San Diego County adopts inclusionary housing ordinance with tiered requirements and ranked alternatives

San Diego County’s Board of Supervisors on June 24 adopted a long‑debated inclusionary housing ordinance that requires many new residential projects of 10 or more units to provide deed‑restricted affordable housing or meet the obligation through ranked alternative compliance options.

The board voted 4–1 to approve a motion that (a) selects tier‑two set‑aside options for most for‑sale and for‑rent projects, (b) sets a 10‑unit minimum project size for applicability, (c) establishes a prioritized list of alternative compliance tools — land donation with covenants, on‑site affordable for‑sale ADUs, allowing an in‑lieu fee to satisfy part of an obligation (the motion specified 50% as a baseline and allowed combinations and additional in‑lieu flexibility by direction), then off‑site development as a last resort — and (d) makes certain incentives available, including an expanded local density bonus and a priority review process for projects that substantially exceed affordable unit requirements. Chair Pro Tem McGeary and Vice Chair Montgomery‑Steppe led the motion; Supervisor Anderson cast the lone no vote.

Why it mattered: staff told the board the ordinance is an implementation item for the county housing element and could produce an estimated 15 to 60 deed‑restricted units per year depending on policy choices. Staff framed the ordinance as a tool to capture land value gains and broaden access to mixed‑income housing while noting it would not, on its own, close the county’s deepest affordability gaps.

What the ordinance does and how it will work: the ordinance organizes options into three tiers that reflect trade‑offs between deeper affordability and project feasibility. The board adopted tier‑two choices for the typical for‑sale and for‑rent pathways while directing that general plan amendment (GPA) projects be held to a stronger standard (the motion also asked staff to return in FY 2027–28 with fresh data and an implementation study). Under the approved approach, applicants seeking to use an alternative compliance option must demonstrate that higher‑priority alternatives are infeasible before moving down the prioritized list. The motion removes the previously proposed strict 3‑mile limitation for off‑site units and allows land donations to be considered within incorporated areas, village areas, VMT‑efficient or infill areas, or high/highest resource areas as defined in the general plan.

Public comment and stakeholder positions: advocates and a coalition of community groups urged stronger requirements and deeper affordability targeted to very low‑income households; the Sierra Club urged a 20% low‑income requirement for GPAs and opposed an in‑lieu fee option. Builders’ groups and developers urged flexibility, enhanced incentives, and a multi‑year phase‑in so that projects in the pipeline could continue and to avoid undermining market‑rate production. A range of public commenters also raised concerns about fees, spatial separation of affordable units, and the county’s capacity to spend in‑lieu funds on affordable projects.

Implementation and next steps: the board directed staff to prepare implementation guidelines that require applicants to show why higher‑priority alternatives cannot be used, clarify the interaction between county incentives and the state density bonus, and return with a new market feasibility study in FY 2027–28 that will inform potential movement to stronger set‑asides. Staff also recommended CEQA findings and adoption of a companion in‑lieu fee ordinance where applicable. The board included a 120‑day post‑adoption grace period for new submittals.

Quotes from the meeting: “San Diegans can’t wait any longer,” Chair Pro Tem McGeary said during debate, urging urgency while balancing feasibility concerns. Nicole Lilly of Our Time to Act, part of a coalition presenting to the board, told supervisors: “Inclusionary housing is a vital and proven tool for producing affordable housing.” Susan Baldwin, representing the Sierra Club, urged requiring “20% affordable units at 65% AMI with no in‑lieu fee option” for GPAs.

What to watch: staff’s FY 2027–28 follow‑up study and the implementation guidelines will be the vehicle for clarifying when and how developers may use in‑lieu fees, land donations, and ADU strategies; the study will also inform any move toward stronger (tier‑three) set‑asides for certain project types. The ordinance’s funding and in‑lieu fee mechanics, how the county spends any funds generated, and the detailed incentive package will be important to monitor.

Vote: motion passed 4–1 (Yes: McGeary, Lawson‑Remer, Montgomery‑Steppe, Desmond; No: Anderson).