The Redwood City Planning Commission will consider reducing its affordable housing impact fee, which staff believe will incentivize more housing production amid financial market constraints.
For each new development, applicants pay different kinds of developer impact fees to cities meant to fund public services and infrastructure, ranging from parks and traffic-related projects to affordable housing production. But after meeting with applicants involved in stalled developments, Redwood City staff believe some projects need additional help moving forward and is recommending the Planning Commission reduce requirements for residential developments by 25%. This would include reducing housing impact fees for developments proposing five to 19 units.
“By offering some temporary relief by reducing the inclusionary housing and fee requirements, the City may serve as a catalyst to advance hundreds of housing units and unlock millions of dollars in much-needed impact fees, including those for parks, sewer, transportation, and water,” according to a staff report.
There are seven residential or mixed-use projects in the pipeline that could qualify for this program, which includes a total of 1,253 units, 234 of which are affordable.
For a residential project for 15 units, the affordable housing impact fee could be reduced from $884,000 to $663,000. Alternatively, once projects proceed to construction the city would collect over $25 million once applicants pay their respective impact fees — the lessened affordable housing fee, park fee, transportation fee, water capacity fees and sewer capacity fees.
However, the program could also result in a reduction of approximately 57 affordable units, but staff believe the loss is worth it.
Between 2023 and 2031, Redwood City has a state obligation to produce 4,588 new housing units. To keep pace, the city should be at 25% of the eight-year goal, but is currently at 18%, according to a staff report.
There are 2,584 housing units in the pipeline, of which 954 are affordable, but are stuck in planning stages before permits are issued.
“Because the City has already secured a significant number of housing units in the pipeline, it may be more feasible to accept a slight reduction in deed-restricted affordable units on select projects than to compromise on essential infrastructure funding,” according to a staff report.
The amended ordinance will be considered at the Planning Commission’s meeting at 6 p.m. Aug. 19.
(1) comment
So the Redwood City Planning Commission is admitting what many already know is an obstacle to building affordable or any housing – the multitude of fees charged to developers (which are likely passed onto the buyer in whole or in large part). A good start but why only 25%?
And maybe it’s early in the morning and my comprehension and math skills are short-circuiting… If a residential project for 15 units incurs a $663,000 affordable housing impact fee but then the city collects over $25 million once applicants pay all of the other imposed impact fees, are we saying the park fee, transportation fee, water capacity fees and sewer capacity fees add up to over $24.3 million? So fees are over $1.6 million a unit and that’s before cost to developers to build these units? A reduction of $220,000 is peanuts. BTW, what are the selling costs for these units? $3 million apiece?
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