Affordable Housing Impact Fee

City of BerkeleyMay 31, 2011

BackgroundBackground Palmer vs City of Los Angeles decision on inclusionary

rental housing in 2009g

Bay Area Economics draft Affordable Housing Impact Fee d i J 2010nexus study in June 2010

Final revised nexus study in January 2011 Final revised nexus study in January 2011

Criteria for draft ordinanceCriteria for draft ordinance Maximum supportable fee is $34,000

per unit in multifamily rental housingper unit in multifamily rental housing

Transparent and predictable for p pdevelopers

Efficient administration

Draft impact fee ordinanceDraft impact fee ordinance Proposed fee of $20,000 per rental

unitunit To apply to all multifamily rental

housing (2+ units) Includes an option to provide units

instead of paying the fee

Units in lieu optionUnits 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 p j , p jcredit.

If Developer provides less than 10% of market rate units affordable at 50% AMI, fee is reduced proportionally.

Fee Calculation Illustrations

Fee calculation: 100% market rateFee calculation: 100% market rate 100 unit development

All units are market rate

Fee is $2 million

100 units

Fee calculation: 10 VLI units in lieuFee calculation: 10 VLI units in lieu 100 unit development

Full fee: 90 units x $20,000 = $1.8 million$

Credit: 10 VLI units x $200,000 unit =$2 million90 market rate

units

No fee is due10 VLI units

units

10 VLI units

Fee calculation: 5 VLI units in lieuFee 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 k Fee due: $900,000

5 VLI units

95 market rate units

5 VLI units

Interaction with the Density Bonus

Interaction with the Density BonusInteraction 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.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 d i ba density bonus.

Fee Calculations: With Density BonusFee Calculations: With Density BonusExample #1: No density

bonusbonus

100 unit developmentp All units are market rate Fee is $2 million

100 units

Fee Calculations: With Density BonusFee Calculations: With Density BonusExample #2: 5% VLI units

for 20% bonusfor 20% bonus

100 unit base project20 bonus units

p j 5 very low income units 20 bonus market rate

5 VLI units

units Fee for 115 units is $2.3M Credit for 5 units is $1M Fee due is $1.3M100 unit base

projectproject

Fee Calculations: With Density BonusFee Calculations: With Density BonusExample #3: 11% VLI units

for 35% bonus

100 unit base project35 bonus units

11 very low income units 35 bonus units Fee for 124 units is

11 VLI units

Fee for 124 units is $2.48M

Credit for 11 units is $2.2M

Fee due is $280,000100 unit base projectproject

Existing and Potential* FeesExisting and Potential FeesLocation Use

city wide

downtown only

West Berkeley only

residential –rental

residential -owned

comm. / light industrialwide only only rental owned industrial

Housing Impact Fee * Housing M Mitigation Childcare Mitigation Inclusionary In- yLieu Fee Streets, Open Space & Trans Imp *

Parking In-Lieu Fee * Open Space In-Lieu Fee * W. Berkeley Trans. Imp. *

Fee ComparisonFee Comparison

Multifamily Housing Fee ComparisonMultifamily Housing Fee Comparison

With AffordableCurrent Fees Housing Fee

Berkeley $8,600 $28,600

Oakland $25,000 to $40,000San Leandro $19 600San Leandro $19,600Hayw ard $32,460

Sources:Cit f O kl d D f t H i El t 2009 Cit f S L dCity of Oakland Draf t Housing Element, 2009; City of San Leandro Draf t Housing Element, 2010; City of Hayw ard Draf t Housing Element, 2010, City of Berkeley, 2010; BAE, 2010

Other housing impact feesOther housing impact feesPer Unit Fee

Proposed Berkeley Fee $20,000

Napa County $1,738

San Carlos $18,554

Santa Monica $18 619Santa 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 studystudy.

Fee calculation: 5 VLI units in lieuFee calculation: 5 VLI units in lieuStep #1: Calculating the full

feefee

95 market rate units at $20,000 =$1,900,000

95 k

5 VLI units

95 market rate units

5 VLI units

Fee calculation: 5 VLI units in lieuFee calculation: 5 VLI units in lieuStep #2a: Calculating credit

for VLI units providedfor VLI units provided

95 market rate units create a need for 10% that number VLI units =

d f 9 5 ineed for 9.5 units 5 VLI units provided P j t h l d 95 k Project has already

satisfied 5 / 9.5 of the need = 52.63%5 VLI units

95 market rate units

5 VLI units

Fee calculation: 5 VLI units in lieuFee calculation: 5 VLI units in lieuStep #2b: Calculating credit

for VLI units providedfor VLI units provided

52.63% of the full fee =52.63% x $1,900,000 =$1,000,000

95 k

5 VLI units

95 market rate units

5 VLI units

Fee calculation: 5 VLI units in lieuFee calculation: 5 VLI units in lieuStep #3: Calculating fee due

Full fee: $1,900,000

Less a credit for the units created: $1,000,000

Fee due = $900,00095 k

5 VLI units

95 market rate units

5 VLI units