AGENDA REPORT - Laserfiche WebLink

BACKGROUND The City initially adopted a lower income housing fee (LIHF) for residential development as part of its growth management program in the late 1970s. In 1989, in cooperation with a community task force, the LIHF was amended to apply to all new residential and commercial properties. This effort also included the establishment of a methodology/model used to assure that the fee was consistent with California AB1600 which requires there be a nexus between the fee amount and the development's impact. At the same time, a provision was incorporated to annually adjust the fee amounts based on the Consumer Price Index (CPI). City staff conducted updates to the 1989 model in 1998 and 2003. Since 2003, the LIHF has been amended only to be consistent with CPI adjustments. The current lower income housing fee, effective January 1, 2013, is as follows: Current City Lower Income Housing Fee Single Family Residential Single Family Residential Multi-Family Residential Commercial/Office/ (over 1,500 sf) (less than 1,500 sf) Industrial(C/O/I) $10,713/ unit $2,655/ unit $2,655/ unit $2.83 per sf The purpose of the LIHF is to provide an alternative to providing affordable units as part of new construction. When a fee is paid, funds are placed in the Lower Income Housing Fund (271900) to provide financial assistance for affordable housing projects or City efforts to promote affordable housing. The fund has a current overall balance of $16.4 million. The recently adopted General Plan Housing Element Amendment includes a number of specific programs and policies requiring further study. One of these, Program 17.1, states "review and modify the lower-income housing fee annually in conformance with AB1600, and consider changing the basis of the fee to reflect the true cost of providing housing." To address this and other Housing Element related matters, the Housing Commission reviewed the Housing Element implementation plan adopted on April 3, 2012, and identified a need to follow through with Program 17.1. This need mirrors staff's assessment that it is advisable to review LIHF methodology fully to identify any appropriate changes or adjustments required to be consistent with current nexus methodologies. As indicated above, the current methodology used for determining the amount and applicability of the lower income housing fee has been in place since 1989. However, recent court decisions have resulted in cities reassessing their lower income housing fee to assure it is consistent with these decisions. As such, the scope of work for the study included: • Developing a nexus between the need for affordable rental and ownership housing . A non-residential nexus analysis that looks at commercial impacts and associated fees . A LIHF feasibility analysis that assesses the impact of various fee amounts . A survey of lower income housing fees in other jurisdictions Page 2 of 12