The Planning Commission on Dec. 3 received an update on the city's inclusionary housing program and plans to develop an in-lieu fee formula.

Housing staff said the Orange County Council of Governments (OCOG) is providing a consultant to refresh the city's housing implementation plan and to analyze the inclusionary program and potential in-lieu fee. Staff noted a long-standing discrepancy between the municipal code, which references a 15% set-aside in some provisions, and the most recently adopted housing element, which includes a 4% requirement for developments of six or more units. The consultant will review past analyses, assess feasibility, and recommend a percentage and an in-lieu fee calculation; staff said a deliverable is tentatively scheduled for June 30, 2026.

Staff described developer options under current practice: provide required affordable units on-site, provide them off-site within city limits, or pay an in-lieu fee. Because the municipal code currently lacks an established in-lieu fee formula, the fee has been set on a case-by-case basis; the consultant will recommend a standard methodology for fee calculation and administration.

Mark Maguire, who also attended the meeting, said he was encouraged by the update but cautioned about assuming a shift from 4% to 15% absent explicit City Council direction. "That's a pretty high level policy decision," Maguire said, and urged staff to include a short staff summary indicating whether action would be taken now or at a later date. Staff responded that the consultant's analysis and recommendations would return to the Planning Commission for review and that any ordinance or fee changes would ultimately require Council action.

Commissioners generally welcomed the work and asked staff to package subsequent recommendations with administrative guidance on fee administration, alignment with housing element goals, and clear public materials explaining next steps. No code changes or fee adoptions were made at the meeting.