Chapter 23.328 — INCLUSIONARY HOUSING

A. The State of California has established a Regional Housing Needs Allocation (RHNA) process under which it allocates a "fair share" of the regional housing need, updated periodically, to each local jurisdiction. The "fair share" allocated to Berkeley increased significantly based on the regional housing needs determination finalized in late 2021. The sixth cycle of the RHNA for the San Francisco Bay Area allocates to Berkeley a "fair share" that calls for adequate sites for 8,934 housing units for the period from 2023 to 2031, including sites for 2,446 Very Low Income units, 1,408 Low Income units, and 1,416 Moderate Income units.

B. The Bay Area suffers from a shortage of affordable housing. As the Bay Area region experiences increased economic growth and a high demand for housing, housing prices continue to rise, which leads to displacement of low income residents and exacerbates the shelter crisis that has led to unacceptably high rates of homelessness in the City of Berkeley and the Bay Area region.

C. In 1990, the City established the Housing Trust Fund program to pool available funding for affordable housing development. The Housing Trust Fund program is funded by federal, state, and local revenues, including by in-lieu and mitigation fees paid by developers of market-rate housing projects under the City’s existing affordable housing ordinances.

D. The City Council hereby finds that there is a legitimate public interest in the provision of affordable housing to address the crises of displacement, homelessness, and lack of housing affordability in the City, and that there is a significant and increasing need for affordable housing in the City to meet the City’s regional share of housing needs under the California Housing Element Law.

E. The City Council further finds that the public interest would best be served if new affordable housing were integrated into new market-rate residential developments to facilitate economically diverse housing, while also providing alternative options to the on-site construction of affordable housing such as the payment of fees to replenish the City’s Housing Trust Fund program and allowing for the construction of affordable housing on land dedicated by market-rate housing developers.

F. The City Council intends that this Ordinance be construed as an amendment to the City’s existing affordability requirements, and that the repeal and re-enactment of any requirement shall not be construed to relieve a party of any outstanding obligation to comply with the requirements applicable to any previously approved Housing Development Project. (Ord. 7853-NS § 2, 2023)

A. "Affordable Unit" means a Residential Unit that is in perpetuity affordable to Very Low Income Households or Lower-Income Households, as defined in California Health and Safety Code sections 50052.5 and 50053.

B. "Affordable Housing Compliance Plan" means an enforceable commitment by an Applicant to comply with the requirements of this Chapter that identifies the number and type of Affordable Units, the amount of In-Lieu Fees, and/or the parcels of land (or portions thereof) that will be provided and/or paid by the Applicant to comply with those requirements.

C. "AMI" means the area median income applicable to the City of Berkeley, as defined by the U.S. Department of Housing and Urban Development, or its successor provision, or as established by the City of Berkeley in the event that such median income figures are no longer published by the U.S. Department of Housing and Urban Development.

D. "Applicant" means any individual, person, firm, partnership, association, joint venture, corporation, entity, combination of entities or authorized representative thereof, who applies to the City for any Housing Development Project.

E. "Housing Development Project" means a development project, including a Mixed-Use Residential project (as defined in 23.502.020(M)(13), involving the new construction of at least one Residential Unit. Projects with one or more buildings or projects including multiple contiguous parcels under common ownership or control shall be considered as a sole Housing Development Project and not as individual projects.

F. "Housing Trust Fund" means the program to finance low and moderate-income housing established by Resolution No. 55,504-N.S., or any successor fund established for the same purpose.

G. "Lower-Income Household" means a household whose income does not exceed the low-income limits applicable to Alameda County, as defined in California Health and Safety Code section 50079.5 and published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development.

H. "Regulatory Agreement and Declaration of Restrictive Covenants" means, for the purposes of this Chapter, a legally binding agreement recorded against the property to codify the requirements and conditions of a Housing Development Project providing Affordable Units.

I. "Residential Unit" means, for purposes of this Chapter, any Dwelling Unit, any Live/Work Unit, or any bedroom of a Group Living Accommodation (GLA) except a GLA in a University-recognized fraternity, sorority or co-op; provided, however, that for purposes of this Chapter, "Residential Unit" shall not include any Accessory Dwelling Unit or Junior Accessory Dwelling Unit.

J. "Residential Unit Floor Area" means, for the purpose of this Chapter, the floor area of the Residential Unit(s) of a Housing Development Project.

1. Residential Unit Floor Area shall be measured from the interior of the walls of each unit. The Residential Unit Floor Area shall exclude areas that are not habitable residential square footage such as:

   (a) Balconies, whether private or open to all residents

   (b) Storage lockers not located within residential units

   (c) Vehicular (e.g., automobile or motorcycle) and bicycle parking areas that are separate areas from

   the residential unit

   (d) Other qualifying areas that are not associated with residential units, upon approval of the Zoning Officer.

   2. For Residential Units consisting of Group Living Accommodations, Residential Unit Floor Area shall also include common rooms/lounges and supporting facilities such as kitchens and restrooms.

K. "Very Low Income Household" means a household whose income is no more than 50% of AMI, as defined in California Health and Safety Code section 50105. (Ord. 7853-NS § 2, 2023)

A. Requirement to Construct Affordable Units.

1. Except as otherwise provided in this Chapter, no permit for the construction of any Housing
Development Project shall be issued unless at least 20% of the Residential Units are Affordable Units. When
the calculation results in a fractional unit, an Applicant will round up to the nearest whole unit. The Affordable
Units shall have the same proportion of unit types (i.e., number of bedrooms) and average size as the market
rate units (provided, however, that no Affordable Unit may have more than three bedrooms).

2. In lieu of providing Affordable Units pursuant to Paragraph 1, an Applicant may propose an alternative
mix of unit-types to comply with this Chapter by providing Affordable Units that comprise at least 20% of the
Residential Unit Floor Area of the Housing Development Project in order to achieve a mix of Affordable Units
including two-bedroom or three-bedroom units. The City Manager or their designee may approve the
proposed alternative mix of unit- types that meet the requirements of this section.

3. Affordable Units shall be (a) reasonably dispersed throughout the Housing Development Project; and (b)
comparable to other Residential Units in the Housing Development Project in terms of appearance, materials,
and finish quality. Residents of Affordable Units shall have access to the same common areas and amenities
that are available to residents of other Residential Units in the Housing Development Project.

4. The City Manager or their designee shall adopt rules and regulations (a) establishing the affordable sales
price or affordable rent for each Affordable Unit, consistent with the requirements of Health and Safety Code
sections 50052.5 and 50053; and (b) ensuring that Affordable Units are sold or rented to Very Low Income
and Lower Income Households, consistent with the requirements of this Chapter.

5. Rental Units.

(a) At least 50% of the required Affordable Units in the Housing Development Project shall be offered at
a rent that is affordable to Very Low Income Households, up to a maximum requirement of 10% of the
total units in the Housing Development Project if the project provides more Affordable Units than are
otherwise required by this Chapter.

(b) In determining whether a unit is affordable to Very Low Income or Low Income Households,
maximum allowable rent for any affordable unit shall be reduced by an amount equal to the value of the

City-published utility allowance provided for Tenant-paid utilities and any other mandatory fee imposed
by the property owner as a condition of tenancy.

(c) Any percentage increase in rent of an occupied Affordable Unit shall not exceed the lesser of 65% of the increase in the Consumer Price Index for All Urban Consumers (CPI-U) in the San Francisco-Oakland- San Jose region as reported and published by the U.S. Department of Labor, Bureau of Labor Statistics, for the twelve-month period ending the previous December 31, or 65% of the percentage increase in AMI for the same calendar year. In no event, however, shall the allowable annual adjustment be less than zero (0%) or greater than seven percent (7%).

(d) Affordable Units designated for Very Low Income Households shall be offered for rent to tenants
receiving assistance under the Section 8 Program (42 U.S.C. Section 1437f), the Shelter Plus Care
Program (42 U.S.C. Section 11403 et. seq.), or any similar state or federally funded rent subsidy program
prior to being offered to other potential tenants. The Council may establish related program
requirements by resolution.

(e) The owner of any Affordable Unit offered for rent must report to the City annually the occupancy
and rents charged for each Affordable Unit, and any other information required pursuant to rules and
regulations adopted by the City Manager or their designee.

6. Ownership Units. Inclusionary units in ownership projects shall be sold at a price that is affordable to an
appropriate-sized household whose income is no more than 80 percent of the AMI.

7. All Affordable Units shall be subject to a recorded affordability restriction requiring in perpetuity that
each Affordable Unit be sold at an affordable sales price or offered for rent at an affordable rent, as defined
in this Chapter.

8. Affordable Live/Work Units shall be proactively marketed by the Applicant and/or owner to income-
eligible persons performing a work activity permitted in the district where the project is located whose type of
work causes them to have a requirement for a space larger in size than typically found in residential units.

9. An Affordable Unit that is constructed to qualify for a density bonus under Government Code
section65915 that otherwise meets the requirements of this Chapter shall qualify as an Affordable Unit under
this Chapter.

B. Option to Pay In-Lieu Fee.

1. In lieu of providing some or all of the Affordable Units required under this Chapter (including any
fractional units), an Applicant may elect to pay a fee, the amount of which the City Council may establish by
resolution ("In-Lieu Fee"). The City Council may by resolution differentiate among types, classes, and locations
of Housing Development Projects to the extent permitted by law; may establish separate fees and criteria for
the provision of units that are affordable to Very Low Income Households and units that are affordable to
Low Income Households; and may establish the method for calculation of the In-Lieu Fee.

2. In-Lieu Fees shall be applied to the Residential Unit Floor Area of a Housing Development Project. For
Live/Work units, the In-Lieu Fee shall be applied to the Residential Unit Floor Area that is designated as non-
workspace in the zoning permit approvals consistent with BMC section 23.312.040.

3. In-Lieu Fees shall be estimated as part of the preliminary Affordable Housing Compliance Plan and
finalized at the time of building permit issuance, consistent with the final Affordable Housing Compliance
Plan.

4. In-Lieu Fees shall be paid prior to the issuance of the first Certificate of Occupancy, or if no Certificate of
Occupancy is required, prior to the initial occupancy of the Housing Development Project.

5. Up to 15% of In-Lieu Fees collected may be used to pay for administration of the In-Lieu Fee or the
Housing Trust Fund program. At least 85% of In-Lieu Fees collected shall be deposited into the City’s Housing
Trust Fund program.

C. Option to Dedicate Land.

1. At the discretion of the City Manager or their designee, the requirements of this Chapter may be satisfied
by the dedication of land in lieu of constructing Affordable Units within the Housing Development Project if
the City Manager or their designee determines that all of the following criteria have been met:

(a) Marketable title to the site is transferred to the City, or an affordable housing developer approved
by the City, prior to issuance of building permit of the Housing Development Project pursuant to an
agreement between the Applicant and the City.

(b) The site has a General Plan designation that authorizes residential uses and is zoned for residential
development at a density to accommodate at least the number of Affordable Units that would otherwise
be required under Paragraph A.

(c) The site is suitable for development of the Affordable Units, taking into consideration its
configuration, physical characteristics, location, access, adjacent uses, and applicable development
standards and other relevant planning and development criteria including, but not limited to, factors
such as the cost of construction or development arising from the nature, condition, or location of the
site.

(d) Infrastructure to serve the dedicated site, including, but not limited to, streets and public utilities,
are available at the property line and have adequate capacity to serve the maximum allowable
residential density permitted under zoning regulations.

(e) The site has been evaluated for the presence of hazardous materials and for the presence of
geological hazards and all such hazards are or will be mitigated to the satisfaction of the City prior to
acceptance of the site by the City.

(f) The value of the site upon the date of dedication is equal to or greater than the in-lieu fee that
would otherwise be required under Paragraph A. The value of the site shall be determined pursuant to
the program guidelines approved by the City Manager or their designee.

2. The City shall solicit proposals from affordable housing developers to construct restricted income units
on the site dedicated to the City, but if the City is unable to obtain a qualified affordable housing developer to
construct a viable affordable housing development on the property within two years of its solicitation or to

commence construction within five years, the City may sell, transfer, lease, or otherwise dispose of the dedicated site for any purpose. Any funds collected as the result of a sale, transfer, lease, or other disposition of sites dedicated to the City shall be deposited into a fund designated for use in the City’s Housing Trust Fund program. (Ord. 7853-NS § 2, 2023)

A. The City Manager or their designee may waive or modify up to fifty percent of the requirements of this Chapter at their sole discretion where any of the following conditions are established:

1. A project providing low- or moderate-income housing is funded in whole or in part by the City’s Housing Trust Fund program;

2. The implementation of the requirements of this Chapter would violate the rights of any person under the California or United States Constitutions, any federal law, or any state law governing a matter of statewide concern and applicable to a charter city; or

3. The benefits of the project to the City outweigh the detriment of foregoing the provision of Affordable Housing or the contribution of In-Lieu fees to the Housing Trust Fund program. In weighing the benefits and detriment to the City, the following factors may be considered:

   (a) The impact of the requirements of this Chapter on the feasibility of a Housing Development Project;

   (b) Other economically beneficial uses of the Applicant’s property;

   (c) The burdens the Housing Development Project places on the City in terms of increased demand for

   affordable housing, childcare, public facilities or amenities, or other impacts which reasonably may be anticipated to be generated by or attributable to the Housing Development Project; and

   (d) The impact on the Housing Trust Fund program of foregoing the payment of any In-Lieu fee that would otherwise be made.

B. Waivers or modifications greater than fifty percent of the amount which otherwise would be required by this Chapter shall be subject to the approval of City Council.

C. The Applicant shall bear the burden of proof to establish eligibility for a waiver or modification of the requirements of this Chapter. (Ord. 7853-NS § 2, 2023)

A. The Applicant for any Use Permit or Zoning Certificate for a Housing Development Project shall submit a preliminary Affordable Housing Compliance Plan to the Zoning Officer at the time of application. The preliminary Affordable Housing Compliance Plan shall be incorporated as a condition of approval of any Use Permit or Zoning Certificate issued to the Applicant. No building permit may be issued for the project until the final Affordable Housing Compliance Plan is approved.

B. The Applicant must execute a Regulatory Agreement and Declaration of Restrictive Covenants to regulate all Affordable Units provided in a Housing Development Project. No building permit may be issued for the project until the Regulatory Agreement and Declaration of Restrictive Covenants are executed.

C. The Affordable Housing Compliance Plan and/or Regulatory Agreement and Declaration of Restrictive Covenants may be amended administratively, provided that the Zoning Officer finds them to be in full compliance with the provisions of this ordinance and State law, prior to issuance of Certificate of Occupancy.

D. The City Manager or their designee may promulgate additional rules and regulations consistent with the requirements of this Chapter.

E. The City Council may by resolution establish fees for the implementation and administration of this Chapter and may establish administrative penalties for violations of this Chapter.

F. Exemptions. The following types of Housing Development Projects and Residential Units are exempt from this Chapter:

1. Housing Development Project for which either a building permit was issued on or before April 1, 2023 or
a preliminary application including all of the information required by subdivision (a) of California Government
Code section 65941.1 was submitted on or before April 1, 2023 shall be subject to this Chapter’s requirements
that were in place as of the preliminary application’s submittal date but shall otherwise be exempt from this
Chapter. This exemption shall expire upon the occurrence of any of the circumstances defined in paragraphs
(2), (6), or (7) of subdivision (O) of California Government Code section 65589.5 or in subdivision (d) of
California Government Code section 65941.

2. A Residential Unit that replaces a unit existing as of April 1, 2023 that has been destroyed by fire,
earthquake or other disaster, or that was previously subject to a mitigation fee or inclusionary housing
requirement.

3. A Residential Unit existing as of April 1, 2023 that is expanded, renovated, or rehabilitated. (Ord. 7954-NS
§ 1, 2025; Ord. 7853-NS § 2, 2023)