Affordable Housing Impact Fee. City of Berkeley May 31, 2011

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1 Affordable Housing Impact Fee City of Berkeley May 31, 2011

2 Background Palmer vs City of Los Angeles decision on inclusionary rental housing in 2009 Bay Area Economics draft Affordable Housing Impact Fee nexus study in June 2010 Final revised nexus study in January 2011

3 Criteria for draft ordinance Maximum supportable fee is $34,000 per unit in multifamily rental housing Transparent and predictable for developers Efficient administration

4 Draft impact fee ordinance Proposed fee of $20,000 per rental unit To apply to all multifamily rental housing (2+ units) Includes an option to provide units instead of paying the fee

5 Units in lieu option Fee is calculated on the number of market rate units. If Developer provides 10% of market rate units in the project affordable at 50% of AMI,,project receives full fee credit. If Developer provides less than 10% of market rate units affordable at 50% AMI, fee is reduced proportionally.

6 Fee Calculation Illustrations

7 Fee calculation: 100% market rate 100 unit development All units are market rate Fee is $2 million 100 units

8 Fee calculation: 10 VLI units in lieu 100 unit development Full fee: 90 units x $20,000 = $1.8 million 90 market rate units 10 VLI units Credit: 10 VLI units x $200,000 unit = $2 million No fee is due

9 Fee calculation: 5 VLI units in lieu 100 unit development Full fee: 95 units x $20,000 = $1.9 million Credit: 5 VLI units x $200,000 = $1 million 95 market rate units 5 VLI units Fee due: $900,000

10 Interaction with the Density Bonus

11 Interaction with the Density Bonus In density bonus projects, the fee is the same for each market rate unit, whether in the base or in the bonus. Developers would not receive a credit against the fee for qualifying density bonus units affordable at 80% of area median. Developers who choose the in-lieu option are entitled to a density bonus.

12 Fee Calculations: With Density Bonus Example #1: No density bonus 100 unit development All units are market rate Fee is $2 million 100 units

13 Fee Calculations: With Density Bonus 20 bonus units 5 VLI units 100 unit base project Example #2: 5% VLI units for 20% bonus 100 unit base project 5 very low income units 20 bonus market rate units Fee for 115 units is $2.3M Credit for 5 units is $1M Fee due is $1.3M

14 Fee Calculations: With Density Bonus Example #3: 11% VLI units for 35% bonus 35 bonus units 11 VLI units 100 unit base project 100 unit base project 11 very low income units 35 bonus units Fee for 124 units is $2.48M Credit for 11 units is $2.2M Fee due is $280,000

15 Existing and Potential* Fees Location Use city downtown West Berkeley residential residential - comm. / light wide only only rental owned industrial Housing Impact Fee * Housing Mitigation Childcare Mitigation Inclusionary In- Lieu Fee Streets, Open Space & Trans Imp * Parking In-Lieu Fee * Open Space In- Lieu Fee * W. Berkeley Trans. Imp. *

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17 Fee Comparison Multifamily Housing Fee Comparison Current Fees With Affordable Housing Fee Berkeley $8,600 $28,600 Oakland $25,000 to $40,000 San Leandro $19,600 Hayw ard $32,460 Sources: City of Oakland Draft Housing Element, 2009; City of San Leandro Draft Housing Element, 2010; City of Hayw ard Draft Housing Element, 2010, City of Berkeley, 2010; BAE, 2010

18 Other housing impact fees Per Unit Fee Proposed Berkeley Fee $20,000 Napa County $1,738 San Carlos $18,554 Santa Monica $18,619 Santa Monica s fee is $26.79 per square foot. For comparison purposes, the fee in the table was calculated using the Berkeley average unit size of 695 sf in the BAE study.

19 Fee calculation: 5 VLI units in lieu Step #1: Calculating the full fee 95 market rate units at $20,000 = $1,900, market rate units 5 VLI units

20 Fee calculation: 5 VLI units in lieu Step #2a: Calculating credit for VLI units provided 95 market rate units create a need for 10% that number VLI units = need for 9.5 units 5 VLI units provided 95 market rate Project has already units satisfied 5 / 9.5 of the 5 VLI units need = 52.63%

21 Fee calculation: 5 VLI units in lieu Step #2b: Calculating credit for VLI units provided 52.63% of the full fee = 52.63% x $1,900,000 = $1,000, market rate units 5 VLI units

22 Fee calculation: 5 VLI units in lieu Step #3: Calculating fee due Full fee: $1,900,000 Less a credit for the units created: $1,000, market rate units 5 VLI units Fee due = $900,000