CITY COUNCIL REGULAR MEETING AGENDA PACKET

Page 4 of 8 size subject to inclusionary requirements (i.e., required to provide units on site) from 15 to 10 units. Inclusionary Unit Standards (Section 17.44.040) Numerous changes are proposed to Section 17.44.040, principally to create more objective standards for the evaluation of inclusionary housing proposals, and in some instances to provide more flexibility in how the inclusionary requirements can be met. Major changes include: • Clustering and dispersal of units (17.44.050.A): The revisions include additional,l but limited, exceptions to permit clustering of units. For example, within single-family detached developments the IZO would have provisions to allow attached units such as duets or townhomes, or where a project is able to use Lower Income Housing Tax Credits (LIHTC) to achieve a multi-family project that would satisfy its inclusionary requirements for those units to be clustered, as a practical matter. The amended IZO allows other exceptions to the clustering/dispersal requirements to be allowed, subject to City Council allowance through an “alternative compliance” approval (see below) and subject to specific findings. • ADUs and JADUs disallowed from counting toward inclusionary requirements (17.44.050.B): The revised IZO explicitly states that ADUs and JADUs may not count toward the IZO. This new requirement is staff’s recommendation, as legally (pursuant to the Ellis Act) the City cannot require a homeowner to rent an ADU (at all), and even if rented, there are significant practical challenges to monitoring and ensuring the unit is rented to an income-qualified household. This provision is not intended to construe that the City does not support or encourage ADUs in general, which could still be used to provide an increment of housing above and beyond the IZO, that is “affordable by design.” Language has been included in the draft amended IZO to that effect. The City Council unanimously supported not allowing JADUs to count toward meeting the IZO but requested additional analysis regarding ADUs. In addition to the above- stated reasons, there are negative reports from staff of cities whose ordinances have allowed ADUs to satisfy their respective IZO only to see virtually all single-family projects elect this option and then face significant challenges with monitoring and enforcement. As such, staff continues to strongly recommend against allowing for ADUs to be used to satisfy the IZO requirements. In particular, it is the intent of the IZO and numerous policies of the Housing Element to secure units that provide housing opportunities for lower-income households in need of those units. The lack of certainty that the unit will actually provide the affordable housing opportunity intended to be secured by the IZO is a compelling reason in support of the staff and Planning Commission recommendation, consistent with the City's stated policy goals. • Unit Size. The proposed amendments allow for: o For-sale inclusionary units: Living area to be up to 50 percent of the size of the average of the market-rate units. o Rental inclusionary units: Minimum unit sizes are specified based on number of bedrooms. (1) a studio shall be at least 450 net square feet; (2) a one-bedroom Page 90 of 658