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<br />8A <br />Page 6 <br /> <br />housing produced. For example, if the adoption of an inclusionary housing policy <br />reduces the amount a housing developer can afford to pay for land to an amount <br />below the value of the land in its present use, the landowner will retain the land in its <br />existing use rather than selling it for housing. This may be an issue particularly in <br />the downtown core where the price of land is high and land assembly is difficult and <br />expensive. <br /> <br />Equality between Affordable Units and Market Rate Units? <br />Should affordable units be equal in size, shape, location and amenities, to market <br />rate units? Although it is tempting to say "yes", requiring such equality can <br />substantially increase the cost of providing the affordable units. As a matter of <br />public policy, is it better to do that or to accept smaller units or less costly interior <br />finishes and increase the number of affordable units that can be provided for the <br />same cost? If differentiation is permitted, how would the City implement this policy? <br />Is a lower income household entitled to housing equal to that of a higher income <br />household, or merely to clean, safe and adequate housing? <br /> <br />Rental vs. OWnership <br />In rental housing there is an entity that owns the property and manages the rental <br />units and this entity can provide long-term management of the affordability of the <br />affordable units. This long-term management can ensure that the designated <br />number of units (say 15%) remain affordable according to city standards, either <br />permanently or for the period of time specified in the city affordability requirements. <br /> <br />In ownership housing on the other hand, the housing developer sells the units to <br />individual purchasers and there is generally no continuing entity to provide long-term <br />management of the affordability of the ownership units. Thus, developers of for-sale <br />housing often prefer to make a payment into an affordable housing fund in lieu of <br />providing the affordable units as part of the project. <br /> <br />An additional factor for consideration is the location of rental units versus ownership <br />units. It may be that certain street-level uses are not as compatible with ownership <br />units as rental might be. <br /> <br />Condominium Conversions <br />In the case of existing rental complexes with affordability requirements seeking to <br />convert to ownership, can the units currently restricted for affordability be preserved? <br />Staff and the Housing and Human Concerns Committee are currently analyzing this <br />situation for an apartment complex in the Redwood Shores neighborhood. <br /> <br />Housing In Lieu Funds <br />If the "In Lieu Fund" approach is used, several issues arise: <br />a) What is the formula for determining how much the In Lieu payment should <br />be? (If the units are not provided on-site, the payment needs to cover land <br />costs as well as construction. Perhaps it should also cover the cost of long- <br />term management of the affordability of the units.) <br />b) Who is going to use the In Lieu Fund monies to provide the affordable units? <br />c) Who is going to manage the long-term affordability of the units? <br /> <br />Page 4 of 7 <br />