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The East Palo Alto City Council majority voted on Tuesday to reject a Temporary Housing Development Incentive Program, which would have exempted projects with 20 or fewer units from stringent local affordable housing laws. The move ended months of debate over whether existing affordability rules were tamping down development and it honored the city’s long-established principles.
In 1983, when East Palo Alto residents saw that neighboring cities were annexing local land, they fought various agencies to incorporate, succeeding by a margin of 15 votes. It was a grassroots effort, led by Black and Latino residents who operated their own health and education systems after facing discrimination.
“From the minute we incorporated, it has never been easy,” said Vice Mayor Ruben Abrica, who served on the first city council, at a Tuesday meeting.
Every time a resident was pushed out of the city due to rising living costs, he said, it drew attention to the history of displacement that originally drew families to East Palo Alto. That’s why, in 1994, city founders created one of the strongest inclusionary housing policies in California, Abrica said.
Today, the inclusionary housing ordinance, a city law that requires developers to dedicate units for low-income residents, still lives up to that standard. Local housing consultants say it has the deepest affordability requirements in San Mateo County. While that is a point of pride for many, it is a weak point for newer council members, who attributed statewide development dryspells to affordability laws.
Council members almost succeeded in a months-long campaign to alter the inclusionary housing ordinance, but in the spirit of a city established by activists, local agencies, families and leaders pushed back.
Council member Martha Barragan, who voted to reject the incentive program Tuesday night, had originally supported lowering affordability requirements, but changed her mind after residents expressed fears over displacement.
“The people have spoken,” Barragan said.
Mayor Webster Lincoln and Council member Mark Dinan have long pushed for changes to local affordable housing policies, establishing it as a city priority shortly after they joined the council. In alignment with the priority, the city contributed $85,000 to a San Mateo County-wide study on affordable housing policies in October 2025. Staff anticipated the council could permanently alter affordable housing standards shortly after receiving the data in November this year.
But tensions rose just a month later, when Lincoln requested that city staff expedite change to the inclusionary housing ordinance. The Temporary Housing Development Incentive Program was the result of that request.
Currently, the inclusionary housing ordinance requires developers to dedicate 20% of new rental units to affordable housing for people who earn 35%, 50% and 60% of the average median income, which is approximately $114,000. If the units are for sale, 20% of them must cater to median to moderate income levels. Smaller projects with less than five units must either pay a fee or provide one affordable unit.
If developers do not wish to adhere to the requirements, they may apply for alternative compliance or pay an “in-lieu” fee.
The housing incentive program originally proposed to exempt developers from building ultra low-income housing altogether and slash the amount of affordable units that new developments are required to provide. Despite resident protests, Lincoln, Dinan and Barragan moved forward this month with a more conservative program that would have exempted smaller development projects from affordable housing laws altogether.
The program, which was set to expire in December 2027, would have affected 128 units out of the total 3,966 in the city pipeline, according to city staff.
“It impacts so few projects,” Lincoln said in response to resident affordability concerns. “We’re talking about like 3% of our pipeline.”
The three council members contended at a July 7 meeting that the incentive program would speed-up local housing production.
East Palo Alto is still behind on its development goals, according to the Regional Housing Needs Allocation, a state process that sets specific mandates for housing production in each city. The city has completed 54% of its required ultra low-income housing stock, 9% of moderate income units and 5% of above moderate homes.
Jia Li, representing AlphaX Re Capital, said her real estate group has been unable to proceed with a 20-unit townhome project at 1201 Runnymede St. due to high fees.
“Neither you nor we can do anything about high interest rates and the high cost of land, material and labor in the Bay Area, but you can make the project financially feasible… if you eliminate and modify the inclusionary housing rules that apply to smaller scale projects like ours,” Li said at a March meeting.
In an attempt to stimulate housing production, San Jose adopted a program in December 2024 to reduce affordable units from 15% to 5% at multi-family development sites, according to city documents. Just this month, San Francisco made the same deep reduction for new market-rate projects.
But city-appointed housing consultants warned the council on multiple occasions to wait for the county study results before making changes to the inclusionary housing ordinance. Development trends have dipped for various reasons, said consultant Kristen Dysinger, who advised against changing laws in an attempt to keep pace with the housing market.
“The studies that have been done in San Francisco and San Jose and Santa Clara County show that even with zero inclusionary, projects just aren’t penciling, which is an indication that moving inclusionary alone is not going to jumpstart the market,” Dysinger said.
California law requires most changes to city development code be approved by the Planning Commission, and at a July 13 meeting, the advisory group took the opportunity to push back on the housing incentive program. Commissioners contended that the program did not align with the city’s general plan, which includes goals to produce affordable housing and prevent resident displacement.
Before July 21, Commissioners Michael Mashack and Juan Mendez joined longtime community activists on social media, to continue advocating for the rejection of the incentive program.
Although the commission did not sway Lincoln and Dinan in the final stretch, residents turned out in droves to protest the prospective changes to affordable housing laws. During the public comment period, dozens of speakers, including Hunter Wang, urged the council to reject the incentive program in a city known for affordability.
“The city would permanently lose 17 affordable home units, as well as upwards of $2 million from estimated in-lieu fees, which would no longer support affordable programs,” he said. “While 17 homes may seem like an insignificant number, these aren’t just abstract numbers, but real people.”
When council members Carlos Romero, Abrica and Barragan voted to reject the incentive program, the room erupted in cheers, closing out a months-long housing tug-of-war.
