DATE: Aug. 1, 2017 TO: FROM: RE: Walnut Creek Mayor Rich Carlston and Councilmembers Justin Wedel, Cindy Silva, Loella Haskew and Kevin Wilk BIA Bay Area East Bay Governmental Affairs Executive Director Lisa Vorderbrueggen Proposed Affordable Housing Impact Fee and Traffic Impact Fee Dear Mayor Carlston and Councilmembers: BIA Bay Area is an organization whose more than 400 member companies are dedicated to developing, designing and producing residential homes for families of all incomes and sizes. We are proud to have members currently building much-needed new homes in Walnut Creek, a community widely known for its many positive attributes including a strong housing market. Ironically, it is the strong housing market that provides the financial environment under which the city s economic consultant concludes that it may collect and consider increasing the impact fees on new development. BIA and its representatives have consistently argued throughout your consideration of these fees that this is a shortsighted strategy that will, in the long run, discourage housing production, increase costs for what does get built and reduce overall supply, all of which will drive up housing prices and rents. (Please see attached article from the Sightline Institute, Yes, Red Tape and Fees Do Raise the Price of Housing, by Dan Bertolet, July 24, 2017.) Given our members significant past and future investment in Walnut Creek through the payment of impact fees, I respectfully make the following requests: 1. By law, traffic fees must be based on the actual impacts of the new development and our members fully support paying their fair share. What other cities charge or don t charge is irrelevant. We would ask that the City Council conduct a final review of the 52 projects on the expanded list adopted in October 2016 to confirm that each and every item and its associated cost is absolutely necessary. Mailing Address: 1350 Treat Blvd. Suite 140 Walnut Creek California 94597 Tel (925) 951-6840 Fax (925) 951-6847 www.biabayarea.org 2. BIA vehemently rejects the methodology used in the affordable housing impact fee nexus study, which purports to tie the demand for affordable units to the production of market-rate units. Burdening new development with what should be the entire community s responsibility will not solve the housing supply and affordability problem. But if the city uses this methodology, it is unfair to impose it solely on new homebuyers and renters. We ask that the city retain the current fee for residential development but if the city hikes the fee on residential, the city must also increase the commercial fee at a comparable level. -1-
3. BIA strongly supports the retention of the in-lieu fee option for developers of for-sale homes. Flexibility is important in today s complex development environment and affordable housing developers rely on impact fees as a key source of funding. 4. The financial forecasts and financing for the projects in Walnut Creek s development pipeline were likely performed many months ago but if fee increases are adopted tonight, the higher rates would go into effect in just 60 days. BIA would ask that any fee increases be delayed until Jan. 1, 2018, or phased in over six months (half on Nov. 1, 2017, and half on March 1, 2018) in order to allow for the developers sufficient time to financially adjust for the added costs. Missing from the staff report was a contextual discussion of how or if the city intends to change its inclusionary numbers, which could have a significant impact on whether or not developers will continue to build homes in Walnut Creek as the fees are tied to the percentages. I understand this issue will come before the City Council later this year. Also not included in the materials presented to you tonight is an explanation of how making it more expensive to produce housing in Walnut Creek will impact the families who want to buy or rent homes in this community. According to Zillow, the median home value in Walnut Creek back in December 2011 was $505,000. In June, that figure had grown to $845,900, a 67 percent increase in the last 5 ½ years. What does that increase actually mean for families? For every $1,000 increase in the price of a home, another 15,328 California households are priced out of the market, says the National Association of Home Builders. Just because the market will bear a fee doesn t mean it should be charged. Sincerely, Lisa A. Vorderbrueggen BIA Bay Area East Bay Governmental Affairs Executive Director Mailing Address: 1350 Treat Blvd. Suite 140 Walnut Creek California 94597 CC: Walnut Creek Interim City Manager Fran Robustelli Walnut Creek Housing Manager Margot Ernst Walnut Creek Economic Development Manager Ethan Bindernagel ATTACHMENT: Sightline Institute article by Dan Bertolet, Yes, Red Tape and Fees Do Raise the Price of Housing, dated July 24, 2017 Tel (925) 951-6840 Fax (925) 951-6847 www.biabayarea.org