After years of study and negotiations, the San Jose City Council has adopted a citywide inclusionary housing ordinance. The measure, which takes effect in 2013 (unless certain market conditions improve), requires market-rate developers to make 15% of new units available to households with incomes of no more than the median. If developers choose to meet the mandate off-site, the affordable housing requirement rises to 20%. The city has had similar requirements for the downtown area for years.

The City Council's decision on citywide inclusionary regulation came only three months after the council suspended a rule requiring 45-year restrictions on 20% of new units in redevelopment project areas to ensure their availability to low- and moderate-income households. Because prices for market-rate and affordable units are so close these days, there is no incentive for buyers to buy an income-restricted unit, city officials concluded. Developers asked for the relief, which city officials say they will revisit when the market changes.