SD County Inclusionary Housing Oct 22 2026 Multi-Unit FAQ

For rental projects, developers can choose among three tiers: (1) 5% of units at extremely low-income levels (30% of Area Median Income), (2) 5% of units at very low-income levels (50% AMI), or (3) 10% of units at low-income levels (60-80% AMI). For for-sale ownership projects, the tiers are: (1) 5% of units at very low-income (50% AMI), (2) 10% of units at low-income (60-80% AMI), or (3) 15% of units at moderate-income levels (80-120% AMI). The ordinance requires affordable units to remain deed-restricted for at least 55 years for rental projects and 45 years for ownership projects, ensuring long-term affordability. Developers selecting higher affordability tiers (targeting lower-income households) may qualify for larger density bonuses under California Government Code Section 65915, potentially increasing total project units by up to 50% beyond base zoning limits.

What density bonuses are available for compliance with affordable housing requirements?

Projects that comply with the County's inclusionary housing ordinance are eligible for density bonuses up to 50% under California's state Density Bonus Law (Government Code Section 65915). According to California Government Code 65915, the density bonus percentage increases proportionally with the percentage of affordable units provided and the depth of affordability (income targeting).

For projects providing 5% very low-income units (50% AMI), developers receive a minimum 20% density bonus. Projects providing 10% very low-income units qualify for a 35% density bonus. To achieve the maximum 50% density bonus, projects must provide 15% very low-income units (50% AMI) or meet equivalent thresholds for other income categories. The City of San Diego's Affordable Housing Density Bonus Program demonstrates how this works in practice: a project with base zoning allowing 20 units that sets aside 15% at very low income could build up to 30 units (50% increase). This density increase often offsets the revenue impact of providing below-market affordable units, making compliance financially viable. In addition to density bonuses, compliant projects may receive development standard modifications (parking reductions, height increases, setback reductions) and priority permit review, which can reduce approval timelines by 3-6 months in San Diego County's permitting process.

What alternative compliance options are available besides on-site affordable units?

The ordinance provides five ranked alternative compliance pathways that allow developers to satisfy affordable housing obligations without constructing on-site affordable units within the primary project. According to the County's adopted ordinance structure, alternatives are prioritized in a specific order, and applicants must demonstrate infeasibility of higher-priority options before pursuing lower-ranked alternatives.

The ranked alternatives are: (1) Land donation with covenants to qualified affordable housing developers or the County Housing Authority for construction of income-restricted units; (2) On-site affordable for-sale ADUs that meet affordability requirements and can be sold separately under AB 1033 regulations; (3) In-lieu fee payments to a dedicated County affordable housing fund, with fees structured to cover up to 50% of the total affordable housing obligation; (4) Off-site construction of below-market units within 3 miles or the same community planning area, particularly in high-resource areas or VMT-efficient locations; and (5) Alternative compliance proposals approved by the Director of Planning & Development Services. For high-cost coastal developments in areas like Pacific Beach, Bird Rock, and Tourmaline Surfing Park where land values exceed $200-300 per square foot, alternative compliance—particularly in-lieu fees or land donation—may be more economically viable than providing on-site affordable units. Developers should conduct pro forma analysis comparing the net present value cost of each compliance option, factoring in land costs, construction costs, financing requirements, and the value of density bonuses and permit timeline acceleration.

How does the 10-unit threshold affect project planning and development strategy?

The ordinance applies only to projects with 10 or more units, creating a clear threshold that developers may strategically design around. According to the San Diego County Planning & Development Services ordinance framework, projects with 9 or fewer units are exempt from inclusionary housing requirements but also ineligible for density bonuses and priority permit review incentives.

This threshold creates a critical decision point for developers evaluating project sizing on constrained sites. A developer with a parcel zoned for 12 units at base density could pursue three strategies: (1) Build 9 units with no affordable housing requirement and no density bonus—avoiding compliance costs but sacrificing potential unit count; (2) Build 10-12 units and provide required affordable housing (1-2 units at appropriate income levels) without pursuing density bonus—minimal compliance but no unit increase; or (3) Pursue 15-18 units using density bonus (50% increase on 12-unit base) by providing required affordable units—maximizing unit count and revenue potential despite below-market revenue. Financial modeling should compare net revenue across all three scenarios, accounting for construction costs averaging $350-450 per square foot in coastal areas like Pacific Beach, Bird Rock, and Tourmaline Surfing Park, land costs, affordable housing subsidy gaps, and market-rate unit pricing. For many coastal sites with high land values near Crystal Pier, Kate Sessions Park, and the Pacific Beach Boardwalk, the density bonus scenario (option 3) generates the highest net present value despite inclusionary requirements, because the additional market-rate units funded through the density increase offset affordable unit costs.

What happens to projects submitted before the October 22, 2026 effective date?

Projects with complete permit applications submitted before October 22, 2026 are grandfathered and exempt from the ordinance requirements. The County's ordinance framework specifies that the effective date serves as the cutoff for applicability, meaning projects in the pipeline before this date can proceed under prior regulations without inclusionary housing obligations.

To qualify for the exemption, developers must submit a complete permit application package to San Diego County Planning & Development Services on or before October 21, 2026. A complete application includes all required documentation, fees, environmental review materials, architectural plans, engineering studies, and supporting technical reports as specified in the County's submittal requirements. Incomplete applications submitted before the deadline but missing required materials will likely be deemed incomplete and subject to the ordinance once completed after October 22. Developers with projects in advanced planning stages should consult with County planning staff immediately to verify completeness requirements and avoid application rejection. For projects not yet ready for permit submission, developers should evaluate whether accelerating permit submission before October 22 to avoid inclusionary requirements makes financial sense compared to pursuing density bonuses and compliance options under the new ordinance. In many cases, particularly for larger projects that can benefit from 35-50% density bonuses, complying with the new ordinance may generate higher returns than rushing to submit an exempt application with lower unit counts.