HomeMy WebLinkAboutReso 70-05 Afford House Impact Fee
RESOLUTION NO. 70 -05
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
****fII.****
ADOPTING A NONRESIDENTIAL DEVEWPMENT
AFFORDABLE HOUSING IMPACT FEE
FOR FUTURE DEVELOPMENT IN THE CITY OF DUBLIN
RECITALS
WHEREAS, the City Council has adopted Dublin Municipal Code Chapter 7.86 creating and
establishing the authority for imposing and charging a Nonresidential Development Affordable Housing
Impact Fee ("Fee") to mitigate the impacts of nonresidential development on the affordability of housing
within the jurisdictional limits of the City of Dublin; and
WHEREAS. on October 2,2001, the City Council adopted Resolution No. 173-01 to authorize a
fee to mitigate the impacts of nonresidential development on the affordability of housing in the City of
Dublin (the "Fee"); and
WHEREAS, in August, 2001 the City undertook a study to prepare a report on nonresidential
development as linked to increased demand for affordable housing. The report, entitled City of Dublin
Nonresidential Development Affordable Housing Impact Fee Study, has been updated by City Staff as of
March 25, 2005 and is attached herein as Exhibit A. ("Report"). The City relies upon and incorporates
the Report; and
WHEREAS, the Report was available for public inspection and review for ten days prior to this
public hearing; and
WHEREAS, in accordance with the Government Code, at least fourteen (14) days prior to the
public hearing at which this resolution was adopted, notice of the time and place of the hearing was
mailed to eligible interested parties who filed written requests with the City for mailed notice of meetings
on new or increased fees or service charges; and
WHEREAS, the City of Dublin Nonresidential Development Affordable Housing Impact Fee
Ordinance (Chapter 7.86 of the Municipal Code) ("the Ordinance") provides as follows:
1. That a nonresidential development affordable housing fee ("fee") is established to pay for
housing affordable to households of very low, low and moderate income housing ("affordable housing").
(Section 7.86.020.)
2. That the City Council shall, in a Council resolution adopted after a duly noticed public
hearing, ITom time to time set forth the amount of the fee, identify the purpose of the fee and the use to
which the fee is to be put, and, detennine how there is a reasonable relationship between the fee's use and
the need for affordable housing and detennine how there is a reasonable relationship between the amount
of the fee and the cost of the affordable housing. (Section 7.86.020.)
3. That the revenues raised by payment of the nonresidential development affordable housing
impact fee shall be accounted for in the City's Affordable Housing Fund. Separate and special accounts
within the fund shall be used to account for revenues, along with any interest earnings on such account.
These monies shall be used solely to increase the supply of housing affordable to households of very low,
low and moderate income. (Section 7.86.030.).
FINDINGS
WHEREAS, The City Council finds as follows:
A Persons of very low, low and moderate income are experiencing increasing difficulty in locating and
maintaining adequate, safe and sanitary affordable housing within the City of Dublin. As noted in the
City's Report, a regional shortage of affordable housing and projected job growth will contribute to an
increased need for affordable housing accommodations. According to the Report projections, the City of
Dublin needs to provide housing affordable to persons of very low, low and moderate income who are
expected to become residents of the City due to the significant gains anticipated in job and population
growth; and
B. Development of new nonresidential projects encourages new residents to move to the City. Some of the
employees needed to meet the needs of new nonresidential development earn incomes only adequate to
pay for affordable housing. Because affordable housing is in short supply within the City, these
employees now may fuœ a lack of choice in where they may live within the City, pay a disproportionate
share of their incomes to live in adequate housing within the City, or commute ever-increasing distances
to their jobs fÌ'om housing located outside the City. These circumstances hann the City's ability to attain
goals articulated in the City's Affordable Housing Implementation Plan, Specific Plans and General
Plan's Housing Element; and
C. Prices and rents for affordable housing remain below the level needed to attract adequate new
construction. At the same time, escalating land costs and rapidly diminishing amounts ofland available
for development hinder the provision of affordable dwelling units solely through private action. The
City's Inclusionary Zoning Ordinance is not sufficient by itself to satisfy the affordable housing needs;
and
D. The Report documents the linkage between projected job growth, and the resulting nonresidential
development and the employees, employee households, and the housing demands of these households
resulting fi-om the projected job growth New housing affordable to persons identified in the Report is
not now being added to the supply in sufficient quantity to meet the needs of the new employee
households associated with projected job growth and resulting nonresidential development. The Report
also identifies the gap between the City's affordable housing goals and the anticipated revenue generated
by the Inclusionary Zoning Ordinance that needs to be filled to meet the needs for affordable housing
for the additional workers. The City is imposing the Fee established by the Ordinance in order to
partially close this gap by using the Fee to provide for increased affordable housing; and
E. In adopting the Fee, the Council is exercising its powers under Section 7 of Article XI of the
California Constitution; and
F. The record establishes:
1. The purpose of the Fee is to implement the goals and objectives of the Housing Element of
the City's General Plan by mitigating the impacts offuture nonresidential development; and
2. The Fee collected pursuant to this resolution shall be used to increase and maintain the
supply of housing affordable to households of very low, low and moderate income; and
3. There is a reasonable relationship between the need for affordable housing and the impacts
of the types of development for which the corresponding Fee is charged in that new
nonresidential development in the City of Dublin will result in additional persons who
work in Dublin who generate or contribute to the need for affordable housing; and
4. There is a reasonable relationship between the Fee's use and the impacts of nonresidential
development as development of new nonresidential projects encourages new residents to
move to the City who are not able to afford market rate housing; and
5. There is a reasonable relationship between the amount of the Fee and the cost of the
affordable housing or portion thereof attributable to nonresidential development in the City
of Dublin in that the Fee is calculated based on the number of residents or employees
generated by specific types ofland uses, the total amount it will cost to construct the
affordable housing, and the percentage by which nonresidential development within the
City of Dublin contributes to the need for the affordable housing; and
6. That the cost estimates set forth in the Report are reasonable cost estimates for constructing
the affordable housing, and the Fees expected to be generated by future nonresidential
development will not exceed the projected costs of constructing the affordable housing;
and
7. The method of allocation of the Fee to a particular nonresidential development bears a fair
and reasonable relationship to, and is roughly proportional to, each development's burden
on, and benefit ITOm, the affordable housing to be funded by the Fee, in that the Fee is
calculated based on the number of residents or employees each particular nonresidential
development will generate; and
8. The empirical data as set forth in the Report demonstrates that anticipated nonresidential
development and job growth would justifY fees that are approximately thirteen times
higher than the Fee imposed by this Resolution; and
WHEREAS, the City Council's intent in adopting this resolution is that the Fee adopted by this
resolution shall apply to projects that have not received final discretionary land use entitlements for which
the application was deemed complete prior to the effective date of this Resolution.
ADOPTION OF FEE
NOW THEREFORE, the City Council of the City of Dublin does RESOLVE as follows:
1. Definitions.
L "Affordable Housing" shall mean housing affordable to households of
very low, low and moderate income as defined in Chapter 8.68 of the City
of Dublin's Zoning Ordinance.
ii. "Development" shall mean the construction, alteration or addition of
any building or structure within the City of Dublin.
iii. "Light Industrial" shall mean development constructed for the
manufacture, production, assembly, and processing of consumer goods
and other space uses incidental to these activities. Industrial land uses
include but are not limited to: assembly, concrete and asphalt batching
plants, contractor's storage yards, fabrication, lumber yards,
manufacturing, outdoor stockyards and service yards, printing, processing,
warehouse and distribution, and wholesale and heavy commercial uses.
IV "Office" shall mean any development constructed for general business
offices, medical and professional offices, administrative or headquarters
offices for large wholesaling operations and other space uses incidental to
these activities. Office land uses. include but are not limited to:
administrative or corporate headquarters, banks and savings and loans,
business parks, finance offices, insurance offices, legal offices, medical
and health services offices, offices and office buildings, professional and
administrative offices, professional associations, real estate and
accounting offices and travel agencies.
v. "Research & Development" shall mean any facilities devoted almost
exclusively to research and development activities. Research &
Development land uses include but are not limited to: biotechnology,
technology and other products and services research facilities.
VI. "Retail" shall mean establishments that are constructed for the purchase
and sale of commodities and the sale, servicing, installation, and repair of
such commodities and services and other space uses incidental to these
activities. RetaH land uses include but are not limited to: apparel and
clothing stores., auto dealers and malls, auto accessories stores, book
stores, discount stores and centers, drug stores, furniture stores and
outlets, home furnishings and improvement centers, service stations,
supermarkets, hardware stores, pharmacies and video rentals.
vii. "Services & Accommodations" shall mean any development constructed
as a hotel, motel, bed-and-breakfast, inn, restaurant, bar, theater, other
entertainment, recreation, cultural facilities, and personal services such as
laundries, dry cleaners and beauty salons.
2. Nonresidential Development Affordable HousiDlzlmpact Fee Imposed.
I. A Nonresidential Development Affordable Housing Impact Fee
("Fee") shall be charged and paid for non-residential buildings or
structures within the City of Dublin when the building permit is issued
for construction of such building or structure.
II. A Fee shall be charged and paid for non-residential development for
any alteration or addition to an existing building or structure jfthe
alteration or addition is greater than 500 square feet and results in the
building or structure's combined floor area being greater than 20,000
square feet. The Fee shall be charged only against that area of the
alteration or addition that is over 20,000 square feet. Square footage
shall be calculated as gross floor area, as defined in the Dublin
Municipal Code, Chapter 8.08.
111. Any nonresidential use of land which is substantially similar to, but
not included in the definitions of "Light Industrial," "Office,"
"Research and Development," "RetaH," and "Services and
Accommodations" shall be allocated by the Community Development
Director to one of the five categories, maintainÎng as much
consistency as possible with the definitions of such terms.
IV. In the event that a nonresidential use ofland is not substantially
similar to the definitions of, "Light Industrial," "Office," "Research
and Development," "Retail," and "Services and Accommodations" the
Community Development Director may establish a new category and
calculate the appropriate fee for such category based upon the
assumptions as used in the Report. The Community Development
Director will calculate the fee based on employment generation rates
adjusted for commuting, income distribution of householder and the
affordability gap for apartments and condominiums as set forth in the
Report at respectively, charts 3-1 and 3-2, 3-3 and 3-4, and 3-7 and 3-
8. The Community Development Director shall determine the
appropriate employment density per square foot by utilizing data ITom
the City of Dublin Community Development Department, the Institute
of Transportation Engineers Trip Generation Manual, 5th Edition,
1997 and the San Diego Association of Governments Trip Generator
Study or other sources as deemed appropriate by the Community
Development Director.
3. Amount of Fee.
i. The Nonresidential Development Affordable Housing Impact Fee
authorized by Municipal Code section 7.86.020 is hereby set as
follows:
Future Land Use Fee oer sauare foot
Liuht Industrial $ .40
Office $ 1.00
Research & Development $ .64
Retail $ .80
Services and $ .34
Accommodations
4. Exemptions ITom Fee.
I. The Fee shall not apply to any proj ect that has received final
discretionary land use entitlements for which the application was
deemed complete prior to the effective date ofthis Resolution.
Notwithstanding the foregoing, this exemption ITom the Fee shall not
apply to any project whereby the applicant explicitly agreed to pay the
Fee. This exemption ITom the Fee shall cease to apply to any project
for which Site Development Review approval expires.
11. Any nonresidential building or structure that is 20,000 square feet or
less. Square footage shall be calculated as gross floor area, as defined
in the Dublin Municipal Code, Chapter 8.08.
111. Any alteration or addition to a nonresidential building or structure,
except when the alteration or addition results in an increase of greater
than 500 SQuare feet and the buildimz or structure's combined floor
area is greater than 20,000 square feet. The Fee shall be charged only
against that area of the alteration or addition that is over 20,000 square
feet. Square footage shall be calculated as gross floor area, as defined
in the Dublin Municipal Code, Chapter 8.08.
iv. Any replacement or reconstruction of an existing nonresidential
building or structure that has been destroyed or demolished, provided
that the building permit for new reconstruction is obtained within
three (3) years after the building was destroyed or demolished and
there is no change in the land use designation of the property (as
betweenLight Industrial, Office, Research & Development, Retain and
Services & Accommodations).
v. Any nonresidential building or structure constructed on property on
which a building or structure was demolished for which the Fee has
been paid within the prior twenty year period, provided the exemption
shall be in the amount of the previously-paid Fee only, and the
applicant shall pay any additional amount based on the then-current
Fee. The new development shall not accrue any unused credit or
reimbursement rights, in the event that the replacement project results
in a lower Fee.
VI. A partial exemption will be granted based on prior Fees paid, if within
20 years of paying the Fees for a specific development project, the
project is demolished or replaced by a new type of development in
which case an exemption ITom payment of the Fee will be given for
up to the antount which was paid by the prior development project.
The new development shall not accrue any unused credit or
reimbursement rights, in the event that the replacement project results
in a lower Fee.
5. Use of Revenues.
1. The revenues raised by payment of the Fee shall be placed in the
Affordable Housing Fund. Separate and special accounts within the
Affordable Housing Fund shall be used to account for such revenues,
along with any interest earnings on each account. The revenues (and
interest) shall be used for the following purposes:
1. To increase the supply of housing affordable to households of
very low, low and moderate income; and
2. To pay for design, engineering, land acquisition and building,
subsidizing and rehabilitation of affordable housing and
reasonable costs of outside consultant studies related thereto;
and
3. To reimburse the City for affordable housing constructed by
the City with funds ITom other sources including funds !Tom
other public entities, unless the City funds were obtained ITom
grants or gifts intended by the grantor to be used for affordable
housing; and
4. To pay for and/or reimburse costs of program development
and ongoing administration of the Fee program.
11. Fees in these accounts shall be expended only for affordable housing
and only for the purpose for which the Fee was collected.
6. Periodic Review.
I. During each fiscal year, the City Manager shall prepare a report for
the City Council, pursuant to Government Code section 6600 1 (b),
detennining how there is a reasonable relationship between the
amount of the Fee and the cost of affordable housing, or portion of the
affordable housing attributable to the development on which the Fee is
imposed.
11. During the fifth fiscal year following the first Nonresidential
Development Affordable Housing Impact Fee deposit into the
Affordable Housing Fund, and every five years thereafter, the City
Manager shall prepare a report for the City Council, pursuant to
Government Code section 6600 I (d), regarding the disposition of any
unexpended portion of the Fund, whether committed or uncommitted.
111. During each fiscal year, the City Manager shall prepare a report for
the City Council, pursuant to Government Code section 66006,
identifying the balance of Fees in each account.
7. Subseouent Analysis and Revision of the Fee.
I. The Fee established herein is adopted and implemented by the Council
in reliance on the record identified above. The City will continue to
conduct further study and analysis to determine whether the Fee
should be revised. When additional information is available, the City
Council shall review the Fee to determine that the amounts are
reasonably related to the impacts of development within the City of
Dublin. The City Council may revise the Fee to incorporate the
findings and conclusions of further studies and the General Plan and
Specific Plans.
8. Automatic Fee Adiustments.
The purpose of this Section is to provide for annual adjustments of the Fee for
inflation, beginning July 1, 2005 and each July 1 thereafter.
Annually each July, the City Manager shall adjust the Fee by applying the then
current Consumer Price Index for all urban consumers for the San Francisco/Oakland bay
area for the months of March or April. The City Manager may round the adjllsted Fee to
whole dollars.
9. Administrative Guidelines.
The Council may, by resolution, adopt administrative guidelines to provide
procedures for calculation and other administrative aspects of the Fee.
10. Effective Date.
This resolution shall become effective immediately. The Fee provided in Sections
2 and 3 of this resolution shall be effective sixty (60) days ITom the adoption of the
resolution.
11. Severabilitv.
The Fee and all portions of this resolution are severable. Should the Fee or other
provision of this resolution be adjudged to be invalid and unenforceable, the remaining
provisions shall be and continue to be fully effective, and the Fee shall be fully effective
except as to that judged to be invalid.
PASSED, APPROVED AND ADOPTED this 3td day of May, 2005, by the following vote:
AYES: Councilmembers Hildenbrand, Oravetz and Mayor Lockhart
NOES: Councilmembers McCormick and Zika
ABSENT: None
ATTEST:
ABST AIN: None
K2/G/S-3-OS/rcso 70-05 -housing impact fee (Item 6.S)
7326'10_ 6. )()C
12 ·'1 ~;r
-.:> "D w--"-"
City of Dublin Nonresidential Development Affordable
Housing Impact Fee Study
March 25, 2005
City of Dublin
NonrasldantiallmpaGt Fee
Final Report
PA 01-039
EXHIBIT A.
I ntrod uction
ILl.,," ·~.d.:,
I~ .1....
\.Y
III
This chapter provides an introduction to the Nonresidential Development Affordable
Housing Impact Fee Study, including the purpose of the study, the methodology of the
study, and data sources used to generate the analysis.
A. Introduction
The State of California, Bay Area, and Tri-Valley
region have experienced unprecedented economic
growth during the latter half of the 1990s,
Concurrent with this economic growth, the region
continues to have a significant demand for new
housing. Because the supply of housing has not
kept pace with the demand for housing created by
new jobs, single-family home prices and apartment
rents have increased dramatically, making housing
less affordable to low and moderate income
households.
In 2000, the Dublin City Council recognized that affordable housing would continue to be
an important issue in Dublin. In February 2001, the City of Dublin adopted an Affordable
Housing Implementation Plan which uitimately resulted in an Inclusionary Housing
Program that requires developers to set aside 12.5% of all new residential development
as affordable to very low, low, and moderate income households. In the Affordable
Housing Implementation Plan, the City Council also expressed a desire to examine the
relationship between job growth and housing, as the second important factor of
affordable housing demand. The City of Dublin retained an outside consultant,
Cotton/Bridges/Associates ("Consultant"), to perform an analysis of the impact of job
growth on the affordability of housing and to recommend an impact fee program to
mitigate this impact.
The analysis reviews the types of industries projected to locate in Dublin, the number of
employees those industries will attract (reduced for commuting patterns), and the
income ranges those employees would receive as salaries, wages and other income. In
addition, the analysis reviews the cost of constructing housing in the Tri-Valley area, as it
relates to the number of employees whose household Incomes fall within the very low,
low and moderate-income ranges. The analysis determines the price of closing the gap
between what employees can afford to pay for housing and what new construction costs,
and the analysis links that price to the size of the business' facility, as an impact fee.
City Staff and the Consultant began work on the Nonresidential Development Affordable
Housing Impact Fee Study (Fee Study) in August 2001. Soon thereafter, it became
clear that current data on household income, employment, and industries in the Tri~
Valley area was limited. Although the U.S. Census 2000 was gradually being released,
detailed cross tabulations needed for the analysis were not readily forthcoming.
City of Dublin
Nonresidential Impact Fee
2
Final Report
- ''') ~~," ...
J ¡::::," t{.J..... ,.,<' ~ ~
I....~U' ,.,'
Moreover, altemative data sources also proved to be less than satisfactory for the study.
Therefore, the Fee Study was suspended in June 2002 until U.S. Census data became
available.
In late 2002, the Census Bureau indicated that staff was available to perform the
detailed cross tabulations necessary for the Nonresidential Development Affordable
Housing Impact Fee Study. The Consultant requested the appropriate cross tabulations
from the U.S. Census Bureau, which were provided in May 2003. The report findings
herein provide the results of the analysis.
B. Legal Requirements
In recent years, as municipalities have struggled to address their residents' needs for
affordable housing, cities have imposed fees on proposed nonresidential developments
to help finance the production of affordable housing for the employees that the
nonresidential development attracts. The U.S. Court of Appeals, Ninth Circuit, upheld
one such fee against a Constitutional challenge in its decision, Commercial Builders of
Norlhern California v. City of Sacramento (941 F2d 872). In short, the Appeilate Court
upheld a fee on nonresidential development to offset burdens created by such
development. based on a housing impacts study,
Commercial impact fees are subject to two overlapping sets of legal requirements. The
Federal constitutional requirements of "nexus" and "rough proportionality" set forth under
Nollan v. California Coastal Commission (1987) 483 U.S.825 and Dolan v. City of Tigard
(1994) 512 U.S.374 are generally inapplicable to fees imposed on a legislative basis on
ali similarly situated development. (See Ehrilich v. City of Culver City (1996) 12 CaIA'"
854; City of Monterey v. Del Monte Dunes (1999) 5267 U.S. 687.) California's
"reasonable relationship" requirements are set forth in California case law and codified In
sections 66000-66010 of the California Government Code, which the Legislature
adopted in 1987 (known alternatively as the Mitigation Fee Act or AS 1600). Althou9h
distinct, these two standards are substantively similar and the California Supreme Court,
in Ehrlich v. City of Culver City (1996) 12 CaIA'", concluded that the two standards in the
context of legisiativeiy enacted and generally applicabie development fees for all
practical purposes have merged.
The Mitigation Fee Act also requires that the City adopt certain findings prior to imposing
a development impact fee, such as the nonresidential development affordable housing
fee proposed by this study. The required findings are as follows:
(1) Identify the purpose of the fee.
(2) Identify the use to which the fee is to be put. If the use is financing
public facilities, the facilities shall be identified.
(3) Determine how there is a reasonable relationship between the fee's
use and the type of development project on which the fee is imposed.
(4) Determine how there is a reasonable relationship between the need
for the public facility and the type of development project on which the
fee is imposed.
City of Dublin
Nonresidentiallmpad Fee
Final Report
3
I &;;:.1-.... ;; ~::'~
l>- .
The Fee Study provides support for these required findings. The Sacramento decision
affords considerable deference to local agencies to develop a reasonable methodology
for establishing the nexus between commercial development and affordable housing and
the appropriate fee amount. The courts do not require mathematical precision in
developing a commercial impact fee, provided that the fee meets the requirements of the
Mitigation Fee Act. The fee upheld in the Sacramento case met the reasonable
relationship standard by demonstrating that non-residential development has an impact
on the affordability of housing, by (a) creating new low-income jobs in the City, which (b)
create additional demand for low-income housing. The amount of the fee upheld in
Sacramento was based on the difference between the incomes of such low-income
workers available for housing expenses and the cost to produce housing to house them.
A portion of this deficit was imposed on non-commercial development as the fee.
Therefore, if a local jurisdiction follows the aforementioned principles in developing a
commercial impact fee, the courts generally have upheld the fees as justifiable.
To develop the fee structure, the Task Force, City Staff and the Consultant examined
five commercial impact fee models used by surrounding jurisdictions. These included the
cities of Oakland. Livermore, Pleasanton, Menlo Park, Mountain View, and Sonoma
County. The cities of Danville, Hayward, San Ramon, San Leandro, and Union City and
counties of Alameda and Contra Costa were not examined because these jurisdictions
do not have impact fees for nonresidential development. The Consuitant examined the
assumptions and data sources used by each jurisdiction and then developed a hybrid
approach tailored for the City of Dublin. Chapter 3 provides the methodology used to
meet the aforementioned legal requirements.
C. Methodology
Based on the survey, the Task Force, City Staff and the Consultant developed a five-
step approach to examining the nexus between new nonresidential development in
Dublin and the demand and cost of producing affordable housing. The methodology is
summarized below.
Step 1:
Determine total employees generated by future
nonresidential development based on employment
generation rates for projected land uses in Dublin.
Calculate the distribution of household income
generated from jobs/industries likely to migrate
into the Tri-Valley area.
Determine the number of employees by income
generated by land use designation who would be
likely to seek housing in Dublin.
Determine the cost of producing market rate
single-family residences and apartments and the
gap between that cost and what very low, low, and
moderate income households could afford to pay
for such housing (known as the "affordability gap").
Step 2:
Step 3:
Step 4:
Final Report
City of Dublin
Nonresidential Impact Fee
4
lliJfß!';,
Step 5:
Determine the maximum impact fee per square
foot by multiplying employment generation factors
by the affordability gap for households of different
income levels and by the contribution of the
Inclusionary Zoning Ordinance housing program,
and, lastly, examine the feasibility of the impact
fee(s).
D. Data Sources
Data for the Nonresidential Development Affordable Housing Impact Fee Study is drawn
from a variety of sources, which are cited in Chapter 3. These data sources are as
follows:
· Employment, population, and households growth projections from the
Association of Bay Area Governments (ABAG Projections Series);
· Demographic data, economic data, and housing production trends from the 1990
and 2000 Census, including special tabulations for the Tri-Valley region related
to household income by industry, number of people in occupations by industry
groups, household income by occupation, and number of workers per household
by income, and other detailed information;
· Inventory of available sites for residential and nonresidential development as well
as the type of industry or project anticipated for each site based on an analysis
by the City of Dublin Community Development Department;
· Employment generation data frorn the City of Dublin Community Developrnent
Department, the Institute of Transportation Engineers, Trip Generation Manual
(1997), and San Diego Association of Governments Trip Generator Study;
· Comparable commercial impact fee studies from the City of Oakland,
Pleasanton, Livermore, Sonoma County, Menlo Park, and Mountain View;
· Housing sales price trends from Dataquick Real Estate Services, and apartment
rents from Real Facts, the 1990 and 2000 Census, and other city survey data;
· Housing production cost information for apartments and single-family homes in
Dublin from developers and from the Home Builders Association of Northern
California.
E. Committee Review
To develop the commercial impact fee, the City Council appointed a six-member task
force to oversee the development of the nexus study and commercial impact fee
analysis. The City Council and Pianning Commission each had one member in
attendance. Developers and the local business community were also represented.
Members were as follows:
· Don Johnson, Imprint Works, for the Dublin Chamber of Commerce
· Adib Nassar, the Dublin Planning Commission
· Janet Lockhart, Mayor of Dublin
· Brad Kaune, Horne Marketing Alternative Project Services
· Pat Cashman, Alameda County Surplus Property Authority
· Michael Parker, KolI Development Corporation
City of Dublin
Nonresidential Impact Fee
Final Report
5
1'3 ö;.jS·
The Task Force met on four occasions, December 13, 2001, February 27,2003, July 31,
2003, and September 4, 2003. The first two meetings focused on an introduction to the
key economic and housing issues facing Dublin over the next decade, as well as a
discussion of the methodology to be used to calculate the nexus study. At the July 31,
2003 meeting, the Fee Study preliminary findings were distributed to the Task Force for
comment. City Staff returned at the last meeting on September 4, 2003, with further
information in response to the Task Force's comments. Based on the information
provided and the Task Force discussion, the Task Force passed a motion expressing
the Task Force's recommendation to the Dublin City Council.
F. Findings Summary
As detailed in Chapters 2 and 3, a strong demand for housing in Dublin, fueled in part by
strong employment growth in the Tri-Valley region, has resulted in a growing gap
between housing costs and the ability of area workers to afford housing. While median
housing costs increased between 55 and 120 percent from 1990 to 2000 (depending on
the type of housing), the median income in Dublin increased by 44 percent (see Chart 2-
1 and discussion on page 2-2 for additional detail).
Dublin has the potential to create 30,120 additional jobs between 2005 and 2025. A
significant percentage of these jobs will be filled by individuals living in very low-, low-,
and moderate-income households. It is these households that experience the greatest
difficulties in finding affordable housing in Dublin.
A portion of the future affordable housing need will be met through the City's inclusionary
housing program, in which 12.5 percent of new housing units constructed in Dublin must
be affordable to very low-, low-, and moderate-income households. Of the affordable
units constructed under the City's inclusionary program, 30 percent must be affordable
to very low-income households, 20 percent to low-income households, and 50 percent to
moderate-income households.
Nevertheless, a significant gap will remain between the need and demand for affordable
housing in Dublin and the number of affordable housing units available to very low-, low-,
and moderate-income residents. One method of bridging that gap is to charge an
affordable housing fee to nonresidential developments. Nonresidential developments
create employment that generates a need and demand for affordable housing based on
the anticipated income levels of the workforce in those developments. Revenues from
the affordable housing fee would be used to build housing in Dublin that very low-, low-,
and moderate-income households can rent or own.
This maximum justifiable fee, however, could be modified to a rate that Is comparable to
non-residential development rates of adjacent communities, so that Dublin can continue
to attract new employment generation in the future (see Chart 3-10 for comparable
rates). Recent economic conditions have slowed commercial development in the Tri-
Valley and any potential fee could be reviewed for its effect on the viability of commercial
projects.
At the September 4, 2003 meeting, the Nonresidential Development Affordable Housing
Impact Fee Task Force made the following recommendations: that the City Council
City of Dublin
Nonresidential Impact Fee
Final Report
6
I "~1 (¡¡.)~ ~~
L,~,
adopt a Nonresidential Development Affordable Housing Impact Fee Ordinance; that
due to current economic conditions, the City Council adopt a fee resolution capped at $1
per square foot of new nonresidential development floor area. which is scaled to the
impacts of different industries; and that the City Council consider exempting projects
which are currently under City review.
City of DUblin
Nonresidential Impact Fee
Final Report
7
'7 ·:;C
,~DCJb-"" ..,
Employment/Housing
Trends
This chapter provides a general background and history of the Tri-Valley area, and then
focuses on econO'mic and housing market changes in Dublin.
A. Trl-Valley Planning Area
The City of Dublin is situated in the Tri-Valley
area, an area encompassing more than 350
square miles in the DiablO', San Ramon, and
Livermore/Amador valleys. The Tri-Valley
includes the cities of Danville. Dublin, Livermore, "
Pleasanton, and San Ramon, and the
surrounding parts of Alameda and Contra Costa
counties.
Over the past fifty years. cities in the Tri-Valley
area have developed in a consistent pattern. ,/,.,r"
Each has shown similar demographics, hO'using ,-""
markets, and economic conditions.
Understandi ng the changes and transition of the
Tri-Valley area are therefore important in that these changes will likely occur in Dublin as
well.
\!i-Volley Areo
.-.-
.-.-----.-.-----
Until the 1950s, the Tri-Valley area was primarily agricultural in nature. Pleasanton and
Livermore incorporated in the 19th century, providing services for the local agricultural
economy. However, the establishment O'f the Lawrence Livermore Laboratory and other
major research facilities during the 1950s began a new direction that would shape the
future character of the Tri-Valley. The completion of the freeway systems in the 1960s
and 1970s (Interstates 580 and 680) opened the area to extensive single-family
suburban develO'pment in unincorporated areas.
With the rapid sub urbanization of the Tri-Valley area, the cities of Dublin in Alameda
County and Danville and San Ramon in Contra Costa County incorporated in the early
1980s. These cities also included large tracts O'f land within their spheres of influence.
During the 1980s, the Tri-Valley area became a major center of employment for the
region, with the development of the Bishop Ranch Office Park in San Ramon and the
Hacienda Business Park in PleasantO'n. Employment development accelerated through
much of the 19905.
City of Dublin
Nonresidential Impact Fee
Final Report
8
B. Dublin Market Trends
Dublin experienced substantial
population and employment growth
during the 1990s. ABAG's
Projections 2003 show that the City
of Dublin experienced a 70%
increase in job growth from 1990
through 2000 (Chart 2_1)',
However, according to the U.S.
Census Bureau, the City
experienced a 41% increase in
housing units and a 29% increase in
population during the same period of
time2. As a result, the jobs-housing
ratio in Dublin significantly increased
since 1990 from 1.84 jobs per
housing unit in 1990 to 2,2 jobs per
housing unit by 20003.
Dublin's rapid growth and demand
for housing is evident in the changes in
housing prices over the decade aswelL
Chart 2-2 details housing price trends
from 1990 to 2000. According to
Dataquick, the median sales price of a
condominium rose 55% to $291,0004.
Meanwhile, the median sales price of a
single-famiiy home increased 120% to
more than $450,0005. Although long-
term trends on apartment rents are not
available, the Census Bureau reports
that the median contract rent for
apartments and single-family
residences has increased by
approximately 54% to $1,245 in 20006.
d'>] ~\,'1 ~~ t'::
(,., ;t",·'h···,·<I···,,'
Chart 2-1
Population, Job, and Housing Growth
City of Dublin, 1990-2000
80%
10%
70% ._m___
30%
60% ....-----------.
. ..n___________
500/0 _n___________..___
40% ..--..---.--..
20% .
10%· ----
0%
Population
Job Growth
Housing
Chart 2-2
HousIng Price Increases
140%·
120%
120%
11))%
&1'%
00"..
40%
20%
0%
Caldcmlnlum
Single-family
I-kme
Calln>:t Refit
1 According to ABAG's Projections 2003, the total. number of jobs in Dublin in 2000 was 21,870. The 1990
fi9ures from ABAG's Projections 2002 totals 12,870 jobs.
2 U.S. Census Bureau figures for housing total 9,872 units in 2000 and 6,992 units in 1990. Population
totals 29,973 people in 2000 and 23,229 people in 2000.
, 2000 U.S. Census
, Condo median starting price of $187,500 in 1990
, Single-family home median starting price of $210,000 in 1990
6 Median contract rent starting price of $811 in 1990
City of Dublin
Nonresidential Impact Fee
Final Report
9
2';1 t)b~-"'
In contrast, the 1990 and 2000 Census reports that the median household income of
Dublin residents increased 44%, considerably slower than housing prices'. Changes in
household income are largely affected by two conditions:
1) The pace of net migration and turnover among households. For example, new
households moving to Dublin tend to have higher incomes, on average, than
existing residents, including those moving out of the community. The rate at
which higher income households replace lower-income households will affect the
pace of income growth in a community.
2) The rate of increase of incomes among existing residents. Most workers
experience significant gains in income as they progress in their careers, and
average incomes rise with age, at least through retirement. The rate of income
growth in a community will also be affected by the percentage of workers who
stay in a community through their peak earning years (typically ages 45 to 54).
According to the City of Dublin Community Development Department projections, Dublin
is expected to continue its rapid pace of development through 2025. Dublin's
employment is expected to increase 154% from 19,500 jobs in 2002 to 49,620 jobs in
2025. Other indicators, such as Association of Bay Area Governments (ABAG), also
point towards rapid development. According to ABAG projections for Dublin for the
period of 2000 to 2025, Dublin's population is projected to increase 120% to 65,900
persons, and households are expected to increase 138% to 22,220 (Projections 2003).
These changes will significantly increase the demand for suitable housing.
These growth projections have long-term implications for the City of Dublin. Lower-
income residents often live in subsidized units and have limited choices to move
elsewhere. This creates a condition where upper income households who have homes
or lower-income persons who have subsidized units remain in the City. However,
moderate income famiiies and the workforce of the City, including teachers, public safety
workers, nurses, and others leave the community entireiy, or find affordable housing
elsewhere and commute to work in Dublin. This trend affects traffic and commuting
patterns, impacts quality of life, and makes it difficult for employers to attract and retain
employees '.
Based on these market trends and the methodology outlined in this Study, the Task
Force in consultation with City Staff and the Consultant developed the following fee
categories to be used in calculating the Nonresidential Development Affordable Housing
Impact Fee:
"Light Industrial" shall mean development constructed for the manufacture, production.
assembly, and processing of consumer goods and other space uses incidental to these
activities.
"Retail" shall mean establishments that are constructed as regional and community-serving
retail facilities for the purchase and sale of commodities and services and the sale,
Median income for Dublin residents was $53,710 in 1990 and $77.283 In 2000, according to the U.S.
Census Bureau.
1 Section 4.6.3 of the Eastern Dublin Speçjflç Plan discusses the advantages of a jobs/housing balance
(page 30).
City of DUblin
Nonresidential Impact Fee
Final Report
10
..:2. . .(,,"
?7Cf1,;,';.>
servicing, installation, and repair of such commodities and services and other space uses
incidental to these activities.
"Office" shall mean any development constructed for general business offices, medical and
professional offices, administrative or headquarters offices for large wholesaling operations
and other space uses incidental to these activities.
"Research & Development" shall mean any facilities devoted almost exclusively to
research and development activities. Research & Development land uses include but
are not limited to: biotechnology, technology and other products and services research
facilities.
"Services and Accommodations" shall mean any development constructed as a hotel,
motel or bed-and-breakfast inn, restaurants and bars, theaters, personal services such as
laundries, dry cleaners and beauty salons, and entertainment, recreation, and cultural
facilities.
City of Dublin
Nonresidential Impact Fee
Final Report
11
'2' '\11)"': ('
- '"~'I,",; t'\'
,
Jobs-Housing Demand
Linka e
This chapter analyzes projected employment growth and evaluates the impact of this
growth on the need for affordable housing. This analysis is intended to demonstrate the
nexus between employment growth and the demand for housing, and calculate the
maximum justifiable fee that could be charged for affordable housing.
A. Employment Growth
Population growth in Dublin is attributable, in
part, to nonresidential development. As available
land is gradually developed with commercial and
industrial businesses, new job opportunities are
created. New jobs will attract a workforce, many
of whom may wish to live in Dublin if suitable
housing is available. The first step in determining
the demand for housing is therefore to estimate
the number of new jobs generated from
nonresidential development in Dublin. The
calculations are illustrated to the right and in
Charts 3-1 and 3·2 on the following page.
Employment
Available Acreage
x
Industry Employee Generation
Rate
x
Commuting Rates
Employees to live in Dublin
To that end, City Staff provided an inventory of developable nonresidential land in Dublin.
For each, City Staff determined the type of use (e.g., commercial, industrial, school,
parkland, etc.) expected to occupy each site and trip generation rates. Using recognized
data sources, the Consultantcalculated the total amount of developable acreage and the
number of jobs generated from different types of commercial, industrial, retail, and other
uses. Taken together, Dublin can expect to accommodate 30,120 additional jobs by build-
out (projected to be 2025).
Regardless of employment projections, not all employees will choose to live in Dublin.
Households choose a community for a variety of reasons, including quality of schools,
availability of affordable housing, proximity to family and relatives, public service levels, etc.
According to a 1990 study by the Tri-Valley Planning Committee2, an association of planning
directors and other public agency officials in the Tri-Valley area, only 48% of all employees
will eventually choose to live within the Tri-Valley area. This factor was applied to projected
employment to estimate the demand for housing in Dublin.
The employment generation rates and the projected employment generation totals are
shown in Charts 3~ 1 and 3-2. The total projected building floor area is approximately
10.78 million square feet.
'Working Paper #3, Trl,Valley Planning Committee, ABAG 1990 Census Transportation Package
(According to ABAG, the Trl-Valley Planning Committee was formed out of the Tri-Valley Transportation
Council with a one-time grant from ABAG to produce a subregional planning strategy.)
City of Dublin
Nonresidential Impact Fee
Final Report
12
Chart 3·1 Empl
Future Land
Dublin
Light Industrial
Office
Research & Devel
Retail
Services & Aceomm
Notations
1. Institute of Tran
2. Eastem Dublin
Engineers, Trip
3. Employment de
Valley Planning
4. Services & Ace
508 square fee
Holiday Inn E
Black Angus, C
Chart 3·2 Empl
Future Land
Dublin
Light Industrial
Office (with Transit
Research & Davel
Retail (with Transit
Services & Accomm
Total
Notations
1. City of Dublin p
2. Total employme
3. Employees exp
52% commuting
City of Dublin
Nonresidential Imp
..--.- ..---.-.----.-
oyment Generation Rates
Emplovment Generation Rates
Uses ITE Average Adj. Rate for
In Industrial Density Commuters
Code 1 per KSF2 per KSFJ
110 1.69 0.81
710 3.85 1.85
opment 780 2.47 1.19
814 2.04 0.99
odations' 310 0.47 0.23
sportation Engineers Trip Generation Manual. 5'" Edition, 1997
Specific Plan, survey, information, and Institute of Transportation
Generation Manual, 5' Edition, 1997
nsity adjusted for average 52% commute factor for Tri·Valley (Tri-
Committee)
ommodatlons rate of ,47 per KSF adjusted for a 240-room hotel at
t per room (based on survey of Monarch Hotel, Amerlsuites and
xtended Stay hotels; Re9al Cinemas; and the Applebee's. Mimi's.
asa Oro¡co, EI Torito, and Macaroni Grill Restaurants,)
oyment Generation Totals From 2003 to Build Out
EmDlovment Generation Totals
New Employees
2 to Live in
Employees 3
Dublin
681
9,811
1,173
2,607
233
.
14,505
Uses
in
Building
Size (KSF) 1
CtL)
opment
CtL)
odations
840.37
5,303.50
985.50
2,633.13
1,012.52
1,420
20,418
2,434
5,372
476
10,775.02
30,120
.
rovided building size capacity by different land uses
nt deten-nlned by calculating employment generation rate by building size.
ected to live in Dublin determined by adjusting employment generation for average
factor tor TrI.Valley (Tri·Valley Planning Committee).
Final Report
13
act Fee
" ..' ~·L-.r
¿,I¿:.,?))-'~
,"., I ,'I ":'1'::',,·
¿ ".'¡? n~,....--:",I'"",
B. Job-Related Earnings and Income
Having calculated the additional jobs created by projected non-residential development,
the question that arises is: How does one determine the wages and salaries of
anticipated future jobs? To that end, the U.S. Census Bureau provided specialized cross
tabulations of earnings of householders working in the Tri-Valley area (2000 Census).
Since many households have more than one worker, the Census Bureau also provided
information in its cross-tabulations on the income of all members of the household,
called "Household Income."
As shown in Chart 3-3, the Task Force, City Staff and the Consultant first calculated the
median earnings of householders employed in various industries, as well as the income
of the entire household of that employee. Household income is a broad measure of all
monetary gains reported by a household. Many households have more than one worker
and sources of income in addition to earnings, which increases their ability to pay more
for housing. For this reason, household income is used as the basis of the
nonresidential development impact fee. Industry categories were collapsed into broader
categories in order to match the types of industries likely to occupy the particular general
plan land use designations in Dublin,
Chart 3-3: Median Earnings and Income by Industry, Census 2000
Median Median Median
ClilSS Indust!)' Householder Householder Household
Earning$ Earnings Income
(Averaged)
1 Manufacturing $ 77,216 $77.216 $107,320
2 Construction $61,213
Transport.. Warehou$e, and Utility $58,904
Wholesale Trade $64,759 $62,440 $91,416
3 Retail Trade $49,923 $49,923 $85,072
4 Information $71,618
Finance and Insurance $67,609
Real Estate, Rental and Leasing $57,846
Professional, Scientific, and Tech. $76,116
Administrative Support $42,571 $69,801 $99,960
5 Educational Services $48,824
Healthcare and Social Assistance $49,112 $48,984 $79,703
6 Arts, Entertainment, and Rec. $31,737
Accommodations and Food $29,468
Other Services $41,609 $35,482 $65,427
7 Public Administration $65,343 $65,343 $95,957
City of DUblin
Nonresidential Impact Fee
Final Report
14
21 ¡51) -:".
,.
Chart 3-4 summarizes the household incomes by householder industry distributed to
very low, low and moderate income groups. For example, using the chart below, one can
calculate that out of 100 employees or jobs within the Service/Accomodation industry in
the Tri-Valley, 14 employees or jobs could be expected to be within the low-income
range set by the State's Department of Housing and Community Development (HCD)'.
Chart 3-4: Trl-Valley Household Income By Industry Distribution
Household·lncome
Very Low- Low.lncome Moderate-
Industry Income Income
Manufacturing 4.5% 6.5% 21.6%
Other Industrial 3.8% 4.4% 15.5%
Retail Trade 8.5% 9.8% 21.2%
Professional 5.7% 6.2% 17.1%
Education/Social 7,8% 10.1% 25.4%
Svcs & Accommodations 18.2% 14.3% 21.7%
Public Administration 3.7% 4.6% 16,6%
Source: U.S. Census, 2000 adjusted for income thresholds developed by HCD.
c. Employment Generation by Land Use
Section A calculated the total number of
jobs expected to be generated in Dublin
from nonresidential development. Section
B then calculated the expected distribution
of household income of a householder
working in each industry. This section
determines the employment densities, by
income, associated with each land use.
The calculations for this step are illustrated
in the sidebar to the right.
Employees Per Land Use
Adjusted Employee Generation Rate
x
Square footage of each land use
(weighted for different industries)
x
Income Distribution Profile (weighted for
different industries)
Number of very low, low, and moderate
income employees per land use
Based on the developable land remaining
in Dublin, the Study estimated the
distribution of industries likely to occupy a
particular site based on Specific Plan land use designations and the North American
Industry Classification System (NAICS) also used by the U.S. Census Bureau. For
example, on commercial-designated sites, the City estimated that the site would contain
60 percent retail industry uses, 26 percent services and accommodations (arts,
entertainment, and food uses), and 14 percent information uses (professional and
administrative offices). This mix of uses was forecasted using the Wateliord commercial
center as the model, because it is a recent commercial project in the Eastern Dublin
Specific Plan area.
1 The California Department of Housing and Community Development (HCD) determines income ranges for
Alameda County based on the median household income, adjusted for household size. Very low income
means 50% or less of the County's median income. Low Income means more than 50% to 80% of the
median income, Moderate means more than 80% to 120% of the median income.
City of Dublin
Nonresidential impact Fee
Final Report
15
~?:'ç~ ,:>::·:··,~~5:-·
Chart 3-5: Employment Generation Per Land Use
Light . Office Res & Retail Svcs &
Industry Mix Industry Dev Accom
Goods 100% 0% 0% 0% 0%
Manufacturing 0% 0% 0% 0% 0%
Retail 0% 0% 0% 100% 0%
Professional 0% 100% 100% 0% 0%
Education/Social 0% 0% 0% 0% 0%
SVC5 & Acorn. 0% 0% 0% 0% 100%
Having estimated the mix of industries on each land use, it is possible to determine the
number of future employees by household income that can be expected to work and live
in Dublin. The Study developed by the Task Force, City Staff and the Consultant
multiplied the employee generation rate (adjusted for commuting) by the amount of
developable land to yield the total number of employees per land use. This total was
then multiplied by the distribution of household income generated by householders
working in those industries. This calculation yielded the number of employees by
household income, generated per 1,000 square feet of floor area. Chart 3-6 provides a
summary of the calculations.
Chart 3-6: Employment Generation Per Land Use
Land Uses
Light Industrial 0.04 0.05
Office 0.11 0.12
Research & Development 0.07 0.07
Retail 0.08 0.10
Services & Accommodations 0.04 0.03
Note: Figures refer to employees per 1,000 square feet of floor area.
Number of Employees Per 1,000 Square Feet
Very Low Income Low Income Moderate-
Income
0.17
0.32
0.20
0.21
0.05
D. Housing Prices and Affordability Gap
Having determined the number jobholders by industry and income projected to locate in
Dublin, the focus turns to the housing market. This section develops the average cost of
producing market rate housing in Dublin and contrasts that with the amount that can be
afforded by very low, low and moderate income households (the "affordability gap").
The City of Dublin's Consultant developed an apartment proforma based on three recent
projects built in Dublin between 2001 and 2003 for the analysis. In addition, the Study
City of Dublin
Nonresidential Impact Fee
Final Report
16
"');':1.""~ ::)r~.
¡,'~- i,~t) ,j,,,."',-
used the single-family home proforma (essentially a small-lot condominium) developed
by the Homebuilders Association for the City's inclusionary program in 2001. Chart 3-7
provides a summary of the cost of producing affordable rental projects and the market
prices of a condominium development in Dublin.
Chart 3-7: Housing Proformas in Dublin
HÓl.Ísh(,CèI$fS'·i'I'i,
Land Costs
Soft Costs
Construction Costs
Avera e Cost
Notes:
1. Based on average of three proformas of apartment projects built in Dublin (2001.2003), average
unit size of 793 square feet.
2. Data provided by HomeBuilder Association for the City's indusia nary program (2001), unit size of
1 ,200 square teet.
The Task Force determined the breakeven rent and sales price for these projects using
residential industry standards for financing, operating costs, and vacancies based on
information provided by the Consuitant and Task Force members' knowledge and
expertise. The Study calculated the maximum amount that could be afforded by
households of different income levels. The difference (called the "afford ability gap) was
annualized and discounted using a 7 percent capitalization rate, which is the market
interest rate for permanent loans. This calculation provides the lump sum amount
necessary to compensate a property owner for renting at below market rents.
Calculating the "affordability gap" for single-family residences was more straightforward.
The maximum affordable payment for moderate-income households was calculated
based on standard assumptions regarding annual property taxes and insurance, a 5
percent down payment, and a 30-year fixed loan at a .7 percent interest rate. The
difference between the sales price and maximum affordable price represented the lump
sum amount necessary to compensate a property owner.
It should be noted that the sales price of a single-family home used in the above analysis
($282,000) is substantially below the market rate price for single-family residences being
built in Dublin today. The difference could be due to the small lot size for the unit (3,500
square feet) as well as the higher densities allowed. Still, even with those qualifications,
the $282,000 price used for the inclusionary analysis is probably more reflective of the
sales price of condominiums. Chart 3-8 summarizes the results of the affordability gap
analysis.
City of Dublin
Nonresidential Impact Fee
Final Report
17
:-> .I,..., ",~ '~;:.\!'~',.,,'
....,.-\,,:v:;"¡ j .....'.
Chart 3-8: Affordability Gap Analysis
Affordablllty Apartment Proiect Slngle-familv Residence ICondo\
Calculation Very Low Low Moderate Very Low Low Moderate
Annual HH Income $ 32,200 $48,450 $77,300 $35,800 $57,280 $85,920
Max. Affordable Rent< $730 $1,136 $1,858 $81,166 $166,129 $279,414
/ Price3
6reakeven $1,668 $1,668 $1,668 $282,000 $282,000 $282,000
RenVSales'
Affordabilitv Gao/Unit 0 $938 $532 $(189) $200 834 $115,871 $ 2.586
Annualized $11,259 $6,384 $(2,271) N/A N/A N/A
Affordabilitv GaD
Lump Sum to
Compensate Property $160,838 $91,195 $(32,448) $200,834 $115,871 $ 2,586
Owner"
Notes:
1. Annual Income determined by HCD income limits. For apartments, a three-person household was
assumed; a four-person household was assumed for a single-family residence (three-bedroom size).
2. Maximum affordable rent refers to payments of no more than 30% of income toward housing after utility
payments.
3. Maximum affordable sales price assumes a 5% down payment, 30 year loan at 7% interest rate and
standard assumptions regarding property taxes and insurance.
4, Breakeven rent was determined by calculating the likely financing costs of a 100% financed loan for 30
years at an interest rate of 7%. The Institute of Real Estate Management provided standard
assumptions for calculating the operating costs of apartment projects. For single-family residences, the
breakeven pnce was assumed to be the sales price.
5. Difference between the breakeven rent for an apartment unit or home sales price and the maximum that
could be afforded by a very low, low, and moderate income household.
6. The lump sum payment needed to compensate the property owner for renting or selling a unit at below
market rates is determined by a 7% capitalization rate.
E. Maximum Justifiable Fee
The final step was to determine the
maximum justifiable commercial impact Maximum Justifiable
fee. and the fee's feasibility. To Commercial Impact Fee
maximize the utility of the fee, the fee ------~----------------~-------~----------
Step A: Employment Generation Rate
was based on ver¡ low and low-income for Each Industry Adjusted for
households living in apartments and Commuting
moderate income households living in x
small lot single-family homes. The fee Step B: income Distribution of
calculation methodology is represented Householder employed by Industry
in the sidebar to the right x
Step C: Affordability Gap for Apartments
City Staff and the Consultant also and Condominiums
surveyed one dozen jurisdictions to
compare their maximum justifiable fees
with the results of the analysis. From this
pool, three jurisdictions were selected
from Alameda County (Pleasanton,
Livermore, and Oakland) and three were
City of Dublin Final Report
Nonresidential Impact Fee 18
, -"._,,-
;, \.'tj" ......
~ ". ,
-' L""
outside the County (Sonoma County, Menlo Park, and Mountain View). The adjacent
cities of Danville, Hayward, San Ramon, San leandro, Union City and counties of
Alameda and Contra Costa were not selected because these jurisdictions do not have
housing impact fees for nonresidential development.
Dubiin's fee methodology is comparable to the latter four studies, conducted after 2000.
Fees for the first two, livermore's study (DMG, 2001) and Pleasanton (EPS, 1990
updated in 2000), were the lowest. The Livermore study derived the lowest fees,
primarily due to significantly lower construction costs estimated at approximately
$77 ,000 for a multi-family apartment unit and low proportions of very low and low-income
jobs. Chart 3.10 shows the comparable jurisdictions with maximum non-residential
affordable housing impact fees, below.
Chart 3·10: Maximum Justifiable Fee (Per Square Feet)
Industries þakland Mountain Menlo Park Sonoma Lillermore PleAsAnton
View County
Light $12.85 16.97 $24.72 $20 $.07 - $.26 $4.58
Industrial
Office $35.11 16.97 45.32 $31 $.52 $13.62
Corp. HQ $24.72 $.52
Rand D 16.97 45.32 $4 $5.37
Retail $32.39 14.84 $24.72 $36 $.81 $6.26
Commercial $24.72
Hotel/A&E/Sllcs $12.91 13.90 $24.72 $32 $397/room $7 A6/room
Public/Semi- $24.72 $31
Public
In most cases, except for the City of Livermore, the cities surveyed did not adopt the
maximum fees established in their studies, but opted instead to adopt fees that were on
average 9 to 34 percent of the maximum justifiable fee. For example, the City of
Pleasanton recently adopted an impact fee of $2.31 per square foot for new commercial
development. The City of Livermore adopted the maximum fee, which was calculated as
totaling between $0.7 and $.81 per square foot.
City of Dublin
Nonresidential Impact Fee
Final Report
19
,,"-,,--
" "1·~·,
.- ,.·-·t)
,,,
¡
F. Dublin's Maximum Justifiable Fee
The City of Dublin's maximum justifiable fee is calculated in a manner similar to the
jurisdictions above. In addition, the Task Force recommended that the contributions of
the City's Inclusionary Zoning Ordinance in meeting the City's housings needs, including
workforce housing, be considered when calculating the maximum justifiable fee.
The Fee Study recognizes that the maximum justifiable fee by industry could be adjusted
for the percentage of very low-, low- and moderate-income housing units anticipated to
be produced under Dublin's inclusionary housing program. The inclusionary program
requires that 12.5 percent of all new units produced be affordable to low- and moderate-
income households, of which 30 percent should be affordable to very low-income
households, 20 percent to low-income households, and 50 percent to moderate-income
households.
The number of units affordable to very low, low and moderate income level residents,
expected to be produced under the InclusionaryZoning Ordinance is approximately
1,260 units'. These units could house 2,772 employed residents within the City of
Dublin or approximately 52 percent of the very low, low and moderate income jobholders
projected to be employed by businesses locating in Dublin. The City of Dublin's housing
needs and the contribution of the Inclusionary Zoning Ordinance are described in Chart
3·11 below.
Chart 3-11, Contribution of Inclusionary Program to Housing Employed Residents
Remaining
Units
to Build by Year
2025
12.5%
Inclusionary
Requirement
Number of
Workers at 2.2
per Unit
Employed
Residents within
Very Low, Low
and Moderate
Income Ranges
To Year 20254
State of
California
Regional
Housing Needs
Assessment
(1999 - 2006)
10,084
1,260 Units
2,772
5,303
5,436
The Study recommends that by reducing the maximum justifiable fee by the percentage
of affordable housing that will be created by the City's Inclusionary Program, the non-
residential development fee program would not duplicate the Inclusionary Zoning
Ordinance's contribution to providing affordable housing to jobholders. Using this
formula, the maximum justifiable fees to provide affordable housing to jobholder
residents, as a direct result of commercial development in Dublin, are as follows (Chart
3-12):
, Affordable Housing Priority Areas map approved May 7, 2002 by City Council Resolution 57-02, totals
10,084 units remaining to be built In Dublin. InclusÎonary requirement of 12.5% produces 1,260.5 units.
4 Employed Residents are the percentage of workers who would desire to move to Dublin at 46%. Average
of Very Low, Low and Moderate Income workers is approximately 35.3% of total employed residents.
City of Dublin
Nonresidential Impact Fee
Final Report
20
~':.'':;:¡J.i.... :..,
.-' ~ -) .......
Chart 3-12, Maximum Justifiable Fees
Future I.and Use
Fee
I.i ht Industrial
Office
R&D
Retail
$ 5.46
$13.72
$ 8.81
$10.99
G. Task Force Recommendation
At the September 4, 2003 meeting, the Nonresidential Development Affordable Housing
Impact Fee Task Force made the following recommendations: that the City Council
adopt a Nonresidential Development Affordable Housing Impact Fee Ordinance; that,
due to current market conditions, the City Council adopt a fee resolution capped at $1
per square foot of new nonresidential floor area, which is scaled to the impacts of
different industries; and that the City Council consider exempting projects which are
currently under City review.
The Task Force approved a motion to make the following recommendations to the City
Council:
1.) That an ordinance be adopted for charging a commercial linkage fee.
2.) That, due to current market conditions, a fee be capped at $1.00 per square foot
. of new nonresidential floor area and that it be scaled to the impacts of different
industries.
3.) That the City Council consider exempting certain categories of projects that are
currently in the pipeline and under City review.
As recommended, the adopted fees would range from $.34 to $1.00 per square foot of
commercial development based on the type of commercial use or business tenant, as
outlined in Chart 3-13, below. The fee would be collected prior to issuance of a building
permit. The fee would be levied one time, with the construction of new commercial floor
area.
5 KSF symbolizes 1,000 square feet of floor area.
City of Dublin
Nonresidential Impact Fee
Final Report
21
~'j I " ,. .,1 .i ',"':'.
....)~rr·.+-.~:_,,'..-'
....".. ! .', I"~
\w....
Liaht Industrial
Office
R&D
Retail
Svcs&Accommodation
Total
Chart 3-13, Recommended Fee
Future Land Use Building Size
(KSF)'
840.37
3,840.8
125
1,936.43
712.78
7,455.38
Fee'
Impact Fees
$ .40
$ 1.00
$ .64
$ .80
$ .34
$ 336,148
$ 3,840,800
$ 80,000
$ 1,549,144
$ 242.346
$ 6,048,438
The City estimates that there is approximately 10.78 million square feet of commercial
development remaining to be built, including the Transit Center Master Plan and the
Dublin Ranch commercial development. Due to the terms of some development
agreements, approximately 7.5 million square feet of commercial development would be
subject to the potential nonresidential development feea.
H. Definitions
To aid in the implementation of the Nonresidential Development Affordable Housing Impact
Fee, the following definitions provide the meanings of the fee categories, as they were
developed in the fee methodology.
"Light Industrial" shall mean development constructed for the manufacture, production,
assembly, and processing of consumer goods and other space uses incidental to these
activities. Industrial land uses include but are not limited to: assembly, contractor's
storage yards, fabrication. lumber yards, manufacturing, outdoor stockyards and service
yards, printing, processing, warehouse and distribution, and wholesale and heavy
commercial uses.
"Office" shall mean any development constructed for general business offices, medical
and professional offices. administrative or headquarters offices for large wholesaling
operations and other space uses incidental to these activities. Office land uses include
but are not limited to: administrative or corporate headquarters, banks and savings and
loans. business parks, finance offices, insurance offices, legal offices, medical and health
services offices, offices and office buildings, professional and administrative offices,
professional associations, real estate and accounting offices and travel agencies.
"Retail" shall mean establishments that are constructed for the purchase and sale of
commodities and the sale, servicing, installation. and repair of such commodities and
selVices and other space uses incidental to these activities. Retail land uses include but
are not limited to: apparel and clothing stores, auto dealers and malls, auto accessories
stores, book stores, discount stores and centers, drug stores, furniture stores and outlets.
'Total building fioor area projections include areas within the Dublin Ranch development which have been
exempted from any potential nonresidential development impact fee.
, Fee calculated per square foot of new commercial development fioor area.
a Total floor area subject to the fee is reduced by the approximately 3.3 million square feet of commercial
floor area exempted by the Fairway Ranch development agreement.
City of Dublin
Nomesidentiellmpact Fee
Finel Report
22
:¿SJ [6',~~ SM-
home furnishings and improvement centers, service stations, supermarkets, hardware
stores, pharmacies and video rentals.
"Research & Development" shall mean any facilities devoted almost exclusively to
research and development activities. Research & Development land uses include but are
not limited to: biotechnology, technology and other products and services research
facilities.
"Services and Accommodations" shall mean any development constructed as a hotel,
motel, bed-and-breakfast, inn, restaurant, bar, theater, other entertainment, recreation,
cultural facilities, and personal services such as laundries, dry cleaners and beauty salons.
I. Conclusion
A strong demand for housing in Dublin, fueled in part by strong employment growth in
the Tri-Valley region. has resulted in a growing gap between housing costs and the
ability of area workers to afford housing. This trend may continue as Dublin has the
potential to create 30,120 additional jobs between 2005 and 2025. According to Census
data for the Tri-Valley area, a significant percentage of these jobs will be filled by
individuals living in very low-, low, and moderate-income households. It is these
households that will experience the greatest difficulties in finding affordable housing in
Dublin.
The City of Dublin has established an Inclusionary Zoning Ordinance which requires
12.5 percent of all residential units be made affordable to very low, low and moderate
income families and individuais. Nevertheless, a significant gap will remain between the
need and demand for affordable housing in Dublin and the number of affordable housing
units avaiiable to these residents. One method of bridging that gap is to charge an
affordable housing impact fee to nonresidential developments. A justification for such a
fee is that nonresidential developments create employment that generates a need and
demand for affordable housing based on the anticipated income levels of the workforce
in those developments, Revenues from the Nonresidential Development Affordable
Housing Impact Fee would be used to build, subsidize, and rehabilitate housing in Dublin
that very low-, low-, and moderate-income households can rent or own.
City of Dublin
Nonresidential Impact Fee
Final Report
23