AgdaPkt 2018-05-21 Joint SA PFA - Laserfiche WebLink

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projects and the corresponding density bonuses and concessions developers could request under state law. If an inclusionary percentage requirement is too costly and the incentives too small, the project may not “pencil,” resulting in reduced construction of new housing. A reduction in new housing construction also reduces the number of new affordable housing units that may be created. For example, a 15% requirement for a 100-unit project would result in 15 affordable units considering project factors such as land value, construction costs, and expectations of a reasonable profit. A 25% requirement on the same site with similar project factors could add 25 affordable units, but if the requirement results in a project that is financially infeasible, the resulting construction of affordable units for that project is zero. The State Housing and Community Development Department (HCD) may further review ordinances exceeding 15% mandated affordable units for low-income and very low income households to ensure the requirement does not reduce overall residential construction. The options below do not exceed this requirement. Inclusionary Percentage Options To ensure feasibility and effectiveness, the City should consider a balance between the percentage of affordable units required and the level of affordability. Greater affordability results in a higher cost to the project developer, potentially reducing the total number of units (marker-rate and below-market-rate) that may be feasible. In addition, affordable housing percentages that align with state density bonus incentives are important for ensuring feasibility and effectiveness. With that in mind, staff developed several options for consideration. Staff recommends an option requiring affordability for a variety of levels within each project as shown in Table 2. At the Planning Commission meeting of May 1, there was significant discussion about the benefits of that option versus for an option where a developer has more choice and flexibility in the level of affordability provided. More info on this discussion is included in the Alternatives section. Table 2 – Options for Percentage Requirements The “Mix of Incomes” Option Affordability for a variety of levels within each project The “Choice of Affordability” Option Applicants may choose targeted affordability levels Rental 10% Moderate Income AND 5% Low Income AND 5% Very Low Income Allows applicant to request an alternative of equal or greater value 20% Moderate OR 15% Low Income OR 12% Very Low Income Allows applicant to request an alternative of equal or greater value 7.A. - Page 7