San Mateo considers impact fee waivers for affordable housing

“It really is a balancing of fiscal responsibility for all of the wonderful things the city needs to do along with our desire to help affordable housing in ways that we can,” Papan said.

The City Council discussed whether to pursue impact fee deferrals or waiver options at its Sept. 7 meeting. Impact fees are a one-time fee levied on a development project to help pay for improvements at the site for public services. Impact fees can help a city, but they can also impede or disincentivize residential development and increase housing costs if the fees are prohibitive, according to a 2019 report from the Terner Center for Housing Innovation at the University of California, Berkeley. Impact fees can only be used for infrastructure and capital-related costs. Fee examples include transportation improvements, child care development, parks and landscape resources, art in public places, tree replacement, water improvement and sewer fees.

Some members of the City Council liked deferrals, while others preferred a partial waiver. The city collects fee deferrals during building permit issuance, but some jurisdictions allow deferred payments later in the process. The deferral gives financial flexibility to developers but creates uncertainty in the payment timeline for the city. Fee waivers or reductions for projects can help incentive affordable housing developments, reduce construction costs and create greater financial certainty for developers. San Mateo can replace lost revenue through various sources. However, it can’t make up for it by charging higher rates on other developments.

A fee deferral example was the city of Woodland, offering multifamily residential and commercial projects fee deferrals for a maximum of 24 months. Sacramento County has waived its fee but has a cap on the number of permits issued with a fee waiver. Additional options could have specific incentives for 100% affordable projects or affordable units in larger projects.

Deputy Mayor Rick Bonilla preferred a fee waiver or reduction program over a deferral.

“I just think it provides better benefit up front, and I think it can make a difference right away,” Bonilla said.

Bonilla recommended looking at sewer and water fees for a waiver and studying park impact fees.

Councilmember Amourence Lee said she wanted to help make development projects in the city more competitive for financing, the biggest barrier to getting projects built. She supported looking at ways to help with fees for developments focused on 100% affordable housing.

“That is where we will get the most bang for the buck. There is merit to treating these projects in a very particular way because they come to us so infrequently. They are so special,” Lee said.

Councilmember Joe Goethals and Mayor Eric Rodriguez supported fee deferrals because it helps developers while not costing the city as much as fee waivers down the road.

“We want to keep the discretion to add financing to a project at our discretion when we see that they are working with the community, when we see that it has the most impact and when it will add additional units or additional projects,” Goethals said.

“The reason I like it is a developer gets the benefit, and the city does not really have to pay directly for that benefit,” Rodriguez.

The city plans to have more focused conversations with developers to get an idea of a feasible fee reduction number and if it could work for the council.

curtis@smdailyjournal.com

(650) 344-5200 ext. 102