Alameda staff propose flexible options to update inclusionary housing rule as developers warn projects are unaffordable

Alameda planning staff told the City Council on Dec. 2 that the city’s 20‑year‑old inclusionary housing ordinance—15% affordable across the board—no longer matches local need or current market conditions and should be updated to give developers and the city more flexible tools.

“During our last housing element update, we discovered that our current inclusionary ordinance … doesn’t quite meet our actual local need,” Planning Director Alan Tai told council. Staff proposed separating rental and ownership requirements, expanding in‑lieu (mitigation) fees charged per net residential square foot, allowing clustered off‑site units in some cases, and extending deed‑restriction terms from 59 to 99 years.

Why it matters: Alameda must meet a regional housing target of 5,350 units for 2023–31, but permit activity is far below that pace. Staff said builders have planning entitlements but are not pulling building permits amid higher financing and construction costs—so the question facing council is how to change local policy to help projects move to construction without undermining affordable housing goals.

Staff framed the update around two policy drivers: (1) state law treats inclusionary requirements as potential barriers if too rigid, so cities must offer alternatives; and (2) state and regional funding increasingly rewards clear, fundable local affordable‑housing strategies. “We’re looking at best positioning our city to be eligible for the funding,” Tai said. Planning Services Manager Steve Buckley said a validated regional pro‑forma tool is being used to compare the developer subsidy under various options.

Developer perspective: Representatives of Pacific Development said medium‑density projects in today’s market are often not feasible. “The Foundry project … cannot support any on‑site BMR requirement,” Andrew Rosenberg told council, offering $10 per gross square foot as a proposed in‑lieu fee that would make a 260‑unit waterfront project financeable. That figure was much lower than staff’s illustrative proposal ($25/sq ft rental; $50/sq ft ownership), and prompted multiple council members to ask staff to study a limited, temporary lower fee or flexible fee schedule as a near‑term incentive.

Housing‑provider view: Nonprofit housing advocates urged the council to preserve or increase the share of very‑low‑income units and to ensure any in‑lieu fee change is backed by a nexus study tying fee levels to demonstrated impacts. “If in‑lieu fees are adjusted, that will likely require a new nexus study,” said Reverend Sophia Dwit of East Bay housing organizations.

Council reaction and next steps: Council members asked staff to run feasibility and nexus analyses, and discussed options including pilot, time‑limited lower fees for specific projects, or project‑by‑project agreements to unlock shovel‑ready developments. No ordinance vote or fee level was adopted; staff said it would return with draft code language and supporting financial studies.

Context and sources: The presentation and public comments came during a staff workshop; staff noted the city has issued 447 permits since Jan. 1, 2023—less than 10% of the RHNA target—and that reworking the inclusionary framework is one tool among many to encourage housing production. The record includes staff slides and public testimony from developers and housing advocates.