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Inclusionary Housing Ordinance

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:

   Obligation  For-Sale  Rental
 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%  Current fee per Inclusionary home is $153,426 (FY17-18).

See Draft
(FY18-19) In-Lieu Fee.
Effective July 1, 2018.
 Current fee per
Inclusionary rental is $125,000 (Jan 1, 2018 to June 30, 2019)
 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.

Which projects are subject to the IHO?

Any proposed project that the owner intends to create 20 or more units. 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:


The Inclusionary Housing Ordinance has several components and thus the following section describes how the San José Housing Department implements the IHO

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 Compliance Plan Application approval. 

Effective January 1, 2018, all projects with 20 units or more will be subject to the Inclusionary Housing Ordinance requirements, although a transition program is available for a limited period of time allowing qualifying rental developments to remain under the AHIF.  Information on the transition period may be found in the Affordable Housing Compliance Plan linked below.  Also, any rental development with an approved Affordable Housing Compliance Plan that has already entered into a recorded Affordable Housing Agreement and pulled building permits prior to January 1, 2018 shall remain subject to the AHIF according to the terms of those agreements.

Information on Potential Modifications to the Affordable Housing Impact Fee and Inclusionary Housing Program

The City of San José is in the preliminary stages of updating and completing various sections of the Implementation Guidelines for the Inclusionary Housing Ordinance:  

Inclusionary Housing Team

All questions pertaining to the development of the Inclusionary Housing Ordinance and the Affordable Housing Impact Fee should be directed to:

Amy Chen 408-975-4489  
Tina Vo 408-975-4416  

To receive automatic e-mails with information on the Affordable Housing Impact Fee and Inclusionary Housing Ordinance, please sign-up and select "Affordable Housing Impact Fee and Inclusionary Housing.