February 19, 2013 Council Meeting

Item 18. Discounted affordable housing fee

Staff presentation
There are fee exemptions for non profits
Local density requirements are with planning department
Student housing has been notified that they are not subject to fee
Impact fee program will be updated to council in December.
Discounted fee would end if benchmarks would be met in 2 years
What projects would qualify:
Projects need to be in process by October 16 2012. 6 projects qualify
There must be a time limit set. Recommend completed through ZAB within 2 years (entitlements)
Level of discount is policy that needs to be established by council.
Does council want to force unitswithin the project or a fee in lieu?  Recommend no discounted fee should be greater than 50% of the established $28,000.
Councilmember comments

Bates. So all of these projects are moving forward in one form or another and all are taking advantage of the state density bonus so they are building the units regardless.  I don’t think there’s will be too many takers.

Worthington. This is described as a referral and is based on a couple of sentences that I made at the October meeting.  I had said we need to incent that more applications come in.  Before us now does nothing to incent new projects and only affects those in the pipeline.
Bates. I sense that what Worthington had said that brought this matter before us was not accurately delivered.
Public comment
Housing Advisory Commission:  It does not make sense to reduce the fee and you must engage the Housing Authority Commission in the future. We were surprised by this and were not told about it.
Rent Board: Case needs to be supported by facts and timelines.  No need to cave in now on the fee negotiation.  How much does it cost the developer to provide a low cost unit?  A lower fee may discourage getting the density bonus.
Concerned about the cost of housing and availability of affordable housing in Berkeley.  Fee is already below the Nexus study.
Councilmember Comments
Bates. 535 units are being proposed.  I understand that every one is planning to provide the units.  So there will be 54 affordable units.  If they all paid the $13K it would build almost 100 units.  At least one developer would prefer to pay they fee but it is too high.
Arreguin. Is it a prospective or retrospective fee reduction?  These developers were aware of our fees when they began the development .  Do we want to grant the developers a fee reduction or incent new development by providing a reduced fee.  How much money will we give to the housing trust fund at the $14k rate?  We need to talk about what the reduced fee should be.  We need more money into the trust fund.  There are issues we need to address going forward.  But 14k is too low.  It should be about $20k.  It should be a prospective reduction but we should review to see how these new policies unfold.
Wengraf.  I want to figure out the consequences of the decisions we make.  Really only two of these projects are in the downtown core area.  We need to consider the physical environment and we are creating much higher buildings in the buffer than we expected.  This creates consequences.  Need to think about the impact of higher buildings.  Those projects will be  up for a long time.  We need to think more about the consequences of reducing or not reducing the fee.
Capitelli.  If the fee is less than producing the unit then they will pay the fee.  Are we allowed to prohibit the use of Section 8 vouchers in a project?  If we capitalize the income rather than the cost of developing the unit then a unit would be worth $300k.  There are other variables that come into play on these things.  Also we debated the height of buildings in the buffer zone.  I would rather see the fee paid  in these zones, rather than the density bonus.  Also the housing trust fund will be bankrupt in a few years.  We need supportive housing as much as affordable housing and we can’t afford to do this.  I would like the developer to pay the fee.  I think that at $28k the fee is too high.  We would get more housing if we got the money into the trust fund.  I believe we have a reasonable chance to get some fees in lieu of we discounted to $20k.  I also think it needs to include retrospective projects and future projects over the next 24 months.
Wozniak. I agree with Councilmember Capitelli’s analysis.  If you can set the fee (I would do a bidding) that people are willing to pay it is a better way to go.  It is better to get projects then can deliver services.  I want to generate more units in the end of the day.
Maio.  So we are looking at $14k vs. $20k.  I thought $14k was too low.  When we have developers building the units we have no control of the size of the units.  We can’t determine what populations we get to serve with the affordable housing.  We also have more control over not for profit builders.  We also need to be concerned in the buffer zones.  We can’t do this later on.  Can we lower the fee later after the fact?  I want to get as many units as we possibly can and want as much control as possible.  I will support the $20k fee
Wengraf.  I want to know how the $20k fee was reached.  It was achievable in the past.  Do you think that since the analysis was done during the recession that the fee should now be higher.
Worthington,  I believe this should be referred to the Housing Advisory Commission.  I also was to encourage further application.
Bates. I think this has been very interesting this evening.  We have 6 projects so we have the ability to experiment a bit.  I think $20k is the same as $28k.  One particular project is taking the density bonus but would rather pay the fee.  How many other projects would feel the same?   Perhaps we should negotiate the fee.  I like that approach but that would be another issue with the public.  I am afraid we won’t get any money in the housing trust fund.  I would like to move this over a few weeks.  I am looking at a more creative way to set a fee.  I want to be able to negotiate fees.  If a project can be deemed to be unfeasible and the benefit of reducing the fee outweighs the project not moving forward then that can be considered a hardship?
Maio I think that we might need some other criteria to reduce the fee – similar to hardship.
Capitelli. I move to adopt the resolution presented by staff but increase the reduced fee to $20k.  Also applications for the past and future 2 years and participate in this potential reduction.
Wengraf. So the provision was meant to help the developer in the case of financial hardship.
Arreguin. What is the timeframe for the reduction?
Bates. So in this case they could also ask for a hardship?
Absent:  Moore, Anderson
Yes. All others
No. Worthington
Item 19. DUI policy recommendations
Peace and Justice Commission presentation
Grateful for taking up DUI issues in Berkeley
Did analysis of Oakley model and do not recommend that process
Will do more research on this if Council deems it appropriate and would like to bring in other commissions to work on it with us.
Councilmember Comments
Maio. Why are you bringing health and mental health commission into this.  I think police review and transportation is enough.
Wozniak. I don’t think there is need for transportation.  The information and other programs are very old.  Is there really a problem in Berkeley?  Before loading up commissions with more work, do we really have a problem?  I would like Peace and Justice to do more research if there is a problem and if there is then we should bring in health and police review
Worthington. I would ask the other commissions if they want to be involved rather than instruct them.  I would also include the City Managers suggestion to get statistics.
Bates. I think we need to get the facts before we move forward on this issue