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1. AFFORDABILITY GAP ANALYSIS For any nexus-based affordable housing fee calculation, it is necessary to estimate the subsidy required to construct affordable housing units. Table 2 shows the subsidy needed to produce multifamily for-sale housing that is affordable to low- through moderate-income households (60 through 120 percent of AMI), while Table 3 calculates the subsidies for rental housing affordable to very low- through moderate-income households (50 through 120 percent of AMI). Product Type According to City staff, at this time in Pleasanton the housing subsidies available are most efficiently used to develop multifamily affordable units rather than single family units. As a result, the subsidy required to construct affordable units of this multifamily product type is used to determine the impact fee that applies to all types of market-rate apartments. EPS has assumed that these affordable multifamily projects will have an average density of 30 units per acre and will adhere to Pleasanton Code that requires two parking spaces per unit, assumed to be surface parking. In order to determine the average household size of future affordable housing units, EPS used two estimates from the US Census 2014 American Community Survey. The Census indicates that the average household size is 2.89 people and the average family size in Pleasanton is 3.25 people. Each of these figures rounds to an average of three people per unit, so EPS uses this assumption to determine the applicable income limits for the new units. California State law (California Health and Safety Code Section 50052.5) assumes that a 2- bedroom unit is occupied by a 3-person household, and this assumption is used in this analysis. Typically, a 2-bedroom unit in the Bay Area has a gross size of about 1,100 square feet (accounting for shared lobbies, hallways, etc.) and a net size of 950 square feet. This analysis estimates the subsidy that would be required to build for-sale and for-rent housing for the lower-income worker households. The subsequent impact fee analysis would assume that the most cost-efficient tenure type would be used; if for-sale units can be built for less subsidy than units offered for rent, the analysis would assume new affordable units would be for-sale. As shown on Tables 2 and 3 and discussed below, for-rent units are estimated to require a lower subsidy under present market conditions. In addition to representing cost savings, and thus a minimization of the impact fee, the reliance on rental housing may be more easily implemented and sustained, as many households at lower incomes will not have adequate wealth reserves for down payments on homeownership units, and may have further difficulty absorbing the ongoing costs of homeownership (taxes, repairs, etc.) that they can effectively avoid by renting their homes rather than buying. Economic&Planning Systems, Inc. 7 P:\151000s\151111PIeasantonFee\pepoTpfordable_Housing\151111report02261Brenlal.doa