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Per EPS’ analysis, under current market conditions, the maximum feasible fee rate is <br />only $8.75 per square foot. All the inclusionary scenarios result in a maximum <br />supportable in-lieu fee well above this amount, which will not be feasible for most <br />projects. <br /> <br />Table 3: Rental Apartments / Multi-family Projects – Revised Inclusionary <br />Scenarios <br /> Inclusionary <br />Rate <br />Affordability <br />Mix <br />In-Lieu <br />Fee/Square <br />Foot* <br />In-Lieu <br />Fee/Unit <br />Existing IZO 15% 50%, 60% and <br />80% AMI <br />$63.85 $51,077 <br />Maximum Feasible <br />Fee <br /> $8.75 <br /> <br />$7,000 <br /> <br />Scenario 1 <br />(Recommended) <br />15% 60% AMI $61.08 $48,867 <br />Scenario 2 10% 60% AMI $40.72 $32,578 <br />* Assumes typical apartment size of 800 sq. ft. <br /> <br />Conclusions/Recommendations: <br />While lowering the rate to 10% would help the financial feasibility of multi-family rental <br />projects, staff nonetheless recommends retaining the existing inclusionary rate at 15%. <br /> As outlined in Section 3, below, reducing the rate to 10% would have a significant <br />effect on affordable housing production, since most remaining units, including <br />market rate and affordable/inclusionary units, will be within higher-density, multi- <br />family projects. <br /> <br /> The 15% rate has proven to be viable during other economic cycles and has <br />successfully produced many affordable units over the years. As the rental <br />housing market recovers, the 15% rate is likely to become feasible again. <br /> <br /> As shown in Table 6, below, a 15% inclusionary rate is comparable to the peer <br />cities surveyed, with Livermore, Danville, and San Ramon also setting their rate <br />at 15%. Dublin, Fremont and Walnut Creek all have rates of 10% or less. (See <br />Section 4, below for a comparison of peer cities.) <br /> <br />Recognizing the challenging environment for multi-family projects, staff recommends <br />two related, complementary strategies that could help stimulate or reduce barriers to <br />multi-family development: <br /> <br /> Establish the in-lieu fee at a reduced rate, below the maximum supportable <br />amount – for example, at between $20.00 and $25.00 per square foot (or less). <br />As shown in Table 6, below, most of the peer cities surveyed have in-lieu fees <br />per square foot around or below this level, likely reflecting a similar intent to avoid <br />impediments to multi-family housing production. <br /> <br />Page 10 of 40