178,000 II. Direct Costs 2
On-Site Improvements/Landscaping 87,120 Sf of Land $20 /Sf of Land $1,742,000 Parking 3
At-Grade Spaces 15 Spaces $7,500 /Space 113,000
Covered & Enclosed Spaces 78 Spaces $15,000 /Space 1,170,000 Above-Grade Spaces 0 Spaces $20,000 /Space 0
Semi-Subterranean Spaces 0 Spaces $35,000 /Space 0
Building Costs 58,350 Sf of GLA $150 /Sf of GLA 8,753,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 2,356,000 Total Direct Costs 58,350 Sf of GLA $242 /Sf of GLA $14,134,000 III. Indirect Costs
Architecture, Engineering & Consulting 8% Direct Costs $1,131,000 Public Permits & Fees 5 60 Units $32,000 /Unit 1,920,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 283,000 Marketing 60 Units $5,000 /Unit 300,000
Developer Fee 5% Direct Costs 707,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 217,000 Total Indirect Costs $4,558,000
IV. Financing Costs
Interest During Construction
Land 6 $2,106,700 Cost 5.0% Avg Rate $158,000
Construction 7 $19,947,000 Cost 5.0% Avg Rate 898,000
Loan Origination Fees 60% Loan to Cost 1.5 Points 199,000 Total Financing Costs $1,255,000
V. Total Construction Cost 60 Units $332,000 /Unit $19,947,000 Total Development Cost 60 Units $369,000 /Unit $22,125,000 1 Estimated in part based on a sales survey of properties located in Redlands. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 4 Includes contractors' fees, general requirements, profit and builder's risk insurance. 5 Based on estimates presented in the City's adopted Housing Element for the period between 2021 and 2029. 6 7 Based on an 18 month construction period, after receipt of entitlements, and a 60% average outstanding loan balance.

Based on am 18 month construction period after receipt of entitlements and a 100% average outstanding loan balance. Includes a $71,300 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 VL Page 17 of 45 Redlands Regular Meeting of 06-20-2023 549 of 1523
APPENDIX C - EXHIBIT III - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
DENSITY @ 30 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
TRANSIT VILLAGE 1 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio Units 0 Units @ $0 /Unit/Month $0
One-Bedroom Units 26 Units @ $2,240 /Unit/Month 699,000 Two-Bedroom Units 28 Units @ $2,750 /Unit/Month 924,000 Three-Bedroom Units 3 Units @ $2,990 /Unit/Month 108,000 B. Very Low Income 2
Studio Units 0 Units @ $635 /Unit/Month 0
One-Bedroom Units 1 Unit @ $716 /Unit/Month 9,000
Two-Bedroom Units 2 Units @ $761 /Unit/Month 18,000
Three-Bedroom Units 0 Units @ $804 /Unit/Month 0
C. Laundry & Miscellaneous Income 60 Units @ $25 /Unit/Month 18,000 Total Gross Income $1,776,000
Vacancy & Collection Allowance 5% Gross Income (89,000) II. Effective Gross Income $1,687,000
III. Operating Expenses
General Operating Expenses 60 Units @ $4,500 /Unit $270,000 Property Taxes 3 60 Units @ $5,000 /Unit 300,000
Replacement Reserve Deposits 60 Units @ $150 /Unit 9,000 Total Operating Expenses 60 Units @ $9,650 /Unit ($579,000) IV. Stabilized Net Operating Income $1,108,000
1 The weighted average monthly rent equates to $2.61 per square foot of leasable area. 2 See APPENDIX B.
3 The assessed value is estimated based on a 4.3% capitalization rate. The property tax rate is set at 1.15%.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 VL Page 18 of 45 Redlands Regular Meeting of 06-20-2023 550 of 1523
APPENDIX C - EXHIBIT III - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
DENSITY @ 30 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
TRANSIT VILLAGE 1 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX C - EXHIBIT III - TABLE 2 $1,108,000 Threshold Return on Total Investment 1 5.2%
Total Supportable Investment $21,174,000
II. Total Development Cost See APPENDIX C - EXHIBIT III - TABLE 1 $22,125,000 III. Total Financial Impact ($951,000)
Stabilized Return on Total Investment 5.0%
% Market Rent Increase to Offset Impact 3.9% Market Rate Units 1 Based on the Developer Return estimated to be generated by the MARKET RATE ALTERNATIVE.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV1 VL Page 19 of 45 Redlands Regular Meeting of 06-20-2023 551 of 1523

APPENDIX D

PRO FORMA ANALYSES
TRANSIT VILLAGE 2 PROTOTYPES
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; App D TV2 Page 20 of 45 Redlands Regular Meeting of 06-20-2023 552 of 1523

APPENDIX D - EXHIBIT I

PRO FORMA ANALYSIS
DENSITY @ 58 UNITS/ACRE - MARKET RATE ALTERNATIVE
TRANSIT VILLAGE 2 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV2 Mkt Page 21 of 45 Redlands Regular Meeting of 06-20-2023 553 of 1523
APPENDIX D - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS
DENSITY @ 58 UNITS/ACRE - MARKET RATE ALTERNATIVE
TRANSIT VILLAGE 2 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 174,240 Sf of Land $25 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 174,240 Sf of Land $20 /Sf of Land $3,485,000 Parking 3
At-Grade Spaces 58 Spaces $7,500 /Space 435,000
Covered & Enclosed Spaces 0 Spaces $15,000 /Space 0
Above-Grade Spaces 0 Spaces $20,000 /Space 0
Semi-Subterranean Spaces 267 Spaces $35,000 /Space 9,345,000 Building Costs 184,880 Sf of GLA $175 /Sf of GLA 32,354,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 9,124,000 Total Direct Costs 184,880 Sf of GLA $296 /Sf of GLA $54,743,000 III. Indirect Costs
Architecture, Engineering & Consulting 8% Direct Costs $4,379,000 Public Permits & Fees 5 232 Units $32,000 /Unit 7,424,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 1,095,000 Marketing 232 Units $5,000 /Unit 1,160,000
Developer Fee 5.0% Direct Costs 2,737,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 840,000 Total Indirect Costs $17,635,000
IV. Financing Costs
Interest During Construction
Land 6 $4,356,000 Cost 5.0% Avg Rate $327,000
Construction 7 $76,896,000 Cost 5.0% Avg Rate 3,460,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 731,000 Total Financing Costs $4,518,000
V. Total Construction Cost 232 Units $331,000 /Unit $76,896,000 Total Development Cost 232 Units $350,000 /Unit $81,252,000 1 Estimated in part based on a sales survey of properties located in Redlands. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 4 Includes contractors' fees, general requirements, profit and builder's risk insurance. 5 Based on estimates presented in the City's adopted Housing Element for the period between 2021 and 2029. 6 Based on an 18 month construction period, after receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period, after receipt of entitlements, and a 60% average outstanding loan balance.

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File name: 1 23 23 Redlands Apt; PF TV2 Mkt Page 22 of 45 Redlands Regular Meeting of 06-20-2023 554 of 1523
APPENDIX D - EXHIBIT I - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
DENSITY @ 58 UNITS/ACRE - MARKET RATE ALTERNATIVE
TRANSIT VILLAGE 2 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio Units 46 Units @ $2,090 /Unit/Month $1,154,000
One-Bedroom Units 116 Units @ $2,310 /Unit/Month 3,216,000 Two-Bedroom Units 70 Units @ $2,880 /Unit/Month 2,419,000 Three-Bedroom Units 0 Units @ $0 /Unit/Month 0
B. Laundry & Miscellaneous Income 232 Units @ $25 /Unit/Month 70,000 Total Gross Income $6,859,000
Vacancy & Collection Allowance 5% Gross Income (343,000) II. Effective Gross Income $6,516,000
III. Operating Expenses
General Operating Expenses 232 Units @ $4,500 /Unit $1,044,000 Property Taxes 2 232 Units @ $5,000 /Unit 1,158,000
Replacement Reserve Deposits 232 Units @ $150 /Unit 35,000 Total Operating Expenses ($2,237,000)
IV. Stabilized Net Operating Income $4,279,000
1 The weighted average monthly rent equates to $3.06 per square foot of leasable area. 2 The assessed value is estimated based on a 4.3% capitalization rate. The property tax rate is set at 1.15%.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV2 Mkt Page 23 of 45 Redlands Regular Meeting of 06-20-2023 555 of 1523
APPENDIX D - EXHIBIT I - TABLE 3

ESTIMATED DEVELOPER RETURN
DENSITY @ 58 UNITS/ACRE - MARKET RATE ALTERNATIVE
TRANSIT VILLAGE 2 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Stabilized Net Operating Income See APPENDIX D - EXHIBIT I - TABLE 2 $4,279,000 II. Total Development Cost See APPENDIX D - EXHIBIT I - TABLE 1 $81,252,000 III. Stabilized Return on Total Investment 5.3%
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File name: 1 23 23 Redlands Apt; PF TV2 Mkt Page 24 of 45 Redlands Regular Meeting of 06-20-2023 556 of 1523

APPENDIX D - EXHIBIT II

PRO FORMA ANALYSIS
DENSITY @ 58 UNITS/ACRE - LOW INCOME REQUIREMENT
TRANSIT VILLAGE 2 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV2 Low Page 25 of 45 Redlands Regular Meeting of 06-20-2023 557 of 1523
APPENDIX D - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
DENSITY @ 58 UNITS/ACRE - LOW INCOME REQUIREMENT
TRANSIT VILLAGE 2 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 174,240 Sf of Land $25 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 174,240 Sf of Land $20 /Sf of Land $3,485,000 Parking 3
At-Grade Spaces 58 Spaces $7,500 /Space 435,000
Covered & Enclosed Spaces 0 Spaces $15,000 /Space 0
Above-Grade Spaces 0 Spaces $20,000 /Space 0
Semi-Subterranean Spaces 267 Spaces $35,000 /Space 9,345,000 Building Costs 184,880 Sf of GLA $175 /Sf of GLA 32,354,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 9,124,000 Total Direct Costs 184,880 Sf of GLA $296 /Sf of GLA $54,743,000 III. Indirect Costs
Architecture, Engineering & Consulting 8% Direct Costs $4,379,000 Public Permits & Fees 5 232 Units $32,000 /Unit 7,424,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 1,095,000 Marketing 232 Units $5,000 /Unit 1,160,000
Developer Fee 5% Direct Costs 2,737,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 840,000 Total Indirect Costs $17,635,000
IV. Financing Costs
Interest During Construction
Land 6 $4,065,700 Cost 5.0% Avg Rate $305,000
Construction 7 $76,873,000 Cost 5.0% Avg Rate 3,459,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 731,000 Total Financing Costs $4,495,000
V. Total Construction Cost 232 Units $331,000 /Unit $76,873,000 Total Development Cost 232 Units $350,000 /Unit $81,229,000 1 Estimated in part based on a sales survey of properties located in Redlands. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 4 Includes contractors' fees, general requirements, profit and builder's risk insurance. 5 Based on estimates presented in the City's adopted Housing Element for the period between 2021 and 2029. 6 7 Based on an 18 month construction period, after receipt of entitlements, and a 60% average outstanding loan balance.

Based on am 18 month construction period after receipt of entitlements and a 100% average outstanding loan balance. Includes a $290,300 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

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File name: 1 23 23 Redlands Apt; PF TV2 Low Page 26 of 45 Redlands Regular Meeting of 06-20-2023 558 of 1523
APPENDIX D - EXHIBIT II - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
DENSITY @ 58 UNITS/ACRE - LOW INCOME REQUIREMENT
TRANSIT VILLAGE 2 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio Units 42 Units @ $2,090 /Unit/Month $1,053,000
One-Bedroom Units 107 Units @ $2,310 /Unit/Month 2,966,000 Two-Bedroom Units 64 Units @ $2,880 /Unit/Month 2,212,000 Three-Bedroom Units 0 Units @ $0 /Unit/Month 0
B. Low Income 2
Studio Units 4 Units @ $1,094 /Unit/Month 53,000
One-Bedroom Units 9 Units @ $1,240 /Unit/Month 134,000
Two-Bedroom Units 6 Units @ $1,351 /Unit/Month 97,000
Three-Bedroom Units 0 Units @ $1,459 /Unit/Month 0
C. Laundry & Miscellaneous Income 232 Units @ $25 /Unit/Month 70,000 Total Gross Income $6,585,000
Vacancy & Collection Allowance 5% Gross Income (329,000) II. Effective Gross Income $6,256,000
III. Operating Expenses
General Operating Expenses 232 Units @ $4,500 /Unit $1,044,000 Property Taxes 3 232 Units @ $4,800 /Unit 1,103,000
Replacement Reserve Deposits 232 Units @ $150 /Unit 35,000 Total Operating Expenses 232 Units @ $9,405 /Unit ($2,182,000) IV. Stabilized Net Operating Income $4,074,000
1 The weighted average monthly rent equates to $3.06 per square foot of leasable area. 2 See APPENDIX B.
3 The assessed value is estimated based on a 4.3% capitalization rate. The property tax rate is set at 1.15%.

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File name: 1 23 23 Redlands Apt; PF TV2 Low Page 27 of 45 Redlands Regular Meeting of 06-20-2023 559 of 1523
APPENDIX D - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
DENSITY @ 58 UNITS/ACRE - LOW INCOME REQUIREMENT
TRANSIT VILLAGE 2 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT II - TABLE 2 $4,074,000 Threshold Return on Total Investment 1 5.3%
Total Supportable Investment $77,359,000
II. Total Development Cost See APPENDIX D - EXHIBIT II - TABLE 1 $81,229,000 III. Total Financial Impact ($3,870,000)
Stabilized Return on Total Investment 5.0%
% Market Rent Increase to Offset Impact 5.0% Market Rate Units 1 Based on the Developer Return estimated to be generated by the MARKET RATE ALTERNATIVE.

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File name: 1 23 23 Redlands Apt; PF TV2 Low Page 28 of 45 Redlands Regular Meeting of 06-20-2023 560 of 1523

APPENDIX D - EXHIBIT III

PRO FORMA ANALYSIS
DENSITY @ 58 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
TRANSIT VILLAGE 2 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF TV2 VL Page 29 of 45 Redlands Regular Meeting of 06-20-2023 561 of 1523
APPENDIX D - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS
DENSITY @ 58 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
TRANSIT VILLAGE 2 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 174,240 Sf of Land $25 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 174,240 Sf of Land $20 /Sf of Land $3,485,000 Parking 3
At-Grade Spaces 58 Spaces $7,500 /Space 435,000
Covered & Enclosed Spaces 0 Spaces $15,000 /Space 0
Above-Grade Spaces 0 Spaces $20,000 /Space 0
Semi-Subterranean Spaces 267 Spaces $35,000 /Space 9,345,000 Building Costs 184,880 Sf of GLA $175 /Sf of GLA 32,354,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 9,124,000 Total Direct Costs 184,880 Sf of GLA $296 /Sf of GLA $54,743,000 III. Indirect Costs
Architecture, Engineering & Consulting 8% Direct Costs $4,379,000 Public Permits & Fees 5 232 Units $32,000 /Unit 7,424,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 1,095,000 Marketing 232 Units $5,000 /Unit 1,160,000
Developer Fee 5% Direct Costs 2,737,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 840,000 Total Indirect Costs $17,635,000
IV. Financing Costs
Interest During Construction
Land 6 $4,091,200 Cost 5.0% Avg Rate $307,000
Construction 7 $76,880,000 Cost 5.0% Avg Rate 3,460,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 731,000 Total Financing Costs $4,498,000
V. Total Construction Cost 232 Units $331,000 /Unit $76,876,000 Total Development Cost 232 Units $350,000 /Unit $81,232,000 1 Estimated in part based on a sales survey of properties located in Redlands. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 4 Includes contractors' fees, general requirements, profit and builder's risk insurance. 5 Based on estimates presented in the City's adopted Housing Element for the period between 2021 and 2029. 6 7 Based on an 18 month construction period, after receipt of entitlements, and a 60% average outstanding loan balance.

Based on am 18 month construction period after receipt of entitlements and a 100% average outstanding loan balance. Includes a $264,800 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

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File name: 1 23 23 Redlands Apt; PF TV2 VL Page 30 of 45 Redlands Regular Meeting of 06-20-2023 562 of 1523
APPENDIX D - EXHIBIT III - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
DENSITY @ 58 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
TRANSIT VILLAGE 2 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio Units 44 Units @ $2,090 /Unit/Month $1,104,000
One-Bedroom Units 110 Units @ $2,310 /Unit/Month 3,049,000 Two-Bedroom Units 66 Units @ $2,880 /Unit/Month 2,281,000 Three-Bedroom Units 0 Units @ $0 /Unit/Month 0
B. Very Low Income 2
Studio Units 2 Units @ $635 /Unit/Month 15,000
One-Bedroom Units 6 Units @ $716 /Unit/Month 52,000
Two-Bedroom Units 4 Units @ $761 /Unit/Month 37,000
Three-Bedroom Units 0 Units @ $804 /Unit/Month 0
C. Laundry & Miscellaneous Income 232 Units @ $25 /Unit/Month 70,000 Total Gross Income $6,608,000
Vacancy & Collection Allowance 5% Gross Income (330,000) II. Effective Gross Income $6,278,000
III. Operating Expenses
General Operating Expenses 232 Units @ $4,500 /Unit $1,044,000 Property Taxes 3 232 Units @ $4,800 /Unit 1,107,000
Replacement Reserve Deposits 232 Units @ $150 /Unit 35,000 Total Operating Expenses 232 Units @ $9,422 /Unit ($2,186,000) IV. Stabilized Net Operating Income $4,092,000
1 The weighted average monthly rent equates to $3.06 per square foot of leasable area. 2 See APPENDIX B.
3 The assessed value is estimated based on a 4.3% capitalization rate. The property tax rate is set at 1.15%.

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File name: 1 23 23 Redlands Apt; PF TV2 VL Page 31 of 45 Redlands Regular Meeting of 06-20-2023 563 of 1523
APPENDIX D - EXHIBIT III - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
DENSITY @ 58 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
TRANSIT VILLAGE 2 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT III - TABLE 2 $4,092,000 Threshold Return on Total Investment 1 5.3%
Total Supportable Investment $77,701,000
II. Total Development Cost See APPENDIX D - EXHIBIT III - TABLE 1 $81,232,000 III. Total Financial Impact ($3,531,000)
Stabilized Return on Total Investment 5.0%
% Market Rent Increase to Offset Impact 4.5% Market Rate Units 1 Based on the Developer Return estimated to be generated by the MARKET RATE ALTERNATIVE.

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File name: 1 23 23 Redlands Apt; PF TV2 VL Page 32 of 45 Redlands Regular Meeting of 06-20-2023 564 of 1523

APPENDIX E

PRO FORMA ANALYSES
R-3 PROTOTYPES
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

APARTMENT DEVELOPMENT
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File name: 1 23 23 Redlands Apt; App E R3 Page 33 of 45 Redlands Regular Meeting of 06-20-2023 565 of 1523

APPENDIX E - EXHIBIT I

PRO FORMA ANALYSIS
DENSITY @ 27 UNITS/ACRE - MARKET RATE ALTERNATIVE
R-3 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

APARTMENT DEVELOPMENT
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File name: 1 23 23 Redlands Apt; PF R3 Mkt Page 34 of 45 Redlands Regular Meeting of 06-20-2023 566 of 1523
APPENDIX E - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS
DENSITY @ 27 UNITS/ACRE - MARKET RATE ALTERNATIVE
R-3 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 217,800 Sf of Land $15 /Sf of Land $3,267,000 II. Direct Costs 2
On-Site Improvements/Landscaping 217,800 Sf of Land $20 /Sf of Land $4,356,000 Parking 3
At-Grade Spaces 153 Spaces $7,500 /Space 1,148,000
Covered & Enclosed Spaces 135 Spaces $15,000 /Space 2,025,000 Above-Grade Spaces 0 Spaces $20,000 /Space 0
Semi-Subterranean Spaces 0 Spaces $35,000 /Space 0
Building Costs 117,250 Sf of GLA $150 /Sf of GLA 17,588,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 5,023,000 Total Direct Costs 117,250 Sf of GLA $257 /Sf of GLA $30,140,000 III. Indirect Costs
Architecture, Engineering & Consulting 8% Direct Costs $2,411,000 Public Permits & Fees 5 135 Units $32,000 /Unit 4,320,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 603,000 Marketing 135 Units $5,000 /Unit 675,000
Developer Fee 5.0% Direct Costs 1,507,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 476,000 Total Indirect Costs $9,992,000
IV. Financing Costs
Interest During Construction
Land 6 $3,267,000 Cost 5.0% Avg Rate $245,000
Construction 7 $42,713,000 Cost 5.0% Avg Rate 1,922,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 414,000 Total Financing Costs $2,581,000
V. Total Construction Cost 135 Units $316,000 /Unit $42,713,000 Total Development Cost 135 Units $341,000 /Unit $45,980,000 1 Estimated in part based on a sales survey of properties located in Redlands. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 4 Includes contractors' fees, general requirements, profit and builder's risk insurance. 5 Based on estimates presented in the City's adopted Housing Element for the period between 2021 and 2029. 6 Based on an 18 month construction period, after receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period, after receipt of entitlements, and a 60% average outstanding loan balance.

The parking ratios are based on the following standards imposed by the Municipal Code: studio units at 1.0 space; one-bedroom units at 1.5 spaces; two-bedroom units at 2.0 spaces; three-bedroom units at 2.5 spaces; and guest spaces at 0.25 spaces per unit.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF R3 Mkt Page 35 of 45 Redlands Regular Meeting of 06-20-2023 567 of 1523
APPENDIX E - EXHIBIT I - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
DENSITY @ 27 UNITS/ACRE - MARKET RATE ALTERNATIVE
R-3 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio Units 0 Units @ $0 /Unit/Month $0
One-Bedroom Units 47 Units @ $2,100 /Unit/Month 1,184,000 Two-Bedroom Units 74 Units @ $2,250 /Unit/Month 1,998,000 Three-Bedroom Units 14 Units @ $2,630 /Unit/Month 442,000 B. Laundry & Miscellaneous Income 135 Units @ $25 /Unit/Month 41,000 Total Gross Income $3,665,000
Vacancy & Collection Allowance 5% Gross Income (183,000) II. Effective Gross Income $3,482,000
III. Operating Expenses
General Operating Expenses 135 Units @ $4,500 /Unit $608,000 Property Taxes 2 135 Units @ $4,500 /Unit 608,000
Replacement Reserve Deposits 135 Units @ $150 /Unit 20,000 Total Operating Expenses ($1,236,000)
IV. Stabilized Net Operating Income $2,246,000
1 The weighted average monthly rent equates to $2.58 per square foot of leasable area. 2 The assessed value is estimated based on a 4.3% capitalization rate. The property tax rate is set at 1.15%.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF R3 Mkt Page 36 of 45 Redlands Regular Meeting of 06-20-2023 568 of 1523
APPENDIX E - EXHIBIT I - TABLE 3

ESTIMATED DEVELOPER RETURN
DENSITY @ 27 UNITS/ACRE - MARKET RATE ALTERNATIVE
R-3 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Stabilized Net Operating Income See APPENDIX E - EXHIBIT I - TABLE 2 $2,246,000 II. Total Development Cost See APPENDIX E - EXHIBIT I - TABLE 1 $45,980,000 III. Stabilized Return on Total Investment 4.9%
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF R3 Mkt Page 37 of 45 Redlands Regular Meeting of 06-20-2023 569 of 1523

APPENDIX E - EXHIBIT II

PRO FORMA ANALYSIS
DENSITY @ 27 UNITS/ACRE - LOW INCOME REQUIREMENT
R-3 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF R3 Low Page 38 of 45 Redlands Regular Meeting of 06-20-2023 570 of 1523
APPENDIX E - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
DENSITY @ 27 UNITS/ACRE - LOW INCOME REQUIREMENT
R-3 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 217,800 Sf of Land $15 /Sf of Land $3,267,000 II. Direct Costs 2
On-Site Improvements/Landscaping 217,800 Sf of Land $20 /Sf of Land $4,356,000 Parking 3
At-Grade Spaces 153 Spaces $7,500 /Space 1,148,000
Covered & Enclosed Spaces 135 Spaces $15,000 /Space 2,025,000 Above-Grade Spaces 0 Spaces $20,000 /Space 0
Semi-Subterranean Spaces 0 Spaces $35,000 /Space 0
Building Costs 117,250 Sf of GLA $150 /Sf of GLA 17,588,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 5,023,000 Total Direct Costs 117,250 Sf of GLA $257 /Sf of GLA $30,140,000 III. Indirect Costs
Architecture, Engineering & Consulting 8% Direct Costs $2,411,000 Public Permits & Fees 5 135 Units $32,000 /Unit 4,320,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 603,000 Marketing 135 Units $5,000 /Unit 675,000
Developer Fee 5% Direct Costs 1,507,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 476,000 Total Indirect Costs $9,992,000
IV. Financing Costs
Interest During Construction
Land 6 $3,118,900 Cost 5.0% Avg Rate $234,000
Construction 7 $42,702,000 Cost 5.0% Avg Rate 1,922,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 414,000 Total Financing Costs $2,570,000
V. Total Construction Cost 135 Units $316,000 /Unit $42,702,000 Total Development Cost 135 Units $341,000 /Unit $45,969,000 1 Estimated in part based on a sales survey of properties located in Redlands. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 4 Includes contractors' fees, general requirements, profit and builder's risk insurance. 5 Based on estimates presented in the City's adopted Housing Element for the period between 2021 and 2029. 6 7 Based on an 18 month construction period, after receipt of entitlements, and a 60% average outstanding loan balance.

Based on am 18 month construction period after receipt of entitlements and a 100% average outstanding loan balance. Includes a $148,100 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF R3 Low Page 39 of 45 Redlands Regular Meeting of 06-20-2023 571 of 1523
APPENDIX E - EXHIBIT II - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
DENSITY @ 27 UNITS/ACRE - LOW INCOME REQUIREMENT
R-3 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio Units 0 Units @ $0 /Unit/Month $0
One-Bedroom Units 43 Units @ $2,100 /Unit/Month 1,084,000 Two-Bedroom Units 67 Units @ $2,250 /Unit/Month 1,809,000 Three-Bedroom Units 13 Units @ $2,630 /Unit/Month 410,000 B. Low Income 2
Studio Units 0 Units @ $1,094 /Unit/Month 0
One-Bedroom Units 4 Units @ $1,240 /Unit/Month 60,000
Two-Bedroom Units 7 Units @ $1,351 /Unit/Month 113,000
Three-Bedroom Units 1 Unit @ $1,459 /Unit/Month 18,000
C. Laundry & Miscellaneous Income 135 Units @ $25 /Unit/Month 41,000 Total Gross Income $3,535,000
Vacancy & Collection Allowance 5% Gross Income (177,000) II. Effective Gross Income $3,358,000
III. Operating Expenses
General Operating Expenses 135 Units @ $4,500 /Unit $608,000 Property Taxes 3 135 Units @ $4,300 /Unit 581,000
Replacement Reserve Deposits 135 Units @ $150 /Unit 20,000 Total Operating Expenses 135 Units @ $8,956 /Unit ($1,209,000) IV. Stabilized Net Operating Income $2,149,000
1 The weighted average monthly rent equates to $2.58 per square foot of leasable area. 2 See APPENDIX B.
3 The assessed value is estimated based on a 4.3% capitalization rate. The property tax rate is set at 1.15%.

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File name: 1 23 23 Redlands Apt; PF R3 Low Page 40 of 45 Redlands Regular Meeting of 06-20-2023 572 of 1523
APPENDIX E - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
DENSITY @ 27 UNITS/ACRE - LOW INCOME REQUIREMENT
R-3 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT II - TABLE 2 $2,149,000 Threshold Return on Total Investment 1 4.9%
Total Supportable Investment $43,994,000
II. Total Development Cost See APPENDIX E - EXHIBIT II - TABLE 1 $45,969,000 III. Total Financial Impact ($1,975,000)
Stabilized Return on Total Investment 4.7%
% Market Rent Increase to Offset Impact 4.4% Market Rate Units 1 Based on the Developer Return estimated to be generated by the MARKET RATE ALTERNATIVE.

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File name: 1 23 23 Redlands Apt; PF R3 Low Page 41 of 45 Redlands Regular Meeting of 06-20-2023 573 of 1523

APPENDIX E - EXHIBIT III

PRO FORMA ANALYSIS
DENSITY @ 27 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
R-3 PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF R3 VL Page 42 of 45 Redlands Regular Meeting of 06-20-2023 574 of 1523
APPENDIX E - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS
DENSITY @ 27 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
R-3 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 217,800 Sf of Land $15 /Sf of Land $3,267,000 II. Direct Costs 2
On-Site Improvements/Landscaping 217,800 Sf of Land $20 /Sf of Land $4,356,000 Parking 3
At-Grade Spaces 153 Spaces $7,500 /Space 1,148,000
Covered & Enclosed Spaces 135 Spaces $15,000 /Space 2,025,000 Above-Grade Spaces 0 Spaces $20,000 /Space 0
Semi-Subterranean Spaces 0 Spaces $35,000 /Space 0
Building Costs 117,250 Sf of GLA $150 /Sf of GLA 17,588,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 5,023,000 Total Direct Costs 117,250 Sf of GLA $257 /Sf of GLA $30,140,000 III. Indirect Costs
Architecture, Engineering & Consulting 8% Direct Costs $2,411,000 Public Permits & Fees 5 135 Units $32,000 /Unit 4,320,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 603,000 Marketing 135 Units $5,000 /Unit 675,000
Developer Fee 5% Direct Costs 1,507,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 476,000 Total Indirect Costs $9,992,000
IV. Financing Costs
Interest During Construction
Land 6 $3,105,100 Cost 5.0% Avg Rate $233,000
Construction 7 $42,701,000 Cost 5.0% Avg Rate 1,922,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 414,000 Total Financing Costs $2,569,000
V. Total Construction Cost 135 Units $316,000 /Unit $42,701,000 Total Development Cost 135 Units $341,000 /Unit $45,968,000 1 Estimated in part based on a sales survey of properties located in Redlands. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 4 Includes contractors' fees, general requirements, profit and builder's risk insurance. 5 Based on estimates presented in the City's adopted Housing Element for the period between 2021 and 2029. 6 7 Based on an 18 month construction period, after receipt of entitlements, and a 60% average outstanding loan balance.

Based on am 18 month construction period after receipt of entitlements and a 100% average outstanding loan balance. Includes a $161,900 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF R3 VL Page 43 of 45 Redlands Regular Meeting of 06-20-2023 575 of 1523
APPENDIX E - EXHIBIT III - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
DENSITY @ 27 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
R-3 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio Units 0 Units @ $0 /Unit/Month $0
One-Bedroom Units 44 Units @ $2,100 /Unit/Month 1,109,000 Two-Bedroom Units 70 Units @ $2,250 /Unit/Month 1,890,000 Three-Bedroom Units 13 Units @ $2,630 /Unit/Month 410,000 B. Very Low Income 2
Studio Units 0 Units @ $635 /Unit/Month 0
One-Bedroom Units 3 Units @ $716 /Unit/Month 26,000
Two-Bedroom Units 4 Units @ $761 /Unit/Month 37,000
Three-Bedroom Units 1 Unit @ $804 /Unit/Month 10,000
C. Laundry & Miscellaneous Income 135 Units @ $25 /Unit/Month 41,000 Total Gross Income $3,523,000
Vacancy & Collection Allowance 5% Gross Income (176,000) II. Effective Gross Income $3,347,000
III. Operating Expenses
General Operating Expenses 135 Units @ $4,500 /Unit $608,000 Property Taxes 3 135 Units @ $4,300 /Unit 579,000
Replacement Reserve Deposits 135 Units @ $150 /Unit 20,000 Total Operating Expenses 135 Units @ $8,941 /Unit ($1,207,000) IV. Stabilized Net Operating Income $2,140,000
1 The weighted average monthly rent equates to $2.58 per square foot of leasable area. 2 See APPENDIX B.
3 The assessed value is estimated based on a 4.3% capitalization rate. The property tax rate is set at 1.15%.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; PF R3 VL Page 44 of 45 Redlands Regular Meeting of 06-20-2023 576 of 1523
APPENDIX E - EXHIBIT III - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
DENSITY @ 27 UNITS/ACRE - VERY LOW INCOME REQUIREMENT
R-3 PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT III - TABLE 2 $2,140,000 Threshold Return on Total Investment 1 4.9%
Total Supportable Investment $43,810,000
II. Total Development Cost See APPENDIX E - EXHIBIT III - TABLE 1 $45,968,000 III. Total Financial Impact ($2,158,000)
Stabilized Return on Total Investment 4.7%
% Market Rent Increase to Offset Impact 4.6% Market Rate Units 1 Based on the Developer Return estimated to be generated by the MARKET RATE ALTERNATIVE.

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ATTACHMENT 4

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

CITYWIDE ANALYSIS
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; Att 4 Title Page 1 of 26 Redlands Regular Meeting of 06-20-2023 578 of 1523

APPENDIX A

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

HOME SALES SURVEY

CITYWIDE ANALYSIS
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; App A HSS Page 2 of 26 Redlands Regular Meeting of 06-20-2023 579 of 1523

APPENDIX A
RESALE HOME SALES SURVEY 1

OWNERSHIP HOUSING DEVELOPMENT - CITYWIDE ANALYSIS
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Unit Size (SF) Total Per SF Year Built
I. Townhomes and Condominiums
93 Kansas St #407 Redlands 92373 1,070 $375,000 $350 2006 93 Kansas St #102 Redlands 92373 1,070 $381,000 $356 2006 93 Kansas St #302 Redlands 92373 1,070 $377,860 $353 2006 93 Kansas St #203 Redlands 92373 1,010 $425,000 $421 2006 1510 Orange Ave #405 Redlands 92373 1,306 $470,000 $360 2012 Minimum 1,010 $375,000 $350 2006
Maximum 1,306 $470,000 $421 2012
Average 1,105 $405,800 $367 2007
93 Kansas St #301 Redlands 92373 1,451 $495,000 $341 2006 93 Kansas St #701 Redlands 92373 1,451 $398,500 $275 2007 93 Kansas St #501 Redlands 92373 1,451 $490,000 $338 2007 1510 Orange Ave #1106 Redlands 92373 1,600 $475,500 $297 2011 1510 Orange Ave #1005 Redlands 92373 1,600 $485,000 $303 2012 1200 E Highland Ave #208 Redlands 92374 1,730 $454,000 $262 2007 Minimum 1,451 $398,500 $262 2006
Maximum 1,730 $495,000 $341 2012
Average 1,547 $466,300 $301 2008
II. Single Family Homes
918 Lawton St Redlands 92374 1,200 $540,000 $450 2019
1018 Lawton St Redlands 92374 1,289 $475,000 $369 2021
926 Herald St Redlands 92374 1,370 $535,000 $391 2017
1459 Galway Ave Redlands 92374 1,627 $515,990 $317 2020 1442 Galway Ave Redlands 92374 1,627 $528,990 $325 2020 1490 Galway Ave Redlands 92374 1,627 $502,990 $309 2020 1499 Shannon Ave Redlands 92374 1,627 $647,821 $398 2021 1483 Shannon Ave Redlands 92374 1,627 $623,797 $383 2021 1475 Claire Ave Redlands 92374 1,627 $644,857 $396 2021 1710 Camellia Ln Redlands 92374 1,864 $532,450 $286 2022 1676 Camellia Ln Redlands 92374 1,864 $581,175 $312 2022 1696 Camellia Ln Redlands 92374 1,864 $536,990 $288 2022 2060 Clementine St Redlands 92374 1,940 $675,000 $348 2017 2065 Clementine St Redlands 92374 1,940 $615,000 $317 2017 2010 Desert Lime Ct Redlands 92374 1,940 $672,000 $346 2017 1890 Clementine St Redlands 92374 1,940 $688,000 $355 2017 915 Dahlia Redlands 92374 1,949 $675,000 $346 2022
943 Dahlia Ave Redlands 92374 1,949 $667,888 $343 2022
Minimum 1,200 $475,000 $286 2017
Maximum 1,949 $688,000 $450 2022
Average 1,715 $592,100 $345 2020
Sales Price
Address
Three-Bedroom Units
Two-Bedroom Units
Three-Bedroom Units
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File name: 1 23 23 Redlands Own; Home Resales Page 3 of 26 Redlands Regular Meeting of 06-20-2023 580 of 1523

APPENDIX A
RESALE HOME SALES SURVEY 1

OWNERSHIP HOUSING DEVELOPMENT - CITYWIDE ANALYSIS
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Unit Size (SF) Total Per SF Year Built
Sales Price
Address
906 Lawton St Redlands 92374 1,430 $550,000 $385 2022
1410 Galway Redlands 92374 1,853 $549,835 $297 2020
1434 Claire Ave Redlands 92374 1,853 $594,335 $321 2020 1450 Claire Ave Redlands 92374 1,853 $600,270 $324 2021 1443 Claire Redlands 92374 1,853 $576,070 $311 2021
31040 Sutherland Dr Redlands 92373 2,191 $900,000 $411 2018 1450 Galway Ave Redlands 92374 2,227 $528,990 $238 2020 1499 Galway Ave Redlands 92374 2,227 $521,990 $234 2020 1498 Galway Ave Redlands 92374 2,227 $495,990 $223 2020 1426 Galway Ave Redlands 92374 2,227 $567,700 $255 2020 1451 Galway Ave Redlands 92374 2,227 $571,035 $256 2020 1451 Claire Ave Redlands 92374 2,227 $589,990 $265 2021 1482 Galway Ave Redlands 92374 2,227 $545,990 $245 2021 26634 Fino Ct Redlands 92373 2,386 $836,000 $350 2019
1652 Penny Ln Redlands 92374 2,397 $922,000 $385 2018
1998 Clementine St Redlands 92374 2,409 $699,900 $291 2017 842 Royal Knight Trl Redlands 92374 2,449 $633,190 $259 2022 1825 Montecito Redlands 92374 2,650 $680,000 $257 2020
1459 Shane Ct Redlands 92374 2,726 $812,500 $298 2019
1580 Adeline Ave Redlands 92374 2,741 $715,000 $261 2018 2005 Clementine St Redlands 92374 2,810 $705,000 $251 2017 1895 Clementine St Redlands 92374 2,810 $670,000 $238 2017 1744 Sunny Heights Ln Redlands 92374 2,877 $677,056 $235 2022 1683 Lucas Ln Redlands 92374 2,924 $800,000 $274 2019
1462 Elliott Ct Redlands 92374 3,090 $910,000 $294 2019 1475 Lucas Ln Redlands 92374 3,152 $950,000 $301 2018
1815 Clementine St Redlands 92374 3,163 $785,000 $248 2017 Minimum 1,430 $495,990 $223 2017
Maximum 3,163 $950,000 $411 2022
Average 2,415 $681,000 $282 2019
Four-Bedroom Units
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APPENDIX A
RESALE HOME SALES SURVEY 1

OWNERSHIP HOUSING DEVELOPMENT - CITYWIDE ANALYSIS
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Unit Size (SF) Total Per SF Year Built
Sales Price
Address
1721 Camellia Ln Redlands 92374 2,010 $555,990 $277 2022 1459 Shannon Ave Redlands 92374 2,537 $798,990 $315 2019 1475 Galway Ave Redlands 92374 2,537 $675,000 $266 2020 1447 Wicklow Redlands 92374 2,537 $670,000 $264 2020
1495 Wicklow Ave Redlands 92374 2,537 $562,970 $222 2020 1458 Galway Ave Redlands 92374 2,537 $574,410 $226 2020 1504 Galway Ave Redlands 92374 2,537 $565,505 $223 2020 1434 Galway Ave Redlands 92374 2,537 $540,990 $213 2020 1506 Shannon Ave Redlands 92374 2,537 $731,272 $288 2021 1426 Claire Ave Redlands 92374 2,537 $576,990 $227 2021 1499 Claire Ave Redlands 92374 2,537 $627,490 $247 2021 1488 Claire Ave Redlands 92374 2,537 $620,990 $245 2021 1454 Shane Ct Redlands 92374 2,726 $870,000 $319 2019
1827 Montecito Redlands 92374 2,908 $650,500 $224 2020
26553 Citrus Ave Redlands 92373 3,152 $695,000 $220 2018 1826 Montecito Ln Redlands 92374 3,167 $840,000 $265 2020 1814 Pansy Ct Redlands 92374 3,297 $955,000 $290 2019
1630 Camden Ct Redlands 92374 3,306 $745,000 $225 2017
10985 Sunny Cove Ct Redlands 92373 3,320 $890,000 $268 2018 138 Jacinto Ranches Ln Redlands 92374 3,462 $1,001,000 $289 2020 1611 Penny Ln Redlands 92374 3,966 $835,000 $211 2018
1685 Halsey St Redlands 92373 4,004 $1,695,000 $423 2020 Minimum 2,010 $540,990 $211 2017
Maximum 4,004 $1,695,000 $423 2022
Average 2,874 $758,000 $264 2020
1 Source: Redfin. Based on townhomes/condominiums built after 2005 and single family homes built after 2017. The sales occurred between January 2021 and December 2022.

Five-Bedroom Units
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File name: 1 23 23 Redlands Own; Home Resales Page 5 of 26 Redlands Regular Meeting of 06-20-2023 582 of 1523

APPENDIX B

AFFORDABLE SALES PRICE CALCULATIONS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

CITYWIDE ANALYSIS
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; App B ASP Page 6 of 26 Redlands Regular Meeting of 06-20-2023 583 of 1523

APPENDIX B - EXHIBIT I
AFFORDABLE SALES PRICE CALCULATIONS 1

TOWNHOME PROTOTYPE
MODERATE INCOME - 2022 INCOME STANDARDS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Two-Bedroom
Units
Three-Bedroom
Units
I. General Assumptions
Benchmark Household Size 2 3 4
Area Median Income 3 $78,650 $87,400
Annual Utilities Allowance 4 $5,520 $6,996
HOA, Maintenance & Insurance 5 $2,760 $3,000
II. Calculations
A. Income Allotted to Housing Based on 110% AMI
Benchmark Annual Household Income $86,515 $96,140
Income Allotted to Housing @ 35% of Income $30,280 $33,650 B. Property Taxes @ 1.15% of Affordable Sales Price $3,130 $3,360 C. Income Available for Mortgage Debt Service 6 $18,870 $20,294 D. Affordable Sales Price
Supportable Mtg @ 6.14% Interest 7 $258,400 $277,900
Home Buyer Down Payment @ 5% of ASP 13,600 14,600
Affordable Sales Price $272,000 $292,500
1 The Affordable Sales Price calculations are based on the California Health and Safety Code Section 50052.5 methodology. 2 3
4 5 Based in part on the HOA dues identified in the home sales survey presented in APPENDIX A. 6 7
Based on the Income Allotted to Housing minus the following: Annual Utilities Allowance; HOA, Maintenance & Insurance; and Property Taxes @ 1.15% of Affordable Sales Price.

Based on a 100 basis points premium applied to the Freddie Mac monthly average, between January 2022 and December 2022, for a fixed-interest rate loan with a 30-year amortization period.

Under the California Health & Safety Code Section 50052.5 calculation methodology, the "family size appropriate for the unit" benchmark is set at the number of bedrooms in the unit plus one. This benchmark is used solely for the purposes of calculating the Affordable Sales Price. It is neither an occupancy cap nor a floor.

Based on 2022 San Bernardino County household incomes published by the California Department of Housing & Community Development (HCD).

Prepared by: Keyser Marston Associates
File name: 1 23 23 Redlands Own; ASP Page 7 of 26
Redlands Regular Meeting of 06-20-2023 584 of 1523

APPENDIX B - EXHIBIT II
AFFORDABLE SALES PRICE CALCULATIONS 1

DETACHED SINGLE FAMILY HOME PROTOTYPE
MODERATE INCOME - 2022 INCOME STANDARDS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Three-Bedroom
Units
Four-Bedroom
Units
Five-Bedroom
Units
I. General Assumptions
Benchmark Household Size 2 4 5 6
Area Median Income 3 $87,400 $94,400 $101,400
Annual Utilities Allowance 4 $6,996 $8,472 $9,948
Maintenance & Insurance 5 $5,400 $6,000 $6,600
II. Calculations
A. Income Allotted to Housing Based on 110% AMI
Benchmark Annual Household Income $96,140 $103,840 $111,540 Income Allotted to Housing @ 35% of Income $33,650 $36,340 $39,040 B. Property Taxes @ 1.15% of Affordable Sales Price $3,020 $3,110 $3,200 C. Income Available for Mortgage Debt Service 6 $18,234 $18,758 $19,292 D. Affordable Sales Price
Supportable Mtg @ 6.14% Interest 7 $249,700 $256,900 $264,200 Home Buyer Down Payment @ 5% of ASP 13,100 13,500 13,900 Affordable Sales Price $262,800 $270,400 $278,100
1 The Affordable Sales Price calculations are based on the California Health and Safety Code Section 50052.5 methodology. 2 3
4 5 Based in part on the HOA dues identified in the home sales survey presented in APPENDIX A. 6 7
Under the California Health & Safety Code Section 50052.5 calculation methodology, the "family size appropriate for the unit" benchmark is set at the number of bedrooms in the unit plus one. This benchmark is used solely for the purposes of calculating the Affordable Sales Price. It is neither an occupancy cap nor a floor.

Based on 2022 San Bernardino County household incomes published by the California Department of Housing & Community Development (HCD).

Utilities allowances are based on the Housing Authority of the County of San Bernardino utility allowance schedule for detached homes effective as of 12/1/22. Assumes: Electric Heating, Electric Cooking, Electric Water Heater, Basic Electric, Air Conditioning, Water, Based on the Income Allotted to Housing minus the following: Annual Utilities Allowance; HOA, Maintenance & Insurance; and Property Taxes @ 1.15% of Affordable Sales Price.

Based on a 100 basis points premium applied to the Freddie Mac monthly average, between January 2022 and December 2022, for a fixed-interest rate loan with a 30-year amortization period.

Prepared by: Keyser Marston Associates
File name: 1 23 23 Redlands Own; ASP Page 8 of 26
Redlands Regular Meeting of 06-20-2023 585 of 1523

REDLANDS, CALIFORNIA

APPENDIX C

PRO FORMA ANALYSES

CITYWIDE TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Own; APP C CW TH Page 9 of 26 Redlands Regular Meeting of 06-20-2023 586 of 1523

REDLANDS, CALIFORNIA

APPENDIX C - EXHIBIT I

PRO FORMA ANALYSIS

MARKET RATE ALTERNATIVE

CITYWIDE TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; Pf CW TH Mkt Page 10 of 26 Redlands Regular Meeting of 06-20-2023 587 of 1523
APPENDIX C - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS

MARKET RATE ALTERNATIVE

CITYWIDE TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 174,240 Sf of Land $15 /Sf of Land $2,614,000 II. Direct Costs 2
On- and Off-Site Improvements 174,240 Sf of Land $20 /Sf of Land $3,485,000 Parking 3 50 Spaces $0 /Space 0
Building Costs 103,600 Sf of GBA $150 /Sf of GBA 15,540,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 3,805,000 Total Direct Costs $22,830,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $1,370,000 Public Permits & Fees 5 72 Units $47,200 /Unit 3,398,000 Taxes, Insurance, Legal & Accounting 1.5% Direct Costs 342,000 Marketing 72 Units $5,000 /Unit 360,000
Developer Fee 3.0% Gross Sales Revenue 1,163,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 332,000 Total Indirect Costs $6,965,000
IV. Financing Costs
Interest During Construction 6 $1,255,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 292,000 Total Financing Costs $1,547,000
V. Total Construction Cost 72 Units $435,000 /Unit $31,342,000 Total Development Cost 72 Units $472,000 /Unit $33,956,000 1 Estimated in part based on the survey presented in APPENDIX A - EXHIBIT I. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 Assumes that the required parking is provided in attached garages. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on estimates presented in the February 2022 draft Housing Element. 6 Assumes a 5.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 10 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; Pf CW TH Mkt Page 11 of 26 Redlands Regular Meeting of 06-20-2023 588 of 1523
APPENDIX C - EXHIBIT I - TABLE 2

PROJECTED NET SALES REVENUE

MARKET RATE ALTERNATIVE

CITYWIDE TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Sales Revenue 1
Two-Bedroom Units 47 Units @ $525,000 /Unit $24,675,000 Three-Bedroom Units 25 Units @ $564,000 /Unit 14,100,000 Total Gross Sales Revenue $38,775,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $1,163,000
Closing 2.0% Gross Sales Revenue 776,000
Warranty 0.5% Gross Sales Revenue 194,000
Total Cost of Sales ($2,133,000)
III. Net Revenue $36,642,000
1 Estimated in part based on the survey presented in APPENDIX A. The weighted average sales price equates to $374 per square foot of saleable area.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; Pf CW TH Mkt Page 12 of 26 Redlands Regular Meeting of 06-20-2023 589 of 1523
APPENDIX C - EXHIBIT I - TABLE 3

PROJECTED DEVELOPER PROFIT

MARKET RATE ALTERNATIVE

CITYWIDE TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Net Revenue See APPENDIX C - EXHIBIT I - TABLE 2 $36,642,000 II. Total Development Cost See APPENDIX C - EXHIBIT I - TABLE 1 $33,956,000 III. Developer Profit 7.9% Total Development Cost $2,686,000 Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; Pf CW TH Mkt Page 13 of 26 Redlands Regular Meeting of 06-20-2023 590 of 1523
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

APPENDIX C - EXHIBIT II

PRO FORMA ANALYSIS

MODERATE INCOME REQUIREMENT

CITYWIDE TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; Pf CW TH Mod Page 14 of 26 Redlands Regular Meeting of 06-20-2023 591 of 1523
APPENDIX C - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS

CITYWIDE TOWNHOME PROTOTYPE

MODERATE INCOME REQUIREMENT

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 174,240 Sf of Land $15 /Sf of Land $2,614,000 II. Direct Costs 2
On- and Off-Site Improvements 174,240 Sf of Land $20 /Sf of Land $3,485,000 Parking 3 50 Spaces $0 /Space 0
Building Costs 103,600 Sf of GBA $150 /Sf of GBA 15,540,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 3,805,000 Total Direct Costs $22,830,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $1,370,000 Public Permits & Fees 5 72 Units $47,200 /Unit 3,398,000 Taxes, Insurance, Legal & Accounting 1.5% Direct Costs 342,000 Marketing 72 Units $5,000 /Unit 360,000
Developer Fee 6 72 Units $16,153 /Unit 1,163,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 332,000 Total Indirect Costs $6,965,000
IV. Financing Costs
Interest During Construction 7 $1,192,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 283,000 Total Financing Costs $1,475,000
V. Total Construction Cost 72 Units $434,000 /Unit $31,270,000 Total Development Cost 72 Units $471,000 /Unit $33,884,000 1 Estimated in part based on the survey presented in APPENDIX A - EXHIBIT I. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 Assumes that the required parking is provided in attached garages. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on estimates presented in the February 2022 draft Housing Element. 6 Based on the Developer Fee per unit generated by the MARKET RATE ALTERNATIVE 7 Assumes a 5.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 9 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

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File Name: 1 23 23 Redlands Own; Pf CW TH Mod Page 15 of 26 Redlands Regular Meeting of 06-20-2023 592 of 1523
APPENDIX C - EXHIBIT II - TABLE 2

PROJECTED NET SALES REVENUE

CITYWIDE TOWNHOME PROTOTYPE

MODERATE INCOME REQUIREMENT

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Sales Revenue
Market Rate Units 1
Two-Bedroom Units 45 Units @ $525,000 /Unit $23,625,000 Three-Bedroom Units 23 Units @ $564,000 /Unit 12,972,000 Moderate Income Units 2
Two-Bedroom Units 2 Units @ $272,000 /Unit 544,000
Three-Bedroom Units 2 Units @ $292,500 /Unit 585,000
Total Gross Sales Revenue $37,726,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $1,132,000
Closing 2.0% Gross Sales Revenue 755,000
Warranty 0.5% Gross Sales Revenue 189,000
Total Cost of Sales ($2,076,000)
III. Net Revenue $35,650,000
1 2 See APPENDIX B.

Estimated in part based on the survey presented in APPENDIX A. The weighted average sales price equates to $375 per square foot of saleable area.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; Pf CW TH Mod Page 16 of 26 Redlands Regular Meeting of 06-20-2023 593 of 1523
APPENDIX C - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS

CITYWIDE TOWNHOME PROTOTYPE

MODERATE INCOME REQUIREMENT

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Funds Available for Development Costs
Net Revenue See APPENDIX C - EXHIBIT II - TABLE 2 $35,650,000 (Less) Threshold Developer Profit 1 7.9% Total Development Cost ($2,680,000) Total Funds Available for Development Costs $32,970,000 II. Total Development Cost See APPENDIX C - EXHIBIT II - TABLE 1 $33,884,000 III. Total Financial Impact ($914,000)
Developer Profit 5.2% Total Development Cost
% Price Increase to Offset Impact 2.5% Market Rate Units 1 Based on the profit as a percentage of Total Development Cost estimated to be generated by the MARKET RATE ALTERNATIVE.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; Pf CW TH Mod Page 17 of 26 Redlands Regular Meeting of 06-20-2023 594 of 1523

APPENDIX D

PRO FORMA ANALYSES

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

CITYWIDE DETACHED SINGLE FAMILY HOME PROTOTYPE
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Own; App D CW SFH Page 18 of 26 Redlands Regular Meeting of 06-20-2023 595 of 1523

REDLANDS, CALIFORNIA

APPENDIX D - EXHIBIT I

MARKET RATE ALTERNATIVE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

PRO FORMA ANALYSIS

CITYWIDE DETACHED SINGLE FAMILY HOME PROTOTYPE
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; Pf CW SFH Mkt Page 19 of 26 Redlands Regular Meeting of 06-20-2023 596 of 1523
APPENDIX D - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS

MARKET RATE ALTERNATIVE

CITYWIDE DETACHED SINGLE FAMILY HOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 435,600 Sf of Land $15 /Sf of Land $6,534,000 II. Direct Costs 2
On- and Off-Site Improvements 435,600 Sf of Land $25 /Sf of Land $10,890,000 Parking 3 120 Spaces $0 /Space 0
Building Costs 142,200 Sf of GBA $135 /Sf of GBA 19,197,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 6,017,000 Total Direct Costs $36,104,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $2,166,000 Public Permits & Fees 5 60 Units $53,200 /Unit 3,192,000 Taxes, Insurance, Legal & Accounting 1.5% Direct Costs 542,000 Marketing 60 Units $2,500 /Unit 150,000
Developer Fee 3.0% Gross Sales Revenue 1,810,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 393,000 Total Indirect Costs $8,253,000
IV. Financing Costs
Interest During Construction 6 $2,079,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 458,000 Total Financing Costs $2,537,000
V. Total Construction Cost 60 Units $782,000 /Unit $46,894,000 Total Development Cost 60 Units $890,000 /Unit $53,428,000 1 Estimated in part based on the survey presented in APPENDIX A - EXHIBIT I. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 Assumes that the required parking is provided in attached garages. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on estimates presented in the February 2022 draft Housing Element. 6 Assumes a 5.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 8 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

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File Name: 1 23 23 Redlands Own; Pf CW SFH Mkt Page 20 of 26 Redlands Regular Meeting of 06-20-2023 597 of 1523
APPENDIX D - EXHIBIT I - TABLE 2

PROJECTED NET SALES REVENUE

MARKET RATE ALTERNATIVE

CITYWIDE DETACHED SINGLE FAMILY HOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Sales Revenue 1
Three-Bedroom Units 18 Units @ $810,000 /Unit $14,580,000 Four-Bedroom Units 24 Units @ $986,000 /Unit 23,664,000 Five-Bedroom Units 18 Units @ $1,228,000 /Unit 22,104,000 Total Gross Sales Revenue $60,348,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $1,810,000
Closing 2.0% Gross Sales Revenue 1,207,000
Warranty 0.5% Gross Sales Revenue 302,000
Total Cost of Sales ($3,319,000)
III. Net Revenue $57,029,000
1 Estimated in part based on the survey presented in APPENDIX A. The weighted average sales price equates to $424 per square foot of saleable area.

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APPENDIX D - EXHIBIT I - TABLE 3

PROJECTED DEVELOPER PROFIT

MARKET RATE ALTERNATIVE

CITYWIDE DETACHED SINGLE FAMILY HOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Net Revenue See APPENDIX D - EXHIBIT I - TABLE 2 $57,029,000 II. Total Development Cost See APPENDIX D - EXHIBIT I - TABLE 1 $53,428,000 III. Developer Profit 6.7% Total Development Cost $3,601,000 Prepared by: Keyser Marston Associates, Inc.

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INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA

APPENDIX D - EXHIBIT II

PRO FORMA ANALYSIS

CITYWIDE DETACHED SINGLE FAMILY HOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT

MODERATE INCOME REQUIREMENT
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; Pf CW SFH Mod Page 23 of 26 Redlands Regular Meeting of 06-20-2023 600 of 1523
APPENDIX D - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS

CITYWIDE DETACHED SINGLE FAMILY HOME PROTOTYPE

MODERATE INCOME REQUIREMENT

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Land Acquisition Costs 1 435,600 Sf of Land $15 /Sf of Land $6,534,000 II. Direct Costs 2
On- and Off-Site Improvements 435,600 Sf of Land $25 /Sf of Land $10,890,000 Parking 3 120 Spaces $0 /Space 0
Building Costs 142,200 Sf of GBA $135 /Sf of GBA 19,197,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 6,017,000 Total Direct Costs $36,104,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $2,166,000 Public Permits & Fees 5 59 Units $53,200 /Unit 3,139,000 Taxes, Insurance, Legal & Accounting 1.5% Direct Costs 542,000 Marketing 59 Units $2,500 /Unit 148,000
Developer Fee 6 59 Units $30,167 /Unit 1,780,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 389,000 Total Indirect Costs $8,164,000
IV. Financing Costs
Interest During Construction 7 $1,959,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 441,000 Total Financing Costs $2,400,000
V. Total Construction Cost 59 Units $791,000 /Unit $46,668,000 Total Development Cost 59 Units $902,000 /Unit $53,202,000 1 Estimated in part based on the survey presented in APPENDIX A - EXHIBIT I. 2 Direct costs assume that prevailing wage requirements will NOT be imposed on the Project. 3 Assumes that the required parking is provided in attached garages. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on estimates presented in the February 2022 draft Housing Element. 6 Based on the Developer Fee per unit generated by the MARKET RATE ALTERNATIVE 7 Assumes a 5.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 8 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

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File Name: 1 23 23 Redlands Own; Pf CW SFH Mod Page 24 of 26 Redlands Regular Meeting of 06-20-2023 601 of 1523
APPENDIX D - EXHIBIT II - TABLE 2

PROJECTED NET SALES REVENUE

CITYWIDE DETACHED SINGLE FAMILY HOME PROTOTYPE

MODERATE INCOME REQUIREMENT

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Gross Sales Revenue
Market Rate Units 1
Three-Bedroom Units 17 Units @ $810,000 /Unit $13,770,000 Four-Bedroom Units 23 Units @ $986,000 /Unit 22,678,000 Five-Bedroom Units 17 Units @ $1,228,000 /Unit 20,876,000 Moderate Income Units 2
Three-Bedroom Units 1 Unit @ $262,800 /Unit 263,000
Four-Bedroom Units 1 Unit @ $270,400 /Unit 270,000
Five-Bedroom Units 1 Unit @ $278,100 /Unit 278,000
Total Gross Sales Revenue $58,135,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $1,744,000
Closing 2.0% Gross Sales Revenue 1,163,000
Warranty 0.5% Gross Sales Revenue 291,000
Total Cost of Sales ($3,198,000)
III. Net Revenue $54,937,000
1 2 See APPENDIX B.

Estimated in part based on the survey presented in APPENDIX A. The weighted average sales price equates to $424 per square foot of saleable area.

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File Name: 1 23 23 Redlands Own; Pf CW SFH Mod Page 25 of 26 Redlands Regular Meeting of 06-20-2023 602 of 1523
APPENDIX D - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS

CITYWIDE DETACHED SINGLE FAMILY HOME PROTOTYPE

MODERATE INCOME REQUIREMENT

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
I. Funds Available for Development Costs
Net Revenue See APPENDIX D - EXHIBIT II - TABLE 2 $54,937,000 (Less) Threshold Developer Profit 1 6.7% Total Development Cost ($3,586,000) Total Funds Available for Development Costs $51,351,000 II. Total Development Cost See APPENDIX D - EXHIBIT II - TABLE 1 $53,202,000 III. Total Financial Impact ($1,851,000)
Developer Profit 3.3% Total Development Cost
% Price Increase to Offset Impact 3.2% Market Rate Units 1 Based on the profit as a percentage of Total Development Cost estimated to be generated by the MARKET RATE ALTERNATIVE.

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ATTACHMENT 5

IN-LIEU FEE CALCULATIONS
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; Att 5 ILF Page 1 of 5
Redlands Regular Meeting of 06-20-2023 604 of 1523

APPENDIX A

IN-LIEU FEE CALCULATIONS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Apt; App A ILF Page 2 of 5
Redlands Regular Meeting of 06-20-2023 605 of 1523

APPENDIX A

IN-LIEU FEE CALCULATIONS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Transit Village 1
Prototypes
Transit Village 2
Prototypes R-3 Prototypes
I. Rent Difference
A. Studio Units
Market Rents 1 $0 $2,090 $0
Affordable Rent 2 0 1,094 0
Difference $0 $996 $0
B. One-Bedroom Units
Market Rents 1 $2,240 $2,310 $2,100
Affordable Rent 2 1,240 1,240 1,240
Difference $1,000 $1,070 $860
C. Two-Bedroom Units
Market Rents 1 $2,750 $2,880 $2,250
Affordable Rent 2 1,351 1,351 1,351
Difference $1,399 $1,529 $899
D. Three-Bedroom Units
Market Rents 1 $2,990 $0 $2,630
Affordable Rent 2 1,459 0 1,459
Difference $1,531 $0 $1,171
II. Distribution of Total Units 3
Studio Units 0% 20% 0%
One-Bedroom Units 45% 50% 35%
Two-Bedroom Units 50% 30% 55%
Three-Bedroom Units 5% 0% 10%
III. Annual Rent Difference Per Inclusionary Unit $14,713 $14,315 $10,951 Less: Property Tax Difference 4 (3,980) (3,870) (2,960) Net Annual Rent Difference Per Inclusionary Unit $10,733 $10,445 $7,991 IV. Assumptions
Total Units 60 232 135
Total Leasable Area 58,350 184,880 117,250
Weighted Avg Unit Size (Sf) 973 797 869
Inclusionary Housing Percentage 9% 9% 9%
Inclusionary Units 5 21 12
V. Supportable In-Lieu Fee
Weighted
Averages
Affordability Gap Per Inclusionary Unit 5 $205,000 $198,000 $164,000 $188,200 Total $1,025,000 $4,158,000 $1,968,000 $7,151,000
Per Total Unit in the Project $17,080 $17,920 $14,580 $16,750 Per Square Foot of Total Leasable Area $17.60 $22.50 $16.80 $19.80 1 The market rents are drawn from the pro forma analyses. 2 See APPENDIX B.
3 Based on the unit mix distribution applied in the pro forma analysis. 4 Based on the rent differential capitalized at a 4.3% rate to establish the value, and a 1.15% property tax rate. 5 Based on the Net Annual Rent Difference Per Inclusionary Unit capitalized at the Threshold Return on Total Investment generated by each prototype apartment development.

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File name: 1 23 23 Redlands Apt; ILF Page 3 of 5
Redlands Regular Meeting of 06-20-2023 606 of 1523

APPENDIX B

IN-LIEU FEE CALCULATIONS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 1 23 23 Redlands Own; App B ILF Page 4 of 5
Redlands Regular Meeting of 06-20-2023 607 of 1523

APPENDIX B
IN-LIEU FEE CALCULATIONS (5% STANDARD)

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Citywide
Townhome
Prototype
Citywide Detached
Single Family
Home Prototype
I. Sales Price Difference
A. Two-Bedroom Units
Market Rate Sales Price 1 $525,000
Affordable Sales Price 2 272,000
Difference $253,000
B. Three-Bedroom Units
Market Rate Sales Price 1 $564,000 $810,000
Affordable Sales Price 2 292,500 262,800
Difference $271,500 $547,200
C. Four-Bedroom Units
Market Rate Sales Price 1 $986,000
Affordable Sales Price 2 270,400
Difference $715,600
D. Five-Bedroom Units
Market Rate Sales Price $1,228,000
Affordable Sales Price 278,100
Difference $949,900
II. Distribution of Total Units 3
Two-Bedroom Units 65%
Three-Bedroom Units 35% 30%
Four-Bedroom Units 40%
Five-Bedroom Units 30%
III. Assumptions
Total Units 72 60
Total Saleable Area 103,600 142,200
Weighted Avg Unit Size (Sf) 1,440 2,370
Inclusionary Housing Percentage 5% 5%
Inclusionary Units 4 3
IV. In-Lieu Fee
Affordability Gap Per Inclusionary Unit 4 $259,500 $735,400 Total In-Lieu Fee $1,038,000 $2,206,200
Per Total Unit in the Project $14,420 $36,770
Per Sf of Total Saleable Area $10.00 $15.50
1 The market rate sales prices are drawn from the pro forma analyses. 2 See APPENDIX B.
3 Based on the unit mix distribution applied in the pro forma analyses. 4 Based on unit mix distribution and the weighted average difference between the Market Rate Sales Prices and the Affordable Sales Prices.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 23 23 Redlands Own; ILF Page 5 of 5
Redlands Regular Meeting of 06-20-2023 608 of 1523
INCLUSIONARY HOUSING:

POLICY RECOMMENDATIONS
Prepared for:

City of Redlands
Prepared by:

Keyser Marston Associates, Inc.

January 30, 2023
Redlands Regular Meeting of 06-20-2023 609 of 1523
Inclusionary Housing: Policy Recommendations Page i
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023

TABLE OF CONTENTS
I. BACKGROUND .............................................................................................................................1 II. POLICY RECOMMENDATIONS ......................................................................................................2 A. INCLUSIONARY HOUSING INCOME AND AFFORDABILITY STANDARDS ..............................................................2 B. THRESHOLD PROJECT SIZE ....................................................................................................................3 C. AFFORDABLE HOUSING COST CALCULATION METHODOLOGY .......................................................................3 D. COVENANT PERIODS ...........................................................................................................................5 E. ALTERNATIVE MEANS OF FULFILLING INCLUSIONARY HOUSING OBLIGATIONS ..................................................5 F. INCLUSIONARY HOUSING DEVELOPMENT STANDARDS ..............................................................................13 III. IMPLEMENTATION RECOMMENDATIONS.................................................................................. 17 A. MARKETING REQUIREMENTS ..............................................................................................................17 B. INCLUSIONARY HOUSING GUIDELINES ...................................................................................................17 C. INCLUSIONARY HOUSING PROGRAM UPDATES ........................................................................................17 D. STAFFING PLAN................................................................................................................................17 IV. CASE STUDIES ........................................................................................................................ 18 A. APARTMENT PROJECT .......................................................................................................................18 B. OWNERSHIP HOUSING PROJECT ..........................................................................................................20 V. SUMMARY................................................................................................................................. 25 Redlands Regular Meeting of 06-20-2023 610 of 1523
Inclusionary Housing: Policy Recommendations Page 1
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 I. BACKGROUND
The City of Redlands (Redlands) is currently exploring the opportunity for creating an Inclusionary Housing program. To assist in this process, the City engaged Keyser Marston Associates, Inc. (KMA) to undertake the following tasks:

1. The preparation of a financial evaluation that tests the impacts created by the imposition of income and affordability restrictions on new residential development; and

2. The recommendation of policies to be incorporated into the Inclusionary Housing program.

As the first step in this process, KMA prepared the accompanying Inclusionary Housing: Financial Evaluation (Financial Evaluation). Based on the results of the Financial Evaluation, KMA prepared Inclusionary Housing program policy recommendations, which are presented in the following report.

This report is organized as follows:

1. The components of the recommended policies are identified.

2. The recommended implementation package is described.

3. Case studies are presented to compare the Inclusionary Housing options that could potentially be applied to hypothetical projects in Redlands.

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Inclusionary Housing: Policy Recommendations Page 2
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 II. POLICY RECOMMENDATIONS
KMA’s Inclusionary Housing policy recommendations cover the following topics:

1. The income and affordability standards to be applied by the Inclusionary Housing program.

2. The minimum residential project size that will trigger an Inclusionary Housing obligation.

3. The affordable housing cost calculation methodologies to apply.

4. The covenant periods under which the income and affordability standards will be imposed for apartment projects and ownership housing projects.

5. Alternative means of fulfilling the Inclusionary Housing requirements.

6. The development standards that should be imposed on the affordable housing units that are produced to fulfill the Inclusionary Housing requirements.

7. Implementation activities that should be undertaken by the City.

A. Inclusionary Housing Income and Affordability Standards

APARTMENT DEVELOPMENT
Based on all the factors considered in the Financial Evaluation, KMA concluded that a 9% low income Inclusionary Housing obligation can be supported by apartment development projects.

It should be noted that developers commonly use the California Government Code Section 65915 et seq. (Section 65915) density bonus to reduce the financial impact created by Inclusionary Housing requirements. Based on the characteristics of the affordability options provided by Section 65915, projects that utilize the density bonus are likely to fulfill the affordable housing requirements with very low income units.

The City must agree to count the affordable units used to fulfill Section 65915 affordable housing requirements towards the Inclusionary Housing requirements that will be imposed on a project.1 This
means that a developer must be allowed to use the same affordable units to fulfill both the Inclusionary Housing requirements and the Section 65915 requirements. However, in order to exercise this option, the developer must apply the more stringent of the two programs’ requirements. 1 Latinos Unidos del Valle de Napa y Solano v. County of Napa, 217 Cal. App. 4th 1160 (Napa).

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Inclusionary Housing: Policy Recommendations Page 3
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 It is KMA’s opinion that the imposition of Inclusionary Housing requirements on apartment development will generate the following results:

1. Projects that can efficiently use the Section 65915 density bonus will use very low income units to fulfill the City’s Inclusionary Housing requirements.

2. Projects that cannot efficiently apply the Section 65915 density bonus will fulfill the Inclusionary Housing obligation with low income units.

OWNERSHIP HOUSING DEVELOPMENT
Based on the results of the Financial Evaluation, KMA concluded that a 5% moderate income Inclusionary Housing obligation can be supported by ownership housing development projects.

The vast majority of ownership housing development in Redlands is low density in nature. Based on this fact, and the more stringent requirements imposed by Section 65915 on ownership housing projects, it is unlikely that a significant number of ownership housing projects will make use of the density bonus benefits.

B. Threshold Project Size
The majority of Inclusionary Housing programs in California include a threshold project size below which projects are not subject to the affordable housing production requirements. Common thresholds fall between three and 10 units. KMA is recommending that the City set the threshold project size at 10 units.

C. Affordable Housing Cost Calculation Methodology

APARTMENT DEVELOPMENT
KMA recommends that the “Affordable Rents” be based on the following standards:

1. Low income rents should be based on 80% of area median income (AMI). This percentage of AMI is based on the standard imposed in Assembly Bill (AB) 1505.

2. The Section 65915 density bonus uses the affordable housing cost calculation methodology defined in California Health & Safety Code (H&SC) Section 50053.

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Inclusionary Housing: Policy Recommendations Page 4
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023

OWNERSHIP HOUSING DEVELOPMENT
KMA recommends that the City apply the H&SC Section 50052.5 methodology to the calculation of “Affordable Sales Prices”. In addition, the following specific calculation metrics are being recommended by KMA.

Benchmark Mortgage Interest Rate
The mortgage interest rate chosen to be applied in the calculations creates a significant impact on the Affordable Sales Price. In establishing a benchmark interest rate it is important to understand the following issues that are commonly faced by moderate income first time home buyers:

1. Credit history and scores that do not fall within the exceptional level required to obtain the lowest interest rate available in the marketplace;

2. Back-end ratios that are often higher than the typical ratios applied in conventional lenders’ underwriting standards for the lowest interest rate mortgages; and

3. There is a limited pool of mortgage lenders that are willing to provide loans on homes that are subject to income and affordability covenants. These lenders do not generally offer the lowest interest rates available in the marketplace.

Given that mortgage interest rates can be expected to fluctuate over time, KMA recommends that the City apply the following conservative methodology in setting the benchmark interest rate used in the Affordable Sales Price calculations:

1. KMA recommends that the benchmark mortgage interest rate be set on the first day of each calendar quarter.

2. In setting the benchmark interest rate, KMA recommends using the interest rate published by Freddie Mac for 30-year fixed interest rate fully amortizing mortgages.

Range of Allowable Home Buyer Down Payments
An Inclusionary Housing program is intended to target home buyers that could otherwise not afford to purchase a home in Redlands. To achieve that goal while minimizing the risk of defaults, KMA recommends that the following down payment requirements be imposed:

1. The minimum home buyer down payment should be set at 5% of the Affordable Sales Price:
a. At least 1% of the down payment must be provided from the home buyer’s own funds.

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Inclusionary Housing: Policy Recommendations Page 5
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 b. Gifts funds may be obtained by the home buyer to fulfill the balance of the 5% requirement.

2. The maximum down payment amount should be set at 20% of the Affordable Sales Price:

3. Gift funds of up to $50,000 may be used for the down payment amount that falls between 1% and 20% of the Affordable Sales Price.

D. Covenant Periods

APARTMENT DEVELOPMENT
KMA recommends that the covenants for the affordable apartment units be required to remain in place for as long as the property is developed with a residential use, but for not less than 55 years.

Following the 55-year term, the covenant should only be removed if at some point the property is rezoned and subsequently put to a non-residential use.

OWNERSHIP HOUSING DEVELOPMENT
KMA recommends that the covenant period for affordable ownership housing units be set at one cumulative 45-year period. Within that one 45-year period the home must be sold and resold to moderate income households at the then current Affordable Sales Price.

E. Alternative Means of Fulfilling Inclusionary Housing Obligations AB 1505, which was adopted by the State Legislature in 2017, includes a provision that requires jurisdictions to provide alternative means of complying with the income and affordability requirements imposed by an Inclusionary Housing program. AB 1505 identifies the following potential alternatives to the on-site production of affordable housing units:2

1. Payment of a fee in lieu of producing affordable units;

2. Off-site development of affordable units;

3. Land dedication; and

4. Acquisition and rehabilitation of existing units.
2 AB 1505 only applies the restrictions imposed on apartment development. However, the provision of alternative means of compliance is a best practice, and is commonly provided to ownership housing development as well.

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Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 Jurisdictions have the discretion to provide any of these alternatives, or additional alternatives that are not listed in AB 1505, as long as alternative means of compliance are offered.

IN-LIEU FEE PAYMENT
In-Lieu Fee Payment Thresholds
KMA recommends that the City allow developers to pay a fee in lieu of producing affordable units in the following cases:

1. The following options should be offered to proposed apartment projects:
a. Inclusionary Housing requirements have a disproportionate impact on smaller projects, because there are fewer market rate units available to spread the impact created by the income and affordability standards. KMA recommends that an in-lieu fee payment be allowed by right for apartment projects with 22 or fewer units. 3 b. As a baseline, apartment projects with more than 22 units should be required to produce the requisite number of “Inclusionary Units”. However, the City Council should be provided with the discretion to allow an in-lieu fee to be paid for apartment projects with more than 22 units if they are deemed to exhibit “Extreme Economic Hardship” circumstances as defined below.

Demonstration that new construction of the required affordable units would create an unreasonable hardship due to such factors as project size, site constraints, and/or excessively large Affordability Gaps. The ultimate burden is on the developer to prove that none of the affordable housing production alternatives provided in the Inclusionary Housing Ordinance can be used without creating an extreme economic hardship on the project. One manner in which this can be achieved is for the developer to demonstrate that the imposition of the affordable housing production requirements would violate the California and/or United States Constitutions.

2. Ownership housing projects of any size should be provided with the option to pay an in-lieu fee.

3. An in-lieu fee should be allowed to be paid for any fractional Inclusionary Unit obligation. 3 For a 22 units project a 9% low income requirements generates a 1.98 unit Inclusionary Housing obligation. This is as close to a to a whole number obligation as is mathematically possible.

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Inclusionary Housing: Policy Recommendations Page 7
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 The key advantages of this strategy are:

1. The City can target the use of the in-lieu fee revenue to projects undertaken by developers that have specific expertise in the development and operation of affordable housing projects.

2. The in-lieu fee revenues can be used as a leveraging source for dedicated affordable housing projects that have access to outside public funding sources. This leveraging creates a more cost-efficient way to achieve deeper affordability than can be supported by an Inclusionary Housing requirement alone.

In-Lieu Fee Schedules
KMA recommends that the City assess the in-lieu fee based on the leasable area in apartment projects and the saleable area in ownership housing projects. This measurement takes the unit sizes into account, which more equitably allocates the in-lieu fee payment obligation. Based on that assumption, and the Financial Evaluation results, KMA recommends that the following the following in-lieu fee schedules be applied:

Recommended In-Lieu Fee Payment Schedules
Per Square Foot of Total Leasable or Saleable Area in the Project Number of Units Apartment Projects
Townhome & Small
Lot Home
Development 4
Detached Single
Family Home
Development
10 $1.52 $0.77 $1.19
11 $3.05 $1.54 $2.38
12 $4.57 $2.31 $3.58
13 $6.09 $3.08 $4.77
14 $7.62 $3.85 $5.96
15 $9.14 $4.62 $7.15
16 $10.66 $5.38 $8.35
17 $12.18 $6.15 $9.54
18 $13.71 $6.92 $10.73
19 $15.23 $7.69 $11.92
20 $16.75 $8.46 $13.12
21 $18.28 $9.23 $14.31
22+ $19.80 $10.00 $15.50
4 “Small Lot Home Development” is defined as homes constructed on lots that are 4,500 square feet and smaller.

Redlands Regular Meeting of 06-20-2023 617 of 1523
Inclusionary Housing: Policy Recommendations Page 8
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 Assuming the City chooses to allow in-lieu fees to be paid for any fractional Inclusionary Unit obligation, the following in-lieu fee schedule should be applied:

Fractional In-Lieu Fee Payment Calculations
Per Square Foot of the Leasable Area of One Unit in the Apartment Development
Net Affordability Gap Per Inclusionary Unit $188,200
Average Unit Size (Square Feet of Leasable Area) 973
In-Lieu Fee Per Square Foot of One Unit $193.50
Fractional In-Lieu Fee:

Per Square Foot of
One Unit
Total Fractional InLieu Fee:

Prototype Apartment
Development
.1 $19.40 $18,870
.2 $38.70 $37,640
.3 $58.10 $56,500
.4 $77.40 $75,270
.5 $96.80 $94,140
.6 $116.10 $112,910
.7 $135.50 $131,770
.8 $154.80 $150,540
.9 $174.20 $169,410
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Inclusionary Housing: Policy Recommendations Page 9
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 Fractional In-Lieu Fee Payment Calculations
Per Square Foot of the Saleable Area of One Unit in the Townhome or Small Lot Home Development
Ownership Housing Development
Net Affordability Gap Per Inclusionary Unit $259,500
Average Unit Size (Square Feet of Saleable Area) 1,440
In-Lieu Fee Per Square Foot of One Unit $180.20
Fractional In-Lieu Fee:

Per Square Foot of
One Unit
Total Fractional InLieu Fee:

Prototype Ownership
Housing Development
.1 $18.00 $25,920
.2 $36.00 $51,840
.3 $54.10 $77,900
.4 $72.10 $103,820
.5 $90.10 $129,740
.6 $108.10 $155,660
.7 $126.10 $181,580
.8 $144.20 $207,650
.9 $162.20 $233,570
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Inclusionary Housing: Policy Recommendations Page 10
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 Fractional In-Lieu Fee Payment Calculations
Per Square Foot of the Saleable Area of One Unit in the Detached Single Family Home Development
Ownership Housing Development
Net Affordability Gap Per Inclusionary Unit $735,400
Average Unit Size (Square Feet of Saleable Area) 2,370
In-Lieu Fee Per Square Foot of One Unit $310.30
Fractional In-Lieu Fee:

Per Square Foot of
One Unit
Total Fractional InLieu Fee:

Prototype Ownership
Housing Development
.1 $31.00 $73,470
.2 $62.10 $147,180
.3 $93.10 $220,650
.4 $124.10 $294,120
.5 $155.20 $367,820
.6 $186.20 $441,290
.7 $217.20 $514,760
.8 $248.20 $588,230
.9 $279.30 $661,940
In-Lieu Fee Payment Timing
Developers should be required to pay the in-lieu fee when building permits are obtained for the project. However, for phased projects the developer should be allowed to pay a pro rata share of the in-lieu fee concurrently with the issuance of building permits for each development phase.

OFF-SITE PRODUCTION OF THE REQUIRED INCLUSIONARY UNITS
Apartment Development
Off-site production of Inclusionary Units should not be offered as an Inclusionary Housing fulfillment option for apartment development projects. It is KMA’s opinion that, from a public policy perspective, it is better to integrate market rate and affordable rental units into the same project.

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Inclusionary Housing: Policy Recommendations Page 11
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 Ownership Housing Development
KMA recommends that the developers of ownership housing projects be given the option to fulfill the Inclusionary Housing obligation in one of the following ways:

1. The off-site production of affordable apartment units; or

2. The creation of a parcel within an ownership housing development site on which affordable apartment units are constructed.

For both of these options, KMA recommends that the Inclusionary Housing requirement be set as follows:

1. The Inclusionary Housing percentage should be set at 9% of the total number of units in the market rate project; and

2. The units should be required to be rented at the low income standard.

LAND DEDICATION
The City Council should have the discretion, but not the requirement, to approve a developer’s proposal to dedicate property in lieu of producing Inclusionary Units. KMA recommends that the following threshold requirements be imposed for any property put forth for City Council consideration:

1. The developer must be willing to convey the property to the City at no cost.

2. The developer must provide evidence of the following when the land dedication proposal is submitted:
a. The developer must have site control with lien-free title. Any encumbrances or easements that adversely impact the property’s title must be disclosed and factored into the estimated value of the interests proposed to be conveyed to the City. b. The property cannot contain any hazardous materials at the time the land dedication proposal is submitted:
i. The developer must disclose whether any hazardous materials were previously contained on the site; and
ii. If hazardous materials were previously remediated, the developer must provide evidence that the cleanup was performed in accordance with applicable law.

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Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 c. The property cannot have been improved with any residential use for at least five years prior to the submission of a land dedication proposal.
d. Payment in full of all property taxes and special taxes must have been made when the proposal is submitted, and again prior to conveyance of the property to the City.

3. It is assumed that the dedicated site would subsequently be developed with an affordable apartment project. Based on that assumption, KMA recommends that the following Inclusionary Housing obligations be applied:
a. The requirement should be set at 15% of the of units in the project that triggered the Inclusionary Housing obligation; and
b. The income and affordability standards should be set at the very low income level.

4. The property must embody the following characteristics:
a. The land dedication site must meet the following conditions:
i. The site’s General Plan and zoning standards must allow for a residential use at a density sufficient to allow for the requisite number of Inclusionary Units to be developed.
ii. The site must consist of at least one acre of land irrespective of the number of Inclusionary Units required to be provided.
iii. The site must be suitable in terms of size, configuration, and physical characteristics to allow for the requisite number of Inclusionary Units to be developed on a cost efficient basis.
b. The property must be fully served by the necessary infrastructure prior to conveyance to the City.

5. KMA recommends that the City only re-convey dedicated properties to developers with experience developing affordable apartment projects targeted to very low income households.

To assist the City in evaluating land dedication proposals, the prospective developer should be required to submit the following documents:
a. A conceptual site plan and narrative description of a project that could be developed on the property.

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Inclusionary Housing: Policy Recommendations Page 13
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 b. A identification of the income and affordability restrictions proposed to be imposed. c. A pro forma analysis that quantifies any financial gap associated with the identified development scope, and describes how this financial gap will be filled. d. If a Section 65915 density bonus will be required, the terms of the requested density bonus; incentives and concessions; and development standards waivers must be identified.

Prior to submitting a proposal to the City Council for consideration, the City staff should independently evaluate the information submitted by the developer. Based on that review, the City should determine whether the proposal meets the defined threshold standards.

ACQUISITION AND REHABILITATION OF EXISTING UNITS
One reason the City is considering the creation of an Inclusionary Housing program is to assist in meeting its Regional Housing Needs Assessment (RHNA) targets. The only way that the acquisition and rehabilitation of existing units can be used to obtain RHNA credit is if the following conditions are met:

1. The project(s) must be identified in the City’s Housing Element; and

2. The units must be in need of substantial rehabilitation as defined by H&SC Section 33413 (2) (A) (iv).

The City has recently adopted the Sixth Cycle Housing Element for the period between 2021 and 2029.

Given that no existing properties were identified as acquisition and rehabilitation opportunities, it will not be possible to count this type of project towards the RHNA obligation. As such, KMA recommends that acquisition and rehabilitation of existing projects not be offered as an Inclusionary Housing fulfillment option.

F. Inclusionary Housing Development Standards

ON-SITE PRODUCTION OPTION
Apartment Development
KMA recommends that the following standards be applied to the on-site production of Inclusionary Units within market rate apartment projects:

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Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023

1. The affordable housing units must be constructed concurrently with the market rate project, and they must be dispersed throughout the project.

2. The affordable housing units should be required to comply with the following development scope requirements:
a. The bedroom mix for the Inclusionary Units must be proportional to the bedroom mix of the market rate units. However, the Inclusionary Units may be smaller in square footage than the market rate units.
b. The interior improvements of the Inclusionary Units must comport with defined quality standards such as those applied California Tax Credit Allocation Committee. 5 The
market rate units in the project can include enhanced interior improvements.

Ownership Housing Development
KMA recommends that the following standards be applied to the on-site production of Inclusionary Units within market rate ownership housing projects:

1. The Inclusionary Units must be dispersed throughout the project.

2. The affordable housing units must be built concurrently with the market rate project. The Inclusionary Units can be constructed in phases if the market rate project is being developed in phases.

3. The affordable housing units must comply with the following development scope requirements:
a. The bedroom mix for the Inclusionary Units must be proportional to the bedroom mix of the market rate units. However, the Inclusionary Units may be smaller in square footage than the market rate units.
b. The exterior improvements for the Inclusionary Units must be comparable to the exterior improvements for the market rate units.
c. The interior improvements for the Inclusionary Units must meet the following standards:
5 California Tax Credit Allocation Committee Regulations Implementing the Federal and State Low Income Housing Tax Credit Laws Section 10325 (f) (7).

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Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 i. The interior finishes must be comparable to the base level interior finishes provided in the market rate units; and
ii. The appliance packages must be the same as the packages provided in the base level market rate units.

OFF SITE AND PARCELIZATION PRODUCTION OPTIONS
If a developer chooses to fulfill the Inclusionary Housing obligation off site, or by creating a separate parcel on the development site for the affordable units, the following development standards should be imposed:

1. The Inclusionary Housing obligation must be fulfilled with apartment units.

2. An off-site development parcel must be located within close proximity of the market rate project that is subject to the Inclusionary Housing obligations.

3. Design, building quality and maintenance standards should be based on a defined standard such as the requirements imposed by the Tax Credit program.

4. The bedroom mix is not be required to match the unit mix provided in the market rate ownership housing project. However, the following standards should be imposed:
a. The percentage of studio units is capped at 15%;
b. At least 40% of the units must include two or more bedrooms; and c. The remaining units must include one or more bedrooms.

5. Under the following circumstances the developer of the market rate project should be allowed to enter into an agreement with an affordable housing developer to construct, own and operate the affordable housing project:
a. The affordable housing developer must have recent relevant experience and be approved by the City.
b. The affordable housing developer may not request any financial assistance from the City.
c. The developer may apply to use the Section 65915 density bonus and the statutorily established number of incentives or concessions.

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Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023

6. The affordable housing project must be constructed prior to or concurrently with the market rate project that triggered the Inclusionary Housing obligation. If the market rate project is proposed to be developed in phases, the affordable housing units should be required to be developed along with the first phase of the market rate project.

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Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 III. IMPLEMENTATION RECOMMENDATIONS
As part of the implementation process for the Inclusionary Housing program KMA recommends that the City take the following actions:

A. Marketing Requirements
The City wishes to focus the marketing effort in a manner that focuses on households that live and/or work in Redlands. To that end, the Inclusionary Housing regulations will require developers to prominently advertise the Inclusionary Units in local publications. In addition, information pertaining to Inclusionary Units that are being developed and marketed should be placed on the City’s website.

B. Inclusionary Housing Guidelines
Manuals should be prepared that detail the Inclusionary Housing policies and procedures that will be applied to residential projects that are subject to the Inclusionary Housing program requirements. Due to the significant differences in the requirements, separate manuals should be prepared for apartment development and ownership housing development.

C. Inclusionary Housing Program Updates
The Inclusionary Housing program should be updated at regular intervals:

1. The entire program should be re-evaluated at least every five years.

2. To allow in-lieu fees to keep pace with changes in the market place during the intervening periods, the in-lieu fees should continue to be adjusted each year based on the percentage change in new home prices in San Bernardino County as published annually by the Real Estate Research Council (RERC).

D. Staffing Plan
A staffing plan should be created for managing the development process and the ongoing monitoring of the Inclusionary Units once they are built.

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Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 IV. CASE STUDIES
The following sections of this report describe case studies for a hypothetical apartment project and a hypothetical ownership housing project. The case studies identify each of the recommended options for fulfilling the Inclusionary Housing requirements.

It is important to note that these case studies are based on the policy recommendations provided in this report. If the City ultimately chooses to apply different requirements, these case studies will need to be modified accordingly.

A. Apartment Project
The development scope used in the apartment project case study can be described as follows:

1. The market rate project includes 100 apartment units.

2. The development site consists of market 3.33 acres of land area, which represents a density of 30 units per acre.

The unit mix is presented in the following table:

Unit Mix - Hypothetical Apartment Project
Number of
Bedrooms
Number of
Units
Percentage of
Total
Leasable
Square Feet
1 35 35% 750
2 55 55% 900
3 10 10% 1,100
Total 100 100% 86,570

ON-SITE PRODUCTION OF AFFORDABLE APARTMENT UNITS
A developer may select the on-site production option by right. The requirements associated with this alternative are:

1. Apartment development projects are subject to a 9% low income requirement. This equates to a nine unit Inclusionary Housing requirement for a 100 unit project.

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Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023

2. To match the distribution of the bedroom types included in the market rate apartment project, the Inclusionary Units must be provided in the following mix:

Affordable Housing Unit Mix
On-Site Fulfillment of the Inclusionary Housing Requirement Apartment Project
Number of
Bedrooms
Number of
Units
Percentage of
Total
1 3 33%
2 5 56%
3 1 11%
Total 9 100%

3. The Inclusionary Units must be dispersed throughout the market rate project and developed concurrently with the market rate project.

IN-LIEU FEE PAYMENT
Under the recommended structure, a 100 unit apartment project would not be allowed to pay a fee to fulfill the Inclusionary Housing obligation. However, if the developer can prove an Extreme Economic Hardship, the City Council has the discretion to approve the payment of an in lieu fee.

Based on the in-lieu fee schedule being recommended by KMA, the hypothetical apartment project would generate the following in-lieu fee payment obligation:

1. The total leasable area of the 100 unit market rate project is 86,750 square feet.

2. The in-lieu fee for projects that include 22 or more units is $19.80 per square foot of leasable area.

3. The resulting total in-lieu fee is $1.7 million, which equates to $17,200 per unit in the market rate project.

OFF-SITE PROJECTION OF AFFORDABLE APARTMENT UNITS
This alternative cannot be used for the fulfillment of the Inclusionary Housing requirement for a market rate apartment development project.

Redlands Regular Meeting of 06-20-2023 629 of 1523
Inclusionary Housing: Policy Recommendations Page 20
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023

LAND DEDICATION
The use of the land dedication option should be subject to City Council approval. Proposals must meet all the following requirements in order to be presented to the City Council for consideration:

1. The Inclusionary Housing obligation is set at 15% of the units being constructed in the market rate project. This equates to 15 units for the hypothetical 100 unit project.

2. The income and affordability standard is set at the very low income level.

3. At an assumed allowable density of 30 units per acre, 15 units could be developed on.5 acres of land. However, the recommended minimum site area for the land dedication alternative is set at one acre. Thus, in this case study example a developer would be required to dedicate at least one acre of land to the City.

4. The unit mix requirements are:

Affordable Housing Unit Mix
Land Dedication to Fulfill the Inclusionary Housing Requirement Apartment Project
Number of
Bedrooms
Number of
Units Percentage of Total
Studio 2 No more than 15%
1 7 47%
2+ 6 No less than 40%
Total 15 100%

5. The developer must submit a conceptual plan and a pro forma analysis to demonstrate that an apartment project that includes 15 very low income units will be feasible with no financial contribution from the City.

B. Ownership Housing Project
The development scope used in the ownership housing project case study can be described as follows:

1. The market rate project consists of 120 detached single family homes.

2. The development site consists of 20 acres, which represents a density of six units per acre.

Redlands Regular Meeting of 06-20-2023 630 of 1523
Inclusionary Housing: Policy Recommendations Page 21
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 The unit mix is presented in the following table:

Unit Mix - Hypothetical Ownership Housing Project
Detached Single Family Home Development
Number of
Bedrooms
Number of
Units
Percentage of
Total
Saleable
Square Feet
3 24 20% 1,800
4 60 50% 2,400
5 36 30% 2,900
Total 120 100% 291,600

ON-SITE PRODUCTION OF AFFORDABLE OWNERSHIP HOUSING UNITS The requirements associated with the on-site production alternative are:

1. Ownership housing development projects are subject to a 5% moderate income requirement.

This equates to a six unit Inclusionary Housing requirement for a 120 unit project.

2. To match the distribution of the bedroom types included in the market rate detached single family home project, the Inclusionary Units must be provided in the following mix:

Affordable Housing Unit Mix
On-Site Fulfillment of the Inclusionary Housing Requirement Ownership Housing Project
Detached Single Family Home Development
Number of
Bedrooms
Number of
Units
Percentage of
Total
3 1 17%
4 3 50%
5 2 33%
Total 6 100%

3. The Inclusionary Units must be dispersed throughout the market rate project and developed concurrently with the market rate project.

Redlands Regular Meeting of 06-20-2023 631 of 1523
Inclusionary Housing: Policy Recommendations Page 22
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023

IN-LIEU FEE PAYMENT
Under the recommended structure, the developer of any ownership housing project would be allowed to pay a fee in lieu of producing affordable housing units. Based on the in-lieu fee schedule being recommended by KMA, the hypothetical ownership housing project would generate the following inlieu fee payment obligation:

1. The total saleable area of the 120 unit market rate project is 291,600 square feet.

2. The in-lieu fee for detached single family home projects that include 22 or more units is $15.50 per square foot of saleable area.

3. The resulting total in-lieu fee is $4.5 million, which equates to $37,700 per unit in the market rate project.

OFF-SITE PRODUCTION OR PARCELIZATION OF THE OWNERSHIP HOUSING PROJECT SITE A developer may select the off-site production or parcelization option by right. However, the City Council has the following approval rights:

1. For the off-site production option: Approval rights over the development site’s location.

2. For the parcelization option: Approval rights over the parcel size and the location within the original development site.

The fulfillment requirements imposed by both options are:

1. The Inclusionary Housing obligation must be fulfilled with the development of affordable apartment units.

2. A 9% Inclusionary Housing requirement is imposed. This equates to an 11 unit requirement.

3. The income and affordability restrictions are set at the low income level.

4. To fulfill the recommended unit distribution standards, the off-site affordable housing units would be required to be provided in the following mix:

Redlands Regular Meeting of 06-20-2023 632 of 1523
Inclusionary Housing: Policy Recommendations Page 23
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 Affordable Housing Unit Mix
Off-Site Production or Parcelization of the
Ownership Housing Development Project Site
Affordable Apartment Units
Number of
Bedrooms
Number of
Units Percentage of Total
Studio 1 No more than 15%
1 5 45%
2+ 5 No less than 40%
Total 11 100%

5. The affordable apartment units must be constructed concurrently with the market rate ownership housing project.

LAND DEDICATION

1. The use of the land dedication option should be subject to City Council approval. Proposals must meet all the following requirements in order to be presented to the City Council for consideration:

2. The Inclusionary Housing obligation is set at 15% of the units being constructed in the market rate project. This equates to 18 units for the hypothetical 120 unit project.

3. It is assumed that the dedicated site would ultimately be developed with an affordable apartment project.

4. The income and affordability standard is set at the very low income level.

5. At an assumed allowable density of 30 units per acre, the dedicated site would need to include .6 acres of land area. Based on the recommended minimum site size required to use the land dedication alternative, this case study project would require the dedication of one acre of land to the City.

The unit mix requirements are:

Redlands Regular Meeting of 06-20-2023 633 of 1523
Inclusionary Housing: Policy Recommendations Page 24
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 Affordable Housing Unit Mix
Land Dedication to Fulfill the Inclusionary Housing Requirement Ownership Housing Project
Number of
Bedrooms
Number of
Units Percentage of Total
Studio 2 No more than 15%
1 8 44%
2+ 8 No less than 40%
Total 18 100%

6. The developer must submit a conceptual plan and a pro forma analysis to demonstrate that an apartment project that includes 18 very low income units will be feasible with no financial contribution from the City.

Redlands Regular Meeting of 06-20-2023 634 of 1523
Inclusionary Housing: Policy Recommendations Page 25
Keyser Marston Associates, Inc. 2301005.RED / 18500.004.002 January 30, 2023 V. SUMMARY
The preceding report presented KMA’s policy recommendations related to creating an Inclusionary Housing program. The recommended affordable housing requirements are based on the results of the accompanying Financial Evaluation, and on an evaluation of the array of fulfillment options that can be made available to the developers of market rate residential projects.

It should be City’s goal to create an Inclusionary Housing program that balances the interests of property owners and developers against the public benefits associated with increasing the inventory of affordable housing units in the community. To that end, KMA identified supportable Inclusionary Housing production requirements and provided a mix of alternative methods for fulfilling the requirements.

Redlands Regular Meeting of 06-20-2023 635 of 1523
777 SOUTH FIGUEROA STREET, SUITE 2555  LOS ANGELES, CALIFORNIA 90017  PHONE 213.622.8095 2204004.RED:KHH
WWW.KEYSERMARSTON.COM 18500.004.001
ADVISORS IN:

Real Estate
Affordable Housing
Economic Development

BERKELEY
A. Jerry Keyser
Timothy C. Kelly
Debbie M. Kern
David Doezema

LOS ANGELES
Kathleen H. Head
James A. Rabe
Gregory D. Soo-Hoo
Kevin E. Engstrom
Julie L. Romey
Tim R. Bretz

SAN DIEGO
Paul C. Marra
Linnie A. Gavino

MEMORANDUM
To: Brian Desatnik, Director of Development Services
City of Redlands
From: Kathleen Head
Date: April 8, 2023
Subject: Inclusionary Housing: Supplemental In-Lieu Fee Analysis In accordance with your request, Keyser Marston Associates, Inc. (KMA) prepared the following supplemental analysis to accompany the Inclusionary Housing: Financial Evaluation (Financial Evaluation) that KMA submitted on January 23, 2023. The purpose of this supplemental analysis is to evaluate the impacts created by modifying the market rate sales prices that were applied in the Financial Evaluation.

BACKGROUND
The Financial Evaluation presented the analysis and conclusions that led to the standards that KMA recommended for an Inclusionary Housing Program to be enacted by the City of Redlands (City). KMA presented the results of this analysis at a Planning Commission meeting held on February 14, 2023.

After public testimony and deliberation, the Planning Commission voted to recommend that a subcommittee be formed to seek out additional information from the residential development community. Specifically, the subcommittee was interested in obtaining input on the ownership housing development component of the Financial Evaluation.

Redlands Regular Meeting of 06-20-2023 636 of 1523
Brian Desatnik, City of Redlands April 8, 2023
Inclusionary Housing: Supplemental In-Lieu Fee Analysis Page 2 2204004.RED:KHH
18500.004.001
Following the outreach meetings, the City staff requested that KMA prepare a supplemental analysis based on the following assumptions:

1. Market rate sales price estimates:
a. In the Financial Evaluation the estimated market rate sales prices were based on the maximum prices per square foot of building area identified in the market survey.
b. In this supplemental analysis the market rate sales prices are based on the average sale prices per square foot of saleable area plus a 10% premium to reflect the additional value achievable by newly constructed homes.

2. The development cost estimates are not changed from the estimates used in the Financial Evaluation.

3. The 5% moderate income Inclusionary Housing requirement derived from the Financial Evaluation is applied in this supplemental analysis.

ANALYSIS
This supplemental analysis is organized as follows:

Appendix A Resale Home Sales Survey
Appendix B Affordable Sales Price Calculations
Appendix C In-Lieu Fee Calculations (5% Standard)
Market Rate Sales Price Estimates
The average resales prices, per square foot of saleable area, are based on the survey presented in Appendix A. The results are summarized in the following table:

Redlands Regular Meeting of 06-20-2023 637 of 1523
Brian Desatnik, City of Redlands April 8, 2023
Inclusionary Housing: Supplemental In-Lieu Fee Analysis Page 3 2204004.RED:KHH
18500.004.001
Average Sales Price Per Square Foot of Saleable Area
Townhomes
Single Family
Homes
Two Bedrooms $367
Three Bedrooms $301 $345
Four Bedrooms $282
Five Bedrooms $253
The average unit size applied in the analysis:

Average Unit Size (Square Foot of Saleable Area)
Townhomes
Single Family
Homes
Two Bedrooms 1,300
Three Bedrooms 1,700 1,800
Four Bedrooms 2,400
Five Bedrooms 2,900
When a 10% premium for new construction is applied, the market rate sales prices applied in this supplemental analysis are estimated as follows:

Market Rate Sales Price Estimates
Townhomes
Single Family
Homes
Two Bedrooms $525,000
Three Bedrooms $564,000 $684,000
Four Bedrooms $744,000
Five Bedrooms $807,000
Redlands Regular Meeting of 06-20-2023 638 of 1523
Brian Desatnik, City of Redlands April 8, 2023
Inclusionary Housing: Supplemental In-Lieu Fee Analysis Page 4 2204004.RED:KHH
18500.004.001
Affordable Sales Price Calculations
The Affordable Sales Price calculations are based on the same methodology as was applied in the Financial Evaluation. The only change to the assumptions is that the maintenance and insurance costs for the single family home units have been reduced to $100 per month based on feedback received from the development community during the outreach process.

The resulting Affordable Sales Price calculations are detailed in Appendix B, and summarized in the following table:

Affordable Sales Prices
Moderate Income Units
Townhomes
Single Family
Homes
Two Bedrooms $272,000
Three Bedrooms $292,500 $314,700
Four Bedrooms $326,100
Five Bedrooms $337,500
In-Lieu Fee Calculations
The in-lieu fee calculations are presented in Appendix C. The assumptions applied in the analysis can be summarized as follows:

1. The Affordability Gap per unit is defined as difference between the achievable market rate sales price and the defined Affordable Sales Price for a moderate income unit.

2. A 5% moderate income Inclusionary Housing requirement is applied.

3. The unit allocation applied in the analysis is presented in the following table:

Redlands Regular Meeting of 06-20-2023 639 of 1523
Brian Desatnik, City of Redlands April 8, 2023
Inclusionary Housing: Supplemental In-Lieu Fee Analysis Page 5 2204004.RED:KHH
18500.004.001
Unit Allocation
Townhomes
Single Family
Homes
Two Bedrooms 65%
Three Bedrooms 35% 30%
Four Bedrooms 40%
Five Bedrooms 30%
The in-lieu fee calculations generate the following results:

In-Lieu Fee Payment Amounts
5% Moderate Income Inclusionary Housing Standard
Ownership Housing Development
In-Lieu Fee
Townhome & Small
Lot Home
Development
Single Family Home
Development
Per Inclusionary Unit $259,500 $735,400
Per Square Foot of Saleable Area
in a 100% Market Rate Project $10.00 $8.80
Redlands Regular Meeting of 06-20-2023 640 of 1523

APPENDIX A

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: SUPPLEMENTAL ANALYSIS

REDLANDS, CALIFORNIA

HOME SALES SURVEY
Prepared by: Keyser Marston Associates, Inc.

File Name: 4 8 23 RSP_Same ILF Percentage; App A HSS Page 1 of 9 Redlands Regular Meeting of 06-20-2023 641 of 1523

APPENDIX A
RESALE HOME SALES SURVEY 1

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: SUPPLEMENTAL ANALYSIS

File name: 4 8 23 RSP_Same ILF Percentage; Home Resales Page 2 of 9 Redlands Regular Meeting of 06-20-2023 642 of 1523

APPENDIX A
RESALE HOME SALES SURVEY 1

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: SUPPLEMENTAL ANALYSIS

File name: 4 8 23 RSP_Same ILF Percentage; Home Resales Page 3 of 9 Redlands Regular Meeting of 06-20-2023 643 of 1523

APPENDIX A
RESALE HOME SALES SURVEY 1

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: SUPPLEMENTAL ANALYSIS

REDLANDS, CALIFORNIA
Unit Size (SF) Total Per SF Year Built
Sales Price
Address
1721 Camellia Ln Redlands 92374 2,010 $555,990 $277 2022 1459 Shannon Ave Redlands 92374 2,537 $798,990 $315 2019 1475 Galway Ave Redlands 92374 2,537 $675,000 $266 2020 1447 Wicklow Redlands 92374 2,537 $670,000 $264 2020
1495 Wicklow Ave Redlands 92374 2,537 $562,970 $222 2020 1458 Galway Ave Redlands 92374 2,537 $574,410 $226 2020 1504 Galway Ave Redlands 92374 2,537 $565,505 $223 2020 1434 Galway Ave Redlands 92374 2,537 $540,990 $213 2020 1506 Shannon Ave Redlands 92374 2,537 $731,272 $288 2021 1426 Claire Ave Redlands 92374 2,537 $576,990 $227 2021 1499 Claire Ave Redlands 92374 2,537 $627,490 $247 2021 1488 Claire Ave Redlands 92374 2,537 $620,990 $245 2021 1454 Shane Ct Redlands 92374 2,726 $870,000 $319 2019
1827 Montecito Redlands 92374 2,908 $650,500 $224 2020
26553 Citrus Ave Redlands 92373 3,152 $695,000 $220 2018 1826 Montecito Ln Redlands 92374 3,167 $840,000 $265 2020 1814 Pansy Ct Redlands 92374 3,297 $955,000 $290 2019
1630 Camden Ct Redlands 92374 3,306 $745,000 $225 2017
10985 Sunny Cove Ct Redlands 92373 3,320 $890,000 $268 2018 138 Jacinto Ranches Ln Redlands 92374 3,462 $1,001,000 $289 2020 1611 Penny Ln Redlands 92374 3,966 $835,000 $211 2018
Minimum 2,010 $540,990 $211 2017
Maximum 3,966 $1,001,000 $319 2022
Average 2,820 $713,400 $253 2020
1 Source: Redfin. Based on townhomes/condominiums built after 2005 and single family homes built after 2017. The sales occurred between January 2021 and December 2022.

Five-Bedroom Units
Prepared by: Keyser Marston Associates, Inc.

File name: 4 8 23 RSP_Same ILF Percentage; Home Resales Page 4 of 9 Redlands Regular Meeting of 06-20-2023 644 of 1523

APPENDIX B

AFFORDABLE SALES PRICE CALCULATIONS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: SUPPLEMENTAL ANALYSIS

REDLANDS, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File Name: 4 8 23 RSP_Same ILF Percentage; App B ASP Page 5 of 9 Redlands Regular Meeting of 06-20-2023 645 of 1523

APPENDIX B - EXHIBIT I
AFFORDABLE SALES PRICE CALCULATIONS 1

TOWNHOME PROTOTYPE
MODERATE INCOME - 2022 INCOME STANDARDS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: SUPPLEMENTAL ANALYSIS

Based on a 100 basis points premium applied to the Freddie Mac monthly average, between January 2022 and December 2022, for a fixed-interest rate loan with a 30-year amortization period.

Based on 2022 San Bernardino County household incomes published by the California Department of Housing & Community Development (HCD).

Prepared by: Keyser Marston Associates
File name: 4 8 23 RSP_Same ILF Percentage; ASP Page 6 of 9 Redlands Regular Meeting of 06-20-2023 646 of 1523

APPENDIX B - EXHIBIT II
AFFORDABLE SALES PRICE CALCULATIONS 1

DETACHED SINGLE FAMILY HOME PROTOTYPE
MODERATE INCOME - 2022 INCOME STANDARDS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: SUPPLEMENTAL ANALYSIS

REDLANDS, CALIFORNIA
Three-Bedroom
Units
Four-Bedroom
Units
Five-Bedroom
Units
I. General Assumptions
Benchmark Household Size 2 4 5 6
Area Median Income 3 $87,400 $94,400 $101,400
Annual Utilities Allowance 4 $6,996 $8,472 $9,948
Maintenance & Insurance 5 $1,200 $1,500 $1,800
II. Calculations
A. Income Allotted to Housing Based on 110% AMI
Benchmark Annual Household Income $96,140 $103,840 $111,540 Income Allotted to Housing @ 35% of Income $33,650 $36,340 $39,040 B. Property Taxes @ 1.15% of Affordable Sales Price $3,620 $3,750 $3,880 C. Income Available for Mortgage Debt Service 6 $21,834 $22,618 $23,412 D. Affordable Sales Price
Supportable Mtg @ 6.14% Interest 7 $299,000 $309,800 $320,600 Home Buyer Down Payment @ 5% of ASP 15,700 16,300 16,900 Affordable Sales Price $314,700 $326,100 $337,500
1 The Affordable Sales Price calculations are based on the California Health and Safety Code Section 50052.5 methodology. 2 3
4 5 Based in part on the HOA dues identified in the home sales survey presented in APPENDIX A. 6 7
Under the California Health & Safety Code Section 50052.5 calculation methodology, the "family size appropriate for the unit" benchmark is set at the number of bedrooms in the unit plus one. This benchmark is used solely for the purposes of calculating the Affordable Sales Price. It is neither an occupancy cap nor a floor.

Based on 2022 San Bernardino County household incomes published by the California Department of Housing & Community Development (HCD).

Based on a 100 basis points premium applied to the Freddie Mac monthly average, between January 2022 and December 2022, for a fixed-interest rate loan with a 30-year amortization period.

Prepared by: Keyser Marston Associates
File name: 4 8 23 RSP_Same ILF Percentage; ASP Page 7 of 9 Redlands Regular Meeting of 06-20-2023 647 of 1523

APPENDIX C

IN-LIEU FEE CALCULATIONS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: SUPPLEMENTAL ANALYSIS

REDLANDS, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 4 8 23 RSP_Same ILF Percentage; App C ILF Page 4 of 5 Redlands Regular Meeting of 06-20-2023 648 of 1523

APPENDIX C
IN-LIEU FEE CALCULATIONS (5% STANDARD)

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: SUPPLEMENTAL ANALYSIS

REDLANDS, CALIFORNIA
Townhome
Prototype
Single Family
Home Prototype
I. Sales Price Difference
A. Two-Bedroom Units
Market Rate Sales Price 1 $525,000
Affordable Sales Price 2 272,000
Difference $253,000
B. Three-Bedroom Units
Market Rate Sales Price 1 $564,000 $684,000
Affordable Sales Price 2 292,500 314,700
Difference $271,500 $369,300
C. Four-Bedroom Units
Market Rate Sales Price 1 $744,000
Affordable Sales Price 2 326,100
Difference $417,900
D. Five-Bedroom Units
Market Rate Sales Price $807,000
Affordable Sales Price 337,500
Difference $469,500
II. Distribution of Total Units 3
Two-Bedroom Units 65%
Three-Bedroom Units 35% 30%
Four-Bedroom Units 40%
Five-Bedroom Units 30%
III. Assumptions
Total Units 72 60
Total Saleable Area 103,600 142,200
Weighted Avg Unit Size (Sf) 1,440 2,370
Inclusionary Housing Percentage 5% 5%
Inclusionary Units 4 3
IV. In-Lieu Fee
Affordability Gap Per Inclusionary Unit 4 $259,500 $418,800 Total In-Lieu Fee $1,038,000 $1,256,400
Per Total Unit in the Project $14,420 $20,940
Per Sf of Total Saleable Area $10.00 $8.80
1 The market rate sales prices are drawn from the pro forma analyses. 2 See APPENDIX B.
3 Based on the unit mix distribution applied in the pro forma analyses. 4 Based on unit mix distribution and the weighted average difference between the Market Rate Sales Prices and the Affordable Sales Prices.

Prepared by: Keyser Marston Associates, Inc.

File Name: 4 8 23 RSP_Same ILF Percentage; ILF Page 5 of 5 Redlands Regular Meeting of 06-20-2023 649 of 1523

APPENDIX B

AFFORDABLE RENT CALCULATIONS
2022 INCOME STANDARDS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

REDLANDS, CALIFORNIA
Studio Units
One-Bedroom
Units
Two-Bedroom
Units
Three-Bedroom
Units
I. General Assumptions
Benchmark Household Size 1 1 2 3 4
Area Median Income 2 $61,200 $69,900 $78,650 $87,400
Monthly Utilities Allowance 3 $130 $158 $222 $289
% of Income Allotted to Housing Expenses 30%
I. Household Income Assumptions
% of AMI Used for Rent Setting Purposes 4 50% 50% 50% 50% Benchmark Annual Household Income $30,600 $34,950 $39,325 $43,700 II. Gross Affordable Rent
Annual $9,180 $10,485 $11,798 $13,110
Monthly $765 $874 $983 $1,093
III. Net Affordable Rent 5 $635 $716 $761 $804
I. Household Income Assumptions
% of AMI Used for Rent Setting Purposes 6 80% 80% 80% 80% Benchmark Annual Household Income $48,960 $55,920 $62,920 $69,920 II. Gross Affordable Rent
Annual $14,688 $16,776 $18,876 $20,976
Monthly $1,224 $1,398 $1,573 $1,748
III. Net Affordable Rent 5 $1,094 $1,240 $1,351 $1,459
I. Household Income Assumptions
% of AMI Used for Rent Setting Purposes 7 110% 110% 110% 110% Benchmark Annual Household Income $67,320 $76,890 $86,515 $96,140 II. Gross Affordable Rent
Annual $20,196 $23,067 $25,955 $28,842
Monthly $1,683 $1,922 $2,163 $2,404
III. Net Affordable Rent 5 $1,553 $1,764 $1,941 $2,115
1 2
3 4 Based on 50% of AMI. This percentage of AMI is based on the standard identified in California Health & Safety Code Section 50053. 5 The Net Affordable Rent equals the Gross Affordable Rent minus the Monthly Utilities Allowance. 6 Based on 80% of AMI. This percentage of AMI is based on the standard identified in AB 1505. 7 Based on 110% of AMI. This percentage of AMI is based on the standard identified in California Health & Safety Code Section 50053.

Very Low Income
Moderate Income
Based on the median income for San Bernardino County published annually by the California Department of Housing & Community Development (HCD).

Low Income
Under the California Health & Safety Code Section 50052.5 calculation methodology, the "family size appropriate for the unit" benchmark is set at the number of bedrooms in the unit plus one. This benchmark is used solely for the purposes of calculating the Affordable Sales Price.

It is neither an occupancy cap nor a floor.

Prepared by: Keyser Marston Associates
File name: 3 13 23 Apt 5% VL 10% Mod; Aff Rent Page 1 of 1 Redlands Regular Meeting of 06-20-2023 650 of 1523
City Council Meeting J. 2.

DATE: 06/20/2023
TO: Honorable Mayor and City Council Members
SUBJECT: Public Hearing to consider Resolution Nos. 8484 and 8485 (Mayor to declare meeting open as a public hearing)
Resolution 8484 - Calling a special election on the question of levying special taxes within the territory to be annexed to Community Facilities District No. 2004-1; and
a.

Resolution No. 8485 - Declaring results of special election of Annexation No. 25 to Community Facilities District No. 2004-1 b.
(Development Services Director Desatnik)
PROCEDURE FOR PUBLIC HEARING:

1. Mayor opens public hearing.

Mayor asks City Clerk if notice of the hearing has been published and mailed as required by law.

2. Mayor calls for report from the development services department with regard to the annual levy of special taxes within the annexing territory to pay costs of the maintenance of infiltration trenches, infiltration basins, storm drain facilities, landscaping, and street trees within lettered lot “A” and street right-of-way adjacent to Tract Map No. 20065, and any other public services authorized by the act.

3. Mayor asks if anyone wishes to file a protest or speak regarding the proposed annexation.

4. Mayor asks if City Clerk agrees to hold the special election within the annexing territory on June 20, 2023.

5. 6. Mayor closes public hearing.

The City Council may adopt the following resolution: resolution of the City Council of the City of Redlands calling special election and submitting to the qualified electors of territory proposed to be annexed to community facilities district No. 2004-1 of the City of Redlands the question of levying special taxes within that territory (Annexation No. 25).

7. 8. City Clerk conducts special election and announces results of canvass of Redlands Regular Meeting of 06-20-2023 651 of 1523
votes cast.

The City Council may adopt the following resolution: resolution of the City Council of the City of Redlands declaring the results of the special election for community facilities district No. 2004-1 of the City of Redlands on the proposition of the annual levy of special taxes within the territory proposed to be annexed to said community facilities district to pay the costs of certain services to be provided by the community facilities district, determining that the territory proposed to be annexed is added to and part of said community facilities district with full legal effect, and ordering the recording of a map of the boundaries of said community facilities district including the territory annexed thereto (Annexation No. 25).

9. MOTION(S):

If the City Council determines that staff's recommendation is appropriate, the following motions are provided:

I move City Council approve Resolution No. 8484.

Mayor to request City Clerk to conduct Special Election and announce results of canvass of votes cast; and

1. 2. I move City Council approve Resolution No. 8585.

RECOMMENDATION:

Staff recommends the Mayor conduct the annexation proceeding in accordance with the above "Mayor's Agenda" and City Council adopt Resolution Nos. 8484 and 8485.

DISCUSSION:

On May 16, 2023, City Council approved Resolution No. 8468 to commence with the annexation proceedings for GS Redlands LLC, Tract Map No. 20065, to Community Facilities District No. 2004-1 (CFD) for the purposes of performing maintenance of infiltration trenches, infiltration basins, storm drain facilities, landscaping, and street trees within and adjacent to Tract Map No. 20065.

Additionally, at that meeting, a public hearing was set for June 20, 2023, regarding the annexation of approximately 7.77 acres of land located on the south side of East Highland Avenue and west of Redlands Street. At the conclusion of the public hearing, City Council will consider adopting Resolution No. 8484 scheduling a special election within the territory to be annexed.

Resolution No. 8484 schedules the special election for June 20, 2023, immediately following the public hearing.

Redlands Regular Meeting of 06-20-2023 652 of 1523
GS Redlands LLC, requested the annexation of its property into the CFD and delivered to the City Clerk a written waiver consenting to the special election being conducted by the City Clerk on June 20, 2023. The City Clerk consented to conduct the special election on that date.

Immediately following the adoption of Resolution No. 8484, the property owners will deliver voted ballots to the City Clerk. The City Clerk will then canvass the voted ballot(s) and report the results of the election to the Council. The Council will then consider the adoption of Resolution No. 8485, declaring the results of the election, which will complete the annexation of the property to the Community Facilities District.

The adoption of Resolution Nos. 8484 and 8485 are not subject to environmental review pursuant to Section 15061 (b)(3) of the California Environmental Quality Act, as the adoption of these Resolutions does not have the potential for causing a significant effect on the environment.

CFD 2004-1 has had multiple annexations in the past 19 years which are listed in Attachment "M".

ALTERNATIVES:

The Council may choose to deny the request to annex property into CFD No. 2004-1; however, another funding source for the maintenance of the infiltration trenches, infiltration basins, storm drain facilities, landscaping, and street trees will need to be identified.

STRATEGIC PLAN:

N/A
SUBMITTED BY:

Brian Desatnik, Development Services Director
RECOMMENDED BY:

Charles M. Duggan, Jr., City Manager
REVIEWED BY:

Yvette M. Abich Garcia, City Attorney
Janice McConnell, Assistant City Manager
Chris Boatman, Assistant City Manager
PREPARED BY:

Donald P. Young, One Stop Permit Center Manager
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Fiscal Impact
Budgeted Y/N: NA
Discussion:

There is no fiscal impact to the City as all costs for this annexation are borne by the property owner.

Appropriation Required Y/N: No
Discussion:

There is no fiscal impact to the City as all costs for this annexation are borne by the property owner.

Attachments
Attachment A - Resolution No. 8468 - Resolution of Intent Attachment B – Ballot
Attachment C - Official Ballot
Attachment D - APN Map
Attachment E - Aerial
Attachment F - Resolution 8484 Calling Election
Attachment G - Resolution 8485 Declare Results of Election Attachment H - Notice of Hearing
Attachment I – Boundary Map
Attachment J - Affidavit Proof of Publication
Attachment K - Signed Redlands CFD 2004-1 Annex No. 25 - Waiver Attachment L – Voter Certification from County of San Bernardino Attachment M - Annexation List
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17942.00056\41239397.1
GS Redlands LLC

7.77 acres – 8 votes

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Redlands City CouncilJune 20, 2023

Redlands City Council
June 20, 2023