Title
Public Hearing to Consider Introduction of Ordinance to Amending the Alameda Municipal Code by Amending Section 30-16 Inclusionary Housing Requirements for Residential Projects.
In accordance with the California Environmental Quality Act (CEQA), this action is categorically exempt from environmental review pursuant to CEQA Guidelines section 15061(b)(3). (Planning, Building and Transportation)
Body
To: Honorable Mayor and Members of the City Council
From: Adam W. Politzer, Interim City Manager
EXECUTIVE SUMMARY
The City Council has recognized the need to update the inclusionary housing ordinance since adopting the Housing Element in 2022. In 2024 the City of Alameda (City) retained a consulting firm to provide advice and analysis based on best practice and local conditions. An ad hoc working group was also formed in 2024 to review their work, with members representing the Planning Board, Alameda Housing Authority, Housing and Human Services Division, and the development community. Outreach was also made to non-profit partners and housing advocates. This led to public workshop discussions with the Planning Board and City Council in 2025.
The Planning Board and City Council provided guidance on several options to be considered, including ways to adjust the percentage requirements for each of the affordability levels, in-lieu fee options, and off-site project development parameters. The recommended Ordinance reflects this guidance.
On April 13, 2026, the Planning Board conducted a public hearing and made a recommendation to City Council recommending the Ordinance as shown in the attachments to this report. In making its recommendation, the Planning Board emphasized the need to make local adjustments to assist with making housing development more feasible, to provide certainty in the development review process, and to provide flexibility through a variety of compliance options.
In its action, the Planning Board included a recommendation that a fee study be completed in support of a future amendment to consider in-lieu fee options within the next 12 months. The Planning Board also recommended that staff prepare an administrative solution to convert vacant moderate income rental inclusionary units to other income levels or find qualified occupants within the next six (6) months.
Staff recommends that the City Council hold a public hearing and adopt the first reading of the draft amended Ordinance. The existing Ordinance is provided as Exhibit 1. Proposed amendments are provided in the Ordinance, and shown in track changes, included with this report.
BACKGROUND
The requirement that new development contributes to the provision of affordable housing is a widely accepted development regulation in California. Alameda has had such a requirement since 2004.
Previous staff reports and workshops provided an overview of the overarching concepts and the Alameda-specific policies, ordinance, programs and issues for the Planning Board and City Council. Exhibit 2 and Exhibit 3 provide that background. The recommended amendments are informed by the City’s consultant, Street Level Advisors, a local firm with national experience in housing policy and economics, as well as by State and regional housing policy. In particular, State law AB1505, applicable to rentals (Govt. Code 65850 and 65850.01), and administrative guidance for the regional Transit-Oriented Communities (TOC) program implemented by the Metropolitan Transportation Commission (MTC) require alternative means of compliance that may include, but are not limited to, in-lieu fees, land dedication, off-site construction, or acquisition and rehabilitation of existing units. The TOC incentive program will prioritize a portion of future transportation funding awards on the basis of policies that cities have adopted. Consistency with State law and the TOC program guidance will help the City advance affordable housing and qualify for future funding opportunities. The proposed amended Ordinance includes a mix of income options that are all comparable to 15% low-income, as required by MTC TOC so the City can apply and be competitive for transportation funding.
DISCUSSION
The following is a summary of the recommended changes to the Inclusionary Housing Program recommended by staff and the Planning Board. All of the recommended changes are designed to support the following goals and objectives:
• Ensure consistency with current State and regional requirements for affordable housing programs.
• Update the City’s 2004 requirements to reflect current economic and housing conditions and improve the financial feasibility of housing development in Alameda.
• Tailor the requirements to better reflect local housing needs.
Inclusionary Housing Requirements. The current ordinance has a requirement of 15% for inclusionary housing for all residential projects, which is comprised of 4% very low income units, 4% low income, and 7% moderate income units. The proposed revisions are designed to better tailor the requirements to reflect the areas of greatest affordable housing needs for both rental and for sale housing.
Rental Projects. For rental projects, the amendments adjust the current 15% requirement, which includes a 7% requirement for moderate income units, to instead focus on Low-Income households (as recommended by the state and regional agencies), or an equivalent ratio of units affordable to Low and Very-Low Income households, as shown in Table 1 below. This adjustment reflects the significant need for low-income rental units in Alameda and the fact that the moderate income units are currently at or near market rate rental units, highlighting that market rate units available in Alameda are affordable to households that qualify as “moderate income”. Currently, moderate income units often remain vacant since market rate units are comparable with no compliance requirements.
Table 1 - Income Mix Options for Rental Units.
Ownership Projects. The amendments adjust the current 15% requirement which includes a 4% requirement for very low-income units in ownership residential projects. Instead, the recommendation is to focus on moderate rate and low-income housing ownership units, which are in high demand in Alameda and recommended by the regional agencies. As shown in Table 2 below, the amendments allow a residential project with ownership units to provide 15% moderate income units, or 6% moderate income and 6% low-income units, or 10% low-income units.
Table 2 - Income Mix Options for Ownership Units.
Clustered Development / Land Dedication. The Ordinance expands upon the current provisions related to off-site construction of affordable units to include provisions for “clustered development”. Not uncommon in Alameda, a “clustered development” is a development where some, or all, of the affordable units are clustered in a single building or a series of buildings on the same development site as the market rate units. These arrangements generally involve a market-rate developer improving and dedicating land on the site for an affordable housing partner. The partnership often includes a financial subsidy from the market rate developer to the non-profit to ensure that the affordable housing project is financially feasible. Depending on the structure, the non-profit partner may be able to leverage other sources of subsidy to increase the number of affordable units, depth of affordability levels, or services provided to residents. In a clustered development, the City imposes conditions of approval on the clustered development to ensure that the affordable units are constructed concurrently with the market rate units, as required by the Ordinance. The draft amendments are designed to recognize this development approach and codify the requirements which the City has historically used to review such developments. Examples of clustered developments built in Alameda include Littlejohn Commons built as part of the Del Monte development and Corsair Flats built as part of Alameda Point Site A.
Term of Affordability. The draft amendments extend the period during which Below Market Rate (BMR) units must remain affordable from 59 to 99 years, consistent with best practice. Recently, many subsidized affordable units in the region have reached the end of their affordability restrictions, causing a loss of affordable units which can be addressed with a longer term requirement. At approximately 55 years, non-profit affordable housing operators in clustered developments often refinance and expand affordability restrictions to even longer periods.
In-Lieu Fees. Under the current ordinance, the City Council establishes an in-lieu fee for small projects, which are between five and nine units in size. The use of those funds is strictly limited by the ordinance to support affordable housing development. Consistent with best practice, the Planning Board and staff believe that expanding the in-lieu fee provision to larger projects would benefit the City’s affordable housing program objectives. Although rough fee recommendations were discussed with the Board earlier, a formal fee study will require a budget allocation and consultant report to recommend a specific fee for an expanded program. Planning Board recommended that the study be completed and an update be brought back to the Board within 12 months. Staff is in full support of the Planning Board’s request. Any future decision to expand the in-lieu program will require a future ordinance amendment that will require Planning Board and City Council public hearings and consideration.
Extremely Low and Acutely and Extremely Low Income. State law has begun to also regulate “Acutely Low Income,” defined as 15% of Area Median Income (AMI), and “Extremely Low Income,” defined as 30% of AMI. Currently State law does not include Acutely and Extremely Low Income in its Regional Housing Needs Allocation (RHNA) AMI requirements. Nonetheless, staff have also included definitions of these income category in the Ordinance in anticipation of further State regulation or requirements.
This proposed amendment to the Inclusionary Housing Ordinance would apply to any future housing developments as well as retroactively to housing development projects that have already been entitled but not yet built. These include Alameda Marina Phase 3 (The Foundry) and a project at Marina Village Parkway and Mariner Square Drive.
FINANCIAL IMPACT
The adoption of a revised ordinance that addresses the Citywide need for affordable housing with more options for market rate development sponsors to choose from would likely increase the amount and pace of new development of market rate and affordable housing, which would have a positive impact on the economy and tax revenues for the City as well as possible fee revenue.
ENVIRONMENTAL REVIEW
In accordance with the California Environmental Quality Act (CEQA), this action is categorically exempt from further environmental review pursuant to CEQA Guidelines section 15061(b)(3) (“Common sense exemption”) because CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Requiring affordable housing to be included, funded, or otherwise supported does not modify generally applicable development regulations or environmental review requirements.
RECOMMENDATION
Hold a public hearing and introduce an Ordinance amending the Alameda Municipal Code by amending Section 30-16 Inclusionary Housing Requirements for residential projects.
Respectfully submitted,
Abby Thorne-Lyman, Planning Building & Transportation Interim Director
By,
Steven Buckley, Planning Services Manager
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibits:
1. Existing Inclusionary Housing Ordinance
2. Staff Report to City Council, December 2, 2025
3. Staff Report to Planning Board, April 13, 2026