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create new affordable housing. Inclusionary housing ordinances are tools used by cities to ensure that a certain percentage of new housing developments are available at affordable levels. This requirement can generally be met through the inclusion of such units within the project itself, rehabilitation or construction of units off site, or through the payment of an in-lieu fee. The units are covenanted to ensure that they remain affordable over time. As of 2007 nearly one-third of California jurisdictions had adopted inclusionary housing programs. At the time that the Housing Element was drafted it was recommended that the feasibility of an inclusionary housing ordinance should be studied and implemented within the 2006-2014 framework. H. On June 7, 2010, several months prior to the adoption of the Housing Element, the City Council adopted the Transit Zoning Code. As part of this action the City Council directed staff to begin a process to draft an inclusionary housing ordinance for those properties within the M1 and M2 Industrial Overlay Zones of the Transit Zoning Code. This direction was given, in part, to address the community's concerns about the provision of affordable housing within re-zoned areas of the Transit Zoning Code, as well as to implement the City's Housing Element and address State Redevelopment Law. State law requires that when new housing is constructed within redevelopment project areas there must also be affordable housing constructed that equals 15% of the total number of units constructed within the project area (Health and Safety Code, Section 33413). Due to the fact that significant areas within the Transit Zoning Code formerly zoned as Industrial now have the ability to convert to mixed-use residential development at the property owners' discretion, the potential exists for a substantial number of new units to be constructed within these Overlay Zone areas. As the majority of these areas are located within redevelopment project areas (Central City, Inter City, North Harbor, South Harbor, Bristol and South Main) new residential development would trigger the requirement for new affordable housing development pursuant to state law. If this new development is not included within the projects themselves, the Redevelopment Agency would be responsible for funding and constructing such housing. The only available funding source for this housing construction would be affordable housing set-aside monies. Given the uncertainty of the availability of these funds over the long term, the burden of the funding of new affordable housing construction could fall to other funding sources, such as the City's general fund. It is therefore necessary to ensure that the 15% affordability Ordinance No. NS-2825 Page 3 of 17