Affordable Housing Requirements for Developers

If you are developing a new residential rental property with five or more units, you must comply with affordable housing requirements through one of the options below:

• Provide 20% of the units in your building as below market rate units, or
• Pay the Affordable Housing Mitigation Fee, or
• Provide some below market rate units and pay a prorated fee

Find details about each of these options in the sections below.

All units in the project are subject to the affordable housing requirements, whether they are in the base project or part of a density bonus.

Provide 20% of units as below market rate housing

To avoid paying the Affordable Housing Mitigation Fee completely, 20% of the units in your development must be provided as below market rate housing. These units will be reserved for low-income and very low-income households, and the maximum rental prices will be set by the City of Berkeley. You must provide these below market rate units for the life of the project.

Out of these below market rate units, half must be provided to low-income households (80% of area median income), and half must be provided to very low-income households (50% of area median income). If an odd number of affordable units are provided, the majority must be very low-income.

In addition, of the total very low-income units, 40% of the units must be reserved for holders of Berkeley Housing Authority Section 8 vouchers and 40% must be reserved for holders of City of Berkeley Shelter + Care certificates.

In summary, to avoid paying the fee, follow the requirements below:

• 20% of units in the property provided at below market rates
  • 50% for low-income households (80% area median income)
  • 50% for very low-income households (50% area median income)
    • 40% for Section 8 vouchers
    • 40% for Shelter + Care certificates

Pay the Affordable Housing Mitigation Fee

If you do not wish to include any below market rate units in your project, then you may choose to pay the Affordable Housing Mitigation Fee instead. Effective July 1, 2022, the fee is set at follows:

• Paid at Certificate of Occupancy: $46,185 per rental unit; or
• Paid at building permit: $43,185 per rental unit.

The fee is automatically adjusted every two years, beginning in 2018.

Provide fewer than 20% below market rate units and pay a prorated fee

As a hybrid option, you can choose to provide fewer than 20% of your projects unit at below market rate and pay a prorated Affordable Housing Mitigation fee. You will still need to provide at least 50% of the below market rate units for very low-income households.

Use the equation below to calculate the reduced fee you will pay:

[A x Fee] – [(B + C) / (A x 20%) x (A x Fee)]  

Where:

• Fee = $37,000 (as an example; for the most recent fee, see above)
• A = Total number of units in the project
• B = Number of Very-Low Income Units provided in the project.
• C = Number of Low-Income Units provided in the project.

Next steps

Unless the Use Permit specifies otherwise, you will make your decision about whether to provide below market rate housing or pay the fee before the City of Berkeley will issue your Certificate of Occupancy or Temporary Certificate of Occupancy (if any). You must make a decision prior to your building permit if you opt to chose the reduced fee amount (see above).

If you choose to provide below market rate units, you must sign a Regulatory Agreement before the City will issue your Certificate of Occupancy. If you choose to provide units, you will need to follow City guidelines for managing these units. For more information, please contact AffordableHousing@cityofberkeley.info.