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:
|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 $192,946 (July 1, 2019 to June 30, 2020)||In-lieu fee per Inclusionary unit is $125,000 (July 1, 2019 to June 30, 2020)|
|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:
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.
|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|
||Acquisition and Rehabilitation|
||HUD Restricted Units|
|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|
Inclusionary Housing Team
All questions pertaining to the Inclusionary Housing Ordinance should be directed to:
- Tina Vo