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2 Ownership • 15% of the units affordable to Moderate Income households3 • In lieu fee is the difference between the sales price and the affordable price • Fractional units pay a percent of the in lieu fee • Retain the impact fee for developments under 20 units, and no fee for fewer than 5 units. Rental Set Aside and AMI Targeting The consultant team modeled a 225 unit rental development typical of what might be built in Redwood City. It included a mix of unit sizes from studios to three bedrooms, with most of the units being one bedroom or two bedroom. The density was assumed to be 225 units per acre. The total development cost was approximately $133.64 million, including affordable housing impact fees. We assumed the following unit sizes and rents Unit Type Number in development Square Footage Rents Studio 16 563 $2,821 1 Bedroom 135 774 $3,351 2 Bedroom 68 1,149 $4,389 3 Bedroom 6 1,441 $5,519 The team then modeled what would happen with a 15 percent inclusionary zoning requirement affordable to Very Low Income households as well as Low Income Households. The developer would be entitled to a 27.5% density bonus for the Low Income units and a 35% density bonus for the Very Low Income units. They would also be entitled to flexibility in the zoning code4. Additionally, the city would typically no longer charge affordable housing impact fees, reducing the costs for developers by $22,500 per unit. The model also assumes lower land costs. (Or potentially land costs that stay constant as all other costs increase.) Holding all other factors constant, real estate economics predicts that prices for developable land will decrease based on new government requirements. This is consistent with the experience of other cities as well. We initially assume land prices will drop 5%, but see below for calculations for achieving 20% of the units as affordable. 3 Moderate income units are available to households making up to 120% of the Area Median Income and the pricing is based on 100% of the Area Median Income. 4 The density bonus calculation is complicated in several ways. The density bonus could increase the cost of construction if different building technologies are needed, while the required zoning flexibility could reduce it. Therefore, we do not change the cost of construction. The model assumes that developers will only use a 25% bonus to be conservative. 7.A. - Page 50