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Study finds Monterey Park's inclusionary requirements strain feasibility; staff to return with phased options
Summary
An EPS feasibility update showed most development prototypes struggle to absorb the city's current 15% inclusionary requirement and estimated in-lieu fees of roughly $30'$59 per square foot; EPS and staff recommended phasing, adjusting thresholds for state density bonus, or lower in-lieu fees and council asked staff to refine options.
Consultant Chinmay Damle of Economic & Planning Systems presented a third iteration of the inclusionary housing feasibility study and told the council that, while townhome prototypes show some feasibility, most condo and mixed-use prototypes do not meet standard developer return thresholds under current market conditions. Damle summarized: "In 2023, Monterey Park adopted their inclusionary housing ordinance, and their requirements were, for rental projects, 15% inclusionary units."
The consultant calculated equivalent in-lieu fees and found citywide fees in the range of about $30 to $41 per square foot and mixed-use fees from $35 to $59 per square foot. EPS outlined policy options: a phased implementation, adjusting rental percentages to qualify for the state density bonus (suggestion: raise from 9% to 10% low-income to trigger a density bonus for rental projects), adopting a lower in-lieu fee to encourage developers to pay rather than build on-site, or limiting IHO to for-sale prototypes. Council members supported pausing full implementation while directing staff to return with refined phase-in or lowered-fee options and a plan to align the ordinance with state incentives.
