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As indicated, the EPS methodology is a departure from the existing methodology with <br /> the primary difference being that it focuses on affordable housing demand created by <br /> market rate housing and C/O/I employment and the financing gap required to provide <br /> affordable housing. While there are some benefits to the existing methodology, the EPS <br /> methodology has been generally accepted as being an appropriate way of <br /> demonstrating nexus requirements for lower income housing fees and therefore, <br /> regardless of City Council action on an adjusted fee amount, it should serve as the <br /> foundation for the LIHF in the future. <br /> LIHF Development Feasibility <br /> While the study identifies the maximum sustainable Lower Income Housing Fee, the <br /> feasibility portion of the study uses an EPS-developed financial pro forma to evaluate <br /> the financial impact that the LIHF would have on developer return on investment which <br /> is a primary indicator for determining the financial attractiveness/viability of new housing <br /> or commercial development. As such, this study looks to determine if a particular fee <br /> amount could be an impediment to new development. <br /> A summary of the supportable fees as detailed in the Report is as follows: <br /> Financially Supportable/Feasible LIHF <br /> Type Existing Maximum Feasible <br /> Residential (1) <br /> Single Family Ownership >1,500 (2) $10,713 $27,187 $27,187 <br /> Single-Family Ownership <1,500 (3) $2,655 $18,265 $18,265 <br /> Multi-Family (4) $2,655 $15,694 $2,655 <br /> Commercial (5) <br /> Retail Commercial $2.83 $108.24 $4.67 <br /> Office Commercial $2.83 $4.67 $4.67 <br /> R&D/ Light Industrial $2.83 $4.67 $4.67 <br /> Hotel/Motel $2.83 $23.85 $4.67 <br /> 1. Per unit fees <br /> 2. Assumes 3,000 square foot unit, but actual maximum and feasible figures depend on unit size/price. <br /> 3. Assumes 1,200 square foot unit, but actual maximum and feasible figures depend on unit size/price. <br /> 4. Assumes 2 BR unit <br /> 5. Per square foot fees <br /> As detailed in the Report's feasibility analysis, EPS used the same development value <br /> and cost assumptions in this report as it did for its East Pleasanton Specific Plan <br /> analysis. However, unlike that study; this EPS Report includes analysis for hotel/motel <br /> and R&D/ light industrial. Further, it's important to note that while the Report indicates <br /> that office, R&D/light industrial, and hotel development are financially challenged under <br /> near-term market conditions, the $4.67 fee may be considered "feasible" because it <br /> represents a small increment of cost (above the existing fee) relative to the overall costs <br /> of development when market conditions will support new construction. <br /> Page 5 of 12 <br />