HomeMy WebLinkAbout*March 19, 2024 Special City Council Meeting PacketCOUNCILMEMBERS
Melissa Hernandez, Mayor
Dr. Sherry Hu, Vice Mayor
Jean Josey, Councilmember
Michael McCorriston, Councilmember
Kashef Qaadri, Councilmember
sKt
DUBLIN
CALIFORNIA
Special Meeting of the
DUBLIN CITY COUNCIL
Tuesday, March 19, 2024
Bray Community Room
(Regional Meeting Room)
Civic Center
100 Civic Plaza
Dublin, CA 94568
Location: Bray Community Room
(Regional Meeting Room)
100 Civic Plaza
Dublin, CA 94568
Notice is hereby given that a Special Meeting of the City of Dublin City Council will be held on
Tuesday, March 19, 2024 at 5:30 PM at Bray Community Room (Regional Meeting Room), Civic
Center, 100 Civic Plaza, Dublin.
1. CALL TO ORDER AND PLEDGE OF ALLEGIANCE
2. PUBLIC COMMENT
At this time, the public is permitted to address the City Council on non-agendized items.
Please step to the podium and clearly state your name for the record. COMMENTS
SHOULD NOT EXCEED THREE (3) MINUTES. In accordance with State Law, no action
or discussion may take place on any item not appearing on the posted agenda. The
Council may respond to statements made or questions asked, or may request Staff to
report back at a future meeting concerning the matter. Any member of the public may
contact the City Clerk's Office related to the proper procedure to place an item on a
future City Council agenda. The exceptions under which the City Council MAY discuss
and/or take action on items not appearing on the agenda are contained in Government
Code Section 54954.2(b)(1)(2)(3).
3. STUDY SESSION
3.1 Inclusionary Zoning and Affordable Housing In -Lieu Fee Study Session
On January 9, 2024, the City Council held a public hearing to consider amendments to
the Inclusionary Zoning Regulations and Affordable Housing In -Lieu Fee. At the
conclusion of that public hearing the City Council directed Staff to return at a future
meeting with additional information and analysis regarding increasing the inclusionary
zoning requirement to 15%; increasing the in -lieu fee; differentiating the affordable
housing requirements for different ownership product types; the impact of interest rate
fluctuations; and a projection of in -lieu fee revenue. The City Council will hold a Study
Session and receive a presentation with this information. No formal action will be taken
by the City Council at this Study Session.
March 19, 2024 Dublin City Council Special Meeting Agenda
1
STAFF RECOMMENDATION:
Receive a presentation and provide feedback and direction regarding amendments
to the Inclusionary Zoning Regulations and Affordable Housing In -Lieu Fee
program.
Staff Report
Attachment 1- Staff Report dated January 9, 2024 (without attachments)
3.1 PowerPoint Presentation
4. ADIOURNMENT
Upcoming City Council Schedule: Regular City Council Meeting, March 19, 2024
This AGENDA is posted in accordance with Government Code Section 54954.2(a)
If requested, pursuant to Government Code Section 54953.2, this agenda shall be made available in appropriate alternative formats to
persons with a disability, as required by Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Section 12132), and the
federal rules and regulations adopted in implementation thereof. To make a request for disability -related modification or accommodation,
please contact the City Clerk's Office (925) 833-6650 at least 72 hours in advance of the meeting.
AFFIDAVIT OF NOTICING AND POSTING:
I, Marsha Moore, City Clerk for the City of Dublin, declare that a copy of this agenda /
notice was posted in the kiosk in front of the Civic Center, on the City's website, and that
the City of Dublin City Councilmembers and the Media were provided notice on March 13,
2024.
AT EST:
Marsha Moore, MMC, City Clerk
March 19, 2024 Dublin City Council Special Meeting Agenda 2
2
r
DUBLIN
CALIFORNIA
STAFF REPORT
CITY COUNCIL
Agenda Item 3.1
DATE: March 19, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SU B.ECT: Inclusionary Zoning and Affordable Housing In -Lieu Fee Study Session
Prepared by: Jason Earl, Senior Management Analyst
EXECUTIVE SUMMARY:
On January 9, 2024, the City Council held a public hearing to consider amendments to the
Inclusionary Zoning Regulations and Affordable Housing In -Lieu Fee. At the conclusion of that
public hearing the City Council directed Staff to return at a future meeting with additional
information and analysis regarding increasing the inclusionary zoning requirement to 15%;
increasing the in -lieu fee; differentiating the affordable housing requirements for different
ownership product types; the impact of interest rate fluctuations; and a projection of in -lieu fee
revenue. The City Council will hold a Study Session and receive a presentation with this
information. No formal action will be taken by the City Council at this Study Session.
STAFF RECOMMENDATION:
Receive a presentation and provide feedback and direction regarding amendments to the
Inclusionary Zoning Regulations and Affordable Housing In -Lieu Fee program.
FINANCIAL IMPACT:
None.
DESCRIPTION:
Background
The City's Two -Year Strategic Plan includes Strategy 2: Housing Affordability, which incorporates
the following two Objectives:
• Objective 2B: Ensure the City's inclusionary zoning regulations incentivize targeted
housing production; and
• Objective 2C: Prepare a nexus study to evaluate the affordable housing commercial linkage
fee and affordable housing in -lieu fee for for -sale and rental housing.
Page 1 of 3
3
Staff and the City's consultant, Economic and Planning Systems (EPS), prepared an Affordable
Housing In -Lieu Fee Feasibility Study and a Commercial Linkage Fee Nexus Study. As directed by
the City Council, these studies analyzed and assessed the targeted housing production and fees,
and provided a housing market analysis to ensure that Dublin remains competitive for both
housing and commercial development, while ensuring the availability of affordable housing.
The City Council received an informational report on these efforts on August 15, 2023, and
provided feedback and direction regarding updates to these programs. On September 19, 2023,
the City Council received another informational report and directed Staff to prepare updates to the
Inclusionary Zoning Regulations, Affordable Housing In -Lieu Fee, and Non -Residential
Development Affordable Housing Impact Fee which is also referred to as a "Commercial Linkage
Fee".
The City Council's direction included amendments which prioritize the collection of fees that can
be leveraged to facilitate the production of lower income units to satisfy the City's Regional
Housing Needs Allocation (RHNA) while providing on -site units where feasible. Staff prepared
amendments to these programs that align with the priorities set by the City Council.
On December 12, 2023, the Planning Commission held a public hearing and unanimously
recommended approval of the proposed amendments to the Inclusionary Zoning Regulations and
Affordable Housing In -Lieu Fee. On January 9, 2024, the City Council held a public hearing to
consider the proposed amendments to the Inclusionary Zoning Regulations, Affordable Housing
In -Lieu Fee, and Non -Residential Development Affordable Housing Impact Fee (Attachment 1). At
the conclusion of the public hearing the City Council directed Staff to return at a future meeting
with additional information and analysis regarding the Inclusionary Zoning Regulations and
Affordable Housing In -Lieu Fee.
At this Study Session, the City Council will receive a presentation by Staff and EPS addressing the
following information as requested by the City Council:
• Evaluate increasing the inclusionary zoning requirement to 15%.
• Evaluate further increasing the proposed Affordable Housing In -Lieu Fee.
• Present options to differentiate the affordable housing requirements and in -lieu fee for the
different ownership product types (i.e., condominiums, townhomes, and single-family homes).
• Demonstrate how interest rate fluctuations impact the inclusionary zoning and in -lieu fee
recommendations.
• Provide a projection of the Affordable Housing In -Lieu Fee revenue.
Page 2 of 3
4
STRATEGIC PLAN INITIATIVE:
Strategy 2: Housing Affordability
Objective 2B: Ensure the City's inclusionary zoning regulations incentivize targeted housing
production.
Objective 2C: Prepare a nexus study to evaluate the affordable housing commercial linkage fee and
affordable housing in -lieu fee for for -sale and rental housing.
ENVIRONMENTAL REVIEW:
The City Council is holding a Study Session on the Inclusionary Zoning Regulations and Affordable
Housing In -Lieu Fee, and no formal action will be taken at this time. The Study Session is not
subject to the requirements of the California Environmental Quality Act (CEQA) as it does not have
the potential to result in a direct physical change in the environment or a reasonably foreseeable
indirect change in the environment and, thus, does not meet the definition of a project under CEQA
Guidelines Section 15378.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
A public notice is not required for the City Council to hold a Study Session. The City Council
Agenda was posted.
ATTACHMENTS:
1) City Council Staff Report dated January 9, 2024 (without attachments)
Page 3 of 3
5
Attachment I
r
%t STAFF REPORT
DUBLIN CITY COUNCIL
CALIFORNIA
DATE: January 9, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
Agenda Item 6.1
SUBJECT: Amendment to the Dublin Municipal Code Inclusionary Zoning
Regulations (Chapter 8.68), Adopting a Methodology for Determining
Affordable Housing In -Lieu Fees and Adopting Non -Residential
Development Affordable Housing Impact Fees (PLPA-2023-00032)
Prepared by: Jason Earl, Senior Management Analyst
EXECUTIVE SUMMARY:
The City Council's Two -Year Strategic Plan includes a review of the Inclusionary Zoning
Regulations (Dublin Municipal Code Chapter 8.68), Affordable Housing In -Lieu Fee, and Non -
Residential Development Affordable Housing Impact Fee (aka "Commercial Linkage Fee").
Staff and the City's consultant, Economic and Planning Systems, prepared an Affordable
Housing In -Lieu Fee Feasibility Study and a Commercial Linkage Fee Nexus Study to address
the Strategic Plan objectives. The City Council received informational reports on August 15,
2023, and September 19, 2023, and directed Staff to prepare amendments to the Inclusionary
Zoning Regulations, Affordable Housing In -Lieu Fee, and Non -Residential Development
Affordable Housing Impact Fee programs to ensure they align with the economics of
developing affordable housing and the City Council's priorities. Staff has prepared the
updates to these programs. The City Council will hold a Public Hearing to consider adopting
the amendments to these programs.
STAFF RECOMMENDATION:
Conduct the public hearing, deliberate, and take the following actions: 1) waive the reading
and INTRODUCE the Ordinance Approving Amendments to Dublin Municipal Code Chapter
8.68 (Inclusionary Zoning Regulations); 2) Adopt the Resolution Establishing the Methodology
for Determining the Affordable Housing In -Lieu Fee for Future Residential Units Subject to
the City of Dublin Inclusionary Zoning Regulations; and 3) Adopt the Resolution Approving
the Non -Residential Development Affordable Housing Impact Fees.
Page 1 of 5
6
Attachment I
FINANCIAL IMPACT:
The Affordable Housing In -Lieu Fee is proposed to be amended to align with the economics of
developing affordable housing. This will generate additional funding for the Affordable
Housing Fund. The proposed amendments to the Non -Residential Affordable Housing Impact
Fee program will combine the Research & Development and Office uses into a single fee and
ensure that the impact fee program does not overburden the economic development
priorities set by the City Council.
DESCRIPTION:
Background
The City of Dublin Two -Year Strategic Plan includes Strategy 2: Housing Affordability, which
includes the following two objectives:
• Objective 2b: Ensure the City's inclusionary zoning regulations incentivize targeted housing
production; and
• Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage
fee and affordable housing in -lieu fee for for -sale and rental housing.
The consulting firm Economic and Planning Systems (EPS) was selected through a
competitive process to assist Staff with addressing these Strategic Plan Objectives. Staff
and EPS prepared an analysis of the development economics, reviewed industry best
practices, reviewed inclusionary regulations in the surrounding Tri-Valley cities, and
evaluated the nexus between non-residential development and the need it generates for
affordable housing to formulate recommendations to the City Council. This culminated
in the Affordable Housing In -Lieu Fee Feasibility Study and the Commercial Linkage Fee
Nexus Study which are included as Attachments 3 and 5.
On August 15, 2023, the City Council received an informational report on these efforts
(Attachment 7). The City Council provided initial feedback and direction regarding updates to
these programs. On September 19, 2023, the City Council received another informational
report (Attachment 8) and directed Staff to prepare the following updates to the Inclusionary
Zoning Regulations, Affordable Housing In -Lieu Fee, and Non -Residential Development
Affordable Housing Impact Fee which is also referred to as a "Commercial Linkage Fee".
• Lower the Inclusionary Zoning Regulations applicability threshold to projects of 10+
units; and
• Assess in -lieu fees on a per -square -foot basis for each market -rate unit; and
• Establish separate regulations for ownership and rental developments; and
• Retain the existing Commercial Linkage Fee amount with an annual inflationary index;
and
Page 2 of 5
7
Attachment I
• Combine the Research & Development and Office use categories and set the fee at
$1.39 per square foot, which is the average of the current fee for those two use
categories.
Staff has prepared the amendments to these programs for consideration by the City Council.
The Ordinance adopting amendments to the Inclusionary Zoning Regulations is included as
Attachment 1, the Resolution approving the methodology for determining the Affordable
Housing In -Lieu Fee is included as Attachment 2, and the Resolution approving the Non -
Residential Development Affordable Housing Impact Fee is included as Attachment 4.
Analysis
The following is an overview of the proposed amendments to the Inclusionary Zoning
Regulations, Affordable Housing In -Lieu Fee, and the Non-residential Development
Affordable Housing Impact Fee. The proposed amendments align the economics of
developing affordable housing and the efforts of the City Council to prioritize the collection of
fees that can be leveraged to facilitate the production of lower income units to satisfy the
City's Regional Housing Need Allocation (RHNA) while providing on -site units.
Inclusionary Zoning Requirements
The proposed amendments to the Inclusionary Zoning Regulations (IZR) in the Dublin
Municipal Code (Chapter 8.68) create separate regulations for ownership and rental
developments. The threshold for projects subject to the IZR would be reduced from 20 units to
10 units. The proposed allocation of affordable ownership units remains unchanged.
However, the allocation of affordable rental units is proposed to focus on low-income
households. Table 1 summarizes these proposed regulations.
Table 1. Ownership and Rental Policy Recommendations
Project
Size
Threshold
Overall
Affordability
Requirement
Very
Low
Low
Moderate
Ownership
Rental
10 Units
10 Units
12.5%
10%
0%
0%
40%
100%
60%
0%
The IZR (Section 8.68.020.E) requires resale controls to ensure that affordable ownership
units remain affordable for a total of 55 years. Staff proposes to amend the regulations to reset
the 55-year period with each transfer of ownership of future for sale units created through the
inclusionary program.
The implementation procedures for the IZR include selection criteria that provide for the use
of preference points by the developer upon the initial sale of units (Section 8.68.050.D). Staff
is proposing to amend this section to require the use of preference points with the resale of
ownership units.
Page 3 of 5
8
Attachment I
The draft Ordinance approving the amendments to the Inclusionary Zoning Regulations is
included as Attachment 1. Please refer to Attachment 6 for the proposed amendments in
redline format where underlined text is proposed to be added and text with a strikcthrough is
proposed to be deleted.
Affordable Housing In -Lieu Fee
The proposed Affordable Housing In -Lieu Fee would be assessed on a per -square -foot basis
for each market -rate unit produced. The proposed fee is based on the Affordable Housing In -
Lieu Fee Feasibility Study and rounded to the nearest dollar. This fee is reflective of the cost
to produce affordable ownership and rental units. The proposed fee would be set at $9/square
foot and adjusted annually based on an inflationary index. The proposed fee is equivalent to
approximately $400,000 per affordable ownership unit and $237,000 per rental unit. The
Resolution to approve the proposed Affordable Housing In -Lieu Fee is included as
Attachment 2.
Non -Residential Development Affordable Housing Impact Fee
The DMC (Chapter 7.86) established the authority for the City to impose a Non -Residential
Development Affordable Housing Impact Fee, also known as a "Commercial Linkage Fee".
This fee is based on a nexus between non-residential development and the need it generates
for affordable housing. The fee was first adopted by the City Council in 2005 (Resolution 70-
05) and is adjusted annually based on an inflationary index. The amount was set to ensure that
it does not overburden the economic development priorities set by the City Council. New non-
residential development is assessed this fee on a per -square -foot basis at the time a building
permit is issued.
On September 19, 2023, the City Council directed Staff to retain the existing fee structure with
an inflationary index but combine Research & Development and Office uses into a single
category and set the fee at $1.39 per square foot. Additionally, the names of the land use
categories have been updated to be consistent with the Nexus Study and current industry
terminology. The remainder of the program is unchanged. The Resolution adopting the Non -
Residential Development Affordable Housing Impact Fee is included as Attachment 4.
ENVIRONMENTAL DETERMINATION:
The California Environmental Quality Act (CEQA), together with State Guidelines and City of
Dublin CEQA Guidelines and Procedures require that certain projects be reviewed for
environmental impacts and that environmental documents be prepared. The proposed
Zoning Ordinance Amendments are exempt from the requirements of CEQA pursuant to
CEQA Guidelines Section 15061(b)(3) as the amendments would not result in any physical
changes and it can be seen with certainty that the amendments would not have a significant
effect on the environment.
Page 4 of 5
9
Attachment I
PLANNING COMMISSION REVIEW:
On December 12, 2023, the Planning Commission held a public hearing to consider the
proposed amendments to the Inclusionary Zoning Regulations and make a recommendation
to the City Council. Following the public hearing, the Planning Commission unanimously
adopted Resolution No. 23-12 (Attachment 9), recommending the City Council approve the
proposed amendments. The Planning Commission further recommended periodic review of
the Inclusionary Zoning Regulations.
STRATEGIC PLAN INITIATIVE:
Strategy 2: Housing Affordability
Objective 2b: Ensure the City's inclusionary zoning regulations incentivize targeted housing
production.
Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage fee
and affordable housing in -lieu fee for for -sale and rental housing.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
In accordance with State law, a public notice was published in the East Bay Times ten days
prior to the hearing and again five days prior to the hearing, posted at several locations
throughout the City, and sent to interested parties notifying the community of the City
Council's consideration of the proposed amendments to the Inclusionary Zoning Regulations,
Affordable Housing In -Lieu Fee, and the Non -Residential Development Affordable Housing
Impact Fee. The City Council Agenda was posted.
ATTACHMENTS:
1) Ordinance Approving Amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary
Zoning Regulations)
2) Resolution Establishing the Methodology for Determining the Affordable Housing In -Lieu
Fee for Future Residential Units Subject to the City of Dublin Inclusionary Zoning
Regulations
3) Exhibit A to the Resolution - Inclusionary Housing Feasibility Report dated December 7,
2023
4) Resolution Approving the Non -Residential Development Affordable Housing Impact Fees
5) Exhibit A to the Resolution - Commercial Linkage Fee Nexus Study dated October 27, 2023
6) Redlined Version of Amendment to Inclusionary Zoning Regulations
7) City Council Staff Report dated August 15, 2023
8) City Council Staff Report dated September 19, 2023
9) Planning Commission Resolution 23-12 Recommending City Council Approval of
Amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations)
Page 5 of 5
10
0
UPDATED INCLUSIONARY
ZONING SCENARIOS
Dublin City Council Study
Session
March 19, 2024
Economic & Planning Systems, Inc. 1330 Broadway, Suite 450 ■ Oakland, CA 94612
The Economics of Land Use 510.841.9190 ■ www.epsys.com
11
IBACKGROUND
■ Strategic Plan Strategy 2: Housing Affordability
■ August 1 5, 2023, & September 19, 2023
— Information Report and Recommendations:
■ December 12, 2023
— Planning Commission held a public hearing and
recommended approval of the proposed amendments
■ January 9, 2024
— City Council directed staff to return at a future meeting
with additional information
Economic & Planning Systems
EPS PPT Presentation 1 12
IPRIOR CITY COUNCIL DIRECTION
■ Prioritize the collection of Affordable Housing In -Lieu Fees
■ Lower the Inclusionary Zoning Regulations applicability
threshold to projects of 10+ units;
■ Assess in -lieu fees of $9 per square foot for each market -
rate unit;
■ Establish separate regulations for ownership and rental
developments;
Project Size
Threshold
Overall
Affordability
Requirement
Income
Targets
Ver Low
Income
Targets
Low
Income
Targets
Moderate
Must Build
Requirement
Ownership
Rental
10+ Units
10+ Units
12.5%
10%
0%
40%
60%
0%
100%
0%
60% of IZR
60% of IZR
Economic & Planning Systems
EPS PPT Presentation 1 2 13
WHAT WE TESTED
Questions
■ Can we increase the inclusionary requirement on ownership housing
to 1 5%?
■ Can we raise the in -lieu fee?
■ Would lower interest rates allow City to consider higher inclusionary
requirement or higher in -lieu fees?
■ Projection of units and revenue
Tested Illustrative 100-unit Development
Threshold Profit/Return Requirements:
4 tke
1 5% profit for
ownership product
Economic & Planning Systems
5.5% yield -on -cost
for rental product
EPS PPT Presentation I 3 14
REASONS PROJECT DEVELOPMENT ECONOMICS VARY
• It's not ideal to push too close to the feasibility threshold, because
project economics vary widely, and the inclusionary requirements
should work for most (if not all) new development
— Timing and cost of land acquisition
— Length and complexity of entitlement process
— Changes in costs of labor and materials
— Availability of materials and supply chain challenges
— Availability of capital and interest rate environments
— Other new construction and competitive supply
— Market prices and rents
— Developer/investor return requirements
— Etc.
Economic & Planning Systems
EPS PPT Presentation 4 15
ICURRENT PROGRAM
Overall inclusionary requir
• Overall requirement is 12.5% affordable
- Option 1 : Build full requirement on -site
— Option 2: Must build 60% and pay in -lieu fee of $241,1 31 per affordable unit on
remaining 40%
Option Metric
Rental Ownership
Apartment Condominium SF Detached
Townhome
Option
1: Build Built
Only
Affordable Units
Cost/Value of
12
$2,330,823
12
$5,876,104
Requirement ($21.19/sq. ft.) ($39.17/sq. ft.)
Feasibility
marginal
12
12
$7,493,752 $5,797,149
($31.22/sq. ft.) ($28.99/sq. ft.)
no
yes yes
Option Affordable Units 7 7 7 7
2: Must Built
Build +
Fee Equiv. Fee per
Market Rate Sq. Ft. $11.79 $8.64 $5.40 $6.48
City Fee Revenue $1,205,655 $1,205,655 $1,205,655 $1,205,655
Cost/Value of $2,385,222 $4,652,349 $5,599,769 $4,608,400
Requirement ($21.68/sq.ft.) ($31.02/sq. ft.) ($23.33/sq. ft.) ($23.04/sq. ft.)
Feasibility
marginal
yes yes
yes
1111
Economic & Planning Systems
EPS PPT Presentation I 5 16
IJANUARY 2024 RECOMMENDATION
• Overall requirement of 125%affordable for Owm
■ Overall requirement of 12.5% affordable for Ownership (SF Detached,
Townhomes, and Condos) and 10% affordable for Rental
Option 1: Build full requirement on -site
Option 2: Must build 60% and pay in -lieu fee of $9 per market -rate sq. ft. on
remaining 40%
Option Metric
Rental
Apartment Condominium
Ownership
SF Detached
Townhome
Option
1: Build Built
Only
Option
2: Must
Build +
Fee
Affordable Units
Cost/Value of
Requirement
Feasibility
Affordable Units
Built
Fee per Market Rate
Sq. Ft.
City Fee Revenue
Cost/Value of
Requirement
Feasibility
10
12
$2,369,153 $5,876,104
($21.54/sq. ft.) ($39.17/sq. ft.)
marginal
6
$9.00
$930,600
$2,352,092
($21.38/sq. ft.)
marginal
12
12
$7,493,752 $5,797,149
($31.22/sq. ft.) ($28.99/sq. ft.)
no
yes
yes
7
$9.00
$1,255,500
$4,702,194
($31.35/sq. ft.)
7
$9.00
$2,008,800
$6,402,914
($26.68/sq. ft.)
yes yes
7
$9.00
$1,674,000
$5,076,745
($25.38/sq. ft.)
Economic & Planning Systems
EPS PPT Presentation 1 6 1 7
I HIGHER INCLUSIONARY PERCENTAGE
a a
• Overall requirement of 12.5% and 1 5% affordable for Ownership
— Option 1: Build full requirement on -site, tested at 12.5% and 1 5%
Option
Metric Condominium
Ownership
SF Detached Townhome
Option 1:
Build Only
@ 12.5%
Option 1:
Build Only
@ 15%
Affordable Units Built
Cost/Value of
Requirement
Feasibility
Affordable Units Built
Cost/Value of
Requirement
Feasibility
12
$5,876,104
($39.17/sq. ft.)
12
$7,493,752
($31.22/sq. ft.)
12
$5,797,149
($28.99/sq. ft.)
no
yes
yes
15 15
$7,288,230 $9,298,915
($48.59/sq.ft.) ($38.75/sq. ft.)
15
$7,183,212
($35.92/sq. ft)
no
yes
yes
Economic & Planning Systems
EPS PPT Presentation I 7 18
HIGHER IN -LIEU FEE
■ Overall requirement of 1 5% affordable for Ownership
- Option 2: Must build 60% and pay in -lieu fee of $9, $12, or $15 per market -rate sq. ft. on remaining 40%
Option Metric
Condominium
Ownership
SF Detached
Townhome
Option 2:
Must Build +
Fee @ $9
Option 2:
Must Build +
Fee @ $12
Option 2:
Must Build +
Fee @ $15
Affordable Units Built
Fee per Market Rate Sq. Ft.
City Fee Revenue
Cost/Value of Requirement
Feasibility
Affordable Units Built
Fee per Market Rate Sq. Ft.
City Fee Revenue
Cost/Value of Requirement
Feasibility
Affordable Units Built
Fee per Market Rate Sq. Ft.
City Fee Revenue
Cost/Value of Requirement
Feasibility
9
$9.00
$1,228,500
$8,516,730
($56.78/sq. ft.)
9
$9.00
$1,965,600
$7,654,189
($31.89/sq. ft.)
9
$9.00
$1,638,000
$6,049,087
($30.25/sq. ft.)
no
yes yes
9 9 9
$12.00 $12.00 $12.00
$1,638,000 $2,620,800 $2,184,000
$8,926,230 $8,309,389 $6,595,087
($59.51/sq. ft.) ($34.62/sq. ft.) ($32.98/sq. ft.)
no
yes yes
9 9 9
$15.00 $15.00 $15.00
$2,047,000 $3,276,000 $2,730,000
$9,335,730 $8,964,589 $7,141,087
($62.24/sq. ft.) ($37.35/sq. ft.) ($35.71/sq. ft.)
4•11=
yes yes
19
IFEE SURVEY OF LOCAL JURISDICTIONS
SINGLE FAMILY DETACHED (OWNERSHIP)
SINGLE FAMILY DETACHED (OWNERSHIP)
City
Overall
Inclusionary Project Size
Requirement Income Targets Threshold
In -Lieu Fee
Last
Ordinance
Update
Dublin 12.5% 60% Moderate 20 units $241,131 per inclusionary unit 2002
40% Low
Fremont 15% 66% Low All units $44.00 per sq. ft. 2021
33% Moderate
Concord 15% 50% Moderate 5 units $20.00 per sq. ft. [1]
50% Low
2024
San Ramon 10% Moderate 10 units $15.70 per sq. ft. 2019
Hayward 10% Moderate 2 units $23.46 per sq. ft. 2018
Walnut Creek
10% Moderate All units $21.86 per sq. ft. 2017
7% Low
6% Very Low
Livermore 15% 50% Moderate
50% Low
11 units
$39.94 per sq. ft. (under 11
units)
11+ units must build
2015
Danville 10% Moderate 10 units market gap calculation 2014
Pleasanton 20% Moderate 15 units $50,480 per dwelling unit
Low
Very Low
2000 [2]
[1] In -lieu fee option applies to Ownership projects between 5 and 9 units.
[2] Pleasanton's inclusionary zoning was first adopted in 2000 and the fee level was last revised in 2018.
Economic & Planning Systems
EPS PPT Presentation 9 20
IFEE SURVEY OF LOCAL JURISDICTIONS
MULTIFAMILY (RENTAL)
MULTIFAMILY (RENTAL)
City
Overall
Inclusionary Project Size
Requirement Income Targets Threshold
In -Lieu Fee
Last
Ordinance
Update
Dublin 12.5% 50% Moderate 20 units $241,131 per inclusionary unit 2002
20% Low
30% Very Low
Fremont 10% Low All units $17.50 per sq. ft. 2021
Concord 6% 4% Moderate
1% Low
1 % Very Low
5 units
$15 per sq. ft. 2024
San Ramon 15% 50% Low 5 units $14.63 per sq. ft. (under 10
50% Very Low units)
10+ units must build
2019
Hayward 6% 50% Low
50% Very Low
2 units
$23.46 per sq. ft. 2018
Walnut Creek 10% Low All units $21.86 per sq. ft. 2017
6% Very Low
Livermore 15% 50% Low
50% Very Low
11 units
In -lieu fee N/A; must build 2015
Danville 15% Moderate 10 units market gap calculation 2014
Pleasanton 15% Low
Very Low
10 units
$50,480 per dwelling unit 2000*
Pleasanton's inclusionary zoning was first adopted in 2000 and the fee level was last revised in 2018.
Economic & Planning Systems
EPS PPT Presentation 10 21
I ALIGN CONDOS WITH APARTMENTS
ff f
10%a affordable for multifamily: rental apartments
• 10% affordable multifamily: rental apartments and condominiums
Option 1: Build full requirement on -site
Option 2: Must build 60% and pay in -lieu fee of $9 per market -rate sq. ft. on
remaining 40%
Multifamily
Option Metric Apartment Condominium
Option 1: Build Only
@ 10%
Affordable Units Built
Cost/Value of Requirement
Feasibility
10
$2,369,153
($21.54/sq. ft.)
marginal
10
$6,224,420
($41.50/sq. ft.)
no
Option 2: Must Build
+ Fee @ $9.00 Affordable Units Built 6 6
Fee per Market Rate Sq. Ft. $9.00 $9.00
City Fee Revenue $930,600 $1,269,000
Cost/Value of Requirement $2,352,092 $5,003,652
($21.38/sq. ft.) ($33.36/sq. ft.)
Feasibility
marginal
yes
Economic & Planning Systems
EPS PPT Presentation I 11 22
ITESTING CONDOMINIUMS
WHAT IF WE ALIGN CONDOS WITH APARTMENTS?
I F WE ALIGN CONDOS WITH APARTMENTS?
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Current
Feasibility Scenarios for Condominiums
•
.
•
Prior 15% on Ownership 10% on Multifamily 10% on Multifamily
Recommendation + $12 fee + $9 fee (split low and mod)
12.5% + $9 fee + $9 fee
■Build Only ■Must Build + Fee
Economic & Planning Systems
EPS PPT Presentation 1 12 23
IFEASIBILITY OUTCOMES
"VALUE"OF THE INCLUSIONARY REQUIREMENT OF THE INCLUSIONARY REQUIREMENT IS PROVIDED
Rental
Scenario Option Apartment
Ownership
Condominium
SF Detached
Townhome
Current
• Rental and Ownership,
12.5%
• $241,131 fee per affordable
unit
January
Recommendation
• Rental, 10% and $9 fee
• Ownership, 12.5% and $9
fee
Test:
• 15%+$9fee
(test on Ownership only)
Build Only
Must -Build + Fee
Build Only
Must -Build + Fee
Build Only
Must -Build + Fee
$2,330,823
$2,385,222
$2,369,153
$2,352,092
$5,876,104
$7,493,752 $5,797,149
$4,652,349 $5,599,769 $4,608,400
$5,876,104
$7,493,752 $5,797,149
$4,702,194 $6,402,914 $5,076,745
$7,288,230
$8,516,730
$9,298,915 $7,183,212
$7,654,189 $6,049,087
Multifamily I Ownership
Scenario Option Apartment Condominium SF Detached Townhome
Test:
• 10% on Multifamily
+ $9 fee
• 15% on SF and TH
+ $12 fee
Test:
• 10% on Multifamily
+ $9 fee
• 15%on SF andTH+
$15 fee
Build Only
Must -Build + Fee
Build Only
Must -Build + Fee
$2,369,153
$2,352,092
$2,369,153
$2,352,092
$6,224,420
$9,298,915 $7,183,212
$5,003,652 $8,309,389 $6,595,087
$6,224,420
$9,298,915 $7,183,212
$5,003,652 $8,964,589
$7,141,087
24
I INTEREST RATES
s c
ILLUSTRATIVE IMPACT
ILLUSTRATIVE IMPACT OF LOWER INTEREST RATES ON FINANCING COSTS
5.60%
5.55%
5.50%
5.45%
5.40%
5.35%
5.30%
5.25%
5.20%
5.15%
5.10%
5.05%
5.00%
5.31%
5.36%
1000/0 Onsite Build
Recommended Inclusionary
■ Interest Rate at 7%
Economic & Planning Systems
5.33%
5.38%
60% Onsite Build
Recommended Fee
■Interest Rate at 4%
■ Current interest rates are
higher than in recent
past
■ Chart at left shows
feasibility of a
multifamily rental
development at the
recommended 10% Low
inclusionary level with
$9/sq. ft. fee.
■ A lower interest rate can
reduce development
costs, leading to
improvements in
feasibility, but does not
significantly alter the
development economics
of the project.
EPS PPT Presentation 1 14 25
IESTIMATED INCLUSIONARY FEE REVENUE
Approximate #
Product Type of Units
For Sale Units
IZO - 12.5% 474
Condos & Rental Units
IZO - 10% 2,722
Totals 3,196
Current In -Lieu
fee of $241,131
Proposed
In -Lieu $9/s.f.
In -Lieu Alternative 1
For Sale: $12/s.f.
Rental: $9/s.f.
In -Lieu Alternative 2
For Sale: $15/s.f.
Rental: $9/s.f.
$5,787,144
$9,521,712
$12,695,616
$15,869,520
$32,793,816
$25,330,932
$25,330,932
$25,330,932
$38,580,960
$34,852,644
$38,026,548
$41,200,452
Assumes 1,100 square foot rental units and 2,400 square foot for -sale units.
Economic & Planning Systems
EPS PPT Presentation 1 15 26
DISCUSSION AND DIRECTION
Questions
1. Should the City's policy continue to prioritize the collection of
Affordable Housing In -Lieu Fees?
2. How should condominiums be treated?
— Like single-family and townhomes
— Like apartments
— Their own category
3. Should the inclusionary requirement on for -sale units remain at
1 2.5% as proposed?
— If not, what percentage should be required?
4. Should the affordable housing in -lieu fee be set at $9 per square
foot as proposed?
— If not, what amount should be required?
Economic & Planning Systems
EPS PPT Presentation I 16 27