Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 18 workers, a portion of which will need affordable housing. The nexus-based fee for market-rate residential units represents the fee that the Town of Atherton would need to collect to support the construction of the affordable housing needed to house these lower-income worker households.
The process for estimating the relationship between new market-rate residential development and the fee revenue necessary to address the resulting affordable housing need consists of the following steps:
Step 1: Identify housing types and prices. This step consists of identifying the types of residential development that will be evaluated in the nexus analysis as well as the typical rental rate or sale price for units of each type.
Step 2: Estimate incomes of households in new market-rate housing. Based on the rental rates or sale price for each residential development type, this step estimates the typical household income for households that would reside in each type of unit.
Step 3: Analyze spending patterns for households in new market-rate units and estimate the number of jobs associated with this spending. Based on the household incomes estimated in Step 2, Step 3 relies on the IMPLAN software model to estimate the number of new jobs that would be associated with household spending among households in new market-rate units. IMPLAN also provides an estimated distribution of these jobs by industry.
Step 4: Estimate new worker households by income level. For each residential development type, the estimated number of worker households at each income level is based on the number of new workers by industry as estimated in Step 3, the typical household income distribution for workers in each industry, and the typical number of workers per household.
This step yields an estimate of the number of lower-income worker households associated with the development of each market-rate unit, by residential development type. This number constitutes the estimated affordable housing need associated with each residential unit type.
Step 5: Calculate the affordable housing financing gap. The financing gap is the amount of public subsidy needed to finance an affordable housing unit.
Step 6: Calculate the maximum nexus-based fee. The maximum nexus-based fee is equal to the number of lower-income worker households from Step 4 multiplied by the affordable housing financing gap from Step 5.
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 19 Each of these steps is discussed in more detail in the following sections.
Step 1: Define Housing Types and Identify Housing Prices This analysis evaluates four market-rate residential unit types, which are consistent with the four prototypes described in the previous chapter: multifamily rental apartment units, rental townhouses, for-sale townhouses, and a single-family home. For the purpose of the nexus analysis, the single-family home does not include a deed-restricted ADU because the nexus analysis evaluates a potential in-lieu fee, which would only be charged in a scenario in which a deed-restricted ADU would not be provided. These unit types encompass the range of development typologies that are anticipated to occur in Atherton over the next several years.
Part of Step 1 is to identify the estimated average rent or sale price for each unit type. To estimate rental rates and sale prices for new multifamily apartment and townhouse developments in Atherton, BAE reviewed data on rental rates among properties in Menlo Park, Palo Alto, and Redwood City. Multifamily rental rates for properties in Atherton could not be used for this analysis due to the lack of existing multifamily properties in the Town. For multifamily rental apartment units, BAE reviewed data from Costar on rental rates among newlyconstructed multifamily rental properties in Menlo Park, Palo Alto, and Redwood City. For rental townhomes, BAE reviewed data from Zillow on asking rents among newly-constructed townhomes in Menlo Park, Palo Alto, and Redwood City. For for-sale townhomes, BAE reviewed data from Redfin on sale prices among recently-constructed townhouses in Menlo Park, Palo Alto, and Redwood City. For single-family homes, BAE reviewed data from Redfin on sale prices among newly-constructed single-family homes in Atherton. The resulting average rent and sale price estimates are shown in Table 5 and Table 6, respectively.
Step 2: Estimate the Incomes of Households in New Market Rate Housing The analysis uses the estimated rent and sale prices for new units in Atherton to estimate the household incomes of households that occupy new rental and for sale units in Atherton. Table 5 presents the annual household income required to rent new market-rate multifamily rental apartment units in Atherton, assuming households spend 30 percent of their gross income on rent and utilities, in accordance with HUD guidelines. Based on an estimated average monthly rent of $5,097 for new rental units in multifamily rental apartment developments and $6,808 for new rental townhomes, the estimated annual household income required to afford these market rents is approximately $210,900 and $279,300, respectively.
Table 6 shows the estimated annual household income required to afford a new for-sale home in Atherton. Based on the sale prices for new for sale units, the estimated annual household income needed to afford new for-sale units in Atherton is approximately $452,900 for townhouses and $2.37 million for single-family units.
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 20 Table 5: Household Income Required to Rent New Multifamily Rental Units in Atherton
Notes:
(a) Estimated average monthly rents for new units based on data from Costar. (b) Housing Authority of San Mateo County 2023 allowances for tenant-furnished utilities and other services for a multifamily unit that uses electricity for cooking, heating, and water heating, as well as electricity for lights and appliances. Figure assumes the tenant is charged for water service. The allowance used in this table is based on a one-bedroom unit. (c) 30 percent of gross income spent on housing costs.
Sources: Costar, 2024; Housing Authority of San Mateo County, 2023; BAE, 2024.
Table 6: Household Income Required to Purchase New Market-Rate Units in Atherton
Notes:
(a) Estimated sale prices based on data from Redfin on recent sales of townhouses in Menlo Park, Palo Alto, and Redwood City.
(b) Monthly housing costs are based on the estimated sale price for each unit type and the assumptions shown in the table. (c) Equal to the average of the average weekly rate for a 30-year fixed rate mortgage between January 2019 and December 2023 per Freddie Mac.
(d) The median of the property tax rates in the tax rate areas in the Town of Atherton per the County of San Mateo 2023- 2024 Tax Rate Book.
(e) Based on insurance rate information provided on the California Department of Insurance website for homes in San Mateo County.
(f) Estimate based on HOA fees for recently-constructed condominiums and townhouses in Menlo Park and Palo Alto that were sold in the past year, according to data from Redfin.
Sources: Redfin, 2024; Freddie Mac, 2019-2023; California Department of Insurance, 2024; San Mateo County AuditorController, 2023/2024; BAE, 2024.
Apartment Townhome
Average Monthly Rent (a) $5,097 $6,808
Plus Utilities (b) $175 $175
Total Monthly Housing Costs $5,272 $6,983
Annual Housing Costs $63,264 $83,796
Household Income Required (c) $210,880 $279,320
Townhouse Single-Family
Estimated Sale Price for New Residential Unit (a) $2,582,000 $13,650,000 Monthly Housing Costs for a New Residential Unit (b) $13,210 $69,265 Annual Housing Costs $158,526 $831,180
Household Income Required $452,931 $2,374,801
Assumptions
Annual Interest Rate (c) 4.43%
Term of Mortgage (years) 30
Percent of sales price as down payment 20%
Property tax as a % fo Sale Price (annual) (d) 1.1071%
Annual homeowner's insurance rate as a percent of sale price (single-family) (e) 0.16% Annual homeowner's insurance cost (townhouse/condo) (e) $513 Monthly homeowners' association fee (townhomes) (f) $410 Percent of household income available for housing costs 35%
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 21 Step 3: Analyze Projected Spending Patterns for Households in New Market-Rate Units and Estimate the Number of Jobs Associated with this Spending New household spending within an economy supports jobs. As households spend money on retail goods, food, and health, personal, professional, and educational services, they support job growth in these and other sectors.
To estimate the effect of new household spending on employment generation, this analysis uses IMPLAN (“Impact analysis for Planning”), a widely-accepted and utilized software model. At the heart of the model is an input-output dollar flow table. For a specified region, the input-output table accounts for all dollar flows between different sectors of the economy. Using this information, IMPLAN models the way income injected into one sector is spent and re-spent in other sectors of the economy, generating waves of economic activity, or so-called “economic multiplier” effects. Appendix D contains a more detailed overview of IMPLAN.
The IMPLAN model is also able to estimate the number of direct, indirect, and induced jobs generated by a given economic “event.” Once the economic events have been entered into the model, IMPLAN reports the following types of impacts:
• Direct Impacts. Direct impacts refer to the set of producer or consumer expenditures applied to the predictive model for impact analysis. It is the amount of spending available to flow through the local economy. IMPLAN then displays how the local economy will then respond to these initial changes. The direct impacts may equal the amount of spending input into the model, depending on a variety of factors. • Indirect Impacts. The indirect impacts refer to the impact of local industries buying goods and services from other local industries. The cycle of spending works its way backward through the supply chain until all money leaks from the local economy, either through imports or by payments to income and taxes. For capital projects this would include payments for construction inputs such as wood, steel, office supplies, and any other non-labor payments that a construction firm would purchase in the building process. Since IMPLAN is only used in the housing analysis for this report to assess the impacts of new resident household expenditures, there are no indirect impacts to assess as there are no industry expenditures as inputs to the model. • Induced Impacts. The induced impacts refer to an economy’s response to an initial change (direct impact) that occurs through re-spending of income according to household spending patterns. When households earn income, they spend part of that income on goods and services, such as food and healthcare. IMPLAN models households’ disposable income spending patterns and distributes them through the local economy.
For the purpose of this analysis, the economic “event” is the household spending by occupants of new residential units in Atherton. By IMPLAN definition these household expenditures are direct
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 22 impacts, and the resulting spending generates induced impacts. For instance, the household expenditures generate jobs for cashiers and baggers at grocery stores patronized by the new households. The process initiated by household expenditures continues as these workers and the businesses they work for spend money in subsequent transactions, supporting employment at places other than the initial point of sale, such as wholesalers supplying retail stores, or truck drivers delivering goods to those stores. In turn, these businesses and workers spend money to generate additional activity in the local economy. These are all part of the induced impacts linked to the household expenditures.
For each of the residential unit types evaluated in this analysis, the IMPLAN analysis provides an estimate of the total number of jobs generated by the household expenditures made by residents in new market-rate housing. Because household spending tends to increase as household incomes increase, the IMPLAN analysis indicates that – of the four residential unit types analyzed – single-family units will generate the highest number of jobs per unit, followed by for-sale townhouses, rental townhouses, and multifamily rental apartment units, in that order. In addition to an estimate of the total number of jobs, the IMPLAN analysis also provides an estimate of the number of jobs in each industry sector that each unit type will generate. These estimates are shown in Step 4 (Table 8 through Table 11) below.
Step 4: Estimate New Worker Households by Household Income Level Worker households5 often have more than one employed person, and therefore the incomes of individual workers do not provide sufficient information to estimate the distribution of household incomes among new workers. This analysis estimates workers’ household incomes using the Public Microdata Sample (PUMS) data set, which consists of detailed data from the US Census American Community Survey that allow for cross-tabulations that are not available through published ACS data. For each of the industry sectors identified in the IMPLAN analysis described above, the PUMS data were used to estimate worker household incomes for workers associated with job growth attributable to new market-rate residential units.
Table 7 shows the distribution of workers in each major industry sector by household income level, based on PUMS data for workers employed in each industry sector that live in San Mateo County.
5 A worker household is defined as a household with one or more employed persons. They may be wage and salary workers, or self-employed/sole proprietors.
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Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 23 Table 7: Worker Household Income Level by Industry of Employment, San Mateo County Note:
(a) Based on a cross tabulation of Public Use Microdata Samples (PUMS) from the 2018-2022 American Community Survey. These incomes were compared to 2022 San Mateo County household income limits published by HCD to determine the percentage of households falling into each income category. The analysis controlled for household size, to address the varying income limits for each household size.
Sources: American Community Survey, 2018-2022 Public Use Microdata Sample; CA Dept. of Housing and Community Development (HCD), 2022; BAE, 2024.
Estimated Household Income as a Percent of AMI (a)
Acutely Extremely Very Above
NAICS Low Low Low Low Moderate Moderate
Industry Code (15% AMI) (30% AMI) (50% AMI) (80% AMI) (120% AMI) (>120% AMI) Total Private Sector
Agriculture and Natural Resources 11, 21 9.0% 5.1% 10.6% 15.1% 40.8% 19.4% 100.0% Construction 23 2.4% 7.9% 15.0% 20.2% 18.1% 36.3% 100.0% Manufacturing 31-33 1.2% 3.6% 4.6% 13.5% 13.5% 63.6% 100.0% Wholesale Trade 42 0.2% 5.8% 8.5% 15.1% 20.3% 50.1% 100.0% Retail Trade 44-45 1.5% 5.5% 14.8% 22.3% 17.6% 38.2% 100.0% Transportation, Warehousing, and Utilities 48-49, 22 1.1% 7.5% 14.3% 26.9% 15.3% 35.0% 100.0% Information 51 0.4% 1.5% 3.1% 7.5% 7.2% 80.3% 100.0%
Finance, Insurance, and Real Estate 52-53 0.6% 2.3% 4.3% 12.1% 12.7% 68.1% 100.0% Professional, Scientific, & Technical Services, & Mgmt of Companies 54-55 0.5% 1.4% 2.7% 8.4% 11.5% 75.5% 100.0% Administrative and Support and Waste Management Services 56 4.6% 12.0% 22.0% 22.2% 13.8% 25.5% 100.0% Educational Services 61 2.5% 3.5% 9.6% 15.3% 16.9% 52.2% 100.0% Health Care and Social Assistance 62 0.8% 3.4% 8.5% 18.3% 16.2% 52.6% 100.0% Leisure and Hospitality 71-72 3.6% 10.7% 14.3% 26.1% 16.7% 28.6% 100.0% Other Services Except Public Administration 81 1.0% 8.3% 16.5% 24.7% 18.0% 31.5% 100.0% Government 1.1% 3.4% 7.6% 15.1% 19.4% 53.4% 100.0%
Total 1.4% 4.7% 9.2% 16.6% 15.3% 52.7% 100.0%
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Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 24 Table 8, Table 9, Table 10, and Table 11 apply the household income distribution by industry, as shown in Table 7, to the number of jobs generated in each industry as a result of spending by households, as estimated in Step 3. Since the income of an individual household generates only a small amount of employment within each specific industry and household income level category, the tables show the number of jobs generated for every 100 units. The results are then divided by 100 in Step 6 below to show the estimated impact of a single household.
Housing need is based on the number of households rather than the number of jobs. As such, the analysis translates the number of jobs into households by dividing the number of jobs by the average number of workers per worker household for each income category, using PUMS data to identify the average number of workers per worker household by household income level.
The number of jobs that each residential product type generates corresponds to the household income required to afford each unit type. As shown in Table 8, multifamily rental apartment units in Atherton generate a need for approximately 18 housing units for local workers per 100 units, including approximately eight units affordable to extremely low-, very low--, and lowincome households. As shown in Table 9, rental townhouse units in Atherton generate a need for approximately 24 housing units for local workers per 100 units, including approximately ten units affordable to extremely low-, very low-, and low-income households. As shown in Table 10, forsale townhouse units in Atherton generate a need for approximately 39 housing units for local workers per 100 units, including approximately 17 units affordable to extremely low-, very low-, and low-income households. As shown in Table 11, single-family homes in Atherton generate a need for approximately 220 housing units for local workers per 100 units, including approximately 96 units affordable to extremely low-, very low-, and low-income households.
These findings are summarized in Table 12.
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 25 Table 8: Jobs and Worker Household Generation by Income Level from New Multifamily Rental Apartment Units Notes:
(a) Total Jobs is output of IMPLAN model, and shows employment generated by household spending. Columns to right may not sum to Total Jobs due to independent rounding. (b) Estimated Jobs per 100 Units at each worker household income level is equal to Total Jobs per 100 Units in each industry, as shown in this table, multiplied by the share of workers in each industry at each income level, as shown in Table 7. (c) Average number of workers per worker household by income category calculated based on American Community Survey PUMS Analysis, 2018-2022.
Sources: American Community Survey, 2018-2022, including the Public User Microdata Sample; CA Department of Housing and Community Development, 2022; IMPLAN; BAE, 2024.
Estimated Jobs per 100 Units
Total Jobs by Worker Household Income Level (b)
NAICS per 100 Up to 15% to 30% to 50% to 80% to Over
Industry Code Units (a) 15% AMI 30% AMI 50% AMI 80% AMI 120% AMI 120% AMI Private Sector
Agriculture and Natural Resources 11, 21 0.022 0.002 0.001 0.002 0.003 0.009 0.004 Construction 23 0.196 0.005 0.015 0.029 0.040 0.036 0.071 Manufacturing 31-33 0.047 0.001 0.002 0.002 0.006 0.006 0.030 Wholesale Trade 42 0.612 0.001 0.035 0.052 0.092 0.124 0.307 Retail Trade 44-45 4.429 0.069 0.245 0.654 0.988 0.780 1.694 Transportation, Warehousing, and Utilities 48-49, 22 1.134 0.012 0.085 0.162 0.305 0.174 0.397 Information 51 0.474 0.002 0.007 0.015 0.036 0.034 0.381 Finance, Insurance, and Real Estate 52-53 3.318 0.018 0.076 0.142 0.400 0.422 2.260 Professional, Scientific, & Technical Services, & Mgmt of Companies 54-55 0.924 0.005 0.013 0.025 0.077 0.106 0.697 Administrative and Support and Waste Management Services 56 0.999 0.046 0.120 0.219 0.222 0.137 0.255 Educational Services 61 2.158 0.054 0.075 0.208 0.329 0.366 1.126 Health Care and Social Assistance 62 6.875 0.058 0.237 0.587 1.261 1.113 3.618 Leisure and Hospitality 71-72 5.366 0.191 0.576 0.765 1.403 0.898 1.533 Other Services Except Public Administration 81 3.666 0.036 0.306 0.604 0.905 0.660 1.155 Government 0.093 0.001 0.003 0.007 0.014 0.018 0.050
Total Jobs 30.31 0.50 1.80 3.47 6.08 4.88 13.58
Workers per Households (c) 1.69 1.19 1.33 1.46 1.67 1.77 1.84 Number of Households 17.96 0.42 1.36 2.38 3.65 2.76 7.38
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 25
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 26 Table 9: Jobs and Worker Household Generation by Income Level from New Rental Townhouse Units Notes:
(a) Total Jobs is output of IMPLAN model, and shows employment generated by household spending. Columns to right may not sum to Total Jobs due to independent rounding. (b) Estimated Jobs per 100 Units at each worker household income level is equal to Total Jobs per 100 Units in each industry, as shown in this table, multiplied by the share of workers in each industry at each income level, as shown in Table 7. (c) Average number of workers per worker household by income category calculated based on American Community Survey PUMS Analysis, 2018-2022.
Sources: American Community Survey, 2018-2022, including the Public User Microdata Sample; CA Department of Housing and Community Development, 2022; IMPLAN; BAE, 2024.
Estimated Jobs per 100 Units
Total Jobs by Worker Household Income Level (b)
NAICS per 100 Up to 15% to 30% to 50% to 80% to Over
Industry Code Units (a) 15% AMI 30% AMI 50% AMI 80% AMI 120% AMI 120% AMI Private Sector
Agriculture and Natural Resources 11, 21 0.029 0.003 0.001 0.003 0.004 0.012 0.006 Construction 23 0.260 0.006 0.021 0.039 0.053 0.047 0.095 Manufacturing 31-33 0.062 0.001 0.002 0.003 0.008 0.008 0.040 Wholesale Trade 42 0.810 0.002 0.047 0.069 0.122 0.165 0.406 Retail Trade 44-45 5.866 0.091 0.325 0.866 1.308 1.033 2.243 Transportation, Warehousing, and Utilities 48-49, 22 1.503 0.016 0.112 0.214 0.404 0.230 0.526 Information 51 0.628 0.003 0.009 0.019 0.047 0.045 0.504 Finance, Insurance, and Real Estate 52-53 4.395 0.024 0.100 0.188 0.530 0.559 2.994 Professional, Scientific, & Technical Services, & Mgmt of Companies 54-55 1.223 0.006 0.018 0.033 0.102 0.141 0.924 Administrative and Support and Waste Management Services 56 1.323 0.060 0.159 0.291 0.294 0.182 0.337 Educational Services 61 2.859 0.072 0.099 0.275 0.436 0.484 1.491 Health Care and Social Assistance 62 9.106 0.077 0.314 0.778 1.670 1.474 4.792 Leisure and Hospitality 71-72 7.108 0.253 0.762 1.014 1.858 1.190 2.030 Other Services Except Public Administration 81 4.855 0.047 0.405 0.800 1.198 0.875 1.530 Government 0.124 0.001 0.004 0.009 0.019 0.024 0.066
Total Jobs 40.15 0.66 2.38 4.60 8.05 6.47 17.98
Workers per Households (c) 1.69 1.19 1.33 1.46 1.67 1.77 1.84 Number of Households 23.78 0.56 1.80 3.16 4.84 3.66 9.78
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 26
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 27 Table 10: Jobs and Worker Household Generation by Income Level from New For-Sale Townhouse Units Notes:
(a) Total Jobs is output of IMPLAN model, and shows employment generated by household spending. Columns to right may not sum to Total Jobs due to independent rounding. (b) Estimated Jobs per 100 Units at each worker household income level is equal to Total Jobs per 100 Units in each industry, as shown in this table, multiplied by the share of workers in each industry at each income level, as shown in Table 7. (c) Average number of workers per worker household by income category calculated based on American Community Survey PUMS Analysis, 2018-2022.
Sources: American Community Survey, 2018-2022, including the Public User Microdata Sample; CA Department of Housing and Community Development, 2022; IMPLAN; BAE, 2024.
Estimated Jobs per 100 Units
Total Jobs by Worker Household Income Level (b)
NAICS per 100 Up to 15% to 30% to 50% to 80% to Over
Industry Code Units (a) 15% AMI 30% AMI 50% AMI 80% AMI 120% AMI 120% AMI Private Sector
Agriculture and Natural Resources 11, 21 0.048 0.004 0.002 0.005 0.007 0.020 0.009 Construction 23 0.431 0.011 0.034 0.065 0.087 0.078 0.157 Manufacturing 31-33 0.103 0.001 0.004 0.005 0.014 0.014 0.066 Wholesale Trade 42 1.343 0.003 0.078 0.114 0.203 0.273 0.673 Retail Trade 44-45 9.725 0.151 0.539 1.435 2.169 1.712 3.719 Transportation, Warehousing, and Utilities 48-49, 22 2.491 0.027 0.186 0.355 0.669 0.382 0.872 Information 51 1.041 0.004 0.016 0.032 0.078 0.075 0.836 Finance, Insurance, and Real Estate 52-53 7.286 0.041 0.166 0.311 0.879 0.927 4.963 Professional, Scientific, & Technical Services, & Mgmt of Companies 54-55 2.028 0.010 0.029 0.055 0.170 0.233 1.531 Administrative and Support and Waste Management Services 56 2.193 0.100 0.263 0.482 0.487 0.302 0.559 Educational Services 61 4.739 0.119 0.165 0.456 0.723 0.803 2.473 Health Care and Social Assistance 62 15.096 0.128 0.520 1.290 2.769 2.444 7.945 Leisure and Hospitality 71-72 11.784 0.419 1.264 1.681 3.081 1.973 3.366 Other Services Except Public Administration 81 8.049 0.078 0.672 1.326 1.986 1.450 2.537 Government 0.205 0.002 0.007 0.016 0.031 0.040 0.109
Total Jobs 66.56 1.10 3.95 7.63 13.35 10.73 29.82
Workers per Households (c) 1.69 1.19 1.33 1.46 1.67 1.77 1.84 Number of Households 39.43 0.92 2.98 5.23 8.02 6.07 16.21
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 27
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 28 Table 11: Jobs and Worker Household Generation by Income Level from New Single-Family Residential Units Notes:
(a) Total Jobs is output of IMPLAN model, and shows employment generated by household spending. Columns to right may not sum to Total Jobs due to independent rounding. (b) Estimated Jobs per 100 Units at each worker household income level is equal to Total Jobs per 100 Units in each industry, as shown in this table, multiplied by the share of workers in each industry at each income level, as shown in Table 7. (c) Average number of workers per worker household by income category calculated based on American Community Survey PUMS Analysis, 2018-2022.
Sources: American Community Survey, 2018-2022, including the Public User Microdata Sample; CA Department of Housing and Community Development, 2022; IMPLAN; BAE, 2024.
Estimated Jobs per 100 Units
Total Jobs by Worker Household Income Level (b)
NAICS per 100 Up to 15% to 30% to 50% to 80% to Over
Industry Code Units (a) 15% AMI 30% AMI 50% AMI 80% AMI 120% AMI 120% AMI Private Sector
Agriculture and Natural Resources 11, 21 0.270 0.024 0.014 0.029 0.041 0.110 0.052 Construction 23 2.406 0.059 0.190 0.360 0.487 0.437 0.874 Manufacturing 31-33 0.577 0.007 0.021 0.027 0.078 0.078 0.367 Wholesale Trade 42 7.494 0.016 0.433 0.634 1.131 1.524 3.755 Retail Trade 44-45 54.244 0.840 3.005 8.006 12.098 9.549 20.746 Transportation, Warehousing, and Utilities 48-49, 22 13.895 0.150 1.038 1.981 3.732 2.130 4.864 Information 51 5.808 0.025 0.088 0.180 0.436 0.417 4.663 Finance, Insurance, and Real Estate 52-53 40.641 0.226 0.929 1.734 4.900 5.169 27.683 Professional, Scientific, & Technical Services, & Mgmt of Companies 54-55 11.313 0.058 0.162 0.306 0.947 1.300 8.540 Administrative and Support and Waste Management Services 56 12.233 0.559 1.469 2.687 2.716 1.684 3.118 Educational Services 61 26.435 0.666 0.919 2.545 4.033 4.480 13.791 Health Care and Social Assistance 62 84.206 0.715 2.902 7.194 15.447 13.631 44.316 Leisure and Hospitality 71-72 65.728 2.338 7.050 9.375 17.186 11.004 18.776 Other Services Except Public Administration 81 44.897 0.436 3.748 7.394 11.080 8.088 14.151 Government 1.144 0.012 0.039 0.087 0.173 0.222 0.610
Total Jobs 371.29 6.13 22.01 42.54 74.48 59.82 166.31
Workers per Households (c) 1.69 1.19 1.33 1.46 1.67 1.77 1.84 Number of Households 219.94 5.15 16.61 29.19 44.73 33.86 90.39
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 28
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 29 Table 12: Summary of Induced Housing Need per 100 Units by Residential Development Type by Income Category Notes:
(a) Total Jobs is output of IMPLAN model, and shows employment generated by household spending. Columns to right may not sum to Total Jobs due to independent rounding. (b) Estimated Jobs per 100 Units at each worker household income level is equal to Total Jobs per 100 Units in each industry, as shown in this table, multiplied by the share of workers in each industry at each income level, as shown in Table 7. (c) Average number of workers per worker household by income category calculated based on American Community Survey PUMS Analysis, 2018-2022.
Sources: American Community Survey, 2018-2022, including the Public User Microdata Sample; CA Department of Housing and Community Development, 2022; IMPLAN; BAE, 2024.
Estimated Jobs per 100 Units
Total Jobs by Worker Household Income Level (b)
per 100 Up to 15% to 30% to 50% to 80% to Over Total Up to Jobs Units (a) 15% AMI 30% AMI 50% AMI 80% AMI 120% AMI 120% AMI 80% AMI Rental Apartments 30.31 0.50 1.80 3.47 6.08 4.88 13.58 11.85 Rental Townhomes 40.15 0.66 2.38 4.60 8.05 6.47 17.98 15.70 For-Sale Townhomes 66.56 1.10 3.95 7.63 13.35 10.73 29.82 26.02 For-Sale Single-Family 371.29 6.13 22.01 42.54 74.48 59.82 166.31 145.16 Estimated Worker Households per 100 Units
Total HH by Worker Household Income Level (c)
per 100 Up to 15% to 30% to 50% to 80% to Over Total Up to Households Units (c) 15% AMI 30% AMI 50% AMI 80% AMI 120% AMI 120% AMI 80% AMI Rental Apartments 17.96 0.42 1.36 2.38 3.65 2.76 7.38 7.81 Rental Townhomes 23.78 0.56 1.80 3.16 4.84 3.66 9.78 10.35 For-Sale Townhomes 39.43 0.92 2.98 5.23 8.02 6.07 16.21 17.15 For-Sale Single-Family 219.94 5.15 16.61 29.19 44.73 33.86 90.39 95.68
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 29
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 30 Step 5: Calculate Financing Gap per Affordable Unit
The next step in the nexus analysis is to calculate the cost to house the extremely low-, very low-, and low-income households calculated in Step 3 by determining the per unit “financing gap” for an affordable unit. The nexus analysis defines the financing gap for an affordable unit as the difference between the cost to develop an affordable unit and the amount of permanent financing available to support the development of the unit.
Affordable Unit Development Cost. To estimate the average construction cost for an affordable unit, BAE reviewed cost estimates provided in applications for tax credit funding that were submitted in 2022 and 2023 for proposed affordable housing developments in San Mateo County. Cost information from applications submitted in 2022 was inflated to 2023 estimates based on the RS Means Historical Cost Index. Based on the information from these applications, BAE estimated that the average cost to construct an affordable housing unit in Atherton would be approximately $915,000, as shown in Table 13 below.
Permanent Financing. To calculate the financing gap for an affordable unit, the nexus analysis assumes that an affordable housing developer is able to secure four percent LIHTC equity financing as well as a permanent loan based on the net operating income (NOI) from each unit.
This analysis assumes four percent LIHTC equity financing because this funding source is more readily available than nine percent LIHTC financing, for which there is considerable competition.
However, it should be noted that four percent LIHTC financing is nonetheless limited and has become more competitive in recent years. As a result, four percent LIHTC financing is unlikely to be available at the levels that would be necessary to construct all affordable units needed to address housing needs attributable to new development in the Atherton area. In addition, inclusion of four percent tax credits as a funding source shifts some of the cost of providing affordable housing onto the public sector because the tax credits reduce the tax credit investors’ tax liability. Including four percent LIHTC financing as a source of funding in the nexus model reduces the net affordability gap show in Table 13, and therefore serves as a conservative assumption in estimating the cost associated with mitigating the housing needs generated by new non-residential development. As shown in Table 13, four percent LIHTC equity would provide an estimated $367,510 per affordable unit, based on an average cost of approximately $915,000 per unit and standard current four percent tax credit pricing assumptions.
The financing gap calculation does not include financing from other public funding sources because other sources are limited, typically require a highly competitive application process, and require a public subsidy to fill the financing gap. These sources are not sufficient to fully address affordable housing needs that arise due to the impacts of future market-rate residential development projects in Atherton.
Table 13 also shows the estimated permanent loan amount per unit, based on the NOI from each unit (i.e., gross income net of vacancy and expenses) and typical financing terms. The rental
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 31 rates used in this analysis are the 2023 rent limits for a two-bedroom unit for households at each income level, as set by the Tax Credit Allocation Committee (TCAC) for LIHTC projects, net of an estimated utility allowance. The use of the two-bedroom rent limit provides a conservative assumption because units in affordable housing developments tend to have a large share of studio and one-bedroom units, which have lower rental rates. Using the higher two-bedroom rental rate results in more assumed rental income from the affordable units, which results in a lower financing gap and a lower maximum fee amount. The vacancy, miscellaneous income, and operating expense assumptions shown in Table 13 are also based on information provided in 2022 and 2023 applications for LIHTC funding for projects in San Mateo County. Based on the NOI for units at each affordability level and standard financing assumptions, the supportable loan amount ranges from $10,466 per unit for units serving extremely low-income households to $295,646 per unit for units serving low-income households.
Net Financing Gap. The financing gap per affordable unit is equal to the total development cost less the tax credit equity and supportable loan amount. As shown, the financing gap per affordable unit ranges from $251,798 for low-income units to $536,978 for extremely low-income units. The financing gap has an inverse relationship to the income levels that each unit serves because units with higher income targeting generate more NOI and can therefore support higher debt service payments on a loan. The financing gap figures shown in Table 13 represent the amount of permanent financing subsidy that Atherton would need to provide to support the development of units at each income level, assuming that the Town’s funds are leveraged with four percent tax credits and a permanent loan.
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 32 Table 13: Affordable Housing Financing Gaps, San Mateo County, 2024 Notes:
(a) Based on a 3-person household, CA Department of Housing & Community Development, 2023. (b) Maximum affordable rents for 2-bedroom units per TCAC rent limits, net of 2-bedroom utility costs as shown in Table 1. (c) Data from funding applications for recent affordable housing projects in San Mateo County. (d) Net Operating Income divided by Debt Coverage Ratio. (e) Average of development costs shown in low-income housing tax credit applications submitted in 2022 and 2023 for projects in San Mateo County.
(f) The financing gap calculations that are shown in this table incorporate credit financing to offset a portion of the cost of constructing an affordable unit, which reduces the estimated financing gaps. However, it should be noted that projects must compete for tax credit financing, with a limited amount of funding available from tax credit financing in each round. It is unlikely that enough tax credits would be available to fully address affordable housing needs in Atherton or in the broader region, and therefore full mitigation of housing needs would likely require affordable housing developments to be constructed without tax credit financing. Therefore, the financing gaps shown in this table likely represent an underestimate of the funding that would be needed to address the full need. (g) Based on financing terms assumptions.
(h) Total Development Costs less Loan Amount and tax credit financing. (i) Atherton is designated as a small difficult to develop area (DDA), meaning that tax credit projects in that portion of the Town would receive a tax credit boost.
Sources: California Tax Credit Allocation Committee, 2022 and 2023; California Department of Housing and Community Development, 2023; Novogradac, 2023; BAE, 2024.
Income Group
Extremely Low Very Low Low
Household Income Limit (a) $50,350 $83,900 $134,200
Maximum Affordable Monthly Contract Rent per Unit (b) $1,021 $1,858 $3,113 Annual Gross Rent per Unit $12,252 $22,296 $37,356
Less 5% Vacancy ($613) ($1,115) ($1,868)
Miscellaneous Income per Unit (Annual) (c) $144 $144 $144 Less 5% Vacancy ($7) ($7) ($7)
Total Annual Revenue per Unit $11,776 $21,318 $35,625
Less Annual Operating Expenses per Unit (c) $10,901 $10,901 $10,901 Annual Net Operating Income per Unit $875 $10,417 $24,724 Annual Supportable Debt Service per Unit (d) $761 $9,058 $21,499 Total Development Costs per Affordable Unit (e) $914,954 $914,954 $914,954 Less: Permanent Loan Amount (f) ($10,466) ($124,565) ($295,646) Less: Tax Credit Financing (4% LIHTC) (g) ($367,510) ($367,510) ($367,510) Financing Gap per Affordable Unit (h) $536,978 $422,879 $251,798 Assumptions
Financing Terms
Debt Coverage Ratio 1.15
Interest Rate 6.10%
Amortization of Loan 30
Tax Credit Assumptions
Tax Credit Price $0.89
Eligible Basis % 86.8%
DDA Boost (i) 130%
Tax Credit Term (years) 10
4% Tax Credit Percentage 4.00%
Equity Partner Share 99.99%
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 33 Step 6: Calculate the Nexus-Based Fee
The final step in calculating the nexus-based fee is to apply the financing gap per unit for each income level (from Step 5) to the total housing need by income level from new market-rate units (from Step 4). As shown in Table 14, the nexus-based fees for each of the four residential product types are as follows:
• Multifamily Rental Apartment Units: $28,812 per unit
• Rental Townhouse Units: $38,163 per unit
• For-Sale Townhouse Units: $63,269 per unit
• Single-Family Units: $352,906 per unit
Table 14 also provides the nexus-based fee per square foot for each residential product type, calculated by dividing the per-unit fee amount by typical unit sizes among new units of each type. The resulting nexus-based fees per square foot are as follows:
• Multifamily Rental Apartment Units: $28.99 per net leasable square foot • Rental Townhouse Units: $25.79 per net leasable square foot • For-Sale Townhouse Units: $31.32 per net saleable square foot • Single-Family Units: $50.42 per net saleable square foot
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 33 Page 191 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 34 Table 14: Nexus-Based Fee Rates for Market-Rate Residential Units Notes:
(a) See Table 8, Table 9, Table 10, and Table 11.
(b) See Table 13.
(c) Equal to the affordable housing need per 100 units at each income level multiplied by the financing gap at the corresponding income level. (d) Equal to the nexus-based fee per 100 units divided by 100. (e) Reflects the fee rate per net leasable/saleable square foot. Based on the following average unit sizes: Multifamily Rental Apartment Units (SF): 994 SF; Townhome Rental Units (SF): 1,480 SF; For-Sale Townhome Units (SF): 2,020 SF; Single-Family Residential Units: 7,000 SF.
Source: BAE, 2024.
Affordable Housing Financing Nexus-Based Fee Nexus-Based Nexus-Based Fee Affordability Level Need Per 100 Units (a) Gap (b) Per 100 Units (c) Fee Per Unit (d) Per Net SF (e) Multifamily Rental Apartment Units
Extremely Low Income (up to 30% AMI) 1.776 $536,978 $953,667 $9,537 $9.60 Very Low Income (31-50% AMI) 2.383 $422,879 $1,007,912 $10,079 $10.14 Low Income (51-80% AMI) 3.652 $251,798 $919,616 $9,196 $9.25 Total 7.812 $2,881,194 $28,812 $28.99
Townhome Rental Units
Extremely Low Income (up to 30% AMI) 2.352 $536,978 $1,263,174 $12,632 $8.53 Very Low Income (31-50% AMI) 3.157 $422,879 $1,335,024 $13,350 $9.02 Low Income (51-80% AMI) 4.837 $251,798 $1,218,072 $12,181 $8.23 Total 10.347 $3,816,270 $38,163 $25.79
For-Sale Townhome Units
Extremely Low Income (up to 30% AMI) 3.900 $536,978 $2,094,176 $20,942 $10.37 Very Low Income (31-50% AMI) 5.234 $422,879 $2,213,294 $22,133 $10.96 Low Income (51-80% AMI) 8.020 $251,798 $2,019,403 $20,194 $10.00 Total 17.154 $6,326,874 $63,269 $31.32
Single-Family Residential Units
Extremely Low Income (up to 30% AMI) 21.753 $536,978 $11,681,077 $116,811 $16.69 Very Low Income (31-50% AMI) 29.194 $422,879 $12,345,504 $123,455 $17.64 Low Income (51-80% AMI) 44.734 $251,798 $11,264,000 $112,640 $16.09 Total 95.681 $35,290,581 $352,906 $50.42
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 34
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 35 In-Lieu Fee Financial Feasibility Analysis
This section analyzes the financial feasibility of an inclusionary housing in-lieu fee.
In-Lieu Fee Prototypes
The financial feasibility analysis involved creating an alternate version of the pro-forma for each of the residential prototypes summarized in Table 2 above, with the alternate versions having no inclusionary units. Because the alternate versions do not include affordable units, the projects would not be eligible for a density bonus under the State Density Bonus Law. Therefore, the prototypes were adjusted to remove any units attributable to a density bonus. Table 15 provides a summary of the development programs for the prototypes that were used to analyze the financial feasibility of an in-lieu fee. The table also shows the development program for each prototype in the inclusionary scenario to facilitate comparisons.
As shown, in the in-lieu fee scenario Prototype 1 would have a total of 30 units, consistent with the 20-dwelling unit/acre zoning for the site, rather than the 51 units that the site would support in the inclusionary scenario, which includes a density bonus. While Prototype 1 is a multifamily rental apartment prototype in the inclusionary scenario, this analysis assumes that the units on this site would consist of townhomes in the in-lieu fee scenario, which is consistent with the density of 20 dwelling units per acre that would be allowable in the in-lieu fee scenario with no density bonus. Consistent with the inclusionary scenario, this analysis evaluates Prototype 1 as a rental project in the in-lieu fee scenario.
Prototypes 2 and 3 are townhome developments in both the inclusionary scenario and the in-lieu fee scenario. However, both prototypes have fewer units in the in-lieu fee scenario due to the lack of a density bonus. Consistent with the inclusionary scenario, the in-lieu fee scenario for Prototype 2 would be a rental development while Prototype 3 would be a for-sale development.
Prototype 4 is a single-family home in both the inclusionary scenario and the in-lieu fee scenario.
In the in-lieu fee scenario this prototype does not include a deed-restricted ADU.
Methodology
The analysis involved first testing each prototype under a scenario with no in-lieu fee to assess the feasibility of a development with inclusionary units relative to a development without inclusionary units, before accounting for the effect of any in-lieu fees. This provides a baseline analysis to compare the tradeoffs associated with providing inclusionary units versus paying an in-lieu fee. To the extent that a prototype is more feasible in the inclusionary scenario than in a non-inclusionary scenario even with no in-lieu fees, developers will generally prefer to provide inclusionary units rather than pay an in-lieu fee regardless of the fee rate, making financial feasibility testing of potential specific in-lieu fee rates unnecessary. As discussed in more detail below, the analysis found that the prototypes were generally more feasible in the inclusionary scenario than in the non-inclusionary scenario, even before applying any in-lieu fees in the nonPage 194 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 36 inclusionary scenario. As a result, no further testing of the financial feasibility of in-lieu fees is shown in this report.
Table 15: Summary of Residential Prototype Development Programs, Inclusionary and In-Lieu Fee Scenarios
Note:
(a) Base density shown reflects assumed density for site before applying any density bonuses.
Source: BAE, 2024.
Financial Feasibility Findings for No Inclusionary, No In-Lieu Fee Scenario As shown in Table 16, the findings from the analysis of a scenario with no inclusionary units and no in-lieu fees are similar to the findings from the financial feasibility analysis of the inclusionary scenarios described above (see Table 4) with respect to which prototypes are currently feasible.
Prototype 1 (rental units with base zoning of 20 du/acre) is feasible with no inclusionary units and no in-lieu fee. Prototype 2 (rental units with a base zoning of 10 du/acre) is not likely to be financially feasible in either the inclusionary scenario or a scenario with no inclusionary units and no in-lieu fee. Prototype 3 (for-sale townhomes with base zoning of 10 du/acre) is financially feasible in both the inclusionary scenario and a scenario with no inclusionary units and no in-lieu fee. Prototype 4 (single-family) is feasible in both the inclusionary scenario and in a scenario with no inclusionary units and no in-lieu fee.
Table 16 also provides a comparison between the on-site inclusionary scenario and the scenario with no inclusionary units and no in-lieu fee to determine which would be preferrable from a developer perspective. As shown, for all three multifamily prototypes (Prototypes 1 through 3), the inclusionary scenario supports a higher residual land value than the no inclusionary/no in-lieu fee scenario. This finding is attributable to the use of the density bonus in the inclusionary scenario for these prototypes, which offsets the cost of providing the affordable units and makes Prototype 1 Prototype 2 Prototype 3 Prototype 4
Tenure Rental Rental For-Sale For-Sale
Base Density (a) 20 du/acre 10 du/acre 10 du/acre Single-Family Site Size (acres) 1.5 1.0 1.0 1.0
Development Program, Inclusionary Scenario
Development Typology Multifamily Apts. Townhouses Townhouses Single-Family Total Units 51 17 14 2
Affordable Units 6 2 2 1
Average Unit Size (net sq. ft.) 999 1,476 1,900 7,000 SF single-family home & 1,000 SF ADU
Parking Spaces 64 34 28 3+
Development Program, In-Lieu Fee Scenario
Development Typology Townhouses Townhouses Townhouses Single-Family Total Units 30 10 10 1
Affordable Units 0 0 0 0
Average Unit Size (net sq. ft.) 1,480 1,480 2,020 7,000 Parking Spaces 60 20 20 2+
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 37 the project that is possible in the inclusionary scenario more attractive to a developer than the project with no inclusionary units and no density bonus, even with no in-lieu fee. This indicates that, if the Town of Atherton were to adopt in-lieu fees, in most cases developers of multifamily projects would be likely to choose to provide affordable inclusionary units within their projects rather than pay in-lieu fees.
For single-family homes, Table 16 shows that development is slightly more feasible with no deed-restricted ADU and no in-lieu fee compared to a scenario with a deed-restricted ADU. This indicates that, depending on the level of in-lieu fees adopted by the Town of Atherton, developers of single-family homes may prefer the in-lieu fee option. The point of indifference section of this report provides additional analysis of the potential economic tradeoffs associated with providing a deed-restricted ADU compared to paying an in-lieu fee.
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 37 Page 197 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 38 Table 16: Financial Feasibility Summary, No Inclusionary/No In-Lieu Fee Scenario Note:
(a) Base density shown reflects assumed density for site before applying any density bonuses. (b) See Table 4. Inclusionary Scenario assumes the use of a density bonus in accordance with the State Density Bonus Law.
Source: BAE, 2024.
Prototype 1 Prototype 2 Prototype 3 Prototype 4
Tenure Rental Rental For-Sale For-Sale
Base Density (a) 20 du/acre 10 du/acre 10 du/acre Single-Family Site Size (acres) 1.5 1.0 1.0 1.0
Development Program
Total Units 30 10 10 1
Affordable Units 0 0 0 0
Average Unit Size (net sq. ft.) 1,480 1,480 2,020 7,000 Parking Spaces 60 20 20 2+
In-Lieu Fee (per net sq. ft.) $0.00 $0.00 $0.00 $0.00
Total Development Costs, Excluding Land and Developer Profit Total Development Cost (TDC) $27,947,950 $9,793,485 $13,156,374 $5,953,725 TDC per Unit $931,598 $979,348 $1,315,637 $5,953,725
TDC per Gross Building SF $629 $662 $651 $851
Residual Land Value Analysis
Capitalized Project Value (Rental) $41,740,800 $13,913,600 N/A N/A Net Sales Revenue (for-sale) N/A N/A $25,045,400 $13,240,500 Residual Land Value (RLV) $10,439,096 $2,944,897 $10,573,389 $6,691,402 Residual Land Value per Acre $6,959,398 $2,944,897 $10,573,389 $6,691,402 RLV Feasibility Threshold (per Acre) $5.0 - $6.5 million $5.0 - $6.5 million $5.0 - $6.5 million $5.0 - $6.5 million Feasible under current conditions? Yes No Yes Yes
Comparison to Inclusionary Scenario with Density Bonus
Residual Land Value per Acre
Inclusionary Scenario (b) $7,895,721 $3,487,312 $10,902,874 $6,528,448 No Inclusionary Scenario $6,959,398 $2,944,897 $10,573,389 $6,691,402 Preferred Scenario for Developer Inclusionary w/
Density Bonus
Inclusionary w/
Density Bonus
Inclusionary w/
Density Bonus No Inclusionary
Atherton Inclusionary Housing & In-Lieu Fee Study | In-Lieu Fee Analysis 38 Page 199 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Inclusionary Housing In-Lieu Fee Analysis 39 Inclusionary Unit Construction Cost
Many jurisdictions base their inclusionary in-lieu fees on the cost to construct an affordable unit, often through a formula that applies on a project-by-project basis that is tied to the cost of construction. Conceptually, charging inclusionary housing in-lieu fees that are equal to the cost of constructing an affordable unit ensures that the revenue from an in-lieu fee is sufficient to support the construction of an affordable unit off site in cases where the affordable unit is not constructed on site as an inclusionary unit. To inform the Town’s consideration of an inclusionary housing in-lieu fee, this subsection provides an analysis of the cost to construct inclusionary units in each of the four residential prototypes analyzed in this report.
The analysis of potential in-lieu fee rates based on construction costs in Atherton is shown in Table 17. For inclusionary rental units, the calculations shown in the table estimate the cost to construct an inclusionary unit based on the per-unit construction costs shown in the pro-formas for the rental developments. The calculations then subtract the amount of debt service that an affordable unit can support from the total construction cost to estimate the construction cost net of supportable debt. This approach recognizes that an affordable unit generates rental income to offset the cost of constructing the unit, albeit at a lower rate than needed to cover construction costs.
For inclusionary townhouse ownership units (Prototype 3), the calculations shown estimate the cost to construct an inclusionary unit based on the per-unit construction costs shown in the proforma for the prototype. The calculations then subtract the average restricted sale price for the inclusionary units from the total per-unit construction cost to estimate the construction cost net of sale proceeds. Similar to the approach used for the rental units, this approach recognizes that an inclusionary unit generates revenue from the sale of the unit to offset the cost of constructing the unit, though this revenue is not sufficient to cover construction costs. For the single-family prototype, the calculations in the table show the estimated net sales revenue attributable to the deed-restricted ADU, based on the difference between the net sales revenue for the singlefamily prototype with a deed-restricted ADU (the inclusionary scenario) and the net sales revenue for the single-family prototype with no ADU (the in-lieu fee scenario). The calculations then subtract the development cost associated with the ADU.
For all of the multifamily development prototypes, this analysis included the cost of land acquisition, estimated at $6.5 million per acre.
As shown in Table 17 below, based on the construction cost approach calculations, the in-lieu fee amount based on the construction cost approach ranges from $91 to $159 per net residential square foot for the rental prototypes. Using the construction cost approach, the in-lieu fee for the for-sale units is equal to $125 per net square foot for the townhouse prototype and $29 per net square foot for the single-family prototype.
Atherton Inclusionary Housing & In-Lieu Fee Study | Inclusionary Housing In-Lieu Fee Analysis 40 Table 17: Construction Cost In-Lieu Fee Amount by Prototype Notes:
(a) Base density shown reflects assumed density for site before applying any density bonuses. (b) Affordable Unit Obligation refers to the number of inclusionary units that would be required based on the Town's proposed inclusionary requirements. In the in-lieu fee scenario, this obligation would be met through the payment of an inlieu fee rather than providing units on site. (c) Average monthly rent per affordable unit based on rents shown in the pro-formas provided in Appendix C. (d) Average net sales revenue per affordable unit is based on net sales revenues shown in the pro-formas provided in Appendix C.
Source: BAE, 2024.
Point of Indifference Approach
One factor to consider when setting an in-lieu fee is the “point of indifference”, or the fee amount that is generally equivalent to the cost of providing inclusionary units in a project. Fees that are set higher than this amount will generally incentivize developers to provide affordable units instead of paying the in-lieu fee because providing the units will be more cost-effective.
Conversely, fees that are set lower than this amount will generally incentivize developers to pay the in-lieu fee instead of providing the affordable units.
The cost of an in-lieu fee and the cost to provide inclusionary units on site are not directly comparable, because an in-lieu fee affects total development costs, whereas providing inclusionary units on site affects either the project’s operating income and the resulting project value (for rental developments) or sale proceeds (for ownership developments). In other words, Prototype 1 Prototype 2 Prototype 3 Prototype 4
Tenure Rental Rental For-Sale For-Sale
Base Density (a) 20 du/acre 10 du/acre 10 du/acre Single-Family Site Size (acres) 1.5 1.0 1.0 1.0
Development Program, In-Lieu Fee Scenario
Total Units 30 10 10 1
Affordable Unit Obligation (b) 6 2 2 1
Average Unit Size (net sq. ft.) 1,480 1,480 2,020 7,000 Net Residential Square Footage 44,400 14,800 20,200 7,000 Construction Cost Approach
Total Development Cost Per Inclusionary Unit, Incl. Land $772,319 $1,303,455 $1,584,930 $834,381 Rental Prototypes
Average Monthly Rent per Affordable Unit (c) $2,029 $2,253 N/A N/A Monthly Net Operating Income per Affordable Unit $677 $890 N/A N/A Supportable Debt per Affordable Unit $98,223 $129,133 N/A N/A For-Sale Prototypes
Avg. Net Sales Revenue per Affordable Unit (d) N/A N/A $323,373 $630,500 Development Cost minus Sale Price per Aff. Unit N/A N/A $1,261,557 $203,881 In-Lieu Fee Per Affordable Unit $674,095 $1,174,322 $1,261,557 $203,881 Construction Cost In-Lieu Fee Amount
Total In-Lieu Fee Amount $4,044,572 $2,348,644 $2,523,114 $203,881 Fee per Net Residential Sq. Ft. $91 $159 $125 $29
Atherton Inclusionary Housing & In-Lieu Fee Study | Inclusionary Housing In-Lieu Fee Analysis 41 payment of an in-lieu fee affects the cost side of the residual land value calculation, while providing inclusionary units on site affects the project value or sale proceeds side of the residual land value calculation.
Multifamily Prototype Methodology
For the rental developments (Prototypes 1 and 2), this analysis evaluated the point of indifference by calculating the cost of making a unit affordable to a lower-income household, with this “cost” defined as the reduction in capitalized project value that would result from charging an affordable rent rather than a market-rate rent on the unit. The calculations shown in Table 18 show the annual operating revenue that a project would forego by making a unit affordable, compared to renting the unit at market rate, and the resulting difference in the capitalized value of the project. The analysis uses the average net operating income per marketrate unit and per affordable unit in each prototype to calculate this difference.
For the for-sale townhome development (Prototype 3), this analysis evaluated the point of indifference by calculating the cost of making a unit affordable to a lower-income household, with this “cost” defined as the difference in the sale price between a market-rate unit and an affordable unit. The calculations shown in Table 18 show the average sale price for an affordable unit and the average sale price for a market-rate unit, and the resulting difference in sale proceeds.
This analysis does not account for the effect that density bonuses available through the State Density Bonus Law would have on overall project feasibility for projects that provide affordable units on site rather than paying an in-lieu fee. In the case of the multifamily prototypes evaluated in this report, the scenarios with inclusionary units were more feasible than the scenarios with no inclusionary units, even with no in-lieu fee, due to the additional density available for these prototypes under State Density Bonus Law (see Table 16 above). Because the inclusionary scenario with a density bonus is already more feasible than the non-inclusionary, non-densitybonus scenario, any in-lieu fee charged on multifamily projects would serve to make the inclusionary scenario with a density bonus even more attractive relative to the in-lieu fee scenario, with higher fees being associated with a stronger incentive to provide units on site.
After accounting for the impact of a density bonus, the point of indifference fee rate would be negative, meaning that a payment would need to be made to the developer to make the noninclusionary scenario more attractive than the inclusionary scenario. As a result, the point of indifference analysis presented here does not account for the effect of a density bonus.
The resulting cost of providing affordable units approximates the “point of indifference,” or the inclusionary in-lieu fee payment that would have the same cost impacts as providing affordable units within each project in a scenario in which the developer chooses not to pursue a density bonus. In other words, if all else were equal, a residential project that pays the “point of indifference” fee rates shown in Table 18 would generally support the same residual land value as a project that provides the affordable units on site with no density bonus.
Atherton Inclusionary Housing & In-Lieu Fee Study | Inclusionary Housing In-Lieu Fee Analysis 42 Single-Family Prototype Methodology
For the single-family prototype (Prototype 4), this analysis estimated the point of indifference based on the difference in the capitalized value of a market-rate ADU and the capitalized value of a deed-restricted ADU. If the proposed inclusionary housing requirements are adopted, a developer of a single-family home in Atherton would have the option to either pay an in-lieu fee or provide an ADU with a deed restriction requiring the ADU to be affordable to a low-income household. Developers that choose to pay an in-lieu fee rather than provide a deed-restricted affordable ADU would nonetheless have the option to provide an ADU that would not be subject to affordability restrictions. Therefore, the inclusionary and non-inclusionary scenarios for single-family home developments could differ only in terms of the affordability requirements for the ADU, with no difference in the physical structures on the property. As a result, this analysis estimates the point of indifference for the single-family prototype based on the difference in the value of an ADU, assuming that a single-family home would have a deed-restricted affordable ADU in the inclusionary scenario and an ADU rented at the market rate in the in-lieu fee scenario.
It should be noted that an ADU could have a range of impacts on single-family home sale prices, whether the ADU is deed restricted to remain affordable or not. The approach used in this analysis effectively assumes that a home buyer will offer a price for a home that incorporates the value of an ADU based on the rental income that the ADU will provide. However, in the case of a deed-restricted affordable ADU, it is likely that some homebuyers will ascribe a value to the ADU that is lower than the capitalized value of the unit because the deed restriction will require them to rent the unit, precluding its use for hosting guests, housing extended family, or other purposes. Furthermore, the deed restrictions for the unit will require verifying tenant eligibility, which could prove burdensome for many households, and will require homeowners to function as landlords, which many homebuyers may not see as desirable. In the case of an ADU with no deed restriction, a homebuyer would have the flexibility to choose whether or not they want to rent the unit, and therefore may not ascribe a value to the ADU as a rental unit. A home buyer that does not plan to rent their ADU could ascribe a value to the ADU that is either higher or lower than the capitalized value of the ADU as a rental unit, depending on how much they value the ADU for other purposes. Therefore, while the point of indifference calculations for the singlefamily prototype represent an approximation of one potential scenario, the actual point of indifference for any individual property could vary significantly. As a result, it is possible that many developers would choose to pay the in-lieu fee even if rates are set higher than the amount shown in Table 18.
Findings
As shown in Table 18, the rental prototypes (Prototypes 1 and 2) yield a point of indifference inlieu fee amount equal to approximately $154 to $156 per net residential square foot. The point of indifference fee amount for the for-sale townhome prototype (Prototype 3) is equal to approximately $212 per net residential square foot. The point of indifference fee amount for the single-family prototype (Prototype 4) is equal to approximately $69 per square foot.
Atherton Inclusionary Housing & In-Lieu Fee Study | Inclusionary Housing In-Lieu Fee Analysis 43 It should be noted that the “point of indifference” fee rates identified in this analysis are sensitive to the relationship between the market-rate rent and the affordable rent for rental projects and the market-rate sale price and the affordable sale price for ownership projects, as well as other assumptions used in the financial modeling. Consequently, the fee rate that represents the point of indifference will vary between projects and over time based on variations in home prices and other factors. Nonetheless, the analysis presented in this subsection provides general insight on the in-lieu fees levels that are comparable in cost to providing inclusionary units in a project.
Table 18: Point of Indifference In-Lieu Fee Amount by Prototype Notes:
(a) Base density shown reflects assumed density for site before applying and density bonuses. (b) Affordable Unit Obligation refers to the number of inclusionary units that would be required based on the Town's proposed inclusionary requirements. In the in-lieu fee scenario, this obligation would be met through the payment of an inlieu fee rather than providing units on site.
Source: BAE, 2024.
Summary of Findings from Inclusionary In-Lieu Fee Analysis Table 19 provides a summary of the findings from the inclusionary housing in-lieu fee analysis that are presented in the preceding sections of this chapter. As shown, all three of the multifamily prototypes (Prototypes 1, 2, and 3) are more financially feasible in a scenario with inclusionary units and a density bonus than in a non-inclusionary scenario, even with no inclusionary housing in-lieu fee. The single-family prototype (Prototype 4) is slightly more feasible in a scenario with no inclusionary housing requirement and no in-lieu fee.
Prototype 1 Prototype 2 Prototype 3 Prototype 4
Tenure Rental Rental For-Sale For-Sale
Base Density (a) 20 du/acre 10 du/acre 10 du/acre Single-Family Site Size (acres) 1.5 1.0 1.0 1.0
Development Program, In-Lieu Fee Scenario
Total Units 30 10 10 1
Affordable Unit Obligation (b) 6 2 2 1
Average Unit Size (net sq. ft.) 1,480 1,480 2,020 7,000 Net Residential Square Footage 44,400 14,800 20,200 7,000 Point of Indifference In-Lieu Fee Amount
Rental Prototypes
Net Annual Operating Income per Affordable Unit $11,300 $10,684 N/A $29,144 Net Annual Operating Income per Market Rate Unit $62,611 $62,611 N/A $50,850 Difference in Net Operating Income $51,311 $51,927 N/A $21,706 Capitalized Value of Difference in NOI per Unit $1,140,253 $1,153,933 N/A $482,347 For Sale Prototypes
Average Net Sale Price per Affordable Unit N/A N/A $359,461 N/A Average Net Sale Price per Market Rate Unit N/A N/A $2,504,540 N/A Difference in Sale Price N/A N/A $2,145,079 N/A
Total In-Lieu Fee Amount $6,841,520 $2,307,867 $4,290,157 $482,347 Per Net Project Sq. Ft. $154 $156 $212 $69
Atherton Inclusionary Housing & In-Lieu Fee Study | Inclusionary Housing In-Lieu Fee Analysis 44 This chapter presents three potential approaches for calculating an in-lieu fee: 1) the nexus-based approach, 2) the construction cost approach, and 3) the point of indifference approach. For the three multifamily prototypes (Prototypes 1, 2, and 3), the nexus-based approach results in the lowest fee rates, ranging from $26 to $31 per net residential square foot. For Prototypes 1 and 3, the point of indifference approach results in the highest fee rates, at $154 and $212 per net residential square foot, respectively. For Prototype 2, the construction cost approach and the point of indifference approach result in similar fee rates ($159 and $156 per net residential square foot, respectively). This means that, if the Town of Atherton chooses to adopt inclusionary housing in-lieu fees that are consistent with the nexus approach, the fee rates for multifamily projects would be lower than both the cost to construct an affordable unit and the point of indifference. Even so, fees that are consistent with the nexus analysis would generally incentivize developers to provide inclusionary units rather than pay an in-lieu fee because developers providing inclusionary units are likely to pursue a density bonus that will make the inclusionary scenario is more feasible than the in-lieu fee scenario regardless of the in-lieu fee rate.
For the single-family prototype (Prototype 4), the construction cost approach results in the lowest in-lieu fee rate ($29 per square foot), followed by the nexus-based approach ($50 per square foot) and the point of indifference approach ($69 per square foot). It should be noted that in the case of the single-family prototype the point of indifference approach may understate the actual point of indifference for the reasons described in the previous subsection of this chapter.
As a result, if the Town of Atherton chooses to adopt inclusionary housing in-lieu fees that are consistent with either the nexus-based approach or the construction cost approach, developers may generally choose to pay an in-lieu fee rather than providing a deed-restricted affordable ADU as an inclusionary unit.
Table 19: Summary of In-Lieu Fee Analysis Findings
Notes:
(a) Base density shown reflects assumed density for site before applying and density bonuses. (b) Shows whether each prototype is more financially feasible with inclusionary units and a density bonus or with no inclusionary units, no density bonus, and no in-lieu fee.
Source: BAE, 2024.
Prototype 1 Prototype 2 Prototype 3 Prototype 4
Tenure Rental Rental For-Sale For-Sale
Base Density (a) 20 du/acre 10 du/acre 10 du/acre Single-Family Site Size (acres) 1.5 1.0 1.0 1.0
In-Lieu Fee Findings
Most Financially-Feasible Scenario (b) Inclusionary w/
Density Bonus
Inclusionary w/
Density Bonus
Inclusionary w/
Density Bonus
No
Inclusionary
Nexus-Based In-Lieu Fee $29 $26 $31 $50
Construction Cost In-Lieu Fee Rate (per net sq. ft.) $91 $159 $125 $29 Pt. of Indifference In-Lieu Fee Rate (per net sq. ft.) $154 $156 $212 $69
Atherton Inclusionary Housing & In-Lieu Fee Study | Inclusionary Housing In-Lieu Fee Analysis 45 Page 206 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Inclusionary Housing In-Lieu Fee Analysis 45 Page 207 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Summary of Findings and Recommendations 46
POLICY OPTIONS AND
RECOMMENDATIONS
The findings from the analysis, as described in the preceding chapters of this report, support the following recommendations.
Recommendation 1. Consider adoption of inclusionary housing requirements that are consistent with the requirements that the Town of Atherton has proposed The Town of Atherton is currently considering an inclusionary housing program that would require the following:
• For multifamily rental developments, 20 percent of units affordable to very low-income households (i.e., up to 50 percent of AMI)
• For multifamily for-sale developments, 20 percent of units affordable to lower-income households (i.e., up to 80 percent of AMI)
• For single-family homes, provide an ADU with a deed restriction that requires the ADU to be affordable to low-income households (i.e., up to 80 percent of AMI) or pay an in-lieu fee.
The financial feasibility analysis provided in this report found that these inclusionary requirements are feasible for multifamily rental apartments, for-sale townhomes, and singlefamily homes (see Table 4). These findings indicate that the adoption of the inclusionary requirements that the Town is currently considering would not impede residential development in Atherton.
While the analysis found that the for-rent townhome prototype was not financially feasible, this prototype is not feasible even with no inclusionary requirements or in-lieu fee. In fact, this study demonstrates that the financial feasibility of the for-rent townhome prototype improves in an inclusionary housing scenario compared to a scenario in which the prototype would not include any affordable units and therefore would not be eligible for a density bonus under State law.
Therefore, the adoption of inclusionary requirements would be unlikely to hinder the construction of for-rent townhomes in Atherton if market conditions were favorable to this product type within the regional market.
Recommendation 2: Adopt new inclusionary requirements concurrently with the adoption of upcoming zoning changes that will implement Housing Element programs As noted in the Introduction chapter of this report, the Town of Atherton is planning to adopt changes to the Town’s Zoning Ordinance to allow for the development of multifamily housing on some sites. If the Town plans to adopt inclusionary requirements, the adoption of these requirements should occur concurrently with the adoption of changes to the Zoning Ordinance.
Atherton Inclusionary Housing & In-Lieu Fee Study | Summary of Findings and Recommendations 47 This will ensure that potential developers of multifamily projects in Atherton will be aware of all requirements that will apply to potential multifamily development sites before moving forward and will allow developers to include the impact of inclusionary requirements in their initial financial modeling and in their offer to landowners to purchase development sites.
Recommendation 3: Consider the adoption of inclusionary housing in-lieu fees for projects that do not provide inclusionary units on site
Under AB 1505, local jurisdictions with inclusionary housing requirements for rental developments must offer at least one alternative to providing inclusionary units on site within rental developments, such as an in-lieu fee, rehabilitation of existing affordable units, a land donation, or building affordable units offsite. While an alternative is not required in the case of inclusionary requirements for ownership developments, many jurisdictions offer in-lieu fees or other alternatives to on-site inclusionary units for ownership developments.
With the exception of in-lieu fees, alternatives to providing inclusionary units on site may be particularly limited in Atherton. Even with the planned zoning changes, there will be only a limited number of sites in Atherton that will be zoned for multifamily use and potentially suitable for a land donation or the construction of affordable units offsite. Moreover, there are no existing affordable units in Atherton that are in need of rehabilitation. As a result, an in-lieu fee option may be the most straightforward and practical alternative to providing inclusionary units on site.
If the Town of Atherton adopts inclusionary housing in-lieu fees, some of the key factors to consider include the following:
Whether to allow developers to pay a fee by right or require discretionary approvals for an inlieu fee payment. Allowing the in-lieu fee option by right makes the process more predictable for project applicants but could result in fewer on-site inclusionary units than the Town desires if fees are set too low to incentivize on-site production.
Whether to establish set fee rates or a process for determining the appropriate fee on a project-by-project basis. A set fee rate is easier to administer and makes the process more predictable for project applicants, while a fee that is determined on a project-by project basis provides the Town with more discretion to determine the appropriate fee on a case-by-case basis.
If the Town adopts set in-lieu fee rates, the specific fee rates for adoption. Table 20 presents potential fee rates for consideration by the Atherton City Council. The table shows fee rates based on the nexus approach, the construction-cost approach, and the point of indifference approach. The table also includes a high-level summary of the conceptual basis for each approach to inform decision making. For all multifamily development types (multifamily rental apartments, rental townhomes, and for-sale townhomes), all fee rates shown are likely to
Atherton Inclusionary Housing & In-Lieu Fee Study | Summary of Findings and Recommendations 48 incentivize developers to provide affordable inclusionary units on site within projects rather than pay an in-lieu fee. However, only fees set higher than the point of indifference fee rate would incentivize developers to provide inclusionary units in a scenario in which the developer would not pursue a density bonus.
For single-family homes, most project applicants are likely to choose to pay an in-lieu fee rather than provide a deed-restricted ADU if the City adopts the nexus-based fee rate or the construction cost fee rate. Project applicants may still elect to pay the in-lieu fee for singlefamily projects if the City adopts fees set at the point of indifference fee rate, though fees set at the point of indifference fee rate might encourage some project applicants to provide a deedrestricted ADU rather than pay an in-lieu fee.
Table 20: Potential Inclusionary Housing In-Lieu Fee rates Fee Rate per Net Square Foot
Approach Multifamily
Rental
Apartments
Rental
Townhomes
For-Sale
Townhomes
SingleFamily
Homes
Nexus-Based Fee
Based on the relationship between
new development and the need for
affordable housing funds.
$29 $26 $31 $50
Construction Cost Fee
Based on the cost to construct an
affordable unit offsite.
$91 $159 $125 $29
Point of Indifference
Approximates the developer's cost to
provide inclusionary units in a
scenario where the developer would
not pursue a density bonus for
inclusionary units
$154 $156 $212 $69
Note: Fee rates shown in bold are likely to incentivize on-site production of affordable units rather than payment of an in-lieu fee, at least in some cases.
Recommendation 4: To the extent that Atherton decision makers prefer that new single-family homes provide deed-restricted ADUs rather than pay an in-lieu fee, consider policies to make the deed-restricted ADU option more attractive to project applicants Developers may be hesitant to provide deed-restricted affordable ADUs as part of single-family development projects because these units could reduce the pool of potential buyers and introduce additional uncertainty related to pricing. While some homebuyers may be attracted to a home with an ADU that can provide additional income, deed restrictions on ADUs would require homebuyers to commit to being landlords and to ensuring that tenants in ADUs are income-qualified to rent the units, which many homebuyers may find unappealing. As a result,
Atherton Inclusionary Housing & In-Lieu Fee Study | Summary of Findings and Recommendations 49 developers may require additional incentives to provide a deed-restricted ADU as part of a singlefamily project.
One possible incentive could allow developers to build one non-deed-restricted ADU in exchange for building a deed-restricted ADU, irrespective of other zoning restrictions on the site. This would mean that developers would not have to forego the opportunity to build a non-deedrestricted ADU in order to provide a deed-restricted ADU. Combined with an in-lieu fee in cases where no deed-restricted ADU is built, this approach could shift the economic tradeoffs to favor construction of deed-restricted ADUs, at least in some cases.
Atherton Inclusionary Housing & In-Lieu Fee Study | Summary of Findings and Recommendations 49 Page 212 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix A: AB 602 Analysis 50 APPENDIX A: AB 602 ANALYSIS
The provisions of Assembly Bill 602 (AB 602) came into effect in January 2022, enacting new requirements for impact fees and impact fee nexus studies. This report provides an analysis of inclusionary housing in-lieu fees, which are not impact fees and therefore are not subject to the AB 602 requirements. However, the Town of Atherton may wish to consider the provisions of AB 602 on a voluntary basis to inform policy decisions. Key provisions of AB 602 include:
1. Level of Service. AB 602 requires that impact fee nexus studies “identify the existing level of service for each public facility, identify the proposed new level of service, and include an explanation of why the new level of service is appropriate.” (See Government Code Section 66016.5(a)(2).)
2. Prior Nexus Study Assumptions and Fees Collected. Pursuant to AB 602, Government Code Section 66016.5(a)(4) provides that “if a nexus study supports the increase of an existing fee, the local agency shall review the assumptions of the nexus study supporting the original fee and evaluate the amount of fees collected under the original fee.”
3. Capital Improvement Plan. Under AB 602, Government Code Section 66016.5(6) states that “large jurisdictions shall adopt a capital improvement plan as a part of the nexus study.” For the purposes of this provision, Atherton is classified as a large jurisdiction.7
4. Residential Fees Proportional to Square Footage. AB 602 stipulates that “if [a nexus] study is adopted after July 1, 2022, [it must] either calculate a fee levied or imposed on a housing development project proportionately to the square footage of the proposed units or make specified findings explaining why square footage is not an appropriate metric to calculate the fees.”
5. 30-Day Noticing. Under AB 602, “All studies shall be adopted at a public hearing with at least 30 days’ notice, and the local agency shall notify any member of the public that requests notice of intent to begin an impact fee nexus study of the date of the hearing.”
6. Updates Every Eight Years. AB 602 stipulates that nexus studies “shall be updated at least every eight years, from the period beginning on January 1, 2022.” This appendix provides discussion and analysis related to the inclusionary housing in-lieu fee analysis based on the provisions of AB 602 described above. The subsections below are numbered to correspond to the six provisions described above. Because inclusionary housing inlieu fees are generally not considered to be impact fees that would require an analysis under AB 602, this analysis is provided for informational purposes only. 7 AB 602 uses the definition of a “large jurisdiction” that is contained in Section 53559.1 of the California Health and Safety Code. This section defines a large jurisdiction as a county with a population of 250,000 or more as of January 1, 2019 or any city within that county.
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix A: AB 602 Analysis 51
1. Level of Service
An inclusionary housing in-lieu fee would generate funding for the construction of new publiclyassisted affordable housing units to serve new workers attributable to the growth in household spending associated with the construction of new homes in Atherton. Therefore, in the context of an inclusionary housing in-lieu fee, the level of service can be defined in terms of the number of publicly-assisted affordable housing units in Atherton as a share of the overall housing stock.
Existing Level of Service. The Town of Atherton does not currently have any publicly-assisted affordable housing units. This means that the current level of service, measured in terms of publicly-assisted affordable housing units as a share of the overall housing stock, is zero percent.
Proposed New Level of Service. The level of service that inclusionary housing in-lieu fees would support in Atherton will depend on the fee rates adopted by the Town of Atherton as well as the share of new developments that pay an in-lieu fee rather than provide inclusionary units.
Because there are currently no publicly-assisted affordable housing units in Atherton, any increase would constitute an increase in the level of service.
Appropriateness of New Level of Service. A higher level of service would be appropriate in part because the current level of service is insufficient to provide affordable housing for the workers attributable to household spending by Atherton residents. There is a persistent shortage of available affordable housing units throughout the region and affordable housing developments consistently have long waiting lists for any available units. Supporting a higher level of service using inclusionary housing in-lieu fees could help to prevent new market-rate residential development in Atherton from continuing to replicate the same gaps in affordable housing delivery that exist under the current level of service.
Furthermore, the higher level of service is appropriate based on the Town of Atherton’s Regional Housing Needs Allocation (RHNA). The RHNA is the number of housing units that the Town is required to plan to accommodate during each eight-year Housing Element cycle. Prior to the start of each Housing Element cycle, the State determines the total RHNA for each region in California. Each region then goes through a process to distribute the RHNA among each of the cities and counties in the region. Under California law, each city and county in California is required to prepare a Housing Element every eight years and must demonstrate through the Housing Element that the jurisdiction has the ability to accommodate its RHNA during the eightyear Housing Element period. The RHNA for each city and county includes an allocation of units that will be affordable to low-income and moderate-income households, and the Housing Element must demonstrate that the jurisdiction has the ability to accommodate units at each affordability level.
For the 6th Housing Element Update Cycle (2023-2031), the Town of Atherton has a RHNA obligation totaling 348 units, including 148 units for lower-income households. Atherton’s
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix A: AB 602 Analysis 52 January 2023 Housing Element for the 2023-2031 Housing Element period reports that the Town permitted 115 ADUs during the 5th Housing Element cycle, with 94 of these estimated to be affordable to very low- or low-income households and the remainder estimated to be affordable to moderate-income households. There were no other affordable units built in Atherton during this period. This suggests that Atherton will need to issue building permits for more affordable housing units during the 6th Housing Element Cycle to address the Town’s RHNA. These figures demonstrate a need for the Town of Atherton to enhance the level of service provided by the Town’s affordable housing inventory relative to existing conditions.
2. Prior Nexus Study Assumptions and Fees Collected
The Town of Atherton does not have an existing inclusionary housing in-lieu fee. As a result, the provision of AB 602 that relates to reviewing the assumptions of a prior nexus study if a study supports an increase to an existing fee does not apply. The provision of AB 602 that relates to evaluating the amount of fees collected under an existing fee also does not apply.
3. Capital Improvement Plan
Under AB 602, Government Code Section 66016.5(6) states that “large jurisdictions shall adopt a capital improvement plan as a part of the nexus study.” For the purposes of this provision, Atherton is classified as a large jurisdiction. Government Code Section 66002 further states that “any local agency which levies a fee subject to [the California Mitigation Fee Act] may adopt a capital improvement plan, which shall indicate the approximate location, size, time of availability, and estimates of cost for all facilities or improvements to be financed with the fees.” Although inclusionary housing in-lieu fees are not impact fees subject to the California Mitigation Fee Act, this subsection provides analysis of an inclusionary housing in-lieu fee in relation to these sections of the Government Code for informational purposes.
A jurisdiction’s capital improvement plan identifies infrastructure improvements and public facilities projects that the jurisdiction intends to implement, though some portions of the capital improvement plan may be unfunded and would be implemented only if funding becomes available in the future. Affordable housing developments are not typically included in a jurisdiction’s capital improvement plan, in part because local jurisdictions do not typically have a direct role in constructing affordable housing. Instead, local jurisdictions with access to affordable housing funds typically provide these funds to affordable housing developers or operators. These affordable housing developers or operators then use the funds to construct new affordable housing units, acquire existing housing units for the purpose of creating or maintaining affordable housing, or rehabilitate existing affordable units.
Although affordable housing developments are not included in a formal capital improvement plan, the Town of Atherton’s 2023-2031 Housing Element Update provides a plan to accommodate the City’s RHNA, including all lower-income units in the City’s RHNA, over the eight-year Housing Element period. These units would be located within Atherton Town limits
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix A: AB 602 Analysis 53 and will likely be geographically distributed a manner that generally corresponds to the sites that the Housing Element identifies as potential sites for accommodating housing affordable to lower-income households. Projects with affordable units will vary in size based on the specific opportunities for affordable housing development that could occur during the planning period and may range from single ADU units to developments with up to 25 units, with potential for larger developments on select housing opportunity sites.
Information provided in recent applications for tax credit financing for new affordable housing developments in San Mateo County indicates that the cost to build a publicly-assisted affordable housing unit currently averages an estimated $915,000 per unit. Funds from inclusionary housing in-lieu fees could help to finance a portion of the cost to construct these units but are not anticipated to be sufficient to fund the construction of all of the lower-income units in the Town’s RHNA. The total cost that will be financed through the fees will depend on the amount of revenue generated by inclusionary housing in-lieu fees during the Housing Element cycle. In addition to inclusionary housing in-lieu fees, construction of these units will be financed by other public and private funding sources, including but not limited to low-income housing tax credits.
A portion of the RHNA will also be met through other local housing programs, including the Town’s inclusionary ordinance.
4. Residential Fees Proportional to Square Footage
The analysis provided in this report includes calculations of potential inclusionary housing in-lieu fees on a per-square-foot basis, thereby enabling the Town to assess any inclusionary housing inlieu fees in a manner that is proportional to the square footage of proposed units.
5. 30-day Noticing
If the Town of Atherton chooses to comply with the 30-day noticing requirement of AB 602, the Town should adopt any inclusionary housing in-lieu fees at a public hearing with at least 30 days’ notice and notify any member of the public that requests notice of the date of the hearing.
6. Updates Every Eight Years
If the Town of Atherton chooses to comply with the eight-year update requirement of AB 602, the Town should update its inclusionary housing in-lieu fees within eight years or less from adoption.
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix A: AB 602 Analysis 53 Page 217 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix B: State Density Bonus Charts 54 APPENDIX B: CALIFORNIA STATE DENSITY
BONUS DENSITY ALLOWANCES
The Density Bonus law provides density bonuses on a sliding scale to projects that provide affordable units. The State Density Bonus law also provides for parking reductions and various development incentives and concessions for projects that meet designated affordability thresholds.
The passage of AB 1287, which went into effect on January 1, 2024, added an option for projects to receive a larger density bonus than was previously available in exchange for additional affordable units. AB 1287 essentially created a second level of density bonuses with associated affordability requirements. In order to be eligible for the second level of bonuses, a project must first provide enough affordable units to be eligible for a 50-percent density bonus based on first level of density bonuses, or the standards that were in effect prior to the passage of AB 1287.
This means that a project must provide 15 percent very low-income units, 24-percent low-income units, or 44-percent moderate-income units (with moderate-income units required to be for-sale units) to be eligible for the second level of density bonuses that were made available by AB 1287.
For the first level of density bonuses, Table B-1 shows the proportion of affordable units that are required for each tier of density bonus based on whether a project is a rental or ownership project and the affordability level of the affordable units.
If a project has provided enough affordable units to be eligible for a 50-percent density bonus under level one, the project can provide additional affordable units to be eligible for an additional density bonus based on density bonuses that are available in level two. These additional affordable units can be either very low-income units or moderate-income units. Unlike moderate income units that are used to satisfy affordability requirements under level one, moderateincome units that are used to satisfy affordability requirements under level two can be either rental units or for-sale units. Table B-2 shows the proportion of affordable units that are required for each tier of density bonus under level two (i.e., the additional bonuses put in place by AB 1287).
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix B: State Density Bonus Charts 55 Table B-1: California State Density Bonus Level 1
Notes:
(a) Density bonuses percentages are based on the percent of units at the base density (i.e., not including density bonus units).
(b) Density bonuses based on moderate-income affordability are available to for-sale projects only. (c) 100 percent affordable developments can meet the affordability requirement with units affordable at a mix of income levels, with a maximum of 20 percent moderate-income units.
Affordable Unit Very Low Low Moderate
Percentage (a) Income Households Income Households Income Households (b) 5% 20% N/A N/A
6% 22.50% N/A N/A
7% 25% N/A N/A
8% 27.50% N/A N/A
9% 30% N/A N/A
10% 32.50% 20% 5%
11% 35% 21.50% 6%
12% 38.75% 23% 7%
13% 42.50% 24.50% 8%
14% 46.25% 26% 9%
15% 50% 27.50% 10%
16% 50% 29% 11%
17% 50% 30.50% 12%
18% 50% 32% 13%
19% 50% 33.50% 14%
20% 50% 35% 15%
21% 50% 38.75% 16%
22% 50% 42.50% 17%
23% 50% 46.25% 18%
24% 50% 50% 19%
25% 50% 50% 20%
26% 50% 50% 21%
27% 50% 50% 22%
28% 50% 50% 23%
29% 50% 50% 24%
30% 50% 50% 25%
31% 50% 50% 26%
32% 50% 50% 27%
33% 50% 50% 28%
34% 50% 50% 29%
35% 50% 50% 30%
36% 50% 50% 31%
37% 50% 50% 32%
38% 50% 50% 33%
39% 50% 50% 34%
40% 50% 50% 35%
41% 50% 50% 38.75%
42% 50% 50% 42.50%
43% 50% 50% 46.25%
44% 50% 50% 50%
100% (c) 80% 80% 80%
Density Bonus if Units are Affordable to…
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix B: State Density Bonus Charts 56 Table B-2: California State Density Bonus Level 2 (per AB 1287) Notes:
Density bonuses shown in this table can only be used if the project is also providing enough affordable units to be eligible for a 50 percent density bonus based on the bonuses shown in Table B-1. (a) Density bonuses percentages are based on the percent of units at the base density (i.e., not including density bonus units).
(b) Density bonuses based on moderate-income affordability are available to either rental or for-sale projects.
Affordable Unit Very Low Moderate
Percentage (a) Income Households Income Households (b)
5% 20.00% 20.00%
6% 23.75% 22.50%
7% 27.50% 25.00%
8% 31.25% 27.50%
9% 35.00% 30.00%
10% 38.75% 32.50%
11% 38.75% 35.00%
12% 38.75% 38.75%
13% 38.75% 42.50%
14% 38.75% 46.25%
15% 38.75% 50.00%
Density Bonus if Units are Affordable to…
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix B: State Density Bonus Charts 56 Page 221 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 57 APPENDIX C: RESIDENTIAL PRO FORMAS
This appendix provides the detailed pro-formas for residential developments that were used for the inclusionary feasibility and inclusionary in-lieu analysis provided in this report. This appendix also includes a description of the key assumptions used in the residential pro-formas.
Key Assumptions
BAE developed the various modeling inputs and assumptions needed for the financial feasibility analysis based on interviews with residential developers who are active in the local area, data from industry publications and databases, experience with recent development projects in the local area, and other research. Developers vary somewhat in the categorization of various project costs, and therefore may show different cost figures for individual cost items even for projects with similar overall development costs. Any variation in the specific cost items described below would not affect the findings of this analysis provided that the total development costs for the prototype projects are consistent with total development costs for similar projects.
Hard Costs: Hard costs are the costs associated with the physical construction of a building, including all construction materials and labor. This analysis uses a hard cost assumption of $400 per leasable square foot of residential space for multifamily rental apartment units, $450 per square foot for rental townhome units, $475 per square foot for for-sale townhome units, and $600 per square foot for single-family homes.
Parking Costs: This analysis uses an estimated cost of $5,000 per surface parking space. The cost for parking in garages attached to townhouse units and single-family homes is included in the construction costs for these unit types. The cost of any additional parking on single-family lots is included in the site prep costs for single-family lots.
Soft Costs: This analysis assumes that soft costs are equal to 20 percent of hard costs for multifamily (i.e., apartment and townhome) unit types and 15 percent of hard costs for singlefamily homes. The slightly higher soft costs for multifamily developments as compared to single-family homes reflects the added complexity associated with the design and engineering for multifamily projects as well as the potential for added entitlement costs. This soft cost estimate includes engineering, architecture, financing, and CEQA costs, as well as Town costrecovery fees for planning, permitting, and entitlements, but does not include impact fees.
Impact fees are included as a separate line item, discussed below.
Impact Fees: BAE calculated impact fees for each prototype based on current school district impact fees. The Town of Atherton does not assess any impact fees.
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 58 Market-Rate Residential Rents: This analysis assumes that rental rates for market-rate units in the multifamily rental apartment prototype will range from $4,125 per month for a one-bedroom unit to $7,228 per month for a three-bedroom unit. These rental rates are based on data from Costar on current multifamily rental rates for new developments in Menlo Park, Palo Alto, and Redwood City. The analysis assumes that rental rates for townhomes will average $5,980 per month for a two-bedroom unit and $7,360 per month for a three-bedroom unit. Due to a lack of build-to-rent townhomes in the Atherton area, these rent assumptions are based on asking rents among townhomes in Menlo Park, Palo Alto, and Redwood City that are rented out by individual property owners, as advertised on Zillow.
Affordable Residential Rents: The affordable rental rates used in this analysis are based on allowable rents for each unit size and income level as determined by the US Department of Housing and Urban Development for projects receiving low-income housing tax credits in San Mateo County.
Market-Rate Residential Sale Prices: This analysis assumes that average sale prices for marketrate townhouse units will range from $2.16 million for two-bedroom units to $2.75 million for four-bedroom units. These assumptions are based on an analysis of data from Redfin on sale prices among recently-sold, recently constructed townhouses in the Atherton area. Based on analysis of data from Redfin on sale prices among recently sold, recently constructed singlefamily homes in Atherton, the analysis assumes that the typical sale price for a single-family home without a deed-restricted ADU is equal to $13.65 million. For the sale price for the singlefamily home with a deed-restricted ADU, the analysis uses a sale price of $14.30 million. The difference in sale price for the two single-family prototypes is based on the capitalized value of the rental income from the ADU, using a rental rate equal to 80 percent of the area median income.
Affordable Residential Sale Prices: The affordable sale prices used in this analysis are based on the sale prices that would be affordable to households at the designated income levels, accounting for the costs of mortgage principal and interest, home insurance, property tax, and homeowners’ association fees.
Residential Rental Operating Expenses: This analysis uses an estimate of $15,000 per unit per year for all residential rental units.
Developer Fee: To cover staff overhead and other internal project costs, developers of rental projects include a one-time developer fee, which is estimated as a percentage of both hard and soft costs. Based on interviews with local developers, the fee typically amounts to roughly four percent of hard and soft costs.
Capitalization Rate: The capitalization rate (cap rate) is defined as the net operating income that a property generates divided by the estimated value of the property. Cap rates are a common
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 59 metric used to estimate the value of a rental property based on its net operating income, and vary by property type, location, and other property-specific characteristics. This analysis uses a
4.5 percent cap rate to value the rental properties. This capitalization rate is based on information obtained through interviews with developers that are familiar with the local market.
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 60 Table C-1: Multifamily Rental Apartment Pro-Forma, 20 du/acre Base Density, Inclusionary Scenario Source: BAE, 2024.
Development Program Assumptions Cost Assumptions Development Cost Analysis Site Size - acres / square feet 1.5 65,340 Construction Affordable Market Rate Total Project Total Units 51 Site Prep Costs (per site. sq.ft) $20 Site Preparation $157,098 $1,149,702 $1,306,800 Affordable (% - count) 12% 6 Hard Cost per net residential sf $400 Market Rate (% - count) 88% 45 Parking cost per space, Surface $5,000 Vertical Construction Leasable sq.ft. 50,950 Soft Costs (% of hard costs) 20% Hard Cost $2,450,000 $17,930,000 $20,380,000 Circulation % 18% School Impact Fees (per sq. ft.) $4.79 Parking Cost $40,000 $280,000 $320,000 Gross SF 62,134 Inclusionary Housing In-Lieu Fee (per SF) $0.00 Soft Costs $498,000 $3,642,000 $4,140,000 Total Parking Spaces 64 School Impact Fees $35,779 $261,844 $297,623 Parking spaces per du 1.25 Rental Revenue Inclusionary Housing In-Lieu Fee $0 $0 $0 Monthly Rent by AMI Level Subtotal $3,023,779 $22,113,844 $25,137,623 Base Density Units Unit Type 50% 60% MR
Units by AMI Level All 1-BR $1,742 $2,091 $4,125 Construction Financing Unit Mix Sq. Ft. 50% 60% MR Units 2-BR $2,091 $2,509 $5,250 Const. Loan Fees $20,676 $151,213 $171,889 1-BR 750 2 0 10 12 3-BR $2,415 $2,898 $7,228 Const. Loan Interest $151,191 $1,105,745 $1,256,936 2-BR 1,050 3 0 11 14
3-BR 1,475 1 0 3 4 Operating Costs Developer Fee $134,110 $980,820 $1,114,930 All Units 6 0 24 30 Annual op. cost per du $15,000
Vacancy Rate 5.0% Total Dev. Cost (excl. Land) $3,486,854 $25,501,324 $28,988,178 Summary Affordable Market-Rate Total Market Rate Cap Rate 4.50% Per Unit $581,142 $566,696 $568,396 Number of Units (# / %) 6 20% 24 80% 30 Per Net SF $569 $569 $569 Leasable Sq. Ft. 6,125 23,475 29,600 Construction Financing Per Gross SF $467 $467 $467 Gross Sq. Ft. 7,470 28,628 36,098 Loan-to-Cost Ratio 65% Parking Spaces 8 30 38 Loan Fees 1.0% Feasibility Analysis Drawdown Factor 65%
Density Bonus Units Interest rate 7.5% Affordable Market Rate Total Project Loan Term (months) 18 Project Income
Unit Mix Market-Rate Gross Scheduled Rents $146,064 $2,758,110 $2,904,174 1-BR 8 Developer Fee (as % of total project costs) 4% Less Vacancy ($7,303) ($137,906) ($145,209) 2-BR 9 Less Operating Expenses ($90,000) ($675,000) ($765,000) 3-BR 4 Developer Profit (as % of total project costs) 12% Net Operating Income $48,761 $1,945,205 $1,993,965 All Units 21
Density Bonus % 70.0% Capitalized Project Value $1,083,573 $43,226,767 $44,310,340 Sq. Ft. (leasable/gross) 21,350 26,037 Less Total Development Costs ($3,486,854) ($25,501,324) ($28,988,178) Parking Spaces 26 Less Developer Profit ($418,422) ($3,060,159) ($3,478,581) Residual Land Value (RLV) ($2,821,703) $14,665,284 $11,843,581 RLV per Unit ($470,284) $325,895 $232,227
RLV per Site sf ($367) $254 $181
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 60 Page 226 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 61 Table C-2: Rental Townhome Pro-Forma, 10 du/acre Base Density, Inclusionary Scenario Source: BAE, 2024.
Development Program Assumptions Cost Assumptions Development Cost Analysis Site Size - acres / square feet 1.0 43,560 Construction Affordable Market Rate Total Project Total Units 17 Site Prep Costs (per site. sq.ft) $20 Site Preparation $100,657 $770,543 $871,200 Affordable (% - count) 12% 2 Hard Cost per net residential sf $450 Market Rate (% - count) 88% 15 Soft Costs (% of hard costs) 20% Vertical Construction Leasable sq.ft. 25,100 School Impact Fees (per sq. ft.) $4.79 Hard Cost $1,305,000 $9,990,000 $11,295,000 Circulation % 0% Inclusionary Housing In-Lieu Fee (per SF) $0.00 Soft Costs $261,000 $1,998,000 $2,259,000 Gross SF 25,100 School Impact Fees $13,891 $106,338 $120,229 Total Parking Spaces 34 Rental Revenue Inclusionary Housing In-Lieu Fee $0 $0 $0 Parking spaces per du 2.00 Monthly Rent by AMI Level Subtotal $1,579,891 $12,094,338 $13,674,229 Unit Type 50% 60% MR
Base Density Units 2-BR $2,091 $2,509 $5,980 Construction Financing Units by AMI Level All 3-BR $2,415 $2,898 $7,360 Const. Loan Fees $10,924 $83,622 $94,545 Unit Mix Sq. Ft. 50% 60% MR Units Const. Loan Interest $79,879 $611,484 $691,362 2-BR 1,300 1 0 3 4 Operating Costs
3-BR 1,600 1 0 5 6 Annual op. cost per du $15,000 Developer Fee $70,854 $542,399 $613,253 All Units 2 0 8 10 Vacancy Rate 5.0%
Market Rate Cap Rate 4.50% Total Dev. Cost (excl. Land) $1,842,204 $14,102,387 $15,944,590 Summary Affordable Market-Rate Total Per Unit $921,102 $940,159 $937,917 Number of Units (# / %) 2 20% 8 80% 10 Construction Financing Per Net SF $635 $635 $635 Leasable Sq. Ft. 2,900 11,900 14,800 Loan-to-Cost Ratio 65% Per Gross SF $635 $635 $635 Gross Sq. Ft. 2,900 11,900 14,800 Loan Fees 1.0%
Parking Spaces 4 16 20 Drawdown Factor 65% Feasibility Analysis Interest rate 7.5%
Density Bonus Units Loan Term (months) 18 Affordable Market Rate Total Project Project Income
Unit Mix Market-Rate Developer Fee (as % of total project costs) 4% Gross Scheduled Rents $54,072 $1,225,440 $1,279,512 2-BR 3 Less Vacancy ($2,704) ($61,272) ($63,976)
3-BR 4 Developer Profit (as % of total project costs) 12% Less Operating Expenses ($30,000) ($225,000) ($255,000) All Units 7 Net Operating Income $21,368 $939,168 $960,536 Density Bonus % 70.0%
Capitalized Project Value $474,853 $20,870,400 $21,345,253 Sq. Ft. (leasable/gross) 10,300 10,300
Parking Spaces 14 Less Total Development Costs ($1,842,204) ($14,102,387) ($15,944,590) Less Developer Profit ($221,064) ($1,692,286) ($1,913,351) Residual Land Value (RLV) ($1,588,415) $5,075,727 $3,487,312 RLV per Unit ($794,207) $338,382 $205,136
RLV per Site sf ($310) $132 $80
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 61 Page 228 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 62 Table C-3: For-Sale Townhome Pro-Forma, 10 du/acre Base Density, Inclusionary Scenario Source: BAE, 2024.
Development Program Assumptions Cost Assumptions Development Cost Analysis Site Size - acres / square feet 1 43,560 Construction Affordable Market Rate Total Project Total Units 14 Site Prep Costs (per site. sq.ft) $20 Site Preparation $114,632 $756,568 $871,200 Affordable (% - count) 14% 2 Hard Cost per net residential sf $475 Market Rate (% - count) 86% 12 Soft Costs (% of hard costs) 20% Vertical Construction Total SF 26,600 School Impact Fees (per sq. ft.) $4.79 Hard Cost $1,662,500 $10,972,500 $12,635,000 Total Parking Spaces 28 Inclusionary Housing In-Lieu Fee (per SF) $0.00 Soft Costs $332,500 $2,194,500 $2,527,000 Parking spaces per du 2.00 School Impact Fees $16,765 $110,649 $127,414 Inclusionary Housing In-Lieu Fee $0 $0 $0
Base Density Units Sale Prices Subtotal $2,011,765 $13,277,649 $15,289,414 Units by AMI Level All Affordable Sale Price by AMI Level Unit Mix Sq. Ft. 70% 110% MR Units Unit Type 70% 110% MR Construction Financing 2-BR 1,600 1 0 1 2 2-BR $312,683 $525,208 $2,160,000 Const. Loan Fees $13,822 $91,222 $105,044 3-BR 1,900 1 0 6 7 3-BR $354,065 $590,088 $2,470,000 Const. Loan Interest $101,070 $667,064 $768,134 4-BR 2,200 0 0 1 1 4-BR $387,093 $642,044 $2,750,000
All Units 2 0 8 10 Total Dev. Cost (excl. Land) $2,241,288 $14,792,504 $17,033,792 Construction Financing Per Unit $1,120,644 $1,232,709 $1,216,699 Summary Affordable Market-Rate Total Loan-to-Cost Ratio 65% Per Gross SF $640 $640 $640 Number of Units (# / %) 2 20% 8 80% 10 Loan Fees 1.0%
Gross Sq. Ft. 3,500 15,200 18,700 Drawdown Factor 65% Feasibility Analysis Parking Spaces 4 16 20 Interest rate 7.5%
Loan Term (months) 18 Affordable Market Rate Total Project Density Bonus Units Project Revenue
Marketing Costs (as % of sale price) 3.0% Sales Revenue $666,748 $29,890,000 $30,556,748 Unit Mix Market-Rate Developer Profit (as % of total project costs) 10.0% Less Marketing Costs ($20,002) ($896,700) ($916,702) 2-BR 0 Net Sales Revenue $646,745 $28,993,300 $29,640,045 3-BR 3
4-BR 1 Less Total Development Costs ($2,241,288) ($14,792,504) ($17,033,792) All Units 4 Less Developer Profit ($224,129) ($1,479,250) ($1,703,379) Density Bonus % 35.0% Residual Land Value (RLV) ($1,818,672) $12,721,546 $10,902,874 RLV per Unit ($909,336) $1,060,129 $778,777
Gross SF 7,900 RLV per Site sf ($292) $341 $250
Parking Spaces 8
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 62 Page 230 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 63 Table C-4: For-Sale Single-Family Home Prototype Pro-Forma, Inclusionary Scenario (with Deed-Restricted ADU) Source: BAE, 2024.
Development Program Assumptions Development Cost Analysis Site Size - acres / square feet 1 43,560 Site Preparation $871,200 Total Units 2
Primary Home - sq. ft. / # 7,000 1 Vertical Construction Deed-Restricted ADU - sq. ft. / # 1,000 1 Hard Cost $4,800,000 Total SF 8,000 Soft Costs $720,000
School Impact Fees $38,320
Cost Assumptions Inclusionary Housing In-Lieu Fee $0
Subtotal $5,558,320
Construction
Site Prep Costs (per site. sq.ft) $20 Construction Financing Hard Cost per net residential sf $600 Const. Loan Fees $41,792 Soft Costs (% of hard costs) 15% Const. Loan Interest $203,735 School Impact Fees (per sq. ft.) $4.79
Inclusionary Housing In-Lieu Fee (per SF) $0.00 Total Dev. Cost (excl. Land) $6,675,047 Per Gross SF $834
Sale Price $14,300,000
Feasibility Analysis
Construction Financing
Loan-to-Cost Ratio 65% Total Project
Loan Fees 1.0% Project Revenue
Drawdown Factor 65% Sales Revenue $14,300,000
Interest rate 7.5% Less Marketing Costs ($429,000)
Loan Term (months) 12 Net Sales Revenue $13,871,000
Marketing Costs (as % of sale price) 3.0% Less Total Development Costs ($6,675,047) Developer Profit (as % of total project costs) 10.0% Less Developer Profit ($667,505) Residual Land Value (RLV) $6,528,448
RLV per Site sf $150
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 63 Page 232 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 64 Table C-5: Multifamily Rental Apartment Pro-Forma, 20 du/acre Base Density, No Inclusionary/No In-Lieu Fee Scenario Source: BAE, 2024.
Development Program Assumptions Cost Assumptions Development Cost Analysis Site Size - acres / square feet 1.5 65,340 Construction Affordable Market Rate Total Project Total Units 30 Site Prep Costs (per site. sq.ft) $20 Site Preparation $0 $1,306,800 $1,306,800 Affordable (% - count) 0% 0 Hard Cost per net residential sf $450 Market Rate (% - count) 100% 30 Soft Costs (% of hard costs) 20% Vertical Construction Leasable sq.ft. 44,400 School Impact Fees (per sq. ft.) $4.79 Hard Cost $0 $19,980,000 $19,980,000 Circulation % 0% Inclusionary Housing In-Lieu Fee (per SF) $0.00 Soft Costs $0 $3,996,000 $3,996,000 Gross SF 44,400 School Impact Fees $0 $212,676 $212,676 Total Parking Spaces 60 Rental Revenue Inclusionary Housing In-Lieu Fee $0 $0 $0 Parking spaces per du 2.00 Monthly Rent by AMI Level Subtotal $0 $24,188,676 $24,188,676 Unit Type 50% 80% MR
Base Density Units 2-BR $2,091 $3,346 $5,980 Construction Financing Units by AMI Level All 3-BR $2,415 $3,865 $7,360 Const. Loan Fees $0 $165,721 $165,721 Unit Mix Sq. Ft. 50% 80% MR Units Const. Loan Interest $0 $1,211,832 $1,211,832 2-BR 1,300 0 0 12 12 Operating Costs
3-BR 1,600 0 0 18 18 Annual op. cost per du $15,000 Developer Fee $0 $1,074,921 $1,074,921 All Units 0 0 30 30 Vacancy Rate 5.0%
Market Rate Cap Rate 4.50% Total Dev. Cost (excl. Land) $0 $27,947,950 $27,947,950 Summary Affordable Market-Rate Total Per Unit N/A $931,598 $931,598 Number of Units (# / %) 0 0% 30 100% 30 Construction Financing Per Net SF N/A $629 $629 Leasable Sq. Ft. 0 44,400 44,400 Loan-to-Cost Ratio 65% Per Gross SF N/A $629 $629 Gross Sq. Ft. 0 44,400 44,400 Loan Fees 1.0%
Parking Spaces 0 60 60 Drawdown Factor 65% Feasibility Analysis Interest rate 7.5%
Density Bonus Units Loan Term (months) 18 Affordable Market Rate Total Project Project Income
Unit Mix Market-Rate Developer Fee (as % of total project costs) 4% Gross Scheduled Rents $0 $2,450,880 $2,450,880 2-BR 0 Less Vacancy $0 ($122,544) ($122,544)
3-BR 0 Developer Profit (as % of total project costs) 12% Less Operating Expenses $0 ($450,000) ($450,000) All Units 0 Net Operating Income $0 $1,878,336 $1,878,336 Density Bonus % 0.0%
Capitalized Project Value $0 $41,740,800 $41,740,800
Sq. Ft. (leasable/gross) 0 0
Parking Spaces 0 Less Total Development Costs $0 ($27,947,950) ($27,947,950) Less Developer Profit $0 ($3,353,754) ($3,353,754)
Residual Land Value (RLV) $0 $10,439,096 $10,439,096
RLV per Unit N/A $347,970 $347,970
RLV per Site sf N/A $160 $160
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 64 Page 234 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 65 Table C-6: Rental Townhome Pro-Forma, 10 du/acre Base Density, No Inclusionary/No In-Lieu Fee Scenario Source: BAE, 2024.
Development Program Assumptions Cost Assumptions Development Cost Analysis Site Size - acres / square feet 1 43,560 Construction Affordable Market Rate Total Project Total Units 10 Site Prep Costs (per site. sq.ft) $20 Site Preparation $0 $871,200 $871,200 Affordable (% - count) 0% 0 Hard Cost per net residential sf $450 Market Rate (% - count) 100% 10 Soft Costs (% of hard costs) 20% Vertical Construction Leasable sq.ft. 14,800 School Impact Fees (per sq. ft.) $4.79 Hard Cost $0 $6,660,000 $6,660,000 Circulation % 0% Inclusionary Housing In-Lieu Fee (per SF) $0.00 Soft Costs $0 $1,332,000 $1,332,000 Gross SF 14,800 School Impact Fees $0 $70,892 $70,892
Total Parking Spaces 20 Rental Revenue Inclusionary Housing In-Lieu Fee $0 $0 $0 Parking spaces per du 2.00 Monthly Rent by AMI Level Subtotal $0 $8,062,892 $8,062,892 Unit Type 50% 80% MR
Base Density Units 2-BR $2,091 $3,346 $5,980 Construction Financing Units by AMI Level All 3-BR $2,415 $3,865 $7,360 Const. Loan Fees $0 $58,072 $58,072 Unit Mix Sq. Ft. 50% 80% MR Units Const. Loan Interest $0 $424,649 $424,649 2-BR 1,300 0 0 4 4 Operating Costs
3-BR 1,600 0 0 6 6 Annual op. cost per du $15,000 Developer Fee $0 $376,672 $376,672 All Units 0 0 10 10 Vacancy Rate 5.0%
Market Rate Cap Rate 4.50% Total Dev. Cost (excl. Land) $0 $9,793,485 $9,793,485 Summary Affordable Market-Rate Total Per Unit N/A $979,348 $979,348 Number of Units (# / %) 0 0% 10 100% 10 Construction Financing Per Net SF N/A $662 $662 Leasable Sq. Ft. 0 14,800 14,800 Loan-to-Cost Ratio 65% Per Gross SF N/A $662 $662 Gross Sq. Ft. 0 14,800 14,800 Loan Fees 1.0%
Parking Spaces 0 20 20 Drawdown Factor 65% Feasibility Analysis Interest rate 7.5%
Density Bonus Units Loan Term (months) 18 Affordable Market Rate Total Project Project Income
Unit Mix Market-Rate Developer Fee (as % of total project costs) 4% Gross Scheduled Rents $0 $816,960 $816,960 2-BR 0 Less Vacancy $0 ($40,848) ($40,848)
3-BR 0 Developer Profit (as % of total project costs) 12% Less Operating Expenses $0 ($150,000) ($150,000) All Units 0 Net Operating Income $0 $626,112 $626,112
Density Bonus % 0.0%
Capitalized Project Value $0 $13,913,600 $13,913,600
Sq. Ft. (leasable/gross) 0 0
Parking Spaces 0 Less Total Development Costs $0 ($9,793,485) ($9,793,485) Less Developer Profit $0 ($1,175,218) ($1,175,218)
Residual Land Value (RLV) $0 $2,944,897 $2,944,897
RLV per Unit N/A $294,490 $294,490
RLV per Site sf N/A $68 $68
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 65 Page 236 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 66 Table C-7: For-Sale Townhome Pro-Forma, 10 du/acre Base Density, No Inclusionary/No In-Lieu Fee Scenario Source: BAE, 2024.
Development Program Assumptions Cost Assumptions Development Cost Analysis Site Size - acres / square feet 1 43,560 Construction Affordable Market Rate Total Project Total Units 10 Site Prep Costs (per site. sq.ft) $20 Site Preparation $0 $871,200 $871,200 Affordable (% - count) 0% 0 Hard Cost per net residential sf $475 Market Rate (% - count) 100% 10 Soft Costs (% of hard costs) 20% Vertical Construction Total SF 20,200 School Impact Fees (per sq. ft.) $4.79 Hard Cost $0 $9,595,000 $9,595,000 Total Parking Spaces 20 Inclusionary Housing In-Lieu Fee (per SF) $0.00 Soft Costs $0 $1,919,000 $1,919,000 Parking spaces per du 2.00 School Impact Fees $0 $96,758 $96,758 Inclusionary Housing In-Lieu Fee $0 $0 $0
Base Density Units Sale Prices Subtotal $0 $11,610,758 $11,610,758 Units by AMI Level All Monthly Rent by AMI Level
Unit Mix Sq. Ft. 70% 110% MR Units Unit Type 70% 110% MR Construction Financing 2-BR 1,600 0 0 0 0 2-BR $312,683 $525,208 $2,160,000 Const. Loan Fees $0 $81,133 $81,133 3-BR 1,900 0 0 6 6 3-BR $354,065 $590,088 $2,470,000 Const. Loan Interest $0 $593,283 $593,283 4-BR 2,200 0 0 4 4 4-BR $387,093 $642,044 $2,750,000
All Units 0 0 10 10 Total Dev. Cost (excl. Land) $0 $13,156,374 $13,156,374 Construction Financing Per Unit N/A $1,315,637 $1,315,637 Summary Affordable Market-Rate Total Loan-to-Cost Ratio 65% Per Gross SF N/A $651 $651 Number of Units (# / %) 0 0% 10 100% 10 Loan Fees 1.0%
Gross Sq. Ft. 0 20,200 20,200 Drawdown Factor 65% Feasibility Analysis Parking Spaces 0 20 20 Interest rate 7.5%
Loan Term (months) 18 Affordable Market Rate Total Project Density Bonus Units Project Revenue
Marketing Costs (as % of sale price) 3.0% Sales Revenue $0 $25,820,000 $25,820,000 Unit Mix Market-Rate Developer Profit (as % of total project costs) 10.0% Less Marketing Costs $0 ($774,600) ($774,600) 2-BR 0 Net Sales Revenue $0 $25,045,400 $25,045,400
3-BR 0
4-BR 0 Less Total Development Costs $0 ($13,156,374) ($13,156,374) All Units 0 Less Developer Profit $0 ($1,315,637) ($1,315,637) Density Bonus % 0.0% Residual Land Value (RLV) $0 $10,573,389 $10,573,389 RLV per Unit N/A $1,057,339 $1,057,339
Gross SF 0 RLV per Site sf N/A $243 $243
Parking Spaces 0
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 66 Page 238 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 67 Table C-8: For-Sale Single-Family Home Prototype Pro-Forma, No Inclusionary/No In-Lieu Fee Scenario Source: BAE, 2024.
Development Program Assumptions Development Cost Analysis Site Size - acres / square feet 1 43,560 Site Preparation $871,200 Total Units 1
Total SF 7,000 Vertical Construction
Hard Cost $4,200,000
Cost Assumptions Soft Costs $630,000
School Impact Fees $33,530
Construction Inclusionary Housing In-Lieu Fee $0
Site Prep Costs (per site. sq.ft) $20 Subtotal $4,863,530 Hard Cost per net residential sf $600
Soft Costs (% of hard costs) 15% Construction Financing School Impact Fees (per sq. ft.) $4.79 Const. Loan Fees $37,276 Inclusionary Housing In-Lieu Fee (per SF) $0.00 Const. Loan Interest $181,719 Sale Price $13,650,000 Total Dev. Cost (excl. Land) $5,953,725 Per Gross SF $851
Construction Financing
Loan-to-Cost Ratio 65% Feasibility Analysis
Loan Fees 1.0%
Drawdown Factor 65% Total Project
Interest rate 7.5% Project Revenue
Loan Term (months) 12 Sales Revenue $13,650,000
Less Marketing Costs ($409,500)
Marketing Costs (as % of sale price) 3.0% Net Sales Revenue $13,240,500 Developer Profit (as % of total project costs) 10.0%
Less Total Development Costs ($5,953,725)
Less Developer Profit ($595,373)
Residual Land Value (RLV) $6,691,402
RLV per Site sf $154
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix C: Residential Pro Formas 67 Page 240 of 273 Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix D: Overview of IMPLAN 68 APPENDIX D: OVERVIEW OF IMPLAN
This appendix provides additional clarification of the workings of the IMPLAN input-output model. It provides a step-by-step account of how IMPLAN estimates economic impacts. This section begins with an overview of the data that IMPLAN uses internally and moves forward through the process of how the model estimates the impacts of new commercial and housing projects.
What is IMPLAN?
IMPLAN is an input-output model that estimates the total economic implications of new economic activity within a specified geography. The model uses national industry data and county-level economic data to generate a series of multipliers, which in turn estimate the total economic implications of economic activity.
At the heart of the model is a national input-output dollar flow table called the Social Accounting Matrix (SAM). Unlike other static input-output models, which just measure the purchasing relationships between industry and household sectors, SAM also measures the economic relationships between government, industry, and household sectors, allowing IMPLAN to model transfer payments such as unemployment insurance. Thus, for the specified region, the input-output table accounts for all the dollar flows between the different sectors within the economy.
National Industry Data. The model uses national production functions for 546 sectors to determine how an industry spends its operating receipts to produce its commodities. The model also uses a national matrix to determine the byproducts9 that each industry generates. To analyze the impacts of household spending, the model treats households as an “industry” to determining their expenditure patterns. IMPLAN couples the national production functions with a variety of county-level economic data to determine the impacts for our example.
County-Level Economic Data. In order to estimate the county-level impacts, IMPLAN combines national industry production functions with county-level economic data. IMPLAN collects data from a variety of economic data sources to generate average output, employment, and productivity for each of the industries in a given county. It also collects data on average prices for all of the goods sold in the local economy. In this analysis, IMPLAN uses economic data for San Mateo County. IMPLAN gathers data on the types and amount of output that each industry generates within the County. In addition, the IMPLAN model uses county-level data on the prices of goods and household expenditures to determine the consumption functions of regional households and local government, taking into account the availability of each commodity within the specified geography. 9 The byproducts refer to any secondary commodities that the industry creates.
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix D: Overview of IMPLAN 69 Multipliers. IMPLAN combines these data to generate a series of SAM-type multipliers for the local economy. The multiplier measures the amount of total economic activity that results from an industry (or household) spending an additional dollar in the local economy. Based on these multipliers, IMPLAN generates a series of tables to show the economic event’s direct, indirect, and induced impacts to gross receipts, or output, within each of the model’s 546 sectors. These outputs have been described above, and also are described here:
▪ Direct Impacts. Direct impacts refer to the dollar value of economic activity available to circulate through the economy and the jobs associated with that economic activity. In the case of new residential development, the direct impacts are equal to the new households’ discretionary spending. The direct impacts do not include household savings and payments to federal, state, and local taxes, as these payments do not circulate through the economy.
It should be noted that impacts from retail expenditures differ significantly between the total economic value of retail and the amount available to circulate through the local economy. The nature of retail expenditures accounts for this difference. The model assumes that only the retail markup impacts the local economy, particularly for industries heavily populated with national firms such as gas stations and grocery stores. Since local stores buy goods from wholesalers and manufacturers outside of the area, and corporate profits also leave the local economy, only the retail markup will be available for distribution within the local economy. To the extent that retailers’ headquarters are located within the county or region, the model allocates their portions of the impacts to the local economy. ▪ Indirect Impacts. The indirect impacts refer to the impact of local industries buying goods and services from other local industries, and to the jobs supported by those purchases. The cycle of spending works its way backward through the supply chain until all money leaks from the local economy, either through imports or by payments to income and taxes. For capital projects this would include payments for construction inputs such as wood, steel, office supplies, and any other non-labor payments that a construction firm would purchase in the building process. ▪ Induced Impacts. The induced impacts refer to the dollar and employment impacts of household spending by the employees generated by the direct and indirect impacts. In other words, induced impacts result from the household spending of employees of business establishments that the new households patronize (direct) and their suppliers (indirect). The model accounts for local commute patterns in the geography. For example, if 20 percent of construction workers who work in the region live outside of the region, the model will allocate 80 percent of labor’s disposable income into the model to generate induced impact estimates.
The model excludes payments to federal and state taxes and savings based on the geography’s average local tax and savings rates. Thus, only the disposable incomes from local workers are included in the model.
Atherton Inclusionary Housing & In-Lieu Fee Study | Appendix D: Overview of IMPLAN 70 Specifying the “Event” and Running the Model
Once the model is built for the specified geographies, it is time to specify the “event” that the model will analyze and run the model.
Specifying the “Event.” The “event” refers to the total economic value of industry output that the analyst is considering. For example, in the case of the ongoing economic impacts of a new institutional development such as a school, the “event” would be the operations of a school, including the resulting new jobs and the worker compensation.
Running the Model. Once the event is specified, IMPLAN runs the event through the model to generate the results. By default, IMPLAN applies the local data on average output per worker and compensation per worker to determine the direct impacts. The model then applies the value of the event to the national production functions and runs a number of iterations of this value through the production functions for the local economy to determine the indirect and induced impacts. For each iteration, the model removes expenditures to government, savings, and for goods bought outside of the local economy so that the results only include those dollars that impact the local economy.
Summarizing the Impacts
Once the model is run, IMPLAN generates a series of output tables to show the direct, indirect, and induced impacts within each of the model’s 546 sectors. IMPLAN generates these tables for three types of impacts: employment, output, and value added. The IMPLAN analysis of this study is focused on the employment impacts.
• Employment shows the number of employees needed to support the economic activity in the local economy. It should be noted that for annual impacts of ongoing operations, the employment figure shown represents the amount of employment needed to support that activity for a year. Furthermore, IMPLAN reports the number of jobs based on average output per employee for a given industry within the geography. This is not necessarily the same as the number of full-time positions.
• Output refers to the total economic value of the project in the local economy. • Value Added shows the total income that the event generates in the local economy. This income includes:
o Employee Compensation – total payroll costs, including benefits o Proprietary Income – payments received by self-employed individuals as income o Other Property Type Income – payments for rents, royalties, and dividends o Indirect Business Taxes – excise taxes, property taxes, fees, and sales taxes paid by businesses. These taxes occur during the normal operation of businesses, but do not include taxes on profits or income.
DRAFT ORDINANCE NO. __
AN ORDINANCE OF THE CITY COUNCIL OF THE TOWN OF ATHERTON ADDING CHAPTER 17.57.010, RELATING TO THE HOUSING ORDINANCE OF THE
ATHERTON MUNICIPAL CODE
WHEREAS, on or around May 5, 2025, the California Department of Housing and Community Development certified the Town of Atherton's 2023-2031 Housing Element as compliant with state law; and
WHEREAS, Program 3.814 of the 2023-2031 Housing Element identified the adoption of an inclusionary housing ordinance that would serve as a tool to facilitate the development of affordable housing; and
WHEREAS, the Town's inclusionary housing ordinance will create housing opportunities for essential workers such as teachers, healthcare workers, public sector and public safety employees to live in the community in which they work; and WHEREAS, the Town retained Bay Area Economics (BAE), Inc. to prepare a study that analyzed the fees necessary to support the construction of affordable housing, the feasibility of imposing such fees on new development, and how new market-rate units are filled with residents who spend in the local economy, thereby creating a demand for lower waged earners that need affordable housing; and
WHEREAS, there is a shortage of adequate, affordable housing extremely low, very low, lower and moderate income households in Atherton, as evidenced by the 2023-2031 Housing Element; and
WHEREAS, the Association of Bay Area Governments (ABAG) and Metropolitan Transportation Commission (MTC) have assigned the Town a total housing need of 348 dwelling units, of which 94 are very low-income, 54 are low-income, 56 are moderate-income and 144 are above moderate-income; and
WHEREAS, the inclusionary ordinance codified in this Chapter will substantially advance the Town's legitimate interest in providing additional housing affordable to all income levels and dispersed throughout the Town because Inclusionary Units required by the ordinance codified in this Chapter, including both rental and ownership units, must be affordable to either Very Low, Low, and Moderate Income Households; and
WHEREAS, this ordinance codified in this Chapter is being adopted pursuant to the Town's police power authority to protect the public health, safety, and welfare. Requiring affordable units within each development is consistent with the community's housing element goals of protecting the public welfare by fostering an adequate supply of housing for persons at all economic levels and maintaining both economic diversity and geographically dispersed affordable housing. Requiring builders of new market rate housing to provide some housing affordable to Very Low, Low, and Moderate Income Households is also reasonably related to the impacts of their projects, because:
1. Rising land prices have been a key factor in preventing development of new affordable housing. New market-rate housing uses available land and drives up the price of remaining land. New development without affordable units reduces the amount of land development opportunities available for the construction of affordable housing.
2. New residents of market-rate housing place demands on services provided by both public and private sectors, creating a demand for new employees. Some of these public and private sector employees needed to meet the needs of the new residents earn incomes only adequate to pay for affordable housing. Because affordable housing is in short supply in the Town, such employees may be forced to pay a disproportionate share of their incomes to live in adequate housing in the Town or commute ever increasing distances to their jobs from housing located outside the Town. These circumstances harm the Town's ability to attain employment and housing goals articulated in the Town's General Plan and place strains on the Town's ability to accept and service new market-rate housing development.
The City Council of the Town of Atherton does hereby ordain as follows:
SECTION 1: The following Chapter and Sections are added to Title 17 of the Atherton Municipal Code and read as follows:
17.57.010 - Purpose.
The purposes of this chapter are to:
A. Enhance the public welfare by establishing policies to provide affordable housing, meet the town's regional share of housing needs, and implement the goals and objectives of the general plan and housing element.
B. The adoption of a citywide inclusionary housing program will also assist in alleviating the use of available residential land solely for the benefit of households that are able to afford market rate housing because such market-rate development will be required to contribute to the provision of affordable housing for the entire Atherton community, and will assist in alleviating the impacts of the service needs of households in new market-rate residential development by making additional affordable housing available.
C. Encourage the development of inclusionary units to be located upon the same site as market rate residential development to provide for integration of Very Low, Low, and Moderate Income households with households in market rate neighborhoods and to disperse inclusionary units throughout the Town where new residential development occurs.
D. To provide the residential development community with alternatives to construction of the inclusionary affordable units on the same site as the market rate residential development through a range of alternative options to constructing inclusionary units. Nothing in this Chapter shall deem or be used to deem the compliance options, including, but not limited to, the in lieu fee, as an ad hoc exaction, as a mandated fee required as a condition to developing property, or as a fee subject to the analysis in Building Industry Association of Central California v. City of Patterson (2009) 171 Cal.App.4th 886.
17.57.020 - Definitions.
The definitions set forth in this section shall govern the application and interpretation of this chapter. Words and phrases not defined in this section shall be interpreted so as to give this chapter its most reasonable application.
A. "Affordable housing agreement" means an agreement in conformance with Section 17.57.080(B) between the town and an applicant, governing how the applicant shall comply with this chapter.
B. "Affordable housing cost" means the maximum purchase price that will be affordable to the specified household at the specified income level, calculated in accordance with California Health and Safety Code Section 50052.5. The affordable sales price shall include a reasonable down payment, and monthly housing payments (including interest, principal, mortgage insurance, property taxes, homeowners insurance, homeowners association dues, property maintenance and repairs, and a reasonable allowance for utilities), all as determined by the town.
C. "Affordable housing fund" means a fund or account designated by the town to maintain and account for all monies received from residential project applicants pursuant to this chapter.
D. "Affordable housing plan" means a plan containing all of the information specified in and submitted in conformance with Section 17.57.080(A) specifying the manner in which affordable units will be provided in conformance with this chapter.
E. "Affordable rent" means the total monthly housing expenses for a rental affordable unit not exceeding the rents specified by Section 50053 of the California Health and Safety Code and California Code of Regulations Title 25, Division 1, Chapter 6.5, Sections 6910-6924. As used in this chapter, "affordable rent" shall include the total of monthly payments by the tenant for all of the following: (1) use and occupancy of the affordable unit and facilities associated with the affordable unit, including but not limited to parking, bicycle storage, storage lockers, and use of all common areas; (2) any additional separately charged fees or service charges assessed by the owner, other than security deposits; (3) a reasonable allowance for utilities paid by the tenant as established by the San Mateo County Housing Authority, including garbage collection, sewer, water, electricity, gas, and other heating, cooking, and refrigeration fuel, but not telephone service; and (4) any possessory interest, taxes, or other fees or charges for use of the land and associated facilities and assessed by a public or private entity other than the owner, and paid by the tenant.
F. "Affordable unit" means a dwelling unit affordable to very low, low, or moderate income households.
G. "Applicant" or "developer" means a person, persons, or entity that applies for a residential or nonresidential project and includes the owner or owners of the property if the applicant does not own the property on which development is proposed.
H. "Area median income" or "AMI" means the annual median income for San Mateo County, adjusted for household size, as published periodically in the California Code of Regulations, Title 25, Division 1, Chapter 6.5, Section 6932, or its successor provision, or as
established by the Town of Atherton in the event that such median income figures are no longer published periodically in the California Code of Regulations.
I. "Building permit" includes full structural building permits as well as partial permits such as foundation-only permits.
J. "City manager" means the City Manager of the Town of Atherton or his or her designee.
K. "Common ownership or control" refers to property owned or controlled by the same person, persons, or entity, or by separate entities in which any shareholder, partner, member, or family member of an investor of the entity owns ten percent or more of the interest in the property.
L. "Decision-making body" means the town staff person or body authorized to approve or deny an application for a planning or building permit for a residential project.
M. “Density bonus units" means dwelling units approved in a residential project pursuant to California Government Code Section 65915 that are in excess of the maximum allowable residential density otherwise permitted by the Town of Atherton.
N. "Extremely low income" are those households whose income does not exceed the extremely low income limits applicable to San Mateo County as defined in California Health and Safety Code Section 50106 and published annually pursuant to Title 25 of the California Code of Regulations, Division 1, Chapter 6.5, Section 6932 (or its successor provision) by the California Department of Housing and Community Development, generally households with incomes between fifteen percent and thirty percent of area median income.
O. "First approval" means the first of the following approvals to occur with respect to a residential project: planning permit or building permit.
P. "In-lieu fee" means the fee paid by developers of residential projects to mitigate the impacts that such developments have on the demand for affordable housing in the town.
Q. "Lower income households" or "low income households" are those households whose income does not exceed the low income limits applicable to San Mateo County as defined in California Health and Safety Code Section 50079.5 and published annually pursuant to Title 25 of the California Code of Regulations, Division 1, Chapter 6.5, Section 6932 (or its successor provision) by the California Department of Housing and Community Development, generally households with incomes between fifty percent and eighty percent of area median income.
R. "Market rate unit" means a new dwelling unit in a residential project that is not an affordable unit.
S. "Moderate income households" are those households whose income does not exceed the moderate income limits applicable to San Mateo County as defined in California Health and Safety Code Section 50093 and published annually pursuant to Title 25 of the California Code of Regulations, Division 1, Chapter 6.5, Section 6932 (or its successor provision) by the California
Department of Housing and Community Development, generally households with incomes between eighty percent and one hundred twenty percent of area median income.
T. "Planning permit" means any discretionary approval of a residential project, including but not limited to a general plan adoption or amendment, rezoning, tentative map, parcel map, conditional use permit, or variances.
U. "Residential project" means any development for which a planning permit or building permit is required that includes the creation of one or more new dwelling units or includes the conversion of nonresidential uses to dwelling units.
V. "Very low income households" are those households whose income does not exceed the very low income limits applicable to San Mateo County as defined in California Health and Safety Code Section 50105 and published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development, generally households with incomes between thirty percent and fifty percent of area median income.
17.57.030 - Exemptions.
The following development projects are exempt from the provisions of this chapter:
A. Residential projects consisting of the construction of a single primary unit with accessory dwelling units permitted by Section 17.52.
B. Residential projects resulting from Urban Lot Splits permitted by Section 17.53.
17.57.040 - Basic affordable housing requirements.
The provisions of this section shall apply to all residential projects resulting in the development of five or more dwelling units, except for any residential project exempt under Section 17.57.030.
Unless an alternative is approved as described in Section 17.57.070, residential projects shall provide the following:
A. For residential projects in the Multifamily Overlay District (RM-10), a minimum of twenty percent (20%) of the dwelling units in the residential project shall be made available at affordable sales or rental prices to very low- or low-income households.
B. For residential projects in the Multifamily Overlay District (RM-20/40) a minimum of twenty percent (20%) of the dwelling units in the residential project shall be made available at affordable sales or rental prices to very low-, low-income households.
C. For all other projects located outside the RM-10 and RM-20/40 Overlay Districts, twenty percent (20%) of the dwelling units in the residential project shall be made available at affordable sales or rental price to very low-, low-, and moderate-income households.
D. For residential projects that convert existing rental housing to condominiums, convert other residential or nonresidential space, or that remove existing rental housing, twenty percent (20%) of the dwelling units in the project shall be made available at affordable sales price to very low, low, and moderate income households.
E. Calculations of the number of affordable units required by this section shall be based on the number of dwelling units in the residential project, excluding any density bonus units.
Residential projects shall not receive credit for any existing dwelling units demolished as part of the project.
F. When the affordable housing requirements described in this section result in a fractional unit, an in-lieu payment as specified in Section 17.57.050 may be made for the fractional unit instead of providing an affordable unit. The in-lieu fee for a fractional unit shall be calculated as described in Section 17.57.050. If a fractional unit of 0.5 or greater (i.e. equal to or more than half a unit) is required, the applicant may elect to round up to the nearest whole number when calculating the required number of affordable units to be provided instead of paying the in-lieu fee.
In any instance where a fractional unit of less than 0.5 units (i.e. less than half a unit) is required, the in-lieu fee shall apply to the fractional unit less than 0.5 units.
17.57.050 - In-lieu fee.
A. Fees. The amount of any in-lieu fees shall be established from time to time by ordinance or resolution of the city council and shall be reflected in the town's master fee schedule.
In-lieu fees shall not exceed the cost of mitigating the impact of residential projects on the need for affordable housing in the town. The in-lieu fee shall be based on the adopted calculation method in the nexus study as adopted by the town council. For purposes of the 2023-2031 housing element cycle, the "point of indifference" calculation method as described in the 2024 BAE study will be used.
B. Fee payment. In-lieu fees, if required, shall be paid prior to issuance of any building permit for a development project subject to this chapter or at a time otherwise specified by city council ordinance or resolution. All fees collected under this Section shall be deposited in the Affordable Housing Fund established pursuant to this Chapter.
C. Fee review. The town will review its in-lieu fees every four (4) years to determine how much it has collected and identify projects for uses for which the fees will be made. This review will ensure that in-lieu fees are used for their intended purpose and addressing the goals and programs set forth in the town's housing element. The town will endeavor to identify anticipated fees and amounts to complete such programs and projects. The study in support of the in-lieu fee shall be reviewed and updated every eight (8) years. The town will endeavor to conduct such update contemporaneously with each new housing element cycle.
17.57.060 - Provision of affordable units.
A. Standards for affordable units.
1. Affordable units shall be comparable in exterior appearance and overall quality of construction to market-rate units in the same housing development. Interior finishes and amenities must equal those provided in the base model market-rate units.
2. The number of bedrooms and the size of the affordable units shall be comparable to the average number of bedrooms in the market-rate units, except that in a singlefamily detached development, the decision-making body may allow smaller affordable units or duplex affordable units, if permitted in the zoning district, when this furthers the provision of onsite affordable units. The affordable units shall be reasonably dispersed within the residential project, with unit locations comparable to those of the market-rate units, or, subject to the approval of the planning and community environment director, may be clustered within the residential project when this furthers affordable housing opportunities.
3. The affordable units shall have the same amenities as the market rate units, including the same access to and enjoyment of common open space, parking, storage, and other facilities in the residential project.
B. Timing of construction. The affordable units shall be constructed in proportion to construction of the market-rate units. No building permit shall be issued for any market-rate unit unless a proportional number of building permits have been issued for affordable units, and no certificates of occupancy or final inspections shall be issued for any market-rate units unless a proportional number of certificates of occupancy or final inspections have been issued for affordable units. An alternative phasing plan may be approved as part of the approval of the affordable housing plan described in Section 17.57.080.
C. Continued affordability.
1. All affordable units provided under Section 17.57.040 shall be subject to a resale restriction, deed of trust, and/or regulatory agreement recorded against the property for execution by the city manager in a form approved by the city attorney, to ensure the continued affordability of the affordable units.
2. Notwithstanding Section 17.57.060(A), to be considered as affordable units under this chapter, all affordable units shall remain affordable to the targeted income group for 55 years.
3. Any household that occupies an affordable unit must occupy that unit as its principal residence, unless otherwise approved in writing by the city manager for rental to a third party for a limited period of time due to household hardship, as determined by the town.
4. No household may begin occupancy of an affordable unit until the household has been determined to be eligible to occupy that unit by the city manager.
5. Any rent regulatory agreement for rental units in a residential ownership project shall include provisions for sale of the affordable units and relocation benefits for tenants of the affordable units if the owner of the residential ownership project later determines to offer the affordable units in the residential project for sale to moderate income households at an affordable sales price.
17.57.070 - Alternative means of compliance.
The developer of a residential project may request an alternative means of compliance, as described in this section, as a component of the affordable housing plan required by Section
17.57.080.
A. In-Lieu Fee. The affordable housing requirement may be satisfied by the payment of a fee, pursuant to Section 17.57.050, and subject to consideration by the City Council.
B. Dedication of land in lieu of construction of affordable units. The provision of affordable units may be satisfied by the dedication of land in lieu of constructing the affordable units if the City Council determines that all of the following criteria have been met:
1. Marketable title to the site is transferred to the Town, or an affordable housing Developer approved by the Town, prior to the commencement of construction of residential project pursuant to an agreement between the Developer and the Town and such agreement is in the best interest of the Town.
2. The site has a General Plan designation that authorizes residential uses and is zoned for multifamily development at a density to accommodate at least the number of otherwise required affordable units, and conforms to the Town’s development standards.
3. The site is suitable for development of the Affordable Units in terms of configuration, physical characteristics, location, access, adjacent uses, and other relevant planning and development criteria including, but not limited to, factors such as the cost of construction or development arising from the nature, condition, or location of the site. In order to be eligible for the dedication of land use alternative, the minimum lot size for dedication is 2,400 square feet of land in order to feasibly facilitate future construction of housing.
4. Infrastructure to serve the dedicated site, including, but not limited to, streets and public utilities, must be available at the property line and have adequate capacity to serve the maximum allowable residential development pursuant to zoning regulations.
5. Environmental review of the site has been completed for the presence of hazardous materials and geological review for the presence of geological hazards and all such hazards are or will be mitigated to the satisfaction of the Town prior to acceptance of the site by the Town.
6. The value of the site upon the date of dedication is equal to the in lieu fee in effect at the date of dedication multiplied by the number of otherwise required Affordable Units within the Residential Project.
C. With respect to sites dedicated pursuant to Subsection B, the Town shall not be required to construct restricted income units on the site dedicated to the Town, but may sell, transfer, lease, or otherwise dispose of the dedicated site in accordance with the requirements of this Chapter and state law. Any funds collected as the result of a sale, transfer, lease, or other disposition of sites dedicated to the Town shall be deposited into the Affordable Housing Fund and used in accordance with the provisions of Section 17.57.090.
D. In considering requests from a developer for alternative compliance to creating affordable units, the City Council’s consideration will include whether creating the affordable units would render the overall project financially infeasible under then current economic conditions. To that end, the developer may, at its option and at its own expense, provide its project financial information to an independent third-party housing/real estate analyst retained by the Town to conduct a financial feasibility analysis. The independent analysis will be conducted utilizing the applicant’s data, and any additional information that may be required of the developer to complete a thorough assessment. The independent analyst shall employ recognized best practices for the industry and render a detailed recommendation to the City Council to support its conclusions. Any of the developer’s sensitive proprietary information shall be redacted before making the report public to the extent permitted by law.
17.57.080 - Application and review procedures.
A. Affordable housing plan.
1. All residential projects proposing to provide affordable units under the provisions of Section 17.57.060 shall submit an affordable housing plan concurrently with the application for the first approval of the project. The affordable housing plan must include information demonstrating compliance with Section 17.57.060. The town shall provide an application form specifying the contents of the affordable housing plan. If an affordable housing plan is required, no application for a first approval of the project may be deemed complete until a complete affordable housing plan is submitted. The cost of reviewing any proposed alternative, including but not limited to the cost to the town of hiring a consultant to review the application, shall be borne by the applicant.
2. Any affordable housing plan shall be processed concurrently with all other permits required for the development project. Before approving the affordable housing plan, the decision-making body shall find that the affordable housing plan conforms to this chapter. A condition shall be attached to require recordation of an affordable housing agreement, as described in subsection (B) of this section below, prior to the approval of any final or parcel map or building permit for the development project.
3. The approved affordable housing plan may be amended prior to issuance of any building permit for the development project. A request for a minor modification of an approved affordable housing plan may be granted by the town planner if the modification is substantially in compliance with the original affordable housing plan and conditions of approval. Other modifications to the affordable housing plan shall be processed in the same manner as the original plan.
B. Affordable housing agreement.
1. Affordable housing agreements acceptable to the city manager and approved as to form by the city attorney shall be recorded against the project prior to approval of any final or parcel map, or issuance of any building permit, whichever occurs first, unless the project solely uses an alternative to housing construction.
2. The affordable housing agreement shall specify the number, type, location, size, and phasing of all affordable units, provisions for income certification and screening of potential purchasers or renters of units, and resale control mechanisms, including the financing of ongoing administrative and monitoring costs, consistent with the approved affordable housing plan and any affordable housing guidelines, as determined by the city manager.
3. The city council, by resolution, may establish fees for the ongoing administration and monitoring of the affordable units, which fees may be updated periodically, as required.
4. The Town Planner may adopt affordable housing guidelines to implement this chapter, and may update those guidelines periodically as required.
17.57.090 - Affordable housing fund.
A. All housing in-lieu fees or other funds collected under this chapter shall be deposited into the town’s affordable housing fund.
B. The monies in the affordable housing fund and all earnings from investment of the moneys in the affordable housing fund shall be expended exclusively to provide housing affordable to very low income, lower income, and moderate income households in the town, consistent with the goals and policies contained in the town’s housing element and for administration and compliance monitoring of the inclusionary housing program.
17.57.100 - Administrative relief.
A. As part of an application for the first approval of a residential project, a developer may request that the requirements of this chapter be waived, adjusted, or reduced by the city council, based upon a showing, supported by substantial evidence, that applying the requirements of this chapter would result in an unconstitutional taking of property or would result in any other unconstitutional result. Full compliance shall be required unless the applicant expressly demonstrates otherwise in accordance with the requirements of this section.
B. The request for a waiver, adjustment, or reduction shall set forth in detail the factual and legal basis for the request.
C. Any request for a waiver, adjustment, or reduction shall be reviewed and considered at the same time as the project application or any affordable housing plan.
D. The waiver, adjustment, or reduction may be approved only to the extent necessary to avoid an unconstitutional result, after adoption of written findings by the town, based on substantial evidence, supporting the determinations required by this section. If a waiver, adjustment, or reduction is granted, any change in the project may require a new application.
17.57.110 - Enforcement.
A. The town, including but not limited to the city attorney, shall be authorized to enforce the provisions of this chapter and all affordable housing agreements, regulatory
agreements, and all other covenants or restrictions placed on affordable units, by civil action and any other proceeding or method permitted by law.
B. Failure of any official or agency to fulfill the requirements of this chapter shall not excuse any developer or owner from the requirements of this chapter. No permit, license, map, or other approval or entitlement for a residential project shall be issued, including without limitation a final inspection or certificate of occupancy, until all applicable requirements of this chapter have been satisfied.
C. The remedies provided for in this section shall be cumulative and not exclusive and shall not preclude the town from any other remedy or relief to which it otherwise would be entitled under law or equity
17.57.120 - Appeals.
Any person dissatisfied with the application of this Chapter may file an appeal pursuant to Sections
17.06.100(c)-(e) of the Atherton Municipal Code. Any decision by the town planner may be appealed to the planning commission. Any decision of the planning commission may be appealed to the city council. Failure to comply with the procedures in this Section is jurisdictional. The action of the city council is final on the date of decision and may not be further appealed. A person may seek judicial review of a final decision of the town in accordance with applicable sections of the California Government Code or Code of Civil Procedure.
SECTION 2: Severability. The City Council hereby declares it would have passed this Ordinance sentence by sentence, paragraph by paragraph, and section by section, and does hereby declare that any provision in the Ordinance severable and, if for any reason any sentence, paragraph, or section of this Ordinance shall be held invalid, such decision shall not affect the validity of the remaining parts of this Ordinance.
SECTION 3: Effective Date. This Ordinance shall be posted in at least three public places according to law and shall take effect and be in force from and after 30 days after its passage and adoption.
Introduced on the __ day of _________________________, 2026.
Passed and adopted as ordinance of the City Council of the Town of Atherton at a regular meeting thereof held on the __ day of ______________________, 2026 by the following vote:
AYES COUNCILMEMBERS:
NOES COUNCILMEMBERS:
ABSENT COUNCILMEMBERS:
ABSTAIN COUNCILMEMBERS:
ATTEST: CITY CLERK
______________________________
Mayor Stacy Holland
Item No. 10
Town of Atherton
CITY COUNCIL STAFF REPORT – REGULAR AGENDA
TO: HONORABLE MAYOR AND CITY COUNCIL
GEORGE RODERICKS, CITY MANAGER
FROM: CHRISTABEL SORIA MENDOZA, MANAGEMENT ANALYST I
DATE: JANUARY 21, 2026
SUBJECT: REVIEW AND CONSIDERATION OF PROPOSED RESOLUTION TO
ESTABLISH A PILOT PROGRAM AT HOLBROOK-PALMER PARK TO
EVALUATE THE USE OF BATTERY-OPERATED GARDENING AND
LANDSCAPING EQUIPMENT
RECOMMENDATION
Staff recommends that the City Council review and consider the Environmental Programs Committee (EPC) proposed resolution requesting the establishment of a pilot program at Holbrook-Palmer Park to evaluate the use of battery-operated gardening and landscaping equipment and provide direction to staff regarding next steps.
BACKGROUND
The EPC has proposed a resolution for a trial program at Holbrook-Palmer Park to compare and evaluate the environmental, health, operational, and economic impacts of using battery operated gardening and landscaping equipment as substitutes for, or supplements to, existing gas-powered equipment.
The proposal attempts to align with the Climate Action Plan and request a trial to reduce noise and air pollution, including the successful townwide transition away from gas leaf blowers. HolbrookPalmer Park has been identified by the EPC as an appropriate location for a trial due to its size, landscape diversity, and range of maintenance activities.
ANALYSIS
The proposed resolution requests that the Town evaluate the performance of battery-operated gardening and landscaping equipment across multiple areas, including pollution reduction, noise levels, plant health, visual appearance, and potential cost effectiveness. A pilot program could provide information on operational feasibility under real world conditions prior to any consideration of broader implementation. Staff notes that such an effort may result in additional costs and require increased staff time and resources to manage, monitor, and evaluate the trial.
The resolution also calls for EPC involvement in identifying appropriate equipment and applications, opportunities for residents to observe elements of the trial, and for the Council to establish a suitable trial at the park to evaluate technical, environmental, and economic impacts.
Staff notes that implementation would require evaluation of available equipment with the Town landscaping contractor and identification of short- and long-term budget impacts. Council direction would be needed to define the scope, duration, budget parameters, roles, and reporting framework for any trial program.
Public Works has contacted BrightView to gather information on current gas-powered equipment used at the Town Center, the availability of battery powered alternatives, prior experience with similar transitions, and any operational considerations. Preliminary feedback indicates potential constraints related to equipment run time, work hours, staff oversight and tracking, and possible additional costs associated with deploying electric equipment. These factors have not yet been fully evaluated, including appropriate trial duration, performance metrics, or cost implications, and would require further analysis prior to implementation.
CONCLUSION
The proposed resolution requests Council consideration of a trial program to evaluate the use of battery-operated gardening and landscaping equipment at Holbrook-Palmer Park. Review of the resolution allows the Council to consider the scope, objectives, and level of Town involvement contemplated by the EPC, as well as to provide direction to staff regarding whether and how to proceed with further evaluation.
POLICY FOCUS
Council consideration of the proposed EPC resolution relates to Priority Area 5, Climate Action and Sustainability, which includes implementation of the Town Climate Action Plan and efforts to reduce emissions and noise associated with Town operations. The resolution requests evaluation of battery-operated gardening and landscaping equipment as part of these broader objectives.
The proposal also relates to Priority Area 3, Fiscal Viability and Budget. Any direction to implement a trial program or pursue broader adoption could result in future expenses associated with equipment procurement, contract extensions, infrastructure, maintenance, staff time, and daily operations. These potential costs would need to be evaluated in the context of existing and planned projects, competing work plan priorities, and future budget demands. Any future pilot program would require assessment of cost effectiveness, operational impacts, and potential budget implications to ensure alignment with the Town commitment to conservative fiscal policies and financial transparency.
FISCAL IMPACT
There is no fiscal impact associated with Council review and consideration of the proposed resolution. Should the Council direct staff to develop and implement a trial program, future costs
would be required. The scope and amount of any such funding are currently unknown and would depend on the scale, duration, potential equipment selection, staffing requirements, and evaluation framework established by the Council.
GOAL ALIGNMENT
This Report and its contents are in alignment with the following Council Policy Goals:
• Goal 3 – Maintain Conservative Fiscal Policies and Financial Transparency • Goal 4 – Be Forward Thinking
• Goal 5 – Maintain and Improve Public Infrastructure
PUBLIC NOTICE
Public notification was achieved by posting the agenda, with this agenda item being listed, at least 72 hours prior to the meeting in print and electronically.
ATTACHMENTS
1. EPC Proposed Resolution
ENVIRONMENTAL PROGRAM COMMITTEE RESOLUTION ON
BATTERY OPERATED GARDENING EQUIPMENT:
-7/13/25
A RESOLUTION OF THE ENVIRONMANTAL PROGRAMS COMMITTEE OF THE TOWN OF
ATHERTON CALLING FOR THE TOWN TO IMPLEMENT A TRIAL PROGRAM AT HOLBROOK PALMER PARK TO EVALUATE THE ENVIRONMENTAL IMPACT (POLLUTION & NOISE, ETC.),
HEALTH AND APPEARANCE CHANGES OF THE GRASS, SHRUBS AND OTHER PLANTS AND
THE ECONOMIC RESUTS OF USING BATTERY OPERATED GARDENING/LANDSACPING
EQUIPTEMENT AS SUBSITUTES FOR, OR ADDITIONS TO THE CURRENT GAS POWERED EQUIPMENT.
WHEREAS, the Town is committed to reducing the environment impact of gardening/landscaping as part of the Town’s Climate Action Plan, and WHEREAS, the Town has recently shown leadership in successfully replacing noisy and polluting gasoline leaf blowers with battery-operated leaf blowers, and WHEREAS, the Town has investigated the commercial viability and availability of many other types of battery-operated gardening/landscaping equipment, and WHEREAS, the gasoline driven equipment used for lawnmowers, trimmers, cutters, saws, etc. produce large amounts of pollution and noise in Atherton, and WHEREAS the EPC is committed to recommending ways to improve the Town’s environmental footprint in a prudent manner that balances performance with economic costs and benefits, and
WHEREAS the Town’s 22-acre Holbrook Palmer Park is a multifaceted landscape that uses many types of gardening/landscaping equipment, and
WHEREAS the Park is large enough and diverse enough to enable a selected area for a trial of using alternative battery-operated gardening/landscaping equipment, and NOW, THEREFORE, BE IT RESOLVED that the EPC request the Town Council to establish a suitable trial in the park to determine the technical, environmental and economic impact of using battery operated equipment for all appropriate gardening/landscaping tasks, and Further:
1) The trial should involve the EPC in determining the equipment and applications at the park.
2) Atherton residents should be invited to observe appropriate segments of the trial to enable them to determine if they should adopt more battery-operated equipment.
Item No. 11
Town of Atherton
CITY COUNCIL STAFF REPORT – REGULAR AGENDA
TO: HONORABLE MAYOR AND CITY COUNCIL
GEORGE RODERICKS, CITY MANAGER
FROM: ANTHONY SUBER, DEPUTY CITY MANAGER/ CITY CLERK
DATE: JANUARY 21, 2026
SUBJECT: JENNINGS PAVILION AUDIO/VIDEO AND ACOUSTIC
UPGRADES — REVIEW PROPOSED IMPROVEMENTS,
PROVIDE DIRECTION, AND CONSIDER APPROVAL FOR
SERVICES CONTRACT
RECOMMENDATION
Staff recommend that the City Council review the proposed options; provide direction regarding the preferred approach for the Holbrook-Palmer Park Jennings Pavilion Technology Upgrade Project; and provide approval for staff to enter into a services agreement with CalCoast for design, supply, and installation of select equipment.
BACKGROUND
The Jennings Pavilion at Holbrook-Palmer Park has undergone a series of incremental improvements over time, including new flooring, restroom and kitchen renovations, and interior painting. While these upgrades have enhanced the overall condition and appearance of the facility, the Pavilion’s electrical and audio-visual infrastructure has not kept pace with its evolving use.
The Pavilion continues to be heavily utilized for Town-hosted events and private rentals, including weddings and social gatherings. In recent years, its use has expanded further, with community organizations and the Town’s Library increasingly relying on the space for meetings, seminars, presentations, and public programs. As these uses have grown, limitations in the Pavilion’s existing technology and connectivity have become more apparent.
Although the recent addition of a NEAT Board (identical to what is now used for Study Sessions in the Council Chambers) has improved audio-visual functionality, network connectivity and supporting infrastructure constraints continue to restrict the space’s full potential. In response, staff undertook a comprehensive review of the Pavilion’s technology needs and engaged a specialized audio-visual consulting firm to evaluate the space and develop recommendations for targeted improvements.
ANALYSIS
Jennings Pavilion Tech Upgrades
JANUARY 21, 2026
The Town received a comprehensive vendor proposal (Attachment 1) and an acoustic treatment design (Attachment 2) for Jennings Pavilion. The vendor was instructed to include a full suite of equipment and services that could be evaluated in a phased approach or to scale back as needed.
Modern municipal audio / video (AV) projects prioritize scalability, accessibility, and networked AV (PoE devices, centralized DSP, and cloud management). Neighboring jurisdictions that have completed recent AV upgrades took a comprehensive approach that combined technical specifications, electrical scope, and a phased installation to control costs and minimize downtime.
Currently, the Pavilion has a corded microphone system, projector screen, two wall-mounted speakers, a subwoofer, and a rack. Most recently, the NEAT Board was added to the space significantly enhancing the Zoom and presentation options for the room.
The new system would replace the existing system with a modern integrated AV system supporting Zoom conferencing, wired and wireless presentations, Bluetooth, XLR inputs and outputs, a new equipment rack, acoustic paneling, assistive listening capabilities, and optional overflow/outdoor speakers. This represents a a total cost of $181,160, broken down into materials at $121,159.44, labor at $51,425, and engineering, project management and programming at $14,685.00.
Some of the major line-item expenses include:
· Projector and Lens: $25,789.27 and $3,829.29
· Pan, Tilt, Zoom (PTZ) Camera (similar to council chambers): $4,222.97 · Acoustic Paneling: $31,992.19
· Audio DSP (microprocessor for audio signals): $4,606.88.
Staff evaluated the scope of the project and recommend pursuit of a phased approach for upgrades leveraging components of the existing system. The core deliverables recommended as part of Phase 1 implementation, include:
Phase 1
Install Zoom capable PTZ cameras, update in-room speakers and DSP wireless microphones, assisted listening devices, new equipment rack, and basic wired presentation inputs. These items restore modern meeting functionality and accessibility. They will complement the current NEAT Board already available in the Pavilion for virtual meeting capabilities.
By replacing and installing DSP speakers, the space will have immediate improved sound quality.
The advanced speaker system can listen to the room using microphones and automatically adjust the EQ to prevent the sound from being boomy or echoey. The current microphone system is entirely wired which has inherent limitations and there are no installed camera system outside of the NEAT Board.
Phase 2
Jennings Pavilion Tech Upgrades
JANUARY 21, 2026
Install a high-luminosity projector and lens, acoustic paneling, Bluetooth audio, and wired XLR expansion. Installing the type of projector suggested will combat ambient light, which creates the washout effect. This is a problem for spaces like Jennings Pavillion with windows and sunlight. If the ambient light is brighter than the projector’s light, the image turns gray and becomes difficult to see. The "XLR" connector allows for the installation of inputs, power and controls.
There are benefits for noise balancing to cancel out humming sounds or interference from lights or other cables. These improvements are industry standards in the audio-video space for highfunctioning equipment. With the newly installed wood flooring, the acoustics in the room have become a challenge for AV equipment. Installation of acoustic paneling on the ceiling will assist with this issue.
Phase 3 - Optional
The overflow – outdoor speaker system will provide expanded distributed audio. Installing outdoor speakers may enhance the rental opportunities and would be of benefit to Town sponsored events at the Pavilion.
There will likely be integration and infrastructure needs for all the proposed upgrades. Those needs may include a electrical review and assessment to confirm power needs, dedicated circuits, and UPS/backups for audio / video and network equipment. The programming / commissioning costs have been included in the proposal, although there will be ongoing costs for maintenance and technical support.
Town staff are conducting separate WiFi assessments to determine access point placement, backhaul capacity, VLANs for guest vs. municipal traffic, and security (RADIUS, WPA3).
Installation of the sound mitigation paneling to improve acoustics has been evaluated to ensure compatibility with lighting. Panels would be reduced near the lights without significant impact to acoustics.
Summary
This item went before the Park & Recreation Committee on January 14 for input. The Committee collectively voiced support to move forward with audio/video improvements. They suggested that actual work be coordinated with onboarding of the new Event Manager who may provide insight into the full project. The Committee sought clarity regarding the expected sound quality improvements as a result of installing acoustic treatments to which staff agreed to provide, as soon as it is available.
Staff is seeking Council direction regarding upgrades to technology and AV systems at HolbrookPalmer Park, Jennings Pavillion with a suggested phased implementation approach.
FISCAL IMPACT
The entire quote totals $181,160. If Council authorizes the project to move forward with the recommended phased approach, staff will incorporate appropriate amounts for implementation
Jennings Pavilion Tech Upgrades
JANUARY 21, 2026
into budget amendments for Council action. This will include any necessary costs for electrical or network connectivity.
GOAL ALIGNMENT
This Report and its contents are in alignment with the following Council Policy Goals:
• Goal A - Preserve Small Town Character & Quality of Life • Goal D - Be Forward Thinking
• Goal E - Maintain and Improve Public Infrastructure
POLICY FOCUS
The policy focus for this item is to obtain Council direction on modernizing the technology opportunities in the Jennings Pavilion.
PUBLIC NOTICE
Public notification was achieved by posting the agenda, with this agenda item being listed, at least 72 hours prior to the meeting in print and electronically. Information about the project is also disseminated via the Town’s electronic News Flash and Atherton Online. There are approximately 1,200 subscribers to the Town’s electronic News Flash publications. Subscribers include residents as well as stakeholders –to include, but be not limited to, media outlets, school districts, Menlo Park Fire Protection District, service provides (water, power, and sewer), and regional elected officials.
COMMISSION/COMMITTEE FEEDBACK/REFERRAL
Park and Recreation Committee (meets each month)
ATTACHMENTS
1. Tech Proposal – Jennings Pavilion
2. Acoustic Design
Cal Coast Telecom
CONFIDENTIAL
CONFIDENTIAL
886 Faulstich Court • San Jose, CA 95112 • tel: 408-275-8888 • fax: 408-275-8895 • www.cctcom.net • Lic.732886 California’s Digital Communications Experts
Proposal Submitted To:
Anthony Suber Date: November 14, 2025
Town of Atherton Proposal No.: Q251174
80 Fair Oaks Lane
Atherton, CA 94027 Type: Standard
Project:
Holbrook Palmer Park
Jennings Pavilion Tech Upgrades
150 Watkins Avenue
Atherton, CA 94027
Q251174 CAL COAST TELECOM (CCT)
Q251174 AUDIO-VISUAL (AV) SCOPE OF WORK
A. Jennings Pavilion Technology Upgrades
1. Decommission (1) existing manual projection screen.
2. Decommission (1) existing wall mounted subwoofer.
3. Decommission (2) existing column speakers.
4. Decommission (1) existing equipment rack.
5. Decommission (1) three gang audio plate.
6. Decommission (1) two gang audio plate.
7. Configure (1) owner furnished iPad
8. Install (3) owner furnished wireless access points.
8.a. (1) Access point installed indoors.
8.b. (2) Access points installed outdoors.
8.c. CCT to require conduit from equipment rack location to all access point locations.
9. Provide and install (1) Panasonic 12,000 lumen 4K laser projector.
9.a. Projector equipped with Chief projector mounting kit.
9.b. CCT to require conduit pathway from equipment rack to projector location for video extension.
9.c. CCT to required access panel near projector location to complete overhead work for mount installation.
10. Provide and install (1) Dalite 137” tensioned contour electrol projection screen.
10.a. Screen to be installed in same location as existing.
10.b. CCT to require conduit pathway from equipment rack to screen location for control cable extension.
11. Provide and install (1) Lenovo Smartcore PC configured for Zoom.
12. Provide and install (1) Crestron AirMedia wireless presentation system complete with the following hardware:
12.a. (2) AM-TX3-100 transmitters.
12.b. (1) AM-TX3-200 transmitter.
12.c. (1) AM-3200-WF receiver.
12.d. (1) Cradle for TX3-100 transmitters.
Cal Coast Telecom
CONFIDENTIAL
CONFIDENTIAL
886 Faulstich Court • San Jose, CA 95112 • tel: 408-275-8888 • fax: 408-275-8895 • www.cctcom.net • Lic.732886 California’s Digital Communications Experts
13. Provide, install, and configure (1) QSYS QLAN audio visual system complete with the following hardware:
13.a. (1) Core 24f audio DSP.
13.b. (1) NC-12x80 networked PTZ camera.
13.b.i. Location TBD.
13.b.ii. CCT to require conduit from equipment rack location for network drop.
13.c. (2) NV-21-HU AV over IP endpoints.
13.c.i. (1) Dedicated as encoder connected to output of conferencing PC.
13.c.ii. (1) Dedicated as decoder connected to projector.
13.d. (1) RDL DD-BN22 two input/two output plate.
13.d.i. Plates to re-use existing three gang plate and infrastructure.
13.e. (1) RDL D-BTN21 Bluetooth input plate.
13.e.i. Plate to re-use existing two gang plate and infrastructure.
13.f. (2) AD-S802 surface mount column mount speakers.
13.f.i. Speakers to re-use existing cabling pathway.
13.g. (1) AD-S.SUB surface mount subwoofer.
13.g.i. Subwoofer to re-use existing cabling pathway.
13.h. (2) Four channel networked audio amplifiers.
13.h.i. (1) Dedicated to indoor speakers.
13.h.ii. (1) Dedicated to outdoor speakers.
13.i. (1) Twenty six port PoE++ network switch.
13.i.i. Network switch to connect to client LAN via existing copper connection and provide network for all new equipment.
14. Provide, install, and configure (1) Shure Microflex Next wireless system complete with the following hardware:
14.a. (1) Four channel wireless transceiver access point.
14.a.i. CCT to require conduit from equipment rack location to wireless transceiver.
14.b. (2) Wireless handheld microphones with SM58 modules.
14.c. (2) Bodypack transmitters with omnidirectional lavalier microphones.
14.d. (1) Two port networked charging station.
14.d.i. Charging station to be shelf mounted in CCT provided equipment rack.
15. Provide and install (4) Sonance 8” surface mounted outdoor rated speakers.
15.a. Speakers to be installed in (2) stereo groupings on perimeter of building.
15.b. CCT to require conduit from equipment rack location to each speaker location.
15.c. Client to determine color to be black or white prior to ordering.
16. Provide, install, and configure (1) ListenWIFI system complete with following hardware:
16.a. (1) LW-170-02 ListenWIFI 2 Channel Wi-Fi Audio Server (Dante)
16.b. (4) LWR-1050 ListenWIFI Wi-Fi Audio Receiver
16.c. (4) LA-165 Stereo Headphones
16.d. (4) LA-445-BK Breakaway Lanyard
16.e. (2) LA-438 Advanced Neck Loop (Adult)
16.f. (1) LA-482 Docking Station 4
16.g. (1) LW-307 ListenWIFI Hearing Assistance Signage
16.h. (1) LW-327 ListenWIFI 2 Channel Server Rack Mount
17. Provide and install acoustic treatment as shown in supplemental document.
18. Provide, install, and build-out (1) Middle Atlantic 18RU wall mount equipment rack with plexiglass front door.
19. Provide all cabling, connectors, and hardware required for installation.
20. Test and commission system.
Cal Coast Telecom
CONFIDENTIAL
CONFIDENTIAL
886 Faulstich Court • San Jose, CA 95112 • tel: 408-275-8888 • fax: 408-275-8895 • www.cctcom.net • Lic.732886 California’s Digital Communications Experts
Q251174 BILL OF MATERIALS
Item
No. Product Description Manuf. Part # Qty. Price Ext Price 1 Plenum Rated CAT6 Cable Windy City CAT6P-WHT 2 $ 391.02 $ 782.04 2 Plenum Rated 14/2 Speaker Cable Windy City 14-02P-WHT 1 $ 501.93 $ 501.93 3 Plenum Rated 12/2 Subwoofer Cable Windy City 12-02P-WHT 1 $ 750.75 $ 750.75 4 Plenum Rated 22/2 Shielded Cable Windy City 2002SPBR-WHT 1 $ 203.33 $ 203.33 5 Outdoor Rated 14/2 Speaker Cable Windy City 1402BRDB-WBT-BLK 1 $ 682.50 $ 682.50 6 Outdoor Rated CAT6 Cable Windy City 775600-110DB-SI 1 $ 412.35 $ 412.35 7 HDMI Cable - 6ft C2G 56783 3 $ 10.83 $ 32.49
8 HDMI Cable - 12ft C2G 50611 2 $ 13.63 $ 27.26
9 Ceiling Adapter Plate for Projector Mount Chief CMA110 1 $ 74.34 $ 74.34 10 Adjustable Threaded Pipe for Projector Mount Chief CMS0507W 1 $ 207.20 $ 207.20 11 Universal Projector Mount Chief VCMUW 1 $ 548.82 $ 548.82 12 18RU Wall Mount Equipment Rack Middle Atlantic CWR-18-22PD 1 $ 1,026.60 $ 1,026.60 13 Rackmount PDU w/Surge Protection Middle Atlantic PDX-915R-SP 1 $ 678.24 $ 678.24 14 1RU Rack Blank Contractor Pack Middle Atlantic EB1-CP12 1 $ 115.18 $ 115.18 15 2RU Vented Rack Shelf Middle Atlantic U2V 2 $ 72.52 $ 145.04 16 100/pk 12-24 Rack Screws Middle Atlantic HP-24 1 $ 35.55 $ 35.55 17 137" Tensioned Contour Electrol Screen Dalite 21864LS 1 $ 4,613.90 $ 4,613.90 18 12000 Lumen 4K Laser Projector (No Lens) Panasonic PT-REQ12LWU 1 $ 25,789.27 $ 25,789.27 19 2.07-3.38:1 Zoom Lens for Panasonic Projector Panasonic ET-C1T700 1 $ 3,829.29 $ 3,829.29 20 QLAN PTZ Camera QSYS NC-12X80 1 $ 4,222.97 $ 4,222.97 21 AirMedia Transmitter Crestron AM-TX3-200 1 $ 782.04 $ 782.04 22 Wireless Presentation Gateway System Crestron AM3-212 KIT 1 $ 2,936.18 $ 2,936.18 23 AV over IP Endpoint Crestron NV-21-HU 2 $ 2,047.50 $ 4,095.00 24 Thinksmart Core PC Configured for Zoom Lenovo 12W80001US 1 $ 2,828.83 $ 2,828.83 25 HDMI to USB Ingest Magewell 32060 1 $ 339.83 $ 339.83 26 HDMI Decora Plate Extron 70-726-63 1 $ 88.16 $ 88.16 27 QLAN Audio DSP QSYS Core 24f 1 $ 4,606.88 $ 4,606.88 28 Networked 4x2 I/O XLR Plate RDL DD-BN22 1 $ 1,010.92 $ 1,010.92 29 Networked Multi-I/O Input Plate RDL D-BTN21 1 $ 511.50 $ 511.50 30 Eight Driver Surface Mount Column Speaker QSYS AD-S802T-WH 2 $ 633.02 $ 1,266.04 31 6.5" Dual Voice Coil Surface Mount Subwoofer QSYS AD-S.SUB-WH 1 $ 550.27 $ 550.27 32 Surface Mount Outdoor Speaker Sonance PS-S83T 4 $ 355.47 $ 1,421.88 33 Four Channel Amplifier QSYS CX-Q 4K4 2 $ 3,642.85 $ 7,285.70 34 Two Channel Wireless Microphone Access Shure MXWAPX4=-Z10 1 $ 3,253.25 $ 3,253.25 35 Handheld Wireless Microphone Shure MXW2X/SM58=-Z10 2 $ 662.60 $ 1,325.20 36 Wireless Bodypack Transmitter Shure MXW1X/O=-Z10 2 $ 645.54 $ 1,291.08 37 Omnidirectional Lavalier Microphone for Bodypack Shure WL183MB/O-TQG 2 $ 152.15 $ 304.30 38 Two Channel Networked Charging Station Shure MXWNDX4 1 $ 1,056.46 $ 1,056.46 39 Two Channel ListenWIFI System w/4 Receivers LISTEN LWS-04B-W1-D 1 $ 3,731.73 $ 3,731.73 40 Acoustic Treatment Paneling SSG CUSTOM 1 $ 31,992.19 $ 31,992.19 41 Acoustic Paneling Mounting Consumables CCT PNL-KIT01 1 $ 3,554.69 $ 3,554.69 42 Surface Mount Raceway CCT SMR-KIT01 1 $ 710.94 $ 710.94 43 Miscellaneous Hardware (Zip ties, Velcro, Anchors, etc) CCT HDW-KIT01 1 $ 1,537.32 $ 1,537.32 MATERIAL TOTAL (INCLUDES SALES TAX): $ 121,159.44
SHIPPING AND MISC EXPENSES: $ 5,575.56
ENGINEERING SUBTOTAL: $ 8,505.00
PROJECT MANAGEMENT/SUPERVISION SUBTOTAL: $ 2,100.00
PROGRAMMING/COMMISSIONING SUBTOTAL: $ 7,080.00
INSTALLATION SUBTOTAL: $ 36,740.00
LABOR TOTAL: $ 54,425.00
Total Proposed Price per Scope of Work: $ 181,160.00
Cal Coast Telecom
CONFIDENTIAL
CONFIDENTIAL
886 Faulstich Court • San Jose, CA 95112 • tel: 408-275-8888 • fax: 408-275-8895 • www.cctcom.net • Lic.732886 California’s Digital Communications Experts
Q251174 ASSUMPTIONS, EXCLUSIONS, GENERAL TERMS, AND CONDITIONS A. ASSUMPTIONS
1. Client to provide iPad controller pre-configured with Zoom Room software for this upgrade.
2. All conduit/access panels/and power required within scope above to be installed prior to agreed installation period.
2.a. CCT can provide conduit sizes and power locations upon project award in drawing package.
3. Mounting surface for projector to be no more than 5ft above hard ceiling soffit.
4. Slim scissor lift can be drive through entry doors to complete acoustic treatments in ceiling.
5. Zoom account creation and provisioning to be completed by client prior to agreed installation period.
5.a. Credentials to be handed over at time of commissioning OR IT resource to be available at time of commissioning to input credentials.
6. CCT resources to have unobstructed access to site for entirety of agreed upon installation period.
Q251174 EXCLUSIONS, GENERAL TERMS, AND CONDITIONS
A. EXCLUSIONS
1. Room acoustics: Audio issues arise due to the acoustic environment. A subpar acoustic environment will affect the quality of both incoming and outgoing audio. CCT can recommend acoustic treatment as deemed necessary to improve audio quality.
2. Bracing, backing, or finish trim for installation.
3. Configuration and/or provision of client network (except where explicitly noted). This includes but is not limited to phone lines, network ports, switches, and firewalls.
4. Functional issues caused and/or created by operating system variations and/or updates. While CCT will configure the audio-visual system to be as cross-platform compatible as possible, due to the number of functional variations between computer operating systems, some computers may not be able to utilize certain system features.
4.a. While CCT understands that many consider it best practice to upgrade operating systems and devices when firmware updates are available, be aware that these updates may cause conflicts with the audiovisual system that will need to be repaired at an additional cost.
5. Configuration and/or provision of licenses for conferencing systems (except where explicitly noted).
6. Pathways: Cable tray, wire basket tray, raceway, junction boxes, conduits, horizontal conduit sleeving, and rings & strings.
7. Grounding: Main ground wire and grounding busbars. CCT will ground the communications racks, cabinets, and cable runway to the electrician provided telecom grounding busbars (TGB or TMGB) only.
8. The warranty of existing and/or client-provided equipment is not included in CCT’s standard workmanship warranty.
9. Configuration and/or provision of client network (except where explicitly noted). This includes but is not limited to phone lines, network ports, switches, and firewalls.
10. Engineered seals and/or stamped structural drawings.
11. BIM modeling.
12. Plywood: Fire-rated plywood in the MDF and IDFs.
13. Demolition.
14. Power and fire alarm.
15. Bell, clock, paging, and security systems.
Cal Coast Telecom
CONFIDENTIAL
CONFIDENTIAL
886 Faulstich Court • San Jose, CA 95112 • tel: 408-275-8888 • fax: 408-275-8895 • www.cctcom.net • Lic.732886 California’s Digital Communications Experts
16. Active equipment and electronics (including, but not limited to switches, routers, modems, UPSs, PDUs, and wireless devices)
17. Providing and/or installing any copper or fiber patch cords.
18. Hazardous material abatement, containment, or costs associated with working in a hazardous material environment.
19. Patching, painting, and masking for painting.
20. Ceiling repair or replacement.
21. Reapplication, spraying, and patching of monokote.
22. Cost of cleanup of other trades.
23. Permits.
24. Cost of bonds.
25. Special certificates of insurance that are required by third parties.
26. Roof penetrations, roof jacks, roof flashing, patch, seal, and guarantee.
27. Fees for Textura or any other software requirements.
B. TERMS, CONDITIONS, AND NOTES
1. When designing and proposing equipment, CCT uses Unified Communication (UC) certified products as much as practical. If issues do arise with equipment, CCT will put forth a reasonable effort to work with the appropriate parties to try and resolve the issue. The aforementioned effort is limited by the following conditions: CCT will not support any system that has an operating system or version that does not appear on the UC provider-supported operating system list. Furthermore, if an operating system manufacturer releases a version or update that causes UC systems to malfunction, CCT will not support the issue as a warranty issue. In some cases, CCT may not be able to resolve issues caused by UC platform and operating system manufacturer updates.
2. Control programs are proprietary and remain the intellectual property of CCT.
3. This proposal is made with the understanding that we will enter into a mutually acceptable contract agreement. We will not accept any terms or conditions that are less favorable to CCT than those imposed in the Prime contract by the owner. Pricing is only valid with this proposal, scope, assumptions, and exclusions. The conditions of this proposal must be attached or incorporated into our subcontract agreement.
4. CCT will indemnify you for personal injury or property damage claims to the extent of our negligence. CCT proposal excludes any obligation to indemnify you for your negligence or to indemnify any other party for that party’s negligence.
5. CCT invoices monthly.
6. CCT will provide lien releases per applicable state statutes or regulations. CCT will be paid within (7) days of the Customer receiving payment by the Owner, but in no case will CCT be paid later than (120) days from the date of our invoice for undisputed work. If any payment due to CCT is past due for more than (10) days, we reserve the right to stop work until all payments are brought current.
7. CCT is an IBEW union contractor.
7.a. CCT will be bound only to collective bargaining agreements to which it is a party. Please request information on our current collective bargaining agreements that pertain to our work for this project.
8. All fees from local agencies for the location of utilities or for performing standby are not included in this proposal.
9. All system designs contained within this document are the intellectual property of CCT.
9.a. Information is confidential and is not to be shared with any entity outside of CCT and the named recipient or organization listed above.
Cal Coast Telecom
CONFIDENTIAL
CONFIDENTIAL
886 Faulstich Court • San Jose, CA 95112 • tel: 408-275-8888 • fax: 408-275-8895 • www.cctcom.net • Lic.732886 California’s Digital Communications Experts
10. The cable cannot be painted; paint on the cable will void all warranties. General and painting contractors must take care to properly mask around cables before painting.
11. CCT is CTS, CTS-D, CTS-I, QSYS Level 1, and QSYS Level 2 certified.
12. Unless otherwise noted, the purchaser shall provide any necessary building permits and is responsible for conforming to all local building code requirements.
13. Department of Industrial Relations (DIR) Registration #1000000317.
14. All work will be installed, labeled, and tested to site and industry standards.
15. The cables installed will follow the building lines unless otherwise stated in this contract.
16. Obstructions of any nature that in any manner interfere with the installation shall be removed by the purchaser before commencing work.
17. Any changes or additional work outside of the above-mentioned scope of work may require a signed change order for additional costs.
18. Project schedule escalation will increase the price.
19. Material Procurement: CCT will make every effort to procure equipment in a timely manner, but cannot be held responsible for material delays caused by unforeseen circumstances, including but not limited to shipping delays, material availability, equipment damaged during shipping, and acts of God.
20. Work will be done during normal business hours (6 AM – 6 PM, Monday – Friday).
21. The proposal includes a single project mobilization and assumes a continuous work schedule. Starts and stops directed by the customer, that were not disclosed at the time of bid, will require a change order for loss of labor efficiency.
22. CCT standard warranty on audio-visual and security equipment and labor is (90) days.
22.a. Warranty coverage beyond (90) days will require a CCT service contract.
23. Purchase order/email acceptance required to start the project.
24. Due to ongoing pricing volatility and fluctuations in tariffs, CCT is unable to guarantee material prices and cannot be held liable for any price increases. Any adjustments to material costs will be captured through a change order.
25. The proposal is valid for (30) days from the proposal date, excluding any tariff-driven price increases.
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Cal Coast Telecom
CONFIDENTIAL
CONFIDENTIAL
886 Faulstich Court • San Jose, CA 95112 • tel: 408-275-8888 • fax: 408-275-8895 • www.cctcom.net • Lic.732886 California’s Digital Communications Experts
Q251174 PROPOSAL PRICING AND ACCEPTANCE
A. Proposed Base Price
Proposed Price for Audio-Visual per Scope of Work .............................................$ 181,160.00
INITIAL
Contractual Terms and Conditions: Terms of payment: NET CASH DUE 30 DAYS FROM DATE OF INVOICE. 1-1/2% per month finance charge shall be charged if not paid when due. For all materials that the customer has agreed upon for installation, a standard restocking fee will be charged if returned. In the event legal action is necessary to enforce any provisions of this contract, the prevailing party shall be entitled to reimbursement for reasonable attorney's fees and costs. Payments made by credit card will result in an additional transaction fee equal to 3% of the total amount charged.
By signing below, I accept and agree with the above-quoted price, terms, and conditions.
Accepted:
BY: DATE:
PRINTED NAME: P.O. / REQ #:
Thank you for allowing us this opportunity to prepare a proposal for your upcoming project. Please call me if there are any questions at (408) 454-7243 direct and/or (831) 566-5599 cell.
Upon acceptance of this proposal, please sign, date, assign a purchase order number and scan/email this document back to me at the email address provided below.
Sincerely,
David Hallmark, CTS-D
Audio Video Engineering Manager
[email protected]
X Preliminary Installation As-Built COMPANY NAME & PROJECT TITLE: PROJECT SITE LOCATION: DATE:SCALE: Drawn by: Revision No. Sheet: www.soundsolutiongroup.com Email: [email protected] 5722 Lonetree Blvd. Rocklin, CA 95765 Phone: (877) 799-2644Fax: (866) 890-1473 NTS Nick de Glymes AP.1 Materials Qty. Area of Scope By adding acoustic paneling to the space, the goal is to reduce the reverberation time and increase speech intelligibility within each area. To acheive this goal we recommend the following options. Overview Treatment Types Elements Clouds Wall Panels Area Name Description % of Recommended Coverage Outer Ceiling: Clouds 12mm (0.5 in) Elements Acoustic Clouds suspended 3 inches from ceiling. 100% Signing off on this document signifies the approving client/representative is satisfied with drawings and all edits have been noted and accepted as shown. Any edits made post sign-off cannot be implemented without written acknowledgment from Sound Solution Group. CUSTOMER APPROVAL SIGN OFF Color Selection COLOR - TBD QTY - TBD SIGNATURE PRINT NAME DATE TBD1Town of Atherton Address, 11/13/24 Plain Wall Panel-24mm (1 in) Custom Shape 8 Elements Acoustic Clouds - 12mm (0.5 in) 1219mm x 1219mm (4' x 4') 16 Inner Ceiling: Panels 24mm (1 in) Custom cut acoustic panels mounted to the wood slatted areas of the ceiling Page 272 of 273 X Preliminary Installation As-Built COMPANY NAME & PROJECT TITLE: PROJECT SITE LOCATION: DATE: SCALE: Drawn by: Revision No. Sheet: www.soundsolutiongroup.com Email: [email protected] 5722 Lonetree Blvd. Rocklin, CA 95765 Phone: (877) 799-2644Fax: (866) 890-1473 NTS Nick de Glymes AP.2 Materials Qty. Ceiling Signing off on this document signifies the approving client/representative is satisfied with drawings and all edits have been noted and accepted as shown. Any edits made post sign-off cannot be implemented without written acknowledgment from Sound Solution Group. CUSTOMER APPROVAL SIGN OFF Color Selection COLOR - TBD QTY - TBD SIGNATURE PRINT NAME DATE 1Town of Atherton 11/13/24 Plain Wall Panel-24mm (1 in) Custom Shape 8 Elements Acoustic Clouds - 12mm (0.5 in) 1219mm x 1219mm (4' x 4') 16 4' x 4' clouds suspended from ceiling by 3" 1" thick wall panels mounted directly to wood slat ceiling Page 273 of 273