AgdaPkt 2015-10-26 Study and Joint SA PFA

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7.A. - Page 31 BIA BAY AREA RitllL DING INDUSTRY ASSOCIATION September 3, 2015 Aaron Aknin, City Manager City of Redwood City 1017 Middlefield Road Redwood City, CA 94063 Dear City Manager Aknin, It is an undisputed fact that there is a need for the greater Silicon Valley region to address the crisis of housing affordability throughout the Bay Area, including the City of Redwood City. However, legally indefensible nexus studies, such as the study provided by Vernazza Wolfe Associates for the San Mateo County 21 Elements model Nexus Study does not provide the lawful basis to implement new fees, i.e.,taxes, on new residential construction. Housing affordability has become a crisis due to the lack of housing supply, recent explosive regional job growth,the termination of redevelopment by the state legislature and other economic, political and social factors that should be addressed by society at large, not allocated to builders of market- rate housing based on studies that fail to satisfy the most basic elements of proximate cause. Additionally, adding to the crisis in housing supply is Redwood City's under performance in meeting its RHNA obligation in the 2007/14 cycle. Per California's Dept. of Housing and Community Development (HCD), Redwood City has permitted only 85%%of its housing responsibility during the past 7 year timeframe! Upon review of the Vernazza Nexus Study and the fee methodology utilized to determine the maximum supportable nexus-based Housing Fees, BIA Bay Area has concluded that the Nexus Study is not a legally defensible document and does not prove legally defensible "causation" through is attenuated fee calculation methodology.The Vernazza methodology consists of a multiple step chain of events subject to numerous assumptions including federal or local tax levels, personal spending habits, personal savings rates, number of jobs created,the location of those jobs, how many of those jobs will be new jobs, how many of those new jobs will be low income jobs, gross household incomes, net household incomes, rate of expenditures on goods&services, how many of those households will choose to live in resulting targeted city and so on. The assumptions in this study are more commonly applied in academic and economic studies.This approach and application of assumptions are not common practice in establishing nexus findings in accordance with provisions of the Mitigation Fee Act.A copy of the legal analysis of Residential Nexus Studies by attorneys Geoffrey Robinson and Christopher Chou of Perkins-Coie dated December 2014 utilizing fee methodologies and analysis as modeled in the 21 Elements Vernazza Wolf study are attached for your review along with a copy of the accompanying Perkins-Coie Executive Summary.