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From:Adam Kates <br />To:CD-Diana ODell <br />Subject:Public Comment - Affordable Housing Requirements <br />Date:Tuesday, April 24, 2018 3:26:58 PM <br />Attachments:image001.png <br />Hi Diana, <br /> <br />Please share my comments below with the Planning Commission in connection with the upcoming May 1st hearing <br />regarding revisions proposed to the affordable housing requirements. <br />Please feel free to call me if you wish to discuss. <br /> <br />Thank you, <br />Adam <br /> <br />Adam Kates <br />Classic Communities, Inc. <br />1068 East Meadow Circle <br />Palo Alto, CA 94303 <br />Direct: (650) 213-1120 <br />akates@mozartdev.com <br /> <br /> <br />------------------------------------------ <br />Dear Planning Commissioners: <br /> <br />I am providing this public comment as a local homebuilder who has recently delivered for-sale housing in Redwood <br />City and is actively seeking new opportunities to deliver more for-sale housing projects within the City. In that <br />capacity, I respectfully discourage the Planning Commission from recommending adoption of the proposed updated <br />Affordable Housing Requirements under consideration tonight - namely, the 20% onsite BMR requirement for <br />projects of 20 units or more. The reason being that the dramatically increased financial burden that this proposal <br />represents would have the unintended consequences of substantially suppressing housing production and <br />worsening the very real affordability crisis by taking future housing sites out of production. <br /> <br />Developers account for the financial burden from affordable housing requirements in what they can offer to pay for <br />land, so the true cost of the Affordable Housing subsidy is primarily borne by the seller of residential land. If the new <br />affordable housing requirements under consideration tonight were to be adopted by the City, many more property <br />owners of underutilized sites with residential or mixed use zoning designations would opt to hold onto their income- <br />producing properties rather than sell to a residential developer at a substantially diminished value. For instance, on <br />one site we recently evaluated for potential purchase and redevelopment, we underwrote the deal first assuming the <br />current affordable housing in-lieu fee would apply, and then we underwrote it again assuming the proposed onsite <br />20% BMR requirement. Under the 20% onsite BMR scenario, the property value was diminished by over 40% (vs. <br />the current in-lieu fee), which was a non-starter for even approaching the property owner regarding a potential land <br />purchase (i.e., the reduced value is far below the owner’s threshold for selling his property). If the 20% onsite <br />requirement is enacted, the scenario I describe above will play out over and over again all over town with respect to <br />any property of scale that could accommodate 20 or more residential units. <br /> <br />As Bay Area residents, workers, businesses and politicians collectively have come to grips with the severe housing <br />shortage and affordability crisis, support for new housing development has surged in recent years. While the <br />proposed revisions to the affordable housing requirements under consideration tonight are intended to be part of <br />the solution to the affordability problem, the reality is that, with the exception of the lucky few who are selected to <br />purchase one of the limited supply of affordable units that will be built, the overall effect for the many will be to <br />exacerbate the housing shortage and drive up prices further. I would encourage the City to consider alternative <br />7.A. - Page 57