Redwood City eyes housing priorities

The governing body offered unanimous support for staff’s proposed improvements to the Affordable Housing Ordinance, which include adding language calling for current and former residents and employees and people offered work in the city to receive priority for affordable housing. 

“We as a city recognize that there isn’t a one-size-fits-all requirement. We recognize that development projects come in many forms with different phasing and financing constraints,” Lancaster said. 

Adopted in 2015, the code requires large residential developments, consisting of at least 20 units, to be made up of at least 20% affordable units. Of the 20%, 10% must be for moderate-income households, 5% for low-income households and 5% for very-low income households. 

By instituting the amendments, city staff hope to fight back against displacement as the city continues to see growing development interests and rents increase, Housing Leadership Manager Alin Lancaster told commissioners. 

Small residential developments and nonresidential developments are not subject to the building requirement but are instead subject to a housing impact fee. Developers of all types and sizes can also fulfill its affordable housing obligations by building on- and off-site housing, purchasing existing units for conversion into affordable ones or donating land for construction of affordable units. 

Staff has also opted to raise the city’s nonresidential housing impact fees by 17% for commercial projects of more than 5,000 square feet. For office, medical office and research and development proposals, the fee will increase from $20 for every square foot to $23.40 while hotel, retail, restaurant and services projects will see an increase from $5 to $5.85 per square foot. 

The city first adopted housing impact fees in 2015 and directs the funds toward the construction of affordable housing, acquisition of land and conservation of existing units. 

The original ordinance gave staff the authority to increase the fees annually in line with the Engineering News-Record Construction Cost Index for San Francisco but the fees have not been increased since adoption, Lancaster said. 

Staff has also proposed that the city implement a requirement that affordable units be completed by the time the nonresidential structure is completed. Residential developments are similarly required to have affordable units delivered at the same time as market-rate units. 

Recognizing that the requirement could deter developers from building affordable housing and encourage payment of in-lieu fees, staff has recommended the city also adopt two alternative paths that would allow developers more time if they provide a competition guaranty, deposit or letter of credit. 

The city may revoke or extend its agreements five years after the building permit is extended but City Attorney Veronica Ramirez said developers have largely met the city’s interests. 

“We’ve actually been really fortunate,” Ramirez said. “We haven’t had to execute on that and hopefully won’t have to.” 

Vice Chair Rick Hunter argued the city should increase its fee by roughly 34% after accounting for a spike in construction costs recorded since April of this year. He also suggested that the city consider including language in the ordinance that would allow the city manager to enter into mutual agreements with neighboring cities to also prioritize each other’s residents and employees. 

On who should qualify for priority, he said close relatives of people who have lived in the city should also be granted the upper hand for affordable units, given that they meet other necessary financial qualifications. 

Alternatively, Commissioner Isabella Chu argued that increasing the fee by 34% would make an already expensive effort to build even more expensive, ultimately deterring developers. She also argued against Hunter’s suggestion that relatives of locals be prioritized by noting many would already receive a “soft landing” from their local family members.

To Hunter’s suggestion for a mutual agreement among neighboring cities, Ramirez recommended that the commission move forward the amendments as proposed while also calling on the city to consider the addition. 

Crnogorac argued to limit the priority list, suggesting that staff should prioritize incoming employees differently than people who have already been living and working in the community.  

Ramirez responded to Crnogorac’s recommendation by noting the city is better protected legally with a broader ordinance and that encouraging employees to live locally cuts down on the city’s greenhouse gas emissions, another council priority. 

Additionally, Chair Nancy Radcliffe backed the broadened priority list because it encourages people who work in the city to spend more time engaging with the community rather than commuting. 

“I think it’s a win-win in that regard,” Radcliffe said. 

sierra@smdailyjournal.com 

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