Affordable housing, parks could benefit from developer fees

CITY HALL — City Council will have a chance to add new development fees that would go to support both affordable housing and parks in the city.
The linkage fees are on the council's Tuesday agenda.
Development, city officials acknowledge, impacts the need for affordable housing and open space in a city.
Consultants were hired to analyze the impacts of development on both parks and affordable housing. They also determined the feasibility of adding developer fees to mitigate those impacts.
"By examining projected development and determining the associated growth in residents, workers and hotel guests, the study concluded that the projected increase in development would result in a 9.1 percent ... increase in demand for parks and recreation facilities," city officials said in their report.
That kind of increase would cost $126 million according to the study.
With the dissolution of the redevelopment agency, City Hall lost hundreds of millions of dollars worth of funding that could have supported affordable housing and parks.
City Hall already requires developers to pay into affordable housing on market-rate multi-family housing developments through the Affordable Housing Production Program, so new affordable housing fees are not proposed for residential projects.
The Housing and Parks in-lieu fee applies to general office development over 15,000 square feet but does not cover creative office space or other commercial development, like hotels or retail space. These current fees cover both affordable housing and recreation improvements. It hasn't generated revenue in four of the last five years. The year it did, $123,785 was split between the two categories.
For the affordable housing, the proposed linkage fees cover only commercial development. Fees, in City Hall's current proposal would range from $3.07 per square foot, for hotels, to $11.21 per square foot, for office space.
Creative office developers would pay $9.59 per square foot under the proposed fees and retail developers would pay $9.75.
For parks and recreation fees, office space (including creative office) developers would pay $2.31 per square foot while medical office and hospital developers would pay $1.27. Hotel developers would pay $3.11 per square foot.
Residential developers would have to pay into the parks and recreation funds, dropping $7,636 for single family homes and $4,138 per studio and one bedroom unit. They'd pay $6,665 per multi-family units of two bedrooms or more.
If passed on Tuesday, a second reading would occur at the next council meeting. The ordinance would go into effect 60 days after the second reading.
"The proposed impact fees are not projected to generate the level of revenues to become primary funding sources for affordable housing or parks and recreation, but would supplement other funding sources," city officials said in the report.
Council's affordable housing measures, Measure H and companion Measure HH, are scheduled to appear on the ballot in November. If both are approved by voters, City Hall could raise the amount of cash it collects on million-dollar property sold in the city. This money would be set aside for affordable housing.
dave@www.smdp.com