Merced eyes options to boost market rate, low-income housing availability

As the housing crisis continues to burden the Central Valley, Merced is doubling down on inclusionary zoning as the future of its housing policies.

As the housing crisis continues to place a burden on the Central Valley, Merced is doubling down on inclusionary zoning as the future of its housing policies.

In April, the Merced City Council passed a resolution that adopted an interim affordable housing production requirement at a rate of 12.5 percent for new private market rate development, meaning that 12.5 percent of new housing development should be developed for lower-income residents.


The adopted requirement is similar to inclusionary zoning, a policy which requires a certain share of new development be affordable for low-income families.

Along with the interim requirement, the council also sought out a study to determine if 12.5 percent rate is appropriate for local housing market conditions.

The study will also seek to address an in-lieu fee as an option to meet the program requirements. The fee structure would allow developers to deposit funds into a housing trust fund to build affordable units.

Merced’s housing trust fund already has $500,000 allocated to it from the city budget.

If the council decides that 12.5 percent is too low and seeks a rate greater than 15 percent, state law requires that Merced pass an inclusionary zoning ordinance and conduct a feasibility study, the latter of which is now being undertaken by the city.

The city has partnered with Southern California consulting firm RSG, Inc. to conduct a prohousing feasibility study and to recommend an in-lieu fee structure for developers.

Once completed, the study will recommend guidelines on best practices for spending and administering the housing trust fund. 

It will also guide the formation of a prohousing policy, which will help the city attain HCD Prohousing Designation.

That designation, which comes through the state, will provide incentives to Merced to meet California’s housing goals.

According to a staff report from Monday’s council meeting agenda, the city views the HCD Prohousing Designation as a way to enhance the ability to fund local affordable housing development.

Related Posts