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2. FINDINGS FOR FEE PROGRAM Purpose of Fee The fee program developed through this Nexus Study would fund the development and preservation of affordable housing projects in the City as required by the increase in local lower wage workers employed by new nonresidential construction projects. The businesses that occupy new nonresidential buildings will demand employees, many of whom will have difficulty finding suitable local housing they can afford. Use of Fee The fee will be deposited in the City's Lower Income Housing Fund. The funds are used to provide assistance for production, acquisition of at-risk units, or rehabilitation of affordable housing. The fee also will fund the studies and administration to support the fee program. Relationship between Use of Fee and Type of Development The development of new nonresidential land uses in the City will generate need for additional workers. The wages of a significant portion of the new employees will be inadequate to support sufficient rent prices to attract residential developers to provide housing opportunities without further subsidy. The fee will be used to help to fill the "affordability gap"for housing development and increase the number of homes available for the local workforce. Relationship between Demand for Affordable Housing and Type of Project The City and EPS have identified three employment categories for which a separate fee has been calculated. The proportion of lower wage workers and the number of square feet per employee for each employment category has been assessed to ensure a proper nexus has been established. Relationship between Amount of Fee and Cost of Public Benefit Attributed to New Development EPS estimated the gap between the cost of developing new rental housing and the achievable value of the new rental units based on different income levels. To estimate the maximum fee, this gap was then multiplied by the number of lower wage workers anticipated by the new development projects and the number of households of various income categories those workers are likely to form. As the fee is one of several mechanisms for generating resources for or reducing the cost of housing development, the EPS-recommended fee is 10 to 20 percent of the maximum calculated fee. Economic&Planning Systems, Inc. 4 151000s\I5111IP aarto ee\NeportNffo tlaLk Np skg\151111 N,, sl tl ff:519 tlou