Inclusionary Housing Programs

What is the Inclusionary Housing Ordinance (IHO)?

The Inclusionary Housing Ordinance, Chapter 5.08 of the San José Municipal Code, was adopted on January 12, 2010. The IHO requires all residential developers who create new, additional, or modified For-Sale or Rental units to provide 15% of housing on-site that is affordable to income qualified buyers/renters specified below. The base obligation is where 15% of the Inclusionary Units are provided On-Site. Please see the following table that summarizes the alternative compliance options based on a 20% obligation:

	Obligation	For-Sale	Rental
On-Site	15%	Purchasers must be at or below 120% AMI	9% at MOD (80% AMI) 6% at VLI (50% AMI)
Off-Site	20%	Purchasers must be at or below 120% AMI	12% at LI (60% AMI) 8% at VLI (50% AMI)
In-Lieu Fee	20%	In-lieu fee per Inclusionary home is $157,858 (July 1, 2020 to June 30, 2021)	In-lieu fee per Inclusionary unit is $125,000 (July 1, 2020 to June 30, 2021)
Dedication of Land	20%	Marketable title, general plan designation zoned for residential development and at a density required, and suitable for inclusionary units. Must comply with the requirements as listed in the Municipal Code 5.08.530.A.
Surplus In-Lieu Credits	20%	Developers may purchase or transfer credits for affordable housing units that are available for occupancy concurrently with market rate units. Must comply with the requirements as listed in the Municipal Code 5.08.540.C.
Acquisition and Rehab of Units	20%	Rehabilitate existing market rate units for conversion to units affordable to Lower and Very Low Income Households. Number of Rehabilitation units must be 2 to 1 of the base inclusionary obligation. Must comply with the requirements as listed in the Municipal Code 5.08.550.
HUD Restricted Units	20%	Developers may provide units that are restricted to Affordable Housing Cost for Lower or Very Low Income Households through entering into an agreement with the U.S. Department of Housing and Urban Development (HUD). Must comply with the requirements as listed in the Municipal Code 5.08.560.H.
Combination of Methods	20%	Developers may propose any combination of methods to satisfy the project's inclusionary housing obligation. Must comply with the requirements as listed in the Municipal Code 5.08.570.

These Compliance Options also require Developers to provide the same bedroom ratio of affordable units in comparison to the total. Please see IHO Guidelines below for more details on each Compliance Option.

PROPOSED CHANGES TO THE IHO

On November 5, 2019, the Housing Department presented a staff report and set of recommendations to update the IHO and encourage the construction of moderate-income affordable apartments and payment of in-lieu fees for the construction of low-income apartments. The goal is to provide a broader range of housing options for City residents. Please download the following memorandum that summarizes the proposed changes. The proposed changes to the IHO will be considered by the City Council in 2020.

To view the minutes from the November 5th meeting, please go to this link.

Here is a briefing sheet that explains the proposed changes.

Which Projects Are Subject to the IHO?

Developments in San Jose that create 20 or more new, additional, or modified dwelling units are subject to the requirements of the IHO. The Housing Department has prepared the following documents that outline the process for fulfilling the IHO requirements:

Ordinance 28689: Inclusionary Housing Ordinance Number 28689
Fact Sheet: IHO Fact Sheet

Please note that the City of San José had two previously adopted programs that have been archived under this page:

What is the Affordable Housing Compliance Plan?

The Affordable Housing Compliance Plan Application packet: 1) provides background and a general understanding of the Affordable Housing Programs, 2) defines what information must be provided for the Housing Department to determine if the project has an affordable housing obligation, and 3) describes the process of selecting an IHO Compliance Option to satisfy that affordable housing obligation.

In order to determine the extent of the affordable housing obligation, and whether any exemptions may apply, all development projects with residential dwelling units seeking permits are required to submit an Affordable Housing Compliance Plan application. Developers who claim their project is exempt or waived from the IHO must comply with this process in order for the claim to be evaluated by Housing Department staff.

A formal submittal of the Compliance Plan does require a developer to also submit an application fee. The Compliance Plan does have information that may be used for estimation purposes. Please download a copy of the Compliance Plan to your computer to activate the functionality, including a fillable worksheet to estimate the In-Lieu Fee Compliance Option:

Compliance Plan: Affordable Housing Compliance Plan Application

IHO Implementation Guidelines

The City of San José is in the process of updating and completing various sections of the IHO Implementation Guidelines. Thus these Guidelines are still in draft form. Please see the main document as well as the subchapters detailing the IHO compliance options.

IHO Implementation Guidelines - Main Document

Attachment	Tenure	Compliance Option
A-1	For-Sale	Build On-Site
A-2	For-Sale	Build Off-Site
A-3	For-Sale	Pay In-Lieu Fee
A-3.1	For-Sale	In-Lieu Fee Calculation
A-4	For-Sale	Dedication of Land
A-5	For-Sale	Surplus Inclusionary Credits
A-6	For-Sale	Acquisition and Rehabilitation
A-7	For-Sale	HUD Restricted Units
B-1	Rental	Build On-Site
B-2	Rental	Build Off-Site
B-3	Rental	Pay In-Lieu Fee
B-3.1	Rental	In-Lieu Fee Calculation
B-4	Rental	Dedication of Land
B-5	Rental	Surplus Inclusionary Credits
B-6	Rental	Acquisition and Rehabilitation
B-7	Rental	HUD Restricted Units