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Affordable units in new housing (inclusionary) in Palo Alto

Palo Alto's own rules on affordable units in new housing (inclusionary), with the code text for every value.

Each rule below links to the section of the Palo Alto Municipal Code it was read from, with the code text one click away (checked October 2026). General information, not legal advice.

What Palo Alto's code says

Palo Alto code What Palo Alto's code adds
Exemptions
  • Mixed use projects with fewer than 3 dwelling units pay housing impact fees on those units.
    § 16.65.070 · code text
    When a mixed use project contains fewer than three dwelling units, impact fees shall apply to those units.
Fee instead of units
  • The city council sets these from time to time by ordinance or resolution.
    Applies: Applies to housing impact fees and in-lieu fees.
    § 16.65.060 · code text
    The amount of any housing impact fees and in-lieu fees shall be established from time to time by ordinance or resolution of the city council.
  • The fee is calculated as described in the city's affordable housing guidelines.
    Applies: A fractional affordable unit may be paid in lieu; projects of 30 or more units add a unit for each fraction of 0.50 or more.
    § 16.65.030 · code text
    The in-lieu fee for a fractional unit shall be calculated as described in the city's affordable housing guidelines.
Projects it applies to
  • The rule applies to projects of 3 or more units.
    Applies: Applies to mixed use projects containing residential ownership units.
    § 16.65.040 · code text
    The residential ownership portion of a mixed use project containing three or more units shall comply with Section 16.65.030.
  • The rule applies to projects of 3 or more dwelling units.
    Applies: Applies to mixed use projects containing residential units.
    § 16.65.070 · code text
    When a mixed use project contains three or more dwelling units, either residential rental or residential ownership, the provisions of this chapter that apply to residential ownership and residential rental projects shall apply
Share of affordable units
  • 15 percent of units go to very low, low and moderate income households.
    Applies: Applies to projects on sites of less than 5 acres.
    § 16.65.030 · code text
    For projects on sites of less than five acres, fifteen percent of the dwelling units in the project shall be made available at affordable sales price to very low, low, and moderate income households;
  • 20 percent of units go to very low, low and moderate income households.
    Applies: Applies to projects on sites of 5 acres or more and all townhome projects in the NV districts.
    § 16.65.030 · code text
    For projects on sites of five acres or more and all townhome projects in the NV districts, twenty percent of the dwelling units in the project shall be made available at affordable sales price to very low, low, and moderate income households;
  • 25 percent of units go to very low, low and moderate income households.
    Applies: Applies to projects that convert existing rental housing to condominiums, other ownership or nonresidential space, or remove existing rental housing.
    § 16.65.030 · code text
    For projects that convert existing rental housing to condominiums, other residential ownership or nonresidential space or that remove existing rental housing, twenty-five percent of the dwelling units in the project shall be made available at affordable sales price to very low, low, and moderate income households.
  • 15 percent of units go to lower income households.
    Applies: Applies to NV districts.
    § 16.65.040 · code text
    In the NV districts, residential rental projects, including mixed use projects containing residential rental units, shall provide fifteen percent of the dwelling units in the project at rates affordable to lower income households.
  • At least two-thirds of units: households at 80% to 100% of area median income. Up to one-third: 100% to 120%.
    Applies: Applies to ownership projects on sites under 5 acres or 5 acres or more (and NV townhome projects).
    § 16.65.030 · code text
    For projects subject to subsections (a)(1) and (2) of this section, at least two-thirds of the required affordable units must be made available at affordable sales price to households earning eighty percent to one hundred percent of the area median income, and one-third may be made available at affordable sales prices to households earning between one hundred percent and one hundred twenty percent of the area median income.
  • At least four-fifths of units: households at 80% to 100% of area median income. Up to one-fifth: 100% to 120%.
    Applies: Applies to ownership projects that convert or remove existing rental housing.
    § 16.65.030 · code text
    For projects subject to subsection (a)(3) of this section, at least four-fifths of the required affordable units must be made available at affordable sales price to households earning eighty percent to one hundred percent of the area median income, and one-fifth may be made available at affordable sales prices to households earning between one hundred percent and one hundred twenty percent of the area median income.

Who this affects

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Frequently asked questions

Does Palo Alto require affordable units in new housing?

Palo Alto's code: Mixed use projects with fewer than 3 dwelling units pay housing impact fees on those units. (§ 16.65.070); The city council sets these from time to time by ordinance or resolution. (Applies to housing impact fees and in-lieu fees.) (§ 16.65.060).

General information, not legal advice.

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Ask GoCodebook how Palo Alto's affordable units in new housing (inclusionary) rules apply to your situation and get an answer that cites the section.

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