Inclusionary Housing Study and Findings
Presentation to City Council | August 11, 2026
Ryan Dyson | City of Sunnyvale
Dena Belzer | Strategic Economics
Jake Cummings | Strategic Economics
2City of Sunnyvale – Inclusionary Housing Study – August 2026 Study Overview
3City of Sunnyvale – Inclusionary Housing Study – August 2026 Background
• City’s inclusionary policy originally adopted in 1980 344 active BMR rental units, 501 active BMR ownership units • Most recent updates in 2019 (Rental) and 2021 (Ownership) • Study Issue CDD 23-01 (2023)
Consider increasing inclusionary housing requirements to 20% Review and update In-Lieu Fees for rental and ownership housing • Housing Element Program H5
Feasibility study to assess if increase to BMR requirement can be supported Review and refine BMR program requirements and guidelines periodically • Accommodate changing market conditions and improve program effectiveness 4City of Sunnyvale – Inclusionary Housing Study – August 2026 Consultant Team and Participating Jurisdictions
Dena Belzer
President
Jake Cummings
Senior Associate
Consultant Team
Participating Jurisdictions
5City of Sunnyvale – Inclusionary Housing Study – August 2026 Community and Stakeholder Engagement
Feb 19, 2025 Real Estate Industry Stakeholder Meeting
Feb 25, 2025 Affordable Housing Advocates and Developers Stakeholder Meeting
Nov 18, 2025 Public Draft Report Published
Dec 9, 2025 Public Draft Meeting #1 (General Public)
Dec 10, 2025 Public Draft Meeting #2 (General Public)
Mar 31, 2026 Final Report Published
Aug 5, 2026 Livable Sunnyvale Meeting
6City of Sunnyvale – Inclusionary Housing Study – August 2026 Applicability Inclusionary
Requirement In-lieu Fee*
Rental • 3 or more units
15% on-site
• 5% Very Low
Income
• 10% Low Income
• 3 to 6 units:
• $16.50 per s.f.
• 7 or more units:
• $33 per s.f.
Ownership • 7 or more units
15% on-site
• All 15% Moderate
Income
• 7% of Contract Sales
Price
Current Inclusionary Housing Policy
*Payment of in-lieu fee instead of on-site affordable units requires Council approval OR
7City of Sunnyvale – Inclusionary Housing Study – August 2026 Study Goals and Methodology
8City of Sunnyvale – Inclusionary Housing Study – August 2026 Overall Goals and Approach
• Analyze financial feasibility of
alternative scenarios and other key
factors
• Recommend in-lieu fees and
inclusionary requirements that align
with chosen policy and current market
conditions
Study reflects a moment in time
Financial feasibility will change as
market conditions change
Community
Objectives
Financial
Feasibility
State or
Regional
Laws and
Guidelines
Peer City
Policies
Current
Policy
Policy ConsiderationsStudy Goals
9City of Sunnyvale – Inclusionary Housing Study – August 2026 Policy Considerations
• HCD may review policies with greater than 15% inclusionary requirement for lower- income households (80% of AMI or less)
City’s rental policy may be reviewed to ensure feasibility if increased above 15% • MTC Transit-Oriented Communities (TOC) guidelines reward policies that are at least 15% • Inclusionary units count toward State Density Bonus Law (SDBL), which allows additional density, waivers from development standards, and concessions Inclusionary requirement is applied to an SDBL project’s base density only An SDBL project’s actual inclusionary percentage may be lower than 15% 10City of Sunnyvale – Inclusionary Housing Study – August 2026 Financial Feasibility Analysis
Revenues
Residual Land Value
Development Financials
Revenues
Inclusionary
requirements decrease
revenues
Development Financials
with Inclusionary Policy
Costs
Return
Costs
Return
Residual Land Value
Inclusionary requirements decrease revenues for new projects, which can impact their feasibility
• Feasibility is assessed with Residual Land Value
• If the residual land value is too low or less than zero, the project doesn’t pencil 11City of Sunnyvale – Inclusionary Housing Study – August 2026 Financial Feasibility Analysis
In-lieu fees affect the financial feasibility of new development by increasing costs
Costs
Return
Revenues
Costs
Residual Land Value
Revenues
Development Financials
Additional fees add to
costs
Return
Residual Land Value
Development Financials
with In-lieu Fees
12City of Sunnyvale – Inclusionary Housing Study – August 2026 Residential Prototypes
5-story Condo
• 52 units/acre
• Avg 1,400 sf/unit
• 1 basement + 1
podium level garage
• 2 spaces/unit
Townhome
Small Scale Rental
• 20 units/acre
• Avg 1,700 sf/unit
• 2 garage spaces/
unit
• 36 units/acre
• Avg 955 sf/unit
• Tuck under parking
• 2 spaces/unit
Rental Prototypes
Ownership Prototypes
• 73 units/acre
• 891 sf/unit
• 1 basement + 1
podium garage
• 1.75 spaces/unit
5-story Rental
• 111 units/acre
• Avg 770 sf/unit
• 1.0 spaces/unit (podium)
• Ground floor retail
8-story Rental
13City of Sunnyvale – Inclusionary Housing Study – August 2026 Financial Feasibility and In-lieu Fee Analysis
14City of Sunnyvale – Inclusionary Housing Study – August 2026 Rental Prototypes: Financial Feasibility at 20%
Residual Land Value vs. Typical Land Cost per Unit
Rental Prototypes• Rental prototypes do not
support 20% requirement
under current market
conditions
• The 8-story rental prototype
performs best
• Conditions for rental
development have been
improving since data were
gathered in 2025
($150,000)
($100,000)
($50,000)
$0
$50,000
$100,000
$150,000
$200,000
Small Scale Rental
Apartments
5-Story Rental Apartments 8-Story Rental Apartments
with Ground Floor Retail
Value per Unit
Residual Land Value - All Market Rate Units
Residual Land Value - 20% Policy
Typical Land Cost per Unit
15City of Sunnyvale – Inclusionary Housing Study – August 2026 Ownership Prototypes: Financial Feasibility at 20%
Residual Land Value vs. Typical Land Cost per Unit
Ownership Prototypes• Townhome prototype is
marginally infeasible
with 20% requirement*
• Condo prototype does
not support 20%
requirement*
*under current market
conditions
($300,000)
($200,000)
($100,000)
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
Townhomes 5-Story Condos
Value per Unit
Residual Land Value - All Market Rate Units
Residual Land Value - Current Policy
Typical Land Cost per Unit
16City of Sunnyvale – Inclusionary Housing Study – August 2026 Ownership: Financial Feasibility for Townhomes
Residual Land Values in Policy Scenarios and
Sensitivity to Changes in Market Price for the
Townhome Prototype
• Townhome prototype
with 20% requirement
becomes feasible with
modest improvements
in market values
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
Price Decline (-10%)
Scenario
Current Market Price Growth
(+10%) Scenario
Price Growth
(+20%) Scenario
RLV: All Market Rate Units RLV: 15% Moderate (Current)
RLV: 20% Moderate (Alternative) Typical Land Cost per Unit 17City of Sunnyvale – Inclusionary Housing Study – August 2026 Peer City Policies
Jurisdiction
Applicable Size
Range Policy Categories
Required Share of Units
Rental Ownership
Sunnyvale
Rental: 3+ units
Ownership: 7+ units N/A
5% Very Low
10% Low 15% Moderate
Cupertino 5+ units N/A
9% Very Low
6% Low
10% Median
10% Moderate
Los Gatos 5+ units
5-19 units 10% Moderate
5% Low
5% Moderate
20-100 units 10-20% Moderate
5-10% Low
5-10% Moderate
100+ units 20% Moderate
10% Low
10% Moderate
Mountain View All projects
Townhouses and
Rowhouses 15% (Avg. 65% AMI)
15% Moderate (Avg. 100% AMI)
10% Above Mod (Avg. 135% AMI)
All other developments 15% (Avg. 65% AMI) 15% (Avg. 100% AMI) Palo Alto 3+ units
Project on <5 acres
Impact Fee
10% Median
5% Moderate
Project on >5 acres 20% (2/3 Median, 1/3 Moderate)
Santa Clara 3+ units
<10 units 1 unit or in-lieu/impact fee
10+ units 15% (Avg 100% AMI) 15% (Avg. 100% AMI)
18City of Sunnyvale – Inclusionary Housing Study – August 2026 Rental: In-Lieu Fee Analysis
On-Site Equivalent Sunnyvale
$72
$91
$98
$32
$-
$20
$40
$60
$80
$100
$120
Small Scale: 15% 5-Story: 15% 8-Story: 15% Current Fee
(All Types)
In-Lieu Fee per Net SF $33
19City of Sunnyvale – Inclusionary Housing Study – August 2026 Rental In-Lieu Fees by Jurisdiction (FY 2026-27)
Jurisdiction Applicable Size Range Fee per SF by Type
Sunnyvale 3+ units
3-6 units: $16.50
7+ units: $33
Cupertino All projects
<35 du/ac: $30.68
>35 du/ac: $38.35
Los Gatos 5+ units 6% of building permit valuation
Mountain View
(effective 8/22/26)
7 or fewer units may pay fee;
8+ units may only pay fee for fractional
units less than .5
$98
Palo Alto All projects $26.55
Santa Clara 3+ units $31.03
Gilroy No residential impact fee or inclusionary policy Los Altos Hills No residential impact fee or inclusionary policy 20City of Sunnyvale – Inclusionary Housing Study – August 2026 Ownership: In-Lieu Fee Analysis
Townhomes 5-Story Condos
$93
$124
$69
$89
$70
$-
$20
$40
$60
$80
$100
$120
$140
Current: 15%
Moderate
Alternative: 20%
Moderate
Current Fee
Equivalent
Current: 15%
Moderate
Current Fee
Equivalent
Townhomes Condo
In-Lieu Fee per Net SF
On-Site Equivalent On-Site
Equivalent SunnyvaleSunnyvale
21City of Sunnyvale – Inclusionary Housing Study – August 2026 Ownership In-Lieu Fee by Jurisdiction (FY 2026-27)
Jurisdiction Applicable Size Range
Fee per SF by Type
Single Family Townhome Condos
Sunnyvale 7+ units 7% of contract sales price
Cupertino All projects $23.01 $25.31 $30.68
Los Gatos 5+ units 6% of building permit valuation
Mountain View
(effective 8/22/26)
7 or fewer units may pay fee;
8+ units may only pay fee for
fractional units less than .5
$91 $118 $91
Palo Alto All projects $99.57 $66.38 $66.38
Santa Clara 3+ units $46.54 $38.78 $31.03
Gilroy No residential impact fee or inclusionary policy Los Altos Hills No residential impact fee or inclusionary policy 22City of Sunnyvale – Inclusionary Housing Study – August 2026 Summary and Discussion
23City of Sunnyvale – Inclusionary Housing Study – August 2026 Summary of Findings
• Current market conditions do not support increase of rental or condo requirements above 15%
• Increase of townhome requirement to 20% could be supported • Rental in-lieu fee could be raised to match cost of providing on-site units • Ownership in-lieu fee could be converted to square footage-based fee that aligns with cost of providing on-site units
24City of Sunnyvale – Inclusionary Housing Study – August 2026 Next Steps
August 11 City Council Study Session
October 12 Planning Commission
October 28 Housing and Human Services Commission
November 10 City Council
25City of Sunnyvale – Inclusionary Housing Study – August 2026 Discussion
• Should townhome requirement be increased to 20%?
• Should rental in-lieu fee be increased to align with cost of on-site units? • Potential rental in-lieu fee: Up to $93/sf
• Should ownership in-lieu fee be converted to square footage-based fee and aligned with cost of on-site units?
• Potential townhome in-lieu fee: Up to $93/sf at 15% or $124/sf at 20% • Potential condo in-lieu fee: Up to $89/sf
Council Feedback Requested