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<br />How does this new requirement relate to the affordable housing impact fee and other <br />programs? The City currently has an impact fee that applies to all new residential <br />development of five or more units and nonresidential development over a certain size. <br />This fee is intended to partially mitigate the affordable housing impacts generated by <br />new residential and commercial development. This fee would continue for all applicable <br />commercial projects and residential projects of 5-19 units. Projects over 20 units would <br />be subject to the inclusionary requirement described above. <br /> <br />The proposed ordinance includes alternatives to payment of the housing impact fee or <br />the construction of on-site affordable units. As an alternative to the construction of <br />affordable units, developers would have the option to pay an “in-lieu” fee in the following <br />instances: <br /> <br />· When a inclusionary requirement results in a fraction of a unit <br />· Upon satisfying certain findings, applicants would be able to pay an in-lieu fee for <br />the entire inclusionary requirement. This would apply where the in-lieu fee covers <br />the cost of providing an equivalent number of affordable units, based upon an <br />affordability gap analysis, and only to projects with larger units (i.e. an average <br />unit size of 2,000 square feet or four bedrooms). <br /> <br />Generally, in-lieu fees are calculated on a per unit basis and are more expensive than a <br />traditional impact fee. This is intended to accurately capture the value of providing an <br />on-site unit without modifications to encourage feasibility. Although payment of an in- <br />lieu fee might appear to be an attractive option, developers paying the fee would give up <br />the ability to include market-rate density bonus units, concessions or incentives, and <br />waivers from development standards. The analysis suggests setting the rate at <br />$400,000 per rental affordable unit required. This fee is substantially higher than the <br />current impact fee. For ownership projects, staff is recommending that individual <br />projects submit an affordability gap analysis and that the in-lieu fee be the amount of the <br />gap. The in-lieu fee is set by resolution of the City Council in Attachment 4. <br /> <br />STAFF RECOMMENDATION: Establishing an in-lieu fee in the master fee <br />schedule that is consistent with the cost of providing an affordable unit. This in- <br />lieu fee would be significantly higher than the current impact fee and would be <br />approved in a resolution as part of Council action. <br /> <br />When does the new requirement take effect? On December 18, 2017, the Council <br />initiated proceedings to consider the new requirement and staff has been <br />communicating with developers of in-process projects regarding the potential impacts of <br />7.A. - Page 11