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EXHIBIT 1 Methodology According to the most recent survey available ofinclusionary programs available,149 jurisdictions in California were identified with inclusionary housing programs.3 This report is limited to the six most populated cities with reported inclusionary housing policies. Chula Vista was also selected to provide a regional comparison to the City of San Diego. The report discusses the most significant elements of each city's policy in a general format beginning with some background, the main or base requirement of the policy, alternatives to the base requirement, and impacts of city policies. FISCAL/POLICY DISCUSSION Recent Legislation — AB 1505 AB 1505 authorizes a city or county to require, as a condition of development of residential rental units, that the development include a certain percentage of units that are affordable to moderate and lower -income households. The new law became operative in January 2018 and supersedes a 2009 court decision in Palmer&Wh Street Properties v. City of Los Angeles (Palmer) that inclusionary zoning for rental residential development conflicts with the state's Costa -Hawkins Rental Housing Act. The Costa -Hawkins Rental Housing Act gives rental housing owners the right to set initial and all subsequent rental rates for a unit built after 1995. In response to the Palmer decision, many jurisdictions suspended their inclusionary zoning ordinances for rental housing development. As shown in this report, many jurisdictions have also changed the structure of the policy to be fee -based and allow, as an alternative to the fee, the production of affordable units within a development project, in order to comply with the Costa -Hawkins Rental Housing Act. A summary of some of the identified impacts from AB 1505 are provided at the end of this report. An overview of inclusionary housing programs is provided below, City of San Diego Inclusionary Housing Ordinance Back rg ound: The City of San Diego's fee -based Inclusionary Housing Ordinance was passed in 2003 and is one of several ways that affordable housing is created and preserved in throughout the city. According to the Inclusionary Affordable Housing Ordinance the purpose of the program is "to encourage diverse and balanced neighborhoods with housing available for households of all income levels." Base requirement: San Diego's Inclusionary Housing Progratn requires that all new residential development that is at least two units is subject to an Inclusionary Affordable Housing Fee. These fees are collected and placed in the Affordable Housing Fund. Instead of the fee, the developer can provide affordable units on or off -site of the project. Off -site units are allowed if they assist in 9 Thaden, Emily and Ruoniu, Wang, "Inclusionary Housing in the United States: Prevalence, Impact, and Practices," Lincoln Institute of Land Policy, September 2017. 65B-13