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<br />8A <br />Page 7 <br /> <br />d) How is the long-term affordability of the units ensured without the need for <br />additional public subsidies? Formulas for sharing the increase in unit value <br />between a seller of an affordable unit and the affordability program need to be <br />carefully crafted to maintain long-term afford ability without future public <br />subsidy. <br /> <br />Separate Affordable Projects or Affordable Units Blended Into Market <br />Projects? <br />Another policy issue is whether affordable housing should be in separate affordable <br />projects or blended into market rate housing projects. An advantage of affordable- <br />only projects is that they are easier to finance from Federal and State Affordable <br />Housing funds, but some critics look with disfavor on affordable-only projects and <br />believe they contribute to community problems. <br /> <br />Downtown Only or Citywide? <br />As the City Council considers an inclusionary housing policy, it has the choice of <br />whether to adopt it just for downtown or for the whole city. Staff suggests that any <br />inclusionary housing policy be applied to the whole city. Applying it only to <br />downtown could discourage the development of new housing in the downtown and <br />provide a financial incentive for developers to seek land for housing in other areas of <br />the city. <br /> <br />3. Reduce Parking Requirements for Residential Development <br />This has been done for both the downtown and on a citywide basis, however, <br />continued scrutiny of the effects of parking on housing developments is prudent. as <br />parking requirements have a significant impact on the cost of producing residential <br />units. <br /> <br />"Parking requirements bundle the cost of parking spaces into the cost of dwelling <br />units, and therefore shift the cost of parking a car into the cost of renting or <br />owning a home - making cars more affordable but housing more expensive. The <br />higher the parking requirement, the higher the cost of housing.lt1 <br /> <br />"Parking requirements substantially increase the cost of providing low-income <br />housing. For example, 107-unit single room occupancy {SRO) project in Palo <br />Alto for low-income residents had a normal parking requirement of 134 parking <br />spaces. Even with a reduced parking requirement of only 72 spaces, the parking <br />spaces increased the cost of the building by 38%. The construction cost for each <br />apartment was $32,000 and for each parking space was $18,000."2 <br /> <br />Reducing residential parking requirements or letting the market determine the <br />amount of parking could contribute to lowering the cost of producing new residential <br />units. Such a change could be particularly helpful in reducing the cost of providing <br />low-income housing units. <br /> <br />1 The High Cost of Free Parking, Donald Shoup (2005) page 141. <br />2 The High Cost of Free Parking, Donald Shoup (2005) page 150. <br /> <br />Page 5 of 7 <br />