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Housing

Mixed Income Housing Ordinance Review

Housing

Mixed Income Housing Ordinance Review

Background

On September 1, 2015, the City Council adopted an updated citywide Mixed Income Housing Ordinance. The ordinance (17.712 of City Code) established a citywide Housing Impact Fee along with additional requirements for projects of 100 acres or more in size. Funds collected from this fee are transferred to the Housing Trust Fund, which is administered by the Sacramento Housing and Redevelopment Agency (SHRA). Funds are used to develop affordable housing units with the goal of increasing the supply available for lower income workers.

Implementation Program H1 of the City’s recently adopted 2021-2029 Housing Element directs the City to review the existing Mixed Income Housing Ordinance. The program commits the City to evaluating the effectiveness of the existing Mixed Income Housing Ordinance (MIHO) and conducting an economic feasibility study of potential changes to the ordinance, including the consideration of a mandatory inclusionary housing component. Amendments to the ordinance will be considered with the goal of increasing the amount of affordable housing built in the City while ensuring the requirements do not pose a constraint to overall housing production.

Project overview

The Mixed Income Housing Ordinance Review Project consists of the following components:

A review of existing (2015) and past (2000) Mixed Income Housing Ordinances, including key features and performance.
A review of affordable housing requirements in programs elsewhere, and
Financial feasibility analyses including pro forma testing of alternatives such as

Alternative fee levels, including adding fees to higher density housing projects
Alternative onsite inclusionary requirements, ranging in terms of the percent of units set aside and the level of affordability of the units
Modifications to or removal of the Housing Incentive Zone
Modifications to the Mixed Income Housing Strategy requirement for sites larger than 100 gross acres

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Project timeline

Summer 2022 - Project Initiation and Draft Report Development
The City initiated the project, received input on the project scope, and released two draft report components, a Historic Performance of Mixed Income Housing Ordinance (February 2023) and Case Studies and Surveys of Affordable Housing Requirements (Local and Non-Local) (June 2023).

Summer 2023 - Feasibility Analysis, Menu of Options, and Policy Objectives
The City released the Mixed Income Housing Ordinance Draft Report in August 2023 along with a Staff Memorandum. This report brought together two previously released studies and a new financial feasibility analysis of different potential requirements on housing development projects. In addition to the draft report, a staff memorandum was released that contains draft policy objectives, a menu of potential ordinance options, and a summary tables of the case studies from the draft report. This memorandum, in conjunction with the draft report, served as the foundation for stakeholder, community member, and decision-maker conversations regarding the update to the Mixed Income Housing Ordinance.

Winter 2023 – Preliminary and Revised Recommendations
Staff released Preliminary Recommendations for the Mixed Income Housing Ordinance in October 2023 and conducted workshops with various hearing bodies. Staff then released Revised Recommendations in February 2024 which were taken for input to the Sacramento Housing and Redevelopment Commission and Planning and Design Commission.

Spring 2024 – Staff Analysis of Alternative Proposals
Following the release of staff recommendations for a revised Mixed Income Housing Ordinance, several proposals for alternative policy options were brought forward by stakeholders and decisionmakers alike.

Current Project Status
The current financial feasibility analysis was based off of Spring/Summer 2022 data, Winter/Spring 2023 data, and interviews with residential developers. Since that time, significant inflation has occurred and has recently stabilized. Due to these changing market dynamics, staff is currently updating the financial feasibility analysis for this project and plans to return with updated recommendations based on new data in the Spring of 2025.

Project resources

Additional resources

September 1, 2015 Council Report

Staff contact

Greta Soos, Senior Planner
Community Development Department
300 Richards Blvd., 3rd floor
Sacramento, CA 95811
(916) 808-2027
gsoos@cityofsacramento.org

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