Economic development is creating thousands of new Bay Area jobs but affordable housing is not keeping pace, leaving San Mateo County and its cities struggling to encourage developers to either provide below-market rate units or equivalent fees.
San Mateo County and a number of its cities are currently banding together for a study of those impact fees which can serve as both a guide for implementation and legal rationale for those in place.
Jurisdictions are turning to these fees for affordable housing more and more since the dissolution of redevelopment agencies and the disappearance of a few state bonds. In cities where they exist, developers must pay if they don’t provide a certain number or percentage of below-market rate units in their projects. The funds are meant to give the cities means to procure affordable housing elsewhere although, with land at a premium on the Peninsula, that can be its own challenge.
Cities and counties are advised to conduct what is known as a nexus study of these fees to provide parameters for the amounts charged, the units requested and other factors which could be challenged in court. Some do while others sidestep the study and set numbers without that information, said Janet Stone, housing policy and development manager with the county Department of Housing.
Now, San Mateo County is taking the novel approach of trying a regional approach of having it and its 20 cities work together on the study rather than having each replicate the same process — and much of the same basic information — individually. Doing so saves the participants time and money, according to local housing officials.
The proposal to join the nexus study is making its way through city councils. The more that join the less expensive each city’s price tag with it falling somewhere between $16,000 to $20,000. In comparison, an individual jurisdiction would pay $30,000 to $60,000 to get the same information on their own.
“It’s a lot of research in the same place so cities are pretty happy to sign off and get what they need at a minimal cost,” said Housing Department Director Bill Lowell.
Participating cities include Brisbane, Burlingame, Colma, Foster City, Menlo Park, Redwood City, San Bruno, San Mateo, Pacifica and South San Francisco. San Mateo County is also on board and Millbrae will be next fiscal year when they can contribute funds and others may also join later although their cost will be higher. Foster City is taking the lead on the project.
The cities have a consultant identified and a list of informational goals — the maximum and recommended fees permitted on new residential development, allowable inclusionary zoning levels, the maximum and recommended fees for new commercial development and other information like fee levels in other cities and the potential benefits.
The consultant is ready to start the study which is estimated to take about eight to nine months and produce individual reports for each city, said Curtis Banks, Community Development director for Foster City.
Once in hand, the communities can decide what do do with the data.
“The study doesn’t obligate any city to initiate fees. It just gives them the background information to take the next step,” Banks said.
Lowell said the joint effort speaks not only to the county’s spirit of collaboration but also the shared understanding that the benefits of the high-tech boom on the Peninsula can be a double-edged sword when only a few hundred housing units are built compared to the tens of thousands of jobs created.
“The problem is where will these people live? In some sense, to say no to housing after you’ve provided many of the jobs, well the cow is out of the barn,” Lowell said.
The nexus study will look at both residential and commercial development and the fees reached will be unique for each city based on its conditions like land costs.
The county’s study effort is catching the attention of other regions and counties, like Santa Clara which Lowell said is “very interested” in seeing how it plays out.
While a shared nexus study is new, the county taking a regional approach to its housing needs is not. For the past two years, the county and its cities have tackled the state-mandated housing element and other goals though “21 Elements.”
The effort gives participating cities a forum for sharing best practices and brainstorm policy and zoning along with — like the nexus study — eliminating redundancies and overlapping costs, Stone said. The 21 Elements discussion is what led to the idea of doing the same with the nexus study, Stone said.
“It’s all a way for us to learn from each other,” Stone said.
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