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reductions, staff suggests that a fee reduction for this project would be appropriate. The degree of reduction is at the discretion of the Council. The PMC is clear in its intent to provide flexibility to reduce fees for exactly this type of circumstance, and staff believes a reduction is warranted, even if not at the rate requested by the applicant. Option 1 would not grant any reduction of the Affordable Housing Fee, which would require payment of the entire amount, $2,156,893. Although this would generate the largest contribution to the City's Affordable Housing fund, it would be significantly disproportionate to the actual degree of impact associated with the project. As noted above, staff believes a reduction is warranted. Further, while not a factor the City Council is required to consider, the applicant has indicated that payment of the full fee amount would render this project financially infeasible. If the project did not move forward, it would not only not contribute any additional impact fees, but it would not bring the benefit of the proposed investment and upgrade to the site as described in Attachment 4. Option 2 outlined by staff aligns with past approvals. While staff cannot affirm the methodology from 1997 and 2002 nor why 77-78 percent reductions for the storage portions of the project were approved, it is assumed some analysis was conducted to support the proposal. The precedents may therefore provide a basis for a similar reduction in fees. However, it would likely reflect a smaller reduction than may be warranted based on actual employee generation. Option 3 reflects the applicant's request and would approve a fee reduction of 98.8 percent for the entire project, inclusive of both the storage and office components. (Note, the applicant's request did not reflect the manager's unit, so no adjustment has been made for this component) Option 4 as noted, represents a hybrid approach. This would include no fee reduction for the office portion of the project, only for the storage element. Staff recommends no fee is charged for the actual unit provided on-site. The office portion of the project generates employees and creates a need for affordable housing. No fee reduction for the office is also consistent with past Affordable Housing Fee reduction approvals. Option 4 does, however, support a fee reduction of 98.8 percent for the storage portion of the project only (consistent with that requested by the applicant), and in alignment with the actual impact/generation of employees (i.e., 1.2 percent of that assumed in the EPS study). Option 5 aligns with the SANDAG-developed employee generation ratio that is widely used by other cities and public agencies in developing studies for calculation of impact fees and evaluating project impacts, for the storage component, and retains the office component at 100 percent of the standard fee rate. Although assuming a somewhat higher employee generation rate than stated by the applicant, the reduction would nonetheless be in alignment with commonly used methodologies and assumptions used Page 16 of 18