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Information and Proposed Changes to Inclusionary Housing Ordinance (IHO)

 

What is an inclusionary housing ordinance?

Cities use inclusionary housing ordinances to make sure that as new neighborhoods are built, they include homes that households with a range of incomes can afford. Instead of only building market-rate units, developers must either:

  • Set aside a percentage of the new homes as affordable;
  • Build affordable homes at another site; or
  • Pay a fee (called an ‘in-lieu fee’) so the city can build affordable housing elsewhere.

The goal is to create mixed-income communities, prevent displacement, and increase the overall supply of affordable housing.

Objectives of Proposed Changes to San Jose’s IHO 

The San José City Council is considering changes to its Inclusionary Housing Ordinance. These changes are intended to:

  • Update the IHO so developers can easily understand the rules, know what to expect, and plan projects in a way that matches real-world construction and financing costs;
  • Support the construction of a more abundant housing stock;
  • Promote the building of homes that people who work in San José — teachers, nurses, public employees, retail workers, and others — can actually afford; and
  • Align the IHO with the City Council Focus Area of Building More Housing, to increase housing supply for households at all income levels.

Summary of Proposed Changes

  • Streamlined compliance process for 100% affordable developments;
  • Set the affordability period for inclusionary units at 55 years, which is the same as housing units financed through Low-Income Housing Tax Credits (LIHTC); and
  • Change compliance options for on-site and off-site building

Public Engagement in the Process

The Housing Department hosted an online community meeting on October 9, 2025, to discuss the proposed changes to the IHO. To view that meeting and the materials presented, please see the following:

A second online community meeting was held on December 10, 2025. To view that meeting and the materials presented, please see the following:

A third community meeting was held in person on January 14, 2026, at San José City Hall.

The City Council will consider changes to the Inclusionary Housing Ordinance at its meeting on January 27, 2026. Community members can watch the City Council meeting live on Zoom or YouTube; however, public comments can only be made in person. If you would like to submit comments before the meeting, please email city.clerk@sanjoseca.gov by 8:00 am the day of the meeting. Those emails will be attached to the City Council Item under “Letters from the Public.” Please identify the agenda item number in the subject line of your email.