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that these sorts of strategies be considered in the forthcoming policy discussion on workforce housing and affordability by design, rather than as part of this meeting. Modification of IZO The IZO, while relatively recently adopted into the PMC respective to other sections, has nonetheless been in place for over 20 years. Policies in the Housing Element could indicate future review or refinement of existing policies or suggest areas of refinement. As outlined above, the IZO includes a requirement for 15 percent of multifamily units in projects over 15 unit to be affordable; and 20 percent of units in a single family residential project over 15 units. One topic area that has been raised by the Planning Commission and others during the Housing Element process, is increasing the percentage of affordable units for a project required by the IZO, to be greater than the current maximum of 20 percent. Having reviewed the field of Inclusionary Zoning programs, Pleasanton's current 15-20 percent range is very consistent, and in fact, on the higher end, of many cities' inclusionary percentage, locally within the Tri -Valley, and across California and the United States. Because building below -market -rate units requires significant subsidy, an overly aggressive inclusionary rate could become a constraint to overall housing production, have unintended consequences of making most housing projects infeasible, and potentially drive up the cost of the market rate units. Exhibit B to this report provides a summary of the IZO requirements for Livermore, Dublin, San Ramon, and Danville; Exhibit C is a comparison by Fannie Mae of inclusionary housing nationwide, and Exhibit D is a report by the Local Government Commission identifying best practices for IZOs, all of which suggest that Pleasanton's current inclusionary rate appears appropriate. Compared to significantly increasing the percentage of affordability required for residential projects, a more modest, but nonetheless beneficial, approach could be to align the percentage of affordable units required between multifamily and single-family development to both be set at 20 percent. It has also been suggested that the inclusionary percentages be "flipped" — such that the higher, 20 percent requirement be tied to multi- family developments, and the lower, 15 percent requirement to single-family projects. This latter change would make sense, given several factors that include: the relatively lower per-unit cost to construct a typical multi -family unit, providing less cost burden and risk of escalation of costs/prices for the project's market -rate units; the larger number of units in a typical multifamily project that will result in a larger yield of affordable units; the greater inherent affordability of rental versus for -sale housing; and the fact that rental housing units typically benefits more individual households over time, as occupancy of such units tends to turn over more quickly. In the City's experience, single-family residential projects are more challenged to provide the high proportion of inclusionary units and have almost all sought (and achieved) alternative means of compliance such as payment of fees, dedication of land, or other approaches allowable under the IZO. Other opportunities for modifying the IZO include: - Identify percentage split between income levels, instead of leaving the percentage to discretion in the Affordable Housing Agreement. This would provide an objective and predictable requirement for the affordability levels. Housing Element Update, P21-0751 Planning Commission 10 of 13