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ATTY/ORD.0007/CC ORD TEMPORARILY AMENDING ZONING CODE (AFFORDABLE HOUSING INCENTIVE PROGRAM) REV: 08-27-25 VR Page 1 of 6 ORDINANCE NO. 1130-891 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF REDWOOD CITY TEMPORARILY AMENDING ARTICLE 29 (REQUIREMENTS FOR AFFORDABLE HOUSING) OF THE ZONING CODE OF REDWOOD CITY BY REDUCING AFFORDABLE HOUSING REQUIREMENTS FOR PIPELINE PROJECTS (AFFORDABLE HOUSING INCENTIVE PROGRAM) WHEREAS, the City of Redwood City (“City”) is experiencing a housing crisis. California has one of the most expensive housing markets and one of the highest rates of homelessness in the nation. The City Council has adopted Article 29 of the Redwood City Zoning Code (Requirements for Affordable Housing) (hereinafter referred to as the “Affordable Housing Ordinance” or “AHO”) in 2018, which was updated in 2021 and 2023, in recognition of the fact that the number of homes affordable to lower income households is significantly lower than the proportion of lower income households in Redwood City and that housing production has not kept up with employment growth. The AHO’s purpose is to increase the supply of affordable housing by imposing inclusionary requirements for residential developers to help meet the needs of all community members and maintain a jobs/housing balance; and WHEREAS, addressing the housing crisis requires a broad spectrum of land use and financing tools. For example, the Legislature has adopted State Density Bonus Law to address the financing gap by allowing a developer to include more total units in a project than would otherwise be allowed by the local zoning ordinance in exchange for affordable units. Inclusionary housing programs, the AHO, have been another useful tool in creating below-market rate affordable housing in Redwood City. The City relied on nexus studies evaluating residential impact fees and commercial linkage fees to establish the AHO’s requirements and has recently initiated an effort to conduct updated studies. Since the adoption of this program, the inclusionary housing requirements have been set at various levels in response to changing economic conditions. Generally, the goal of the AHO is to set the inclusionary housing requirements at the maximum economically feasible amount for market rate housing that is within the range of and legally justified by the City’s adopted nexus studies; and WHEREAS, City staff has identified that certain residential projects have received their land use planning approvals but have not pulled any building permits to begin construction (defined below as “Pipeline Projects”). The applicants for these Pipeline Projects have raised concerns that interest rates, capitalization rates, land prices, construction costs, affordable housing requirements, and rents/sale prices have indicated that the projects are not financially feasible. Because these projects are typical of most of the housing production in Redwood City, this suggests that residential development more broadly is not financially feasible under current economic conditions. Economic conditions that render residential development infeasible threaten several important policy priorities of the City, including expansion of the City’s housing supply, the