Sacramento City Council Adopts Inclusionary Housing Ordinance, Shaping Rental Options for Working Families

The Sacramento City Council voted 7-2 on July 7 to adopt an inclusionary housing ordinance that mandates 15 percent of units in new residential developments of 20 homes or more be priced below market rates for 55 years. The policy applies to projects within the city limits and targets areas such as Downtown, Midtown and South Sacramento. Residents in those corridors will see the first units subject to the rule appear in permits filed after January 2027.

The ordinance updates the city’s 2023 Housing Element, which identified a shortfall of 8,200 affordable units through 2031. City planning staff presented data showing that market-rate projects approved since 2022 have added 4,100 units with fewer than 300 deed-restricted affordable homes attached. The vote aligns the local code with state density bonus law changes enacted in 2024.

Local voices on the new requirements

Policy analysts at the Sacramento Housing Alliance state that the 15 percent set-aside will generate roughly 650 new below-market units over the next five years if current permitting rates hold. Community advocates note that the income targeting, set at 60 percent of area median income, matches the earnings of many service and healthcare workers who commute into the city from surrounding counties. One example cited in council testimony was a certified nursing assistant earning $48,000 annually who currently pays 42 percent of income on rent in the 95814 zip code.

Transportation and land-use data from the Sacramento Area Council of Governments 2024 report shows the average one-way commute for south Sacramento residents stands at 31 minutes. The new ordinance is expected to reduce pressure on outer-ring housing by allowing more workforce households to locate closer to job centers along the light rail Blue Line.

Implementation timeline and budget effects

City staff will begin accepting applications under the new rules on August 1. Developers may satisfy the requirement through on-site units, off-site construction within two miles, or payment of an in-lieu fee of $185,000 per required unit, with proceeds directed to the city’s Affordable Housing Trust Fund. The 2026-27 city budget already allocates $4.2 million from that fund for gap financing on two projects in Oak Park.

Next steps include staff drafting administrative guidelines by October and the first compliance reports due to the council in March 2028. Residents can track individual projects through the city’s online permit portal, which will flag inclusionary requirements on each application.