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Mr. Bocian said regarding the COI fee, the recommendation of staff shows an adjustment to the COl fee of 15%. The methodology supports a much higher COI fee that could go up to almost $3.00/sq. fi. When the City had its task force in 1988 and 1990 and EPS looked at the COl fee, the feeling was that it would be more appropriate to not have a flat fee, but rather make some adjustment to the fee to reflect the fact that the COI community provides jobs and infrastructure improvements to the city. What the task force did and staff has continued to do was to take the base COl fee and reduce it by 75%. The methodology would allow the fee to go up by 75%. When the Housing Commission reviewed this, it agreed with that concept and that is consistent with all city fees. Regarding trying to attract very low income or low income products, staff believes that things have changed with the adoption of the inclusionary housing ordinance. Because developers must present an affordable housing plan, staff has an opportunity early in the process to express the needs for lower income units. So far staff has been successful. In the future, he felt that point can be made and will attract that product, even if it results in buying down some units to get down to the 50% level. A big issue is the focus throughout the development process and he did not think the fee would affect that one way or another. The third point the Housing Commission discussed was that if the fee was high enough, the developers will build the units. Staff agrees with that to an extent, but felt a more effective way to get traits was through the political process. Ms. Dennis asked if it was correct that there is a 15% increase in the COI fee, but it could be increased by 75%? Mr. Bocian said yes. Ms. Dennis acknowledged the inclusionary zoning was good, but she would also like to have a fee that encourages things like the Hacienda Business Park considering developing commercially zoned property as mixed use. She did not think the fee provides the same incentive to commercial office and industrial as it does to residential developers as far as expanding our inclusionary world. She hoped the methodology would encourage the businesses to provide the housing for the people with jobs here. Mayor Pico asked if the COl fee could go as high at $3.47/sq. ft.? Mr. Bocian said yes. Mayor Pico asked for an explanation of a 5% vs. 10% cap rate on these calculations. Mr. Bocian said the 10% rate would reduce the fee, because it would take less money to provide the subsidy over a thirty year period. If there is a gap between an affordable unit and a market unit that is $2.51 per month per trait, the question is how much money will be needed right now to invest over a thirty year period to fill that gap. In the past, staff had used a ten percent cap rate, which is high now. This report suggests reducing the cap to 5%. Mr. Campbell asked what the downside was of adopting the 3% of sales price figure for single-family units? Pleasanton City Council 28 09/03/02 Minutes