CITY COUNCIL AGENDA PACKET WORKSHOP

5 of 19 o For single-family projects 2, 20 percent of total units to be dedicated to very-low, low-, and/or moderate-income households. Note that the “and/or” language, and lack of a specified affordability mix, leaves a developer free to choose the specific mix of affordable units among the range allowed. • Projects of fewer than 15 units, and commercial, industrial and office (CIO) projects are allowed to pay Lower-Income Housing Fees, at a rate either per market rate unit (for residential projects); or per square foot for CIO projects. (See below for additional discussion on the establishment of the LIHF.) • Allowance for projects to propose a range of alternatives to building on-site units, that include payment of in-lieu fees (see below), dedication of land, and construction of units off-site, transfer of fee credits, and other mechanisms. • Parameters for the location and design of the inclusionary units, generally prohibiting clustering the units in a single area of the site; requiring consistent design and amenities among the market-rate and affordable units, but allowing the affordable units to be smaller than the market-rate units. Although the IZO has not been updated in recent years, the City recognized the need to create more objective standards for housing developments, including with respect to inclusionary requirements. The 2023 Objective Design Standards for Housing Sites include more stringent criteria with respect to the affordability mix, minimum unit sizes, and ability to “count” ADUs as inclusionary units. These standards apply to all the sites re-zoned as part of the 4th, 5th or 6th Cycle Housing Element. The May 7 workshop content, with respect to the IZO, is focused on the key elements of the ordinance that affect development costs and feasibility: specifically, the overall inclusionary rate and the mix of affordability among the required inclusionary units. Other aspects of the IZO, such as alternative compliance (the ability to pay fees or offer other methods of meeting the inclusionary requirements), development standards for inclusionary units, definitions, and procedures for review, will be the subject of future City Council and/or Planning Commission review and discussion. Lower-Income Housing Fee In 2018, the City also reviewed and updated the Lower-Income Housing Fee (LIHF), (in 2018 re-titled the Affordable Housing Fee – the terms are used interchangeably in this memo). The fee is calculated based on the cost to mitigate the demand for new affordable housing generated by new commercial and market-rate residential development. The fee operates alongside/in tandem with the City’s Inclusionary Zoning Ordinance (IZO), which as noted, automatically allows smaller residential projects of less than 15 units, and non-residential projects, to pay LIHF on a per unit basis (residential) or per square-foot (non-residential) basis. Projects otherwise required to 2 Single-Family Projects are defined as: A residential project consisting of detached and attached single-family homes, including paired single-family, duets, duplexes, townhomes, and similar unit types where each unit is located on a separate parcel of land (PMC 17.44.030)