INCLUSIONARY HOUSING IN-LIEU FEE STUDY
Prepared for:
City of Coronado
Prepared by:
Keyser Marston Associates, Inc.
November 2024
Attachment 2
TABLE OF CONTENTS
EXECUTIVE SUMMARY
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
I. Introduction....................................................................................................................................... 4 II. In-Lieu Fee Financial Analysis............................................................................................................ 6 III. Potential Fee Level Adjustments..................................................................................................... 18 IV. Survey of San Diego County Jurisdictions........................................................................................ 19 V. Limiting Conditions.......................................................................................................................... 21
APPENDICES
Appendix A Summary of Potential In-Lieu Fees
Appendix B Estimate of Affordable Sales Prices and Rents Appendix C In-Lieu Fee Financial Analysis
Approach 1: On-Site Production
Appendix D In-Lieu Fee Financial Analysis
Approach 2: Off-Site Production
Appendix E Comparison of Affordable Housing Fees, San Diego County Attachment 2
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EXECUTIVE SUMMARY
OVERVIEW
The City of Coronado (City) is considering a review of the methodology and approach used to determine the City’s inclusionary housing in-lieu fee. The City’s inclusionary housing policy requires that new residential developments in subdivisions of two or more units reserve twenty percent (20%) for lowerincome (rental) or moderate-income (for-sale) households. Alternatively, developers may pay an in-lieu fee of $7,000 per market-rate dwelling unit.
The City engaged Keyser Marston Associates, Inc. (KMA) to prepare an Inclusionary Housing In-Lieu Fee Study (Study) to evaluate the potential of updating the inclusionary housing in-lieu fee for the City. As part of this effort, KMA reviewed the current in-lieu fee and impact fee levels charged in local jurisdictions and evaluated a range of approaches to determine appropriate housing in-lieu fee levels for new market-rate residential development in the City.
RESIDENTIAL DEVELOPMENT PROTOTYPES
The Study identified four (4) market-rate residential prototypes reflective of the types of development projects occurring or anticipated to occur in the City including:
• For-sale single-family detached in R1-B Zone
• For-sale townhomes in R-3/P Zone
• For-sale townhomes in R-3 Zone
• For-sale townhomes in R-4 Zone
For each residential prototype, KMA prepared base case financial pro forma models assuming: (i) 100% of all units are sold at market prices; and (ii) a potential inclusionary housing set-aside at 20% moderate income.
APPROACH TO IN-LIEU FEE FINANCIAL ANALYSIS
KMA used two approaches to determine possible fee levels: (1) the economic impact on the developer to provide affordable housing on-site; and (2) the funding level required for the City to develop affordable housing in an off-site location.
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• Approach 1 – Economic Impact of Including Units On-Site – This approach uses a financial analysis to estimate fee levels that are approximately equivalent to the economic impact to market-rate developments of incorporating inclusionary units on-site. • Approach #2 – Off-Site Affordability Gap – This approach determines how much the City would need to receive from a market-rate residential developer in order to produce affordable rental housing in an off-site location.
POTENTIAL FEE LEVELS
As presented in Table 1, based on the findings from the two approaches noted above, the City may wish to consider an in-lieu fee of $59.00 per square foot (SF) of market-rate residential living area.
Table 1: Potential Fee Levels
Per Market-Rate Net SF $59/SF
The potential fee level of $59.00 reflects the lowest outcome of all the approaches tested by KMA.
This potential fee level is expressed on a per-SF basis. A per-SF in-lieu fee, as compared to a flat fee or perunit fee, recognizes the various residential unit sizes produced and avoids overly burdening the production of small market-rate units.
In order to mitigate affordable housing impacts -- and fund affordable housing -- over a long term and respond to economic cycles, the City should consider a potential annual escalator that could be used to adjust fee levels over time, such as the Construction Cost Index (CCI) published by the Engineering NewsRecord (ENR).
POTENTIAL FEE LEVELS IN COMPARISON TO OTHER SAN DIEGO COUNTY JURISDICTIONS KMA surveyed inclusionary in-lieu fees and affordable housing impact fees in 11 other San Diego County jurisdictions. The survey is summarized in Table 2 in comparison with the potential fee levels for the City.
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Table 2: Comparison of Affordable Housing Fees, Coronado vs. San Diego County Jurisdictions City of Coronado
San Diego County Jurisdictions
(range of findings)
Inclusionary Housing
Requirement
Applies to subdivisions only
subdivisions
only
-
all residential
development
Inclusionary Housing Required
Threshold
2 units 1 unit - 20 units
% of Affordable Units Required 20% 10% - 20%
In-Lieu Fee Option Available
Available to all projects
developed in subdivisions
In-lieu fee option is available to
developers in all jurisdictions
except for projects in the City of
Del Mar (only available to
subdivisions creating new lots), and
projects located within the City of
San Diego’s Future Urbanizing Area
(FUA) within the City of San Diego
In-Lieu Fee Amount
Per Unit -----
$500/Unit to $9,300/Unit
San Diego County Jurisdictions
charging per unit fees include:
Poway and San Marcos (1)
Per SF
Potential Fee Level:
$59/SF
$17.56/SF to $$50/SF
San Diego County jurisdictions
charging per SF fees include:
Carlsbad, Encinitas, Oceanside, San
Diego, Solana Beach, and Vista
(1) Update of San Marcos inclusionary housing in-lieu fee to a per SF fee to be considered by the City Council in November 2024.
The City’s current inclusionary requirements – in terms of project size threshold for inclusionary housing, percent of affordable units required, and in-lieu fee option -- fall within the range of inclusionary requirements found in other San Diego County jurisdictions. The potential fee level for the City ($59 per SF) would exceed other per-SF fees in the County. Within Southern California, KMA found a number of jurisdictions with similar or higher fees than the potential fee level proposed for the City, with the highest fee of $73.52/SF charged by the City of Pasadena.
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INCLUSIONARY HOUSING IN-LIEU FEE STUDY
I. INTRODUCTION
A. Objective
This report presents the economic analysis prepared by Keyser Marston Associates, Inc. (KMA) for the City of Coronado (City) to evaluate the update of the City’s inclusionary housing in-lieu fee.
B. City of Coronado Inclusionary Housing Policy
The City of Coronado Subdivision Code Chapter 82.21 establishes the City’s affordable housing requirements and in-lieu fees. Current statute and case law support the City’s authority to impose an inclusionary requirement on residential development.
The City requires that 20% of all new residential developments in subdivisions be reserved for lower- or moderate- income households, as follows:
Table I-1: City of Coronado Existing Inclusionary Housing Program Inclusionary Requirement Applies only to the creation of subdivisions Project Size Threshold 2 Units
% of Affordable Units Required
Rental
For-Sale
20% @ Lower Income
20% @ Moderate
Affordable Housing In-Lieu Fee
Available to projects of all sizes
$7,000/unit
In-lieu fees collected by the City are added to the City’s affordable housing fund to provide funding assistance to future affordable housing units. As of July 2024, the City’s in-lieu fee account had a balance of approximately $1,700,000.
The City requested that KMA review current in-lieu fee and impact fee levels charged in local jurisdictions, evaluate potential methodologies to determine an appropriate fee, and recommend a preferred methodology and fee level.
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C. Methodology
KMA performed the following key work tasks in completing this analysis.
1. Compiled data pertaining to inclusionary housing in-lieu fees and/or affordable housing impact fees currently being charged by other cities in San Diego County and Southern California.
2. Reviewed market trends data, land values, development cost estimates, and other industry standards for for-sale and rental residential development in Coronado and San Diego County overall.
3. Formulated market-rate residential development prototypes in coordination with City staff.
4. Prepared pro forma financial models to estimate the residual land value generated by each residential prototype under two scenarios: (a) at 100% market-rate; and (b) an inclusionary requirement of 20% at moderate income.
D. Organization of Report
This report is organized into the following key sections:
• Following this Introduction, Section II presents the financial analysis for an affordable housing inclusionary in-lieu fee.
• Section III reviews potential indices that could be used to adjust the fee in the future. • Section IV presents a survey of affordable housing in-lieu fees in other San Diego and Southern California jurisdictions.
• Section V presents limiting conditions pertaining to this report.
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II. IN-LIEU FEE FINANCIAL ANALYSIS
A. Residential Development Prototypes
Table II-1 provides a summary of the residential development prototypes identified for the Study. The prototypes are illustrative of the types of residential development projects occurring and anticipated to occur in the City. Four (4) new construction for-sale residential prototypes were identified based on review of recent development activity and discussion with City staff. While this level of feasibility analysis is useful for conceptual planning purposes, the actual circumstances for individual projects – physical, planning, market, financial, and other factors – will likely vary from the findings presented in this Study.
Table II-1: Project Descriptions for Development Prototypes
FOR-SALE
Single-Family Townhome Townhome Townhomes
Zoning R1-B Zone R-3/P Zone R-3 Zone R-4 Zone
Site Area (SF) 7,000 SF 5,250 SF 7,500 SF 14,000 SF
Density (Units/Acre) 12 Units/Acre 25 Units/Acre 23 Units/Acre 31 Units/Acre Number of Units 2 Units 3 Units 4 Units 10 Units
Unit Mix 1 and 4 Bedrooms 2 and 3 Bedrooms 2 and 3 Bedrooms 2 and 3 Bedrooms Stories 2 Stories 2 Stories 2 Stories 3 Stories
Average Unit Size 2,250 SF 2,000 SF 2,250 SF 1,870 SF
Parking Type Garage and
Surface
Garage and
Surface
Garage and
Surface Garage
B. Projected Market Sales Prices
KMA surveyed new for-sale development in the City and surrounding trade area. The purpose of the survey was to derive currently achievable market prices for the types of developments likely to be constructed in the City. The base case market-rate sales prices that are used in the financial feasibility analyses are presented in Table II-2.
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Table II-2: Projected Market Prices
FOR-SALE
Single-Family Townhomes Townhomes Townhomes
2 units
R1-B Zone
3 Units
R-3/P Zone
4 Units
R-3 Zone
10 Units
R-4 Zone
Average Market Price
per SF $1,178 $1,188 $1,184 $1,265
Average Unit Size 2,250 SF 2,000 SF 2,250 SF 1,870 SF
Average Market Price
per Unit $2,650,000 $2,375,000 $2,663,000 $2,365,000
C. Affordable Sales Price and Rent Calculation
For the purposes of this financial analysis, the maximum affordable sales prices and rents for the incomerestricted units were calculated based on the standards imposed by California Health and Safety Code (H&SC) Section 50052.5 (ownership) and Section 50053 (rental). The detailed calculations are presented in Appendix B; the key assumptions and results are summarized below.
Affordable Sales Price
• The household income information used in the calculations of affordable sales prices were based on 2024 income statistics for San Diego County as a whole. The household incomes are published annually by the U.S. Department of Housing and Urban Development (HUD). • The household size appropriate for each unit was based on one additional person vs. the number of bedrooms, per H&SC Section 50052.5.
• Maximum monthly ownership housing payments were calculated as equal to 1/12 x 35% x 110% AMI for moderate income households, adjusted for household size. • Housing-related costs reflecting the specifics of each residential prototype and current lending industry underwriting criteria were determined as follows:
o Utility expenses were based on the County of San Diego utility allowance schedule, effective March 1, 2024, and the assumption that the homeowner’s utility costs are comprised of electric heat, electric cooking, electric water heater, other basic electric services, water and sewer, and trash.
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o Homeowner Association (HOA) dues, reflecting an allowance for structure insurance, maintenance, and reserves.
o Property taxes, assuming a typical City tax rate of 1.05% of assessed value. o City Flat Tax of $643 per unit.
o Supportable mortgage, assuming a 30-year loan; 6.79% interest rate (the national 52-week average interest rate for a 30-year fixed mortgage1); and a 10.0% down payment.
Affordable Rent
• The household income information used in the calculations of affordable rent were based on 2024 income statistics for San Diego County as a whole. The household incomes are published annually by HUD.
• The household size appropriate for each unit was based on one additional person vs. the number of bedrooms, per H&SC Section 50053.
• Maximum monthly rental housing payment for very low income units is calculated as equal to 1/12 x 30% x 50% AMI (adjusted for household size), less adjustments for certain tenant-paid utilities. • Maximum monthly rental housing payment for low income units is calculated as equal to 1/12 x 30% x 60% AMI (adjusted for household size), less adjustments for certain tenant-paid utilities. • Utility expenses were based on the County of San Diego utility allowance schedule, effective March 1, 2024, and the assumption that the tenant’s utility costs are comprised of electric cooking, electric water heating, electric heating, and other basic electric services.
The resulting average affordable sales prices and rents are presented in Table II-3. 1 Source: Freddiemac.com, effective October 29, 2024.
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Table II-3: Affordable Sales Prices and Rents
Affordable Sales Price Affordable Monthly Rent
1 Bedroom 2 Bedroom 3 Bedroom 1 Bedroom 2 Bedroom 3 Bedroom Very Low
Income --- --- --- $1,094 $1,208 $1,315
Low
Income --- --- --- $1,333 $1,477 $1,614
Moderate
Income $356,000 $396,000 $436,000 --- --- ---
D. Economic Impact of Potential Fee Levels
The KMA analysis estimates the economic impact of the potential fee levels on project feasibility. The economic impact of the in-lieu fees was measured against residual land value. Residual land value is defined as the maximum land value supported by a proposed development. It is calculated by estimating the total value upon completion (or total available funding sources) and subtracting the estimated total development costs (other than land acquisition costs) required to develop the project.
Specifically, the residual land value for each residential prototype is derived from the following calculation.
Exhibit II-1: Residual Land Value Calculation
E. Approach 1: Economic Impact of Incorporating Affordable Housing On-Site To estimate the economic impact of incorporating inclusionary housing requirements on-site, KMA prepared financial pro forma models for each residential development prototype. Appendix C provides the detailed pro forma analyses prepared by KMA for each of the for-sale development prototypes. Appendix C is organized as follows:
Total Value at
Completion
Estimated
Development
Costs
(excluding land)
Residual
Land Value - =
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Appendix C – On-Site Production – For-Sale
Table 1 Prototype Project Descriptions
Table 2 Development Costs
Table 3 Gross Sales Proceeds and Residual Land Value – Single-Family R1-B Zone – 2 Units
Table 4 Gross Sales Proceeds and Residual Land Value – Townhomes R-3/P Zone – 3 Units
Table 5 Gross Sales Proceeds and Residual Land Value – Townhomes R-3 Zone – 4 Units
Table 6 Gross Sales Proceeds and Residual Land Value – Townhomes R-4 Zone – 10 Units
The financial pro forma models estimate the residual land value for: (1) a base case consisting of a 100% market-rate development; and (2) a development that complies with an inclusionary requirement, i.e., 20% at moderate income. The base case residual land value outcome can then be measured against the residual land value that is generated when the 20% moderate income requirement is imposed. It should be noted that because of the small number of units in each residential prototype, in almost all cases the number of affordable units assumed for each mixed-income scenario exceed the 20% moderate income requirement.
The economic impact of incorporating the City’s existing inclusionary requirement on-site is summarized in Table II-4.
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Table II-4: Economic Impact of Incorporating Affordable Housing On-Site
FOR-SALE
Single-Family Townhomes Townhomes Townhomes
Average
2 units
R1-B Zone
2,250 SF
Avg. Unit Size
3 Units
R-3/P Zone
2,000 SF
Avg. Unit Size
4 Units
R-3 Zone
2,250 SF
Avg. Unit Size
10 Units
R-4 Zone
1,870 SF
Avg. Unit Size
Residual Land Value Per Unit
100% Market-Rate $683,000 $797,000 $925,000 $921,000 $832,000 80% Market-Rate /
20% Affordable ($135,000) $346,000 $571,000 $673,000 $364,000 Economic Impact of Incorporating Affordable Housing On-Site Per Market-Rate
Unit ($818,000) ($451,000) ($354,000) ($248,000) ($468,000) Per Market-Rate
Net SF ($364) ($226) ($157) ($133) ($220)
As shown in Table II-4, the economic impacts to a developer of including 20% moderate income units onsite are estimated to range from $248,000 to $818,000 per market-rate unit, or $133 to $364 per SF of market-rate residential living area.
F. Approach 2: Funding Level Required to Implement Inclusionary Housing Production in an Off-Site Location
KMA also prepared estimates of the affordability gaps associated with developing affordable housing in an off-site location. The purpose of this financial analysis was to estimate the funding gap that would be required for either a market-rate residential developer or the City to create the targeted inclusionary housing production in a separate off-site location.
Lower Income
As detailed in Appendix D, the analysis assumed off-site affordable housing projects affordable to lower income households to be stacked-flat apartments over tuck-under parking on a 20,000 SF site. The KMA analysis estimated the development costs, operating budget, and anticipated funding sources for the affordable housing development prototypes under three financing scenarios: (i) no Low Income Housing Tax Credits (Tax Credits); (ii) with 9% Tax Credits; and (iii) with 4% Tax Credits. The following key assumptions were used to estimate a potential in-lieu fee based on implementing inclusionary housing production in an off-site location:
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• Total development costs for the three financing scenarios, excluding acquisition, estimated to average $623,000 per unit. The development budget for the 4% Tax Credit scenario was assumed to include the payment of prevailing wages due to the requirements of other State funding sources assumed in the analysis.
• Acquisition costs of $500 per SF of site area based on a survey of residential land sales in City. • Monthly rents at 60% AMI for the No Tax Credits financing scenario. • Monthly rents at an average of 50% AMI for the 9% and 4% Tax Credit scenarios in order to competitively apply for Tax Credits.
The resulting stabilized average annual net operating income generated by the affordable units is shown in Table II-5 (allow for rounding).
Table II-5: Off-Site Affordable Units – Average Net Operating Income per Unit per Year (1) RENTAL
Stacked Flat Apartments
No Tax Credits 9% Tax Credits 4% Tax Credits
Average Monthly Rent, 2024 $1,450 $1,190 $1,190
Effective Gross Income (2) $16,880 $13,840 $13,840
(Less) Operating Expenses (3) ($7,960) ($8,160) ($8,760) Net Operating Income $8,920 $5,680 $5,080
(1) Reflects net operating income per unit for each financing scenario. (2) Reflects rental income; other income such as laundry and vending; and a vacancy factor of 5.0%. (3) Includes payroll, management fees, administration, utilities, maintenance, insurance, tenant services, property assessments, and replacement reserves.
Funding sources available for the affordable units are assumed to include a combination of first mortgage debt, warranted equity investment, Tax Credit equity investment, State funding sources, and deferred developer fee/General Partner equity contribution. These potential funding sources are itemized in Table II-6.
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Table II-6: Off-Site Affordable Units – Sources of Funds per Unit RENTAL
Stacked Flat Apartments
No Tax Credits 9% Tax Credits 4% Tax Credits
Supportable Permanent Loan $101,000 $64,000 $56,000
Warranted Equity Investment $10,000 $0 $0
Tax Credit Equity Investment (1) $0 $429,000 $384,000
Other State Funding Sources $0 $0 $125,000
Total Sources of Funds $111,000 $493,000 $565,000
(1) Includes Federal and State tax credit equity investment.
The outcome of the KMA analysis indicates a developer would find it more economically beneficial to pursue 9% or 4% Tax Credits when developing an affordable housing project in an off-site location. As shown in Table II-7, the affordability gap for a lower income affordable unit financed with 9% and 4% Tax Credits is estimated to average $530,000 per affordable unit. These figures are calculated as the difference between total development costs and acquisition costs as compared to total funding sources.
Table II-7: Off-Site Affordable Units - Average Affordability Gap per Unit RENTAL
Stacked Flat Apartments
No Tax Credits 9% Tax Credits 4% Tax Credits Average (1) Total Sources of Funds $111,000 $493,000 $565,000 $529,000 (Less) Total Development Costs ($552,000) ($613,000) ($705,000) ($659,000) (Less) Acquisition Costs (2) ($400,000) ($400,000) ($400,000) ($400,000) Affordability Gap per
Affordable Unit ($841,000) ($520,000) ($540,000) ($530,000) (1) Excludes outcome from No Tax Credits scenario. Assumes off-site compliance for Low Income units would be met through the development of a Low Income Housing Tax Credit project with a combination of Extremely, Very Low, Low Income units.
(2) Reflects KMA estimate of $500 per SF site area based on survey of residential land sales in the City.
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As shown above, KMA estimates that an affordable rental unit has an estimated average financing gap of $530,000. In other words, for the market-rate developer or City to facilitate creation of off-site lower income units would require a contribution of $530,000 per unit. As shown in Table II-8, assuming a 20% lower income inclusionary requirement, the required number of off-site lower income units is calculated against the total number of market-rate units approved plus the inclusionary units produced off-site. This equates to $135,000 per market-rate unit developed (i.e., $530,000 ÷ 80% x 20%).
Table II-8: Estimate of Funding Gap for Off-Site Units - Lower Income Affordability Gap per Off-Site Affordable Unit $530,000 Per Market-Rate Unit
$133,000/Unit @ 20% Lower Income Inclusionary Set-Aside Per Market-Rate Net Square Fee $64/SF
@ 20% Lower Income Inclusionary Set-Aside Average
Moderate Income
KMA also prepared an estimate of the affordability gap associated with developing for-sale moderate income affordable housing in an off-site location. The KMA analysis assumed off-site affordable housing projects affordable to moderate income households to be stacked-flat condominiums over podium parking on a 15,000-SF site. Using the same framework and assumptions described for lower income offsite production above, KMA estimates the average financing gap required to develop a moderate income unit in an off-site location is $1,184,000 per affordable unit. As shown in Table II-9, this figure is calculated as the affordability gap outcome assuming 100% of units at moderate income plus a land acquisition cost estimate of $750,000 per unit of $500 per SF of site area.
Table II-9: Off-Site Affordable Units – Affordability Gap per Unit - Moderate Income Residual Land Value per Affordable Unit ($434,000)
(Less) Land Acquisition Costs ($750,000)
Affordability Gap per Affordable Unit ($1,184,000)
Assuming a 20% moderate income inclusionary requirement, the required number of off-site moderate income units is calculated against the total number of market-rate units approved plus the inclusionary units produced off-site. As shown in Table II-10, this equates to $296,000 per market-rate unit developed (i.e., $1,184,000 ÷ 80% x 20%).
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Table II-10: Estimate of Funding Gap for Off-Site Units - Moderate Income Affordability Gap per Off-Site Affordable Unit $1,184,000 Per Market-Rate Unit
$296,000/Unit
@ 20% Moderate Income Inclusionary Set-Aside
Per Market-Rate Net Square Fee $142/SF
Average
@ 20% Moderate Income Inclusionary Set-Aside
Funding Gap for Affordable Housing Off-Site
As shown in Table II-11, the funding gap outcome for off-site inclusionary housing can be expressed on both a per-unit basis and per-SF basis relative to the market-rate residential development.
To create an affordable lower income unit off-site, KMA estimates that the City would need to receive an average in-lieu fee of $133,000 per market-rate unit. On a per-SF basis, the City would need to receive a fee ranging between $59 and $71, depending on the market-rate prototype, or an average of $64 per SF living area.
To create an affordable moderate income unit off-site, KMA estimates that the City would need to receive an average in-lieu fee of $296,000 per market-rate unit. On a per-SF basis, the City would need to receive a fee ranging between $132 and $158, depending on the market-rate prototype, or an average of $142 per SF living area.
Table II-11: Funding Level Required to Create Affordable Housing Off-Site
FOR-SALE
Single-Family Townhomes Townhomes Townhomes
Average
2 units
R1-B Zone
2,250 SF
Avg. Unit Size
3 Units
R-3/P Zone
2,000 SF
Avg. Unit Size
4 Units
R-3 Zone
2,250 SF
Avg. Unit Size
10 Units
R-4 Zone
1,870 SF
Avg. Unit Size
20% LOWER - RENTAL
Affordability Gap per
Market-Rate Unit $133,000 $133,000 $133,000 $133,000 $133,000 Per Market-Rate Net SF $59 $67 $59 $71 $64
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Table II-11: Funding Level Required to Create Affordable Housing Off-Site
FOR-SALE
Single-Family Townhomes Townhomes Townhomes
Average
2 units
R1-B Zone
2,250 SF
Avg. Unit Size
3 Units
R-3/P Zone
2,000 SF
Avg. Unit Size
4 Units
R-3 Zone
2,250 SF
Avg. Unit Size
10 Units
R-4 Zone
1,870 SF
Avg. Unit Size
20% MODERATE – FOR-SALE
Per Market-Rate Unit $296,000 $296,000 $296,000 $296,000 $296,000 Per Market-Rate
Net SF $132 $148 $132 $158 $142
G. Potential In-Lieu Fees
As summarized in Table II-12, Approach 1 -- an in-lieu fee based on the economic impact on the developer to provide units on-site is estimated to range between $133 to $364 per SF of market -rate residential livening area. By comparison, an in-lieu fee based on Approach 2 -- the funding level required of the City to develop affordable housing in an off-site location is estimated to range from $132 and $158 per SF living area to create an affordable moderate income unit off-site; or between $59 and $71 per SF living area to create an affordable lower income unit off-site.
Table II-12: Potential Fee Levels
Approach to Setting Fee Levels
Approach 1:
On-Site Production
Approach 2:
Off-Site Production
FOR-SALE – 20% MODERATE
Per Market-Rate Net SF
$133 - $364
Average: $220
$132 - $158
Average: $142
RENTAL – 20% LOWER
Per Market-Rate Net SF ---
$59 - $71
Average: $64
In view of these findings, the City may wish to consider an in-lieu fee of $59 per SF of market-rate residential living area, as shown in Table II-13.
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Table II-13: Potential Fee Levels
Per Market-Rate Net SF $59/SF
This potential fee is based on the off-site production approach, rather than the on-site production approach. As shown in the table, the on-site production approach results in a much higher in-lieu fee that could present a feasibility challenge for market-rate projects. It should be noted that using the off-site production approach as the benchmark results in a per-SF in-lieu fee that is higher than existing per-unit fees found in other areas of the County. Refer to Section IV and Appendix E for further detail.
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III. POTENTIAL FEE LEVEL ADJUSTMENTS
Some jurisdictions apply an automatic adjustment to their in-lieu fee on an annual basis. This provision ensures that the fees charged will adjust annually to reflect changes in housing production costs. A review of potential indices that could be used to adjust the fee in the future is presented in Table III-1.
Table III-1: Potential Indices for Fee Level Adjustment Index Concept / Description Advantages Disadvantages
#1
Building Cost
Index (BCI)
Fees go up or down based on
building construction costs.
Published by Engineering News
Record (ENR).
Available at national average and
for 20 cities (not Vista or San
Diego; Los Angeles is nearest city
available).
Very well established.
Consistent fee burden
over time relative to
construction costs.
May not trend with changes
in non-construction
development costs (land,
other soft costs).
May not trend with cost to
produce affordable units.
Only addresses cost side of
the equation.
#2
Construction
Costs Index
(CCI)
Also published by ENR and
similar to Building Cost Index but
with different weighting of labor
and material cost categories.
Same as above. Same as above.
#3
Consumer Price
Index (CPI)
Published by the U.S. Bureau of
Labor Statistics. Available for
major metro areas including San
Diego.
Very well established.
Generally tracks with
inflation.
Produced by neutral
governmental agency.
May not trend with:
- Construction costs
(consistent fee burden)
or
- Cost to produce
affordable units
(consistent ability to
mitigate impacts)
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IV. SURVEY OF SAN DIEGO COUNTY JURISDICTIONS
KMA conducted a survey of inclusionary in-lieu fees and affordable housing impact fees in other San Diego County communities. The survey is summarized in Exhibit IV-1, in comparison with the potential fee level for the City of Coronado. Further information on each jurisdiction’s inclusionary program and fee levels is presented in Appendix E. Inclusionary housing programs and in-lieu fees vary widely throughout the County in terms of fee levels and threshold requirements for the payment of in-lieu fees. Key factors for these variations appear to relate to local housing market conditions, real estate development trends, State-mandated affordable housing obligations, and policy direction from public officials.
As shown in the exhibit above, the recommended per-SF fee of $59 for the City would exceed other per-SF fees in the County.
Outside of San Diego County, within Southern California, KMA found a number of jurisdictions with similar or higher fees than the potential fee level proposed for the City, as summarized in Table IV-1.
Exhibit IV-1: Coronado Potential Fee Levels vs. San Diego County Jurisdictions - Per SF (1) $18.00
$24.08
$20.00 $25.00 (3)
$27.22
$17.56
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
Carlsbad Encinitas Oceanside San Diego Solana Beach Vista Coronado In-Lieu Fee - Per SF
15% Low
15% Very Low or 20% Low
15% Low or 15% Moderate (1)
10% Low
15% Very Low or 15% Low
5% Low/
4% Moderate
20% Low (Rental) or 20% Moderate (For-Sale)
$50.00 (2)
(1) Inclusionary requirement of 15% moderate in the City of Oceanside available to for-sale developments only. (2) Reflects in-lieu fee available to projects in San Diego‘s University Community Plan Area who do not produce any on-site affordable housing units.
(3) Reflects in-lieu fee available to developments located outside of the City of San Diego’s North City Future Urbanizing Area (FUA).
$59.00
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Table IV-1: Comparison of Affordable Housing Fees, Select Southern California Jurisdictions City In-Lieu Fee Amount
Glendale Sliding scale: 8 Units @ $28.71/SF; 21 Units @ $55/SF Mission Viejo Ownership
Rental
$41.90/SF
$58.20/SF
Pasadena Sliding scale by sub-area and project site $34.19/SF - $73.52/SF Ventura Ownership
Rental
$29.80 - $66.30/SF
$20.30 - $48.90/SF
Santa Monica Ownership
Rental
$41.70/SF
$35.70/SF
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V. LIMITING CONDITIONS
1. The analysis contained in this document is based, in part, on data from secondary sources such as state and local government, planning agencies, real estate brokers, and other third parties. While KMA believes that these sources are reliable, we cannot guarantee their accuracy.
2. The analysis assumes that neither the local nor national economy will experience a major recession. If an unforeseen change occurs in the economy, the conclusions contained herein may no longer be valid.
3. The findings are based on economic rather than political considerations. Therefore, they should be construed neither as a representation nor opinion that government approvals for development can be secured.
4. Development opportunities are assumed to be achievable during the specified time frame. A change in development schedule requires that the conclusions contained herein be reviewed for validity.
5. The analysis, opinions, recommendations, and conclusions of this document are KMA's informed judgment based on market and economic conditions as of the date of this report. Due to the volatility of market conditions and complex dynamics influencing the economic conditions of the building and development industry, conclusions and recommended actions contained herein should not be relied upon as sole input for final business decisions regarding current and future development and planning.
6. Any estimates of development costs, capitalization rates, income and/or expense projections are based on the best available project-specific data as well as the experiences of similar projects. They are not intended to be projections of the future for the specific project. No warranty or representation is made that any of the estimates or projections will actually materialize.
7. KMA is not advising or recommending any action be taken by City of Coronado with respect to any prospective, new, or existing municipal financial products or issuance of municipal securities (including with respect to the structure, timing, terms, and other similar matters concerning such financial products or issues).
8. KMA is not acting as a Municipal Advisor to the City of Coronado and does not assume any fiduciary duty hereunder, including, without limitation, a fiduciary duty to the City of Coronado pursuant to Section 15B of the Exchange Act with respect to the services provided hereunder and any information and material contained in KMA’s work product.
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9. The City of Coronado shall discuss any such information and material contained in KMA’s work product with any and all internal and/or external advisors and experts, including its own municipal advisors, that it deems appropriate before acting on the information and material.
Attachment 2
Appendix A Summary of Potential In-Lieu Fees
Appendix B Estimate of Affordable Sales Prices and Rents Appendix C In-Lieu Fee Financial Analysis
Approach 1: On-Site Production
Appendix D In-Lieu Fee Financial Analysis
Approach 2: Off-Site Production
Appendix E Comparison of Affordable Housing Fees, San Diego County
APPENDICES
APPENDIX A
Summary of Potential In-Lieu Fees
ON-SITE PRODUCTION
TABLE A-1
ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 1: ECONOMIC IMPACT OF INCORPORATING AFFORDABLE HOUSING ON-SITE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
C D E
2 Units 3 Units 4 Units 10 Units
2,250 SF 2,000 SF 2,250 SF 1,870 SF
Avg. Unit Size Avg. Unit Size Avg. Unit Size Avg. Unit Size R1-B Zone R-3/P Zone R-3 Zone R-4 Zone
I. Residual Land Value - Per Unit
100% Market-Rate $683,000 $797,000 $925,000 $921,000 $832,000 20% MODERATE INCOME
II. Residual Land Value - Per Unit
80% Market-Rate / 20% Affordable ($135,000) $346,000 $571,000 $673,000 $364,000 III. Economic Impact of Affordable Housing On-Site
Per Market-Rate Unit $818,000 $451,000 $354,000 $248,000 $468,000 % Change (1) 119.8% 56.6% 38.3% 26.9% 56.3%
Per Market-Rate Net SF $364 $226 $157 $133 $220
(1) Reflects the % change in residual land value resulting from incorporating 20% of units on-site for affordable housing.
A B
Single-Family Townhomes Townhomes Townhomes
FOR-SALE
Average
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OFF-SITE PRODUCTION
TABLE A-2
ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 2: FUNDING LEVEL REQUIRED FOR INCLUSIONARY HOUSING PRODUCTION OFF-SITE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
C D E
2 Units 3 Units 4 Units 10 Units
2,250 SF 2,000 SF 2,250 SF 1,870 SF
Avg. Unit Size Avg. Unit Size Avg. Unit Size Avg. Unit Size R1-B Zone R-3/P Zone R-3 Zone R-4 Zone
I. Affordability Gap per Affordable Unit (1) $530,000 $530,000 $530,000 $530,000 $530,000 II.
Affordability Gap per Market-Rate Unit @ 20.0% (2) $133,000 $133,000 $133,000 $133,000 $133,000 Per Market-Rate Net SF $59 $67 $59 $71 $64
(1)
(2) Assumes inclusionary requirement applied to total number of market-rate units approved [i.e., (gap ÷ 80%) x 20%].
Reflects average affordability gap per affordable unit assuming off-site compliance for Low Income units would be met through the development of a project financed with Low Income Housing Tax Credits with a combination of Extremely Low, Very Low, and Low Income units.
Average
A
Single-Family Townhomes Townhomes
B
FOR-SALE
Townhomes
20% LOWER - RENTAL
Funding Required for Inclusionary Housing
Production Off-Site
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OFF-SITE PRODUCTION
TABLE A-3
ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 2: FUNDING LEVEL REQUIRED FOR INCLUSIONARY HOUSING PRODUCTION OFF-SITE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
C D E
2 Units 3 Units 4 Units 10 Units
2,250 SF 2,000 SF 2,250 SF 1,870 SF
Avg. Unit Size Avg. Unit Size Avg. Unit Size Avg. Unit Size R1-B Zone R-3/P Zone R-3 Zone R-4 Zone
I. Affordability Gap per Affordable Unit (1) $1,184,000 $1,184,000 $1,184,000 $1,184,000 $1,184,000 II.
Affordability Gap per Market-Rate Unit @ 20.0% (2) $296,000 $296,000 $296,000 $296,000 $296,000 Per Market-Rate Net SF $132 $148 $132 $158 $142
(1)
(2) Assumes inclusionary requirement applied to total number of market-rate units approved [i.e., (gap ÷ 80%) x 20%]. 20% MODERATE - FOR-SALE
Reflects affordability gap assuming off-site compliance met through the development of stacked flat condominiums with 100% of units at Moderate Income.
A B
FOR-SALE
Funding Required for Inclusionary Housing
Production Off-Site
Average
Single-Family Townhomes Townhomes Townhomes
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APPENDIX B
Estimate of Affordable Rents and Sales Prices
TABLE B-1
ESTIMATE OF AFFORDABLE SALES PRICES - SINGLE-FAMILY HOMES/TOWNHOMES - 110% AMI
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
Number of Bedrooms 1 2 3
I. Benchmark Household Size (1) 2.0 3.0 4.0
County of San Diego Median income $95,600 $107,550 $119,500 Percent of AMI 110% 110% 110%
II. Benchmark Household Income (2) $105,160 $118,305 $131,450 Income Allocation to Housing 35% 35% 35%
Amount Available for Housing $36,806 $41,407 $46,008
III. HOA Fees(3) $350 /Month $4,200 $350 /Month $4,200 $350 /Month $4,200 Utilities(4) $268 /Month $3,216 $353 /Month $4,236 $466 /Month $5,592 Annual Taxes(5) 1.05% $3,738 1.05% $4,158 1.05% $4,578
Flat Tax (6) $643 $643 $643
IV. Available for Mortgage $25,009 $28,170 $30,995
V. Interest Rate (7) 6.79% 6.79% 6.79%
Down Payment 10.0% 10.0% 10.0%
VI. Supportable Mortgage $320,008 $360,452 $396,597
Add: Down Payment $35,600 $36,045 $39,660
VII. Maximum Unit Price (Rounded) $356,000 $396,000 $436,000 (1) Assumed family size per California Health & Safety Code §50052.5, reflects the number of bedrooms in the unit plus one. (2) State of California Department of Housing and Community Development (HCD) 2024 income limits. (3) HOA Fees based on data from Redfin.com
(4) See Table B-2.
(5)
(6) Reflects City flat tax on all properties
(7) Reflects national 30-year fixed mortgage 52-week average interest rate per Freddiemac.com effective October 29, 2024.
Source: State of California Department of Housing and Community Development, San Diego County Department of Housing and Community Development, California Redevelopment Law H&SC § 50052.5.
Based on affordable unit price. Property tax may be based on market value of actual unit if project is granted a density bonus.
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TABLE B-2
UTILITY ALLOWANCES - FOR-SALE UNITS - TOWNHOMES/SINGLE-FAMILY HOMES
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
A. Utilities (Annual) (1)
Number of Bedrooms 1 2 3
Electric Heat $19 $25 $35
Electric Cooking $12 $17 $22
Electric Water Heater $26 $33 $44
Other Electric $44 $61 $78
Air Conditioning $10 $17 $22
Water $93 $136 $201
Sewer $26 $26 $26
Trash $38 $38 $38
Total Utilities $268 $353 $466
B. Total Annual Utilities $3,216 $4,236 $5,592
(1) Source: Housing Authority of the County of San Diego 2024 Utility Allowance Schedule, effective March 1, 2024.
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TABLE B-3
ESTIMATE OF AFFORDABLE RENTS - 50% AMI, 2024
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
Number of Bedrooms 1 2 3
A. Health and Safety Code Section 50053 - Very Low Income Household Size (1) 2.0 3.0 4.0
Percent of AMI 50% 50% 50%
Household Income (2) $47,800 $53,775 $59,750
Income Allocation to Housing 30% 30% 30%
Monthly Housing Cost $1,195 $1,344 $1,494
(Less) Utility Allowance (3) ($101) ($136) ($179)
Maximum Monthly Rent $1,094 $1,208 $1,315
B. Low Income Housing Tax Credit (LIHTC) Program
Household Size (4) 1.5 3.0 4.5
Percent of AMI 50% 50% 50%
Household Income (5) $56,825 $68,200 $78,800
Income Allocation to Housing 30% 30% 30%
Monthly Housing Cost (6) $1,420 $1,705 $1,969
(Less) Utility Allowance (3) ($101) ($136) ($179)
Maximum Monthly Rent $1,319 $1,569 $1,790
C. Maximum Monthly Rent $1,094 $1,208 $1,315
(1) Assumed familiy size per California Health & Safety Code §50052.5, reflects the number of bedrooms in the unit plus one. (2) Based on State of California Department of Housing and Community Development (HCD) 2024 income limits. (3) Reflects County of San Diego utility allowances, as of March 1, 2024.
Monthly Utility One Two Three
Electric Heating $19 $25 $35
Electric Cooking $12 $17 $22
Other Electric $44 $61 $78
Electric Water Heating $26 $33 $44
Total $101 $136 $179
(4) As assigned by Low Income Housing Tax Credit Program. (5) California Tax Credit Allocation Committee 2024 maximum income levels for projects placed in service on or after April 1, 2024. (6) California Tax Credit Allocation Committee 2024 maximum rents for projects placed in service on or after April 1, 2024.
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TABLE B-4
ESTIMATE OF AFFORDABLE RENTS - 60% AMI, 2024
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
Number of Bedrooms 1 2 3
A. Health and Safety Code Section 50053 - Low Income
Household Size (1) 2.0 3.0 4.0
Percent of AMI 60% 60% 60%
Household Income (2) $57,360 $64,530 $71,700
Income Allocation to Housing 30% 30% 30%
Monthly Housing Cost $1,434 $1,613 $1,793
(Less) Utility Allowance (3) ($101) ($136) ($179)
B. Maximum Monthly Rent $1,333 $1,477 $1,614
(1) Assumed familiy size per California Health & Safety Code §50052.5, reflects the number of bedrooms in the unit plus one. (2) Based on State of California Department of Housing and Community Development (HCD) 2024 income limits. (3) Reflects County of San Diego utility allowances, as of March 1, 2024.
Monthly Utility One Two Three
Electric Heating $19 $25 $35
Electric Cooking $12 $17 $22
Other Electric $44 $61 $78
Electric Water Heating $26 $33 $44
Total $101 $136 $179
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APPENDIX C
In-Lieu Fee Financial Analysis
Approach 1: On-Site Production
ON-SITE PRODUCTION
TABLE C-1 FOR-SALE
PROTOTYPE PROJECT DESCRIPTIONS
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
I. Site Area 0.16 Acres 0.12 Acres 0.17 Acres 0.32 Acres 7,000 SF 5,250 SF 7,500 SF 14,000 SF
II. Gross Building Area (GBA)
Residential Area 4,500 SF 100% 6,000 SF 100% 9,000 SF 100% 18,700 SF 100% Common Area (1) 0 SF 0% 0 SF 0% 0 SF 0% 0 SF 0%
Total GBA - Residential 4,500 SF 100% 6,000 SF 100% 9,000 SF 100% 18,700 SF 100% III. Number of Units 2 Units 3 Units 4 Units 10 Units
IV. Unit Mix # of Units Unit Size # of Units Unit Size # of Units Unit Size # of Units Unit Size Two Bedroom 1 Unit 50% 1,750 SF 1 Unit 33% 1,500 SF 1 Unit 25% 1,500 SF 2 Units 20% 1,350 SF Three Bedroom 0 Units 0% - 2 Units 67% 2,250 SF 3 Units 75% 2,500 SF 8 Units 80% 2,000 SF Four Bedroom 1 Unit 50% 2,750 SF 0 Units 0% - 0 Units 0% - 0 Units 0% - Total/Average 2 Units 100% 2,250 SF 3 Units 100% 2,000 SF 4 Units 100% 2,250 SF 10 Units 100% 1,870 SF V. Density 12 Units/Acre 25 Units/Acre 23 Units/Acre 31 Units/Acre VI. Construction Type Type V Type V Type V Type V
VII. Stories 2 Stories 2 Stories 2 Stories 3 Stories
VIII. Parking
Type Garage and Surface Garage and Surface Garage and Surface Spaces - Residential 4 Spaces 6 Spaces 8 Spaces 20 Spaces Ratio 2.0 Spaces/Unit 2.0 Spaces/Unit 2.0 Spaces/Unit 2.0 Spaces/Unit (1) Prototypes do not have shared indoor common areas.
A
Single Family Homes
Garage
R1-B Zone - 2 Units R-3/P Zone - 3 Units R-3 Zone - 4 Units R-4 Zone - 10 Units B C D
Townhomes Townhomes Townhomes
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ON-SITE PRODUCTION
FOR-SALE TABLE C-2
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
Total Per Unit Comments Total Per Unit Comments Total Per Unit Comments Total Per Unit Comments I. Direct Costs
Off-Site Improvements (1) $105,000 $53,000 $15 Per SF Site $79,000 $26,000 $15 Per SF Site $113,000 $28,000 $15 Per SF Site $140,000 $14,000 $10 Per SF Site On-Site Improvements/Landscaping (1) $175,000 $88,000 $25 Per SF Site $131,000 $44,000 $25 Per SF Site $188,000 $47,000 $25 Per SF Site $280,000 $28,000 $20 Per SF Site Parking $0 $0 Included Below $0 $0 Included Below $0 $0 Included Below $0 $0 Included Below Shell Construction - Residential $1,575,000 $788,000 $350 Per SF GBA $1,950,000 $650,000 $325 Per SF GBA $2,925,000 $731,000 $325 Per SF GBA $6,078,000 $608,000 $325 Per SF GBA FF&E/Amenities $100,000 $50,000 Allowance $75,000 $25,000 Allowance $100,000 $25,000 Allowance $150,000 $15,000 Allowance Contingency $147,000 $74,000 7.5% of Above Directs $168,000 $56,000 7.5% of Above Directs $166,000 $42,000 5.0% of Above Directs $332,000 $33,000 5.0% of Above Directs Total Direct Costs $2,102,000 $1,051,000 $467 Per SF GBA $2,403,000 $801,000 $401 Per SF GBA $3,492,000 $873,000 $388 Per SF GBA $6,980,000 $698,000 $373 Per SF GBA II. Indirect Costs
Architecture & Engineering $147,000 $74,000 7.0% of Directs $168,000 $56,000 7.0% of Directs $244,000 $61,000 7.0% of Directs $489,000 $49,000 7.0% of Directs Permits & Fees (2) $46,000 $23,000 $10 Per SF GBA $41,000 $14,000 $7 Per SF GBA $56,000 $14,000 $6 Per SF GBA $105,000 $11,000 $6 Per SF GBA Legal & Accounting $32,000 $16,000 1.5% of Directs $36,000 $12,000 1.5% of Directs $52,000 $13,000 1.5% of Directs $105,000 $11,000 1.5% of Directs Taxes & Insurance $265,000 $133,000 5.0% of Market Value $356,000 $119,000 5.0% of Market Value $533,000 $133,000 5.0% of Market Value $1,182,000 $118,000 5.0% of Market Value Developer Fee $84,000 $42,000 4.0% of Directs $96,000 $32,000 4.0% of Directs $140,000 $35,000 4.0% of Directs $279,000 $28,000 4.0% of Directs Marketing/Sales $265,000 $133,000 5.0% of Market Value $356,000 $119,000 5.0% of Market Value $533,000 $133,000 5.0% of Market Value $1,182,000 $118,000 5.0% of Market Value Contingency $42,000 $21,000 5.0% of Above Indirects $53,000 $18,000 5.0% of Above Indirects $78,000 $20,000 5.0% of Above Indirects $167,000 $17,000 5.0% of Above Indirects Total Indirect Costs $881,000 $441,000 41.9% of Directs $1,106,000 $369,000 46.0% of Directs $1,636,000 $409,000 46.8% of Directs $3,509,000 $351,000 50.3% of Directs III. Financing Costs(3) $263,000 $132,000 12.5% of Directs $300,000 $100,000 12.5% of Directs $437,000 $109,000 12.5% of Directs $873,000 $87,000 12.5% of Directs IV. Development Costs(4) $3,246,000 $1,623,000 $721 Per SF GBA $3,809,000 $1,270,000 $635 Per SF GBA $5,565,000 $1,391,000 $618 Per SF GBA $11,362,000 $1,136,000 $608 Per SF GBA (1) Estimated allowance; not verified by KMA or the City of Coronado. (2) KMA estimate, includes building fees, fire fees, water capacity fees, development impact fees, Regional Transportation Congestion Improvement Program (RTCIP) fees, and Coronado Unified School District fees. (3) Includes loan fees, interest during construction, and interest during sales. (4) Excludes acquisition costs.
R1-B Zone - 2 Units R-3/P Zone - 3 Units R-3 Zone - 4 Units R-4 Zone - 10 Units A
Single Family Homes Townhomes
C D
Townhomes Townhomes
B
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ON-SITE PRODUCTION
TABLE C-3 FOR-SALE
GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
I. Gross Sales Proceeds
# Units $/SF Price/Unit Total # Units $/SF Price/Unit Total A. Market-Rate
Two Bedroom 1,750 SF 1 $1,300 $2,275,000 $2,275,000 0 $1,300 $2,275,000 $0 Four Bedroom 2,750 SF 1 $1,100 $3,025,000 $3,025,000 1 $1,100 $3,025,000 $3,025,000 Subtotal/Average 2,250 SF 2 $1,178 $2,650,000 $5,300,000 1 $1,100 $3,025,000 $3,025,000 B. Affordable - Moderate (1)(2)
Two Bedroom 1,750 SF 0 $0 $0 $0 1 $226 $396,000 $396,000 Four Bedroom 2,750 SF 0 $0 $0 $0 0 $159 $436,000 $0
Subtotal/Average 2,250 SF 0 $0 $0 $0 1 $226 $396,000 $396,000 C. Total/Average 2,250 SF 2 $1,178 $2,650,000 $5,300,000 2 $760 $1,711,000 $3,421,000 II. Total Gross Sales Proceeds
(Less) Cost of Sale 3.0% of Value ($159,000) 3.0% of Value ($103,000) (Less) Target Developer Profit 10.0% of Value ($530,000) 10.0% of Value ($342,000) III. Total Net Sales Procees $4,611,000 $2,976,000
(Less) Development Costs (3) ($3,246,000) ($3,246,000)
IV. Residual Land Value $1,365,000 ($270,000)
Per Unit $683,000 ($135,000)
Per SF Site Area $260 ($51)
(1) Affordable sales prices based on State of California Department of Housing and Community Development (HCD) 2024 income limits. (2) Reflect maximum ownership housing payment at 35% of 110% AMI; see Table B-1. (3) See Table C-2.
Unit Size
A
Single Family Homes
100% @ Market-Rate 80% @ Market-Rate
20% @ Affordable
R1-B Zone - 2 Units
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ON-SITE PRODUCTION
TABLE C-4 FOR-SALE
GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
I. Gross Sales Proceeds
# Units $/SF Price/Unit Total # Units $/SF Price/Unit Total A. Market-Rate
Two Bedroom 1,500 SF 1 $1,300 $1,950,000 $1,950,000 0 $1,300 $1,950,000 $0 Three Bedroom 2,250 SF 2 $1,150 $2,588,000 $5,176,000 2 $1,150 $2,587,500 $5,175,000 Subtotal/Average 2,000 SF 3 $1,188 $2,375,000 $7,126,000 2 $1,294 $2,588,000 $5,175,000 B. Affordable - Moderate (1)(2)
Two Bedroom 1,500 SF 0 $0 $0 $0 1 $264 $396,000 $396,000 Three Bedroom 2,250 SF 0 $0 $0 $0 0 $194 $436,000 $0
Subtotal/Average 1,500 SF 0 $0 $0 $0 1 $264 $396,000 $396,000 C. Total/Average 2,000 SF 3 $1,188 $2,375,000 $7,126,000 3 $929 $1,857,000 $5,571,000 II. Total Gross Sales Proceeds
(Less) Cost of Sale 3.0% of Value ($214,000) 3.0% of Value ($167,000) (Less) Target Developer Profit 10.0% of Value ($713,000) 10.0% of Value ($557,000) III. Total Net Sales Procees $6,199,000 $4,847,000
(Less) Development Costs (3) ($3,809,000) ($3,809,000)
IV. Residual Land Value $2,390,000 $1,038,000
Per Unit $797,000 $346,000
Per SF Site Area $455 $198
(1) Affordable sales prices based on State of California Department of Housing and Community Development (HCD) 2024 income limits. (2) Reflect maximum ownership housing payment at 35% of 110% AMI; see Table B-1. (3) See Table C-2.
Unit Size
B
Townhomes
100% @ Market-Rate 80% @ Market-Rate
20% @ Affordable
R-3/P Zone - 3 Units
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ON-SITE PRODUCTION
TABLE C-5 FOR-SALE
GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
I. Gross Sales Proceeds
# Units $/SF Price/Unit Total # Units $/SF Price/Unit Total A. Market-Rate
Two Bedroom 1,500 SF 1 $1,350 $2,025,000 $2,025,000 0 $1,350 $2,025,000 $0 Three Bedroom 2,500 SF 3 $1,150 $2,875,000 $8,625,000 3 $1,150 $2,875,000 $8,625,000 Subtotal/Average 2,250 SF 4 $1,184 $2,663,000 $10,650,000 3 $1,278 $2,875,000 $8,625,000 B. Affordable - Moderate (1)(2)
Two Bedroom 1,500 SF 0 $0 $0 $0 1 $264 $396,000 $396,000 Three Bedroom 2,500 SF 0 $0 $0 $0 0 $174 $436,000 $0
Subtotal/Average 2,250 SF 0 $0 $0 $0 1 $176 $396,000 $396,000 C. Total/Average 2,250 SF 4 $1,184 $2,663,000 $10,650,000 4 $1,002 $2,255,000 $9,021,000 II. Total Gross Sales Proceeds
(Less) Cost of Sale 3.0% of Value ($320,000) 3.0% of Value ($271,000) (Less) Target Developer Profit 10.0% of Value ($1,065,000) 10.0% of Value ($902,000) III. Total Net Sales Procees $9,265,000 $7,848,000
(Less) Development Costs (3) ($5,565,000) ($5,565,000)
IV. Residual Land Value $3,700,000 $2,283,000
Per Unit $925,000 $571,000
Per SF Site Area $493 $304
(1) Affordable sales prices based on State of California Department of Housing and Community Development (HCD) 2024 income limits.. (2) Reflect maximum ownership housing payment at 35% of 110% AMI; see Table B-1. (3) See Table C-2.
C
Unit Size
Townhomes
100% @ Market-Rate 80% @ Market-Rate
20% @ Affordable
R-3 Zone - 4 Units
Prepared by: Keyser Marston Associates, Inc.
Filename: City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
ON-SITE PRODUCTION
TABLE C-6 FOR-SALE
GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
I. Gross Sales Proceeds
# Units $/SF Price/Unit Total # Units $/SF Price/Unit Total A. Market-Rate
Two Bedroom 1,350 SF 2 $1,350 $1,823,000 $3,646,000 0 $1,350 $1,822,500 $0 Three Bedroom 2,000 SF 8 $1,250 $2,500,000 $20,000,000 8 $1,250 $2,500,000 $20,000,000 Subtotal/Average 1,870 SF 10 $1,265 $2,365,000 $23,646,000 8 $1,337 $2,500,000 $20,000,000 B. Affordable - Moderate (1)(2)
Two Bedroom 1,350 SF 0 $0 $0 $0 2 $293 $396,000 $792,000 Three Bedroom 2,000 SF 0 $0 $0 $0 0 $218 $436,000 $0
Subtotal/Average 1,870 SF 0 $0 $0 $0 2 $212 $396,000 $792,000 C. Total/Average 1,870 SF 10 $1,265 $2,365,000 $23,646,000 10 $1,112 $2,079,000 $20,792,000 II. Total Gross Sales Proceeds
(Less) Cost of Sale 3.0% of Value ($709,000) 3.0% of Value ($624,000) (Less) Target Developer Profit 10.0% of Value ($2,365,000) 10.0% of Value ($2,079,000) III. Total Net Sales Procees $20,572,000 $18,089,000
(Less) Development Costs (3) ($11,362,000) ($11,362,000) IV. Residual Land Value $9,210,000 $6,727,000
Per Unit $921,000 $673,000
Per SF Site Area $658 $481
(1) Affordable sales prices based on State of California Department of Housing and Community Development (HCD) 2024 income limits. (2) Reflect maximum ownership housing payment at 35% of 110% AMI; see Table B-1. (3) See Table C-2.
D
Unit Size
Townhomes
100% @ Market-Rate 80% @ Market-Rate
20% @ Affordable
R-4 Zone - 10 Units
Prepared by: Keyser Marston Associates, Inc.
Filename: City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
ON-SITE PRODUCTION
TABLE C-7
AVERAGE RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
C D E
2 Units 3 Units 4 Units 10 Units
R1-B Zone R-3/P Zone R-3 Zone R-4 Zone
I. Moderate Income
A. Residual Land Value - 100% Market Rate $1,365,000 $2,390,000 $3,700,000 $9,210,000 Per Unit $683,000 $797,000 $925,000 $921,000 $832,000
Per SF Site Area $260 $455 $493 $658 $467
A B
FOR-SALE
Average Single-Family Townhomes Townhomes Townhomes
Prepared by: Keyser Marston Associates, Inc.
Filename i:\City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
APPENDIX D
In-Lieu Fee Financial Analysis
Approach 2: Off-Site Production
OFF-SITE PRODUCTION
TABLE D-1
PROTOTYPE PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
I. Site Area 0.46 Acres 0.34 Acres
20,000 SF 15,000 SF
II. Gross Building Area (GBA)
A. Residential
Net Rentable Area 20,950 SF 87.5% 12,900 SF 85.0%
Circulation/Common Area 2,990 SF 12.5% 2,280 SF 15.0%
Total GBA - Residential 23,940 SF 100.0% 15,180 SF 100.0% B. Retail/Restaurant 0 SF
C. Total GBA 23,940 SF 15,180 SF
III. Number of Units 25 Units 10 Units
IV. Unit Mix # of Units Unit Size # of Units Unit Size
One Bedroom 7 Units 28% 700 SF 2 Units 8% 950 SF
Two Bedroom 15 Units 60% 850 SF 6 Units 24% 1,250 SF
Three Bedroom 3 Units 12% 1,100 SF 2 Units 8% 1,750 SF
Total/Average 25 Units 100% 838 SF 10 Units 40% 1,290 SF V. Affordability Mix
Moderate Income 0 Units 0 10 Units 100%
Very Low / Low Income 25 Units 100% 0 Units 0%
Manager 0 Units 0% 0 Units 0%
Total/Av 25 Units 100% 10 Units 100%
VI. Density 54 Units/Acre 29 Units/Acre
VII. Construction Type Type V Type V
VIII. Stories 3 Stories 4 Stories
IX. FAR 1.20 FAR 1.01 FAR
X. Parking
Type
Spaces - Residential 13 Spaces 5 Spaces
Ratio 0.50 Spaces/Unit 0.50 Spaces/Unit
Tuck-under Podium
E F
Stacked Flat Apartments
Rental
Stacked Flat Condominiums
For-Sale
---
Prepared by: Keyser Marston Associates, Inc.
Filename: City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
OFF-SITE PRODUCTION
TABLE D-2
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
Total Per Unit Comments Total Per Unit Comments Total Per Unit Comments Total Per Unit Comments I. Direct Costs
$300,000 $12,000 $15 Per SF Site $300,000 $12,000 $15 Per SF Site $300,000 $12,000 $15 Per SF Site $225,000 $23,000 $15 Per SF Site $500,000 $20,000 $25 Per SF Site $500,000 $20,000 $25 Per SF Site $500,000 $20,000 $25 Per SF Site $375,000 $38,000 $25 Per SF Site Parking $325,000 $13,000 $25,000 Per Space $325,000 $13,000 $25,000 Per Space $325,000 $13,000 $25,000 Per Space $175,000 $18,000 $35,000 Per Space Shell Construction - Residential $8,978,000 $359,000 $375 Per SF GBA $8,978,000 $359,000 $375 Per SF GBA $8,978,000 $359,000 $375 Per SF GBA $4,934,000 $493,000 $325 Per SF GBA Shell Construction - Retail $0 $0 $0 Per SF GBA $0 $0 $0 Per SF GBA $0 $0 $0 Per SF GBA $0 $0 $300 Per SF GBA Tenant Improvements $0 $0 $0 Per SF GBA $0 $0 $0 Per SF GBA $0 $0 $0 Per SF GBA $0 $0 $50 Per SF GBA FF&E/Amenities $213,000 $8,500 $9 Per SF GBA $212,500 $8,500 $9 Per SF GBA $212,500 $8,500 $9 Per SF GBA $50,000 $5,000 $3 Per SF GBA Subtotal $10,316,000 $413,000 $431 Per SF GBA $10,315,500 $413,000 $431 Per SF GBA $10,315,500 $413,000 $431 Per SF GBA $5,759,000 $576,000 $379 Per SF GBA Add: Prevailing Wages $0 $0 0.0% of Directs $0 $0 0.0% of Directs $1,547,000 $62,000 15.0% of Directs $0 $0 0.0% of Directs Contingency $516,000 $21,000 5.0% of Directs $516,000 $21,000 5.0% of Directs $593,000 $24,000 5.0% of Directs $288,000 $29,000 5.0% of Directs Total Direct Costs $10,832,000 $433,000 $452 Per SF GBA $10,831,500 $433,000 $452 Per SF GBA $12,455,500 $498,000 $520 Per SF GBA $6,047,000 $605,000 $398 Per SF GBA II. Indirect Costs
Architecture & Engineering $758,000 $30,000 7.0% of Directs $758,000 $30,000 7.0% of Directs $872,000 $35,000 7.0% of Directs $423,000 $42,000 7.0% of Directs $130,000 $5,000 $5 Per SF GBA $130,000 $5,000 $5 Per SF GBA $130,000 $5,000 $5 Per SF GBA $87,000 $9,000 $6 Per SF GBA Legal & Accounting $162,000 $6,000 1.5% of Directs $162,000 $6,000 1.5% of Directs $187,000 $7,000 1.5% of Directs $91,000 $9,000 1.5% of Directs Taxes & Insurance $217,000 $9,000 2.0% of Directs $217,000 $9,000 2.0% of Directs $249,000 $10,000 2.0% of Directs $121,000 $12,000 2.0% of Directs Developer Fee $433,000 $17,000 4.0% of Directs $1,886,000 $75,000 17.4% of Directs $2,148,000 $86,000 17.2% of Directs $242,000 $24,000 4.0% of Directs Marketing/Lease-Up/Sales $88,000 $3,500 $4 Per SF GBA $88,000 $3,500 $4 Per SF GBA $88,000 $3,500 $4 Per SF GBA $119,000 $12,000 3.0% of Market Value Contingency $89,000 $4,000 5.0% of Indirects $162,000 $6,000 5.0% of Indirects $184,000 $7,000 5.0% of Indirects $54,000 $5,000 5.0% of Indirects Total Indirect Costs $1,877,000 $75,000 17.3% of Directs $3,403,000 $136,000 31.4% of Directs $3,858,000 $154,000 31.0% of Directs $1,137,000 $114,000 18.8% of Directs III. Financing Costs $1,083,000 $43,000 10.0% of Directs $1,078,000 $43,000 10.0% of Directs $1,308,000 $52,000 10.5% of Directs $605,000 $61,000 10.0% of Directs IV. Development Costs (3) $13,792,000 $552,000 $576 Per SF GBA $15,312,500 $613,000 $640 Per SF GBA $17,621,500 $705,000 $736 Per SF GBA $7,789,000 $779,000 $513 Per SF GBA (1) Estimated allowance; not verified by KMA or the City of Coronado. (2) KMA estimate, includes building fees, fire fees, water capacity fees, development impact fees, Regional Transportation Congestion Improvement Program (RTCIP) fees, and Coronado Unified School District fees. (3) Excludes acquisition costs.
4% Tax Credits For-Sale
E F
100% Affordable
Stacked Flats Apartments Stacked Flat Condominiums
Off-Site Improvements (1)
On-Site Improvements/Landscaping (1)
Permits & Fees (2)
No Tax Credits 9% Tax Credits
Prepared by: Keyser Marston Associates, Inc.
Filename: City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
OFF-SITE PRODUCTION
RENTAL TABLE D-3
NET OPERATING INCOME
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
I. Gross Scheduled Income (GSI) Unit Size # Units $/Month Annual # Units $/Month (1) Annual # Units $/Month (1) Annual One Bedroom @ Very Low - 50% AMI (2) 700 SF 0 $1,094 $0 7 $1,094 $92,000 7 $1,094 $92,000 One Bedroom @ Low - 60% AMI (3) 700 SF 7 $1,333 $112,000 0 $1,333 $0 0 $1,333 $0 Two Bedroom @ Very Low - 50% AMI (2) 850 SF 0 $1,208 $0 15 $1,208 $217,000 15 $1,208 $217,000 Two Bedroom @ Low - 60% AMI (3) 850 SF 15 $1,477 $266,000 0 $1,477 $0 0 $1,477 $0 Three Bedroom @ Very Low - 50% AMI (2) 1,100 SF 0 $1,315 $0 3 $1,315 $47,000 3 $1,315 $47,000 Three Bedroom @ Low - 60% AMI(3) 1,100 SF 3 $1,614 $58,000 0 $1,614 $0 0 $1,614 $0 Total/Average 838 SF 25 $1,450 $436,000 25 $1,190 $356,000 25 $1,190 $356,000 Add: Other Income $25 /Unit/Month $8,000 $25 /Unit/Month $8,000 $25 /Unit/Month $8,000 Total Gross Scheduled Income (GSI) $444,000 $364,000 $364,000 II. Effective Gross Income
(Less) Vacancy 5.0% of GSI ($22,000) 5.0% of GSI ($18,000) 5.0% of GSI ($18,000) Effective Gross Income (EGI) $422,000 $346,000 $346,000 III. Operating Expenses
(Less) Operating Expenses $7,500 /Unit/Year ($188,000) $7,500 /Unit/Year ($188,000) $7,500 /Unit/Year ($188,000) (Less) Tenant Services $0 /Unit/Year $0 $200 /Unit/Year ($5,000) $500 /Unit/Year ($13,000) (Less) Property Taxes/Assessments (4) $200 /Unit/Year ($5,000) $200 /Unit/Year ($5,000) $200 /Unit/Year ($5,000) (Less) Replacement Reserves $250 /Unit/Year ($6,000) $250 /Unit/Year ($6,000) $500 /Unit/Year ($13,000) (Less) Monitoring Fee $0 /Unit/Year $0 $0 /Unit/Year $0 $0 /Unit/Year $0 Total Operating Expenses $7,960 /Unit/Year ($199,000) $8,160 /Unit/Year ($204,000) $8,760 /Unit/Year ($219,000) 47% of EGI 59% of EGI 63% of EGI
IV. Net Operating Income (NOI) $223,000 $142,000 $127,000 V. (Less) Debt Service - Other State Funding Source (5) 0.00% of Loan $0 0.00% of Loan $0 0.42% of Loan ($13,000) VI. NOI after Debt Service for State Funding Source $223,000 $142,000 $114,000 (1)
(2) Assumes monthly rents at an average of 50% AMI in order to competitively apply for Tax Credits; see Table B-3 for calculation of affordable rents at 50% AMI. (3) See Table B-4 for calculation of affordable rents at 60% AMI. (4) Reflects special assessments only. Assumes project will qualify for tax-exempt status. (5) Reflects competitive State funding source, e.g., AHSC, MIP, MHP, IIG, etc.
Based on the lower of State of California Department of Housing and Community Development (HCD) 2024 income limits or California Tax Credit Allocation Committee 2024 maximum income and rent levels for projects placed in service on or after May 15, 2023.
E
100% Affordable
Stacked Flat Apartments
No Tax Credits 9% Tax Credits 4% Tax Credits
Prepared by: Keyser Marston Associates, Inc.
Filename: City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
OFF-SITE PRODUCTION
RENTAL
TABLE D-4
RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
I. Sources of Funds Total Per Unit Total Per Unit Total Per Unit Supportable Permanent Loan (1) $2,531,000 $101,000 $1,604,000 $64,000 $1,407,000 $56,000 Warranted Equity Investment (2) $242,000 $10,000 $0 $0 $0 $0 Tax Credit Equity Investment-Federal (3) $0 $0 $8,880,000 $355,000 $7,489,000 $300,000 Tax Credit Equity Investment-State (3) $0 $0 $1,842,000 $74,000 $2,098,000 $84,000 Other State Funding Source (4) $0 $0 $0 $0 $3,125,000 $125,000 Deferred Developer Fee (5) $0 $0 $0 $0 $0 $0
General Partner Equity Contribution (5) $0 $0 $0 $0 $0 $0 Total Sources of Funds $2,773,000 $111,000 $12,326,000 $493,000 $14,119,000 $565,000 II. (Less) Development Costs excluding Land ($13,792,000) ($552,000) ($15,312,500) ($613,000) ($17,621,500) ($705,000) III. Residual Land Value ($11,019,000) ($441,000) ($2,986,500) ($119,000) ($3,502,500) ($140,000) E
100% Affordable
Stacked Flat Apartments
No Tax Credits 9% Tax Credits 4% Tax Credits
Prepared by: Keyser Marston Associates, Inc.
Filename: City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
OFF-SITE PRODUCTION
RENTAL
TABLE D-4 (CONT'D.)
RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
(1) Supportable Permanent Loan
NOI $223,000 $142,000 $114,000
Interest Rate 7.00% 7.00% 6.25%
Term (years) 35 35 35
Debt Coverage Ratio 1.15 1.15 1.15
Annual Debt Service $194,000 $123,000 $99,130
Supportable Permanent Loan $2,531,000 $1,604,000 $1,407,000 (2) Warranted Equity Investment
NOI $223,000
(Less) Annual Debt Service ($194,000)
Project Cash Flow $29,000
Target Return 12.0%
Warranted Equity Investment $242,000
(3) Low Income Housing Tax Credits
A. Federal
Estimate of Eligible Basis:
Total Development Costs $15,312,500 $17,621,500
(Less) Ineligible Costs 6% ($853,000) 7% ($1,154,000)
Eligible Basis $14,459,500 $16,467,500
Tax Credit Proceeds:
Maximum Eligible Basis $14,459,500 $16,467,500
(Less) Voluntary Credit Adjustment 40.0% ($5,784,000) 0.0% $0 Total Requested Unadjusted Basis $8,675,500 $16,467,500 Impacted Bonus Factor 130% $11,278,000 130% $21,407,750 Tax Credit Qualified Units/Applicable Factor 100% $11,278,000 100% $21,407,750 Tax Credit Rate 9.00% $1,015,000 4.00% $856,000
Maximum Annual Tax Credits $1,015,000 N/A
Total Tax Credits @ 10 $10,150,000 10 $8,560,000
Limited Partner Share 99.99% $10,149,000 99.99% $8,559,144 Tax Credit Equity Investment @ 87.5% $8,880,000 87.5% $7,489,000 B. State
Unadjusted Eligible Basis $14,459,500 $16,467,500
Requested Eligible Basis 50.0% $7,230,000 50.0% $8,234,000 Tax Credit Factor 30.0% $2,169,000 30.0% $2,470,000
Limited Partner Share 99.9% $2,167,000 99.9% $2,468,000 Tax Credit Equity @ 85.0% $1,842,000 85.0% $2,098,000
E
100% Affordable
Stacked Flat Apartments
No Tax Credits 9% Tax Credits 4% Tax Credits
Prepared by: Keyser Marston Associates, Inc.
Filename: City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
OFF-SITE PRODUCTION
RENTAL
TABLE D-4 (CONT'D.)
RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
E
100% Affordable
Stacked Flat Apartments
No Tax Credits 9% Tax Credits 4% Tax Credits
(4) Other State Funding Source
Total Loan $0 $3,125,000
Annual Debt Service 0.00% $0 0.42% $13,000
(5) Estimate of Deferred Developer Fee
Eligible Basis $14,459,500 $16,467,500
(Less) Developer Fee ($1,886,000) ($2,148,000)
Unadjusted Eligible Basis $12,573,500 $14,319,500
Total Developer Fee 15.0% $1,886,000 15.0% $2,148,000
Developer Overhead Fee $1,886,000 $2,148,000
(Less) Deferred Developer Fee 0.00% $0 0.0% $0
Upfront Developer Fee $1,886,000 $2,148,000
Prepared by: Keyser Marston Associates, Inc.
Filename: City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
OFF-SITE PRODUCTION
FOR-SALE
TABLE D-5
GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
I. Gross Sales Proceeds Unit Size # Units Price/Unit (2) Total Affordable - Moderate (1)
One Bedroom 950 SF 2 $356,000 $712,000
Two Bedroom 1,250 SF 6 $396,000 $2,376,000
Three Bedroom 1,750 SF 2 $436,000 $872,000
Total/Average 1,290 SF 10 $396,000 $3,960,000
II. Total Gross Sales Proceeds
(Less) Cost of Sale 3.0% of Value ($119,000)
(Less) Target Developer Profit 10.0% of Value ($396,000) III. Total Net Sales Proceeds $3,445,000
(Less) Development Costs (3) ($7,789,000)
IV. Residual Land Value ($4,344,000)
Per Unit ($434,000)
(1)
(2) Reflect maximum ownership housing payment at 35% of 110% AMI, see Table B-1. (3) See Table D-2.
F
100% Affordable
Stacked Flat Condominiums
For-Sale
Affordable sales prices based on State of California Department of Housing and Community Development (HCD) 2024 income limits.
Prepared by: Keyser Marston Associates, Inc.
Filename: City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;ejr
OFF-SITE PRODUCTION
TABLE D-6
AVERAGE AFFORDABILITY GAP
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
Stacked Flat
Condominiums
No Tax Credits 9% Tax Credits 4% Tax Credits For-Sale
I. Lower Income
A. Residual Land Value - 100% Lower Income ($11,019,000) ($2,986,500) ($3,502,500) --- Per Affordable Unit ($441,000) ($119,000) ($140,000) ($130,000) (1) B. Acquisition Costs @ $500 /SF Site Area (2) ($10,000,000) ($10,000,000) ($10,000,000) --- Per Affordable Unit ($400,000) ($400,000) ($400,000) ($400,000) (1) C. Total Afforability Gap ($21,019,000) ($12,986,500) ($13,502,500) --- Per Affordable Unit ($841,000) ($519,000) ($540,000) ($530,000) (1) II. Moderate Income
A. Residual Land Value - 100% Moderate Income --- --- --- ($4,344,000) Per Affordable Unit ($434,000) ($434,000)
B. Acquisition Costs @ $500 /SF Site Area (2)--- --- --- ($7,500,000) Per Affordable Unit ($750,000) ($750,000)
C. Total Afforability Gap --- --- --- ($11,844,000)
Per Affordable Unit ($1,184,000) ($1,184,000)
(1)
(2) KMA estimate based on survey of residential land sales in the City.
Stacked Flat Apartments
Average
Excludes outcome from No Tax Credits scenario. Assumes off-site compliance for Low Income units would be met through the development of a Low Income Housing Tax Credit project with a combination of Extremely Low, Very Low, and Low Income units.
Prepared by: Keyser Marston Associates, Inc.
Filename i:\City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
APPENDIX E
Comparison of Affordable Housing Fees
San Diego County
TABLE E-1
COMPARISON OF AFFORDABLE HOUSING FEES, SAN DIEGO COUNTY
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
Rental For-Sale Project Size
Threshold
% Affordable
Units Required Fee Option Project Size Threshold Fee Type Amount Per
Market-Rate Unit or
Market-Rate SF
Carlsbad 1993 Yes Yes 7 units 15% @ Low Income Yes In-Lieu Fee $18/SF Chula Vista 1981 Yes Yes 20 units 10% Yes In-Lieu Fee varies by project Del Mar 2006 Yes Yes 2 - 30 units 15% Low, Very Low, Yes In-Lieu Fee $27,350 or Extremely Low per lot created
30-49 units
50+ units
Encinitas 1987 Yes Yes 7 units 15% @ Very Low Income Yes In-Lieu Fee $24.08/SF or 20% Low Income
Escondido --- None None None None None None
Oceanside 1983 Yes Yes 10 units Rental Yes In-Lieu Fee $20/SF (1) 15% @ Low Income
For-Sale Yes In-Lieu Fee $20/SF (1)
15% @ Low or
Moderate Income
Available to
projects of all sizes
Updated
2024
Available to
projects up to 6 units and
fractional units
20% @ Low, Very Low, or
Extremely Low
Available only to subdivisions
creating
Updated new lots
2024 20% @ Low, Very Low, or
Extremely Low
Updated
2024 Available to
projects of all sizes
Affordable Housing Fee
Available to
projects up to 6 units Updated
2024
Available to
(5% Low Income projects of all sizes
5% Moderate Income)
City
Year
Adopted
Inclusionary Production Requirement
No
Requirement
No
Requirement
20% of inclusionary units @
Extremely Low
Updated
2024
Prepared by: Keyser Marston Associates, Inc.
Filename i:\City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
TABLE E-1
COMPARISON OF AFFORDABLE HOUSING FEES, SAN DIEGO COUNTY
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
Rental For-Sale Project Size
Threshold
% Affordable
Units Required Fee Option Project Size Threshold Fee Type Amount Per
Market-Rate Unit or
Market-Rate SF
Affordable Housing Fee
City
Year
Adopted
Inclusionary Production Requirement
San Diego (2) 2003 Yes Yes 10 units Rental Yes In-Lieu Fee $25/SF Outside FUA 10% @ 60% AMI
For-Sale Yes In-Lieu Fee $25/SF
10% @ 100% AMI or
15% @ 120% AMI
San Diego
Inside FUA 1992 Yes Yes 2 units 20% @ 65% AMI or less None None None None San Diego
2023 Yes Yes 10 units 15% Very Low and Yes In-Lieu Fee $25/SF Low Income
San Diego Options:
2024 Yes Yes 10 units
10% @ 60% AMI None None None None
5% @ 80% AMI Yes - Required Available to all projects; In-Lieu Fee $25/SF must pay in-lieu fee
and provide minimum
of 5% of units @
80% AMI
10% @ 120% AMI Yes - Required Available to all projects; In-Lieu Fee $25/SF must pay in-lieu fee
and provide minimum
of 10% of units @
120% AMI
Alternative compliance Yes - Required Available to all projects; In-Lieu Fee $50/SF fee must pay a rate of
200% of applicable fee
Available to projects of all sizes;
<10 units exempt
Updated
2020 Available to projects of all sizes;
<10 units exempt
Available to projects of all sizes;
<10 units exempt
Barrio Logan
Community Plan
Area
University
Community Plan
Area
Prepared by: Keyser Marston Associates, Inc.
Filename i:\City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag
TABLE E-1
COMPARISON OF AFFORDABLE HOUSING FEES, SAN DIEGO COUNTY
INCLUSIONARY HOUSING IN-LIEU FEE STUDY
CITY OF CORONADO
Rental For-Sale Project Size
Threshold
% Affordable
Units Required Fee Option Project Size Threshold Fee Type Amount Per
Market-Rate Unit or
Market-Rate SF
Affordable Housing Fee
City
Year
Adopted
Inclusionary Production Requirement
Poway 2018 Yes Yes 1 unit Rental Yes In-Lieu Fee $500/unit (3) 15% @ Very Low Income
For-Sale Yes In-Lieu Fee $500/unit (3)
15% @ Low Income or
20% @ Moderate Income
San Marcos (4) 2000 Yes For-Sale For-Sale Yes For-Sale In-Lieu Fee $9,300/unit 1 unit
Update
pending Rental
2024 6 Units Rental
Rental
15% of Target Households
(determined by City)
Solana Beach 2011 Yes Yes 5 units 15% @ Very Low or Yes Impact Fee $27.22/SF Low Income
Updated
2023
Vista 1985 Yes Yes 20 units 5% @ Low Yes In-Lieu Fee $17.56/SF 4% @ Moderate
Updated
2022
(1) In-lieu fee effective January 1, 2024 - December 31, 2024. Beginning January 1, 2025 and every calendar year thereafter the fee will be administratively adjusted based on the ENR CCI index. (2)
(3) City of Poway base fee varies by zoning, with a maximum total of $500 per unit for all projects. (4) Reflects City's existing inclusionary ordinance. Proposed update of the City of San Marcos' inclusionary housing in-lieu to be considered by the City Council in November 2024.
Yes, as
alternative to
paying fee
Available to all projects
Available to projects of all sizes;
<20 units exempt
Partial affordable units subject
to the payment of an in-lieu fee
in proportion to the partial unit
Applies to development located outside of the City of San Diego's North City Future Urbanizing Area (FUA). Reflects ordinance approved by the San Diego City Council December 11, 2019, effective July 1, 2020. Inclusionary housing requirements to be phased in over five (5) years. In-lieu fee of $25 per SF reflects fee beginning July 1, 2024.
Pay in-lieu fee unless opting to
produce inclusionary units of
15% @ Target Households
(determined by City)
Available to projects
of all sizes
Projects of 6 or less units and
fractional units
Available to projects
of all sizes
Available to projects
of all sizes
Prepared by: Keyser Marston Associates, Inc.
Filename i:\City of Coronado_In-Lieu Fee Justification Study v2;11/21/2024;lag