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Commission hears feasibility study on 15% inclusionary requirement; staff asked to refine town‑specific models
Summary
Consultant Derek Braun told the Planning Commission that a 15% inclusionary requirement is likely feasible for ownership projects in Los Altos Hills, while rental projects are currently marginal due to construction and financing costs. Commissioners asked the consultant to rerun models using local unit‑size assumptions (700–800 sq ft) and to return with policy “straw men.”
Consultant Derek Braun of Strategic Economics presented a feasibility study April 2 that tested inclusionary housing options and an affordable‑housing impact‑fee nexus analysis for Los Altos Hills.
Braun told commissioners the study examined multiple development prototypes — large and medium single‑family homes, townhomes, small rental projects and five‑story condominiums — and concluded that a 15% inclusionary requirement focused on ownership projects (targeting moderate income or a mix of moderate/low income) is generally financially supportable for townhomes and ownership prototypes under current market assumptions. By contrast, larger rental prototypes were not financially feasible in most modeled scenarios due to high construction and financing costs; the consultant recommended conservatism for rental requirements and suggested possible scenarios that include extremely low income units but at reduced overall percentages.
Commissioners asked the consultant to re‑run feasibility analyses using product assumptions closer to Los Altos Hills’ zoning (20–30 units/acre and average unit sizes in the 750–800 sq ft range) rather than larger regional averages. They also discussed the difference between on‑site inclusionary units and in‑lieu/impact fees. Braun explained that impact fees require a nexus study and typically fall well below the legal maximum; jurisdictions often charge a small fraction of the maximum justifiable fee and commonly use in‑lieu fees to fund 100% affordable projects that can reach deeper affordability levels.
Key policy trade‑offs emerged across the discussion: commissioners signaled interest in prioritizing extremely low and very low income production for rental projects, favoring on‑site units for ownership projects when feasible, and using targeted impact fees or in‑lieu fees for single‑unit or small projects that cannot support on‑site units. Several commissioners also suggested applying higher fees or thresholds for very large/luxury single‑family homes (e.g., fees only above a certain square‑foot threshold).
Next steps: staff and the consultant will produce a public draft report that incorporates commission feedback (including updated prototypes at 20–30 units/acre and 750–800 sq ft averages), take the study to the Finance & Investment Committee, and then present recommendations to city council. Commissioners asked the consultant to prepare a set of policy bundles or a “straw man” that illustrates how different combinations of percentages, income targets and fee alternatives would affect production and developer feasibility.
