HomeMy WebLinkAbout6.1 Amendment to the DMC Inclusionary Zoning Regulations, Adopting a Methodology for Determining Affordable Housing In-Lieu Fees and Adopting Non-Residential Development Affordable Housing Impact Feesr
DUBLIN
CALIFORNIA
STAFF REPORT
CITY COUNCIL
DATE: .Line 4, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
Agenda Item 6.1
SU B.ECT: Amendments to the Dublin Municipal Code Inclusionary Zoning Regulations
(Chapter 8.68), Adoption of a Methodology for Determining Affordable
Housing In -Lieu Fees and Adoption of Non -Residential Development
Affordable Housing Impact Fees (PLPA-2023-00032)
Prepared by: Jason Earl, Senior Management Analyst
EXECUTIVE SUMMARY:
The City Council will hold a public hearing to consider adopting amendments to the Dublin
Municipal Code Inclusionary Zoning Regulations (Chapter 8.68), the methodology for establishing
the Affordable Housing In -Lieu Fee, and the Non -Residential Development Affordable Housing
Impact Fee. The amendments to the Inclusionary Zoning Regulations include lowering the
applicability of the regulations to residential development projects of 10 or more units, creating
separate affordability requirements for different product types, resetting the 55-year affordable
resale restriction upon transfer of ownership units, and applying selection criteria to resale of
ownership units. The Affordable Housing In -Lieu Fee program would be revised to establish fees
on a per -square -foot basis for each product type. The Non -Residential Development Affordable
Housing Impact Fee program would be retained with an inflationary index but would combine
Research & Development and Office uses into a single category and set the fee at $1.39 per square
foot.
STAFF RECOMMENDATION:
Conduct the public hearing, deliberate, and take the following actions: 1) Waive the reading and
INTRODUCE the Ordinance Approving Amendments to Dublin Municipal Code Chapter 8.68
(Inclusionary Zoning Regulations); 2) Adopt the Resolution Establishing the Methodology for
Determining the Affordable Housing In -Lieu Fee for Future Residential Units Subject to the City of
Dublin Inclusionary Zoning Regulations; and 3) Adopt the Resolution Adopting a Non -Residential
Development Affordable Housing Impact Fee Within the City of Dublin.
Page 1 of 6
1
FINANCIAL IMPACT:
The Affordable Housing In -Lieu Fee is proposed to be amended to align with the economics of
developing affordable housing. This will generate additional funding for the Affordable Housing
Fund. The proposed amendments to the Non -Residential Affordable Housing Impact Fee program
will combine the Research & Development and Office uses into a single fee and ensure that the
impact fee program does not overburden the economic development priorities set by the City
Council.
DESCRIPTION:
Background
The City of Dublin Two -Year Strategic Plan includes Strategy 2: Housing Affordability, which
includes the following two objectives:
• Objective 2b: Ensure the City's inclusionary zoning regulations incentivize targeted housing
production; and
• Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage
fee and affordable housing in -lieu fee for for -sale and rental housing.
The City of Dublin hired a consulting firm, Economic and Planning Systems (EPS), to work with
Staff to develop amendments to the Inclusionary Zoning Regulations (IZR), the Affordable Housing
In -Lieu Fee and the Non -Residential Development Affordable Housing Impact Fee (aka
Commercial Linkage Fee) programs. Staff and EPS prepared an analysis of the development
economics, reviewed industry best practices, reviewed inclusionary regulations in the
surrounding Tri-Valley cities, and evaluated the nexus between non-residential development and
the need it generates for affordable housing. An Affordable Housing In -Lieu Fee Feasibility Study
and the Commercial Linkage Fee Nexus Study were prepared and included as Attachments 3 and 5
of this Staff Report.
On the August 15, 2023 and September 19, 2023, the City Council received informational reports
about the Inclusionary Zoning Regulations, Affordable Housing In -Lieu Fee, and Non -Residential
Development Affordable Housing Impact Fee and directed Staff to prepare amendments to these
programs.
On January 9, 2024, the City Council held a public hearing to consider the amendments to the IZR
and related fee programs (Attachment 8). At the conclusion of the public hearing, the City Council
directed Staff to return with additional information and analysis regarding the feasibility of raising
the inclusionary requirements for for -sale units to 15%, increasing the in -lieu fee on for -sale units,
differentiating the affordable housing requirements for different ownership product types, and
evaluate the impact of interest rate fluctuations on the feasibility of the IZR.
On March 19, 2024, the City Council held a Study Session to review the additional information and
provided direction to prepare the following additional amendments to the IZR:
Page 2 of 6
2
• Increase the affordable housing requirement for single-family detached units and
townhomes from 12.5% to 15%; and
• Require condominium developments to provide 10% of the units as affordable at the same
income levels required for apartments, and ensure these regulations apply to projects with
a density consistent with the feasibility analysis; and
• Assess in -lieu fees of $15 per -square -foot for each market -rate ownership (for -sale) unit
and $9 per -square -foot for each market -rate condominium unit.
Analysis
The analysis below focuses on the additional amendments made to the draft Inclusionary Zoning
Regulations and Affordable Housing In -Lieu Fee Methodology based on the direction received at
the March 19, 2024 Study Session. The City Council Staff Report dated January 9, 2024
(Attachment 8) has more information about the broader set of proposed amendments to the IZR,
Affordable Housing In -Lieu Fee Methodology, and Non -Residential Development Affordable
Housing Impact Fee.
Inclusionary Zoning Requirements
The economics of developing for -sale ownership units such as single-family detached units and
townhomes is significantly different from higher density condominium units. As there is capacity
to increase the affordable housing requirement for ownership units, the proposed ordinance has
been revised to increase the requirement for ownership units from the current 12.5% to 15%.
Higher density condominium development is at the limits of feasibility, and the subsidy required
for affordable units pushes that limit even further. Reducing the inclusionary requirement for
condominiums would help improve the financial feasibility of such projects. Therefore, the
proposed amendments separate condominiums of 30+ units per acre from other ownership units.
The proposed ordinance has been revised to include an affordable housing requirement of 10%
for these condominium developments. The affordable housing requirement for condominium
developments of less than 30 units per acre would be that of Ownership Units. Table 1
summarizes these proposed regulations.
Table 1.Ownershin and Rental Policy Recommendations
Project Size
Threshold
Overall
Affordability
Requirement
Very -
Low-
Income
Low-
Income
Moderate -
Income
Ownership Units (other
than Condominium 10 Units 15% 0% 40% 60%
Units)
Rental Units &
Condominium Units
10 Units
10%
0% 100%
0%
The following are the sections of the draft ordinance that have been revised to incorporate the
changes noted above:
• Section 8.68.020 Definitions was updated with the addition of Subsection C adding the
definition for Condominium.
Page 3 of 6
3
o "Condominium" means a development consisting of condominiums. A condominium
consists of an undivided interest in common in a portion of real property coupled
with a separate interest in space called a unit, the boundaries of which are described
on a recorded final map, parcel map, or condominium plan in sufficient detail to
locate all boundaries thereof.
• Section 8.68.030 General Requirements Subsection A was updated to include
Condominiums of 30+ units per acre.
• Section 8.68.030 General Requirements Subsection B was updated to include
Condominiums with less than 30 units per acre, and to reflect the new Inclusionary Zoning
Requirement of 15% for Ownership (for -sale) Units (other than Condominiums).
The proposed amendments to the Inclusionary Zoning Regulations align the economics of
developing affordable housing and the efforts of the City Council to prioritize the collection of fees
that can be leveraged to facilitate the production of lower income units to satisfy the City's RHNA
while providing on -site units.
Attachment 1 is the draft Ordinance approving amendments to the Inclusionary Zoning
Regulations. Attachment 6 is the proposed amendments in redline format where underlined text is
proposed to be added, and text with a strikethrough is proposed to be deleted. Attachment 8
includes a comprehensive discussion of the proposed amendments to the Inclusionary Zoning
Regulations.
Affordable Housing In -Lieu Fee
The proposed methodology for establishing the Affordable Housing In -Lieu Fee would assess the
fee on a per -square -foot basis for each market -rate unit produced. The proposed methodology for
determining the fee is based on the Affordable Housing In -Lieu Fee Feasibility Study and rounded
to the nearest dollar. This fee is reflective of the cost to produce affordable units of each product
type. The proposed fee for ownership (for -sale) units (other than high density Condominiums of
30+ units per acre) would be set at $15 per square foot and adjusted annually based on an
inflationary index. The proposed fee is equivalent to approximately $546,000 per affordable
ownership unit. The proposed fee for rental and high -density Condominium units (condominiums
with a density of 30+ units per acre) would be set at $9 per square foot and adjusted annually
based on an inflationary index. The proposed fee is equivalent to approximately $232,650 per
affordable rental or condominium unit. The Resolution to establishing the methodology for
determining the Affordable Housing In -Lieu Fee is included as Attachment 2.
Non -Residential Development Affordable Housing Impact Fee
The Dublin Municipal Code (Chapter 7.86) establishes the authority for the City to impose a Non -
Residential Development Affordable Housing Impact Fee. This fee is based on a nexus between
non-residential development and the need it generates for affordable housing. New non-
residential development is assessed this fee on a per -square -foot basis at the time a building
permit is issued. The existing fee structure is proposed to be retained but would combine
Research & Development and Office uses into a single category and set the fee at $1.39 per square
foot. Additionally, the names of the land use categories have been updated to be consistent with
the Nexus Study and current industry terminology. Please refer to the City Council Staff Report
Page 4 of 6
4
dated January 9, 2024, for further details (Attachment 8). No additional amendments to the
program are proposed since that meeting. The Resolution adopting the Non -Residential
Development Affordable Housing Impact Fee is included as Attachment 4.
STRATEGIC PLAN INITIATIVE:
Strategy 2: Housing Affordability
Objective 2b: Ensure the City's inclusionary zoning regulations incentivize targeted housing
production.
Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage fee and
affordable housing in -lieu fee for for -sale and rental housing.
ENVIRONMENTAL DETERMINATION:
The California Environmental Quality Act (CEQA), together with State Guidelines and City of
Dublin CEQA Guidelines and Procedures require that certain projects be reviewed for
environmental impacts and that environmental documents be prepared. The proposed Zoning
Ordinance Amendments are exempt from the requirements of CEQA pursuant to CEQA Guidelines
Section 15061(b)(3) and Section 15378(b)(4) as the amendments would not result in any
physical changes it can be seen with certainty that the amendments would not have a significant
effect on the environment, and the amendments do not involve any commitment to any specific
project.
PLANNING COMMISSION REVIEW:
The Planning Commission held a public hearing on May 14, 2024 to consider the additional
amendments to the IZR. The Planning Commission made a unanimous recommendation of
approval on the proposed changes to the regulations. Planning Commission Resolution 24-04
recommending the City Council approval is included as Attachment 7.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
In accordance with State law, a public notice was published in the East Bay Times 10 days and five
days prior to the hearing and posted at several locations throughout the City. The public notice
was provided to all people who have expressed an interest in being notified of this item 14 days
prior to the meeting. The Staff Report for this public hearing was also made available on the City's
website.
ATTACHMENTS:
1) Ordinance Approving Amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary
Zoning Regulations)
2) Resolution Establishing the Methodology for Determining the Affordable Housing In -Lieu Fee
for Future Residential Units Subject to the City of Dublin Inclusionary Zoning Regulations
3) Exhibit A to the Resolution - Inclusionary Housing Feasibility Report dated December 7, 2023
and Revised March 27, 2024
Page 5 of 6
5
4) Resolution Adopting a Non -Residential Development Affordable Housing Impact Fee Within
the City of Dublin
5) Exhibit A to the Resolution - Commercial Linkage Fee Nexus Study dated October 27, 2023
6) Redlined Version of Amendment to Inclusionary Zoning Regulations
7) Planning Commission Resolution 24-04 Recommending City Council Approval of Amendments
to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations)
8) City Council Staff Report Dated January 9, 2024
9) City Council Staff Report Dated March 19, 2024
Page 6 of 6
6
Attachment I
ORDINANCE NO. XX — 24
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING AMENDMENTS TO DUBLIN MUNICIPAL CODE CHAPTER 8.68
(INCLUSIONARY ZONING REGULATIONS)
PLPA-2023-00032
The Dublin City Council does ordain as follows:
SECTION 1. RECITALS
A. The City occasionally initiates amendments to the Dublin Municipal Code to clarify, add, or
amend certain provisions to ensure that it remains current with federal and state law, internally
consistent, simple to understand and implement, and relevant to changes occurring in the
community.
B. Staff initiated amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning
Regulations) consistent with the City of Dublin Two -Year Strategic Plan, which includes
Strategy 2: Housing Affordability, Objective 2b: Ensure the City's inclusionary zoning
regulations incentivize targeted housing production and Objective 2c: Prepare a nexus study
to evaluate the affordable housing commercial linkage.
C. The City selected the consulting firm Economic and Planning Systems (EPS) to prepare an
Inclusionary Zoning and Affordable Housing In -Lieu Fee Feasibility Study and Commercial
Linkage Fee Nexus Study to inform the proposed amendments.
D. On August 15, 2023, and September 19, 2023, the City Council received informational reports
on the Commercial Linkage Fee and Inclusionary Zoning and In -Lieu Fee programs and
provided direction to staff to prepare updates to the programs.
E. On January 9, 2024, the City Council held a public hearing to consider amendments to the
Inclusionary Zoning Regulations and Affordable Housing In -Lieu Fee. City Council directed
Staff to return at a future meeting with additional information and analysis regarding increasing
the inclusionary zoning requirement to 15%; increasing the in -lieu fee; differentiating the
affordable housing requirements for different ownership product types; the impact of interest
rate fluctuations; and a projection of in -lieu fee revenue.
F. On March 19, 2024, the City Council held a Study Session and provided direction to staff
regarding increasing the inclusionary zoning requirement to 15%; increasing the in -lieu fee;
differentiating the affordable housing requirements for different ownership product types; the
impact of interest rate fluctuations; and a projection of in -lieu fee revenue.
G. The proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning
Regulations) include changes to the affordability requirements for rental and ownership
development projects, modifications to the provisions for the payment of fees in -lieu of
constructing affordable units, revisions to the allocation of units to income levels, and revisions
to the exceptions to the affordability requirements.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 1 of 10
7
H. The Planning Commission held a duly noticed public hearing on May 14, 2024, during which
all interested persons were heard, and adopted Resolution No. 24-04 recommending that the
City Council approve the proposed amendments to Dublin Municipal Code Chapter 8.68
(Inclusionary Zoning Regulations).
I. A Staff Report was submitted to the Dublin City Council recommending approval of the
proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning
Regulations).
J. The City Council held a public hearing on the proposed amendments to Dublin Municipal Code
Chapter 8.68 (Inclusionary Zoning Regulations) on June 4, 2024, at which time all interested
persons had an opportunity to be heard.
K. Proper notice of said hearing was given in all respects as required by law.
L. The City Council did hear and consider all said reports, recommendations and testimony herein
above set forth and used its independent judgement to evaluate the project.
SECTION 2. FINDINGS
A. Pursuant to Dublin Municipal Code Section 8.120.050.B., the City Council hereby finds that
the amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations)
are consistent with the General Plan and any applicable Specific Plan in that they would
provide an update to the City's affordable housing requirements. Specifically, the amendments
would implement Housing Element Program B.4, which calls for a review of the Inclusionary
Zoning Regulations and preparation of a nexus study reviewing the affordable housing in -lieu
fee.
B. The California Environmental Quality Act (CEQA), together with the State Guidelines and City
of Dublin CEQA Guidelines and Procedures require that certain projects be reviewed for
environmental impacts and that environmental documents be prepared. The City Council
hereby finds that the amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning
Regulations) are exempt from the requirements of CEQA pursuant to CEQA Guidelines
Section 15061(b)(3) as the amendments would not result in any physical changes and it can
be seen with certainty that the amendments would not have a significant effect on the
environment.
SECTION 3. AMENDMENT OF CHAPTER 8.68.
Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) is amended to read as
follows:
"Inclusionary Zoning Regulations"
8.68.010 Purpose.
The purpose of this Chapter is to:
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 2 of 10 8
A. Enhance the public welfare and assure that further housing development contributes to
the attainment of the City's housing goals by increasing the production of residential units
affordable by households of very low, low, and moderate income.
B. Assure that the limited remaining developable land in the City's planning area is utilized
in a manner consistent with the City's housing policies and needs.
8.68.020 Definitions.
As used in this Chapter, each of the following terms shall be defined as follows:
A. "Affordable unit" means an ownership or rental -housing unit, affordable to households with
very low-, low-, or moderate -incomes as defined in this Chapter.
1. Rental units are deemed affordable units if the annual rent does not exceed 30% of
maximum income level for very low-, low- and moderate -income households, adjusted for
household size and as defined below.
2. Owner -occupied units are deemed affordable units if the sales price results in
annual housing expenses that do not exceed 35% of the maximum income level for very
low-, low-, and moderate -income households, adjusted for household size and as defined
below.
B. "Applicant" means any person, firm, partnership, association, joint venture, corporation, or
any entity or combination of entities that seeks city real property development permits or
approvals.
C. "Condominium" means a development consisting of condominiums. A condominium
consists of an undivided interest in common in a portion of real property coupled with a
separate interest in space called a unit, the boundaries of which are described on a
recorded final map, parcel map, or condominium plan in sufficient detail to locate all
boundaries thereof.
D. "Dwelling unit" means a dwelling designed and intended for occupancy by one household.
E. "Very low-, low-, and moderate -income levels" means those income and eligibility levels
determined periodically by the California Department of Housing and Community
Development based on Alameda County median income levels adjusted for family size. Such
levels shall be calculated on the basis of gross annual household income considering
household size and number of dependents, income of all household members eighteen years
of age and older, , and all other sources of household income and will be recertified as set
forth by local standards, and state and federal housing law.
1. "Very low-income" means 50% or less of the median income, adjusted for actual
household size.
2. "Low-income" means more than 50% and up to 80% of the median income, adjusted
for actual household size.
3. "Moderate -income" means more than 80% and up to 120% of the median income,
adjusted for actual household size.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 3 of 10
9
F. "Resale controls and/or rent restrictions" means legal restrictions by which the affordable
units shall be restricted to ensure that the unit remains affordable to very low-, low-, or
moderate -income households, as applicable, for a period of not less than 55 years. The 55
year period will reset each time ownership of the unit is transferred through a bona fide sales
transaction with a third party during the resale restriction period sale. With respect to rental
units, such rent restrictions shall be in the form of a regulatory agreement recorded against
the applicable property. With respect to owner -occupied units, such resale controls shall be in
the form of resale restrictions, deeds of trust, and/or other similar documents recorded against
the applicable property.
G. "Residential development" includes, without limitation, detached single-family dwellings,
multiple -dwelling structures, groups of dwellings, condominium or townhouse developments,
condominium conversions, cooperative developments, mixed use developments that include
housing units, and residential land subdivisions intended to be sold to the general public.
8.68.030 General Requirements.
A. Affordability Requirement for Rental Units and Condominium Units. All new rental
residential development projects, and all for -sale Condominium development projects
(condominium developments with a density of 30 units per acre or more) with 10 units or more
designed and intended for permanent occupancy shall construct 10.0% of the total number of
dwelling units within the development as affordable units, except as otherwise provided by this
Chapter, and except when all of the dwelling units (excluding units reserved for property
management) within the project are affordable. (Any Condominium development project with
a density of less than 30 units per acre shall be required to meet the Affordability Requirement
for Ownership Units). The foregoing requirement shall be applied no more than once to an
approved residential development (and generally at the tentative map stage), regardless of
the changes in the character or ownership of the development, except as provided by this
Chapter, provided the total number of units does not change. In applying and calculating the
affordability requirement, any decimal fraction less than or equal to 0.50 may be disregarded,
and any decimal fraction greater than 0.50 shall be construed as one unit.
B. Affordability Requirement for Ownership Units. All for -sale (ownership) residential
development projects (including condominium development projects with a density of less than
30 units per acre), of 10 units or more designed and intended for permanent occupancy shall
construct 15.0% of the total number of dwelling units within the development as affordable
units, except as otherwise provided by this Chapter. The foregoing requirement shall be
applied no more than once to an approved residential development (and generally at the
tentative map stage), regardless of the changes in the character or ownership of the
development, except as provided by this Chapter, provided the total number of units does not
change. In applying and calculating the affordability requirement, any decimal fraction less
than or equal to 0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be
construed as one unit.
C. Allocation of Units to Income Levels. Affordable units provided pursuant to this section
shall be allocated as follows:
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 4 of 10 10
Rental and Condominium Ownership
Units Units
Very low-income households 0% 0%
Low-income households 100% 40%
Moderate -income households 0% 60%
Where the calculation of the allocation results in fewer units than would otherwise be required,
one additional unit should be allocated to the income level with a decimal fraction closest to
0.50.
D. Conditions of Approval: Any tentative map, conditional use permit, or site development
review approving residential development projects subject to this Chapter shall contain
conditions sufficient to ensure compliance with the provisions of this Chapter. Such conditions
shall detail the number of affordable units required, set forth the applicant's manner of
compliance with this Chapter, and require the execution of an agreement imposing appropriate
resale controls and/or rental restrictions on the affordable units.
E. Concurrent Construction. All affordable units in a project or phase of a project shall be
constructed concurrently with market -rate units, unless the City Manager determines in writing
that extenuating circumstances exist that make concurrent construction infeasible or
impractical.
F. Design and Distribution of Affordable Units. All affordable units shall reflect the range
of numbers of bedrooms provided in the project as a whole and shall not be distinguished by
exterior design, construction, or materials. Affordable units may be of smaller size than the
units in the project and may have fewer amenities than the market rate units in the project. All
affordable units shall be reasonably dispersed throughout the project.
8.68.040 Exceptions to Affordability Requirement.
Developers of projects subject to Sections 8.68.030.A and 8.68.030.E shall construct the total
number of affordable dwelling units within the development, unless subject to an exception set
forth in this section. All exceptions require City Council approval.
A. Payment of Fees In Lieu of Constructing Affordable Units. Upon request, the applicant
shall be permitted to pay a fee in lieu of constructing up to 40% of the affordable units that the
developer would otherwise be required to construct pursuant to Sections 8.68.030.A and
8.68.030.B. The amount of the fee shall be as set forth in a resolution of the City Council,
which may be amended from time to time to reflect inflation and changed conditions in the City
and the region. In lieu fees shall be paid at the time and in the amount set forth in the in lieu
fee resolution in effect at the time of issuance of the building permit.
B. Off -Site Projects. An applicant may construct the affordable units not physically within
the development in lieu of constructing some or all of the affordable units within the
development, with the approval of the City Council, if the City Council finds:
1. Construction of the units off -site in lieu of constructing units on -site is consistent with
the Chapter's goal of creating, preserving, maintaining, and protecting housing for very
low-, low- and moderate -income households.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 5 of 10
11
2. Units to be constructed off site are consistent with Section 8.68.030.F above.
3. Would be infeasible or impractical to construct affordable units on -site.
4. Conditions of approval for the project require that the off -site affordable units would be
governed by the terms of a deed restriction and, if applicable, rental restrictions similar to
that used for the on -site affordable units.
5. Conditions of approval for the project, or other security such as a cash deposit, bond,
or letter of credit, are adequate to require the construction of the off -site affordable units
concurrently with the completion of the construction of the residential development or within
a reasonable period (not to exceed five years).
C. Land Dedication. An applicant may dedicate land to the City or City -designated local non-
profit housing developer in lieu of construction of some or all of the required affordable units,
if the City Council finds all of the following:
1. Dedication of land in lieu of constructing units is consistent with the Chapter's goal of
creating, preserving, maintaining, and protecting housing for very low-, low- and moderate -
income households.
2. The dedicated land is useable for its intended purpose; is free of toxic substances and
contaminated soils; is fully improved with infrastructure, adjacent utilities, grading; and all
development -impact fees paid excluding any inclusionary zoning ordinance fees.
3. The proposed land dedication is of sufficient size to meet the following requirements:
a. The dedication includes land sufficient to construct the number of units that the applicant
would otherwise be required to construct by Section 8.68.030.A and Section 8.68.030.B,
based on the size of lots in the subdivision for which the applicant is meeting its obligation;
and
b. The dedication finds the additional land's market value is equal to or exceeds the
difference between the value of a market -rate, 1200-square foot unit, and the price at which
such a unit could be sold as an Affordable Unit, times the number of units required. The
amount an Affordable Unit may be sold at shall be set forth in a resolution adopted by the
City Council as needed.
D. Credit Transfers. An applicant may fully or partially satisfy the requirements of Sections
8.68.030.A and 8.68.030.E through the use of transfer credits created pursuant to
Section 8.68.060. Credit certificates shall be presented to the Community Development
Director, who shall note at the time of project approval the credit certificate by number. Credit
certificates may only be used to satisfy the requirements for Inclusionary Units for the income
category (i.e., very low-, low-, or moderate -income) and number of bedrooms for which they
are issued.
E. Waiver of Requirements. The City Council, at its discretion, may waive, wholly or partially,
the requirements of this ordinance and approve alternate methods of compliance with this
Chapter if the applicant demonstrates, and the City Council finds, that such alternate methods
meet the purposes of this Chapter.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 6 of 10
12
8.68.050 General Procedures for Implementing Inclusionary Zoning Requirements.
A. Agreements. Prior to the issuance of a building permit for an affordable unit, resale
restrictions or rental controls, or both, as the case may be, shall be set forth in an agreement
between the City and the developer, in a form consistent with the City Council -adopted form
agreement, which agreement shall be recorded against the property containing the affordable
units. The agreement shall be executed by the City Manager, and its requirements shall run
with the land and bind the applicant's successors.
B. Rental Units; Occupancy; Annual Report. Agreements involving rental units shall
require the owner of the affordable units to ensure that the units are occupied by tenants whose
monthly income levels do not exceed very low-, low-, or moderate -income levels, as the case
may be, and shall preclude tenants from subletting or subleasing the unit. The agreement shall
also require the owner of the affordable unit to submit an annual report to the City Manager, in
a format approved by the City. The report shall include, but not be limited to the following
information: an identification of the affordable units within the project; the monthly rents
charged and proposed to be charged; vacancy information for the prior year; and the monthly
income for tenants of each affordable unit throughout the prior year.
C. Ownership Units; Occupancy; City's Right of First Refusal. Agreements for ownership
units shall specify that the inclusionary units must be occupied by the owner or owners and
may not be leased or rented without the written approval of the City. The resale restrictions
shall provide that in the event of the sale of an affordable unit, the City shall have the right to
purchase any affordable owner -occupant unit at the maximum price that could be charged to
an eligible household.
D. Selection Criteria. No household shall be permitted to occupy a unit that is required under
this Chapter to be affordable unless the City or its designee has approved the household's
eligibility. Eligible potential occupants of affordable units will be qualified on the basis of
household income as defined by this Chapter. The selection criteria for a qualified household
may not distinguish between adults and children. Selection of qualified person should be based
on priorities established using the point system described below:
• Employed within the boundaries of the City of Dublin (3 points maximum, one per
household member)
Public Service employee working in the City of Dublin (1 point)
Dublin resident (3 points maximum, one per household member)
Seniors (1 point, one per household)
Permanently disabled (1 point, one per household)
Immediate family member of Dublin resident (1 point, one per household)
Required to relocate from current Dublin residence due to demolition of dwelling or
conversion of dwelling from rental to for -sale unit (1 point, one per household)
To qualify as a "Public Service Employee", the person shall be employed by a Public Agency.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 7 of 10 13
To qualify as "Employed within the boundaries of the City of Dublin", the person shall have
been employed within the City of Dublin for at least six months.
To qualify as a "Dublin resident," the person shall have been a resident of the City of Dublin
for at least a one-year period prior to the eligibility determination.
8.68.060 Affordable Unit Credits.
A. Creation. Affordable unit credits may be created by the City Council. One affordable unit
credit certificate shall be issued for each affordable unit constructed in excess of the number
of affordable units required to be constructed for the project by Sections 8.68.030.A and
8.68.030.B. The certificate shall designate a specific income category (i.e., very low-, low-, or
moderate -income) and number of bedrooms for which they are issued.
B. Ownership and Use of Credits. Affordable unit credit certificates are issued to and
become the possession of the project owner, who may use them to satisfy the requirements
of this Chapter for another project in the City. If a project owner proposes to sell credit
certificates, the parties shall first obtain the consent of the Finance Director, who will document
the transfer by certificate number.
8.68.070 Incentives to Encourage On -Site Construction of Affordable Units.
The City may, but shall not be required to, offer incentives or financial assistance to encourage
the on -site construction of affordable units in excess of the total number of affordable units
required by this Chapter to be included in the project to the extent resources for this purpose
are available and approved for such use by the City Council or City Manager. Such incentives
may include, but shall not be limited to, the following:
A. Fee Deferral.
1. Development Processing Fees. The City Manager may approve deferred
payment of City processing fees applicable to the review and processing of the project.
The terms and payment schedule of the deferred fees shall be subject to the approval of
the City Manager.
2. Development Impact Fees. The City Council may authorize the deferred payment
of development impact fees applicable to the affordable units. Approval of this incentive
requires demonstration by the Applicant that the deferral increases the project's feasibility.
The applicant must provide appropriate security to ensure future payment of such fees.
B. Design Modifications. The City Council may approve design modifications to affordable
units that increase the feasibility of the construction of affordable units, including but not limited
to, the following:
1. Reduced lot size.
2. Reduced setback requirements.
3. Reduced open space requirements.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 8 of 10
14
4. Reduced landscaping requirements.
5. Reduced interior or exterior amenities.
6. Reduction in parking requirements.
7. Height restriction waivers.
Section 8.68.080 Inclusionary Zoning In Lieu Fees.
The fund previously known as the "Inclusionary Zoning In Lieu Fee fund" is hereby renamed
the "Affordable Housing Fund" ("Fund") and all In Lieu Fees shall be deposited into the Fund.
A. Use. All monies in the Fund, together with any interest earnings on such monies less
reasonable administrative charges, shall be used or committed to use by the City for the
purpose of providing very low-, low-, and moderate -income ownership or rental housing in the
City of Dublin.
B. Annual Report. The City Manager shall prepare an annual report to the City Council
identifying the balance of monies in the Fund and the affordable units provided and any monies
committed to providing very low-, low-, and moderate -income housing. The annual report shall
also include a review of administrative charges.
Section 8.68.090 Violations.
It shall be unlawful for any person, firm, corporation, partnership or other entity that is subject
to this ordinance pursuant to Sections 8.68.030.A and 8.68.030.E to violate any provision or
to fail to comply with any of the requirements of this Chapter. A violation of any of the provisions
of or failure to comply with any of the requirements of this Chapter shall constitute a
misdemeanor; except that notwithstanding any other provisions of this Code, any such
violation constituting a misdemeanor under this Chapter, may in the discretion of the enforcing
authority, be charged and prosecuted as an infraction. Any person convicted of an infraction
under the provisions of this Code shall be punishable as provided by the Government Code of
the State of California.
8.68.100 Enforcement.
A. General. The City Manager shall enforce this Chapter, and its provisions shall be binding
on all agents, successors, and assigns of an applicant. The City Manager may suspend or
revoke any building permit or approval upon finding a violation of any provision of this Chapter.
No land -use approval, building permit, or certificate of occupancy shall be issued for any
residential development unless exempt from or in compliance with this Chapter. The City may
institute any appropriate legal actions or proceedings necessary to ensure compliance
herewith, including, but not limited to, actions to revoke, deny, or suspend any permit or
development approval.
B. Excessive Rents/Legal Action. If the City Manager determines that rents in excess of
those allowed by operation of this Chapter have been charged to a tenant residing in an
affordable unit, the City may take appropriate legal action to recover, and the project owner
shall be obligated to pay to the tenant, or to the City in the event the tenant cannot be located,
any excess rents charged.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 9 of 10
15
Section 8.68.110 Appeals.
Decisions of the City Manager under this Chapter may be appealed as provided in
Chapter 8.136.
SECTION 4. EFFECTIVE DATE. This Ordinance shall take effect thirty (30) days following its
final adoption.
SECTION 5. SEVERABILITY. The provisions of this Ordinance are severable and if any
provision, clause, sentence, word or part thereof is held illegal, invalid, unconstitutional, or
inapplicable to any person or circumstances, such illegality, invalidity, unconstitutionality, or
inapplicability shall not affect or impair any of the remaining provisions, clauses, sentences,
sections, words or parts thereof of the Ordinance or their applicability to other persons or
circumstances.
SECTION 6. POSTING. The City Clerk of the City of Dublin shall cause this Ordinance to be
posted in at least three public places in the City of Dublin in accordance with Section 36933 of the
Government Code of the State of California.
PASSED, APPROVED AND ADOPTED this _ day of June 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Mayor
ATTEST:
City Clerk
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 10 of 10 16
Attachment 2
RESOLUTION NO. XX — 24
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
ESTABLISHING THE METHODOLOGY FOR DETERMINING THE AFFORDABLE HOUSING
IN -LIEU FEE FOR FUTURE RESIDENTIAL UNITS SUBJECT TO THE CITY OF DUBLIN
INCLUSIONARY ZONING REGULATIONS
WHEREAS, the Dublin City Council adopted Dublin Municipal Code Chapter 8.68
Inclusionary Zoning Regulations to ensure the attainment of the City's housing goals by increasing
the production of residential units affordable by households of very low-, low-, and moderate -
income; and
WHEREAS, the Inclusionary Zoning Regulations establish the authority to impose and
charge a fee in -lieu of constructing affordable units; and
WHEREAS, on May 7, 2002, the City Council adopted Resolution 56-02 establishing a
revised fee in -lieu of constructing affordable housing; and
WHEREAS, the City of Dublin Strategic Plan for Fiscal Year 22-23 includes Objective 2.b
to ensure the City's Inclusionary Zoning Regulations incentivize targeted housing production and
Objective 2.c to evaluate the affordable housing in -lieu fee for ownership and rental housing; and
WHEREAS, the City selected the consulting firm Economic and Planning Systems (EPS)
through a competitive process to assist Staff with evaluating the City's Inclusionary Zoning
Regulations and Affordable Housing In -Lieu Fee; and
WHEREAS, EPS prepared the Feasibility Analysis of Inclusionary Housing Requirements,
attached as Exhibit A, recommending changes to the Inclusionary Zoning Regulations and
Affordable Housing In -Lieu Fee; and
WHEREAS, on August 15, 2023, and September 19, 2023, the City Council received a
report on the City's Inclusionary Zoning Regulations, Affordable Housing In -Lieu Fee, and Non -
Residential Development Affordable Housing In -Lieu Fee (aka "Commercial Linkage Fee") and
directed Staff to prepare amendments to the Inclusionary Zoning Regulations and revise the
methodology for determining the Affordable Housing In -Lieu Fee; and
WHEREAS, pursuant to California Environmental Quality Act (CEQA) and CEQA
Guidelines Section 15378 (b)(4) and Section 15061(b)(3), revising Affordable Housing In -Lieu
Fees is not a project and, therefore, exempt from the requirements of CEQA.
WHEREAS, on January 9, 2024, the City Council held a public hearing where Staff
described and analyzed the proposed changes to the Affordable Housing In -Lieu Fee, at which
time the City Council directed Staff to analyze the feasibility of raising the inclusionary
requirements for for -sale units to 15% and increasing the in -lieu fee, differentiating the affordable
housing requirement for different ownership product types, and to evaluate the impact of interest
rate fluctuations on the proposed Inclusionary Zoning Regulations; and
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 1 of 3
17
WHEREAS, on March 19, 2024, the City Council held a Study Session to consider
additional information and analysis regarding the Affordable Housing In -Lieu fee, at which time
Staff was given direction to prepare updates and amendments to these programs; and
WHEREAS, on June 4, 2024, the City Council held a properly noticed public hearing to
consider the Affordable Housing In -Lieu Fee, at which time all interested parties had the
opportunity to be heard; and
WHEREAS, on June 4, 2024, the City Council did hear and use independent judgment and
considered all said reports, recommendations and testimony; and
NOW, THEREFORE, BE IT RESOLVED that this Resolution supersedes and replaces
Resolution 56-02 and goes into effect 30 days after City Council approval.
BE IT FURTHER RESOLVED that the Dublin City Council hereby adopts the following
methodology for determining the amount of the Affordable Housing In -Lieu Fee for each residential
development project subject to the requirements of the Inclusionary Zoning Regulations in the
Dublin Municipal Code Chapter 8.68 as follows:
1. The Affordable Housing In -Lieu Fee shall be $15.00 per square foot for single-family
detached units and for attached for -sale market rate units (except for condominium units
with a density of 30 or more units per acre).
2. The Affordable Housing In -Lieu Fee shall be $9.00 per square foot for multi -family rental
market rate units, and for for -sale condominium market rate units with a density of 30 or
more units per acre.
3. The Affordable Housing In -Lieu Fee shall be calculated based on the habitable square feet
per dwelling unit.
4. The Affordable Housing In -Lieu Fee shall be adjusted annually on July 1 of each year based
on the greater of the percentage change in either: a) the February ENR Building Cost Index
for the San Francisco Bay Area; b) the February Bay Area Consumer Price Index for All
Urban Consumers (CPI-U); or c) the United States Department of Housing and Urban
Development (HUD) Fair Market Rent limits for the Oakland Primary Metropolitan Statistical
Area that are in effect in February of each year.
5. Affordable Housing In -Lieu Fees shall be paid at the time of Building Permit issuance for
each market rate unit.
6. The Affordable Housing In -Lieu Fee adopted by this Resolution shall be effective and
applied to Building Permits issued for each market rate unit 30 days after City Council
adoption.
{Signatures on the following page}
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 2 of 3 18
PASSED, APPROVED AND ADOPTED this 4th day of June 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Mayor
ATTEST:
City Clerk
5565379.1
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 3 of 3 19
Attachment 3
The Economics of Land Use
•
Economic & Planning Systems, Inc.
1330 Broadway
Suite 450
Oakland, CA 94612
510 841 9190 tel
Oakland
Sacramento
Denver
Los Angeles
Report
Feasibility Analysis of Inclusionary
Housing Requirements
Prepared for:
City of Dublin
Prepared by:
Economic & Planning Systems, Inc.
EPS #231009
December 7, 2023
Revised March 27, 2024
www.epsys.com
20
Attachment 3
Table of Contents
1. Introduction and Executive Summary 1
Key Findings and Recommendation 2
2. Background and Local Market Context 7
Housing Market Conditions and Challenges 7
Dublin's Strategic Plan Objectives 8
Regional Housing Needs Allocation 9
Household Incomes and Affordability 9
3. Methodology and Assumptions 11
Return Metrics and Feasibility Thresholds 11
Product Prototypes 12
Development Cost Assumptions 13
Revenue and Value Assumptions 18
4. Feasibility Analysis 21
Market -Rate Development 21
Current Inclusionary Program 23
On -Site Inclusionary Requirement Alignment 25
5. Council Direction and Program Recommendations 27
Appendix A: Survey of Inclusionary Requirements in Select California Jurisdictions
21
Attachment 3
List of Tables
Table 1 Recommended Inclusionary Requirements and In -Lieu Fees for Ownership and
Rental 6
Table 2 RHNA Allocation for Dublin 9
Table 3 Alameda County 2023 Income Limits by Persons in Household 10
Table 4 Prototype Residential Products 13
Table 5 Market -Rate Multifamily Attached Rental Product Prototype Unit Cost
Assumptions 14
Table 6 Market -Rate Multifamily Attached Condominium Product Prototype Unit Cost
Assumptions 15
Table 7 Market -Rate Single Family Attached Townhome Product Prototype Unit Cost
Assumptions 16
Table 8 Market -Rate Single Family Detached Product Prototype Unit Cost Assumptions.17
Table 9 Maximum Unit Values for Affordable Housing in Alameda County 20
Table 10 Feasibility of Market -Rate Product Prototypes 22
Table 11 Required Affordable Units by Income Category 23
Table 12 Feasibility of Current Inclusionary Program on Product Prototypes 25
Table 13 Subsidy Required for Below -Market -Rate Units by Income Level 26
Table 14 Recommended Inclusionary Program 28
Table 15 Feasibility of Recommended Inclusionary Program 29
22
Attachment 3
Economic & Planning Systems
1. Introduction and Executive Summary
Inclusionary housing programs require that new market -rate residential
development projects include a certain percentage of housing units at rents or
sale prices that are affordable to lower -income households. These program
requirements often vary for different product types and/or different tenures and
also may include the option for new development to pay a fee in lieu of providing
affordable units on -site, as an alternative means of compliance. Inclusionary
housing programs have been adopted by hundreds of jurisdictions nationwide,
including nearly 200 cities and counties in the State of California. They are one of
many tools that cities can use to achieve more affordable housing in their
communities.
The City of Dublin (City) is updating its inclusionary zoning ordinance (IZO),
which was first adopted in 2002. Economic & Planning Systems, Inc. (EPS) was
retained by the City to conduct an economic feasibility study to determine what
level of updated inclusionary requirements may be supportable in Dublin, in the
context of current market conditions.
EPS analyzed how the provision of below -market -rate (BMR) units impacts the
financial feasibility of new market -rate residential development by evaluating the
effect of varying inclusionary requirements on industry standard profit and return
metrics. Such an analysis is intended to provide the City additional context
regarding the implications of revising its inclusionary requirements, while ensuring
that the updated requirements do not have the unintended impact of impeding
new development. Dublin is not legally required to consider these financial
impacts when updating inclusionary housing requirements; however, they are
often studied and incorporated into the development of inclusionary policies in
order to align a jurisdiction's overall housing goals with its local real estate market
conditions.1
In addition, cities introducing or updating inclusionary housing programs often
consider the requirements and fees set by their "peer cities." Appendix A
presents comparisons of inclusionary requirements and in -lieu fees for rental and
ownership projects in several cities in the Bay Area, with a focus on the Tri-Valley
region.
1 An exception to this statement is Assembly Bill (AB) 1505, which allows the State's Department
of Housing and Community Development (HCD) to request an economic feasibility study for
inclusionary housing policies that include a requirement that more than 15 percent of total rental
units developed be affordable to households earning 80 percent of area median income (AMI) or
below.
1
23
Attachment 3
REPORT: Feasibility Analysis of Inclusionary Housing Requirements in Dublin
The key findings and recommendations stemming from the feasibility analysis are
summarized below. The subsequent chapters of this report provide details on the
methodology and assumptions underlying the feasibility analysis, the results of
the feasibility analysis, and the recommendations for inclusionary requirements by
development product type that align with the feasibility findings.
Key Findings and Recommendation
1. Under the City's existing inclusionary zoning ordinance requirements,
the must -build on -site construction of affordable units ensures
affordable housing production across multiple income levels while
adding revenue to the City's affordable housing fund.
Dublin's current inclusionary program applies to projects of 20 units or more.
It has an overall 12.5 percent inclusionary requirement, targeting Very Low-,
Low-, and Moderate -income households in rental projects, and Low- and
Moderate -income households in ownership projects. However, a developer
may opt to pay a fee in -lieu of building up to 40 percent of the inclusionary
units; the remaining 60 percent must be built on -site. The must -build
component of the policy ensures that at least some inclusionary units are
provided as part of market -rate developments, while the fees collected by the
City help facilitate the development of 100 percent affordable housing projects
within Dublin.
2. Since the inclusionary zoning ordinance's initial adoption in 2002, the
relationship between construction costs and market rate sales prices
and rents have shifted, resulting in inclusionary requirements that are
no longer aligned with market conditions.
Construction costs have outpaced multifamily rents in the years since the IZO
was adopted, and as a result, multifamily rental projects may face challenges
meeting the City's inclusionary requirements. During the same time period,
single-family home values increased, outpacing construction costs. As a
result, the ownership inclusionary requirements remain feasible, but the in -
lieu fee is no longer aligned with the equivalent cost of providing the units
onsite.
3. Modeling the City's current inclusionary requirements demonstrates
that the inclusionary requirements on rental projects face feasibility
challenges, while the inclusionary requirements on ownership
projects remain feasible.
The current and recommended inclusionary requirements were modeled and
tested in development pro formas reflecting four different residential
prototypes - one rental prototype and three ownership prototypes:
• Rental multifamily apartments (at a density of 65 units/acre)
• For -sale condominiums (at a density of 45 units/acre)
2
24
Attachment 3
Economic & Planning Systems
• For -sale townhomes (at a density of 20 units/acre), and
• For -sale single family homes (at a density of 10 units/acre).
Each prototype evaluated in this Study is shown to be feasible under current
market conditions when developed as a market -rate project, without
inclusionary requirements, with the development economics of each prototype
exceeding industry -standard profit thresholds. However, modeling the current
inclusionary requirements for rental projects lowers the yield -on -cost below
the threshold, indicating that new multifamily, rental development will face
feasibility challenges meeting the City's inclusionary requirements.
The model indicates that new ownership projects can meet the inclusionary
requirements given current construction costs and market pricing, but the
current in -lieu fee is set so much lower than the actual cost of
building/providing the units onsite, that developers of ownership product will
always opt to pay the fee. The model further indicates that multifamily
condominium developments, while feasible, cannot absorb the same level of
inclusionary requirements as single family detached or attached townhome
developments.
Underscoring the misalignment with market conditions, city staff has
confirmed that in the last few years, new residential development projects
have selected alternatives to full on -site construction of inclusionary units,
either paying the fee, negotiating alternative benefits (e.g., land dedication),
or a combination of both.
4. The recommended updates to the IZO will improve the feasibility of
new multifamily rental development, apply the updated multifamily
inclusionary requirements to for -sale condominium units, and
increase the requirements on single family detached and attached
townhome projects, which will generate higher in -lieu fee revenue
from ownership developments. The recommended updates are
consistent with other inclusionary programs in the Tri-Valley region
and also respond to other typical program parameters such as
charging the in -lieu fee on a "per square foot of market rate
development" basis and lowering the threshold project size from 20
units to 10 units.
Recommended updates across both the rental and ownership inclusionary
programs include lowering the feasibility threshold to 10 units and updating
the fee to a per market rate square foot basis, consistent with that of most
other cities. Where the in -lieu fee is well below the actual cost of providing the
inclusionary units onsite, EPS recommends increasing the fee to capture
greater in -lieu fee revenue while preserving project feasibility.
3
25
Attachment 3
REPORT: Feasibility Analysis of Inclusionary Housing Requirements in Dublin
While this analysis provides a useful assessment of the feasibility of each
prototype, development costs and values are extremely variable across
individual projects. Based on typical fee and inclusionary levels seen in peer
cities, consideration of current feasibility challenges in residential construction
and the City's affordable housing goals, and direction from the City Council,
EPS worked with City staff to develop a set of recommended inclusionary
requirements for new multifamily apartment and condominium developments
and new for -sale single family detached and attached townhome
developments. The recommendations are summarized below and in Table 1.
Multifamily Attached Rental and Multifamily Attached
Condominium Residential Development
• The current inclusionary requirement is 12.5 percent, targeting a blend of
Very Low, Low, and Moderate -income households for rental projects and
Low and Moderate -income households for ownership projects. The FY
2023-24 in -lieu fee is $241,131 per affordable unit.
• Because the current requirements challenge the feasibility of new
multifamily apartment and condominium development, EPS recommends
lowering the requirement to 10 percent, and focusing on Low-income
households. At this level, the in -lieu fee that would be equivalent to the
subsidy is $236,915 per affordable unit, or approximately $9.00 per
market rate square foot for multifamily attached rental.
• EPS recommends a fee of $9 per market rate square foot ($232,650 per
affordable unit for multifamily attached rental). The recommended option
eases program administration and improves feasibility relative to the
current requirement, although some projects in this current development
cost and interest rate environment may still face challenges.
For Sale Single Family Detached and Attached Townhome
Residential Development
• The current inclusionary requirement is 12.5 percent, targeting a blend of
Low and Moderate -income households. The FY 2023-24 in -lieu fee is
$241,131 per affordable unit.
• The recommended option increases the inclusionary requirement to 15
percent while maintaining the current Low and Moderate -income split. The
in -lieu fee per affordable unit that would be equivalent to this subsidy is
$619,928 for single family detached, which would be a nearly threefold
increase in the fee.
• Per Council direction, the recommended in -lieu fee is $15 per market rate
square foot ($546,000 per affordable unit for single family detached). With
this recommendation, the City is incentivizing developers of ownership
product to choose the fee option, which, because of the City's must -build
requirement, will result in new inclusionary units and in -lieu fee revenue
the City can use to support the production of units affordable to lower-
4
26
Attachment 3
Economic & Planning Systems
income households to help satisfy the Regional Housing Needs Allocation.
Even with the increase in the in -lieu fee, the recommended option
maintains the feasibility of new single family detached and attached
townhome development.
5
27
Attachment 3
Economic & Planning Systems
Table 1 Recommended Inclusionary Requirements and In -Lieu Fees for Ownership and Rental
Equivalent
Very Low Low Moderate Fee per Fee per
Income Income [1] Income Market Affordable
Item Applicable Development Types Overall (50%AMI) (70-80%AMI) (110%AMI) Rate Sq. Ft. Unit [2]
Multifamily Multifamily Attached Rental
Multifamily Attached Condominium 10.0% 0% 100% 0% $9.00 $232,650
Single Family Single Family Attached Townhome
Single Family Detached 15.0% 0% 40% 60% $15.00 $546,000
Source: Economic & Planning Systems, Inc.
[1] Consistent w ith Dublin's Inclusionary Guidelines, Low Income households are defined at 80% AMI for rental developments, and 70% AMI for ow nership developments.
[2] Calculated for Multifamily Attached Rental and Single Fanily Detached.
6
28
Attachment 3
Economic & Planning Systems
2. Background and Local Market Context
Inclusionary housing programs are only able to deliver affordable units if new
market -rate residential development is occurring and can achieve prices or rents
that support the additional costs of including affordable units. Therefore, before
evaluating the development feasibility of updates to the City's inclusionary
housing program, EPS evaluated the local residential market activity. This
evaluation provides a sense of the need, and the types of market -rate
development that is occurring along with the prevailing sales prices and rents of
new residential development.
Housing Market Conditions and
Challenges
Dublin's IZO was first adopted in 2002, which means that it has been more than
twenty years since the program was comprehensively evaluated, although the in -
lieu fee has been updated each year to account for inflation. Since 2002, the City
of Dublin has undergone significant changes in its housing landscape, and in
general, the Bay Area housing market has evolved as well. According to an
analysis by the San Francisco Chronicle, Dublin was California's fastest growing
city between 2010 and 2020, increasing its population by 58 percent, or 26,600
residents, over the last decade. Much of that increase can be attributed to the
City's ability to add new housing units to accommodate that growth; in that time
frame, Dublin permitted nearly 8,300 housing units, the highest of any Bay Area
city.
2
In the last decade, construction costs have also been on the rise, affecting the
profit yields that developers are able to achieve. Figure 1 shows a price index of
construction costs, multifamily rents, and single-family home sales since 2002.
The costs of construction have outpaced multifamily rents in Dublin since 2002
and the gap between the two widened over time, constraining the feasibility of
multifamily development. However, since 2014, demand for single-family homes
in Dublin created a sharp uptick in home values that have been able to bear the
additional costs and generate higher profit margins for single-family home
developers. This demonstrates how inclusionary requirements and in -lieu fees
established twenty years ago have fallen out of sync with current market
conditions and development costs.
2 https://www.sfchronicle.com/bayarea/article/dublin-population-growing-17781799.php
7
29
REPORT: Feasibility Analysis of Inclusionary Housing Requirements in Dublin
Attachment 3
Figure 1 Price Index of Construction Costs, Multifamily Rents, and Single -
Family Home Sales in Dublin
Price Index
150
130
110
90
70
50
30
10
-1
-30
2005 2010 2015 2020
-Construction Cost Index (ENR) -Multi-family Market-Rate/Affordable Rents (Costar) -Single Family Home Sales (Zillow)
Dublin's Strategic Plan Objectives
Dublin's most recent Two -Year Strategic Plan, adopted in 2022, outlines the City's
goals and Strategy Areas, one of which is Housing Affordability.3 Within this
Strategy, the city has established six objectives, three of which relate to the
structuring and implementation of the inclusionary zoning ordinance:
• 26. Ensure the City's inclusionary zoning regulations incentivize targeted
housing production.
• 2C. Prepare a nexus study to evaluate the affordable housing commercial
linkage fee and affordable housing in -lieu fee for for -sale and rental
housing.
• 2D. Facilitate the production of affordable housing for lower -income
seniors, workforce, and special needs households.
An update to the inclusionary zoning ordinance policy and in -lieu fee directly
addresses 26 and 2C, while the implementation of an updated inclusionary
program to produce on -site affordable units would meet strategy 2D.
illps.//ULa i.l.a.ienter/View/31668/2022-24-Strategic-Plan?bidId=
8
30
Attachment 3
Economic & Planning Systems
Regional Housing Needs Allocation
The State of California requires every jurisdiction to adequately plan for its
community's housing needs, as specified by the Regional Housing Needs
Allocation (RHNA), which determines the amount of housing units needed for each
jurisdiction by income category. Currently, jurisdictions in the Association of Bay
Area Governments (ABAG) have adopted or are working towards adopting their
6th Cycle (2023 through 2031) Housing Elements to reflect policies and strategies
required to meet current RHNA numbers. The City of Dublin adopted its 6th Cycle
Housing Element in November 2022.
Through the RHNA process, Dublin has an allocation of 3,719 total units. Table 2
displays the RHNA allocation breakdown by income levels. The allocation is
concentrated in affordable units, with 61 percent of the total units at Moderate or
below. Affordable housing programs like the inclusionary zoning ordinance can
help cities achieve their RHNA numbers in the lower -income affordability
categories.
Table 2 RHNA Allocation for Dublin
Affordablility Category Units Percentage
Very Low Income 1,085 29.2%
Low Income 625 16.8%
Moderate Income 560 15.1
Above Moderate 1,449 39.0%
Total 3,719 100.0%
Source: ABAG; Economic & Planning Systems, Inc.
Household Incomes and Affordability
HCD Income Limits
Affordable rents and sale prices for below -market -rate units are based on
maximum housing costs affordable to households at various household income
levels. Income levels in the County of Alameda are set by the California
Department of Housing and Community Development (HCD) on an annual basis.
According to the 2023 HCD Income Limits for Alameda County (Table 3), the
Area Median Income (AMI) in Alameda County is defined at $133,100 for a
household of three and $147,900 for a household of four.
9
31
Table 3 Alameda County 2023 Income Limits by Persons in Household
Affordability Category Maximum Percentage
of County Median
Attachment 3
Economic & Planning Systems
Number of Persons in Household
1 2 3 4 5 6 7 8
Acutely Low Income 0% - 15% $15,550 $17,750 $20,000 $22,200 $24,000 $25,750 $27,550 $29,300
Extremely Low Income 30% $31,050 $35,500 $39,950 $44,350 $47,900 $51,450 $55,000 $58,550
Very Low Income 50% $51,800 $59,200 $66,600 $73,950 $79,900 $85,800 $91,700 $97,650
Low Income 80% $78,550 $89,750 $100,950 $113,150 $121,150 $130,100 $139,100 $148,050
Median Income 100% $103,550 $118,300 $133,100 $147,900 $159,750 $171,550 $183,400 $195,250
Moderate Income 120% $124,250 $142,000 $159,750 $177,500 $191,700 $205,900 $220,100 $234,300
Sources: CA Department of Housing and Community Development; Economic & Planning Systems, Inc.
10
32
Attachment 3
Economic & Planning Systems
3. Methodology and Assumptions
In an inclusionary program, developers are required to set aside a portion of their
units for lower -income households. When a developer builds the affordable units
on -site, the project's construction costs are not significantly affected. It costs
approximately the same to build a market -rate unit as an affordable unit.
However, the revenue the developer can expect from the affordable units is less
than the revenue from the market -rate units. The developer is, in effect,
subsidizing the development of the affordable units. The subsidy is greater for
units affordable to Very Low-income households than it is for Low-income
households and Moderate -income households.
In some cases, the developer may opt to pay a fee in lieu of providing the units
on site. When a developer pays an in -lieu fee, all the units are sold or rented as
market -rate units, so the revenue potential is not affected. However, the
constructions costs are affected by the amount of the in -lieu fee, which is typically
paid at the time of building permit issuance or certificate of occupancy.
In Dublin, the Inclusionary Zoning Ordinance includes a "must build" requirement
of 60 percent, meaning that a developer who chooses to pay the in -lieu fee must
still provide 60 percent of the inclusionary requirement on -site, but is allowed to
"fee out" on the remaining 40 percent.
Return Metrics and Feasibility
Thresholds
The assessment of financial feasibility for real estate development products is
based on calculating financial return metrics and comparing them against typical
industry target thresholds. In the case of residential development, relevant return
metrics are based on comparing total project revenues to total project
construction costs.
This analysis established a feasibility threshold based on two standard return
metrics used by real estate developers. These return metrics reflect the value of
the investment in a project, and are a critical element in informing a developer's
"go/no-go" decision to proceed with development:
• For ownership, or for -sale housing products (typically single family detached
and attached homes, including townhomes and condominiums), the feasibility
threshold is based on the return metric of "profit margin," calculated as the
percentage by which total project value exceeds total project cost. Based on
EPS research and feedback from the developer community, the analysis
11
33
Attachment 3
Economic & Planning Systems
assumes that developers in Dublin and the surrounding region will require at
least a 15 percent profit margin on for -sale development projects. Therefore,
any project attaining a profit margin at or above 15 percent would be
considered feasible in this analysis.
• For rental housing products (typically, multifamily apartments), the feasibility
threshold is based on the return metric of "yield on cost," calculated by
dividing the annual net operating income (NOI) by the total costs of
development.4 Based on EPS research and experience, the analysis assumes
that developers in Dublin and the surrounding region will require a yield on
cost of at least 5.5 percent.
It is important to note that these return metrics do not account for the time value
of money and are not based on any assumption regarding project timeline. EPS
assumptions for prototype revenues and costs used to calculate the return metrics
are detailed in the following sections.
Product Prototypes
The prototype residential products used in the feasibility analysis were informed
by EPS research on the local housing market. Research included review of recent
developments and proposed projects, discussions with developers active in the
region, and discussions with City staff. The characteristics for the prototype
development products are summarized in Table 4. They include one rental
prototype - multifamily apartments - and three for -sale prototypes -
condominiums, townhomes, and single-family detached homes. A recently
constructed example of each prototype specific to the City of Dublin is also given.
The critical differentiator between the for -sale prototypes is the density at which
they are built and how parking is provided, with the condominium product
assumed to be built at a higher density (45 units per acre) than the townhome
product (20 units per acre) and with wrap -around style parking. The townhome
product is assumed to include an attached, "tuck -under" garage. The single-family
detached product is assumed to be developed at an even lower density (10 units
per acre) and with an attached garage. The analysis also assumes that the
prototypical townhome is smaller than the prototypical single-family home. In
some cases, there may be additional design factors - such as whether a unit is
detached or attached - that are used to define a project as a townhome or single-
family home. This analysis does not account for those types of factors, only
differentiating the two prototypes based on density, parking, and unit size.
The unit characteristics for each prototype are meant to represent average unit
sizes, with the resulting analysis demonstrating feasibility for an average
4 Net operating income reflects total rent collected minus operating costs.
12
34
Attachment 3
REPORT: Feasibility Analysis of Inclusionary Housing Requirements in Dublin
residential project. The findings of this analysis assume that the unique unit mix
of any particular project will, in aggregate, conform to these average unit sizes.
However, any specific project will have its own cost and revenue factors that may
be impacted in part by its unit mix.
Table 4 Prototype Residential Products
Item
Multifamily Attached Multifamily Attached Single Family
Rental Condominium Attached Townhome
Tenure Rental
Building Type Multifamily
Density (units/acre) 65 units/acre
Unit Square Feet 1,100 sq. ft.
Unit Bedrooms 2 per unit
Amount of Parking 1.5 per unit
Parking Type Wrap
Ownership
Multifamily
45 units/acre
1,500 sq. ft.
2 per unit
1.5 per unit
Wrap
Ownership
Attached
20 units/acre
2,000 sq. ft.
3 per unit
2 per unit
Attached Garage
Dublin Project Example Avalon West Dublin Elan at Dublin Station Apex Townhomes
Source: City of Dublin; Costar; EPS discussions w ith local active developers
Development Cost Assumptions
Single Family
Detached
Ownership
Detached
10 units/acre
2,400 sq. ft.
4 per unit
2 per unit
Attached Garage
Lombard at Boulevard
Housing construction costs categories include land acquisition, site preparation,
hard costs (e.g., construction labor and materials), and indirect or "soft" costs
(e.g., architecture, entitlement, marketing, etc.). For multifamily projects that
include a structured garage, EPS also defines parking costs per unit as a separate
line item. Data from recent developments and land transactions in the local
market have been combined with information from interviews with various
housing developers to inform the construction cost assumptions used in this
analysis. Total development costs are comprised of land acquisition, hard costs,
and soft costs (collectively, construction costs) plus an estimated developer profit
amount. Table 5, Table 6, Table 7, and Table 8 below detail the cost
assumptions and estimated costs per unit for the multifamily attached rental,
multifamily attached condominium, single family attached townhome, and single
family detached product prototypes, respectively.
13
35
Attachment 3
Economic & Planning Systems
Table 5 Market -Rate Multifamily Attached Rental Product Prototype Unit
Cost Assumptions
Item
Multifamily Attached Rental
Assumptions Per Unit
Development Prototype
Tenure Rental
Parcel Size 1 acre
Density 65 units/acre
Unit Size 1,100 sq.ft.
Number of Bedrooms 2.0 per unit
Amount of Parking 1.5 per unit
Development Costs
Land Costs
Site Preparation
Subtotal, Land
Direct Construction Costs
Parking Costs
Builder Fee
Subtotal, Direct Costs
Development Impact Fees [1]
Indirect Costs [2]
Subtotal, Indirect Costs
Total Construction Costs
Developer Profit Threshold
Total Development Costs
$5,000,000 per acre
$10 per sq.ft. of land
$325 per sq.ft.
$40,000 per space, wrap -style
0.0% of direct costs, incl. parking
$28,671 per unit
20% of direct costs
27% of direct costs
5.5% yield on cost
Sources: Costar; Marshall & Sw ift; EPS discussions w ith local active developers
$76,923
$6, 702
$83,625
$357,500
$60,000
$417,500
$28,671
$83, 500
$112,171
$613,295
[1] Development impact fee total does not include current affordable housing inclusionary fee requirements
[2] Includes costs for architecture and engineering; entitlement and fees; project management; appraisal and market
study; marketing, commissions, and general administration; financing and charges; insurance; and contingency.
14
36
Attachment 3
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin
Table 6 Market -Rate Multifamily Attached Condominium Product Prototype
Unit Cost Assumptions
Item
Multifamily Attached Condominium
Assumptions Per Unit
Development Prototype
Tenure Ownership
Parcel Size 1 acre
Density 45 units/acre
Unit Size 1,500 sq.ft.
Number of Bedrooms 2.0 per unit
Amount of Parking 1.5 per unit
Development Costs
Land Costs
Site Preparation
Subtotal, Land
Direct Construction Costs
Parking Costs
Builder Fee
Subtotal, Direct Costs
Development Impact Fees [1]
Indirect Costs [2]
Subtotal, Indirect Costs
Total Construction Costs
Developer Profit Threshold
Total Development Costs
$4,000,000 per acre
$10 per sq.ft. of land
$325 per sq.ft.
$40,000 per space, wrap -style
3.0% of direct costs, incl. parking
$28,671 per unit
20% of direct costs
25% of direct costs
15% of total construction costs
Sources: Costar; Marshall & Sw ift; EPS discussions w ith local active developers
$88, 889
$9.680
$98, 569
$487, 500
$60, 000
$16, 425
$563, 925
$28,671
$112.785
$141,456
$803,950
$120.592
$924,542
[1] Development impact fee total does not include current affordable housing inclusionary fee requirements
[2] Includes costs for architecture and engineering; entitlement and fees; project management; appraisal and market
study; marketing, commissions, and general administration; financing and charges; insurance; and contingency.
15
37
Attachment 3
Economic & Planning Systems
Table 7 Market -Rate Single Family Attached Townhome Product Prototype
Unit Cost Assumptions
Item
Single Family Attached Townhome
Assumptions Per Unit
Development Prototype
Tenure Ownership
Parcel Size 1 acre
Density 20 units/acre
Unit Size 2,000 sq.ft.
Number of Bedrooms 3.0 per unit
Amount of Parking 2.0 per unit
Construction Costs
Land Costs $3,000,000 per acre $150,000
Site Preparation $10 per sq.ft. of land $21,780
Subtotal, Land $171,780
Direct Construction Costs $250 per sq.ft. $500,000
Parking Costs $0 per space $0
Builder Fee 3.0% of direct const. costs $15,000
Subtotal, Direct Costs $515, 000
Development Impact Fees [1] $45,195 per unit $45,195
Indirect Costs [2] 20% of direct costs $103,000
Subtotal, Indirect Costs 29% of direct costs $148,195
Total Construction Costs $834,975
Developer Profit Threshold 15% of total construction $125,246
costs
Total Development Costs $960,221
Sources: Costar; Marshall & Swift; EPS discussions with local active developers
[1] Development impact fee total does not include current affordable housing inclusionary fee requirements
[2] Includes costs for architecture and engineering; entitlement and fees; project management; appraisal and market
study; marketing, commissions, and general administration; financing and charges; insurance; and contingency.
16
38
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin
Attachment 3
Table 8 Market -Rate Single Family Detached Product Prototype Unit Cost
Assumptions
Item
Single Family Detached
Assumptions Per Unit
Development Prototype
Tenure Ownership
Parcel Size 1 acre
Density 10 units/acre
Unit Size 2,400 sq.ft.
Number of Bedrooms 4.0 per unit
Amount of Parking 2.0 per unit
Construction Costs
Land Costs $3,000,000 per acre $300,000
Site Preparation $10 per sq.ft. of land $43,560
Subtotal, Land $343, 560
Direct Construction Costs $200 per bldg. sq.ft. $480,000
Parking Costs $0 per space $0
Builder Fee 3.0% of direct const. costs $14,400
Subtotal, Direct Costs $494,400
Development Impact Fees [1] $52,106 per unit $52,106
Indirect Costs [2] 20% of direct costs $98,880
Subtotal, Indirect Costs 31% of direct costs $150,986
Total Construction Costs $988,946
Developer Profit Threshold 15% of total construction $148,342
costs
Total Development Costs $1,137,288
Sources: Costar; Marshall & Swift; EPS discussions with local active developers
[1] Development impact fee total does not include current affordable housing inclusionary fee requirements
[2] Includes costs for architecture and engineering; entitlement and fees; project management; appraisal and market
study; marketing, commissions, and general administration; financing and charges; insurance; and contingency.
17
39
Attachment 3
Economic & Planning Systems
Revenue and Value Assumptions
Market -Rate Rents
For rental apartments, the metric used to determine feasibility is yield -on -cost,
which is calculated as annual net operating income (NOI) divided by construction
costs. Annual NOI is calculated as annual rent minus annual operating expenses,
which are assumed at $10,000 per market -rate unit in this analysis. Current
market -rate rents for recently constructed products are reported by CoStar to be
$3.34 per square foot, which equates to $3,674 per month for a 2-bedroom,
1,100 square -foot apartment.
Market -Rate Sales Prices
For the for -sale prototypes, the value of the unit is equal to the estimated sale
price. The sale prices for each prototype are established based on market
research and conversations with local developers. Current sales prices for newly
constructed condominium units, estimated from Redfin, are reported to be
$980,000 per unit; townhome units are valued at $1.14 million per unit, and new
single family detached homes are selling for approximately $1.39 million.
Affordable Housing Values
In general, Very Low-income households are defined as those earning up to 50
percent of AMI. Low-income households earn up to 80 percent AMI and Moderate -
income households earn up to 120 percent of AMI, adjusted for household size.
Dublin chooses to define Low-income for ownership projects at up to 70 percent
AMI and Moderate -income for both rental and ownership projects at up to 110
percent AMI. This differs slightly from the percentage thresholds defined by HCD5
but acknowledges that some Low-income households will earn less than 80
percent AMI and some Moderate -income households will earn less than 120
percent AMI.
Based on the maximum household income at each income level, as defined in
Dublin, EPS calculated the maximum spending towards housing costs affordable
at each income level. Consistent with the City's published inclusionary zoning
ordinance guidelines, the analysis assumes that rental households spend 30
percent of their gross annual income on total housing costs and for -sale
households spending 35 percent of gross annual income. For rental units, housing
costs include rent and utilities. For for -sale units, housing costs include mortgage
and interest payments, insurance, property taxes, and Homeowners Association
(HOA) fees. To calculate the maximum affordable sale price for these for -sale
units, EPS estimated other housing costs based on assumptions given in the City's
inclusionary program guidelines and subtracted it from 35 percent of gross annual
income to obtain the maximum income available for a mortgage payment. This
5 See HCD State Income Limits 2023, https://www.hcd.ca.gov/sites/default/files/docs/grants-
and-funding/income-limits-2023.pdf
18
40
Attachment 3
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin
mortgage payment was converted into an affordable home sale price assuming a
5 percent down payment and a 30-year mortgage with a fixed interest rate of 5
percent.
Table 9 indicates the maximum annual incomes for County households
associated with each income category for the associated household size, as well
as the affordable rents and sale prices associated with each category.
19
41
Attachment 3
Economic & Planning Systems
Table 9 Maximum Unit Values for Affordable Housing in Alameda County
Item
Very Low Low Moderate
Income Income Income
(50% AMI) (70-80% AMI) [9] (110% AMI)
Multifamily Attached Rental
Maximum Household Income [1] $66,600 $100,950 $146,410
Income Available for Housing Costs/Year [2] $16,014 $26,319 $39,957
(less) Operating Expenses per Unit/Year [3] ($7,500) ($7,500) ($10,000)
Net Operating Income $8,514 $18,819 $29,957
Capitalization Rate [4] 5% 5% 5%
Unit Value [5] $170,280 $376,380 $599,140
Multifamily Attached Condominium
Household Income [1] $66,600 $93,170 $146,410
Income Available for Housing Costs/Year [6] $23,310 $32,610 $51,244
Supportable Mortgage [7] $179,155 $287,030 $503,191
Affordable Home Price (8] $188,600 $302,100 $529,700
Single Family Attached Townhome
Household Income [1] $73,950 $103,530 $162,690
Income Available for Housing Costs/Year [6] $25,883 $36,236 $56,942
Supportable Mortgage [7] $193,056 $313,154 $553,350
Affordable Home Price [8] $203,200 $329,600 $582,500
Single Family Detached
Household Income [1] $79,900 $111,825 $175,725
Income Available for Housing Costs/Year [6] $27,965 $39,139 $61,504
Supportable Mortgage [7] $206,219 $335,837 $595,278
Affordable Home Price (8] $217,100 $353,500 $626,600
[1] Reflects 2023 HCD Income Limits for a three -person household for apartments and condominiums, a four -person household for
tow nhomes, and a five -person household for single-family homes.
[2] Assumes that no more than 30% of a household's income should be spent on housing costs for housing to be considered
affordable.
[3] Operating expenses are generally based on EPS feasibility studies in the region and are inclusive of utility costs; units at or
below 80% of AMI are assumed to be built as non-profit and are therefore exempt from property taxes. Property taxes are
assumed to comprise a share of the operating expenses for the moderate income category.
[4] The capitalization rate is used to determine the current value of a property based on estimated future operating income, and is
typically a measure of estimated operating risk. Obtained for multifamily developments in Dublin and the surrounding region from
CoStar.
[5] The unit value is determined by dividing the net operating income by the capitalization rate.
[6] Based on Dublin's Inclusionary Guidelines for calculating income, this reflects that total housing costs should not exceed 35%
of income, and takes into account other housing -related costs, such as taxes, insurance, and HOA fees.
[7] Assumes a 30-year mortgage and a fixed 5% interest rate.
[8] Assumes a 5% dow n payment, consistent w ith the City of Dublin's Inclusionary guidelines.
[9] Consistent w ith Dublin's Inclusionary Guidelines, Low Income households are defined at 80% AMI for rental developments, and
70% AMI for ow nership developments.
20
42
Attachment 3
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin
4. Feasibility Analysis
Market -Rate Development
The first step in assessing feasible inclusionary housing requirements for Dublin
involved evaluating whether 100 percent market -rate projects reflecting the
defined product prototypes are financially feasible and then evaluating the
financial feasibility of the current inclusionary requirements before considering
updates to the inclusionary program.
Table 10 illustrates yield -on -cost or profit margin for each product prototype
without inclusionary requirements, assuming current market rate prices, based on
the data shown above in Table 5 through Table 8. As shown in Table 10, the
analysis suggests that the development of all ownership prototypes
(condominium, townhome, and single-family home) is feasible given the current
relationship of construction costs and market rate rents and sale prices.
The rental prototype is marginally feasible under the given assumptions, but
rising construction costs compared to rents have made the economics of this
housing type challenging. By comparison, demand for single-family housing has
led to high sales prices that generate profits far exceeding the 15 percent profit
margins threshold.
It is important to note that this analysis only reflects an average prototypical
project, and any specific project may have its own cost and revenue factors that
may be impacted in part by its unit mix. There are many factors that can impact
the financial feasibility of any particular development project. For example, if a
project can acquire land at a lower price or build at a higher density or provide
less parking than what is represented in the above assumptions or identify lower -
cost financing, the project economics may improve. Similarly, a developer may
find that there is sufficient market demand to achieve rents or sale prices higher
than those assumed in this analysis.
21
43
Attachment 3
Economic & Planning Systems
Table 10 Feasibility of Market -Rate Product Prototypes
Item
Multifamily Attached Rental
Development Costs Per Unit
Net Operating Income Per Unit
Yield on Cost
Multifamily Attached Condominium
Development Costs Per Unit
Average Sale Price
Profit
Profit Margin
Single Family Attached Townhome
Development Costs Per Unit
Average Sale Price
Profit
Profit Margin
Single Family Detached
Development Costs Per Unit
Average Sale Price
Profit
Profit Margin
Source: Economic & Planning Systems
Feasibility
Threshold
5.5%
15%
15%
15%
Results
$613,295
$34,088
5.6%
$803, 950
$980, 000
$176,050
22%
$834, 975
$1,140,000
$305, 025
37%
$988, 946
$1,390,000
$401,054
41%
22
44
Attachment 3
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin
Current Inclusionary Program
Next, EPS tested the feasibility of the current inclusionary program under the two
options that a developer can pursue to meet the inclusionary requirement. Under
the current requirements, which apply to both rental and ownership developments
of 20 units or more, 12.5 percent of the total units must be set aside as
affordable. Any fractional amount of 0.5 units or less resulting from this
calculation are discarded (i.e., rounded down), while fractional amounts greater
than 0.5 must be rounded up. As an alternative to building the full 12.5 percent of
units on -site, the developer may pay an in -lieu fee covering up to 40 percent of
the inclusionary obligation and build the remaining 60 percent.
On -Site Build Option
The full on -site requirement is a 12.5 percent affordability requirement, divided
between Very Low Income, Low Income, and Moderate -Income levels. Table 11
describes the income level allocations for rental and ownership projects.
Table 11 Required Affordable Units by Income Category
Current Very Low Low Moderate
Overall Income Income Income
Income Level Requirement (50% AMI) (70-80% AMI) [1] (110% AMI)
Rental 12.5% 30% 20% 50%
Ownership 12.5% 40% 60%
Source: City of Dublin Guidelines to the Inclusionary Zoning Regulations Ordinance
[1] Consistent w ith Dublin's Inclusionary Guidelines, Low Income households are defined at 80% AMI for
rental developments, and 70% AMI for ow nership developments.
Under these guidelines, a 100-unit project would be required to provide 12 BMR
units (rounded down from 12.5). For rental units, there would be 6 Moderate -
income units, 2 Low-income units, and 4 Very Low-income units. For ownership
units, there would be 7 Moderate -income units and 5 Low-income units.
Must -Build and Fee Payment Option
As an alternative to on -site construction of the full inclusionary requirement, the
developer may pay in -lieu fees on up to 40 percent of the requirement and build
the remaining 60 percent. In -lieu fees, which are a common alternative means of
complying with an inclusionary requirement, are typically calculated based on the
financial subsidy needed to support the development of affordable units that are
not being provided on -site. The fee revenues are collected in a dedicated fund
that can be utilized to support the production and preservation of affordable units
in the City.
23
45
Attachment 3
Economic & Planning Systems
Dublin's current in -lieu fee is charged on a per affordable unit basis and adjusted
for inflation annually based on either (a) the Bay Area Urban Consumer Price
Index as of February in each year, or (b) the HUD Fair Market Rent limits for the
Oakland Primary Metropolitan Statistical Area, whichever represents the greater
percentage change amount. As of July 2023, the in -lieu fee is $241,131 per
affordable unit.
In a hypothetical 100-unit project where the inclusionary obligation is 12 BMR
units, the developer could pay an in -lieu fee on 5 units (rounded up from 4.8) and
provide 7 units (rounded down from 7.2) as affordable units. The total in -lieu fee
payment would be $1,205,655. The 7 units are distributed across income
categories as described in Table 11. The same rounding rules on fractional units
apply in calculating the must -build portion. For rental, this results in 4 Moderate -
income units, 1 Low-income unit, and 2 Very Low-income units.6 For ownership,
there would be 4 Moderate -income units and 3 Low-income.
Table 12 shows the yield -on -cost or profit margins obtained in both options for
each of the four prototypes, given the additional costs that the inclusionary
requirements add to the project in terms of rent subsidies or in -lieu fee payments.
For the on -site build, single family detached and single family attached townhome
units remain very feasible in excess of the feasibility threshold, but the
multifamily attached condominium prototype falls just below, at 14 percent.
Choosing the in -lieu fee option increases the feasibility for the single-family
prototypes. This is because given current construction costs and single-family
home values, the current in -lieu fee of $241,131 no longer aligns with the
subsidy, such that the paying the fee costs less for the developer than providing
the affordable unit.
6 As directed by the City's IZO guidelines, if the allocation calculation and rounding rules result in
one less unit than the total required, one additional unit is assigned to the lowest income level
with the fractional amount closest to or at 0.5. In this example, the Moderate -Income fraction is
3.5, so the extra unit is assigned as Moderate and brings the allocation up to 4.
24
46
Attachment 3
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin
Table 12 Feasibility of Current Inclusionary Program on Product Prototypes
Ite m
Multifamily Apartment
Yield on Cost
Multifamily Attached Condo
Profit Margin
Single Family Attached Townhome
Profit Margin
Single Family Detached
Profit Margin
Source: Economic & Planning Systems
On -Site Inclusionary Requirement
Feasibility
Threshold
Current Program Feasibility
On -Site Build Must -Build and Fee
Alignment
5.5% 5.30% 5.32%
15% 14% 15%
15% 27% 29%
15% 30% 33%
As described above, it is best practice for an inclusionary housing program to
have an on -site inclusionary requirement that aligns with the cost of the in -lieu
fee. Stated another way, the cost to the developer of paying the in -lieu fee should
be approximately equal to the subsidy that a project is providing when some
portion of units are rented or sold at below -market -rates, given that the value of
those units is typically less than the cost to build them. This subsidy, also called
the affordability gap, is the difference between the cost of building units that will
be BMR (equal to the cost of building market -rate units, as detailed in Table 5
through Table 8) and their value based on maximum affordable rents or sale
prices (as detailed in Table 9). However, some cities make a policy decision to
incentivize the payment of fees over the production of on -site units (or vice
versa). In these circumstances, a city's on -site requirement and the associated in -
lieu fee may be intentionally different from a development cost perspective.
The subsidy required for each product type across the three affordable income
levels (Very Low, Low, and Moderate -income) is shown below in Table 13. It is
worth noting that these affordability gaps represent the cost to a developer of
providing BMR units on -site as part of a larger market -rate project. The subsidy
required for building BMR units as part of a 100 percent affordable project may be
different, as the costs for building an affordable housing project can often differ
from the costs for building a market -rate housing project.
25
47
Attachment 3
Economic & Planning Systems
Table 13 Subsidy Required for Below -Market -Rate Units by Income Level
Item
Very Low Low Moderate
Income Income Income
(50% AMI) (70-80% AMI) [1] (110% AMI)
Multifamily Attached Rental
Development Costs Per Unit $613,295 $613,295 $613,295
Development Value Per Unit $170,280 $376,380 $599,140
Affordability Gap ($443,015) ($236,915) ($14,155)
Multifamily Attached Condominium
Development Costs Per Unit $924,542 $924,542 $924,542
Development Value Per Unit $188,600 $302,100 $529,700
Affordability Gap ($735,942) ($622,442) ($394,842)
Single Family Attached Townhome
Development Costs Per Unit $960,221 $960,221 $960,221
Development Value Per Unit $203,200 $329,600 $582,500
Affordability Gap ($757,021) ($630,621) ($377,721)
Single Family Detached
Development Costs Per Unit $1,137,288 $1,137,288 $1,137,288
Development Value Per Unit $217,100 $353,500 $626,600
Affordability Gap ($920,188) ($783,788) ($510,688)
Source: Economic & Planning Systems
[1] Consistent w ith Dublin's Inclusionary Guidelines, Low Income households are defined at 80% AMI for
rental developments, and 70% AMI for ow nership developments.
26
48
Attachment 3
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin
5. Council Direction and Program
Recommendations
In selecting appropriate inclusionary requirements and in -lieu fee levels, a city
may consider several tradeoffs or policy preferences. Factors like development
feasibility, affordable housing and economic development goals, political viability,
and a desire to stay competitive with neighboring cities and their housing markets
could all be considered. For example, should a city wish to move to a higher
inclusionary level, they would need to raise the in -lieu fee or lean towards more
Moderate -income housing in order to maintain feasibility. Conversely, a policy
decision to target more Very Low or Low-income households or bring down the in -
lieu fee may require lowering the overall on -site requirement. In consideration of
these tradeoffs, the following recommendations in Table 14 were developed with
policy input from the City Council.'
Given the differences in development economics between the rental and
ownership housing markets as well as the differences between multifamily
(apartments and attached condominiums) and single family (detached and
attached townhomes) product types, EPS recommends two sets of inclusionary
requirements.
For single family detached and attached townhome ownership developments, it is
recommended to increase the inclusionary requirement to 15 percent, split
between Low (40 percent of the required units) and Moderate (60 percent of the
required units). The in -lieu fee is proposed to be set at $15 per market rate
square foot, after accounting for the must -build requirement. For multifamily
rental apartments and for -sale attached condominiums, the recommendation is to
lower the requirement to 10 percent of the total project units and focus
exclusively on the Low-income cohort. The in -lieu fee is proposed to be set at $9
per market rate square foot, after the must -build requirement.
7 The City Council discussed updates to the inclusionary program on August 15, 2023; on
September 19, 2023; and on January 9, 2024.
27
49
Attachment 3
Economic & Planning Systems
Table 14 Recommended Inclusionary Program
Equivalent
Very Low Low Moderate Fee per Fee per
Income Income [1] Income Market Affordable
Item Applicable Development Types Overall (50% AMI) (70-80% AMI) (110% AMI) Rate Sq. Ft. Unit [2]
Multifamily Multifamily Attached Rental 10.0% 0% 100% 0% $9.00 $232,650
Multifamily Attached Condominium
Single Family Single Family Attached Townhome 15.0% 0% 40% 60% $15.00 $546,000
Single Family Detached
[1] Consistent w ith Dublin's Inclusionary Guidelines, Low Income households are defined at 80% AMI for rental developments, and 70% AMI for ow nership developments.
[2] Calculated for Multifamily Attached Rental and Single Family Detached.
Source: Economic & Planning Systems, Inc.
In addition to the updated inclusionary requirements and in -lieu fee levels, EPS
also recommends several other changes to the program structure across both
multifamily and single family product types. First, it is recommended to reduce
the threshold project size to 10 units (from its current 20). This puts Dublin more
in line with its peer jurisdictions, which have an average threshold level of 10
units, and ensures that the inclusionary requirements would apply to smaller infill
projects that are expected to emerge in the future.
Second, EPS recommends charging in -lieu fees on a per market rate square foot
basis, rather than per affordable unit. This approach encourages smaller,
"affordable by design" development and aligns the fee structure with that of
inclusionary programs in other cities, as well as with that of other development
impact fees collected by the City.
The must -build component of the fee option has been helpful in ensuring that on -
site inclusionary units are built, while collecting fee revenue at the same time.
EPS recommends maintaining this option at its current 60 percent must -build
level.
Table 15 demonstrates the feasibility of the recommended inclusionary program
and fee under both full on -site build and build -fee options. For the multifamily
attached rental and multifamily attached condominium program, the reduction in
overall inclusionary level improves yield -on -cost for attached rental apartments
and profit margin for attached condominiums over the existing option. For the
single family detached and attached townhome ownership inclusionary
recommendation, the increased in -lieu fees result in lower profit margins under
the build -fee option compared to the current program, but the projects remain
feasible above the 15 percent threshold level, so it would not deter development.
28
50
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin
Attachment 3
Table 15 Feasibility of Recommended Inclusionary Program
Ite m
Feasibility
Threshold
Recommended Program Feasibility
On -Site Build Must -Build and Fee
Rental - 10% Low
Multifamily Attached Rental
Yield on Cost 5.5% 5.31% 5.33%
Multifamily Attached Condominium
Profit Margin 15% 15% 16%
Ownership - 12.5% Blended
Single Family Attached Townhome
Profit Margin 15% 25% 25%
Single Family Detached
Profit Margin 15% 27% 28%
Source: Economic & Planning Systems
29
51
Attachment 3
APPENDIX A:
Survey of Inclusionary Requirements in
Select California Jurisdictions
0
52
Attachment 3
Table A-1
Single Family Detached Ownership Inclusionary Requirements as of January 2024
City of Dublin Commercial Linkage Fee Study; EPS #231009
City
Overall
Inclusionary Project Size
Requirement Income Targets Threshold
In -Lieu Fee
Last
Ordinance
Update
Dublin
12.5% 60% Moderate 20 units $241,131 per inclusionary unit 2002
40% Low
Fremont 15% 66% Low All units $44.00 per sq. ft. 2021
33% Moderate
Concord 15% 50% Moderate
50% Low
5 units
$20.00 per sq. ft. [11
2024
San Ramon 10% Moderate 10 units $15.70 per sq. ft. 2019
Hayward 10% Moderate 2 units $23.46 per sq. ft. 2018
Walnut Creek
10% Moderate All units $21.86 per sq. ft. 2017
7%
Low
6% Very Low
Livermore 15% 50% Moderate 11 units $39.94 per sq. ft. (under 11
50% Low units)
11+ units must build
2015
Danville 10% Moderate 10 units market gap calculation 2014
Pleasanton 20% Moderate 15 units $50,480 per dwelling unit
Low
Very Low
2000 [21
[1] In -lieu fee option applies to Ownership projects between 5 and 9 units.
[2] Pleasanton's inclusionary zoning was first adopted in 2000 and the fee level was last revised in 2018.
53
Attachment 3
Table A-2
Multifamily Rental Inclusionary Requirements as of January 2024
City of Dublin Commercial Linkage Fee Study; EPS #231009
City
Ove ra l l
Inclusionary Project Size
Requirement Income Targets Threshold
In -Lieu Fee
Last
Ordinance
Update
Dublin
12.5% 50% Moderate 20 units $241,131 per inclusionary unit 2002
20% Low
30%Very Low
Fremont 10% Low All units $17.50 per sq. ft. 2021
Concord 6% 4% Moderate 5 units $15 per sq. ft. 2024
1% Low
1% Very Low
San Ramon 15% 50% Low 5 units $14.63 per sq. ft. (under 10
50% Very Low units)
10+ units must build
2019
Hayward 6% 50% Low 2 units $23.46 per sq. ft. 2018
50% Very Low
Walnut Creek 10% Low All units $21.86 per sq. ft. 2017
6% Very Low
Livermore 15% 50% Low 11 units In -lieu fee N/A; must build 2015
50% Very Low
Danville 15% Moderate 10 units market gap calculation 2014
Pleasanton 15% Low 10 units $50,480 per dwelling unit 2000*
Very Low
* Pleasanton's inclusionary zoning w as first adopted in 2000 and the fee level w as last revised in 2018.
54
Attachment 3
RESOLUTION NO. XX — 24
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
ADOPTING A NON-RESIDENTIAL DEVELOPMENT AFFORDABLE HOUSING IMPACT FEE
WITHIN THE CITY OF DUBLIN
WHEREAS, the Dublin City Council adopted Dublin Municipal Code Chapter 7.86 creating
and establishing the authority for imposing and charging a Non -Residential Development
Affordable Housing Impact Fee ("Fee") to mitigate the impacts of non-residential development on
the affordability of housing within the City; and
WHEREAS, the Inclusionary Zoning Regulations establish the authority to impose and
charge a fee to mitigate the impacts of non-residential development on the affordability of housing
in the City of Dublin; and
WHEREAS, on May 3, 2005, the City Council adopted Resolution 70-05 establishing a
Non -Residential Development Affordable Housing Impact Fee; and
WHEREAS, the City of Dublin Strategic Plan for Fiscal Years 22-23 includes Objective 2.b
to ensure the City's Inclusionary Zoning Regulations incentivize targeted housing production and
Objective 2.c to evaluate the affordable housing in -lieu fee for ownership and rental housing; and
WHEREAS, the City selected the consulting firm Economic and Planning Systems (EPS)
through a competitive process to assist with preparing a nexus study to evaluate the Non -
Residential Development Affordable Housing Impact Fee, also known as the "Commercial Linkage
Fee"; and
WHEREAS, EPS prepared the Commercial Linkage Fee Nexus Study, attached as Exhibit
A, to evaluate the nexus for collecting Non -Residential Affordable Housing Impact Fees; and
WHEREAS, on August 15, 2023, and September 19, 2023, the City Council received a
report on the City's Inclusionary Zoning Regulations, Affordable Housing In -Lieu Fee, and Non -
Residential Development Affordable Housing Impact Fee and directed Staff to prepare
amendments to these programs; and
WHEREAS, pursuant to California Environmental Quality Act (CEQA) and CEQA
Guidelines Section 15061(b)(3) and Section 15378 (b)(4), revising Affordable Housing In -Lieu
Fees is not a project and, therefore, is exempt from the requirements of CEQA; and
WHEREAS, on January 9, 2024, the City Council held a public hearing, at which time the
City Council directed Staff to bring back additional information and analysis; and
WHEREAS, on March 19, 2024, the City Council held a Study Session to consider
additional information and analysis, at which time Staff was given direction to prepare updates
and amendments to these programs; and
WHEREAS, a Staff Report, dated June 4, 2024, described and analyzed the proposed
changes to the Non -Residential Development Affordable Housing Impact Fee; and
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 1 of 6 55
WHEREAS, on June 4, 2024, the City Council held a properly noticed public hearing to
consider the Non -Residential Development Affordable Housing Impact Fee, at which time all
interested parties had the opportunity to be heard; and
WHEREAS, on June 4, 2024, the City Council did hear and use independent judgment and
considered all said reports, recommendations and testimony; and
NOW, THEREFORE, BE IT RESOLVED that in accordance with DMC Section 7.86.020.B,
the Dublin City Council hereby sets forth the following:
1. The purpose of the Fee is to implement the goals and objectives of the General Plan
Housing Element and the Dublin Municipal Code Inclusionary Zoning Regulations
Chapter 8.68; and
2. The Fee collected pursuant to this resolution shall be used to increase and maintain the
supply of housing affordable to households of very low-, low-, and moderate -income;
and
3. There is a reasonable relationship between the need for affordable housing and the
impacts of the types of development for which the corresponding fee is charged in that
new non-residential development in the City of Dublin will result in additional persons
who work in Dublin and generate or contribute to the need for affordable housing; and
4. There is a reasonable relationship between the use of the Fee and the impacts of non-
residential development as such development encourages new residents to move to the
City who are not able to afford market rate housing; and
5. There is a reasonable relationship between the amount of the Fee and the cost of the
affordable housing or portion thereof attributable to non-residential development in the
City of Dublin in that the Fee is calculated based on the number of employees generated
by specific land uses, the total amount it will cost to construct the affordable housing
and the percentage by which non-residential development within the City of Dublin
contributes to the need for the affordable housing; and
6. The cost estimates set forth in the Report are reasonable cost estimates for constructing
the affordable housing, and the Fees expected to be generated by future non-residential
development will not exceed the projected costs of construction the affordable housing;
and
7. The method of allocating the Fee to non-residential development bears a fair and
reasonable relationship to, and is roughly proportional to, each development's burden
on, and benefit from, the affordable housing to be funded by the Fee, in that the Fee is
calculated based on the number of employees each particular non-residential
development will generate.
BE IT FURTHER RESOLVED the Dublin City Council adopts the following:
1. Definitions
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 2 of 6 56
i. "Affordable Housing" shall mean housing affordable to households of very low-
, low-, and moderate -income as defined in Chapter 8.68 of the City of Dublin's
Zoning Ordinance.
ii. "Commercial" shall mean a business selling or providing merchandise,
entertainment, and personal services to the general public. Examples include
grocery stores, drug stores, clothing stores, general merchandise stores,
beauty salons, and gas stations. Food and drinking places are also included
in this category.
iii. "Development" shall mean the construction, alteration or addition of any building
or structure within the City of Dublin.
iv. "Industrial" shall mean employers engaged in business activity with limited
direct access from the general public; businesses focused on assembling,
distributing, or repairing products; businesses focused on the testing and
invention of new materials, products, or processes; and businesses engaged
in the transformation of raw materials into consumable products. Examples
include auto repair, self -storage facilities, and food/beverage products
manufacturing. Additionally, Industrial includes warehousing, and the storage
and distribution of goods.
v. "Lodging" shall mean lodging or short-term accommodations for travelers,
vacationers, and others in facilities known as hotels, motor hotels, resort
hotels, and motels.
vi. "Research & Development/Office" shall mean any facilities devoted almost
exclusively to research and development activities. Research & Development
land uses include but are not limited to: biotechnology, technology and other
products and services research facilities.
2. Non -Residential Development Affordable Housina Impact Fee Imposed
i. A Non -Residential Development Affordable Housing Impact Fee ("Fee") shall
be charged and paid for non-residential buildings or structures within the City
of Dublin when the building permit is issued for construction of such building
or structure.
ii. A Fee shall be charged and paid for non-residential development for any
alteration or addition to an existing building or structure if the alteration or
addition is greater than 500 square feet and results in the building or structure's
combined floor area after the alteration or addition being greater than 20,000
square feet. The Fee shall be charged only against that area of the alteration
or addition that is over 20,000 square feet. Square footage shall be calculated
as gross floor area, as defined in the Dublin Municipal Code, Chapter 8.08.
iii. Any non-residential use of land which is substantially similar to, but not
included in the definitions of "Commercial", "Industrial", "Lodging", "Research
& Development/Office" or "Retail" shall be allocated by the Community
Development Director to one of the four categories, maintaining as much
consistency as possible with the definitions of such terms.
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 3 of 6
57
i v . In the event that a non-residential use of land is not substantially similar to the
definitions of, "Commercial", "Industrial", "Lodging", "Research &
Development/Office" or "Retail" the Community Development Director may
establish a new category and calculate the appropriate fee for such category
based upon the assumptions as used in the Report.
3. Amount of Fee
i. The Non -Residential Development Affordable Housing Impact Fee authorized
by Municipal Code section 7.86.020 is hereby set as follows:
Land Use Fee per square foot
Commercial $1.35
Industrial $0.65
Lodging $0.57
Research & Development/Office $1.39
4. Exemptions from Fee
i. Any non-residential building or structure that is 20,000 square feet or less.
Square footage shall be calculated as gross floor area, as defined in the Dublin
Municipal Code, Chapter 8.08.
ii. Any alteration or addition to a non-residential building or structure, except
when the alteration or addition results in an increase of greater than 500
square feet and the building or structure's combined floor area after the
alteration or addition is greater than 20,000 square feet. The Fee shall be
charged only against that area of the alteration or addition that is over 20,000
square feet. Square footage shall be calculated as gross floor area, as defined
in the Dublin Municipal Code, Chapter 8.08.
iii. Any replacement or reconstruction of an existing non-residential building or
structure that has been destroyed or demolished, provided that the building
permit for new reconstruction is obtained within three (3) years after the building
was destroyed or demolished and there is no change in the land use category
(i.e., Commercial, Lodging, Research & Development/Office, or Industrial).
iv. Any non-residential building or structure constructed on property on which a
building or structure was demolished for which the Fee has been paid within the
prior 20-year period, provided the exemption shall be in the amount of the
previously -paid Fee only, and the applicant shall pay any additional amount
based on the then -current Fee. The new development shall not accrue any
unused credit or reimbursement rights, in the event that the replacement project
results in a lower Fee.
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 4 of 6 58
5. Use of Revenue
i. The revenue raised by payment of the Fee shall be placed in the Affordable
Housing Fund. Separate and special accounts within the Affordable Housing
Fund shall be used to account for such revenues, along with any interest
earnings on each account. The revenues (and interest) shall be used for the
following purposes:
1. To increase the supply of housing affordable to households of very low-,
low- and moderate -income; and
2. To pay for design, engineering, land acquisition and building, and to
subsidize and rehabilitate affordable housing and reasonable costs of
outside consultant studies related thereto; and
3. To reimburse the City for affordable housing constructed by the City with
funds from other sources including funds from other public entities, unless
the City funds were obtained from grants or gifts intended by the grantor to
be used for affordable housing; and
4. To pay for and/or reimburse costs of program development and ongoing
administration of the Fee program.
ii. Fees in these accounts shall be expended only for affordable housing and only
for the purpose for which the Fee was collected.
6. Periodic Review
i. During each fiscal year, the City Manager shall prepare a report for the City
Council, pursuant to Government Code section 66001(b), determining how
there is a reasonable relationship between the amount of the Fee and the
cost of affordable housing, or portion of the affordable housing attributable to
the development on which the Fee is imposed.
ii. During the fifth fiscal year following the first Fee deposit into the Affordable
Housing Fund, and every five years thereafter, the City Manager shall prepare
a report for the City Council, pursuant to Government Code section 6600I(d),
regarding the disposition of any unexpended portion of the Fund, whether
committed or uncommitted.
iii. During each fiscal year, the City Manager shall prepare a report for the City
Council, pursuant to Government Code section 66006, identifying the balance
of Fees in each account.
7. Automatic Fee Adjustments
j. The Fee shall be adjusted annually on the greater of the percentage change
in either: a) the February ENR Building Cost Index for the San Francisco Bay
Area; b) the February Bay Area Consumer Price Index for All Urban
Consumers (CPI-U) ; or c) the United States Department of Housing and
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 5 of 6 59
70-05.
Urban Development (HUD) Fair Market Rent limits for the Oakland Primary
Metropolitan Statistical Area that are in effect in February of each year.
8. Administrative Guidelines
The City Council may, by resolution, adopt administrative guidelines to provide
procedures for calculation and other administrative aspects of the Fee.
9. Effective Date
This resolution shall become effective 60 days after City Council adoption and
applied to applicable building permits issued on or after that date.
10. Severability
The Fee and all portions of this resolution are severable. Should the Fee or other
provision of this resolution be adjudged to be invalid and unenforceable, the
remaining provisions shall be and continue to be fully effective, and the Fee shall
be fully effective except as to that judged to be invalid.
BE IT FURTHER RESOLVED that this Resolution shall supersede and replace Resolution
PASSED, APPROVED AND ADOPTED this 4th day of June 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Mayor
ATTEST:
City Clerk
5564422.2
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 6 of 6 60
Attachment 5
Economic & Planning Systems, Inc.
1330 Broadway
Suite 450
Oakland, CA 94612
510 841 9190 tel
Oakland
Sacramento
Denver
Los Angeles
Report
Commercial Linkage Fee
Nexus Study
Prepared for:
City of Dublin
Prepared by:
Economic & Planning Systems, Inc.
October 27, 2023
EPS #231009
www.epsys.com
61
Attachment 5
Table of Contents
1. INTRODUCTION AND EXECUTIVE SUMMARY 1
Background 1
Regional Context 1
Summary of Maximum Nexus -Based Fees 2
Primary Sources 2
Organization of Report 4
2. REQUIRED NEXUS FINDINGS FOR FEE PROGRAM 5
Background 5
Authority 5
Required Nexus Findings 5
Assembly Bill 602 Provisions 6
3. METHODOLOGY AND FEE CALCULATION 9
Land Use Categories 9
Estimates of New Worker Households 11
Housing Development Costs and Affordability Gap 16
Fee Calculation 19
Appendices:
Appendix A: Survey of Commercial Linkage Fees in Other Jurisdictions
Appendix B: Occupation Distribution by Employment Category
Appendix C: Assumptions and Sources
62
Attachment 5
List of Tables
Table 1 Summary of Maximum Allowable Linkage Fees 2
Table 2 Alameda County Income Category Definitions (2023) 3
Table 3 Land Use Category Descriptions 10
Table 4 Illustration of Employees' Household Income Calculation 12
Table 5 Income Distribution of Worker Households by Employment Category 14
Table 6 Household Generation Rates by Employment Category 15
Table 7 Affordability Gap Analysis - Rental Product Type 18
Table 8 Fee Calculation - Commercial 20
Table 9 Fee Calculation - Lodging 21
Table 10 Fee Calculation - Office/R&D 22
Table 11 Fee Calculation - Industrial 23
63
Attachment 5
1, INTRODUCTION AND EXECUTIVE SUMMARY
Background
The City of Dublin is exploring various tools to advance the City's affordable housing objectives,
including a review of the City's commercial linkage fee program. The City's commercial linkage
fee program was adopted in 2001 and last updated in 2005. Fees are adjusted each year
according to the Consumer Price Index (CPI) for the San Francisco area. Other than these annual
adjustments, the commercial linkage fee program has not been reevaluated since 2005.
A commercial linkage fee, also known as a jobs -housing linkage fee, is a type of development
impact fee charged to developers of new, nonresidential properties to help support affordable
housing for lower -wage workers. The conceptual underpinning of the fee is that new
nonresidential development creates new jobs, and some of these jobs will pay wages below what
is required for a worker to afford a market -rate housing unit in the City. If the cost to construct
new housing units is higher than can be supported by the rents or home prices that workers can
afford to pay, the difference is considered an "affordability gap." The nexus (or reasonable
relationship) established between the projected number of lower -wage jobs created by new
development, and the subsidy needed to fund this "affordability gap" and support the creation
and maintenance of units that are affordable to workers in these jobs is the basis for the fee.
Economic & Planning Systems (EPS) was retained to update the nexus analysis based on current
economic and market factors. EPS has completed the required nexus analysis that quantifies the
relationship between the growth in several nonresidential land uses (Commercial, Office/R&D,
Lodging, and Industrial) and the demand for and cost of affordable housing for the local
workforce.
Assessing an impact fee, such as a linkage fee, based on an established nexus is allowed
pursuant to the State of California's Mitigation Fee Act (California Government Code sections
66000 et seq.). As a development impact fee, this linkage fee can only be charged to new
development and must be based on the impact of new development on the need for resources to
subsidize the development of new affordable housing. Fee revenue may be collected by the City
and used to subsidize the production or preservation of affordable units for lower -income
households. Expenditures may include, but are not limited to, direct contributions to affordable
housing developers, land acquisition, and funding local match requirements to leverage other
funding opportunities. This is consistent with how the City has been using fee revenue collected
since the fee's adoption.
Regional Context
Commercial linkage fees are common across the state but most common in high -demand, high -
value jurisdictions with strong nonresidential development trends. Fees are often set well below
the nexus -based maximums and typically range from $1 to $10 (or as high as $40 per square
foot of office development in some Bay Area Peninsula jurisdictions). Appendix A exhibits
examples of commercial linkage fees in other cities by land use category.
Economic & Planning Systems, Inc. 1
64
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Summary of Maximum Nexus -Based Fees
Table 1 summarizes the maximum justifiable linkage fee by commercial land use category. The
methodology used to establish the maximum justifiable fees is described in the subsequent
chapters of this report. Please note that these maximum fees are supported by the nexus
analysis but likely exceed levels that could feasibly be borne by new commercial developments.
The City has the opportunity to adopt fees up to these maximum levels but will want to consider
other economic development and fiscal revenue factors. The "adjusted maximum" fees identified
on Table 1 reflect one rationale for adjusting the maximum fees downward, by discounting the
maximum fees to reflect that 9.4 percent of people who work in Dublin also reside in Dublin, but
still likely exceed feasible fee levels.1
Table 1 Summary of Maximum Allowable Linkage Fees
Employment Category
Maximum Fee
per sq. ft.
Adjusted Maximum [1]
per sq. ft.
Commercial $380 $344
Lodging $62 $57
Office/R&D $202 $183
Industrial $127 $115
[1] Adjusted to avoid potential double -counting of the 9.4% of people who work in Dublin and
also live in Dublin (as of 2020 LEHD data).
Source: Economic & Planning Systems, Inc.
Primary Sources
To estimate the fee, EPS relied on numerous sources of data, including the following:
• JobsEQ, which is a software tool that compiles industry and wage occupation data for 2022
from a variety of sources, including U.S. Census Bureau, Bureau of Labor Statistics, Bureau
of Economic Analysis, National Center of Education Statistics, and others.
• State Department of Housing and Community Development (HCD) annual income limits for
Alameda County, 2023 (see Table 2)
• U.S. Census Bureau American Community Survey (ACS) 5-Year Estimates (2017-2021)
1 As a separate deliverable to support City Council consideration of appropriate commercial linkage fee
levels, EPS is providing fee level recommendations.
Economic & Planning Systems, Inc. 2
65
Attachment 5
Table 2 Alameda County Income Category Definitions (2023)
Income Group Standard Definition Number of Persons in Household
1 2 3 4 5 6 7 8
Acutely Low 515% AMI $15,550 $17,750 $20,000 $22,200 $24,000 $25,750 $27,500 $29,300
Extremely Low >15% to 530% AMI $31,050 $35,500 $39,950 $44,350 $47,900 $51,450 $55,000 $58,550
Very Low >30% to 550% AMI $51,800 $59,200 $66,600 $73,950 $79,900 $85,800 $91,700 $97,650
Low >50% to 580% AMI $78,550 $89,750 $100,950 $113,150 $121,150 $130,100 $139,100 $148,050
Median 100%AMI $103,550 $118,300 $133,100 $147,900 $159,750 $171,550 $183,400 $195,250
Moderate >80% AMI to 5120% AMI $124,250 $142,000 $159,750 $177,500 $191,700 $205,900 $220,100 $234,300
Source: California Department of Housing and Community Development, 2023
Economic & Planning Systems, Inc. 3
66
Attachment 5
In addition, EPS sought input from City of Dublin staff regarding affordability levels and recently
developed affordable housing projects. Data from recent Dublin developments and land
transactions were combined with information collected from various market -rate and affordable
housing developers to estimate appropriate development cost assumptions for use in Dublin.
These and other data sources are identified on the tables provided throughout this report.
Organization of Report
Following this Introduction and Executive Summary, this study includes the following
chapters:
• Chapter 2 summarizes the required nexus findings of the Study.
• Chapter 3 describes the methodology used to calculate the fee.
Economic & Planning Systems, Inc. 4
67
Attachment 5
2, REQUIRED NEXUS FINDINGS FOR FEE PROGRAM
The following section confirms that this Nexus Study contains the findings required under the
Mitigation Fee Act for the establishment of a development impact fee.
Background
The City of Dublin (City) first adopted a commercial linkage fee for affordable housing in 2001,
and it was last updated in 2005. The City is in the process of addressing a number of changes in
local housing supply, regional housing needs, and broader economic and housing trends. The
Two -Year Strategic Plan established an objective to prepare a Nexus Study to review the
commercial linkage fee program. Therefore, the City retained EPS to explore the feasibility of an
affordable housing impact fee for new commercial (i.e., nonresidential) development.
Authority
This study serves as the basis for requiring development impact fees under AB 1600 legislation,
as codified by the Mitigation Fee Act (California Government Code sections 66000 et seq.). This
section of the Mitigation Fee Act sets forth the procedural requirements for establishing and
collecting development impact fees. These procedures require that a reasonable relationship, or
nexus, must exist between a governmental exaction and the purpose of the condition.
In 1991, the Ninth Circuit U.S. Court of Appeals upheld the City of Sacramento's nonresidential
linkage fee.2 In that case, the court found that the City of Sacramento's fee program
"substantially advanced a legitimate interest." EPS is using a similar methodology to the nexus
study reviewed in that case to develop the City of Dublin's fee program.
Required Nexus Findings
The Mitigation Fee Act clearly identifies the required nexus findings.
Required Nexus Findings
• Identify the purpose of the fee.
• Identify how the fee is to be used.
• Determine how a reasonable relationship exists between the fee's use and the type of
development project on which the fee is imposed.
• Determine how a reasonable relationship exists between the demand for the affordable
housing and the type of development project on which the fee is imposed.
• Demonstrate a reasonable relationship between the amount of the fee and the cost of the
public benefit attributable to the development on which the fee is imposed.
2 Commercial Builders of Northern California v. City of Sacramento, 941 F2d 872 (1991).
Economic & Planning Systems, Inc. 5
68
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Purpose of Fee
The fee program established through this Nexus Study will fund the development and
preservation of affordable housing in the City to serve lower -wage workers employed by new
nonresidential development.
Use of Fee
The fee will be collected by the City. The funds are used to assist with the production and/or
rehabilitation and preservation of affordable housing units and/or the acquisition of land in the
City. The fee may also fund the studies and administration to support the fee program.
Relationship between Use of Fee and Type of Development
New commercial development in the City will generate new jobs. Some portion of the workers in
those jobs will not earn wages high enough to afford rent prices necessary to support new
residential development without subsidy. The linkage fee will be used to help fund this subsidy,
resulting in the development of residential units affordable to the local workforce.
Relationship between Demand for Affordable Housing and Type of Project
The City and EPS have identified four non-residential land use categories for which a separate
fee has been calculated. The proportion of lower wage workers and the number of square feet
per employee for each employment category has been assessed to ensure a proper nexus is
established.
Relationship between Amount of Fee and Cost of Public Benefit Attributed to New
Development
EPS estimated the difference between the cost of developing new rental housing and the value of
the new rental units based on rents affordable to workers at wages typical of businesses in
different commercial land uses. The affordable rents yielded unit values below the cost of
construction, indicating an "affordability gap." To estimate the fee for each non-residential land
use, this gap was multiplied by the anticipated number of lower wage workers generated by the
new development projects and the number of households of various income categories those
workers are likely to form.
Assembly Bill 602 Provisions
AB 602 passed in the California Assembly in 2021 and was signed by the Governor. The
legislation adds some new requirements for impact fees in addition to those required under AB
1600. While much of the intent of AB 602 was to clarify and limit impact fees applied to
residential development, certain aspects of AB 602 may also apply to nonresidential
development.
Existing Level of Service
Under Government Code 66016.5, AB 602 requires that an impact fee nexus study "identify the
existing level of service for each public facility, identify the proposed new level of service, and
include an explanation of why the new level of service is appropriate."
Economic & Planning Systems, Inc. 6
69
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
The City of Dublin currently has 1,443 affordable housing units for an employment base of
37,116 workers.3 This represents a ratio of 0.039 assisted affordable units per worker. The
"adjusted maximum" linkage fee levels identified herein would allow the City to subsidize a
similar or greater number of affordable units per worker - 0.5 per Commercial worker, 0.5 per
Office/R&D worker, 0.2 per Lodging worker, and 0.4 per Industrial worker.4 These higher
proportions, except in the case of Lodging, may be appropriate given the shortfall of such
affordable units in the City, region, and state, and the demonstrated impacts of new commercial
development on the City's need for affordable housing.
As an example of public policy reflecting that shortfall, the State's Regional Housing Needs
Allocation (RHNA) process has indicated that Dublin should aim to produce 3,719 total housing
units between 2023 and 2031, including 2,270 units priced at moderate or lower incomes, and
this target would represent a significant increase in the pace of both targeted and actual
affordable housing production in recent years.
Collection of Fees at Previous Levels
Under Government Code 66016.5, AB 602 requires that "if a nexus study supports the increase
of an existing fee, the local agency shall review the assumptions of the nexus study supporting
the original fee and evaluate the amount of fees collected under the original fee." The City of
Dublin wishes to use the commercial linkage fee program to generate revenue to increase the
amount of deed -restricted affordable housing in the City as new workers are added to the local
employment base.
According to the 2022 Annual Progress Report staff report, from 2015 to 2022, the City has
collected $724,111 in commercial linkage fees:
• 2015: $45,830
• 2016: $3,462
• 2017: $359,928
• 2018: $11,879
• 2019: $191,697
• 2020: $0
• 2021: $71,568
• 2022: $39,847
3 Assisted rental unit count is from the City of Dublin Community Development department as of
December 2022. The employment base is from the US Census Bureau, ACS, Five -Year Estimates,
2021.
4 Proportions are calculated as the number of affordable units that could be subsidized by the
maximum fee on a 100,000 square foot space, discounted by 9.4 percent of that figure given
commute patterns to reflect the "adjusted maximum" (as shown on Tables 8-11) and then divided by
the total number of employees that would work in a given building type (as shown on Table 6).
Economic & Planning Systems, Inc. 7
70
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Capital Improvement Plan
Under Government Code 66016.5, AB 602 requires that "large jurisdictions shall adopt a capital
improvement plan as a part of the nexus study." Under Government Code 66002, "any local
agency which levies a fee subject to Section 66001 may adopt a capital improvement plan, which
shall indicate the approximate location, size, time of availability, and estimates of cost for all
facilities or improvements to be financed with the fees." Capital improvement plans typically
include specific infrastructure projects and public facilities rather than affordable housing
developments, and affordable housing is not listed in the statute as the type of "facility" or
"improvement" for which a capital improvement plan must be adopted. However, the City has
expressed its intent to support the permitting and construction of affordable housing units as
specified in the State's RHNA process, including 2,270 moderate and lower income units. These
units may be located in various areas within the City's boundaries, may range from single units
to larger complexes of 100 or more units, and are intended to be permitted and/or developed by
2031. This nexus study estimates the costs to develop such units, less their value as income -
restricted units, which represents the housing production subsidies to be financed with the
collected linkage fees.
Economic & Planning Systems, Inc. 8
71
Attachment 5
3. METHODOLOGY AND FEE CALCULATION
Land Use Categories
The current fee program has five land use categories: Retail, Services & Accommodation
(Lodging), Office, Research & Development (R&D), and Industrial. The City decided that the land
use categories should more closely match the categories of the City's other non-residential
impact fees. These changes are intended to make the fee structure more transparent and to ease
administration.
For this update, the City asked EPS to evaluate four distinct land use categories. Office and R&D
land use categories were combined to reflect recent R&D developments that have similar land
use patterns and employment densities to office development and to acknowledge that wages of
R&D workers are more like the wages of office/professional workers than typical industrial
workers. While EPS explored combining Lodging with other Commercial land uses, Lodging was
ultimately maintained as a separate category due to distinct employment densities observed in
proposed hotel projects in Dublin (detailed in Appendix Table C-1).
While most land use categories are discretely associated with a particular type of building, others
may be interchangeable as tenants may shift between building types (e.g., businesses located in
industrial space moving to Office/R&D space). The commercial land uses analyzed in this study
are presented in Table 3, along with a description of the types of businesses that often locate in
each category. In general, each land use category is intended to be associated with a particular
type of building or land use, to which the fees can be applied. This analysis bases its
employment projections on NAICS codes associated with the most typical tenants for each land
use category.
Economic & Planning Systems, Inc. 9
72
Attachment 5
Table 3 Land Use Category Descriptions
Land Use Category
Commercial
Lodging
Office/R&D
Industrial
Description and Examples
Businesses selling or providing merchandise, entertainment, and personal services to the
general public. Examples include grocery stores, drug stores, clothing stores, general
merchandise stores, beauty salons, and gas stations. Food and drinking places are also
included in this category.
Lodging or short-term accommodations for travelers, vacationers, and others in facilities
known as hotels, motor hotels, resort hotels, and motels. Does not include short-term
Employers engaged in business activity with limited direct access from the general public;
businesses focused on professional, financial, scientific, and technical services. Examples
include finance, insurance, real estate, law, engineering, medical offices, and science and
technology.
Employers engaged in business activity with limited direct access from the general public;
businesses focused on assembling, distributing, or repairing products; businesses focused
on the testing and invention of new materials, products, or processes; and businesses
engaged in the transformation of raw materials into consumable products. Examples include
auto repair, self -storage facilities, and food/beverage products manufacturing. Additionally
includes warehousing, and the storage and distribution of goods.
Sources: City of Dublin; Economic & Planning Systems, Inc.
NAICS Sectors
44 and 45 - Retail Trade
532 - Rental and Leasing Services
722 - Food Services and Drinking Places
812 - Personal and Laundry Services
721000 - Accommodation.
51 - Information
52 - Finance and Insurance
53 - Real Estate and Rental and Leasing (excluding 532000 -Rental and
Leasing Services)
54 - Professional, Scientific, and Technical Services
5417 - Scientific R&D Services
55 - Management of Companies and Enterprises
561 - Admin. and Support Services
6211 - Offices of Physicians
6212 - Offices of Dentists
6213 - Offices of Other Health Practitioners
6214 - Outpatient Care Centers
6215 - Medical and Diagonostic Laboratories
22 - Utilities
23 - Construction
31 - Manufacturing
42 - Wholesale Trade
484 - Truck Transportation
493 - Warehousing & Storage
811 - Repair and Maintenance
Economic & Planning Systems, Inc. 10
73
Attachment 5
Estimates of New Worker Households
The following section details the methodology for estimating the distribution of household income
levels for new worker households in the City, and the number of these households that will be
generated by new development in each commercial land use category.
Occupational Category and Wage Distribution
The first step in determining the number of new worker households requiring affordable
residential units is to associate each land use type with occupational categories and the wage
distribution within those categories. This estimate included the following analytical steps:
• EPS used JobsEQ to calculate the proportion of occupations likely to be represented under
each land use category in the San Francisco -Oakland -Berkeley Core -Based Statistical
Area (CBSA), which includes Dublin.5 For example, EPS evaluated the occupation
categories within the lodging industry to determine the proportional distribution of
occupations for the land use category "Lodging." Using JobsEQ, the North American
Industry Classification System (NAICS) sector 721000 ("Accommodation") for San
Francisco -Oakland -Berkeley MSA shows that 9.36 percent of the jobs in the Lodging
industry nationwide are filled by managers, while 32.80 percent are in the category of
buildings and grounds cleaning and maintenance (see Table B-3). The occupational
distribution for all designated employment categories is provided in Appendix B. In
addition to the distribution by occupation, JobsEQ provided the average wage for each
occupation in each land use category.
• The wages for each occupation were multiplied by 1.70, the average number of workers
per working household in the City.6 While certainly there will be some variation in wages
per employee within a household, in the absence of more specific data, this analysis
assumes comparable levels of education and training and thus hourly earnings among all
workers in a household.?
• Each occupation is placed into its income category and the distribution is calculated based
on JobsEQ's reported percent of each industry's jobs that is in the income category. This
sorting uses HCD's income classifications for a 3-person household because there are
3.29 people per working household in the City of Dublin. For consistency, the affordability
gap calculation uses a 2-bedroom multi -family unit, which assumes three occupants.
Table 4 presents an example of how household income is calculated for each occupational
category and the corresponding income category for that household.
5 The San Francisco -Oakland -Berkeley Core -Based Statistical Area (CBSA) includes Alameda County, Contra Costa
County, Marin County, San Francisco County, and San Mateo County.
6 From the Census Bureau's American Community Survey.
7 This assumption is consistent with "Assortative Mating" theory. See National Bureau of Economic Research.
"Marry Your Like: Assortative Matins and Income Ineaualitv."
Economic & Planning Systems, Inc. 11
23100,0.1,comrneroal Linkage Fee_Oraft_20230[123 door
74
AttKWIRSAA
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Table 4 Illustration of Employees' Household Income Calculation
Item Source Example
Employment Category City of Dublin and EPS Lodging
Industry JobsEQ Accommodation (NAICS Code 721000)
Occupation Category JobsEQ Buildings and Grounds Cleaning and Maintenance
Median Wage for the San Francisco -Oakland -Berkeley MSA
for Occupation within Industry
Workers per Household
Median Income per Household
Income Category for 3-person Household
JobsEQ $46,100
American Community Survey 5-Year Estimates 2021 1.70
Workers per HH Multiplied by Med. Annual Wage $78,370
California Housing and Community Development (HCD) Low
Sources: City of Dublin; California Housing and Community Development (HCD); JobsEQ, 2022; U.S. Census American Community Survey 5-Year Estimates 2021; Economic &
Planning Systems, Inc.
Economic & Planning Systems, Inc. 12
75
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Distribution of Workers by Land Use Type
After identifying income ranges for each occupation category, EPS summed the percentages of
the households in each income bracket across all occupations represented in the land use
categories. These estimates of the proportion of worker households in each income brackets by
land use category are presented in Table 5.
As illustrated, only Lodging is expected to generate a very small number of households at the
very low-income levels. Commercial, Lodging, and Industrial are expected to generate significant
numbers of households at the low-income level, while jobs in the Office/R&D uses are expected
to yield more households with incomes at or above moderate -income levels. See Appendix B for
details regarding the distribution of occupations and wages within each land use type.
Employment Densities
Different land use categories operate with varying levels of employment densities. A 100,000
square foot industrial development, for example, typically has fewer employees than an office
building of the same size. The number of building square feet anticipated for an employee is
termed the "employment density" of each land use category.
Based on input from City staff, independent research, and experience with other comparable
cities, EPS estimated the employment density for each of the land use categories (detailed in
Appendix Table C-1). Using these employment density assumptions, EPS estimated the
number of employees that would occupy a prototype 100,000-square foot building for each land
use category, as shown in Table 6.
Household Formation
After calculating the estimated number of new employees generated for each land use category,
EPS estimated the number of households represented by these new employees, detailed in
Table 6. To calculate new households, EPS first adjusted the number of workers expected to
form new households, accounting for those workers who are typically too young (aged 16 to 19)
to form their own households.8 The resulting adjusted estimate of new workers was divided by
1.70, which represents the average number of workers per households in Dublin.9
8 Data from the Bureau of Labor Statistics indicate this age cohort represents about 2.0 percent of the overall
workforce. This proportion was applied to all industries except Commercial, which represents retail and food service
industries, where the younger worker cohort represent 7.7 percent of the overall industry employment.
9 Based on the Census Bureau's American Community Survey 2017-2021 data regarding the number of Dublin
residents who are defined as"workers" in households that have workers.
Economic & Planning Systems, Inc. 13
76
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Table 5 Income Distribution of Worker Households by Employment Category
Employment Income Level
Category Very Low Low Moderate Above Moderate
50% AMI 80% AMI 120% AMI >120% AMI
Commercial 0.0% 90.5% 3.5% 6.0%
Lodging 0.5% 87.1% 3.0% 9.4%
Office/R&D 0.0% 26.3% 14.0% 59.7%
Industrial O.0% 43.4% 36.2% 20.4%
[1] Designation of household income assumes a 3-person household and 1.7 workers per household,
based on American Community Survey data.
Sources: JobsEQ, 2022; California Housing and Community Development (HCD); Economic & Planning
Systems, Inc.
Economic & Planning Systems, Inc. 14
77
AttKWIRSAA
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Table 6 Household Generation Rates by Employment Category
%of Workers Total Households by Income Levels Total
Employment Sq.Ft. per Total Workers Forming Households per Very Low Low Moderate Above Moderate Households per
Category Worker per 100k Sq.Ft. Households2 100k Sq. Ft.3• ° 50% AMI 80% AMI 120% AMI >120% AMI 100k Sq. Ft.3' a
Commercial 472 212 92.3% 115 0 104 4 7 115
Lodging 3,000 33 98.0% 19 0 17 1 2 20
Office/R&D 307 326 98.0% 188 0 49 26 112 187
Industrial 862 116 98.0% 67 0 29 24 14 67
[1] See Appendix Table A-1 for sources on employment densities in different land uses.
[2] U.S. Bureau of Labor Statistics data indicates that 7.7% of retail/restaurant workers are aged 16-19, but an average of only 2% of workers in other industries fall into that age cohort. EPS
has assumed that workers aged 16-19 do not form their own households.
[3] Assumes 1.70 workers per household based on Census data; rounded.
[4] This maximum nexus -based fee calculation assumes that Dublin fees account for all worker households generated by new employers in City of Dublin, though some workers and their
households may choose to reside outside of Dublin. Total number of households may not match sum of households by income level due to rounding.
[5] Figures are rounded to nearest whole number.
Sources: U.S. Census American Community Survey 5-Year Estimates 2021; JobsEQ, 2022; California Housing and Community Development (HCD); Economic & Planning Systems, Inc.
Economic & Planning Systems, Inc. 15
78
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Housing Development Costs and Affordability Gap
To calculate the maximum justifiable fee for each land use category, EPS estimated the
"affordability gap" related to developing residential units affordable to very -low, low, and
moderate -income households. The average household size in Dublin is 3.03 people per
household according to 2021 Five -Year Estimates from the American Community Survey (ACS),
but the average number of people, per working household (households with earnings - not
including retired households, etc.) is 3.29. Thus, this analysis estimates the costs of providing
affordable housing for a three -person household, to represent the average size of working
households (rounded). California State law (California Health and Safety Code Section 50052.5)
assumes that a three -person household would occupy a two -bedroom unit, and this assumption
is used in this analysis.
The assumed prototype reflects multifamily construction at 85 dwelling units to the acre with
podium parking, reflecting the highest allowable residential density in the Dublin Downtown
Specific Plan Area, and consistent with City staff representations of the general type of
multifamily projects being built in Dublin. This building prototype is relatively cost-effective to
construct, as it makes efficient use of land and does not involve overly expensive construction
materials or techniques. Based on comparable recent projects in the vicinity of Dublin, EPS
assumes that the typical gross square footage of a two -bedroom rental unit in Dublin will be
approximately 1,000 square feet.
Development Cost Assumptions
Affordable housing development costs include land costs, direct costs (e.g., labor and materials),
and indirect or "soft" costs (e.g., architecture, entitlement, marketing, etc.). Data from recent
land transactions in and around Dublin have been combined with EPS's information from various
market -rate and affordable housing developers in the surrounding region to estimate appropriate
development cost assumptions for use in Dublin. A developer fee is also estimated and
represents the compensation to the developer for their efforts, investment, and risk. These
assumptions are shown on Table 7 and indicate that the total cost per unit for rental apartments
is about $692,000. By necessity, this figure represents a "prototypical" project; the actual costs
for a given project will vary by location and project design characteristics.
Revenue Assumptions
Assumptions must be made regarding the applicable income level (very -low, low, and moderate)
and the percentage of household income spent on housing costs to calculate the values of the
affordable units. In addition, translating these assumptions into unit prices and values requires
estimates of operating expenses and capitalization rates. The following assumptions were used in
these calculations:
• Income Levels —This analysis estimates the subsidy required to produce units for households
falling into the very low, low, and moderate -income categories for a three -person household.
While these categories are generally defined as a percentage of area median income (AMI)
by HCD. In Alameda County, the dollar amount thresholds for each category are in line with
Economic & Planning Systems, Inc. 16
79
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
the percentage thresholds.10 EPS has assumed the maximum income level allowable for the
Very Low category but has defined Low as "Lower" at 60 percent AMI and Moderate at 110
percent AMI, consistent with State Density Bonus guidelines. This assumption is conservative
in that it does not assume households earn at the very top of the income range.
• Percentage of Gross Household Income Available for Housing Costs— HCD standards on
overpaying for rent indicate that households should pay no more than 30 percent of their
gross income on housing cost.11 For this analysis, EPS has assumed that all households shall
spend 30 percent of their gross income on housing costs, including the cost of utilities stated
by the Alameda County utility allowance schedule.
• Operating Costs for Rental Units —This analysis assumes that apartment operators incur
annual operating costs of $7,500 per unit for below market rate housing for units affordable
for those falling into the very low and low-income categories. EPS has assumed the units for
moderate -income households would have similar operating costs but would be built by for -
profit builders and thus also subject to property taxes, increasing their annual operating cost
to $10,000 per unit.
Affordability Gap Results
Table 7 shows the costs and values for developing rental apartments in the City for households
at various income levels. Across all categories, the cost of constructing the unit is higher than
the supportable value of the unit. This is considered the "affordability gap," and serves as the
basis for calculating the subsidies required to provide housing for the lower -wage worker
households generated by new nonresidential development. The results of the analysis illustrate
that rents affordable to households earning moderate incomes and below cannot support the
costs of new construction without subsidy.
10 See HCD State Income Limits 2023 for Alameda County,
https://www. hcd.ca.gov/sites/default/files/docs/grants-and-funding/income-limits-2023.pdf
11 See HCD standards for Overpayment and Overcrowding, Building Blocks: Housing Needs - Overpayment and
Overcrowding (ca.aov)
Economic & Planning Systems, Inc. 17
23100,0.1,comrneroal Linkage Fee_Oraft_20230[123 door
80
AttachrirCikport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Table 7 Affordability Gap Analysis - Rental Product Type
Item
Multifamily Rental Apartments
with Podium -style, Above -grade, Structured Parking
Very Low Lower Low Moderate
Income Income [1] Income Income [2]
50% AMI 60% AMI 80% AM 110% AMI
Development Program Assumptions
Density/Acre [3] 85 85 85 85
Gross Unit Size 1,000 1,000 1,000 1,000
Number of Bedrooms 2 2 2 2
Occupants per 2-bedroom Unit [4] 3 3 3 3
Parking Spaces/Unit [5] 0.75 0.75 0.75 0.75
Project Development Cost Assumptions (per acre)
Land Acquisition and Site Improvement [6] $9,350,000 $9,350,000 $9,350,000 $9,350,000
Direct Development Costs [7] $33,787,500 $33,787,500 $33,787,500 $33,787,500
Indirect Development Costs [8] $8,446,875 $8,446,875 $8,446,875 $8,446,875
Developer Fee $7.221.813 $7.221.813 $7.221.813 $7.221.813
Total Development Costs $58,806,188 $58,806,188 $58,806,188 $58,806,188
per Unit Development Costs $691,838 $691,838 $691,838 $691,838
Maximum Supported Home Price
Household Income [9] $66,600 $79,860 $93,170 $146,410
Income Available for Housing Costs/Year [10] $16,014 $19,992 $23,985 $39,957
(less) Operating Expenses per Unit/Year [11] ($7,500) ($7,500) ($7,500) ($10,000)
Net Operating Income $8,514 $12,492 $16,485 $29,957
Capitalization Rate [12] 5.0% 5.0% 5.0% 5.0%
Total Supportable Unit Value [13] $170,280 $249,840 $329,700 $599,140
Affordability Gap
$521,558 $441,998
$362,138 $92,698
[1] Assuming the State Density Bonus is used, the rents for Lower -income households will need to be affordable to households with earnings of
not greater than 60% AMI.
[2] Astand-alone Moderate -income rental project would not qualifyfor the State Density Bonus, but as part of a 100% affordable project that
includes Lower -income units, moderate -income rental units are allowed. The rents for Moderate -income households are assumed to be
affordable to households with earnings of not greater than 110%.
[3] Reflects highest allowable densities in Dublin's Downtown Specific Plan area (85 dwelling units per acre)
[4] Consistent with guidance in State law (Health and Safety Code Section 50052.5), a 2-bedroom unit should be assumed to be occupied bya 3-
person household.
[5] Typical parking requirement in high -density residential zone is 1.5 spaces per unit plus guest parking. This analysis assumes state density
bonus parking concession is used to improve development economics.
[6] Includes land acquisition, site preparation costs, entitlement consultants, and fees/permits. Land acquisition value reflects a weighted
average, based on vacant, residentially -zoned land transactions in Tri-Valley during the past four years, as reported byCoStar. Estimate aligns
with figures provided by local developers but can varywidely.
[7] Includes on -site work, offsite work, vertical construction, general requirements, overhead and builder fees. The cost estimate reflects wood -
frame construction. Assumes workers are paid prevailing wage.
[8] Includes costs for architecture and engineering; project management; appraisal and market study marketing, commissions, and general
administration; financing and charges; insurance; and contingency.
[9] Incomes are based on 2023 HCD Income Limits for three -person households in Alameda Countyand revised to reflect State Density Bonus
Law affordability requirements.
[10] Assumes that no more than 30% of a household's income should be spent on housing -related costs for housing to be considered affordable,
subtracting cost of utilities for3-person household based on the Alameda County Housing Authority.
[11] Operating expenses are generally based on EPS feasibility studies in the region and are inclusive of utility costs; lower -income units (at or
below 80% ofAMl) are assumed to be built as non-profit and are, therefore, exempt from propertytaxes. Property taxes are assumed to comprise
a share of the operating expenses for the moderate -income category.
[12] The capitalization rate is used to determine the current value ofa property based on estimated future operating income, and is typically
measure of estimated operating risk.
[13] The total supportable unit value is determined by dividing the net operating income bythe capitalization rate.
Sources: Cityof Dublin; Alameda County Housing Authority, California Housing and Community Development (HCD); Costar; Economic &
Planning Systems, Inc.
Economic & Planning Systems, Inc. 18
81
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Fee Calculation
Table 8 through Table 11 provide the maximum nonresidential housing fee calculations for each
of the three land use categories.
The fee is calculated by the following steps:
1. Estimate the number of new households by income category generated by a prototype
100,000-square foot building in the land use category.
2. Multiply the number of households generated by the per -unit affordability gap (as
calculated in Table 7) to determine the level of subsidy required to provide housing in
Dublin for all new worker households.
3. Divide the total affordability gap by 100,000 square feet (the size of the prototype
building) to determine a maximum fee per building square foot.
The "Maximum Fee per Square Foot" calculated in the following tables represents the maximum
justifiable linkage fee that the City can charge for each land use category based on the required
nexus findings. The City may, however, decide to adopt fees below the maximum justifiable
levels based on economic or policy considerations. For example, EPS has calculated an "Adjusted
Maximum" fee reflecting the idea that not every employee of newly developed workplaces will in
fact reside in Dublin. According to the most recently available data from the US Census Bureau's
Longitudinal Employer -Household Dynamics program, only 9.4 percent of people who work in
Dublin also live in Dublin. EPS has applied that proportion to the "Maximum Fee" to calculate an
"Adjusted Maximum" for each land use category. To be clear, however, this type of adjustment is
not legally required, but does yield a lower fee.
Economic & Planning Systems, Inc. 19
82
Table 8 Fee Calculation — Commercial
Item
Table References:
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Worker
Households Affordability Gap Total Gap
per 100k sq. ft. per household
Table 6 Table 7
Aggregate Financing Gap per 100K Sq. Ft
Affordability Level
Very Low Income 0 $521,558 $0
Low Income 104 $362,138 $37,662,300
Moderate 4 $92,698 $370.790
Total 108 $38,033,090
Fee Calculation formula
Total Financing Gap a $38,033,090
Total Building Sq. Ft. b 100,000
Maximum Fee per Sq. Ft. c=a/b $380.33
Adjustment for % of Workers Living in Dublin [1] 9.4%
Adjusted Fee per Sq. Ft. $344.44
[1] The US Census Bureau indicates that 9.4% of people working in Dublin also lived in Dublin
in 2020 (most recent data available).
Sources: US Census Bureau "On The Map"; Economic & Planning Systems, Inc.
Economic & Planning Systems, Inc. 20
83
Table 9 Fee Calculation - Lodging
Item
Table References:
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Worker
Households Affordability Gap Total Gap
per 100k sq. ft. per household
Aggregate Financing Gap per 100K Sq. Ft
Table 6 Table 7
Affordability Level
Very Low Income 0 $521,558 $0
Low Income 17 $362,138 $6,156,338
Moderate 1 $92,698 $92,698
Total 18 $6,249,035
Fee Calculation formula
Total Financing Gap a $6,249,035
Total Building Sq. Ft.1 b 100,000
Maximum Fee per Sq. Ft. c =a/b $62.49
Adjustment for % of Workers Living in Dublin [1] 9.4%
Adjusted Fee per Sq. Ft. $56.59
[1] The US Census Bureau indicates that 9.4% of people working in Dublin also lived in Dublin in 2020 (most
recent data available).
Sources: US Census Bureau "On The Map'; Economic & Planning Systems, Inc.
Economic & Planning Systems, Inc. 21
23100,0,lin_comrnersal Linkage Fee_Oraft_20230a23 door
84
Table 10 Fee Calculation — Office/R&D
Ite m
Table References:
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Worker
Households Affordability Gap Total Gap
per 100k sq. ft. per household
Table 6 Table 7
Aggregate Financing Gap per 100K Sq. Ft
Affordability Level
Very Low Income 0 $521,558 $0
Low Income 49 $362,138 $17,744,738
Moderate 26 $92,698 $2.410.135
Total 75 $20,154,873
Fee Calculation formula
Total Financing Gap a $20,154,873
Total Building Sq. Ft. b 100,000
Maximum Fee per Sq. Ft. c = a /b $201.55
Adjustment for % of Workers Living in Dublin [1] 9.4%
Adjusted Fee per Sq. Ft. $182.53
[1] The US Census Bureau indicates that 9.4% of people working in Dublin also lived in Dublin in
2020 (most recent data available).
Sources: US Census Bureau "On The Map"; Economic & Planning Systems, Inc.
Economic & Planning Systems, Inc. 22
85
Table 11 Fee Calculation - Industrial
Item
Table References:
Attachrl3tAport
Dublin Commercial Linkage Fee Nexus Study
10/27/2023
Worker
Households Affordability Gap Total Gap
per 100k sq. ft. per household
Aggregate Financing Gap per 100K Sq. Ft
Table 6 Table 7
Affordability Level
Very Low Income 0 $521,558 $0
Low Income 29 $362,138 $10,501,988
Moderate 24 $92,698 $2,224,740
Total 53 $12,726,728
Fee Calculation formula
Total Financing Gap a $12,726,728
Total Building Sq. Ft.1 b 100,000
Maximum Fee perSq. Ft. c=a/b $127.27
Adjustment for % of Workers Living in Dublin [1] 9.4%
Adjusted Fee perSq. Ft. $115.26
[1] The US Census Bureau indicates that 9.4% of people working in Dublin also lived in Dublin in 2020 (most
recent data available).
Sources: US Census Bureau "On The Map"; Economic & Planning Systems, Inc.
Economic & Planning Systems, Inc. 23
86
Attachment 5
APPENDICES:
Appendix A: Survey of Commercial Linkage Fees
in Other Jurisdictions
Appendix B: Occupation Distribution by
Employment Category
Appendix C: Assumptions and Sources
87
Attachment 5
0
APPENDIX A:
Survey of Commercial Linkage Fees
in Other Jurisdictions
88
Attachment 5
Table A-1
Survey of Commercial Linkage Fees as of August 2023
City of Dublin Commercial Linkage Fee Study; EPS #231009
Commercial Linkage Fee per Sq. Ft.
Commercial (Retail) Lodging Office/R&D Industrial
Dublin $1.35 $0.57 $1.09-1.68 $0.65
San Ramon $4.32 $4.32 $4.32 $3.24
Danville no commercial linkage fee program
Pleasanton $5.21 $3.59 $8.68 $14.42
Livermore $2.38 $3.34 $1.53 $0.21-1.52
Fremont $11.33 $11.33 $11.33 $5.67
Hayward no commercial linkage fee program
Walnut Creek $5.00 $5.00 $5.00 $5.00
Concord no commercial linkage fee program
89
Attachment 5
APPENDIX B:
Occupation Distribution
by Employment Category
90
Attachment 5
Table B-1
Occupation and Wage Distribution - Commercial (without Lodging)
City of Dublin Commercial Linkage Fee Study; EPS #231009
Occupation Category [1]
Commercial
San Francisco -Oakland -
Berkeley, CA MSA %of Industry Jobs in
Average Wage Occupation Category
HH Income at
1.70 workers/HH
Income Category
Management Occupations $101,153.66 4.05% $171,961.22 Above Moderate
Business and Financial Operations Occupations $79,403.97 1.26% $134,986.75 Moderate
Computer and Mathematical Occupations $107,491.80 0.33% $182,736.05 Above Moderate
Architecture and Engineering Occupations $107,765.50 0.02% $183,201.36 Above Moderate
Life, Physical, and Social Science Occupations $84,624.70 0.01% $143,861.99 Moderate
Community and Social Service Occupations $51,467.04 0.04% $87,493.97 Low
Legal Occupations $108,695.65 0.02% $184,782.61 Above Moderate
Educational Instruction and Library Occupations $56,927.36 0.03% $96,776.52 Low
Arts, Design, Entertainment, Sports, and Media Occupations $55,439.53 0.65% $94,247.19 Low
Healthcare Practitioners and Technical Occupations $96,029.88 1.62% $163,250.79 Above Moderate
Healthcare Support Occupations $56,312.85 0.53% $95,731.85 Low
Protective Service Occupations $48,022.99 0.29% $81,639.08 Low
Food Preparation and Serving Related Occupations $39,487.58 38.88% $67,128.89 Low
Building and Grounds Cleaning and Maintenance Occupations $44,801.74 0.76% $76,162.96 Low
Personal Care and Service Occupations $41,373.20 5.12% $70,334.45 Low
Sales and Related Occupations $43,598.88 27.03% $74,118.09 Low
Office and Administrative Support Occupations $49,440.79 4.89% $84,049.33 Low
Farming, Fishing, and Forestry Occupations $42,092.71 0.14% $71,557.61 Low
Construction and Extraction Occupations $66,877.97 0.19% $113,692.54 Moderate
Installation, Maintenance, and Repair Occupations $59,658.15 2.05% $101,418.85 Moderate
Production Occupations $44,744.93 2.20% $76,066.38 Low
Transportation and Material Moving Occupations $42,359.83 9.88% $72,011.71 Low
Total or Weighted Average $46,493.40 100.00% $79,038.78
[1] Includes NAICS Sectors: 44 and 45 - Retail Trade; 532000 - Rental and Leasing Services; 812000 - Personal and Laundry Services; and 722000 - Food Services and Drinking Places.
Sources: JobsEQ, 2021; U.S. Census American Community Survey 5-Year Estimates 2021; Economic & Planning Systems, Inc.
91
Attachment 5
Table B-2
Occupation and Wage Distribution - Lodging
City of Dublin Commercial Linkage Fee Study; EPS #231009
Occupation Category [1]
Lodging
San Francisco -Oakland -
Berkeley, CA MSA %of Industry Jobs in
Average Wage Occupation Category
HH Income at
1.70 workers/HH
Income Category
Management Occupations $108,000.00 9.36% $183,600.00 Above Moderate
Business and Financial Operations Occupations $64,800.00 2.42% $110,160.00 Moderate
Computer and Mathematical Occupations $78,700.00 0.18% $133,790.00 Moderate
Architecture and Engineering Occupations $119,800.00 0.07% $203,660.00 Above Moderate
Life, Physical, and Social Science Occupations $70,700.00 0.01% $120,190.00 Moderate
Community and Social Service Occupations $65,300.00 0.02% $111,010.00 Moderate
Legal Occupations $164,600.00 0.01% 279,820.00 Above Moderate
Educational Instruction and Library Occupations $57,700.00 0.08% $98,090.00 Low
Arts, Design, Entertainment, Sports, and Media Occupations $71,700.00 0.21% $121,890.00 Moderate
Healthcare Practitioners and Technical Occupations $95,100.00 0.01% $161,670.00 Above Moderate
Healthcare Support Occupations $35,500.00 0.46% $60,350.00 Very Low
Protective Service Occupations $42,800.00 1.87% $72,760.00 Low
Food Preparation and Serving Related Occupations $42,000.00 17.00% $71,400.00 Low
Building and Grounds Cleaning and Maintenance Occupations $46,100.00 32.80% $78,370.00 Low
Personal Care and Service Occupations $41,000.00 3.41% $69,700.00 Low
Sales and Related Occupations $49,800.00 2.39% $84,660.00 Low
Office and Administrative Support Occupations $42,900.00 20.45% $72,930.00 Low
Farming, Fishing, and Forestry Occupations $48,000.00 0.08% $81,600.00 Low
Construction and Extraction Occupations $68,500.00 0.21% $116,450.00 Moderate
Installation, Maintenance, and Repair Occupations $56,400.00 6.33% $95,880.00 Low
Production Occupations $43,200.00 1.94% $73,440.00 Low
Transportation and Material Moving Occupations $39,400.00 0.70% $66,980.00 Low
Total or Weighted Average $51,586.65 100.00% $87,697.31
[1] Includes NAICS Sector: 721 -Accommodation.
Sources: JobsEQ, 2022; U.S. Census American Community Survey 5-Year Estimates 2021; Economic & Planning Systems, Inc.
92
Attachment 5
Table B-3
Occupation and Wage Distribution - Office/R&D
City of Dublin Commercial Linkage Fee Study; EPS #231009
Occupation Category [1]
Office/R&D
San Francisco -Oakland -
Berkeley, CA MSA % of Industry Jobs in
Average Wage Occupation Category
HH Income at
1.70 workers/HH
Income Category
Management Occupations $186,928.04 12.43% $317,777.67 Above Moderate
Business and Financial Operations Occupations $112,199.26 14.53% $190,738.75 Above Moderate
Computer and Mathematical Occupations $137,383.52 15.98% $233,551.99 Above Moderate
Architecture and Engineering Occupations $124,474.22 4.33% $211,606.18 Above Moderate
Life, Physical, and Social Science Occupations $113,363.11 4.45% $192,717.29 Above Moderate
Community and Social Service Occupations $71,506.82 0.79% $121,561.59 Moderate
Legal Occupations $152,823.83 2.25% $259,800.50 Above Moderate
Educational Instruction and Library Occupations $73,603.93 0.25% $125,126.68 Moderate
Arts, Design, Entertainment, Sports, and Media Occupations $93,142.15 3.84% $158,341.65 Moderate
Healthcare Practitioners and Technical Occupations $145,114.86 5.75% $246,695.26 Above Moderate
Healthcare Support Occupations $54,417.72 2.49% $92,510.13 Low
Protective Service Occupations $48,276.53 2.26% $82,070.10 Low
Food Preparation and Serving Related Occupations $40,479.47 0.22% $68,815.10 Low
Building and Grounds Cleaning and Maintenance Occupations $46,638.02 3.79% $79,284.63 Low
Personal Care and Service Occupations $45,934.07 0.34% $78,087.93 Low
Sales and Related Occupations $92,511.49 6.74% $157,269.53 Moderate
Office and Administrative Support Occupations $57,904.91 13.84% $98,438.35 Low
Farming, Fishing, and Forestry Occupations $51,397.31 0.12% $87,375.43 Low
Construction and Extraction Occupations $80,538.98 0.52% $136,916.27 Moderate
Installation, Maintenance, and Repair Occupations $69,607.82 1.84% $118,333.29 Moderate
Production Occupations $48,922.47 1.30% $83,168.21 Low
Transportation and Material Moving Occupations $44,803.83 1.95% $76,166.51 Low
Total or Weighted Average $110,011.04 100.00% $187,018.77
[1] Includes NAICS Sectors: 51 - Information; 52 - Finance and Insurance; 53 - Real Estate and Rental and Leasing (excluding 532000 -Rental and Leasing Services); 54 - Professional, Scientific,
and Technical Services; 55 - Management of Companies and Enterprises; 561 - Admin. and Support Services; 6211 - Offices of Physicians; 6212 - Offices of Dentists; 6213 - Offices of Other Health
Practitioners; 6214 - Outpatient Care Centers; and 621500 - Medical and Diagonostic Laboratories.
Sources: JobsEQ, 2021; U.S. Census American Community Survey 5-Year Estimates 2021; Economic & Planning Systems, Inc.
93
Attachment 5
Table B-4
Occupation and Wage Distribution - Industrial
City of Dublin Commercial Linkage Fee Study; EPS #231009
Occupation Category [1]
Industrial
San Francisco -Oakland -
Berkeley, CA MSA % of Industry Jobs in
Average Wage Occupation Category
HH Income at
1.70 workers/HH
Income Category
Management Occupations $158,147.54 8.23% $268,850.81 Above Moderate
Business and Financial Operations Occupations $103,392.89 6.03% $175,767.91 Above Moderate
Computer and Mathematical Occupations $139,076.43 2.41% $236,429.93 Above Moderate
Architecture and Engineering Occupations $112,828.89 3.54% $191,809.12 Above Moderate
Life, Physical, and Social Science Occupations $92,162.61 1.05% $156,676.44 Moderate
Community and Social Service Occupations $78,359.68 0.00% $133,211.45 Moderate
Legal Occupations $199,705.44 0.08% $339,499.25 Above Moderate
Educational Instruction and Library Occupations $69,094.23 0.01% $117,460.18 Moderate
Arts, Design, Entertainment, Sports, and Media Occupations $72,251.41 0.78% $122,827.40 Moderate
Healthcare Practitioners and Technical Occupations $112,353.32 0.15% $191,000.64 Above Moderate
Healthcare Support Occupations $59,860.28 0.02% $101,762.47 Moderate
Protective Service Occupations $59,228.02 0.11% $100,687.63 Low
Food Preparation and Selling Related Occupations $41,556.54 0.42% $70,646.12 Low
Building and Grounds Cleaning and Maintenance Occupations $49,462.99 0.57% $84,087.08 Low
Personal Care and Service Occupations $47,499.67 0.01% $80,749.44 Low
Sales and Related Occupations $84,554.44 6.22% $143,742.54 Moderate
Office and Administrative Support Occupations $57,812.72 9.52% $98,281.63 Low
Farming, Fishing, and Forestry Occupations $46,613.34 0.27% $79,242.67 Low
Construction and Extraction Occupations $78,336.07 20.78% $133,171.31 Moderate
Installation, Maintenance, and Repair Occupations $71,292.15 7.31% $121,196.66 Moderate
Production Occupations $54,838.13 19.41% $93,224.82 Low
Transportation and Material Moving Occupations $51,202.17 13.10% $87,043.69 Low
Total or Weighted Average $78,713.23 100.00% $133,812.48
[1] Includes NNCS Sectors: 22 - Utilities; 23 - Construction; 42 - Wholesale Trade; 484 - Truck Transportation; 493 - Warehousing & Storage; and 811 - Repair and Maintenance
94
Attachment 5
APPENDIX C:
Assumptions and Sources
0
95
Attachment 5
Table C-1
Assumptions and Sources
City of Dublin Commercial Linkage Fee Study; EPS #231009
Item
Demographic Assumptions
Total Population
Total Employed
Households
Households with Eamings
Workers per Household with Workers
Persons per Working Household
Dublin Workers Living in Dublin
Employment Density Assumptions
Commercial
Office/R&D
Lodging
Industrial
Total
Unit
71,680 persons
37,116 persons
23,688 households
21,819 households
1.70 persons
3.29 persons
9.4% of workers
472 sq. ft. per employee
307 sq. ft. per employee
3,000 sq. it. per employee
862 sq. ft. per employee
Source
American Community Survey 5-Year Estimates 2021
American Community Survey 5-Year Estimates 2021
American Community Survey 5-Year Estimates 2021
American Community Survey 5-Year Estimates 2021
American Community Survey 5-Year Estimates 2021
American Community Survey 5-Year Estimates 2021
US Census Bureau "On The Map" 2020 data
Draft Public Facilities Fee study, City of Dublin, 2023
Draft Public Facilities Fee study, City of Dublin, 2023
Draft Public Facilities Fee study, City of Dublin, 2023
Draft Public Facilities Fee study, City of Dublin, 2023
Sources: U.S. Census American CommunitySurvey 5-Year Estimates 2021;US Census Bureau "On The Map"; Cityof Dublin
96
Attachment 6
INCLUSIONARY ZONING REGULATIONS
8.68.010 Purpose.
The purpose of this EChapter is to:
A. eEnhance the public welfare and assure that further housing development contributes to the
attainment of the City's housing goals by increasing the production of residential units affordable by
households of very low, low, and moderate income.
B. aAssure that the limited remaining developable land in the City's planning area is utilized in a
manner consistent with the City's housing policies and needs. Rev. Ord. 1 03 (January 2003); Ord.
8 02 (May 2002)
8.68.020 Definitions.
As used in this oChapter, each of the following terms shall be defined as follows:
A. "Affordable unit" means an ownership or rental -housing unit, including senior housing,
affordable to households with very -low=, low-, or moderate=incomes as defined in this Chapter.
1. Rental units are deemed affordable units if the annual rent does not exceed 30% of
maximum income level for very low-. low- and moderate -income households, adjusted for
household size and as defined below.
2. Owner -occupied units are deemed affordable units if the sales price results in annual
housing expenses that do not exceed 35% of the maximum income level for very -low-, low-,
and moderate -income households, adjusted for household size and as defined below.
B. "Applicant" means any person, firm, partnership, association, joint venture, corporation, or any
entity or combination of entities that seeks city real property development permits or approvals.
C. "Condominium" means a development consisting of condominiums. A condominium consists of
an undivided interest in common in a portion of real property coupled with a separate interest in
space called a unit, the boundaries of which are described on a recorded final map, parcel map, or
condominium plan in sufficient detail to locate all boundaries thereof.
CD. "Dwelling unit" means a dwelling designed and intended for occupancy by one household.
DE. "Very -low-, low-, and moderate -income levels" means those income and eligibility levels
determined periodically by the California Department of Housing and Community Development
based on Alameda County median income levels adjusted for family size. Such levels shall be
calculated on the basis of gross annual household income considering household size and number
of dependents, income of all wage earners household members eighteen years of age and older;
cldcrly or disablcd family mcmbcrs, and all other sources of household income and will be recertified
as set forth by local standards, and state and federal housing law.
97
Attachment 6
1. "Very-low=income" means 50% or less of the median income, adjusted for actual
household size.
2. "Low=income" means more than 50% and up to 80% of the median income, adjusted for
actual household size.
3. "Moderate=income" means more than 80% and up to 120% of the median income,
adjusted for actual household size.
€F. "Resale controls and/or rent restrictions" means legal restrictions by which the affordable units
shall be restricted to ensure that the unit remains affordable to very -low-, low-, or moderate -income
households, as applicable, for a period of not less than 55 years. The 55 year period will reset with
each time ownership of the unit is transferred through a bona fide sales transaction with a third party
durina the resale restriction period sale of the unit. With respect to rental units, such rent restrictions
shall be in the form of a regulatory agreement recorded against the applicable property. With respect
to owner -occupied units, such resale controls shall be in the form of resale restrictions, deeds of
trust, and/or other similar documents recorded against the applicable property.
FG. "Residential development" includes, without limitation, detached single-family dwellings,
multiple -dwelling structures, groups of dwellings, condominium or townhouse developments,
condominium conversions, cooperative developments, mixed use developments that include
housing units, and residential land subdivisions intended to be sold to the general public. Rev. Ord.
43 08 (Dcccmbcr 2008); Ord. 8 05 (March 2005); Ord. 1 03 (January 2003); Ord. 8 02 (May 2002)
8.68.030 General Requirements.
A. 12.5% Affordability Requirement for Rental Units and Condominium Units. All new rental
residential rental development projects. and all for -sale Condominium development projects
(condominium developments with a density of 30 units per acre or more) of -with 20 10 units or more
designed and intended for permanent occupancy shall construct 12.5 10.0% of the total number of
dwelling units within the development as affordable units, except as otherwise provided by this
GChapter. and except when all of the dwellina units (excludina units reserved for property
management) within the project are affordable. (Any Condominium development project with a
density of less than 30 units per acre shall be required to meet the Affordability Requirement for
Ownership Units). The foregoing requirement shall be applied no more than once to an approved
residential development (and generally at the tentative map stage), regardless of the changes in the
character or ownership of the development. except as provided by this Chapter, provided the total
number of units does not change. In applying and calculating the affordability requirement, any
decimal fraction less than or equal to 0.50 may be disregarded, and any decimal fraction greater
than 0.50 shall be construed as one unit.
B. Affordability Requirement for Ownership Units. All for -sale (ownership) residential
development proiects (includina condominium development projects with a density of less than 30
units per acre). of 10 units or more desianed and intended for permanent occupancy shall construct
15.0% of the total number of dwelling units within the development as affordable units. except as
otherwise provided by this Chapter. The foreaoina requirement shall be applied no more than once
to an approved residential development (and aenerally at the tentative map stage). reaardless of the
changes in the character or ownership of the development, except as provided by this Chapter.
provided the total number of units does not change. In applvina and calculatina the affordability
requirement. any decimal fraction less than or equal to 0.50 may be disregarded. and any decimal
fraction areater than 0.50 shall be construed as one unit.
98
Attachment 6
BC. Allocation of Units to Income Levels. Affordable units provided pursuant to this section
shall be allocated to households with vcry low, low , and moderato incomc Icvclo as follows:
Rental Units and Ownership Units
Condominium Units
Very -low-income households 030% 0%
Low-income households 10020% 40%
Moderate -income households 050% 60%
Where the calculation of the allocation results in fewer units than would otherwise be required
pursuant to cub action A of this section, one additional unit should be allocated to the income level
with a decimal fraction closest to 0.50.
CD. Conditions of Approval: Any tentative map, Conditional Use Permit, or Site Development
Review Permit approving residential development projects subject to this EChapter shall contain
conditions sufficient to ensure compliance with the provisions of this eChapter. Such conditions shall
detail the number of affordable units required, specify the schcdulc of construction of affordablc
unito, set forth the applicant's manner of compliance with this eChapter, and require the execution of
an agreement imposing appropriate resale controls and/or rental restrictions on the affordable units.
DE. Concurrent Construction. All affordable units in a project or phase of a project shall be
constructed concurrently with market -rate units, unless the City Manager determines in writing that
extenuating circumstances exist that make concurrent construction infeasible or impractical.
EF. Design and Distribution of Affordable Units. All affordable units shall reflect the range of
numbers of bedrooms provided in the project as a whole and shall not be distinguished by exterior
design, construction, or materials. Affordable units may be of smaller size than the units in the
project and may have fewer amenities than the market rate units in the project. All affordable units
shall be reasonably dispersed throughout the project. Rev. Ord 43_08 (December 008); Ord 1 03
(January 2003); Ord. 8 02 (May 2002)
8.68.040 Exceptions to 12.5% Affordability Requirement.
Developers of projects subject to Sections 8.68.030.A and 8.68.030.E shall construct 12.5% of the
total number of affordable dwelling units within the development as affordcblo unito, unless subject
to an exception set forth in this section. All exceptions require City Council approval, which shall be
obtained at or prior to tho laot discretionary approval for the project.
A. Payment of Fees In Lieu of Creation of Affordable Units. Upon request of the applicant, the
City Council shall permit the applicant to pay a fee in lieu of constructing up to 40% of the affordable
units that the developer would otherwise be required to construct pursuant to Sections 8.68.030.A
and 8.68.030.B. The amount of the fee shall be as set forth in a resolution of the City Council, which
may be amended from time to time to reflect inflation and changed conditions in the City and the
region. In lieu fees shall be paid at the time and in the amount set forth in the in lieu fee resolution in
effect at the time of issuance of the building permit.
B. Off -Site Projects. An applicant may construct the affordable units not physically within the
development in lieu of constructing some or all of the affordable units within the development, with
the approval of the City Council, if the City Council finds:
99
Attachment 6
1. that cConstruction of the units off -site in lieu of constructing units on -site is consistent with
the EChapter's goal of creating, preserving, maintaining, and protecting housing for very low-,
low- and moderate -income households.
2. thet the Units to be constructed off site are consistent with Section 8.68.030.€F above.
3. that it wWould be infeasible or impractical to construct affordable units on -site.
4. that cConditions of approval for the project require that the off -site affordable units would
be governed by the terms of a deed restriction and, if applicable, rental restrictions similar to
that used for the on -site affordable units.
5. thet the sConditions of approval for the project, or other security such as a cash deposit,
bond, or letter of credit, are adequate to require the construction of the off -site affordable units
concurrently with the completion of the construction of the residential development or within a
reasonable period (not to exceed 5 five years).
C. Land Dedication. An applicant may dedicate land to the City or City -designated local non-profit
housing developer in lieu of construction of some or all of the required affordable units, if the City
Council finds that all of the following:
1. that dDedication of land in lieu of constructing units is consistent with the eChapter's goal
of creating, preserving, maintaining, and protecting housing for very -low-, low- and moderate -
income households.
2. that tThe dedicated land is useable for its intended purpose; is free of toxic substances
and contaminated soils -and; is fully improved with infrastructure, adjacent utilities, grading; and
all development -impact fees paid excluding any inclusionary zoning ordinance fees.
3. that tThe proposed land dedication is of sufficient size to meet the following requirements:
a. tThe dedication includes land sufficient to construct the number of units that the applicant
would otherwise be required to construct by Section 8.68.030.A and Section 8.68.030.B,
based on the size of lots in the subdivision for which the applicant is meeting its obligation; and
b. iln addition, the The dedication finds the includes such additional land's the market value
for which is equal to or exceeds the difference between the value of a market -rate, 1200-
square foot unit, and the price at which such a unit could be sold as an Affordable Unit (which
amount shall be sot forth in a r000lution adopted from time to time by the City Council) times
the number of units required. The amount an Affordable Unit may be sold at shall be set forth
in a resolution adopted by the City Council as needed.
D. Credit tTransfers. An applicant may fully or partially satisfy the requirements of Sections
8.68.030.A and 8.68.030.B through the use of transfer credits created pursuant to Section 8.68.060.
Credit certificates shall be presented to the Community Development Director, who shall note at the
time of project approval the credit certificate by number. Credit certificates may only be used to
satisfy the requirements for Inclusionary Units for the income category (i.e., very low=, low=, or
moderate -income) and number of bedrooms for which they are issued.
E. Waiver of Requirements. The City Council, at its discretion, may waive, wholly or partially, the
requirements of this ordinance and approve alternate methods of compliance with this Chapter if the
100
Attachment 6
applicant demonstrates, and the City Council finds, that such alternate methods meet the purposes
of this Chapter. Rev. Ord. 1 03 (January 2003); Ord. 8 02 (May 2002)
8.68.050 General Procedures for
Implementing Inclusionary Zoning Requirements.
A. Agreements. Prior to the issuance of a building permit for an affordable unit, resale restrictions
or rental controls, or both, as the case may be, shall be set forth in an agreement between the City
and the developer, in a form consistent with the City Council -adopted form agreement, which
agreement shall be recorded against the property containing the affordable units. The agreement
shall be executed by the City Manager, and its requirements shall run with the land and bind the
applicant's successors.
B. Rental Units; Occupancy; Annual Report. Agreements involving rental units shall require the
owner of the affordable units to ensure that the units are occupied by tenants whose monthly income
levels do not exceed very low-, low-, or moderate -income levels, as the case may be, and shall
preclude tenants from subletting or subleasing the unit. The agreement shall also require the owner
of the affordable unit to submit an annual report to the City Manager, in a format approved by the
City. The report shall include, but not be limited to the following information: an identification of the
affordable units within the project; the monthly rents charged and proposed to be charged; vacancy
information for the prior year; and the monthly income for tenants of each affordable unit throughout
the prior year.
C. Ownership Units; Occupancy; City's Right of First Refusal. Agreements for ownership
units, including condominium units, shall specify that the inclusionary units must be occupied by the
owner or owners and may not be leased or rented without the written approval of the City. The
resale restrictions shall provide that in the event of the sale of an affordable unit, the City shall have
the right to purchase any affordable owner -occupant unit at the maximum price that could be
charged to an eligible household.
D. Selection Criteria. No household shall be permitted to occupy a unit that is required under this
GChapter to be affordable unless the City or its designee has approved the household's eligibility.
Eligible potential occupants of affordable units will be qualified on the basis of household income, the
median combined household income `aics for Alameda County published periodically by the
California Department of Housing and Community Developmont, all sources of household income
and assets, the relativnohip �atweeia o—seh-e' ze-and-tthc a' &ilcblo unito, end any further
criteria required by law as defined by this Chapter. The developor ohcll i o an equitable selection
method s\,..blahcd in conformance with tho torma of this chapter. The selection criteria for a
qualified household may not distinguish between adults and children. Selection of qualified person
should be based on priorities established using the point system described below:
• Employed within the boundaries of the City of Dublin (3 points maximum, one per
household member)
Public Service employee working in the City of Dublin (1 additional point)
Dublin resident (3 points maximum, one per household member)
Seniors (1 point, one per household)
101
Attachment 6
Permanently disabled (1 point, one per household)
Immediate family member of Dublin resident (1 point, one per household)
Required to relocate from current Dublin residence due to demolition of dwelling or
conversion of dwelling from rental to for -sale unit (1 point, one per household)
To qualify as a "Public Service Employee", the person shall be employed by a Public Agency.
To qualify as "Employed within the boundaries of the City of Dublin", the person shall have been
employed within the City of Dublin for at least six months.
To qualify as a "Dublin resident," the person shall have been a resident of the City of Dublin for at
least a one-year period prior to the eligibility determination. Rev. Ord. 8 05 (March 2005); Ord. 1 03
(January 2003); Ord. 8 02 (May 2002)
8.68.060 Affordable Unit Credits.
A. Creation. Affordable unit credits may be created by the City Council. One affordable unit credit
certificate shall be issued for each affordable unit constructed in excess of the number of affordable
units required to be constructed for the project by Sections 8.68.030.A and 8.68.030.B. The
certificate shall designate a specific income category (i.e., very -low=, low=, or moderate=income) and
number of bedrooms for which they are issued.
B. Ownership and uUse of GGredits. Affordable unit credit certificates are issued to and become
the possession of the project owner, who may then use them to satisfy the requirements of this
eChapter for another project in the City. If a project owner proposes to sell credit certificates, the
parties shall first obtain the consent of the Gommunity DevelopmentFinance Director, who will
document the transfer by certificate number. Rev. Ord. 1 03 (January 2003); Ord. 8 02 (May 2002)
8.68.070 Incentives to Encourage On -Site Construction of
Affordable Units.
The City may, but shall not be required to, offer incentives or financial assistance to encourage the
on -site construction of affordable units in excess of 12.5% of the total number of affordable units
required by this Chapter to be included in the project to the extent resources for this purpose are
available and approved for such use by the City Council or City Manager. Such incentives may
include, but shall not be limited to, the following:
A. Fee Deferral.
1. Development Processing Fees. The City Manager may approve deferred payment of
City processing fees applicable to the review and processing of the project. The terms and
payment schedule of the deferred fees shall be subject to the approval of the City Manager.
2. Development Impact Fees. The City Council may authorize the deferred payment of
development impact fees applicable to the affordable units. Approval of this incentive requires
demonstration by the Applicant that the deferral increases the project's feasibility. The
applicant must provide appropriate security to ensure future payment of such fees.
102
Attachment 6
B. Design Modifications. The City Council may approve design modifications to affordable units
that increase the feasibility of the construction of affordable units, including but not limited to, the
following:
1. Reduced lot size.
2. Reduced setback requirements.
3. Reduced open space requirements.
4. Reduced landscaping requirements.
5. Reduced interior or exterior amenities.
6. Reduction in parking requirements.
7. Height restriction waivers. Rev. Ord. 1 03 (January 2003); Ord. 8 02 (May 2002)
8.68.080 Inclusionary Zoning In Lieu Fees -Fund.
The fund previously known as the "Inclusionary Zoning In Lieu Fee fund" is hereby renamed the
"Affordable Housing Fund" ("Fund") and all In Lieu Fees shall be deposited into the Fund. In Lieu
Fyw c 'I be deposited into a fund known as the "Inclusionary Zoning In Lieu Fees Fund" ("Fund").
A. Use. All monies in the Fund, together with any interest earnings on such monies less
reasonable administrative charges, shall be used or committed to use by the City for the purpose of
providing very low-, low-, and moderate -income ownership or rental housing in the City of Dublin.
B. Annual rReport. The City Manager shall prepare an annual report to the City Council
identifying the balance of monies in the Fund and the affordable units provided and any monies
committed to providing very low-, low-, and moderate -income housing. The annual report shall also
include a review of administrative charges. Rev. Ord. 1 03 (January 2003); Ord. 8 02 (May 2002)
8.68.090 Violations.
It shall be unlawful for any person, firm, corporation, partnership or other entity that is subject to this
ordinance pursuant to Sections 8.68.030.A and 8.68.030.B to violate any provision or to fail to
comply with any of the requirements of this eChapter. A violation of any of the provisions of or
failingure to comply with any of the requirements of this Chapter shall constitute a misdemeanor;
except that notwithstanding any other provisions of this Code, any such violation constituting a
misdemeanor under this eChapter, may in the discretion of the enforcing authority, be charged and
prosecuted as an infraction. Any person convicted of an infraction under the provisions of this Code
shall be punishable as provided by the Government Code of the State of California. Rev. Ord. 1 03
(January 2003); Ord. 8 02 (May 2002)
8.68.100 Enforcement.
A. General. The City Manager shall enforce this eChapter, and its provisions shall be binding on
all agents, successors, and assigns of an applicant. The City Manager may suspend or revoke any
103
Attachment 6
building permit or approval upon finding a violation of any provision of this sChapter. No land -use
approval, building permit, or certificate of occupancy shall be issued for any residential development
unless exempt from or in compliance with this sChapter. The City may institute any appropriate legal
actions or proceedings necessary to ensure compliance herewith, including, but not limited to,
actions to revoke, deny, or suspend any permit or development approval.
B. Excessive rRents/ILegal aAction. If the City Manager determines that rents in excess of those
allowed by operation of this sChapter have been charged to a tenant residing in an affordable unit,
the City may take appropriate legal action to recover, and the project owner shall be obligated to pay
to the tenant, or to the City in the event the tenant cannot be located, any excess rents
charged. Rcv. Ord. 1 03 (January 2003); Ord. 8 02 (May 2002)
8.68.110 Appeals.
Decisions of the City Manager under this Chapter may be appealed as provided in
Chapter 8.136. Rcv. Ord. 1 03 (January 2003); Ord. 8 02 (May 2002)
104
Attachment 7
RESOLUTION NO. 24 — 04
A RESOLUTION OF THE PLANNING COMMISSION
OF THE CITY OF DUBLIN
RECOMMENDING CITY COUNCIL APPROVAL OF AMENDMENTS TO DUBLIN MUNICIPAL
CODE CHAPTER 8.68 (INCLUSIONARY ZONING REGULATIONS) EFFECTIVE CITYWIDE
PLPA-2023-00032
WHEREAS, the City occasionally initiates amendments to the Dublin Municipal Code to
clarify, add, or amend certain provisions to ensure that it remains current with federal and state
law, internally consistent, simple to understand and implement, and relevant to changes occurring
in the community; and
WHEREAS, Staff initiated amendments to Dublin Municipal Code Chapter 8.68
(Inclusionary Zoning Regulations) consistent with the City of Dublin Two -Year Strategic Plan,
which includes Strategy 2: Housing Affordability, Objective 2b: Ensure the City's inclusionary
zoning regulations incentivize targeted housing production and Objective 2c: Prepare a nexus
study to evaluate the affordable housing commercial linkage; and
WHEREAS, the City selected the consulting firm Economic and Planning Systems (EPS)
to prepare an Inclusionary Zoning and Affordable Housing In -Lieu Fee Feasibility Study and
Commercial Linkage Fee Nexus Study to inform the proposed amendments; and
WHEREAS, on August 15, 2023, and September 19, 2023, the City Council received
informational reports on the Commercial Linkage Fee and Inclusionary Zoning and In -Lieu Fee
programs and provided direction to Staff to prepare updates to the programs; and
WHEREAS, on December 12, 2023, the Planning Commission held a public hearing to
consider amendments to the Inclusionary Zoning Regulations; and
WHEREAS, on January 9, 2024, the City Council held a public hearing to consider
amendments to the Inclusionary Zoning Regulations. City Council directed Staff to return at a
future meeting with additional information and analysis regarding increasing the inclusionary
zoning requirement for for -sale units to 15%; increasing the in -lieu fee on for -sale units;
differentiating the affordable housing requirements for different ownership product types;
evaluating the impact of interest rate fluctuations; and a projection of in -lieu fee revenue; and
WHEREAS, on March 19, 2024, the City Council held a Study Session and directed Staff
to differentiate the affordable housing requirements for different ownership product types, and to
increase the inclusionary requirement for certain for -sale product types; and
WHEREAS, proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary
Zoning Regulations) include changes to the applicability threshold for projects subject to the
regulations, affordability requirements for different product types, and revisions to the allocation
of units to income levels; and
WHEREAS, the California Environmental Quality Act (CEQA), together with the State
Guidelines and City of Dublin CEQA Guidelines and Procedures require that certain projects be
reviewed for environmental impacts and that environmental documents be prepared; and
Reso. No. 24-04, Item 6.1, Adopted 05/14/2024 Page 1 of 2
105
Attachment 7
WHEREAS, the Planning Commission recommends that the City Council find the proposed
amendments exempt from the requirements of CEQA pursuant to CEQA Guidelines Section
15061(b)(3) as the amendments would not result in any physical changes and it can be seen with
certainty that the amendments would not have a significant effect on the environment; and
WHEREAS, the Planning Commission held a duly noticed public hearing on May 14, 2024,
during which all interested persons were heard; and
WHEREAS, proper notice of said hearing was given in all respects as required by law; and
WHEREAS, a Staff Report dated May 14, 2024, was submitted to the Dublin Planning
Commission recommending approval of the proposed amendments to Dublin Municipal Code
Chapter 8.68; and
WHEREAS, the Planning Commission did hear and consider all said reports,
recommendations and testimony herein above set forth and used its independent judgment to
evaluate the recommendations.
NOW, THEREFORE, BE IT RESOLVED that the foregoing recitals are true and correct
and made a part of this Resolution.
BE IT FURTHER RESOLVED that the City of Dublin Planning Commission does hereby
recommend that the City Council adopt the Ordinance attached hereto as Exhibit A. and
incorporated herein by reference.
PASSED, APPROVED AND ADOPTED this 14th day of May 2024, by the following vote:
AYES: Aini, Grier, Rashid, Thalblum, Tyler
NOES:
ABSENT: Wright
ABSTAIN:
ATTEST:
[7DocuSigned by:
4-A Aklut
Assistanttommunity Development Director
{_____DocuSined by:
PlanningVCommission Chair
Reso. No. 24-04, Item 6.1, Adopted 05/14/2024 Page 2 of 2 106
Attachminahlbit A
ORDINANCE NO. XX — 24
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING AMENDMENTS TO DUBLIN MUNICIPAL CODE CHAPTER 8.68
(INCLUSIONARY ZONING REGULATIONS)
PLPA-2023-00032
The Dublin City Council does ordain as follows:
SECTION 1. RECITALS
A. The City occasionally initiates amendments to the Dublin Municipal Code to clarify, add, or
amend certain provisions to ensure that it remains current with federal and state law, internally
consistent, simple to understand and implement, and relevant to changes occurring in the
community.
B. Staff initiated amendments to Dublin Municipal Code Chapter 8.68 (lnclusionary Zoning
Regulations) consistent with the City of Dublin Two -Year Strategic Plan, which includes
Strategy 2: Housing Affordability, Objective 2b: Ensure the City's inclusionary zoning
regulations incentivize targeted housing production and Objective 2c: Prepare a nexus study
to evaluate the affordable housing commercial linkage.
C. The City selected the consulting firm Economic and Planning Systems (EPS) to prepare an
Inclusionary Zoning and Affordable Housing In -Lieu Fee Feasibility Study and Commercial
Linkage Fee Nexus Study to inform the proposed amendments.
D. On August 15, 2023, and September 19, 2023, the City Council received informational reports
on the Commercial Linkage Fee and Inclusionary Zoning and In -Lieu Fee programs and
provided direction to staff to prepare updates to the programs.
E. On January 9, 2024, the City Council held a public hearing to consider amendments to the
Inclusionary Zoning Regulations and Affordable Housing In -Lieu Fee. City Council directed
Staff to return at a future meeting with additional information and analysis regarding increasing
the inclusionary zoning requirement to 15%; increasing the in -lieu fee; differentiating the
affordable housing requirements for different ownership product types; the impact of interest
rate fluctuations; and a projection of in -lieu fee revenue.
F. On March 19, 2024, the City Council held a Study Session and provided direction to staff
regarding increasing the inclusionary zoning requirement to 15%; increasing the in -lieu fee;
differentiating the affordable housing requirements for different ownership product types; the
impact of interest rate fluctuations; and a projection of in -lieu fee revenue.
G. The proposed amendments to Dublin Municipal Code Chapter 8.68 (lnclusionary Zoning
Regulations) include changes to the affordability requirements for rental and ownership
development projects, modifications to the provisions for the payment of fees in -lieu of
constructing affordable units, revisions to the allocation of units to income levels, and revisions
to the exceptions to the affordability requirements.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 1 of 10
107
Attachment 7
H. The Planning Commission held a duly noticed public hearing on May 14, 2024, during which
all interested persons were heard, and adopted Resolution No. 24-XX recommending that the
City Council approve the proposed amendments to Dublin Municipal Code Chapter 8.68
(Inclusionary Zoning Regulations).
I. A Staff Report was submitted to the Dublin City Council recommending approval of the
proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning
Regulations).
J. The City Council held a public hearing on the proposed amendments to Dublin Municipal Code
Chapter 8.68 (Inclusionary Zoning Regulations) on June 4, 2024, at which time all interested
persons had an opportunity to be heard.
K. Proper notice of said hearing was given in all respects as required by law.
L. The City Council did hear and consider all said reports, recommendations and testimony herein
above set forth and used its independent judgement to evaluate the project.
SECTION 2. FINDINGS
A. Pursuant to Dublin Municipal Code Section 8.120.050.B., the City Council hereby finds that
the amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations)
are consistent with the General Plan and any applicable Specific Plan in that they would
provide an update to the City's affordable housing requirements. Specifically, the amendments
would implement Housing Element Program B.4, which calls for a review of the Inclusionary
Zoning Regulations and preparation of a nexus study reviewing the affordable housing in -lieu
fee.
B. The California Environmental Quality Act (CEQA), together with the State Guidelines and City
of Dublin CEQA Guidelines and Procedures require that certain projects be reviewed for
environmental impacts and that environmental documents be prepared. The City Council
hereby finds that the amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning
Regulations) are exempt from the requirements of CEQA pursuant to CEQA Guidelines
Section 15061(b)(3) as the amendments would not result in any physical changes and it can
be seen with certainty that the amendments would not have a significant effect on the
environment.
SECTION 3. AMENDMENT OF CHAPTER 8.68.
Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) is amended to read as
follows:
"Inclusionary Zoning Regulations"
8.68.010 Purpose.
The purpose of this Chapter is to:
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 2 of 10 108
Attachment 7
A. Enhance the public welfare and assure that further housing development contributes to
the attainment of the City's housing goals by increasing the production of residential units
affordable by households of very low, low, and moderate income.
B. Assure that the limited remaining developable land in the City's planning area is utilized
in a manner consistent with the City's housing policies and needs.
8.68.020 Definitions.
As used in this Chapter, each of the following terms shall be defined as follows:
A. "Affordable unit" means an ownership or rental -housing unit, affordable to households with
very low-, low-, or moderate -incomes as defined in this Chapter.
1. Rental units are deemed affordable units if the annual rent does not exceed 30% of
maximum income level for very low-, low- and moderate -income households, adjusted for
household size and as defined below.
2. Owner -occupied units are deemed affordable units if the sales price results in
annual housing expenses that do not exceed 35% of the maximum income level for very
low-, low-, and moderate -income households, adjusted for household size and as defined
below.
B. "Applicant" means any person, firm, partnership, association, joint venture, corporation, or
any entity or combination of entities that seeks city real property development permits or
approvals.
C. "Condominium" means a development consisting of condominiums. A condominium
consists of an undivided interest in common in a portion of real property coupled with a
separate interest in space called a unit, the boundaries of which are described on a recorded
final map, parcel map, or condominium plan in sufficient detail to locate all boundaries thereof.
D. "Dwelling unit" means a dwelling designed and intended for occupancy by one household.
E. "Very low-, low-, and moderate -income levels" means those income and eligibility levels
determined periodically by the California Department of Housing and Community
Development based on Alameda County median income levels adjusted for family size. Such
levels shall be calculated on the basis of gross annual household income considering
household size and number of dependents, income of all household members eighteen years
of age and older, , and all other sources of household income and will be recertified as set
forth by local standards, and state and federal housing law.
1. "Very low-income" means 50% or less of the median income, adjusted for actual
household size.
2. "Low-income" means more than 50% and up to 80% of the median income, adjusted
for actual household size.
3. "Moderate -income" means more than 80% and up to 120% of the median income,
adjusted for actual household size.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 3 of 10 109
Attachment 7
F. "Resale controls and/or rent restrictions" means legal restrictions by which the affordable
units shall be restricted to ensure that the unit remains affordable to very low-, low-, or
moderate -income households, as applicable, for a period of not less than 55 years. The 55
year period will reset each time ownership of the unit is transferred through a bona fide sales
transaction with a third party during the resale restriction period sale. With respect to rental
units, such rent restrictions shall be in the form of a regulatory agreement recorded against
the applicable property. With respect to owner -occupied units, such resale controls shall be in
the form of resale restrictions, deeds of trust, and/or other similar documents recorded against
the applicable property.
G. "Residential development" includes, without limitation, detached single-family dwellings,
multiple -dwelling structures, groups of dwellings, condominium or townhouse developments,
condominium conversions, cooperative developments, mixed use developments that include
housing units, and residential land subdivisions intended to be sold to the general public.
8.68.030 General Requirements.
A. Affordability Requirement for Rental Units and Condominium Units. All new rental
residential development projects, and all for -sale Condominium development projects
(condominium developments with a density of 30 units per acre or more) with 10 units or more
designed and intended for permanent occupancy shall construct 10.0% of the total number of
dwelling units within the development as affordable units, except as otherwise provided by this
Chapter, and except when all of the dwelling units (excluding units reserved for property
management) within the project are affordable. (Any Condominium development project with
a density of less than 30 units per acre shall be required to meet the Affordability Requirement
for Ownership Units). The foregoing requirement shall be applied no more than once to an
approved residential development (and generally at the tentative map stage), regardless of
the changes in the character or ownership of the development, except as provided by this
Chapter, provided the total number of units does not change. In applying and calculating the
affordability requirement, any decimal fraction less than or equal to 0.50 may be disregarded,
and any decimal fraction greater than 0.50 shall be construed as one unit.
B. Affordability Requirement for Ownership Units. All for -sale (ownership) residential
development projects (including condominium development projects with a density of less than
30 units per acre), of 10 units or more designed and intended for permanent occupancy shall
construct 15.0% of the total number of dwelling units within the development as affordable
units, except as otherwise provided by this Chapter. The foregoing requirement shall be
applied no more than once to an approved residential development (and generally at the
tentative map stage), regardless of the changes in the character or ownership of the
development, except as provided by this Chapter, provided the total number of units does not
change. In applying and calculating the affordability requirement, any decimal fraction less
than or equal to 0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be
construed as one unit.
C. Allocation of Units to Income Levels. Affordable units provided pursuant to this section
shall be allocated as follows:
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 4 of 10 110
Attachment 7
Rental and Condominium Ownership
Units Units
Very low-income households 0% 0%
Low-income households 100% 40%
Moderate -income households 0% 60%
Where the calculation of the allocation results in fewer units than would otherwise be required,
one additional unit should be allocated to the income level with a decimal fraction closest to
0.50.
D. Conditions of Approval: Any tentative map, conditional use permit, or site development
review approving residential development projects subject to this Chapter shall contain
conditions sufficient to ensure compliance with the provisions of this Chapter. Such conditions
shall detail the number of affordable units required, set forth the applicant's manner of
compliance with this Chapter, and require the execution of an agreement imposing appropriate
resale controls and/or rental restrictions on the affordable units.
E. Concurrent Construction. All affordable units in a project or phase of a project shall be
constructed concurrently with market -rate units, unless the City Manager determines in writing
that extenuating circumstances exist that make concurrent construction infeasible or
impractical.
F. Design and Distribution of Affordable Units. All affordable units shall reflect the range
of numbers of bedrooms provided in the project as a whole and shall not be distinguished by
exterior design, construction, or materials. Affordable units may be of smaller size than the
units in the project and may have fewer amenities than the market rate units in the project. All
affordable units shall be reasonably dispersed throughout the project.
8.68.040 Exceptions to Affordability Requirement.
Developers of projects subject to Sections 8.68.030.A and 8.68.030.E shall construct the total
number of affordable dwelling units within the development, unless subject to an exception set
forth in this section. All exceptions require City Council approval.
A. Payment of Fees In Lieu of Constructing Affordable Units. Upon request, the applicant
shall be permitted to pay a fee in lieu of constructing up to 40% of the affordable units that the
developer would otherwise be required to construct pursuant to Sections 8.68.030.A and
8.68.030.B. The amount of the fee shall be as set forth in a resolution of the City Council,
which may be amended from time to time to reflect inflation and changed conditions in the City
and the region. In lieu fees shall be paid at the time and in the amount set forth in the in lieu
fee resolution in effect at the time of issuance of the building permit.
B. Off -Site Projects. An applicant may construct the affordable units not physically within
the development in lieu of constructing some or all of the affordable units within the
development, with the approval of the City Council, if the City Council finds:
1. Construction of the units off -site in lieu of constructing units on -site is consistent with
the Chapter's goal of creating, preserving, maintaining, and protecting housing for very
low-, low- and moderate -income households.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 5 of 10 111
Attachment 7
2. Units to be constructed off site are consistent with Section 8.68.030.F above.
3. Would be infeasible or impractical to construct affordable units on -site.
4. Conditions of approval for the project require that the off -site affordable units would be
governed by the terms of a deed restriction and, if applicable, rental restrictions similar to
that used for the on -site affordable units.
5. Conditions of approval for the project, or other security such as a cash deposit, bond,
or letter of credit, are adequate to require the construction of the off -site affordable units
concurrently with the completion of the construction of the residential development or within
a reasonable period (not to exceed five years).
C. Land Dedication. An applicant may dedicate land to the City or City -designated local non-
profit housing developer in lieu of construction of some or all of the required affordable units,
if the City Council finds all of the following:
1. Dedication of land in lieu of constructing units is consistent with the Chapter's goal of
creating, preserving, maintaining, and protecting housing for very low-, low- and moderate -
income households.
2. The dedicated land is useable for its intended purpose; is free of toxic substances and
contaminated soils; is fully improved with infrastructure, adjacent utilities, grading; and all
development -impact fees paid excluding any inclusionary zoning ordinance fees.
3. The proposed land dedication is of sufficient size to meet the following requirements:
a. The dedication includes land sufficient to construct the number of units that the applicant
would otherwise be required to construct by Section 8.68.030.A and Section 8.68.030.B,
based on the size of lots in the subdivision for which the applicant is meeting its obligation;
and
b. The dedication finds the additional land's market value is equal to or exceeds the
difference between the value of a market -rate, 1200-square foot unit, and the price at which
such a unit could be sold as an Affordable Unit, times the number of units required. The
amount an Affordable Unit may be sold at shall be set forth in a resolution adopted by the
City Council as needed.
D. Credit Transfers. An applicant may fully or partially satisfy the requirements of Sections
8.68.030.A and 8.68.030.B through the use of transfer credits created pursuant to
Section 8.68.060. Credit certificates shall be presented to the Community Development
Director, who shall note at the time of project approval the credit certificate by number. Credit
certificates may only be used to satisfy the requirements for Inclusionary Units for the income
category (i.e., very low-, low-, or moderate -income) and number of bedrooms for which they
are issued.
E. Waiver of Requirements. The City Council, at its discretion, may waive, wholly or partially,
the requirements of this ordinance and approve alternate methods of compliance with this
Chapter if the applicant demonstrates, and the City Council finds, that such alternate methods
meet the purposes of this Chapter.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 6 of 10
112
Attachment 7
8.68.050 General Procedures for Implementing Inclusionary Zoning Requirements.
A. Agreements. Prior to the issuance of a building permit for an affordable unit, resale
restrictions or rental controls, or both, as the case may be, shall be set forth in an agreement
between the City and the developer, in a form consistent with the City Council -adopted form
agreement, which agreement shall be recorded against the property containing the affordable
units. The agreement shall be executed by the City Manager, and its requirements shall run
with the land and bind the applicant's successors.
B. Rental Units; Occupancy; Annual Report. Agreements involving rental units shall
require the owner of the affordable units to ensure that the units are occupied by tenants whose
monthly income levels do not exceed very low-, low-, or moderate -income levels, as the case
may be, and shall preclude tenants from subletting or subleasing the unit. The agreement shall
also require the owner of the affordable unit to submit an annual report to the City Manager, in
a format approved by the City. The report shall include, but not be limited to the following
information: an identification of the affordable units within the project; the monthly rents
charged and proposed to be charged; vacancy information for the prior year; and the monthly
income for tenants of each affordable unit throughout the prior year.
C. Ownership Units; Occupancy; City's Right of First Refusal. Agreements for ownership
units shall specify that the inclusionary units must be occupied by the owner or owners and
may not be leased or rented without the written approval of the City. The resale restrictions
shall provide that in the event of the sale of an affordable unit, the City shall have the right to
purchase any affordable owner -occupant unit at the maximum price that could be charged to
an eligible household.
D. Selection Criteria. No household shall be permitted to occupy a unit that is required under
this Chapter to be affordable unless the City or its designee has approved the household's
eligibility. Eligible potential occupants of affordable units will be qualified on the basis of
household income as defined by this Chapter. The selection criteria for a qualified household
may not distinguish between adults and children. Selection of qualified person should be based
on priorities established using the point system described below:
• Employed within the boundaries of the City of Dublin (3 points maximum, one per
household member)
Public Service employee working in the City of Dublin (1 point)
Dublin resident (3 points maximum, one per household member)
Seniors (1 point, one per household)
Permanently disabled (1 point, one per household)
Immediate family member of Dublin resident (1 point, one per household)
Required to relocate from current Dublin residence due to demolition of dwelling or
conversion of dwelling from rental to for -sale unit (1 point, one per household)
To qualify as a "Public Service Employee", the person shall be employed by a Public Agency.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 7 of 10 113
Attachment 7
To qualify as "Employed within the boundaries of the City of Dublin", the person shall have
been employed within the City of Dublin for at least six months.
To qualify as a "Dublin resident," the person shall have been a resident of the City of Dublin
for at least a one-year period prior to the eligibility determination.
8.68.060 Affordable Unit Credits.
A. Creation. Affordable unit credits may be created by the City Council. One affordable unit
credit certificate shall be issued for each affordable unit constructed in excess of the number
of affordable units required to be constructed for the project by Sections 8.68.030.A and
8.68.030.B. The certificate shall designate a specific income category (i.e., very low-, low-, or
moderate -income) and number of bedrooms for which they are issued.
B. Ownership and Use of Credits. Affordable unit credit certificates are issued to and
become the possession of the project owner, who may use them to satisfy the requirements
of this Chapter for another project in the City. If a project owner proposes to sell credit
certificates, the parties shall first obtain the consent of the Finance Director, who will document
the transfer by certificate number.
8.68.070 Incentives to Encourage On -Site Construction of Affordable Units.
The City may, but shall not be required to, offer incentives or financial assistance to encourage
the on -site construction of affordable units in excess of the total number of affordable units
required by this Chapter to be included in the project to the extent resources for this purpose
are available and approved for such use by the City Council or City Manager. Such incentives
may include, but shall not be limited to, the following:
A. Fee Deferral.
1. Development Processing Fees. The City Manager may approve deferred
payment of City processing fees applicable to the review and processing of the project.
The terms and payment schedule of the deferred fees shall be subject to the approval of
the City Manager.
2. Development Impact Fees. The City Council may authorize the deferred payment
of development impact fees applicable to the affordable units. Approval of this incentive
requires demonstration by the Applicant that the deferral increases the project's feasibility.
The applicant must provide appropriate security to ensure future payment of such fees.
B. Design Modifications. The City Council may approve design modifications to affordable
units that increase the feasibility of the construction of affordable units, including but not limited
to, the following:
1. Reduced lot size.
2. Reduced setback requirements.
3. Reduced open space requirements.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 8 of 10
114
Attachment 7
4. Reduced landscaping requirements.
5. Reduced interior or exterior amenities.
6. Reduction in parking requirements.
7. Height restriction waivers.
Section 8.68.080 Inclusionary Zoning In Lieu Fees.
The fund previously known as the "Inclusionary Zoning In Lieu Fee fund" is hereby renamed
the "Affordable Housing Fund" ("Fund") and all In Lieu Fees shall be deposited into the Fund.
A. Use. All monies in the Fund, together with any interest earnings on such monies less
reasonable administrative charges, shall be used or committed to use by the City for the
purpose of providing very low-, low-, and moderate -income ownership or rental housing in the
City of Dublin.
B. Annual Report. The City Manager shall prepare an annual report to the City Council
identifying the balance of monies in the Fund and the affordable units provided and any monies
committed to providing very low-, low-, and moderate -income housing. The annual report shall
also include a review of administrative charges.
Section 8.68.090 Violations.
It shall be unlawful for any person, firm, corporation, partnership or other entity that is subject
to this ordinance pursuant to Sections 8.68.030.A and 8.68.030.E to violate any provision or
to fail to comply with any of the requirements of this Chapter. A violation of any of the provisions
of or failure to comply with any of the requirements of this Chapter shall constitute a
misdemeanor; except that notwithstanding any other provisions of this Code, any such
violation constituting a misdemeanor under this Chapter, may in the discretion of the enforcing
authority, be charged and prosecuted as an infraction. Any person convicted of an infraction
under the provisions of this Code shall be punishable as provided by the Government Code of
the State of California.
8.68.100 Enforcement.
A. General. The City Manager shall enforce this Chapter, and its provisions shall be binding
on all agents, successors, and assigns of an applicant. The City Manager may suspend or
revoke any building permit or approval upon finding a violation of any provision of this Chapter.
No land -use approval, building permit, or certificate of occupancy shall be issued for any
residential development unless exempt from or in compliance with this Chapter. The City may
institute any appropriate legal actions or proceedings necessary to ensure compliance
herewith, including, but not limited to, actions to revoke, deny, or suspend any permit or
development approval.
B. Excessive Rents/Legal Action. If the City Manager determines that rents in excess of
those allowed by operation of this Chapter have been charged to a tenant residing in an
affordable unit, the City may take appropriate legal action to recover, and the project owner
shall be obligated to pay to the tenant, or to the City in the event the tenant cannot be located,
any excess rents charged.
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 9 of 10
115
Attachment 7
Section 8.68.110 Appeals.
Decisions of the City Manager under this Chapter may be appealed as provided in
Chapter 8.136.
SECTION 4. EFFECTIVE DATE. This Ordinance shall take effect thirty (30) days following its
final adoption.
SECTION 5. SEVERABILITY. The provisions of this Ordinance are severable and if any
provision, clause, sentence, word or part thereof is held illegal, invalid, unconstitutional, or
inapplicable to any person or circumstances, such illegality, invalidity, unconstitutionality, or
inapplicability shall not affect or impair any of the remaining provisions, clauses, sentences,
sections, words or parts thereof of the Ordinance or their applicability to other persons or
circumstances.
SECTION 6. POSTING. The City Clerk of the City of Dublin shall cause this Ordinance to be
posted in at least three public places in the City of Dublin in accordance with Section 36933 of the
Government Code of the State of California.
PASSED, APPROVED AND ADOPTED this th day of 2024, by the following
vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Mayor
ATTEST:
City Clerk
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 10 of 10 116
s�
IF
STAFF REPORT
DUBLIN CITY COUNCIL
CALIFORNIA
DATE:
TO:
FROM:
SUBJECT:
January 9, 2024
Honorable Mayor and City Councilmembers
Linda Smith, City Manager
Attachment 8
Agenda Item 6.1
Amendment to the Dublin Municipal Code Inclusionary Zoning Regulations
(Chapter 8.68), Adopting a Methodology for Determining Affordable Housing
In -Lieu Fees and Adopting Non -Residential Development Affordable Housing
Impact Fees (PLPA-2023-00032)
Prepared by: Jason Earl, Senior Management Analyst
EXECUTIVE SUMMARY:
The City Council's Two -Year Strategic Plan includes a review of the Inclusionary Zoning
Regulations (Dublin Municipal Code Chapter 8.68), Affordable Housing In -Lieu Fee, and Non -
Residential Development Affordable Housing Impact Fee (aka "Commercial Linkage Fee"). Staff
and the City's consultant, Economic and Planning Systems, prepared an Affordable Housing In -
Lieu Fee Feasibility Study and a Commercial Linkage Fee Nexus Study to address the Strategic
Plan objectives. The City Council received informational reports on August 15, 2023, and
September 19, 2023, and directed Staff to prepare amendments to the Inclusionary Zoning
Regulations, Affordable Housing In -Lieu Fee, and Non -Residential Development Affordable
Housing Impact Fee programs to ensure they align with the economics of developing affordable
housing and the City Council's priorities. Staff has prepared the updates to these programs. The
City Council will hold a Public Hearing to consider adopting the amendments to these programs.
STAFF RECOMMENDATION:
Conduct the public hearing, deliberate, and take the following actions: 1) waive the reading and
INTRODUCE the Ordinance Approving Amendments to Dublin Municipal Code Chapter 8.68
(Inclusionary Zoning Regulations); 2) Adopt the Resolution Establishing the Methodology for
Determining the Affordable Housing In -Lieu Fee for Future Residential Units Subject to the City of
Dublin Inclusionary Zoning Regulations; and 3) Adopt the Resolution Approving the Non -
Residential Development Affordable Housing Impact Fees.
Page 1 of 5
117
FINANCIAL IMPACT:
The Affordable Housing In -Lieu Fee is proposed to be amended to align with the economics of
developing affordable housing. This will generate additional funding for the Affordable Housing
Fund. The proposed amendments to the Non -Residential Affordable Housing Impact Fee program
will combine the Research & Development and Office uses into a single fee and ensure that the
impact fee program does not overburden the economic development priorities set by the City
Council.
DESCRIPTION:
Background
The City of Dublin Two -Year Strategic Plan includes Strategy 2: Housing Affordability, which
includes the following two objectives:
• Objective 2b: Ensure the City's inclusionary zoning regulations incentivize targeted housing
production; and
• Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage
fee and affordable housing in -lieu fee for for -sale and rental housing.
The consulting firm Economic and Planning Systems (EPS) was selected through a
competitive process to assist Staff with addressing these Strategic Plan Objectives. Staff and
EPS prepared an analysis of the development economics, reviewed industry best practices,
reviewed inclusionary regulations in the surrounding Tri-Valley cities, and evaluated the
nexus between non-residential development and the need it generates for affordable housing
to formulate recommendations to the City Council. This culminated in the Affordable Housing
In -Lieu Fee Feasibility Study and the Commercial Linkage Fee Nexus Study which are
included as Attachments 3 and 5.
On August 15, 2023, the City Council received an informational report on these efforts
(Attachment 7). The City Council provided initial feedback and direction regarding updates to
these programs. On September 19, 2023, the City Council received another informational report
(Attachment 8) and directed Staff to prepare the following updates to the Inclusionary Zoning
Regulations, Affordable Housing In -Lieu Fee, and Non -Residential Development Affordable
Housing Impact Fee which is also referred to as a "Commercial Linkage Fee".
• Lower the Inclusionary Zoning Regulations applicability threshold to projects of 10+ units;
and
• Assess in -lieu fees on a per -square -foot basis for each market -rate unit; and
• Establish separate regulations for ownership and rental developments; and
• Retain the existing Commercial Linkage Fee amount with an annual inflationary index; and
• Combine the Research & Development and Office use categories and set the fee at $1.39 per
square foot, which is the average of the current fee for those two use categories.
Page 2 of 5
118
Staff has prepared the amendments to these programs for consideration by the City Council. The
Ordinance adopting amendments to the Inclusionary Zoning Regulations is included as
Attachment 1, the Resolution approving the methodology for determining the Affordable Housing
In -Lieu Fee is included as Attachment 2, and the Resolution approving the Non -Residential
Development Affordable Housing Impact Fee is included as Attachment 4.
Analysis
The following is an overview of the proposed amendments to the Inclusionary Zoning Regulations,
Affordable Housing In -Lieu Fee, and the Non-residential Development Affordable Housing Impact
Fee. The proposed amendments align the economics of developing affordable housing and the
efforts of the City Council to prioritize the collection of fees that can be leveraged to facilitate the
production of lower income units to satisfy the City's Regional Housing Need Allocation (RHNA)
while providing on -site units.
Inclusionary Zoning Requirements
The proposed amendments to the Inclusionary Zoning Regulations (IZR) in the Dublin Municipal
Code (Chapter 8.68) create separate regulations for ownership and rental developments. The
threshold for projects subject to the IZR would be reduced from 20 units to 10 units. The proposed
allocation of affordable ownership units remains unchanged. However, the allocation of affordable
rental units is proposed to focus on low-income households. Table 1 summarizes these proposed
regulations.
Table 1. Ownership and Rental Policy Recommendations
Project Size
Threshold
Overall
Affordability
Requirement
Very
Low
Low
Moderate
Ownership
Rental
10 Units
10 Units
12.5%
10%
0%
0%
40%
100%
60%
0%
The IZR (Section 8.68.020.E) requires resale controls to ensure that affordable ownership units
remain affordable for a total of 55 years. Staff proposes to amend the regulations to reset the 55-
year period with each transfer of ownership of future for sale units created through the
inclusionary program.
The implementation procedures for the IZR include selection criteria that provide for the use of
preference points by the developer upon the initial sale of units (Section 8.68.050.D). Staff is
proposing to amend this section to require the use of preference points with the resale of
ownership units.
The draft Ordinance approving the amendments to the Inclusionary Zoning Regulations is
included as Attachment 1. Please refer to Attachment 6 for the proposed amendments in redline
format where underlined text is proposed to be added and text with a atrilothrough is proposed
to be deleted.
Affordable Housing In -Lieu Fee
Page 3 of 5
119
The proposed Affordable Housing In -Lieu Fee would be assessed on a per -square -foot basis for
each market -rate unit produced. The proposed fee is based on the Affordable Housing In -Lieu Fee
Feasibility Study and rounded to the nearest dollar. This fee is reflective of the cost to produce
affordable ownership and rental units. The proposed fee would be set at $9/square foot and
adjusted annually based on an inflationary index. The proposed fee is equivalent to approximately
$400,000 per affordable ownership unit and $237,000 per rental unit. The Resolution to approve
the proposed Affordable Housing In -Lieu Fee is included as Attachment 2.
Non -Residential Development Affordable Housing Impact Fee
The DMC (Chapter 7.86) established the authority for the City to impose a Non -Residential
Development Affordable Housing Impact Fee, also known as a "Commercial Linkage Fee". This fee
is based on a nexus between non-residential development and the need it generates for affordable
housing. The fee was first adopted by the City Council in 2005 (Resolution 70-05) and is adjusted
annually based on an inflationary index. The amount was set to ensure that it does not overburden
the economic development priorities set by the City Council. New non-residential development is
assessed this fee on a per -square -foot basis at the time a building permit is issued.
On September 19, 2023, the City Council directed Staff to retain the existing fee structure with an
inflationary index but combine Research & Development and Office uses into a single category and
set the fee at $1.39 per square foot. Additionally, the names of the land use categories have been
updated to be consistent with the Nexus Study and current industry terminology. The remainder
of the program is unchanged. The Resolution adopting the Non -Residential Development
Affordable Housing Impact Fee is included as Attachment 4.
ENVIRONMENTAL DETERMINATION:
The California Environmental Quality Act (CEQA), together with State Guidelines and City of
Dublin CEQA Guidelines and Procedures require that certain projects be reviewed for
environmental impacts and that environmental documents be prepared. The proposed Zoning
Ordinance Amendments are exempt from the requirements of CEQA pursuant to CEQA Guidelines
Section 15061(b)(3) as the amendments would not result in any physical changes and it can be
seen with certainty that the amendments would not have a significant effect on the environment.
PLANNING COMMISSION REVIEW:
On December 12, 2023, the Planning Commission held a public hearing to consider the proposed
amendments to the Inclusionary Zoning Regulations and make a recommendation to the City
Council. Following the public hearing, the Planning Commission unanimously adopted Resolution
No. 23-12 (Attachment 9), recommending the City Council approve the proposed amendments.
The Planning Commission further recommended periodic review of the Inclusionary Zoning
Regulations.
STRATEGIC PLAN INITIATIVE:
Strategy 2: Housing Affordability
Page 4 of 5
120
Objective 2b: Ensure the City's inclusionary zoning regulations incentivize targeted housing
production.
Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage fee and
affordable housing in -lieu fee for for -sale and rental housing.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
In accordance with State law, a public notice was published in the East Bay Times ten days prior to
the hearing and again five days prior to the hearing, posted at several locations throughout the
City, and sent to interested parties notifying the community of the City Council's consideration of
the proposed amendments to the Inclusionary Zoning Regulations, Affordable Housing In -Lieu
Fee, and the Non -Residential Development Affordable Housing Impact Fee. The City Council
Agenda was posted.
ATTACHMENTS:
1) Ordinance Approving Amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary
Zoning Regulations)
2) Resolution Establishing the Methodology for Determining the Affordable Housing In -Lieu Fee
for Future Residential Units Subject to the City of Dublin Inclusionary Zoning Regulations
3) Exhibit A to the Resolution - Inclusionary Housing Feasibility Report dated December 7, 2023
4) Resolution Approving the Non -Residential Development Affordable Housing Impact Fees
5) Exhibit A to the Resolution - Commercial Linkage Fee Nexus Study dated October 27, 2023
6) Redlined Version of Amendment to Inclusionary Zoning Regulations
7) City Council Staff Report dated August 15, 2023
8) City Council Staff Report dated September 19, 2023
9) Planning Commission Resolution 23-12 Recommending City Council Approval of Amendments
to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations)
Page 5 of 5
121
s�
STAFF REPORT
DUBLIN CITY COUNCIL
CALIFORNIA
Attachment 9
Agenda Item 3.1
DATE: March 19, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SU B.ECT: Inclusionary Zoning and Affordable Housing In -Lieu Fee Study Session
Prepared by: Jason Earl, Senior Management Analyst
EXECUTIVE SUMMARY:
On January 9, 2024, the City Council held a public hearing to consider amendments to the
Inclusionary Zoning Regulations and Affordable Housing In -Lieu Fee. At the conclusion of that
public hearing the City Council directed Staff to return at a future meeting with additional
information and analysis regarding increasing the inclusionary zoning requirement to 15%;
increasing the in -lieu fee; differentiating the affordable housing requirements for different
ownership product types; the impact of interest rate fluctuations; and a projection of in -lieu fee
revenue. The City Council will hold a Study Session and receive a presentation with this
information. No formal action will be taken by the City Council at this Study Session.
STAFF RECOMMENDATION:
Receive a presentation and provide feedback and direction regarding amendments to the
Inclusionary Zoning Regulations and Affordable Housing In -Lieu Fee program.
FINANCIAL IMPACT:
None.
DESCRIPTION:
Background
The City's Two -Year Strategic Plan includes Strategy 2: Housing Affordability, which incorporates
the following two Objectives:
• Objective 2B: Ensure the City's inclusionary zoning regulations incentivize targeted
housing production; and
• Objective 2C: Prepare a nexus study to evaluate the affordable housing commercial linkage
fee and affordable housing in -lieu fee for for -sale and rental housing.
Page 1 of 3
122
Staff and the City's consultant, Economic and Planning Systems (EPS), prepared an Affordable
Housing In -Lieu Fee Feasibility Study and a Commercial Linkage Fee Nexus Study. As directed by
the City Council, these studies analyzed and assessed the targeted housing production and fees,
and provided a housing market analysis to ensure that Dublin remains competitive for both
housing and commercial development, while ensuring the availability of affordable housing.
The City Council received an informational report on these efforts on August 15, 2023, and
provided feedback and direction regarding updates to these programs. On September 19, 2023,
the City Council received another informational report and directed Staff to prepare updates to the
Inclusionary Zoning Regulations, Affordable Housing In -Lieu Fee, and Non -Residential
Development Affordable Housing Impact Fee which is also referred to as a "Commercial Linkage
Fee".
The City Council's direction included amendments which prioritize the collection of fees that can
be leveraged to facilitate the production of lower income units to satisfy the City's Regional
Housing Needs Allocation (RHNA) while providing on -site units where feasible. Staff prepared
amendments to these programs that align with the priorities set by the City Council.
On December 12, 2023, the Planning Commission held a public hearing and unanimously
recommended approval of the proposed amendments to the Inclusionary Zoning Regulations and
Affordable Housing In -Lieu Fee. On January 9, 2024, the City Council held a public hearing to
consider the proposed amendments to the Inclusionary Zoning Regulations, Affordable Housing
In -Lieu Fee, and Non -Residential Development Affordable Housing Impact Fee (Attachment 1). At
the conclusion of the public hearing the City Council directed Staff to return at a future meeting
with additional information and analysis regarding the Inclusionary Zoning Regulations and
Affordable Housing In -Lieu Fee.
At this Study Session, the City Council will receive a presentation by Staff and EPS addressing the
following information as requested by the City Council:
• Evaluate increasing the inclusionary zoning requirement to 15%.
• Evaluate further increasing the proposed Affordable Housing In -Lieu Fee.
• Present options to differentiate the affordable housing requirements and in -lieu fee for the
different ownership product types (i.e., condominiums, townhomes, and single-family homes).
• Demonstrate how interest rate fluctuations impact the inclusionary zoning and in -lieu fee
recommendations.
• Provide a projection of the Affordable Housing In -Lieu Fee revenue.
Page 2 of 3
123
STRATEGIC PLAN INITIATIVE:
Strategy 2: Housing Affordability
Objective 2B: Ensure the City's inclusionary zoning regulations incentivize targeted housing
production.
Objective 2C: Prepare a nexus study to evaluate the affordable housing commercial linkage fee and
affordable housing in -lieu fee for for -sale and rental housing.
ENVIRONMENTAL REVIEW:
The City Council is holding a Study Session on the Inclusionary Zoning Regulations and Affordable
Housing In -Lieu Fee, and no formal action will be taken at this time. The Study Session is not
subject to the requirements of the California Environmental Quality Act (CEQA) as it does not have
the potential to result in a direct physical change in the environment or a reasonably foreseeable
indirect change in the environment and, thus, does not meet the definition of a project under CEQA
Guidelines Section 15378.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
A public notice is not required for the City Council to hold a Study Session. The City Council
Agenda was posted.
ATTACHMENTS:
1) City Council Staff Report dated January 9, 2024 (without attachments)
Page 3 of 3
124
Inclusionary Zoning Regulations (IZR)
and associated In -Lieu and Impact Fees
City Council
June 4, 2024
DUBLIN
CALIFORNIA
125
Background
• January 9, 2024: City Council reviewed the
IZR and associated In -Lieu and Impact Fees
and directed staff to do more analysis
• March 19, 2024: City Council held a study
session to review the additional analysis and
directed staff to make further amendments
to the IZR
• May 14, 2024 Planning Commission
unanimously made a recommendation to
City Council to approve the amended IZR
Changes Requested to IZR on March 2024
Ownership Units
• Increase the Affordable Housing requirement to 15%
• Remove higher density condominium units to 10% and include them with
Rental Units
Rental Units
• Include higher density for -sale condominium units (minimum density of
30 units per acre)
Changes to IZR since March 2024
Section 8.68.020 Definitions
• Added Subsection C which adds the definition for Condominium
Section 8.68.030 General Requirements
• Updated Subsection A to include Condominiums of 30+ units per acre
Section 8.68.030 General Requirements
• Updated Subsection B to include Condominiums with less than 30 units
per acre, and to reflect the new IZR Requirement of 15% for Ownership
(for -sale) Units
Inclusionary Zoning Regulations (IZR)
- Current IZR
Project Siz
Threshold
Overall
Inclusionary
Re • uirement
Income Targets
(Ownership)
Income Targets
(Rental)
Must Build Requirement
12.5%
- Proposed IZR
60% Moderate
40% Low
50% Moderate
20% Low
30% Very Low
60% of Inclusionary
Requirement
Unit Typ
Ownership
Rental &
Condominium*
Project Size
Threshold
10+ Units
Overall
Affordability
Re • uirement
Income
Targets
Ver Low
0%
Income
Targets
Low
40%
Income
Targets
Moderate
60%
Must Build
Requirement
60% of IZR
10+ Units
0%
100%
0%
60% of IZR
*Includes high density for -sale condominiums with a minimum density of 30 dwelling units per acre
CALIFORNIA
129
Changes to Affordable Housing In -Lieu Fee
Ownership (for -sale) Units
• Fees based on market -rate units built
• Fee set at $15 per square -foot for each market -rate unit
• Excludes high density condominiums (density of 30+ units per acre)
• Includes high density condominiums (density of 30+ units per acre)
Rental & Condominium Units
• Fees based on market -rate units built
• Fee set at $9 per square -foot for each market -rate unit
• Includes high density condominiums (density of 30+ units per acre)
In -Lieu Fee Calculation
• Based on a hypothetical 100-unit project:
Proposed Rental Fee
1,100 s.f. unit
• 10% Inclusionary Requirement
• 60% Must Build (6 units)
• 40% Fee out Option (4 units)
• Fees based on 94 market -rate units
built
• $9 per square foot fee
94 x $9 x 1,100 = $930,600
Proposed Ownership Fee
2. 400 s.f. unit
• 1 5% Inclusionary Requirement
• 60% Must Build (9 units)
• 40% Fee out Option (6 units)
• Fees based on 91 market -rate units
built
• $1 5 per square foot fee
91 x $15 x 2,400= $ 3,2 76,000
1
131
Changes to Non -Residential Development
Affordable Housing Impact Fee
• Retain existing fee structure
• Combine Research & Development and Office category
— Fee set at $ I.39 per square foot (average of the two categories)
• Updated the names of the land use categories
Recommendation
Conduct the public hearing, deliberate, and take the following actions:
I) Waive the reading and INTRODUCE the Ordinance Approving
Amendments to Dublin Municipal Code Chapter 8.68 (lnclusionary
Zoning Regulations);
2) Adopt the Resolution Establishing the Methodology for Determining
the Affordable Housing In -Lieu Fee for Future Residential Units Subject
to the City of Dublin Inclusionary Zoning Regulations; and
3) Adopt the Resolution Approving the Non -Residential Development
Affordable Housing Impact Fees.
Questions
Any questions?
R
DUBLIN
CALIFORNIA
134