CITY COUNCIL AGENDA PACKET WORKSHOP

amount of the current in-lieu fee for for-sale housing, which is currently well below the level supported by the economic analysis. As noted above, setting the inclusionary rate at 15% across the board provides the best opportunity to increase the Affordable Housing Fee to better align with the inclusionary rate. Overall Fee Levels • For for-sale residential development, the study indicates there is some capacity (based on the gap between total development costs and sales prices) to increase fees. There is very little capacity in multi-family rental projects. • The survey of Pleasanton’s current fees, compared to nearby peer jurisdictions shows that Pleasanton charges less for single-family development than most of the peer cities (local fees only); whereas multi-family fee rates are on a par with or above several other cities. When looking at fees for a typical office development, Pleasanton’s current fees are similar to some other neighboring jurisdictions (e.g., Livermore and San Ramon), but well above cities such as Dublin, Fremont, Danville and Walnut Creek. • The initial findings of the nexus study will support maximum fees that are considerably higher than the fees charged today. However, while charging the maximum fee is justifiable under the study, doing so, particularly for the CFF and TIF, is likely to render almost all new development, whether commercial or residential, financially infeasible. As such, the City will have to make policy choices about where to set its impact fees. POLICY APPROACHES As noted above, and documented in more detail in Attachment 1, the initial assessment of facilities needs, costs, and service population indicate that substantially higher maximum impact fees than are charged today could be justified by the nexus studies. However, increasing fees to the maximum, or substantially increasing the inclusionary rate will threaten the feasibility of new development. It is important that development pay fees to address the burden its new residents and employees place on City facilities; however, those fees and the costs to meet the City’s housing inclusionary requirements must be set at a reasonable level. Fees, if set too high, will affect development’s financial feasibility, and discourage or prevent projects from proceeding altogether. Projects once built contribute ongoing benefits to the community in the form of property tax, sales tax, and other revenues that support the City’s ability to maintain facilities and provide essential services. As such, it would be fiscally counterproductive, and could adversely affect the City’s ability to meet its RHNA, if fees and inclusionary requirements are set at too high of a level. The City Council will therefore need to strike an appropriate balance between three potentially competing policy goals: