Getting Inclusionary Housing Right

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Cities across Santa Clara County are considering this powerful tool to build more new affordable homes without subsidy.

But done wrong it can fall short, or even stop the development of new homes in its tracks. Learn how it works, and how to get it right!

Many of our local cities are joining forces right now in a shared nexus study, the wonky and in-depth analysis that assesses the feasibility of local residential development and the potential for developers of market-rate housing to add a share of affordable homes to their buildings.

If cities require too few affordable homes or affordability that’s too shallow, they leave public benefits on the table. Too much, and developers can’t build any housing at all.

Come hear about local cities that are getting it right: successfully using inclusionary housing policies to achieve mixed-income communities, generate funding to subsidize deeper levels of affordability, and gain valuable land for affordable homes!

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The California Housing Partnership Corporation (CHPC) tracks all income-restricted apartments that have been developed with funding from HUD (in the form of either development financing, or a Project-Based Rental Assistance contract with the property owner, or both), development financing from Low-Income Housing Tax Credits (LIHTC), or the Off-Farm Program development financing from the US Department of Agriculture (USDA). Most cities in Santa Clara County, with the exception of Los Altos, Los Altos Hills, and Monte Sereno, have at least one HUD-funded project and one Tax Credit-funded project.  The USDA-funded units are all in Gilroy.

When affordable housing is built with public funds, the housing units must be income-restricted for a specific period of time. Once that period of time has lapsed, the apartments can be converted to market rate, a process that usually results in displacement of residents who relied on the affordability restrictions. This conversion also results in the loss of affordable housing units, increasing pressure in lower-income households.

‘There’s nowhere to go:’ Peninsula tenants face eviction as rent control expires

Decades ago, said Michael Lane of the affordable housing advocacy group SV@Home, cities weren’t thinking too far ahead. “Unfortunately, when programs first began, there were relatively short terms for deed restrictions and people didn’t really think about what happens on the back end,” Lane said. “It’s a real problem.”   By EMILY DERUY | ederuy@bayareanewsgroup.com | Bay Area News […]
Learn more

“At-risk” rental apartments are those affordable to lower- or moderate-income households that are in danger of conversion to market rate when the term of the affordability restriction ends. Cities and counties are required to provide in their housing elements a program for preserving at-risk properties, including actions to monitor, finance, provide technical and regulatory assistance, and actions to assist tenants.

CHPC uses the following categories for assisted housing developments in its database:

Low Risk: affordable homes that are at-risk of converting to market rate in 10+ years and/or are owned by a large/stable nonprofit, mission-driven developer.

Moderate Risk: affordable homes that are at-risk of converting to market rate in the next 5-10 years that do not have a known overlapping subsidy that would extend affordability and are not owned by a large/stable nonprofit, mission-driven developer.

High Risk: affordable homes that are at-risk of converting to market rate in the next 1-5 years that do not have a known overlapping subsidy that would extend affordability and are not owned by a large/stable nonprofit, mission-driven developer.

Very-High Risk: affordable homes that are at-risk of converting to market rate within the next year that do not have a known overlapping subsidy that would extend affordability and are not owned by a large/stable nonprofit, mission-driven developer.

As of April 2025, out of the total of 39,086 units reported below, 36,268 are rated as Low Risk.  The remaining 2,818 units, with moderate to very high-risk ratings, are distributed throughout the County, as shown in the matrix below.

Affordable Rental Units in Santa Clara County At Risk of Conversion to Market Rate, April 2025
JurisdictionLow RiskModerate RiskHigh RiskVery High RiskTotal
Campbell6110730684
Cupertino10010000200
Gilroy1,890745002,014
Los Altos8800088
Los Altos Hills00000
Los Gatos218000218
Milpitas70701490856
Monte Sereno00000
Morgan Hill1,5820001,582
Mountain View1,7950001,795
Palo Alto1,539500721,661
San Jose23,8912611,32232625,800
Santa Clara2,182613302,321
Saratoga168000168
Sunnyvale1,497020201,699
Unincorporated Santa Clara County00000
Total Units, All Jurisdictions Countywide36,2684911,92939839,086

Source: California Housing Partnership Corporation Preservation Database

Note: While California Housing Partnership’s Preservation Database is the state’s most comprehensive source of information on subsidized affordable housing at risk of losing its affordable status and converting to market-rate housing, this database does not include all deed-restricted affordable units in the state. Consequently, there may be at-risk assisted units in a jurisdiction that are not captured in this data table.

Learn more about best practices for local government preservation strategies.

Additional Resources

National Housing Preservation Database

California Housing Partnership: Affordable Homes At-Risk, April 2025

California Housing Partnership: Unsubsidized Affordable Homes At-Risk, April 2025

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