www.fema.gov
Enclosures (2)
Tri-Valley Plan Review Tool, dated December 15, 2023
Status of Participating Jurisdictions, dated December 15, 2023 cc:
Ron Miller, Acting State Hazard Mitigation Officer, California Governor’s Office of Emergency Services
Robyn Fennig, Planning Division Chief, California Governor’s Office of Emergency Services
Victoria LaMar-Haas, Hazard Mitigation Planning Chief, California Governor’s Office of Emergency Services
Status of Participating Jurisdictions as of December 15, 2023 Jurisdictions – Adopted and Approved
# Jurisdiction Date of Adoption
1 2
3 4
5 6
Jurisdictions – Approvable Pending Adoption
# Jurisdiction
1 City of Dublin
2 City of Livermore
3 City of Pleasanton
4 Dublin San Ramon Services District
711
STAFF REPORT
CITY COUNCIL
Agenda Item 5.5
DATE: January 9, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: 2024 Storm Drain Art Selection
Prepared by: Shelby Perry, Recreation Coordinator
EXECUTIVE SUMMARY:
The City Council will consider a recommendation from the Heritage and Cultural Arts Commission for artwork to be painted on 20 storm drain inlets in spring 2024.
STAFF RECOMMENDATION:
Approve the Heritage and Cultural Arts Commission’s recommendations for the 2024 Storm Drain Art Program.
FINANCIAL IMPACT:
The cost of the Storm Drain Art Program, including artist stipends ($500 per mural) and miscellaneous supplies, is estimated at $13,000. This program is funded by the Public Art Fund and is included in the Fiscal Year 2023-24 Budget.
DESCRIPTION:
Background
In October 2019, the City Council approved an annual temporary art display program. Each year, Staff works with the Heritage and Cultural Arts Commission to identify the program that will be developed and implemented that year.
For 2024, a Storm Drain Art Program has been developed that will include painting 20 storm drain inlets throughout Dublin. Storm drains are the initial inlets allowing rainwater to enter local waterways before eventually flowing to the San Francisco Bay. Pollutants, such as motor oil, pet waste, and other sediment and urban chemicals also make their way into stormwater systems.
Adding artistic murals to storm drain inlets will help raise awareness and improve water quality in local watersheds and the San Francisco Bay. Staff from the City’s Environmental Services Division evaluated the program idea and confirmed that the murals will not interfere with clean storm water discharge.
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Design Proposals
Under the City’s current Public Art Master Plan, all public artworks must be produced by professional artists or by a student artist under the direction of a professional artist. Student artists may work under a visual arts mentor's guidance, and student artists' design proposals must identify the professional artist by whom they are being mentored.
Selected artworks must align with the City’s Values, which are a part of the adopted Mission and Vision Statements, including safety, inclusivity, diversity, equality, and history. Artwork must also be suitable for all ages.
Staff issued a Call for Artists on October 10, 2023 (Attachment 2), publicizing the opportunity through normal City channels (website, social media, etc.) and via email to a list of interested artists, past artists, and registrants in the City’s Cultural Arts Database. Fifty-five unique design proposals were received from 21 artists.
On December 14, 2023, the Heritage and Cultural Arts Commission reviewed the artists' proposals and deliberated before recommending 20 artist proposals for City Council consideration and approval. The recommended artists’ design proposals are included with this Staff Report (Attachment 1). Below is a list of the recommended artists and the title of the artist’s proposal.
TABLE 1: STORM DRAIN LOCATIONS AND ARTISTS’ ASSIGNMENTS Artist Proposal Title Storm Drain Location
May Yin Giang Gael’s Shield Dublin High School
Rhonda Chase Sleepy Sea Otter Wells Middle School
Rhonda Chase Sea Otter with Kelp Wells Middle School
Nikolette Metcalf Drains to the Bay Kolb Park
Megan Rohrbach Be Careful of What Goes
Down the Drain Schaefer Ranch
Elli Maskiell Raindrop Fish Civic Center/Library
Elli Maskiell Leviathan Civic Center/Library
Jen Huber Rainbow School Dublin Sports Grounds
Anne Giancola Mind the Drain, Curb
the Climate Strain Dougherty Hills Dog Park
Anne Giancola When it Rains Dougherty Hills Dog Park
Rob Corder Koi Fish Emerald Glen Park
Rob Corder Toy Boat Emerald Glen Park
Lisa Long Save the Turtles Frederiksen Elem
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Lisa Long Water Drains to Bay Frederiksen Elem
Ekaterina Bazlakova Golden Fish Alamo Creek Park
Ekaterina Bazlakova Wave Alamo Creek Park
Chih Chun Eroles The Future of the Ocean Martin Canyon Creek Trail Head Alyssa Wu* Entrance to the Clean
Bay Martin Canyon Creek Trail Head
Deirdre Weinberg It Goes This Way Bray Commons
Deirdre Weinberg Do As You Otter Bray Commons
*Student Artist
STRATEGIC PLAN INITIATIVE:
None.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
The City Council Agenda was posted, and a copy was provided to the artists.
ATTACHMENTS:
1) Design Proposals from Recommended Artists
2) Call for Artists Storm Drain Art 2024
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May Yin Giang - Gael’s Shield
Attachment 1
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Rhonda Chase - Sleepy Sea Otter
Attachment 1
716
Rhonda Chase - Sea Otter with Kelp
Attachment 1
717
Nikolette Metcalf – Drains to the Bay
Attachment 1
718
Megan Rohrbach - Be careful of what goes down the
drain
Attachment 1
719
Elli Maskiell - Raindrop Fish
Attachment 1
720
Elli Maskiell - Leviathan
Attachment 1
721
Jen Huber -Rainbow School
Attachment 1
722
Anne Giancola - Mind the drain, curb the climate
strain
Attachment 1
723
Anne Giancola - When it Rains
Attachment 1
724
Rob Corder – Koi Fish
Attachment 1
725
Rob Corder – Toy Boat
Attachment 1
726
Lisa Long - Save the Turtles
Attachment 1
727
Lisa Long - Water Drains to Bay
Attachment 1
728
Ekaterina Bazlakova – Golden Fish
Attachment 1
729
Ekaterina Bazlakova - Wave
Attachment 1
730
Chih Chun Eroles - The Future of the Ocean
Attachment 1
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Alyssa Wu - Entrance to the Clean Bay
Attachment 1
732
Deirdre Weinberg - It Goes This Way
Attachment 1
733
Deirdre Weinberg – Do As You Otter
Attachment 1
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CALL FOR ARTISTS
Temporary Art Project
Storm Drain Art
CALL ISSUE DATE: 10/10/23
CALL DEADLINE: 11/15/23, 4:00 p.m. PST
The City of Dublin invites qualified professional artists and student artists working under the supervision of a professional artist or art teacher to submit designs for an upcoming unique temporary art project. Temporary art displays are a great way to bring public art to City parks, streets, and facilities, define neighborhoods, and bring culture to the community.
BACKGROUND
For this project, the City of Dublin is seeking artists to paint functional murals directly adjacent to 10-20 storm drain inlets throughout Dublin. This unique project would include soliciting artists/muralists to complete the design and painting of each storm drain inlet. Storm Drains are the initial inlets that allow for rainwater to enter local waterways before eventually flowing to the San Francisco Bay. Pollutants, such as motor oil, pet waste, and other sediment and urban chemicals, also make their way into stormwater systems. The addition of artistic murals to storm drain inlets will help raise awareness and improve water quality in local watersheds and the San Francisco Bay.
Artists are encouraged to be as creative as possible when approaching this project. The proposed design should help raise awareness and improve water quality in local watersheds and the San Francisco Bay. Site-specific proposals and general proposals that the City may display at its sole discretion are acceptable. Artists are responsible for priming, painting, and sealing the storm drain art.
Because of the nature of this project, artists will be provided with the paint, primer, and sealant to be utilized. The city intends to provide SUNSHIELD 3800 by Davlin Coatings, or similar. Red, yellow, blue, white, and black paint will be provided, and artists are expected to mix paint as needed to achieve desired colors.
Stipends of $500 will be provided to selected artists or artist teams. Artists may submit up to five (5) proposals and be selected for up to three (3). The stiped will be paid for each selection ($1,500 max).
Attachment 2
735
LOCATIONS
Exact location of storm drain inlets is not yet finalized and may be dependent on proposals received. Selected storm drain inlets will be near City Parks, Schools, and other high pedestrian areas. Storm drain inlets on busy roadways and directly in front of private residences will be avoided. Possible locations include:
o Dublin High School (1)
o Wells Middle School/Stager Gym (2)
o Kolb Park (1)
o Schaefer Ranch (1)
o Civic Center/Library (3)
o Dougherty Hills Dog Park (2)
o Emerald Glen Park (2)
o Frederiksen Elem (2)
o Alamo Creek Park (2)
o Martin Canyon Creek Trail Head (2)
PROJECT TIMELINE
October 10, 2023 Call for Artists Issued
November 15, 2023 Proposals Due No Later Than 4:00 p.m.
December 2023 Heritage & Cultural Arts Commission Review (Tentative) January 2024 City Council Approval of Art Proposals. (Tentative) January 2024 Agreement(s) Execution (Tentative)
Feb – March 2024 Storm Drain Painting (Tentative)
April 2024 Artwork Unveiling (Tentative)
DESIGN SPECIFICATIONS
The following specifications apply:
• Artwork must align with the City of Dublin Public Art Master Plan’s Vision, Purpose, and Goals (the full Public Art Master Plan can be found on the City’s Public Art website).
• Projects involving the community during design/creation are encouraged but not required.
• Artwork must be suitable for all ages and in keeping with community values. • Artwork must be an original design and the artwork of the applicant. • Artwork must align with the City of Dublin’s Adopted Mission and Vision Statements.
The storm drain painting area will be approximately 6-10 sq. ft. (like the ones below). It is the intention of the city that the selected artist will paint the sidewalk adjacent to the Attachment 2
736
storm drain and not directly on to the storm drain. The storm drain location is subject to change at the sole discretion of the City.
STORM DRAIN ART EXAMPLES
Artwork created under this program is considered temporary artwork and property of the City of Dublin. Therefore, the City retains the right and sole discretion to remove, modify, sell, or replace the artwork.
ART SELECTION PROCESS
Staff will review applications for completeness. The Heritage and Cultural Arts Commission will review designs and then make a recommendation to the City Council.
The City Council will review the recommended design(s) and approve an artist(s).
Selected artist(s) will be required to sign an Art Agreement, including standard Liability Waiver and Release. In the case of underage artists, the city will sign the Agreement with the Supervising Professional Artist or Art Teacher. Underage artists and underage painting assistants will be required to have a parent sign the Liability Waiver and Release.
Attachment 2
737
IMPLEMENTATION PROCESS
Artists are responsible for prepping, painting the design, and sealing with a clear antigraffiti coating. The city will provide primer, paint, and sealant. Artists are responsible for purchasing any additional painting supplies required for the project.
Artists are expected to prime, paint, and seal the art when the painting is complete.
Artists may not paint over the storm drain inlet itself. The city will work with the artist to implement protective measures to ensure the protection of storm drains during the painting process.
Artists may enlist painting assistants. All painting assistants must sign a liability waiver and release. Underage painting assistants must have a parent sign the liability waiver and release.
Student artists must be supervised by a professional artist, who is responsible for the artwork of the student. Student artists must provide their professional artist’s qualifications with their application. Student artists and their teacher/professional artist will be required to meet with Staff prior to starting the project to ensure they understand the City’s expectations.
Upon completion of the Storm Drain Art, City Staff will meet with the artist at the site to inspect/approve the artwork and take a publicity photo of the artwork.
PROPOSAL SPECIFICATIONS
Artists are welcome to submit up to five design proposals for this project. The proposal shall be submitted electronically, which needs to include all required attachments. The acceptable file type for the attachment is PDF. Required attachments include:
a. Completed Coversheet: Use the form provided at the end of this application. b. Artist Qualifications: Include the biography or professional resume of each artist involved. Student artists should include their biographies/resumes and that of the professional artist or art teacher who serves as the team’s supervisor.
This should include a portfolio of past work relevant to this project. c. Artist Statement: Provide a brief statement about your proposed artwork. This could include your source of inspiration, the significance of the design, or a comment on the style or technique you have proposed.
d. Design: Renderings should include dimensions and scale of the artwork. If you wish to be considered for a specific location or locations, please label the rendering with the location name. If you have no preference, label the rendering “Any.” Label each rendering with your name.
Attachment 2
738
DIRECTIONS FOR SUBMITTAL
Proposals for this project must be submitted electronically. Submit one electronic copy of each proposal to: [email protected]. The subject line for each proposal shall include: “Dublin Storm Drain Art Proposal 2023.” Proposals may be included as email attachments or delivered via a filesharing website. Proposals are limited to five pages, including the cover sheet.
COSTS INCURRED IN RESPONDING TO THE PROPOSAL
The City of Dublin shall not be liable for any costs incurred by the artist(s) in responding to this request for a design proposal or for any costs incurred if the artist chooses to provide a mock-up.
SUBMISSION DEADLINE
All proposals must be received by Shelby Perry, Recreation Coordinator, by November 15, 2023, at 4:00 p.m. It is the applicant's responsibility to verify the proposal's receipt by the scheduled deadline.
CONTACT INFORMATION
Name/Title: Shelby Perry, Recreation Coordinator
Phone: (925) 556-4509
Email: [email protected]
Address: City of Dublin - Parks and Community Services
100 Civic Plaza
Dublin, CA. 94568
Attachment 2
739
Storm Drain Art Proposal
PROPOSAL COVERSHEET:
Dublin 2023 Temporary Art Project, Storm Drain Art
Proposals will not be accepted after Wednesday, November 15, 2023, at 4:00 p.m.
Artist Name:
Address:
City: __________________________________ State: ___________ Zip:
Main Phone: Other Phone:
E-mail Address: ____________________________Website:
Please indicate experience level: Professional Artist(s) Student Artist(s) Please indicate any specific location(s) you have proposed a design for, or check ‘No Preference’ if you would be willing to adapt your design(s) to fit any assigned location:
Location: No Preference
Artwork Title:
Signature of Artist: __________________________________________Date: ________________ Co-Artist Name, if applicable:
Signature of Co-Artist, if applicable: _____________________________Date:
Supervising Art Professional Name, if applicable:
Address:
City: __________________________________ State: ___________ Zip:
Main Phone: _______________________________Other Phone: __________________________ E-mail Address: ____________________________Website:
Signature of Supervising Art Professional: ____________________________Date: _____________ Attachment 2
740
STAFF REPORT
CITY COUNCIL
Agenda Item 5.6
DATE: January 9, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: Change Order No. 2 to the Amended and Restated Energy Services Contract with Engie Services U.S. Inc.
Prepared by: Debbie Bell, Public Works Manager
EXECUTIVE SUMMARY:
The City Council will consider approving a second change order to the Amended and Restated Energy Services Contract for Operation and Maintenance with Engie Services U.S. Inc. (formerly OpTerra Energy Services, Inc.) to extend the contract term and add funding for photovoltaic system equipment operations, monitoring, maintenance, repair, replacement, and inspection services.
STAFF RECOMMENDATION:
Adopt the Resolution Approving Change Order No. 2 to the Amended and Restated Energy Services Contract for Operations and Maintenance with Engie Services U.S. Inc. and approve the budget change.
FINANCIAL IMPACT:
Approval of the recommended action would set the not-to-exceed compensation of the agreement at $989,250 over five years and will require a budget adjustment in the current fiscal year of $127,300 funded by the General Fund Undesignated Reserve. Future costs of these services will be included in the Public Works Department’s annual budget.
DESCRIPTION:
In May 2011, the City Council approved an agreement with Chevron Energy Solutions to conduct an energy audit of all City facilities. In August 2012, based on the findings of the audit, the City entered into an Energy Service Contract and an associated financing contract with Chevron Energy Solutions for the implementation and funding of certain energy-related improvements to City facilities. On May 2, 2017, the City Council adopted Resolution 41-17 Approving an Amended and Restated Energy Services Contract with OpTerra Energy Services, Inc. (as successor-in-interest to 741
Chevron Energy Solutions) to remove the Annual Performance Guarantee Fee of $35,000. The fee was determined to be unnecessary because the constructed energy improvements were consistently outperforming the original performance projections.
Engie Services U.S. Inc. then purchased Opterra Energy Services, Inc. and its subsidiaries, and in July 2018, Engie began providing services to the City as outlined in the contract. In April 2022, the City Council adopted Resolution 29-22, approving Change Order No. 1 to add maintenance and monitoring of the Public Safety Complex solar canopies and related equipment. The total cost of ongoing maintenance and monitoring services at that time was about $40,000 per year. There was no cap set in the contract for repairs and other services.
Article 2 of the contract includes a provision allowing it to be renewed for additional five-year periods. Staff recommends that the City Council approve a contract change order to extend the term of services through January 31, 2029 and set the not-to-exceed compensation at $989,250 for: photovoltaic (PV) operations, maintenance, and monitoring services ($383,850 or about $77,000 per year); monitoring hardware and setup ($90,000); commissioning inspections for new systems ($15,400); and as-needed repair and replacement funds ($500,000). The additional work is described below.
Operations, Maintenance, Monitoring Services
Engie currently provides operations, maintenance, and monitoring services for the existing PV systems at the Civic Center, Library, Senior Center, Shannon Community Center, Public Safety Complex, and Fire Stations 16, 17, and 18. This includes monthly reporting on PV production, comprehensive monitoring services, panel cleaning, and preventative maintenance of solar panels and grid connectivity.
The City has constructed, or will construct, new PV systems as part of the Citywide Energy Improvements project to address resiliency and disaster preparedness, energy efficiency, and support the City’s Climate Action Plan. The PV system locations are:
1. Civic Center
2. The Wave/Emerald Glen Park
3. Library
4. Corporation Yard
5. Senior Center
6. Fire Station 17
7. Fire Station 18
8. Fallon Sports Park
9. Dublin Sports Ground
10. Public Safety Complex
The systems are on independent construction schedules and will come online over the next few years. As each becomes operational, the installer will provide limited duration maintenance and monitoring services. After the duration expires, the City will be fully responsible for operations, maintenance, monitoring, and repairs. As such, Staff recommends adding these new systems into the contract with Engie.
742
Funding to provide services to all existing and new PV systems for five years is $383,850, which includes a 3% annual adjustment. However, not every new site will be operational in year one.
Any new site brought online in the future will have service fees prorated for the remainder of the year and non-service months credited on the following year’s invoice. Additionally, Staff recommends that $90,000 be included for as-needed monitoring hardware and communications system setup for all new PV systems. The need for such will be determined as the new PV systems are commissioned and turned over to the City for operations and maintenance.
Commissioning/Inspections
As construction of each new PV system is completed, the City will hire consultants to conduct commissioning services. These inspections will verify that all components are installed properly and are working together as intended to ensure that the solar panels generate the expected amount of electricity, and that the entire system is safe and reliable. Staff recommends adding $15,400 to the contract for commissioning inspection services on a task order basis.
Equipment Repair/Replacement
Section 4.03 of the contract allows for repair and replacement activities on a time-and-materials basis. Staff recommends that the contract include $500,000 for as-needed repair services of PV systems. The City’s existing PV system is over 10 years old and some hardware components, particularly inverters, are beginning to require replacement. If the City Council approves the contract change order, Engie’s first equipment replacement in the current fiscal year will be for two failing inverters at the Civic Center and one at the Shannan Community Center, at a total cost of approximately $40,000.
STRATEGIC PLAN INITIATIVE:
None.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
The City Council Agenda was posted.
ATTACHMENTS:
1) Resolution Approving Change Order No. 2 to the Amended and Restated Energy Services Contract for Operations and Maintenance with Engie Services U.S. Inc. 2) Exhibit A to the Resolution – Change Order No.2 to the Amended and Restated Energy Services Contract
3) Change Order No. 01 and Amended and Restated Energy Services Contract for Operation and Maintenance
4) Budget Change Form
743
Attachment 1
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 1 of 2 RESOLUTION NO. XX – 24
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING CHANGE ORDER NO. 2 TO THE AMENDED AND RESTATED ENERGY
SERVICES CONTRACT FOR OPERATIONS AND MAINTENANCE WITH ENGIE SERVICES U.S. INC.
WHEREAS, on August 1, 2012, the City Council approved an Energy Service Contract and an associated financing contract with Chevron Energy Solutions Company for the implementation and funding of certain energy related improvements to City of Dublin Facilities; and
WHEREAS, on October 24, 2015, the City Council approved an amendment to the Energy Services Contract; and
WHEREAS, on May 2, 2017, the City Council approved an Amended and Restated Contract with OpTerra Energy Services, Inc. (successor-in-interest to Chevron Energy Solutions Company, a division of Chevron U.S.A. Inc.) clarifying the operation and maintenance services to the City of Dublin; and
WHEREAS, Engie Services U.S. Inc. purchased Opterra Energy Services, Inc., and in July 2018, began providing services to the City as outlined in the Amended and Restated Energy Services Contract; and
WHEREAS, on April 22, 2022, the City Council approved Change Order No. 1 to the Amended and Restated Energy Services Contract with Engie Services U.S. Inc. to provide routine annual maintenance of the Public Safety Complex parking lot solar panels; and WHEREAS, the City Council desires to approve Change Order No.2 to the Amended and Restated Energy Services Contract with Engie Services U.S. Inc. to extend the contract term to January 31, 2029, and to set the not-to-exceed compensation at $989,250 for photovoltaic equipment operations, monitoring, maintenance, repair, replacement, and inspection services.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby approve Change Order No. 2 to the Amended and Restated Energy Services Contract with Engie Services U.S. Inc attached hereto as Exhibit A to this Resolution.
BE IT FURTHER RESOLVED that the City Manager, or designee, is authorized to execute Exhibit A and make any necessary, non-substantive changes to Exhibit A to carry out the intent of this Resolution.
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Reso. No. XX-24, Item X.X, Adopted 01/09/2024 Page 2 of 2 PASSED, APPROVED AND ADOPTED this 9th day of January 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Mayor
ATTEST:
_________________________________
City Clerk
745
ENGIE Services Project #: CN-000692
ENGIE Services Contract # CU1286
Change Order No. 02
Customer Contract Title: Amended and Restated Energy
Services Contract for Operation and Maintenance
Customer Contract No. CU1286
Customer Contract Effective Date: 3/29/2017 Change Order Effective Date: 01/31/2024 Customer Name: City of Dublin
Customer Address: 100 Civic Plaza, Dublin CA 94568
Contact: Debbie Bell, Public Works Manager
Job Location: See Attachment A, Table 1
Description
of Change
Order:
The Scope of Work set forth in the Contract for Operation and Maintenance Agreement referenced above is hereby amended to add the following term, scope, and cost revisions. Further explanation is as follows:
1. table (shown below) - updated to include the
following:
a. for years 11-15
b. existing and new PV systems for years 11-15
a. One-time monitoring integration fees for new sites will be scoped and added as they come online. $90,000 NTE.
c. Any new site brought online during the service year will have service fees prorated for the remainder of the year and non- ice per
breakdown on Attachment A Table 1.
2. Section 2.01 of the Agreement is amended to extend the Term an additional five (5) years, for a total of fifteen (15) years, terminating on January 31, 2029. Year 11 shall commence on February 1, 2024.
3. Section 4.03 Repair Services - $500,000 NTE added for the term of the agreement for T&M repairs or repowering needs that may arise.
4. Add Section 4.05 Commissioning Inspection Services - Commissioning services to include precommissioning inspection, testing and verification, system integration, safety checks, regulatory compliance, and commissioning report. $15,400 T&M.
5. Attachment A Project Locations updated to add new PV systems, as set forth on Attachment A hereto.
6. Attachment B T&M Repair Services replaces Section 4.03 Repair Services Updated Annual Service Fees Table:
Repair/Replacement Services Budget (+) $500,000
Commissioning/Inspections Services for New Sites (+) $15,400 Monitoring Integration Budget for New Sites (NTE) (+) $90,000 This Amendment Will Add (+): $989,250
The changes within are hereby authorized, subject to the terms and conditions of that certain Customer Contract referenced above by and between ENGIE Services U.S. Inc., and City of Dublin. Except as set forth herein, the Customer Contract is not amended, modified, impaired or otherwise affected, and is hereby confirmed in full force and effect.
CITY OF DUBLIN ENGIE SERVICES U.S. INC.
By: By:
Print Name: Print Name:
Title: Title:
RETURN EXECUTED COPY TO: ENGIE Services U.S. Inc., 500 Twelfth Street, Suite 300, Oakland, CA 94607, Attn.: Contract Administrator
Attachment 2
746
ENGIE Services Project #: CN-000692
ENGIE Services Contract # CU1286
Change Order No. 2: Attachment A:
Table 1: Locations and PV Systems Summary:
Site Name Site Address kW # Panels #
Inverters Type*
Year 11
PV O&M
Services**
Year 11
Monitoring
Services
*** Civic Center 100 Civic Plaza 369.40 1,368 25 CP
Corporation Yard 100 Civic Plaza 47.60 140 2 RT $1,759 $1,000 Fallon Park 4605 Lockhart St 66.24 138 1 CP $1,938 $1,000 Fire Station 16 7494 Donohue Dr. 11.90 44 1 RT
Fire Station 17 6200 Madigan Dr. 38.90 144 3 CP
Fire Station 17 100 Civic Plaza 23.46 69 2 RT $1,112 N/A Fire Station 18 4800 Fallon Dr. 25.90 96 2 CP
Fire Station 18 4800 Fallon Dr. 13.26 39 1 RT $838 N/A
Library 200 Civic Plaza 132.80 492 9 CP
Library 200 Civic Plaza 127.84 376 3 RT $3,909 N/A
Public Safety Complex
PH1 6361 Clark Ave. 188.20 579 9 CP $5,670 $1,000
Public Safety Complex
Ph2 6361 Clark Ave. 90.72 189 3 CP $2,476 N/A
Senior Center 7600 Amador
Valley Blvd. 32.40 120 3 RT
Senior Center 7600 Amador
Valley Blvd 38.40 113 1 RT $1,512 N/A
Shannon Center 4201 Central Pkwy 116.60 432 12 CP
Sports Grounds 7494 Donohue Dr. 117.60 245 2 CP $3,066 $1,000 The Wave 4201 Central
Pkwy 524.64 1,093 11 CP $12,007 $1,000
Sites in bold font and shaded in blue are new systems coming oline that were not designed or constructed by Engie.
*Type column indicates CP for carport, RT for rooftop
**PV O&M Services Year 1 fees for new systems provided to assist with pro-rate calculations if applicable. ***Monitoring Services Year 1 fees for new systems provided to assit with pro-rate calculations if applicable.
New systems at locations with existing monitoring services do not require added monitoring fees = N/A 747
ENGIE Services Project #: CN-000692
ENGIE Services Contract # CU1286
Change Order No. 2: Attachment B:
IV. T&M Repair Services
(a) If a Generating Facility is damaged and requires safe-off, repair, demolition and/or reconstruction, or otherwise requires repair outside of warranty, Customer must contact the ENGIE Services U.S. PV Operations & Maintenance Manager. In the event of damage, any component of the Generating Facility installed by ENGIE Services U.S. can Customer must submit a request for
quotation to the ENGIE Services U.S. PV Operations & Maintenance Manager. ENGIE Services U.S. will inspect the damage and provide a written quotation and complete scope of work to Customer to restore the Generating Facility to normal operational condition. Before proceeding with repairs, ENGIE Services U.S. and Customer must Repair
work is done on a time and materials basis. Standard Business Hours are M-F, 7am to 5pm. Non-business Hours & Saturdays Equals 1.5x Rates. Sundays & Holidays Equals 2.0x Rates. Labor Category Straight Time Hourly Rate PV Electrical Journeyman Technician1$/hr. County Labor Rate Hourly Rate PV Electrical Apprentice Technician1$/hr. County Labor Rate Hourly Rate Engineering2$/hr. $ 170.00
Hourly Rate Administrative2$/hr. $ 65.00
Mileage $ IRS Rate
Material mark-up % % 15.00
Lift rental fee $ Current Market Price 1Trade Hourly rate will be adjusted based on the current year of the local prevailing wage determination plus Burden, requirement for either travel or subsistence and lodging, and markup for services being requested. 2Escalated according to an inflation rate to the year in which service will occur .
748
ENGIE Services Project #: CN-000692
ENGIE Services Contract # CU1286
V 12/5/15
Change Order No. 01
Customer Contract Title:
Operation and Maintenance Agreement
Customer Contract No.
CU1286
Customer Contract Effective Date:
3/29/2017
Change Order Effective Date:
2/1/2022
Customer Name: City of Dublin
Customer Address: 100 Civic Plaza
Dublin, CA 94568
Contact: Dean McDonald, Public Works Maintenance Superintendent Job Location: Public Safety Complex
Description of
Change Order:
The Scope of Work set forth in Attachment A to the Operation and Maintenance Agreement referenced above is hereby amended to add the following scope and cost revisions in this Change Order. Further explanation is as follows:
PCO #1:
1. Project Location to add the existing PV System services at the Public Safety Complex.
2. Article 1. “Annual Maintenance and Monitoring Fee”. Start the O&M and monitoring services in year nine 2/1/2022, and year ten, 2/2/2023 of the O&M term.
Change from:
Year Period M&V
Services
Monitoring
Services
PV O&M
Services Total Fee
9 2022 $ - $ 12,238 $ 19,926 $ 32,164
10 2023 $ - $ 12,238 $ 20,524 $ 32,762
Change to:
Year Period M&V
Services
Monitoring
Services
PV O&M
Services Total Fee
9 2022 $ - $ 13,419 $ 24,679 $ 38,099
10 2023 $ - $ 13,822 $ 25,420 $ 39,241
Original Contract Amount for year 9 & 10: $64,926.00
Prior Amendment(s) Added (+): $.00
This Amendment Will Add (+): $12,047.00
Revised Contract Amount: $76,973.00
The changes within are hereby authorized, subject to the terms and conditions of that certain Customer Contract referenced above by and between ENGIE Services U.S. Inc., and City of Dublin. Except as set forth herein, the Customer Contract is not amended, modified, impaired or otherwise affected, and is hereby confirmed in full force and effect.
CITY OF DUBLIN ENGIE SERVICES U.S. INC.
By: By:
Print Name: Print Name:
Title: Title:
RETURN EXECUTED COPY TO: ENGIE Services U.S. Inc., 500 Twelfth Street, Suite 300, Oakland, CA 94607, Attn.: Contract Administrator
Attachment 3
749
750
751
752
753
754
755
756
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Budget Change Reference #:
From Un-Appropriated Reserves X Budget Transfer Between Funds From Designated Reserves Other
Account Amount Account Amount
10016311.64005 $127,300
1/9/2024
Posted By: Date:
As Presented at the City Council Meeting
**********Finance Use Only**********
CITY OF DUBLIN
Increased costs for maintenance of solar equipment, replacement of parts and inspection services.
REASON FOR BUDGET CHANGE
FISCAL YEAR 2023-24
BUDGET CHANGE FORM
DECREASE BUDGET AMOUNT INCREASE BUDGET AMOUNT
General Fund - Non-Departmental - Professional Services City Council's Approval Required
ATTACHMENT 4
760
STAFF REPORT
CITY COUNCIL
Agenda Item 6.1
DATE: January 9, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: Amendment to the Dublin Municipal Code Inclusionary Zoning Regulations (Chapter 8.68), Adopting a Methodology for Determining Affordable Housing In-Lieu Fees and Adopting Non-Residential Development Affordable Housing Impact Fees (PLPA-2023-00032)
Prepared by: Jason Earl, Senior Management Analyst
EXECUTIVE SUMMARY:
The City Council’s Two-Year Strategic Plan includes a review of the Inclusionary Zoning Regulations (Dublin Municipal Code Chapter 8.68), Affordable Housing In-Lieu Fee, and NonResidential Development Affordable Housing Impact Fee (aka “Commercial Linkage Fee”). Staff and the City’s consultant, Economic and Planning Systems, prepared an Affordable Housing InLieu Fee Feasibility Study and a Commercial Linkage Fee Nexus Study to address the Strategic Plan objectives. The City Council received informational reports on August 15, 2023, and September 19, 2023, and directed Staff to prepare amendments to the Inclusionary Zoning Regulations, Affordable Housing In-Lieu Fee, and Non-Residential Development Affordable Housing Impact Fee programs to ensure they align with the economics of developing affordable housing and the City Council’s priorities. Staff has prepared the updates to these programs. The City Council will hold a Public Hearing to consider adopting the amendments to these programs.
STAFF RECOMMENDATION:
Conduct the public hearing, deliberate, and take the following actions: 1) waive the reading and INTRODUCE the Ordinance Approving Amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations); 2) Adopt the Resolution Establishing the Methodology for Determining the Affordable Housing In-Lieu Fee for Future Residential Units Subject to the City of Dublin Inclusionary Zoning Regulations; and 3) Adopt the Resolution Approving the NonResidential Development Affordable Housing Impact Fees.
FINANCIAL IMPACT:
The Affordable Housing In-Lieu Fee is proposed to be amended to align with the economics of 761
developing affordable housing. This will generate additional funding for the Affordable Housing Fund. The proposed amendments to the Non-Residential Affordable Housing Impact Fee program will combine the Research & Development and Office uses into a single fee and ensure that the impact fee program does not overburden the economic development priorities set by the City Council.
DESCRIPTION:
Background
The City of Dublin Two-Year Strategic Plan includes Strategy 2: Housing Affordability, which includes the following two objectives:
Objective 2b: Ensure the City’s inclusionary zoning regulations incentivize targeted housing production; and
Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage fee and affordable housing in-lieu fee for for-sale and rental housing.
The consulting firm Economic and Planning Systems (EPS) was selected through a competitive process to assist Staff with addressing these Strategic Plan Objectives. Staff and EPS prepared an analysis of the development economics, reviewed industry best practices, reviewed inclusionary regulations in the surrounding Tri-Valley cities, and evaluated the nexus between non-residential development and the need it generates for affordable housing to formulate recommendations to the City Council. This culminated in the Affordable Housing In-Lieu Fee Feasibility Study and the Commercial Linkage Fee Nexus Study which are included as Attachments 3 and 5.
On August 15, 2023, the City Council received an informational report on these efforts (Attachment 7). The City Council provided initial feedback and direction regarding updates to these programs. On September 19, 2023, the City Council received another informational report (Attachment 8) and directed Staff to prepare the following updates to the Inclusionary Zoning Regulations, Affordable Housing In-Lieu Fee, and Non-Residential Development Affordable Housing Impact Fee which is also referred to as a “Commercial Linkage Fee”. Lower the Inclusionary Zoning Regulations applicability threshold to projects of 10+ units; and
Assess in-lieu fees on a per-square-foot basis for each market-rate unit; and Establish separate regulations for ownership and rental developments; and Retain the existing Commercial Linkage Fee amount with an annual inflationary index; and Combine the Research & Development and Office use categories and set the fee at $1.39 per square foot, which is the average of the current fee for those two use categories.
Staff has prepared the amendments to these programs for consideration by the City Council. The Ordinance adopting amendments to the Inclusionary Zoning Regulations is included as Attachment 1, the Resolution approving the methodology for determining the Affordable Housing 762
In-Lieu Fee is included as Attachment 2, and the Resolution approving the Non-Residential Development Affordable Housing Impact Fee is included as Attachment 4.
Analysis
The following is an overview of the proposed amendments to the Inclusionary Zoning Regulations, Affordable Housing In-Lieu Fee, and the Non-residential Development Affordable Housing Impact Fee. The proposed amendments align the economics of developing affordable housing and the efforts of the City Council to prioritize the collection of fees that can be leveraged to facilitate the production of lower income units to satisfy the City’s Regional Housing Need Allocation (RHNA) while providing on-site units.
Inclusionary Zoning Requirements
The proposed amendments to the Inclusionary Zoning Regulations (IZR) in the Dublin Municipal Code (Chapter 8.68) create separate regulations for ownership and rental developments. The threshold for projects subject to the IZR would be reduced from 20 units to 10 units. The proposed allocation of affordable ownership units remains unchanged. However, the allocation of affordable rental units is proposed to focus on low-income households. Table 1 summarizes these proposed regulations.
Table 1. Ownership and Rental Policy Recommendations
Project Size
Threshold
Overall
Affordability
Requirement
Very
Low
Low Moderate
Ownership 10 Units 12.5% 0% 40% 60%
Rental 10 Units 10% 0% 100% 0%
The IZR (Section 8.68.020.E) requires resale controls to ensure that affordable ownership units remain affordable for a total of 55 years. Staff proposes to amend the regulations to reset the 55- year period with each transfer of ownership of future for sale units created through the inclusionary program.
The implementation procedures for the IZR include selection criteria that provide for the use of preference points by the developer upon the initial sale of units (Section 8.68.050.D). Staff is proposing to amend this section to require the use of preference points with the resale of ownership units.
The draft Ordinance approving the amendments to the Inclusionary Zoning Regulations is included as Attachment 1. Please refer to Attachment 6 for the proposed amendments in redline format where underlined text is proposed to be added and text with a strikethrough is proposed to be deleted.
Affordable Housing In-Lieu Fee
The proposed Affordable Housing In-Lieu Fee would be assessed on a per-square-foot basis for each market-rate unit produced. The proposed fee is based on the Affordable Housing In-Lieu Fee Feasibility Study and rounded to the nearest dollar. This fee is reflective of the cost to produce 763
affordable ownership and rental units. The proposed fee would be set at $9/square foot and adjusted annually based on an inflationary index. The proposed fee is equivalent to approximately $400,000 per affordable ownership unit and $237,000 per rental unit. The Resolution to approve the proposed Affordable Housing In-Lieu Fee is included as Attachment 2.
Non-Residential Development Affordable Housing Impact Fee The DMC (Chapter 7.86) established the authority for the City to impose a Non-Residential Development Affordable Housing Impact Fee, also known as a “Commercial Linkage Fee”. This fee is based on a nexus between non-residential development and the need it generates for affordable housing. The fee was first adopted by the City Council in 2005 (Resolution 70-05) and is adjusted annually based on an inflationary index. The amount was set to ensure that it does not overburden the economic development priorities set by the City Council. New non-residential development is assessed this fee on a per-square-foot basis at the time a building permit is issued.
On September 19, 2023, the City Council directed Staff to retain the existing fee structure with an inflationary index but combine Research & Development and Office uses into a single category and set the fee at $1.39 per square foot. Additionally, the names of the land use categories have been updated to be consistent with the Nexus Study and current industry terminology. The remainder of the program is unchanged. The Resolution adopting the Non-Residential Development Affordable Housing Impact Fee is included as Attachment 4.
ENVIRONMENTAL DETERMINATION:
The California Environmental Quality Act (CEQA), together with State Guidelines and City of Dublin CEQA Guidelines and Procedures require that certain projects be reviewed for environmental impacts and that environmental documents be prepared. The proposed Zoning Ordinance Amendments are exempt from the requirements of CEQA pursuant to CEQA Guidelines Section 15061(b)(3) as the amendments would not result in any physical changes and it can be seen with certainty that the amendments would not have a significant effect on the environment.
PLANNING COMMISSION REVIEW:
On December 12, 2023, the Planning Commission held a public hearing to consider the proposed amendments to the Inclusionary Zoning Regulations and make a recommendation to the City Council. Following the public hearing, the Planning Commission unanimously adopted Resolution No. 23-12 (Attachment 9), recommending the City Council approve the proposed amendments.
The Planning Commission further recommended periodic review of the Inclusionary Zoning Regulations.
STRATEGIC PLAN INITIATIVE:
Strategy 2: Housing Affordability
Objective 2b: Ensure the City’s inclusionary zoning regulations incentivize targeted housing production.
Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage fee and affordable housing in-lieu fee for for-sale and rental housing. 764
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
In accordance with State law, a public notice was published in the East Bay Times ten days prior to the hearing and again five days prior to the hearing, posted at several locations throughout the City, and sent to interested parties notifying the community of the City Council’s consideration of the proposed amendments to the Inclusionary Zoning Regulations, Affordable Housing In-Lieu Fee, and the Non-Residential Development Affordable Housing Impact Fee. The City Council Agenda was posted.
ATTACHMENTS:
1) Ordinance Approving Amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations)
2) Resolution Establishing the Methodology for Determining the Affordable Housing In-Lieu Fee for Future Residential Units Subject to the City of Dublin Inclusionary Zoning Regulations 3) Exhibit A to the Resolution - Inclusionary Housing Feasibility Report dated December 7, 2023 4) Resolution Approving the Non-Residential Development Affordable Housing Impact Fees 5) Exhibit A to the Resolution - Commercial Linkage Fee Nexus Study dated October 27, 2023 6) Redlined Version of Amendment to Inclusionary Zoning Regulations 7) City Council Staff Report dated August 15, 2023
8) City Council Staff Report dated September 19, 2023
9) Planning Commission Resolution 23-12 Recommending City Council Approval of Amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) 765
Attachment 1
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 1 of 10 ORDINANCE NO. XX – 24
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING AMENDMENTS TO DUBLIN MUNICIPAL CODE CHAPTER 8.68 (INCLUSIONARY ZONING REGULATIONS)
PLPA-2023-00032
The Dublin City Council does ordain as follows:
SECTION 1. RECITALS
A. The City occasionally initiates amendments to the Dublin Municipal Code to clarify, add, or amend certain provisions to ensure that it remains current with federal and state law, internally consistent, simple to understand and implement, and relevant to changes occurring in the community.
B. Staff initiated amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) consistent with the City of Dublin Two-Year Strategic Plan, which includes Strategy 2: Housing Affordability, Objective 2b: Ensure the City’s inclusionary zoning regulations incentivize targeted housing production and Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage.
C. The City selected the consulting firm Economic and Planning Systems (EPS) to prepare an Inclusionary Zoning and Affordable Housing In-Lieu Fee Feasibility Study and Commercial Linkage Fee Nexus Study to inform the proposed amendments.
D. On August 15, 2023, and September 19, 2023, the City Council received informational reports on the Commercial Linkage Fee and Inclusionary Zoning and In-Lieu Fee programs and provided direction to staff to prepare updates to the programs.
E. The proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) include changes to the affordability requirements for rental and ownership development projects, modifications to the provisions for the payment of fees in-lieu of constructing affordable units, revisions to the allocation of units to income levels, and revisions to the exceptions to the affordability requirements.
F. The Planning Commission held a duly noticed public hearing on December 12, 2023, during which all interested persons were heard, and adopted Resolution No. 23-12 recommending that the City Council approve the proposed amendments to Dublin Municipal Code Chapter
8.68 (Inclusionary Zoning Regulations).
G. A Staff Report was submitted to the Dublin City Council recommending approval of the proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations).
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Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 2 of 10 H. The City Council held a public hearing on the proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) on January 9, 2024, at which time all interested persons had an opportunity to be heard.
I. Proper notice of said hearing was given in all respects as required by law.
J. The City Council did hear and consider all said reports, recommendations and testimony herein above set forth and used its independent judgement to evaluate the project.
SECTION 2. FINDINGS
A. Pursuant to Dublin Municipal Code Section 8.120.050.B., the City Council hereby finds that the amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) are consistent with the General Plan and any applicable Specific Plan in that they would provide an update to the City’s affordable housing requirements. Specifically, the amendments would implement Housing Element Program B.4, which calls for a review of the Inclusionary Zoning Regulations and preparation of a nexus study reviewing the affordable housing in-lieu fee.
B. The California Environmental Quality Act (CEQA), together with the State Guidelines and City of Dublin CEQA Guidelines and Procedures require that certain projects be reviewed for environmental impacts and that environmental documents be prepared. The City Council hereby finds that the amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) are exempt from the requirements of CEQA pursuant to CEQA Guidelines Section 15061(b)(3) as the amendments would not result in any physical changes and it can be seen with certainty that the amendments would not have a significant effect on the environment.
SECTION 3. AMENDMENT OF CHAPTER 8.68.
Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) is amended to read as follows:
“Inclusionary Zoning Regulations”
8.68.010 Purpose.
The purpose of this Chapter is to:
A. Enhance the public welfare and assure that further housing development contributes to the attainment of the City’s housing goals by increasing the production of residential units affordable by households of very low, low, and moderate income.
B. Assure that the limited remaining developable land in the City’s planning area is utilized in a manner consistent with the City’s housing policies and needs.
8.68.020 Definitions.
As used in this Chapter, each of the following terms shall be defined as follows:
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Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 3 of 10 A. “Affordable unit” means an ownership or rental-housing unit, affordable to households with very low-, low-, or moderate-incomes as defined in this Chapter.
1. Rental units are deemed affordable units if the annual rent does not exceed 30% of maximum income level for very low-, low- and moderate-income households, adjusted for household size and as defined below.
2. Owner-occupied units are deemed affordable units if the sales price results in annual housing expenses that do not exceed 35% of the maximum income level for very low-, low-, and moderate-income households, adjusted for household size and as defined below.
B. “Applicant” means any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities that seeks city real property development permits or approvals.
C. “Dwelling unit” means a dwelling designed and intended for occupancy by one household.
D. “Very low-, low-, and moderate-income levels” means those income and eligibility levels determined periodically by the California Department of Housing and Community Development based on Alameda County median income levels adjusted for family size. Such levels shall be calculated on the basis of gross annual household income considering household size and number of dependents, income of all household members eighteen years of age and older, and all other sources of household income and will be recertified as set forth by local standards, and state and federal housing law.
1. “Very low-income” means 50% or less of the median income, adjusted for actual household size.
2. “Low-income” means more than 50% and up to 80% of the median income, adjusted for actual household size.
3. “Moderate-income” means more than 80% and up to 120% of the median income, adjusted for actual household size.
E. “Resale controls and/or rent restrictions” means legal restrictions by which the affordable units shall be restricted to ensure that the unit remains affordable to very low-, low-, or moderate-income households, as applicable, for a period of not less than 55 years. The 55 year period will reset each time ownership of the unit is transferred through a bona fide sales transaction with a third party during the resale restriction period. With respect to rental units, such rent restrictions shall be in the form of a regulatory agreement recorded against the applicable property. With respect to owner-occupied units, such resale controls shall be in the form of resale restrictions, deeds of trust, and/or other similar documents recorded against the applicable property.
F. “Residential development” includes, without limitation, detached single-family dwellings, multiple-dwelling structures, groups of dwellings, condominium or townhouse developments, condominium conversions, cooperative developments, mixed use developments that include housing units, and residential land subdivisions intended to be sold to the general public. 768
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 4 of 10
8.68.030 General Requirements.
A. Affordability Requirement for Rental Units. All new rental residential development projects with 10 units or more designed and intended for permanent occupancy shall construct
10.0% of the total number of dwelling units within the development as affordable units, except as otherwise provided by this Chapter, and except when all of the dwelling units (excluding units reserved for property management) within the project are affordable. The foregoing requirement shall be applied no more than once to an approved residential development (and generally at the tentative map stage), regardless of the changes in the character or ownership of the development, except as provided by this Chapter, provided the total number of units does not change. In applying and calculating the affordability requirement, any decimal fraction less than or equal to 0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be construed as one unit.
B. Affordability Requirement for Ownership Units. All for-sale (ownership) residential development projects of 10 units or more designed and intended for permanent occupancy shall construct 12.5% of the total number of dwelling units within the development as affordable units, except as otherwise provided by this Chapter. The foregoing requirement shall be applied no more than once to an approved residential development (and generally at the tentative map stage), regardless of the changes in the character or ownership of the development, except as provided by this Chapter, provided the total number of units does not change. In applying and calculating the affordability requirement, any decimal fraction less than or equal to 0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be construed as one unit.
C. Allocation of Units to Income Levels. Affordable units provided pursuant to this section shall be allocated as follows:
Rental Units Owner-Occupied Units
Very low-income households 0% 0%
Low-income households 100% 40%
Moderate-income households 0% 60%
Where the calculation of the allocation results in fewer units than would otherwise be required, one additional unit should be allocated to the income level with a decimal fraction closest to
0.50. D. Conditions of Approval: Any tentative map, conditional use permit, or site development review approving residential development projects subject to this Chapter shall contain conditions sufficient to ensure compliance with the provisions of this Chapter. Such conditions shall detail the number of affordable units required, set forth the applicant’s manner of compliance with this Chapter, and require the execution of an agreement imposing appropriate resale controls and/or rental restrictions on the affordable units.
E. Concurrent Construction. All affordable units in a project or phase of a project shall be constructed concurrently with market-rate units, unless the City Manager determines in writing that extenuating circumstances exist that make concurrent construction infeasible or impractical.
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Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 5 of 10 F. Design and Distribution of Affordable Units. All affordable units shall reflect the range of numbers of bedrooms provided in the project as a whole and shall not be distinguished by exterior design, construction, or materials. Affordable units may be of smaller size than the units in the project and may have fewer amenities than the market rate units in the project. All affordable units shall be reasonably dispersed throughout the project.
8.68.040 Exceptions to Affordability Requirement.
Developers of projects subject to Sections 8.68.030A and 8.68.030B shall construct the total number of affordable dwelling units within the development, unless subject to an exception set forth in this section. All exceptions require City Council approval.
A. Payment of Fees In Lieu of Constructing Affordable Units. Upon request, the applicant shall be permitted to pay a fee in lieu of constructing up to 40% of the affordable units that the developer would otherwise be required to construct pursuant to Sections 8.68.030A and
8.68.030B. The amount of the fee shall be as set forth in a resolution of the City Council, which may be amended from time to time to reflect inflation and changed conditions in the City and the region. In lieu fees shall be paid at the time and in the amount set forth in the in lieu fee resolution in effect at the time of issuance of the building permit.
B. Off-Site Projects. An applicant may construct the affordable units not physically within the development in lieu of constructing some or all of the affordable units within the development, with the approval of the City Council, if the City Council finds:
1. Construction of the units off-site in lieu of constructing units on-site is consistent with the Chapter’s goal of creating, preserving, maintaining, and protecting housing for very low-, lowand moderate-income households.
2. Units to be constructed off site are consistent with Section 8.68.030F above.
3. Would be infeasible or impractical to construct affordable units on-site.
4. Conditions of approval for the project require that the off-site affordable units would be governed by the terms of a deed restriction and, if applicable, rental restrictions similar to that used for the on-site affordable units.
5. Conditions of approval for the project, or other security such as a cash deposit, bond, or letter of credit, are adequate to require the construction of the off-site affordable units concurrently with the completion of the construction of the residential development or within a reasonable period (not to exceed five years).
C. Land Dedication. An applicant may dedicate land to the City or city-designated local nonprofit housing developer in lieu of construction of some or all of the required affordable units, if the Council finds:
1. Dedication of land in lieu of constructing units is consistent with the Chapter’s goal of creating, preserving, maintaining, and protecting housing for very low-, low- and moderateincome households. 770
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 6 of 10
2. The dedicated land is useable for its intended purpose, is free of toxic substances and contaminated soils, and is fully improved, with infrastructure, adjacent utilities, grading, and all development-impact fees paid excluding any inclusionary zoning ordinance fees.
3. The proposed land dedication is of sufficient size to meet the following requirements:
a. The dedication includes land sufficient to construct the number of units that the applicant would otherwise be required to construct by Section 8.68.030.A, based on the size of lots in the subdivision for which the applicant is meeting its obligation; and b. In addition, the dedication includes such additional land the market value for which is equal to or exceeds the difference between the value of a market-rate, 1200-square foot unit and the price at which such a unit could be sold as an Affordable Unit (which amount shall be set forth in a resolution adopted from time to time by the City Council) times the number of units required.
D. Credit Transfers. An applicant may fully or partially satisfy the requirements of Sections
8.68.030A and 8.68.030B through the use of transfer credits created pursuant to Section 8.68.060. Credit certificates shall be presented to the Community Development Director, who shall note at the time of project approval the credit certificate by number. Credit certificates may only be used to satisfy the requirements for Inclusionary Units for the income category (i.e., very low-, low-, or moderate-income) and number of bedrooms for which they are issued.
E. Waiver of Requirements. The City Council, at its discretion, may waive, wholly or partially, the requirements of this ordinance and approve alternate methods of compliance with this Chapter if the applicant demonstrates, and the City Council finds, that such alternate methods meet the purposes of this Chapter.
8.68.050 General Procedures for Implementing Inclusionary Zoning Requirements.
A. Agreements. Prior to the issuance of a building permit for an affordable unit, resale restrictions or rental controls, or both, as the case may be, shall be set forth in an agreement between the City and the developer, in a form consistent with the City Council-adopted form agreement, which agreement shall be recorded against the property containing the affordable units. The agreement shall be executed by the City Manager, and its requirements shall run with the land and bind the applicant’s successors.
B. Rental Units; Occupancy; Annual Report. Agreements involving rental units shall require the owner of the affordable units to ensure that the units are occupied by tenants whose monthly income levels do not exceed very low-, low-, or moderate-income levels, as the case may be, and shall preclude tenants from subletting or subleasing the unit. The agreement shall also require the owner of the affordable unit to submit an annual report to the City Manager, in a format approved by the City. The report shall include, but not be limited to the following information: an identification of the affordable units within the project; the monthly rents charged and proposed to be charged; vacancy information for the prior year; and the monthly income for tenants of each affordable unit throughout the prior year.
C. Ownership Units; Occupancy; City’s Right of First Refusal. Agreements for ownership units shall specify that the inclusionary units must be occupied by the owner or owners and may not be leased or rented without the written approval of the City. The resale restrictions 771
Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 7 of 10 shall provide that in the event of the sale of an affordable unit, the City shall have the right to purchase any affordable owner-occupant unit at the maximum price that could be charged to an eligible household.
D. Selection Criteria. No household shall be permitted to occupy a unit that is required under this Chapter to be affordable unless the City or its designee has approved the household’s eligibility. Eligible potential occupants of affordable units will be qualified on the basis of household income as defined by this Chapter. The selection criteria for a qualified household may not distinguish between adults and children. Selection of qualified person should be based on priorities established using the point system described below:
• Employed within the boundaries of the City of Dublin (3 points maximum, one per household member)
• Public Service employee working in the City of Dublin (1 point) • Dublin resident (3 points maximum, one per household member) • Seniors (1 point, one per household)
• Permanently disabled (1 point, one per household)
• Immediate family member of Dublin resident (1 point, one per household) • Required to relocate from current Dublin residence due to demolition of dwelling or conversion of dwelling from rental to for-sale unit (1 point, one per household) To qualify as a “Public Service Employee”, the person shall be employed by a Public Agency.
To qualify as “Employed within the boundaries of the City of Dublin”, the person shall have been employed within the City of Dublin for at least six months.
To qualify as a “Dublin resident,” the person shall have been a resident of the City of Dublin for at least a one-year period prior to the eligibility determination.
8.68.060 Affordable Unit Credits.
A. Creation. Affordable unit credits may be created by the City Council. One affordable unit credit certificate shall be issued for each affordable unit constructed in excess of the number of affordable units required to be constructed for the project by Sections 8.68.030A and
8.68.030B. The certificate shall designate a specific income category (i.e., very low-, low-, or moderate-income) and number of bedrooms for which they are issued.
B. Ownership and Use of Credits. Affordable unit credit certificates are issued to and become the possession of the project owner, who may use them to satisfy the requirements of this Chapter for another project in the City. If a project owner proposes to sell credit certificates, the parties shall first obtain the consent of the Finance Director, who will document the transfer by certificate number.
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Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 8 of 10
8.68.070 Incentives to Encourage On-Site Construction of Affordable Units.
The City may, but shall not be required to, offer incentives or financial assistance to encourage the on-site construction of affordable units in excess of the total number of affordable units required by this Chapter to be included in the project to the extent resources for this purpose are available and approved for such use by the City Council or City Manager. Such incentives may include, but shall not be limited to, the following:
A. Fee Deferral.
1. Development Processing Fees. The City Manager may approve deferred payment of City processing fees applicable to the review and processing of the project. The terms and payment schedule of the deferred fees shall be subject to the approval of the City Manager.
2. Development Impact Fees. The City Council may authorize the deferred payment of development impact fees applicable to the affordable units. Approval of this incentive requires demonstration by the Applicant that the deferral increases the project’s feasibility. The applicant must provide appropriate security to ensure future payment of such fees.
B. Design Modifications. The City Council may approve design modifications to affordable units that increase the feasibility of the construction of affordable units, including but not limited to, the following:
1. Reduced lot size.
2. Reduced setback requirements.
3. Reduced open space requirements.
4. Reduced landscaping requirements.
5. Reduced interior or exterior amenities.
6. Reduction in parking requirements.
7. Height restriction waivers.
Section 8.68.080 Inclusionary Zoning In Lieu Fees.
The fund previously known as the “Inclusionary Zoning In Lieu Fee fund” is hereby renamed the “Affordable Housing Fund” (“Fund”) and all In Lieu Fees shall be deposited into the Fund.
A. Use. All monies in the Fund, together with any interest earnings on such monies less reasonable administrative charges, shall be used or committed to use by the City for the purpose of providing very low-, low-, and moderate-income ownership or rental housing in the City of Dublin.
B. Annual Report. The City Manager shall prepare an annual report to the City Council identifying the balance of monies in the Fund and the affordable units provided and any monies committed to providing very low-, low-, and moderate-income housing. The annual report shall also include a review of administrative charges.
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Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 9 of 10 Section 8.68.090 Violations.
It shall be unlawful for any person, firm, corporation, partnership or other entity that is subject to this ordinance pursuant to Sections 8.68.030A and 8.68.030B to violate any provision or to fail to comply with any of the requirements of this Chapter. A violation of any of the provisions of or failure to comply with any of the requirements of this Chapter shall constitute a misdemeanor; except that notwithstanding any other provisions of this Code, any such violation constituting a misdemeanor under this Chapter, may in the discretion of the enforcing authority, be charged and prosecuted as an infraction. Any person convicted of an infraction under the provisions of this Code shall be punishable as provided by the Government Code of the State of California.
8.68.100 Enforcement.
A. General. The City Manager shall enforce this Chapter, and its provisions shall be binding on all agents, successors, and assigns of an applicant. The City Manager may suspend or revoke any building permit or approval upon finding a violation of any provision of this Chapter.
No land-use approval, building permit, or certificate of occupancy shall be issued for any residential development unless exempt from or in compliance with this Chapter. The City may institute any appropriate legal actions or proceedings necessary to ensure compliance herewith, including, but not limited to, actions to revoke, deny, or suspend any permit or development approval.
B. Excessive Rents/Legal Action. If the City Manager determines that rents in excess of those allowed by operation of this Chapter have been charged to a tenant residing in an affordable unit, the City may take appropriate legal action to recover, and the project owner shall be obligated to pay to the tenant, or to the City in the event the tenant cannot be located, any excess rents charged.
Section 8.68.110 Appeals.
Decisions of the City Manager under this Chapter may be appealed as provided in Chapter 8.136.
SECTION 4. EFFECTIVE DATE. This Ordinance shall become effective on July 1, 2024 following its final adoption.
SECTION 5. SEVERABILITY. The provisions of this Ordinance are severable and if any provision, clause, sentence, word or part thereof is held illegal, invalid, unconstitutional, or inapplicable to any person or circumstances, such illegality, invalidity, unconstitutionality, or inapplicability shall not affect or impair any of the remaining provisions, clauses, sentences, sections, words or parts thereof of the Ordinance or their applicability to other persons or circumstances.
SECTION 6. POSTING. The City Clerk of the City of Dublin shall cause this Ordinance to be posted in at least three public places in the City of Dublin in accordance with Section 36933 of the Government Code of the State of California.
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Ord. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 10 of 10 PASSED, APPROVED AND ADOPTED this __th day of _______ 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Mayor
ATTEST:
_________________________________
City Clerk
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Attachment 2
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 1 of 2 RESOLUTION NO. XX – 24
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
ESTABLISHING THE METHODOLOGY FOR DETERMINING THE AFFORDABLE HOUSING
IN-LIEU FEE FOR FUTURE RESIDENTIAL UNITS SUBJECT TO THE CITY OF DUBLIN
INCLUSIONARY ZONING REGULATIONS
WHEREAS, the Dublin City Council adopted Dublin Municipal Code Chapter 8.68 Inclusionary Zoning Regulations to ensure the attainment of the City’s housing goals by increasing the production of residential units affordable by households of very low-, low-, and moderateincome; and WHEREAS, the Inclusionary Zoning Regulations establish the authority to impose and charge a fee in-lieu of constructing affordable units; and WHEREAS, on May 7, 2002, the City Council adopted Resolution 56-02 establishing a revised fee in-lieu of constructing affordable housing; and WHEREAS, the City of Dublin Strategic Plan for Fiscal Year 22-23 includes Objective 2.b to ensure the City’s Inclusionary Zoning Regulations incentivize targeted housing production and Objective 2.c to evaluate the affordable housing in-lieu fee for ownership and rental housing; and WHEREAS, the City selected the consulting firm Economic and Planning Systems (EPS) through a competitive process to assist Staff with evaluating the City’s Inclusionary Zoning Regulations and Affordable Housing In-Lieu Fee; and
WHEREAS, EPS prepared the Feasibility Analysis of Inclusionary Housing Requirements, attached as Exhibit A, recommending changes to the Inclusionary Zoning Regulations and Affordable Housing In-Lieu Fee; and
WHEREAS, on August 15, 2023, and September 19, 2023, the City Council received a report on the City’s Inclusionary Zoning Regulations, Affordable Housing In-Lieu Fee, and NonResidential Development Affordable Housing In-Lieu Fee (aka “Commercial Linkage Fee”) and directed Staff to prepare amendments to the Inclusionary Zoning Regulations and revise the methodology for determining the Affordable Housing In-Lieu Fee; and WHEREAS, pursuant to California Environmental Quality Act (CEQA) and CEQA Guidelines Section 15378 (b)(4), revising Affordable Housing In-Lieu Fees is not a project and, therefore, exempt from the requirements of CEQA; and
WHEREAS, a Staff Report, dated January 9, 2024, described and analyzed the proposed changes to the Affordable Housing In-Lieu Fee; and
WHEREAS, on January 9, 2024, the City Council held a properly noticed public hearing to consider the Affordable Housing In-Lieu, at which time all interested parties had the opportunity to be heard; and
WHEREAS, on January 9, 2024, the City Council did hear and use independent judgment and considered all said reports, recommendations and testimony. 776
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 2 of 2 NOW, THEREFORE, BE IT RESOLVED that this Resolution supersedes and replaces Resolution 56-02 effective on July 1, 2024.
BE IT FURTHER RESOLVED that the Dublin City Council hereby adopts the following methodology for determining the amount of the Affordable Housing In-Lieu Fee for each residential development project subject to the requirements of the Inclusionary Zoning Regulations in the Dublin Municipal Code Chapter 8.68 as follows:
1. The Affordable Housing In-Lieu Fee shall be $9.00 per square foot for single-family (detached) and multi-family (attached) market rate units.
2. The Affordable Housing In-Lieu Fee shall be calculated based on the habitable square feet per dwelling unit.
3. The Affordable Housing In-Lieu Fee shall be adjusted annually on July 1 of each year based on the greater of the percentage change in either: a) the February ENR Building Cost Index for the San Francisco Bay Area; b) the February Bay Area Consumer Price Index for All Urban Consumers (CPI-U); or c) the United States Department of Housing and Urban Development (HUD) Fair Market Rent limits for the Oakland Primary Metropolitan Statistical Area that are in effect in February of each year.
4. Affordable Housing In-Lieu Fees shall be paid at the time of Building Permit issuance for each market rate unit.
5. The Affordable Housing In-Lieu Fee adopted by this Resolution shall be effective and applied to Building Permits issued for each market rate unit on or after July 1, 2024.
PASSED, APPROVED AND ADOPTED this 9th day of January 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Mayor
ATTEST:
_________________________________
City Clerk
777
Report
Feasibility Analysis of Inclusionary
Housing Requirements
Prepared for:
City of Dublin
Prepared by:
Economic & Planning Systems, Inc.
EPS #231009
December 7, 2023
Attachment 3
Exhibit A to the Resolution
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779
Table of Contents
1. Introduction and Executive Summary..........................................................1 Key Findings and Recommendation..................................................................2
2. Background and Local Market Context.........................................................6 Housing Market Conditions and Challenges .......................................................6 Dublin’s Strategic Plan Objectives....................................................................7 Regional Housing Needs Allocation...................................................................7 Household Incomes and Affordability ...............................................................8
3. Methodology and Assumptions ................................................................. 10 Return Metrics and Feasibility Thresholds ....................................................... 10 Product Prototypes ...................................................................................... 11 Development Cost Assumptions .................................................................... 12 Revenue and Value Assumptions ................................................................... 17
4. Feasibility Analysis.................................................................................. 20 Market-Rate Development............................................................................ 20 Current Inclusionary Program ....................................................................... 22 On-Site Inclusionary Requirement Alignment .................................................. 24
5. Recommendations .................................................................................. 26 Appendix A: Survey of Inclusionary Requirements in Select California Jurisdictions 780
List of Tables
Table 1 Recommended Inclusionary Requirements and In-Lieu Fees for Ownership and Rental .................................................................................................5 Table 2 RHNA Allocation for Dublin......................................................................8 Table 3 Alameda County 2023 Income Limits by Persons in Household.....................9 Table 4 Prototype Residential Products .............................................................. 12 Table 5 Market-Rate Rental Apartment Product Prototype Unit Cost Assumptions..... 13 Table 6 Market-Rate Ownership Condominium Product Prototype Unit Cost Assumptions....................................................................................... 14 Table 7 Market-Rate Ownership Townhome Product Prototype Unit Cost Assumptions....................................................................................... 15 Table 8 Market-Rate Ownership Single Family Product Prototype Unit Cost Assumptions....................................................................................... 16 Table 9 Maximum Unit Values for Affordable Housing in Alameda County................ 19 Table 10 Feasibility of Market-Rate Product Prototypes .......................................... 21 Table 11 Required Affordable Units by Income Category ........................................ 22 Table 12 Feasibility of Current Inclusionary Program on Product Prototypes .............. 24 Table 13 Subsidy Required for Below-Market-Rate Units by Income Level................. 25 Table 14 Recommended Inclusionary Program...................................................... 26 Table 15 Feasibility of Recommended Inclusionary Program ................................... 28 781
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1 1. Introduction and Executive Summary
Inclusionary housing programs require that new market-rate residential development projects include a certain percentage of housing units at rents or sale prices that are affordable to lower-income households. These program requirements often vary for ownership and rental projects and also may include the option for new development to pay a fee in-lieu of providing affordable units on-site, as an alternative means of compliance. Inclusionary housing programs have been adopted by hundreds of jurisdictions nationwide, including nearly 200 cities and counties in the State of California. They are one of many tools cities can use to achieve more affordable housing in their communities.
The City of Dublin (City) is updating its inclusionary zoning ordinance (IZO), which was first adopted in 2002. Economic & Planning Systems, Inc. (EPS) was retained by the City to conduct an economic feasibility study to determine what level of updated inclusionary requirements may be supportable in Dublin, in the context of current market conditions.
EPS analyzed how the provision of below-market-rate (BMR) units impacts the financial feasibility of new market-rate residential development by evaluating the effect of varying inclusionary requirements on industry standard profit and return metrics. Such an analysis is intended to provide the City additional context regarding the implications of revising its inclusionary requirements, while ensuring that the updated requirements do not have the unintended impact of impeding new development. Dublin is not legally required to consider these financial impacts when updating inclusionary housing requirements; however, they are often studied and incorporated into the development of inclusionary policies in order to align a jurisdiction’s overall housing goals with its local real estate market conditions.1
In addition, cities introducing or updating inclusionary housing programs often consider the requirements and fees set by their “peer cities.” Appendix A presents comparisons of inclusionary requirements and in-lieu fees for rental and ownership projects in several cities in the Bay Area, with a focus on the Tri-Valley region.
The key findings and recommendations stemming from the feasibility analysis are summarized below. The subsequent chapters of this report provide details on the 1 An exception to this statement is Assembly Bill (AB) 1505, which allows the State’s Department of Housing and Community Development (HCD) to request an economic feasibility study for inclusionary housing policies that include a requirement that more than 15 percent of total rental units developed be affordable to households earning 80 percent of area median income (AMI) or below.
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REPORT: Feasibility Analysis of Inclusionary Housing Requirements in Dublin 2 methodology and assumptions underlying the feasibility analysis, the results of the feasibility analysis, and the recommendations for inclusionary requirements by development product type that align with the feasibility findings.
Key Findings and Recommendation
1. Under the City’s existing inclusionary zoning ordinance requirements, the must-build on-site construction of affordable units ensures affordable housing production across multiple income levels while adding revenue to the City’s affordable housing fund.
Dublin’s current inclusionary program applies to projects of 20 units or more.
It has an overall 12.5 percent inclusionary requirement, targeting Very Low-, Low-, and Moderate-income households in rental projects, and Low- and Moderate-income households in ownership projects. However, a developer may opt to pay a fee in-lieu of building up to 40 percent of the inclusionary units; the remaining 60 percent must be built on-site. The must-build component of the policy ensures that at least some inclusionary units are provided as part of market-rate developments, while the fees collected by the City help facilitate the development of 100 percent affordable housing projects within Dublin.
2. Since the inclusionary zoning ordinance’s initial adoption in 2002, the relationship between development costs and market rate sales prices and rents have shifted, resulting in inclusionary requirements that are no longer aligned with market conditions.
Construction costs have outpaced multifamily rents in the years since the IZO was adopted, and as a result, multifamily rental projects may face challenges meeting the City’s inclusionary requirements. During the same time period, single-family home values increased, outpacing construction costs. As a result, the ownership inclusionary requirements remain feasible, but the inlieu fee is no longer aligned with the equivalent cost of providing the units onsite.
3. Modeling the City’s current inclusionary requirements demonstrates that the inclusionary requirements on rental projects face feasibility challenges, while the inclusionary requirements on ownership projects remain feasible.
The current and recommended inclusionary requirements were modeled and tested in development pro formas reflecting four different residential prototypes - one rental prototype and three ownership prototypes:
• Rental multifamily apartments (at a density of 65 units/acre) • For-sale condominiums (at a density of 45 units/acre) • For-sale townhomes (at a density of 20 units/acre), and • For-sale single family homes (at a density of 10 units/acre). 783
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3 Each prototype evaluated in this Study is shown to be feasible under current market conditions when developed as a market-rate project, without inclusionary requirements, with the development economics of each prototype exceeding industry-standard profit thresholds. However, modeling the current inclusionary requirements for rental projects lowers the yield-on-cost below the threshold, indicating that new multifamily, rental development will face feasibility challenges meeting the City’s inclusionary requirements. The model indicates that new ownership projects can meet the inclusionary requirements given current development costs and market pricing, but the current in-lieu fee is set so much lower than the actual cost of building/providing the units onsite, that developers of ownership product will always opt to pay the fee.
Underscoring this misalignment with market conditions, city staff has confirmed that in the last few years, new residential development projects have selected alternatives to full on-site construction of inclusionary units, either paying the fee, negotiating alternative benefits (e.g., land dedication), or a combination of both.
4. The recommended updates to the IZO will improve the feasibility of new multifamily rental development, while generating higher in-lieu fee revenue from ownership developments. The recommended updates are consistent with other inclusionary programs in the TriValley region and also respond to other typical program parameters such as charging the in-lieu fee on a “per square foot of market rate development” basis and lowering the threshold project size from 20 units to 10 units.
Recommended updates across both the rental and ownership inclusionary programs include lowering the feasibility threshold to 10 units and updating the fee to a per market rate square foot basis, consistent with that of most other cities. Where the in-lieu fee is well below the actual cost of providing the inclusionary units onsite, EPS recommends increasing the fee to capture greater in-lieu fee revenue while preserving project feasibility.
While this analysis provides a useful assessment of the feasibility of each prototype, development costs and values are extremely variable across individual projects. Based on typical fee and inclusionary levels seen in peer cities, as well as consideration of current feasibility challenges in residential construction and the City’s affordable housing goals, EPS worked with City staff to develop a set of recommended inclusionary requirements for new rental development and new for-sale development. The recommendations are summarized below and in Table 1.
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REPORT: Feasibility Analysis of Inclusionary Housing Requirements in Dublin 4 Rental, Residential Development
• The current inclusionary requirement is 12.5 percent, targeting a blend of Very Low, Low, and Moderate-income households. The FY 2023-24 in-lieu fee is $241,131 per affordable unit.
• Because the current requirement challenges the feasibility of new development, EPS recommends lowering the requirement to 10 percent, and focusing on Low-income households. At this level, the in-lieu fee that would be equivalent to the subsidy is $236,915 per affordable unit, or $9.17 per market rate square foot.
• EPS recommends a fee of $9 per market rate square foot ($232,440 per affordable unit), consistent with the recommended Ownership fee. The recommended option eases program administration and improves feasibility relative to the current requirement, although some projects in this current development cost and interest rate environment may still face challenges.
Ownership, Residential Development
• The current inclusionary requirement is 12.5 percent, targeting a blend of Low and Moderate-income households. The FY 2023-24 in-lieu fee is $241,131 per affordable unit.
• The recommended option maintains the 12.5 percent inclusionary requirement and the current Low and Moderate-income split. The in-lieu fee per affordable unit that would be equivalent to this subsidy is $624,479, which would be a nearly threefold increase in the fee. • EPS recommends a fee of $9 per market rate square foot ($401,333 per affordable unit), consistent with the recommended Rental fee. With this recommendation, the City is incentivizing developers of ownership product to choose the fee option, which, because of the City’s must-build requirement, will result in new inclusionary units and in-lieu fee revenue the City can use to support the production of units affordable to lowerincome households to help satisfy the Regional Housing Needs Allocation.
Even with the increase in the in-lieu fee, the recommended option maintains the feasibility of new ownership development. Of the ownership prototypes, condominium development displays the lowest profit margins and mid-density townhome-style development displays the highest profit margins.
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5 Table 1 Recommended Inclusionary Requirements and In-Lieu Fees for Ownership and Rental
Overall
Very Low
Income
(50% AMI)
Low
Income
(70-80% AMI) [1]
Moderate
Income
(110% AMI)
Fee per
Market
Rate Sq. Ft.
Equivalent
Fee per
Affordable
Unit
Rental 10.0% 0% 100% 0% $9.00 $232,440
Ownership 12.5% 0% 40% 60% $9.00 $401,333
Source: Economic & Planning Systems, Inc.
[1] Consistent with Dublin's Inclusionary Guidelines, Low Income households are defined at 80% AMI for rental developments, and 70% AMI for ownership developments.
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REPORT: Feasibility Analysis of Inclusionary Housing Requirements in Dublin 6 2. Background and Local Market Context
Inclusionary housing programs are only able to deliver affordable units if new market-rate residential development is occurring and can achieve prices or rents that support the additional costs of including affordable units. Therefore, before evaluating the development feasibility of updates to the City’s inclusionary housing program, EPS evaluated the local residential market activity. This evaluation provides a sense of the need, and the types of market-rate development that is occurring along with the prevailing sales prices and rents of new residential development.
Housing Market Conditions and
Challenges
Dublin’s IZO was first adopted in 2002, meaning that it has been more than twenty years since the program was comprehensively evaluated, although the inlieu fee has been updated each year accounting for inflation. Since 2002, the City of Dublin has undergone significant changes in its housing landscape, and in general, the Bay Area housing market has evolved as well. According to an analysis by the San Francisco Chronicle, Dublin was California’s fastest growing city between 2010 and 2020, increasing its population by 58 percent, or 26,600 residents, over the last decade. Much of that increase can be attributed to the City’s ability to add new housing units to accommodate that growth; in that time frame, Dublin permitted nearly 8,300 housing units, the highest of any Bay Area city.2
In the last decade, construction costs have also been on the rise, affecting the profit yields that developers are able to achieve. Figure 1 shows a price index of construction costs, multifamily rents, and single-family home sales since 2002.
The costs of construction have outpaced multifamily rents in Dublin since 2002 and the gap between the two widened over time, constraining the feasibility of multifamily development. However, since 2014, demand for single-family homes in Dublin created a sharp uptick in home values that have been able to bear the additional costs and generate higher profit margins for single-family home developers. This demonstrates how inclusionary requirements and in-lieu fees established twenty years ago have fallen out of sync with current market conditions and development costs.
2 https://www.sfchronicle.com/bayarea/article/dublin-population-growing-17781799.php 787
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7 Figure 1 Price Index of Construction Costs, Multifamily Rents, and SingleFamily Home Sales in Dublin Dublin’s Strategic Plan Objectives
Dublin’s most recent Two-Year Strategic Plan, adopted in 2022, outlines the City’s goals and Strategy Areas, one of which is Housing Affordability.3 Within this Strategy, the city has established six objectives, three of which relate to the structuring and implementation of the inclusionary zoning ordinance:
• 2B. Ensure the City’s inclusionary zoning regulations incentivize targeted housing production.
• 2C. Prepare a nexus study to evaluate the affordable housing commercial linkage fee and affordable housing in-lieu fee for for-sale and rental housing.
• 2D. Facilitate the production of affordable housing for lower-income seniors, workforce, and special needs households.
An update to the inclusionary zoning ordinance policy and in-lieu fee directly addresses 2B and 2C, while the implementation of an updated inclusionary program to produce on-site affordable units would meet strategy 2D.
Regional Housing Needs Allocation
The State of California requires every jurisdiction to adequately plan for its community’s housing needs, as specified by the Regional Housing Needs 3 https://dublin.ca.gov/DocumentCenter/View/31668/2022-24-Strategic-Plan?bidId= 788
REPORT: Feasibility Analysis of Inclusionary Housing Requirements in Dublin 8 Allocation (RHNA), which determines the amount of housing units needed for each jurisdiction by income category. Currently, jurisdictions in the Association of Bay Area Governments (ABAG) have adopted or are working towards adopting their 6th Cycle (2023 through 2031) Housing Elements to reflect policies and strategies required to meet current RHNA numbers. The City of Dublin adopted its 6th Cycle Housing Element in November 2022.
Through the RHNA process, Dublin has an allocation of 3,719 total units. Table 2 displays the RHNA allocation breakdown by income levels. The allocation is concentrated in affordable units, with 61 percent of the total units at Moderate or below. Affordable housing programs like the inclusionary zoning ordinance can help cities achieve their RHNA numbers in the lower-income affordability categories.
Table 2 RHNA Allocation for Dublin
Household Incomes and Affordability
HCD Income Limits
Affordable rents and sale prices for below-market-rate units are based on maximum housing costs affordable to households at various household income levels. Income levels in the County of Alameda are set by the California Department of Housing and Community Development (HCD) on an annual basis.
According to the 2023 HCD Income Limits for Alameda County (Table 3), the Area Median Income (AMI) in Alameda County is defined at $133,100 for a household of three and $147,900 for a household of four.
Affordablility Category Units Percentage
Very Low Income 1,085 29.2%
Low Income 625 16.8%
Moderate Income 560 15.1%
Above Moderate 1,449 39.0%
Total 3,719 100.0%
Source: ABAG; Economic & Planning Systems, Inc.
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9 Table 3 Alameda County 2023 Income Limits by Persons in Household 1 2 3 4 5 6 7 8
Acutely Low Income 0% - 15% $15,550 $17,750 $20,000 $22,200 $24,000 $25,750 $27,550 $29,300 Extremely Low Income 30% $31,050 $35,500 $39,950 $44,350 $47,900 $51,450 $55,000 $58,550 Very Low Income 50% $51,800 $59,200 $66,600 $73,950 $79,900 $85,800 $91,700 $97,650 Low Income 80% $78,550 $89,750 $100,950 $113,150 $121,150 $130,100 $139,100 $148,050 Median Income 100% $103,550 $118,300 $133,100 $147,900 $159,750 $171,550 $183,400 $195,250 Moderate Income 120% $124,250 $142,000 $159,750 $177,500 $191,700 $205,900 $220,100 $234,300 Sources: CA Department of Housing and Community Development; Economic & Planning Systems, Inc.
Affordability Category Maximum Percentage
of County Median
Number of Persons in Household
790
Economic & Planning Systems
10 3. Methodology and Assumptions
In an inclusionary program, developers are required to set aside a portion of their units for lower-income households. When a developer builds the affordable units on-site, the project’s development costs are not significantly affected. It costs approximately the same to build a market-rate unit as an affordable unit.
However, the revenue the developer can expect from the affordable units is less than the revenue from the market-rate units. The developer is, in effect, subsidizing the development of the affordable units. The subsidy is greater for units affordable to Very Low-income households than it is for Low-income households and Moderate-income households.
In some cases, the developer may opt to pay a fee in lieu of providing the units on site. When a developer pays an in-lieu fee, all the units are sold or rented as market-rate units, so the revenue potential is not affected. However, the development costs are affected by the amount of the in-lieu fee, which is typically paid at the time of building permit issuance or certificate of occupancy.
In Dublin, the Inclusionary Zoning Ordinance includes a “must build” requirement of 60 percent, meaning that a developer who chooses to pay the in-lieu fee must still provide 60 percent of the inclusionary requirement on-site, but is allowed to “fee out” on the remaining 40 percent.
Return Metrics and Feasibility
Thresholds
The assessment of financial feasibility for real estate development products is based on calculating financial return metrics and comparing them against typical industry target thresholds. In the case of residential development, relevant return metrics are based on comparing total project revenues to total project development costs.
This analysis established a feasibility threshold based on two standard return metrics used by real estate developers. These return metrics reflect the value of the investment in a project, and are a critical element in informing a developer’s “go/no-go” decision to proceed with development:
• For ownership, or for sale housing products (typically single family detached and attached homes, including townhomes and condominiums), the feasibility threshold is based on the return metric of “profit margin,” calculated as the percentage by which total project value exceeds total project cost. Based on EPS research and feedback from the developer community, the analysis 791
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11 assumes that developers in Dublin and the surrounding region will require at least a 15 percent profit margin on for-sale development projects. Therefore, any project attaining a profit margin at or above 15 percent would be considered feasible in this analysis.
• For rental housing products (typically, multifamily apartments), the feasibility threshold is based on the return metric of “yield on cost,” calculated by dividing the annual net operating income (NOI) by the total costs of development.4 Based on EPS research and experience, the analysis assumes that developers in Dublin and the surrounding region will require a yield on cost of at least 5.5 percent.
It is important to note that these return metrics do not account for the time value of money and are not based on any assumption regarding project timeline. EPS assumptions for prototype revenues and costs used to calculate the return metrics are detailed in the following sections.
Product Prototypes
The prototype residential products used in the feasibility analysis were informed by EPS research on the local housing market. Research included review of recent developments and proposed projects, discussions with developers active in the region, and discussions with City staff. The characteristics for the prototype development products are summarized in Table 4. They include one rental prototype – multifamily apartments - and three for-sale prototypes – condominiums, townhomes, and single-family detached homes. A recently constructed example of each prototype specific to the City of Dublin is also given.
The critical differentiator between the for-sale prototypes is the density at which they are built and how parking is provided, with the condominium product assumed to be built at a higher density (45 units per acre) than the townhome product (20 units per acre) and with wrap-around style parking. The townhome product is assumed to include an attached, “tuck-under” garage. The single-family detached product is assumed to be developed at an even lower density (10 units per acre) and with an attached garage. The analysis also assumes that the prototypical townhome is smaller than the prototypical single-family home. In some cases, there may be additional design factors – such as whether a unit is detached or attached – that are used to define a project as a townhome or singlefamily home. This analysis does not account for those types of factors, only differentiating the two prototypes based on density, parking, and unit size.
The unit characteristics for each prototype are meant to represent average unit sizes, with the resulting analysis demonstrating feasibility for an average 4 Net operating income reflects total rent collected minus operating costs. 792
REPORT: Feasibility Analysis of Inclusionary Housing Requirements in Dublin 12 residential project. The findings of this analysis assume that the unique unit mix of any particular project will, in aggregate, conform to these average unit sizes.
However, any specific project will have its own cost and revenue factors that may be impacted in part by its unit mix.
Table 4 Prototype Residential Products
Development Cost Assumptions
Housing development costs categories include land acquisition, site preparation, hard costs (e.g., construction labor and materials), and indirect or “soft” costs (e.g., architecture, entitlement, marketing, etc.). For multifamily projects that include a structured garage, EPS also defines parking costs per unit as a separate line item. Data from recent developments and land transactions in the local market have been combined with information from interviews with various housing developers to inform the development cost assumptions used in this analysis. Table 5, Table 6, Table 7, and Table 8 below detail the cost assumptions and estimated costs per unit for the apartment, condominium, townhome, and single-family home product prototypes, respectively.
Item
Single Family
Detached
Single Family
Attached Townhome
Multifamily Attached
Condominium
Multifamily Attached
Rental
Tenure Ownership Ownership Ownership Rental
Building Type Detached Attached Multifamily Multifamily Density (units/acre) 10 units/acre 20 units/acre 45 units/acre 65 units/acre Unit Square Feet 2,400 sq. ft. 2,000 sq. ft. 1,500 sq. ft. 1,100 sq. ft.
Unit Bedrooms 4 per unit 3 per unit 2 per unit 2 per unit Amount of Parking 2 per unit 2 per unit 1.5 per unit 1.5 per unit Parking Type Attached Garage Attached Garage Wrap Wrap
Dublin Project Example Lombard at Boulevard Apex Townhomes Elan at Dublin Station Avalon West Dublin Source: City of Dublin; Costar; EPS discussions w ith local active developers 793
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13 Table 5 Market-Rate Rental Apartment Product Prototype Unit Cost Assumptions
Item Per Unit
Development Prototype
Tenure
Parcel Size 1 acre
Density 65 units/acre
Unit Size 1,100 sq.ft.
Number of Bedrooms 2.0 per unit
Amount of Parking 1.5 per unit
Development Costs
Land Costs $5,000,000 per acre $76,923
Site Preparation $10 per sq.ft. of land $6,702
Subtotal, Land $83,625
Direct Construction Costs $325 per sq.ft. $357,500
Parking Costs $40,000 per space, wrap-style $60,000
Builder Fee 0.0% of direct costs, incl. parking $0
Subtotal, Direct Costs $417,500
Development Impact Fees [1] $28,671 per unit $28,671
Indirect Costs [2] 20% of direct costs $83,500
Subtotal, Indirect Costs 27% of direct costs $112,171
Total Construction Costs $613,295
Developer Profit Threshold 5.5% yield on cost
Sources: Costar; Marshall & Sw ift; EPS discussions w ith local active developers [1] Development impact fee total does not include current affordable housing inclusionary fee requirements [2] Includes costs for architecture and engineering; entitlement and fees; project management; appraisal and market study; marketing, commissions, and general administration; financing and charges; insurance; and contingency.
Multifamily Apartment
Assumptions
Rental
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REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin 14 Table 6 Market-Rate Ownership Condominium Product Prototype Unit Cost Assumptions
Item Per Unit
Development Prototype
Tenure
Parcel Size 1 acre
Density 45 units/acre
Unit Size 1,500 sq.ft.
Number of Bedrooms 2.0 per unit
Amount of Parking 1.5 per unit
Development Costs
Land Costs $4,000,000 per acre $88,889
Site Preparation $10 per sq.ft. of land $9,680
Subtotal, Land $98,569
Direct Construction Costs $325 per sq.ft. $487,500
Parking Costs $40,000 per space, wrap-style $60,000
Builder Fee 3.0% of direct costs, incl. parking $16,425 Subtotal, Direct Costs $563,925
Development Impact Fees [1] $28,671 per unit $28,671
Indirect Costs [2] 20% of direct costs $112,785
Subtotal, Indirect Costs 25% of direct costs $141,456
Total Construction Costs $803,950
Developer Profit Threshold 15% of total development costs $120,592 Total Development Costs $924,542
Sources: Costar; Marshall & Sw ift; EPS discussions w ith local active developers [1] Development impact fee total does not include current affordable housing inclusionary fee requirements [2] Includes costs for architecture and engineering; entitlement and fees; project management; appraisal and market study; marketing, commissions, and general administration; financing and charges; insurance; and contingency.
Multifamily Attached Condo
Assumptions
Ownership
795
Economic & Planning Systems
15 Table 7 Market-Rate Ownership Townhome Product Prototype Unit Cost Assumptions
Item Per Unit
Development Prototype
Tenure
Parcel Size 1 acre
Density 20 units/acre
Unit Size 2,000 sq.ft.
Number of Bedrooms 3.0 per unit
Amount of Parking 2.0 per unit
Development Costs
Land Costs $3,000,000 per acre $150,000
Site Preparation $10 per sq.ft. of land $21,780
Subtotal, Land $171,780
Direct Construction Costs $250 per sq.ft. $500,000
Parking Costs $0 per space $0
Builder Fee 3.0% of direct const. costs $15,000
Subtotal, Direct Costs $515,000
Development Impact Fees [1] $45,195 per unit $45,195
Indirect Costs [2] 20% of direct costs $103,000
Subtotal, Indirect Costs 29% of direct costs $148,195
Total Construction Costs $834,975
Developer Profit Threshold 15% of total development
costs
$125,246
Total Development Costs $960,221
Sources: Costar; Marshall & Sw ift; EPS discussions w ith local active developers [1] Development impact fee total does not include current affordable housing inclusionary fee requirements [2] Includes costs for architecture and engineering; entitlement and fees; project management; appraisal and market study; marketing, commissions, and general administration; financing and charges; insurance; and contingency.
Single Family Attached Townhome
Assumptions
Ownership
796
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin 16 Table 8 Market-Rate Ownership Single Family Product Prototype Unit Cost Assumptions
Item Per Unit
Development Prototype
Tenure
Parcel Size 1 acre
Density 10 units/acre
Unit Size 2,400 sq.ft.
Number of Bedrooms 4.0 per unit
Amount of Parking 2.0 per unit
Development Costs
Land Costs $3,000,000 per acre $300,000
Site Preparation $10 per sq.ft. of land $43,560
Subtotal, Land $343,560
Direct Construction Costs $200 per bldg. sq.ft. $480,000 Parking Costs $0 per space $0
Builder Fee 3.0% of direct const. costs $14,400
Subtotal, Direct Costs $494,400
Development Impact Fees [1] $52,106 per unit $52,106
Indirect Costs [2] 20% of direct costs $98,880
Subtotal, Indirect Costs 31% of direct costs $150,986
Total Construction Costs $988,946
Developer Profit Threshold 15% of total development
costs
$148,342
Total Development Costs $1,137,288
Sources: Costar; Marshall & Sw ift; EPS discussions w ith local active developers [1] Development impact fee total does not include current affordable housing inclusionary fee requirements [2] Includes costs for architecture and engineering; entitlement and fees; project management; appraisal and market study; marketing, commissions, and general administration; financing and charges; insurance; and contingency.
Single Family Detached
Assumptions
Ownership
797
Economic & Planning Systems
17 Revenue and Value Assumptions
Market-Rate Rents
For rental apartments, the metric used to determine feasibility is yield-on-cost, which is calculated as annual net operating income (NOI) divided by development costs. Annual NOI is calculated as annual rent minus annual operating expenses, which are assumed at $10,000 per market-rate unit in this analysis. Current market-rate rents for recently constructed product are reported by CoStar to be $3.34 per square foot, which equates to $3,674 per month for a 2-bedroom, 1,100 square-foot apartment.
Market-Rate Sales Prices
For the for-sale prototypes, the value of the unit is equal to the estimated sale price. The sale prices for each prototype are established based on market research and conversations with local developers. Current sales prices for newly constructed condominium units, estimated from Redfin, are reported to be $980,000 per unit; townhome units are valued at $1.14 million per unit, and new single family detached homes are selling for approximately $1.39 million.
Affordable Housing Values
In general, Very Low-income households are defined as those earning up to 50 percent of AMI. Low-income households earn up to 80 percent AMI and Moderateincome households earn up to 120 percent of AMI, adjusted for household size.
Dublin chooses to define Low-income for ownership projects at up to 70 percent AMI and Moderate-income for both rental and ownership projects at up to 110 percent AMI. This differs slightly from the percentage thresholds defined by HCD5 but acknowledges that some Low-income households will earn less than 80 percent AMI and some Moderate-income households will earn less than 120 percent AMI.
Based on the maximum household income at each income level, as defined in Dublin, EPS calculated the maximum spending towards housing costs affordable at each income level. Consistent with the City’s published inclusionary zoning ordinance guidelines, the analysis assumes that rental households spend 30 percent of their gross annual income on total housing costs and for-sale households spending 35 percent of gross annual income. For rental units, housing costs include rent and utilities. For for-sale units, housing costs include mortgage and interest payments, insurance, property taxes, and Homeowners Association (HOA) fees. To calculate the maximum affordable sale price for these for-sale units, EPS estimated other housing costs based on assumptions given in the City’s inclusionary program guidelines and subtracted it from 35 percent of gross annual income to obtain the maximum income available for a mortgage payment. This 5 See HCD State Income Limits 2023, https://www.hcd.ca.gov/sites/default/files/docs/grantsand-funding/income-limits-2023.pdf 798
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin 18 mortgage payment was converted into an affordable home sale price assuming a 5 percent down payment and a 30-year mortgage with a fixed interest rate of 5 percent.
Table 9 indicates the maximum annual incomes for County households associated with each income category for the associated household size, as well as the affordable rents and sale prices associated with each category. 799
Economic & Planning Systems
19 Table 9 Maximum Unit Values for Affordable Housing in Alameda County Item
Very Low
Income
(50% AMI)
Low
Income
(70-80% AMI) [9]
Moderate
Income
(110% AMI)
Rental Multifamily Apartments
Maximum Household Income [1] $66,600 $100,950 $146,410
Income Available for Housing Costs/Year [2] $16,014 $26,319 $39,957 (less) Operating Expenses per Unit/Year [3] ($7,500) ($7,500) ($10,000) Net Operating Income $8,514 $18,819 $29,957
Capitalization Rate [4] 5% 5% 5%
Unit Value [5] $170,280 $376,380 $599,140
Ownership Condominiums
Household Income [1] $66,600 $93,170 $146,410
Income Available for Housing Costs/Year [6] $23,310 $32,610 $51,244 Supportable Mortgage [7] $179,155 $287,030 $503,191
Supportable Home Price [8] $188,600 $302,100 $529,700
Ownership Townhomes
Household Income [1] $73,950 $103,530 $162,690
Income Available for Housing Costs/Year [6] $25,883 $36,236 $56,942 Supportable Mortgage [7] $193,056 $313,154 $553,350
Supportable Home Price [8] $203,200 $329,600 $582,500
Ownership Single Family Detached
Household Income [1] $79,900 $111,825 $175,725
Income Available for Housing Costs/Year [6] $27,965 $39,139 $61,504 Supportable Mortgage [7] $206,219 $335,837 $595,278
Affordable Home Price [8] $217,100 $353,500 $626,600
[7] Assumes a 30-year mortgage and a fixed 5% interest rate. [8] Assumes a 5% dow n payment, consistent w ith the City of Dublin's Inclusionary guidelines. [9] Consistent w ith Dublin's Inclusionary Guidelines, Low Income households are defined at 80% AMI for rental developments, and 70% AMI for ow nership developments.
[1] Reflects 2023 HCD Income Limits for a three-person household for apartments and condominiums, a four-person household for tow nhomes, and a five-person household for single-family homes. [2] Assumes that no more than 30% of a household's income should be spent on housing costs for housing to be considered affordable.
[3] Operating expenses are generally based on EPS feasibility studies in the region and are inclusive of utility costs; units at or below 80% of AMI are assumed to be built as non-profit and are therefore exempt from property taxes. Property taxes are assumed to comprise a share of the operating expenses for the moderate income category. [4] The capitalization rate is used to determine the current value of a property based on estimated future operating income, and is typically a measure of estimated operating risk. Obtained for multifamily developments in Dublin and the surrounding region from CoStar.
[5] The unit value is determined by dividing the net operating income by the capitalization rate. [6] Based on Dublin's Inclusionary Guidelines for calculating income, this reflects that total housing costs should not exceed 35% of income, and takes into account other housing-related costs, such as taxes, insurance, and HOA fees. 800
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin 20 4. Feasibility Analysis
Market -Rate Development
The first step in assessing feasible inclusionary housing requirements for Dublin involved evaluating whether 100 percent market-rate projects reflecting the defined product prototypes are financially feasible and then evaluating the financial feasibility of the current inclusionary requirements before considering updates to the inclusionary program.
Table 10 illustrates yield-on-cost or profit margin for each product prototype assuming current market rate prices, based on the data shown above in Table 5 through Table 8. As shown in Table 10, the analysis suggests that the development of all ownership prototypes (condominium, townhome, and singlefamily home) is feasible given the current relationship of development costs and market rate rents and sale prices.
The rental prototype is marginally feasible under the given assumptions, but rising construction costs compared to rents have made the economics of this housing type challenging. By comparison, demand for single-family housing has led to high sales prices that generate profits far exceeding the 15 percent profit margins threshold.
It is important to note that this analysis only reflects an average prototypical project and any specific project may have its own cost and revenue factors that may be impacted in part by its unit mix. There are many factors that can impact the financial feasibility of any particular development project. For example, if a project can acquire land at a lower price or build at a higher density or provide less parking than what is represented in the above assumptions or identify lowercost financing, the project economics may improve. Similarly, a developer may find that there is sufficient market demand to achieve rents or sale prices higher than those assumed in this analysis.
801
Economic & Planning Systems
21 Table 10 Feasibility of Market-Rate Product Prototypes Item
Feasibility
Threshold Results
Multifamily Apartment
Development Costs Per Unit $613,295
Net Operating Income Per Unit $34,088
Yield on Cost 5.5% 5.6%
Multifamily Attached Condo
Development Costs Per Unit $803,950
Average Sale Price $980,000
Profit $176,050
Profit Margin 15% 22%
Single Family Attached Townhome
Development Costs Per Unit $834,975
Average Sale Price $1,140,000
Profit $305,025
Profit Margin 15% 37%
Single Family Detached
Development Costs Per Unit $988,946
Average Sale Price $1,390,000
Profit $401,054
Profit Margin 15% 41%
Source: Economic & Planning Systems
802
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin 22 Current Inclusionary Program
Next, EPS tested the feasibility of the current inclusionary program and the two options that a developer can pursue to meet the inclusionary requirement. Under the current requirements, which apply to both rental and ownership developments of 20 units or more, 12.5 percent of the total units must be set aside as affordable. Any fractional amount of 0.5 units or less resulting from this calculation are discarded (i.e., rounded down), while fractional amounts greater than 0.5 must be rounded up. As an alternative to building the full 12.5 percent of units on-site, the developer may pay an in-lieu fee covering up to 40 percent of the inclusionary obligation and build the remaining 60 percent.
On-Site Build Option
The full on-site requirement is a 12.5 percent affordability requirement, divided between Very Low Income, Low Income, and Moderate-Income levels. Table 11 describes the income level allocations for rental and ownership projects.
Table 11 Required Affordable Units by Income Category
Under these guidelines, a 100-unit project would be required to provide 12 BMR units (rounded down from 12.5). For rental units, there would be 6 Moderateincome units, 2 Low-income units, and 4 Very Low-income units. For ownership units, there would be 7 Moderate-income units and 5 Low-income units.
Must-Build and Fee Payment Option
As an alternative to on-site construction of the full inclusionary requirement, the developer may pay in-lieu fees on up to 40 percent of the requirement and build the remaining 60 percent. In-lieu fees, which are a common alternative means of complying with an inclusionary requirement, are typically calculated based on the financial subsidy needed to support the development of affordable units that are not being provided on-site. The fee revenues are collected in a dedicated fund that can be utilized to support the production and preservation of affordable units in the City.
Income Level
Current
Overall
Requirement
Very Low
Income
(50% AMI)
Low
Income
(70-80% AMI) [1]
Moderate
Income
(110% AMI)
Rental 12.5% 30% 20% 50%
Ownership 12.5% 40% 60%
Source: City of Dublin Guidelines to the Inclusionary Zoning Regulations Ordinance [1] Consistent w ith Dublin's Inclusionary Guidelines, Low Income households are defined at 80% AMI for rental developments, and 70% AMI for ow nership developments. 803
Economic & Planning Systems
23 Dublin’s current in-lieu fee is charged on a per affordable unit basis and adjusted for inflation annually based on either (a) the Bay Area Urban Consumer Price Index as of February in each year, or (b) the HUD Fair Market Rent limits for the Oakland Primary Metropolitan Statistical Area, whichever represents the greater percentage change amount. As of July 2023, the in-lieu fee is $241,131 per affordable unit.
In a hypothetical 100-unit project where the inclusionary obligation is 12 BMR units, the developer could pay an in-lieu fee on 5 units (rounded up from 4.8) and provide 7 units (rounded down from 7.2) as affordable units. The total in-lieu fee payment would be $1,205,655. The 7 units are distributed across income categories as described in Table 11. The same rounding rules on fractional units apply in calculating the must-build portion. For rental, this results in 4 Moderateincome units, 1 Low-income unit, and 2 Very Low-income units.6 For ownership, there would be 4 Moderate-income units and 3 Low-income.
Table 12 shows the yield-on-cost or profit margins obtained in both options for each of the four prototypes, given the additional costs that the inclusionary requirements add to the project in terms of rent subsidies or in-lieu fee payments.
For the on-site build, for-sale single family units remain very feasible in excess of the feasibility threshold, but the multifamily condo prototype falls just below, at 14 percent. Choosing the in-lieu fee option increases the feasibility for the singlefamily prototypes. This is because given current construction costs and singlefamily home values, the current in-lieu fee of $241,131 no longer aligns with the subsidy, such that the paying the fee costs less for the developer providing the affordable unit.
6 As directed by the City’s IZO guidelines, if the allocation calculation and rounding rules result in one less unit than the total required, one additional unit is assigned to the lowest income level with the fractional amount closest to or at 0.5. In this example, the Moderate-Income fraction is
3.5, so the extra unit is assigned as Moderate and brings the allocation up to 4. 804
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin 24 Table 12 Feasibility of Current Inclusionary Program on Product Prototypes On- Site Inclusionary Requirement
Alignment
As described above, it is best practice for an inclusionary housing program to have an on-site inclusionary requirement that aligns with the cost of the in-lieu fee. Stated another way, the cost to the developer of paying the in-lieu fee should be approximately equal to the subsidy that a project is providing when some portion of units are rented or sold at below-market-rates, given that the value of those units is typically less than the cost to build them. This subsidy, also called the affordability gap, is the difference between the cost of building units that will be BMR (equal to the cost of building market-rate units, as detailed in Table 5 through Table 8) and their value based on maximum affordable rents or sale prices (as detailed in Table 9). However, some cities make a policy decision to incentivize the payment of fees over the production of on-site units (or vice versa). In these circumstances, a city’s on-site requirement and the associated inlieu fee may be intentionally different from a development cost perspective.
The subsidy required for each product type across the three affordable income levels (Very Low, Low, and Moderate-income) is shown below in Table 13. It is worth noting that these affordability gaps represent the cost to a developer of providing BMR units on-site as part of a larger market-rate project. The subsidy required for building BMR units as part of a 100 percent affordable project may be different, as the costs for building an affordable housing project can often differ from the costs for building a market-rate housing project.
Item On-Site Build Must-Build and Fee
Multifamily Apartment
Yield on Cost 5.5% 5.30% 5.32%
Multifamily Attached Condo
Profit Margin 15% 14% 15%
Single Family Attached Townhome
Profit Margin 15% 27% 29%
Single Family Detached
Profit Margin 15% 30% 33%
Source: Economic & Planning Systems
Feasibility
Threshold Current Program Feasibility
805
Economic & Planning Systems
25 Table 13 Subsidy Required for Below-Market-Rate Units by Income Level Item
Very Low
Income
(50% AMI)
Low
Income
(70-80% AMI) [1]
Moderate
Income
(110% AMI)
Rental Multifamily Apartments
Development Costs Per Unit $613,295 $613,295 $613,295
Development Value Per Unit $170,280 $376,380 $599,140
Affordability Gap ($443,015) ($236,915) ($14,155)
Ownership Condominiums
Development Costs Per Unit $803,950 $803,950 $803,950
Development Value Per Unit $188,600 $302,100 $529,700
Affordability Gap ($615,350) ($501,850) ($274,250)
Ownership Townhomes
Development Costs Per Unit $960,221 $960,221 $960,221
Development Value Per Unit $203,200 $329,600 $582,500
Affordability Gap ($757,021) ($630,621) ($377,721)
Ownership Single Family Detached
Development Costs Per Unit $1,137,288 $1,137,288 $1,137,288 Development Value Per Unit $217,100 $353,500 $626,600
Affordability Gap ($920,188) ($783,788) ($510,688)
Source: Economic & Planning Systems
[1] Consistent w ith Dublin's Inclusionary Guidelines, Low Income households are defined at 80% AMI for rental developments, and 70% AMI for ow nership developments. 806
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin 26 5. Recommendations
In selecting appropriate inclusionary requirements and fee level, a city may consider several tradeoffs or policy preferences. Factors like development feasibility, affordable housing and economic development goals, political viability, and a desire to stay competitive with neighboring cities and their housing markets could all be considered. For example, should the City wish to move to a higher inclusionary level, they would need to raise the in-lieu fee or lean towards more Moderate-income housing in order to maintain feasibility. Conversely, a policy decision to target more Very Low or Low-income or bring down the in-lieu fee may require lowering the overall on-site requirement. In consideration of these tradeoffs, the following recommendations in Table 14 were developed with policy input from City staff and the City Council.7
Given the differences in development economics between the rental and ownership housing markets, EPS recommends distinct inclusionary requirements for the two tenures. Furthermore, each housing type attracts different income cohorts and the fee survey underscores that rental developments are more suitable to target lower-income cohorts.
For Ownership, it is recommended to maintain the current inclusionary requirement of 12.5 percent, split between Low and Moderate. For Rental, given that current market conditions that have made it more challenging to build feasible multifamily rental developments, EPS recommends lowering the requirement to 10 percent of the total project units and focusing exclusively on the Low-income cohort.
Table 14 Recommended Inclusionary Program
7 The City Council discussed updates to the inclusionary program on August 15, 2023 and September 19, 2023.
Overall
Very Low
Income
(50% AMI)
Low
Income
(70-80% AMI) [1]
Moderate
Income
(110% AMI)
Fee per
Market
Rate Sq. Ft.
Equivalent
Fee per
Affordable
Unit
Rental 10.0% 0% 100% 0% $9.00 $232,440
Ownership 12.5% 0% 40% 60% $9.00 $401,333
Source: Economic & Planning Systems, Inc.
[1] Consistent with Dublin's Inclusionary Guidelines, Low Income households are defined at 80% AMI for rental developments, and 70% AMI for ownership developments.
807
Economic & Planning Systems
27 In addition to the updated inclusionary requirement and in-lieu fee levels, EPS also recommends several other changes to the program structure across both rental and ownership product types. First, it is recommended to reduce the threshold project size to 10 units (from its current 20). This puts Dublin more in line with its peer jurisdictions, which have an average threshold level of 10 units, and ensures that the inclusionary requirements would apply to smaller infill projects that are expected to emerge in the future.
Second, EPS recommends charging in-lieu fees on a per market rate square foot basis, rather than per affordable unit. This approach encourages smaller, “affordable by design” development and aligns the fee structure with that of inclusionary programs in other cities, as well as with that of other development impact fees collected by the City.
The must-build component of the fee option has been helpful in ensuring that onsite inclusionary units are built, while collecting fee revenue at the same time.
EPS recommends maintaining this option for both rental and ownership at its current 60 percent must-build level.
Table 15 demonstrates the feasibility of the recommended inclusionary program and fee under both full on-site build and build-fee options. For the rental program, the reduction in overall inclusionary level improves yield-on-cost over the existing option. For the ownership inclusionary recommendation, the increased in-lieu fees result in slightly lower profit margins under the build-fee option compared to the current program, but the projects remain feasible above the 15 percent threshold level, so it would not deter development.
808
REPORT: Feasibility Analysis of Updated Inclusionary Housing Requirements in Dublin 28 Table 15 Feasibility of Recommended Inclusionary Program Item On-Site Build Must-Build and Fee
Rental - 10% Low
Multifamily Apartment
Yield on Cost 5.5% 5.31% 5.33%
Ownership - 12.5% Blended
Multifamily Attached Condo
Profit Margin 15% 14% 15%
Single Family Attached Townhome
Profit Margin 15% 27% 28%
Single Family Detached
Profit Margin 15% 30% 32%
Source: Economic & Planning Systems
Feasibility
Threshold Recommended Program Feasibility
809
APPENDIX A:
Survey of Inclusionary Requirements in
Select California Jurisdictions
810
Table A-1
Single Family Detached Ownership Inclusionary Requirements as of August 2023 City of Dublin Commercial Linkage Fee Study; EPS #231009 City
Overall
Inclusionary
Requirement Income Targets
Project Size
Threshold
Last
Ordinance
Update
Dublin 12.5% 60% Moderate
40% Low
20 units $241,131 per inclusionary unit 2002
Fremont 15% 66% Low
33% Moderate
All units $44.00 per sq. ft. 2021
Concord 10%
6%
Moderate
Low
5 units $9.00 per sq. ft. 2016
San Ramon 10% Moderate 10 units $15.70 per sq. ft. 2019 Hayward 10% Moderate 2 units $23.46 per sq. ft. 2018
Walnut Creek 10%
7%
6%
Moderate
Low
Very Low
All units $21.86 per sq. ft. 2017
Livermore 15% 50% Moderate
50% Low
11 units $39.94 per sq. ft. (under 11
units)
11+ units must build
2015
Danville 10% Moderate 10 units 2014
Pleasanton 20% Moderate
Low
Very Low
15 units $50,480 per dwelling unit 2000*
* Pleasanton's inclusionary zoning was first adopted in 2000 and the fee level was last revised in 2018.
In-Lieu Fee
market gap calculation
811
Table A-2
Multifamily Rental Inclusionary Requirements as of August 2023 City of Dublin Commercial Linkage Fee Study; EPS #231009 City
Overall
Inclusionary
Requirement Income Targets
Project Size
Threshold
Last
Ordinance
Update
Dublin 12.5% 50% Moderate
20% Low
30% Very Low
20 units $241,131 per inclusionary unit 2002
Fremont 10% Low All units $17.50 per sq. ft. 2021
Concord 10%
6%
Low
Very Low
15 units 2018
San Ramon 15% 50% Low
50% Very Low
5 units $14.63 per sq. ft. (under 10
units)
10+ units must build
2019
Hayward 6% 50% Low
50% Very Low
2 units $23.46 per sq. ft. 2018
Walnut Creek 10%
6%
Low
Very Low
All units $21.86 per sq. ft. 2017
Livermore 15% 50% Low
50% Very Low
11 units 2015
Danville 15% Moderate 10 units 2014
Pleasanton 15% Low
Very Low
10 units $50,480 per dwelling unit 2000*
* Pleasanton's inclusionary zoning was first adopted in 2000 and the fee level was last revised in 2018.
In-Lieu Fee
market gap calculation
In-lieu fee N/A; must build
Program is currently postponed;
update is underway.
812
Attachment 4
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 1 of 6 RESOLUTION NO. XX – 24
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING THE NON-RESIDENTIAL DEVELOPMENT AFFORDABLE HOUSING IMPACT FEES
WHEREAS, the Dublin City Council adopted Dublin Municipal Code Chapter 7.86 creating and establishing the authority for imposing and charging a Non-Residential Development Affordable Housing Impact Fee (“Fee”) to mitigate the impacts of non-residential development on the affordability of housing within the city; and
WHEREAS, the Inclusionary Zoning Regulations establish the authority to impose and charge a fee to mitigate the impacts of non-residential development on the affordability of housing in the City of Dublin; and
WHEREAS, on May 3, 2005, the City Council adopted Resolution 70-05 establishing a Non-Residential Development Affordable Housing Impact Fee; and WHEREAS, the City of Dublin Strategic Plan for Fiscal Years 22-23 includes Objective 2.b to ensure the City’s Inclusionary Zoning Regulations incentivize targeted housing production and Objective 2.c to evaluate the affordable housing in-lieu fee for ownership and rental housing; and WHEREAS, the City selected the consulting firm Economic and Planning Systems (EPS) through a competitive process to assist with preparing a nexus study to evaluate the NonResidential Development Affordable Housing Impact Fee, also known as the “Commercial Linkage Fee”; and
WHEREAS, EPS prepared the Commercial Linkage Fee Nexus Study, attached as Exhibit A, to evaluate the nexus for collecting Non-Residential Affordable Housing Impact Fees; and WHEREAS, on August 15, 2023, and September 19, 2023, the City Council received a report on the City’s Inclusionary Zoning Regulations, Affordable Housing In-Lieu Fee, and NonResidential Development Affordable Housing Impact Fee and directed Staff to prepare amendments to these programs; and
WHEREAS, pursuant to California Environmental Quality Act (CEQA) and CEQA Guidelines Section 15378 (b)(4), revising Affordable Housing In-Lieu Fees is not a project and, therefore, exempt from the requirements of CEQA; and
WHEREAS, a Staff Report, dated January 9, 2024, described and analyzed the proposed changes to the Non-Residential Development Affordable Housing Impact Fee; and WHEREAS, on January 9, 2024, the City Council held a properly noticed public hearing to consider the Non-Residential Development Affordable Housing Impact Fee, at which time all interested parties had the opportunity to be heard; and WHEREAS, on January 9, 2024, the City Council did hear and use independent judgment and considered all said reports, recommendations and testimony. 813
Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 2 of 6 NOW, THEREFORE, BE IT RESOLVED that in accordance with DMC Section 7.86.020.B, the Dublin City Council hereby sets for the following:
1. The purpose of the Fee is to implement the goals and objectives of the General Plan Housing Element and the Dublin Municipal Code Inclusionary Zoning Regulations Chapter 8.68; and
2. The Fee collected pursuant to this resolution shall be used to increase and maintain the supply of housing affordable to households of very low-, low-, and moderate-income; and
3. There is a reasonable relationship; between the need for affordable housing and the impacts of the types of development for which the corresponding fee is charged in that new non-residential development in the City of Dublin will result in additional persons who work in Dublin and generate or contribute to the need for affordable housing; and
4. There is a reasonable relationship between the use of the Fee and the impacts of nonresidential development as development which encourages new residents to move to the City who are not able to afford market rate housing; and
5. There is a reasonable relationship between the amount of the Fee and the cost of the affordable housing or portion thereof attributable to non-residential development in the City of Dublin in that the Fee is calculated based on the number of employees generated by specific land uses, the total amount it will cost to construct the affordable housing and the percentage by which non-residential development within the City of Dublin contributes to the need for the affordable housing; and
6. The cost estimates set forth in the Report are reasonable cost estimates for constructing the affordable housing, and the Fees expected to be generated by future non-residential development will not exceed the projected costs of construction the affordable housing; and
7. The method of allocating the Fee to non-residential development bears a fair and reasonable relationship to, and is roughly proportional to, each development’s burden on, and benefit from, the affordable housing to be funded by the Fee, in that the Fee is calculated based on the number of employees each particular non-residential development will generate.
BE IT FURTHER RESOLVED the Dublin City Council adopts the following:
1. Definitions
i. "Affordable Housing'' shall mean housing affordable to households of very low-, low-, and moderate-income as defined in Chapter 8.68 of the City of Dublin's Zoning Ordinance.
ii. “Commercial” shall me a business selling or providing merchandise, entertainment, and personal services to the general public. Examples include grocery stores, drug stores, clothing stores, general merchandise stores, beauty salons, and gas stations. Food and drinking places are also included in this category.
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Reso. No. XX-24, Item X.X, Adopted XX/XX/2024 Page 3 of 6 iii. "Development" shall mean the construction, alteration or addition of any building or structure within the City of Dublin.
iv. “Industrial” shall mean employers engaged in business activity with limited direct access from the general public; businesses focused on assembling, distributing, or repairing products; businesses focused on the testing and invention of new materials, products, or processes; and businesses engaged in the transformation of raw materials into consumable products.
Examples include auto repair, self-storage facilities, and food/beverage products manufacturing. Additionally, includes warehousing, and the storage and distribution of goods.
v. “Lodging” shall mean lodging or short-term accommodations for travelers, vacationers, and others in facilities known as hotels, motor hotels, resort hotels, and motels.
vi. "Research & Development/Office" shall mean any facilities devoted almost exclusively to research and development activities. Research & Development land uses include but are not limited to: biotechnology, technology and other products and services research facilities.
2. Non-Residential Development Affordable Housing Impact Fee Imposed i. A Non-Residential Development Affordable Housing Impact Fee ("Fee'') shall be charged and paid for non-residential buildings or structures within the City of Dublin when the building permit is issued for construction of such building or structure.
ii. A Fee shall be charged and paid for non-residential development for any alteration or addition to an existing building or structure if the alteration or addition is greater than 500 square feet and results in the building or structure's combined floor area being greater than 20,000 square feet. The Fee shall be charged only against that area of the alteration or addition that is over 20,000 square feet. Square footage shall be calculated as gross floor area, as defined in the Dublin Municipal Code, Chapter 8.08.
iii. Any non-residential use of land which is substantially similar to, but not included in the definitions of “Commercial”, “Industrial", “Lodging”, “Research & Development/Office" or "Retail" shall be allocated by the Community Development Director to one of the four categories, maintaining as much consistency as possible with the definitions of such terms.
i v . In the event that a non-residential use of land is not substantially similar to the definitions of, “Commercial”, “Industrial", “Lodging”, “Research & Development/Office" or "Retail" the Community Development Director may establish a new category and calculate the appropriate fee for such category based upon the assumptions as used in the Report. 815
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3. Amount of Fee
i. The Non-Residential Development Affordable Housing Impact Fee authorized by Municipal Code section 7.86.020 is hereby set as follows:
Land Use Fee per square foot
Commercial $1.35
Industrial $0.65
Lodging $0.57
Research & Development/Office $1.39
4. Exemptions from Fee
i. Any non-residential building or structure that is 20,000 square feet or less. Square footage shall be calculated as gross floor area, as defined in the Dublin Municipal Code, Chapter 8.08.
ii. Any alteration or addition to a non-residential building or structure, except when the alteration or addition results in an increase of greater than 500 square feet and the building or structure's combined floor area is greater than 20,000 square feet. The Fee shall be charged only against that area of the alteration or addition that is over 20,000 square feet. Square footage shall be calculated as gross floor area, as defined in the Dublin Municipal Code, Chapter 8.08.
iii. Any replacement or reconstruction of an existing non-residential building or structure that has been destroyed or demolished, provided that the building permit for new reconstruction is obtained within three (3) years after the building was destroyed or demolished and there is no change in the land use category (i.e., Commercial, Lodging, Research & Development/Office, or Industrial).
iv. Any non-residential building or structure constructed on property on which a building or structure was demolished for which the Fee has been paid within the prior 20-year period, provided the exemption shall be in the amount of the previously-paid Fee only, and the applicant shall pay any additional amount based on the then-current Fee. The new development shall not accrue any unused credit or reimbursement rights, in the event that the replacement project results in a lower Fee.
5. Use of Revenue
i. The revenue raised by payment of the Fee shall be placed in the Affordable Housing Fund. Separate and special accounts within the Affordable Housing Fund shall be used to account for such revenues, along with any interest earnings on each account. The revenues (and interest) shall be used for the following purposes:
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1. To increase the supply of housing affordable to households of very low-, low- and moderate-income; and
2. To pay for design, engineering, land acquisition and building, and to subsidize and rehabi1itate affordable housing and reasonable costs of outside consultant studies related thereto; and
3. To reimburse the City for affordable housing constructed by the City with funds from other sources including funds from other public entities, unless the City funds were obtained from grants or gifts intended by the grantor to be used for affordable housing; and
4. To pay for and/or reimburse costs of program development and ongoing administration of the Fee program.
ii. Fees in these accounts shall be expended only for affordable housing and only for the purpose for which the Fee was collected.
6. Periodic Review
i. During each fiscal year, the City Manager shall prepare a report for the City Council, pursuant to Government Code section 66001(b), determining how there is a reasonable relationship between the amount of the Fee and the cost of affordable housing, or portion of the affordable housing attributable to the development on which the Fee is imposed.
ii. During the fifth fiscal year following the first Non-residential Development Affordable Housing Impact Fee deposit into the Affordable Housing Fund, and every five years thereafter, the City Manager shall prepare a report for the City Council, pursuant to Government Code section 6600l(d), regarding the disposition of any unexpended portion of the Fund, whether committed or uncommitted. iii. During each fiscal year, the City Manager shall prepare a report for the City Council, pursuant to Government Code section 66006, identifying the balance of Fees in each account.
7. Automatic Fee Adjustments
i. The Non-Residential Affordable Housing Impact Fee shall be adjusted annually on the greater of the percentage change in either: a) the February ENR Building Cost Index for the San Francisco Bay Area; b) the February Bay Area Consumer Price Index for All Urban Consumers (CPI-U) ; or c) the United States Department of Housing and Urban Development (HUD) Fair Market Rent limits for the Oakland Primary Metropolitan Statistical Area that are in effect in February of each year. 817
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8. Administrative Guidelines
The City Council may, by resolution, adopt administrative guidelines to provide procedures for calculation and other administrative aspects of the Fee.
9. Effective Date
This resolution shall become effective on July 1, 2024 and applied to applicable building permits issued on or after that date.
10. Severability
The Fee and all portions of this resolution are severable. Should the Fee or other provision of this resolution be adjudged to be invalid and unenforceable, the remaining provisions shall be and continue to be fully effective, and the Fee shall be fully effective except as to that judged to be invalid.
BE IT FURTHER RESOLVED that this Resolution shall supersede and replace Resolution 70-05.
PASSED, APPROVED AND ADOPTED this 9th day of January 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Mayor
ATTEST:
_________________________________
City Clerk
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Report
Commercial Linkage Fee
Nexus Study
Prepared for:
City of Dublin
Prepared by:
Economic & Planning Systems, Inc.
October 27, 2023
EPS #231009
Attachment 5
Exhibit A to the Resolution
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Table of Contents
1. INTRODUCTION AND EXECUTIVE SUMMARY .................................................................... 1 Background............................................................................................................ 1 Regional Context .................................................................................................... 1 Summary of Maximum Nexus-Based Fees .................................................................. 2 Primary Sources ..................................................................................................... 2 Organization of Report............................................................................................. 1
2. REQUIRED NEXUS FINDINGS FOR FEE PROGRAM.............................................................. 2 Background............................................................................................................ 2 Authority ............................................................................................................... 2 Required Nexus Findings .......................................................................................... 2 Assembly Bill 602 Provisions..................................................................................... 3
3. METHODOLOGY AND FEE CALCULATION ........................................................................ 6 Land Use Categories................................................................................................ 6 Estimates of New Worker Households ........................................................................ 8 Housing Development Costs and Affordability Gap ..................................................... 13 Fee Calculation ..................................................................................................... 16 Appendices:
Appendix A: Survey of Commercial Linkage Fees in Other Jurisdictions Appendix B: Occupation Distribution by Employment Category Appendix C: Assumptions and Sources
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List of Tables
Table 1 Summary of Maximum Allowable Linkage Fees .................................................... 2 Table 2 Alameda County Income Category Definitions (2023) ........................................... 1 Table 3 Land Use Category Descriptions ........................................................................ 7 Table 4 Illustration of Employees' Household Income Calculation....................................... 9 Table 5 Income Distribution of Worker Households by Employment Category .................... 11 Table 6 Household Generation Rates by Employment Category ....................................... 12 Table 7 Affordability Gap Analysis – Rental Product Type................................................ 15 Table 8 Fee Calculation – Commercial ......................................................................... 17 Table 9 Fee Calculation – Lodging............................................................................... 18 Table 10 Fee Calculation – Office/R&D........................................................................... 19 Table 11 Fee Calculation – Industrial............................................................................. 20 821
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1. INTRODUCTION AND EXECUTIVE SUMMARY
Background
The City of Dublin is exploring various tools to advance the City’s affordable housing objectives, including a review of the City’s commercial linkage fee program. The City’s commercial linkage fee program was adopted in 2001 and last updated in 2005. Fees are adjusted each year according to the Consumer Price Index (CPI) for the San Francisco area. Other than these annual adjustments, the commercial linkage fee program has not been reevaluated since 2005.
A commercial linkage fee, also known as a jobs-housing linkage fee, is a type of development impact fee charged to developers of new, nonresidential properties to help support affordable housing for lower-wage workers. The conceptual underpinning of the fee is that new nonresidential development creates new jobs, and some of these jobs will pay wages below what is required for a worker to afford a market-rate housing unit in the City. If the cost to construct new housing units is higher than can be supported by the rents or home prices that workers can afford to pay, the difference is considered an “affordability gap.” The nexus (or reasonable relationship) established between the projected number of lower-wage jobs created by new development, and the subsidy needed to fund this “affordability gap” and support the creation and maintenance of units that are affordable to workers in these jobs is the basis for the fee.
Economic & Planning Systems (EPS) was retained to update the nexus analysis based on current economic and market factors. EPS has completed the required nexus analysis that quantifies the relationship between the growth in several nonresidential land uses (Commercial, Office/R&D, Lodging, and Industrial) and the demand for and cost of affordable housing for the local workforce.
Assessing an impact fee, such as a linkage fee, based on an established nexus is allowed pursuant to the State of California’s Mitigation Fee Act (California Government Code sections 66000 et seq.). As a development impact fee, this linkage fee can only be charged to new development and must be based on the impact of new development on the need for resources to subsidize the development of new affordable housing. Fee revenue may be collected by the City and used to subsidize the production or preservation of affordable units for lower-income households. Expenditures may include, but are not limited to, direct contributions to affordable housing developers, land acquisition, and funding local match requirements to leverage other funding opportunities. This is consistent with how the City has been using fee revenue collected since the fee’s adoption.
Regional Context
Commercial linkage fees are common across the state but most common in high-demand, highvalue jurisdictions with strong nonresidential development trends. Fees are often set well below the nexus-based maximums and typically range from $1 to $10 (or as high as $40 per square foot of office development in some Bay Area Peninsula jurisdictions). Appendix A exhibits examples of commercial linkage fees in other cities by land use category. 822
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Economic & Planning Systems, Inc. 2 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Summary of Maximum Nexus - Based Fees
Table 1 summarizes the maximum justifiable linkage fee by commercial land use category. The methodology used to establish the maximum justifiable fees is described in the subsequent chapters of this report. Please note that these maximum fees are supported by the nexus analysis but likely exceed levels that could feasibly be borne by new commercial developments.
The City has the opportunity to adopt fees up to these maximum levels but will want to consider other economic development and fiscal revenue factors. The ”adjusted maximum” fees identified on Table 1 reflect one rationale for adjusting the maximum fees downward, by discounting the maximum fees to reflect that 9.4 percent of people who work in Dublin also reside in Dublin, but still likely exceed feasible fee levels.1
Table 1 Summary of Maximum Allowable Linkage Fees
Primary Sources
To estimate the fee, EPS relied on numerous sources of data, including the following:
• JobsEQ, which is a software tool that compiles industry and wage occupation data for 2022 from a variety of sources, including U.S. Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, National Center of Education Statistics, and others. • State Department of Housing and Community Development (HCD) annual income limits for Alameda County, 2023 (see Table 2)
• U.S. Census Bureau American Community Survey (ACS) 5-Year Estimates (2017-2021) 1 As a separate deliverable to support City Council consideration of appropriate commercial linkage fee levels, EPS is providing fee level recommendations.
Maximum Fee Adjusted Maximum [1]
per sq. ft. per sq. ft.
Commercial $380 $344
Lodging $62 $57
Office/R&D $202 $183
Industrial $127 $115
Source: Economic & Planning Systems, Inc.
[1] Adjusted to avoid potential double-counting of the 9.4% of people who work in Dublin and also live in Dublin (as of 2020 LEHD data).
Employment Category
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Economic & Planning Systems, Inc. 1 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Table 2 Alameda County Income Category Definitions (2023) Income Group Standard Definition
1 2 3 4 5 6 7 8
Acutely Low ≤15% AMI $15,550 $17,750 $20,000 $22,200 $24,000 $25,750 $27,500 $29,300 Extremely Low >15% to ≤30% AMI $31,050 $35,500 $39,950 $44,350 $47,900 $51,450 $55,000 $58,550 Very Low >30% to ≤50% AMI $51,800 $59,200 $66,600 $73,950 $79,900 $85,800 $91,700 $97,650 Low >50% to ≤80% AMI $78,550 $89,750 $100,950 $113,150 $121,150 $130,100 $139,100 $148,050 Median 100% AMI $103,550 $118,300 $133,100 $147,900 $159,750 $171,550 $183,400 $195,250 Moderate >80% AMI to ≤120% AMI $124,250 $142,000 $159,750 $177,500 $191,700 $205,900 $220,100 $234,300 Source: California Department of Housing and Community Development, 2023 Number of Persons in Household
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Economic & Planning Systems, Inc. 1 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx In addition, EPS sought input from City of Dublin staff regarding affordability levels and recently developed affordable housing projects. Data from recent Dublin developments and land transactions were combined with information collected from various market-rate and affordable housing developers to estimate appropriate development cost assumptions for use in Dublin.
These and other data sources are identified on the tables provided throughout this report.
Organization of Report
Following this Introduction and Executive Summary, this study includes the following chapters:
• Chapter 2 summarizes the required nexus findings of the Study. • Chapter 3 describes the methodology used to calculate the fee. 825
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2. REQUIRED NEXUS FINDINGS FOR FEE PROGRAM
The following section confirms that this Nexus Study contains the findings required under the Mitigation Fee Act for the establishment of a development impact fee.
Background
The City of Dublin (City) first adopted a commercial linkage fee for affordable housing in 2001, and it was last updated in 2005. The City is in the process of addressing a number of changes in local housing supply, regional housing needs, and broader economic and housing trends. The Two-Year Strategic Plan established an objective to prepare a Nexus Study to review the commercial linkage fee program. Therefore, the City retained EPS to explore the feasibility of an affordable housing impact fee for new commercial (i.e., nonresidential) development.
Authority
This study serves as the basis for requiring development impact fees under AB 1600 legislation, as codified by the Mitigation Fee Act (California Government Code sections 66000 et seq.). This section of the Mitigation Fee Act sets forth the procedural requirements for establishing and collecting development impact fees. These procedures require that a reasonable relationship, or nexus, must exist between a governmental exaction and the purpose of the condition.
In 1991, the Ninth Circuit U.S. Court of Appeals upheld the City of Sacramento’s nonresidential linkage fee.2 In that case, the court found that the City of Sacramento’s fee program “substantially advanced a legitimate interest.” EPS is using a similar methodology to the nexus study reviewed in that case to develop the City of Dublin’s fee program.
Required Nexus Findings
The Mitigation Fee Act clearly identifies the required nexus findings.
Required Nexus Findings
• Identify the purpose of the fee.
• Identify how the fee is to be used.
• Determine how a reasonable relationship exists between the fee’s use and the type of development project on which the fee is imposed.
• Determine how a reasonable relationship exists between the demand for the affordable housing and the type of development project on which the fee is imposed. • Demonstrate a reasonable relationship between the amount of the fee and the cost of the public benefit attributable to the development on which the fee is imposed. 2 Commercial Builders of Northern California v. City of Sacramento, 941 F2d 872 (1991). 826
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Economic & Planning Systems, Inc. 3 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Purpose of Fee
The fee program established through this Nexus Study will fund the development and preservation of affordable housing in the City to serve lower-wage workers employed by new nonresidential development.
Use of Fee
The fee will be collected by the City. The funds are used to assist with the production and/or rehabilitation and preservation of affordable housing units and/or the acquisition of land in the City. The fee may also fund the studies and administration to support the fee program.
Relationship between Use of Fee and Type of Development New commercial development in the City will generate new jobs. Some portion of the workers in those jobs will not earn wages high enough to afford rent prices necessary to support new residential development without subsidy. The linkage fee will be used to help fund this subsidy, resulting in the development of residential units affordable to the local workforce.
Relationship between Demand for Affordable Housing and Type of Project The City and EPS have identified four non-residential land use categories for which a separate fee has been calculated. The proportion of lower wage workers and the number of square feet per employee for each employment category has been assessed to ensure a proper nexus is established.
Relationship between Amount of Fee and Cost of Public Benefit Attributed to New Development
EPS estimated the difference between the cost of developing new rental housing and the value of the new rental units based on rents affordable to workers at wages typical of businesses in different commercial land uses. The affordable rents yielded unit values below the cost of construction, indicating an “affordability gap.” To estimate the fee for each non-residential land use, this gap was multiplied by the anticipated number of lower wage workers generated by the new development projects and the number of households of various income categories those workers are likely to form.
A ssembly B ill 602 Provisions
AB 602 passed in the California Assembly in 2021 and was signed by the Governor. The legislation adds some new requirements for impact fees in addition to those required under AB 1600. While much of the intent of AB 602 was to clarify and limit impact fees applied to residential development, certain aspects of AB 602 may also apply to nonresidential development.
Existing Level of Service
Under Government Code 66016.5, AB 602 requires that an impact fee nexus study “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.” 827
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Economic & Planning Systems, Inc. 4 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx The City of Dublin currently has 1,443 affordable housing units for an employment base of 37,116 workers.3 This represents a ratio of 0.039 assisted affordable units per worker. The “adjusted maximum” linkage fee levels identified herein would allow the City to subsidize a similar or greater number of affordable units per worker – 0.5 per Commercial worker, 0.5 per Office/R&D worker, 0.2 per Lodging worker, and 0.4 per Industrial worker.4 These higher proportions, except in the case of Lodging, may be appropriate given the shortfall of such affordable units in the City, region, and state, and the demonstrated impacts of new commercial development on the City’s need for affordable housing.
As an example of public policy reflecting that shortfall, the State’s Regional Housing Needs Allocation (RHNA) process has indicated that Dublin should aim to produce 3,719 total housing units between 2023 and 2031, including 2,270 units priced at moderate or lower incomes, and this target would represent a significant increase in the pace of both targeted and actual affordable housing production in recent years.
Collection of Fees at Previous Levels
Under Government Code 66016.5, AB 602 requires 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.” The City of Dublin wishes to use the commercial linkage fee program to generate revenue to increase the amount of deed-restricted affordable housing in the City as new workers are added to the local employment base.
According to the 2022 Annual Progress Report staff report, from 2015 to 2022, the City has collected $724,111 in commercial linkage fees:
• 2015: $45,830
• 2016: $3,462
• 2017: $359,928
• 2018: $11,879
• 2019: $191,697
• 2020: $0
• 2021: $71,568
• 2022: $39,847
3 Assisted rental unit count is from the City of Dublin Community Development department as of December 2022. The employment base is from the US Census Bureau, ACS, Five-Year Estimates, 2021.
4 Proportions are calculated as the number of affordable units that could be subsidized by the maximum fee on a 100,000 square foot space, discounted by 9.4 percent of that figure given commute patterns to reflect the “adjusted maximum” (as shown on Tables 8-11) and then divided by the total number of employees that would work in a given building type (as shown on Table 6). 828
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Economic & Planning Systems, Inc. 5 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Capital Improvement Plan
Under Government Code 66016.5, AB 602 requires that “large jurisdictions shall adopt a capital improvement plan as a part of the nexus study.” Under Government Code 66002, “any local agency which levies a fee subject to Section 66001 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.” Capital improvement plans typically include specific infrastructure projects and public facilities rather than affordable housing developments, and affordable housing is not listed in the statute as the type of “facility” or “improvement” for which a capital improvement plan must be adopted. However, the City has expressed its intent to support the permitting and construction of affordable housing units as specified in the State’s RHNA process, including 2,270 moderate and lower income units. These units may be located in various areas within the City’s boundaries, may range from single units to larger complexes of 100 or more units, and are intended to be permitted and/or developed by 2031. This nexus study estimates the costs to develop such units, less their value as incomerestricted units, which represents the housing production subsidies to be financed with the collected linkage fees.
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3. METHODOLOGY AND FEE CALCULATION
Land Use Categories
The current fee program has five land use categories: Retail, Services & Accommodation (Lodging), Office, Research & Development (R&D), and Industrial. The City decided that the land use categories should more closely match the categories of the City’s other non-residential impact fees. These changes are intended to make the fee structure more transparent and to ease administration.
For this update, the City asked EPS to evaluate four distinct land use categories. Office and R&D land use categories were combined to reflect recent R&D developments that have similar land use patterns and employment densities to office development and to acknowledge that wages of R&D workers are more like the wages of office/professional workers than typical industrial workers. While EPS explored combining Lodging with other Commercial land uses, Lodging was ultimately maintained as a separate category due to distinct employment densities observed in proposed hotel projects in Dublin (detailed in Appendix Table C-1).
While most land use categories are discretely associated with a particular type of building, others may be interchangeable as tenants may shift between building types (e.g., businesses located in industrial space moving to Office/R&D space). The commercial land uses analyzed in this study are presented in Table 3, along with a description of the types of businesses that often locate in each category. In general, each land use category is intended to be associated with a particular type of building or land use, to which the fees can be applied. This analysis bases its employment projections on NAICS codes associated with the most typical tenants for each land use category.
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Economic & Planning Systems, Inc. 7 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Table 3 Land Use Category Descriptions
Land Use Category Description and Examples NAICS Sectors Commercial Businesses selling or providing merchandise, entertainment, and personal services to the general public. Examples include grocery stores, drug stores, clothing stores, general merchandise stores, beauty salons, and gas stations. Food and drinking places are also included in this category.
44 and 45 - Retail Trade
532 - Rental and Leasing Services
722 - Food Services and Drinking Places
812 - Personal and Laundry Services
Lodging Lodging or short-term accommodations for travelers, vacationers, and others in facilities known as hotels, motor hotels, resort hotels, and motels. Does not include short-term 721000 - Accommodation.
Office/R&D Employers engaged in business activity with limited direct access from the general public; businesses focused on professional, financial, scientific, and technical services. Examples include finance, insurance, real estate, law, engineering, medical offices, and science and technology.
51 - Information
52 - Finance and Insurance
53 - Real Estate and Rental and Leasing (excluding 532000 -Rental and Leasing Services)
54 - Professional, Scientific, and Technical Services
5417 - Scientific R&D Services
55 - Management of Companies and Enterprises
561 - Admin. and Support Services
6211 - Offices of Physicians
6212 - Offices of Dentists
6213 - Offices of Other Health Practitioners
6214 - Outpatient Care Centers
6215 - Medical and Diagonostic Laboratories
Industrial Employers engaged in business activity with limited direct access from the general public; businesses focused on assembling, distributing, or repairing products; businesses focused on the testing and invention of new materials, products, or processes; and businesses engaged in the transformation of raw materials into consumable products. Examples include auto repair, self-storage facilities, and food/beverage products manufacturing. Additionally includes warehousing, and the storage and distribution of goods. 22 - Utilities
23 - Construction
31 - Manufacturing
42 - Wholesale Trade
484 - Truck Transportation
493 - Warehousing & Storage
811 - Repair and Maintenance
Sources: City of Dublin; Economic & Planning Systems, Inc. 831
Economic & Planning Systems, Inc. 8 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Estimates of New Worker Households
The following section details the methodology for estimating the distribution of household income levels for new worker households in the City, and the number of these households that will be generated by new development in each commercial land use category.
Occupational Category and Wage Distribution
The first step in determining the number of new worker households requiring affordable residential units is to associate each land use type with occupational categories and the wage distribution within those categories. This estimate included the following analytical steps:
• EPS used JobsEQ to calculate the proportion of occupations likely to be represented under each land use category in the San Francisco-Oakland-Berkeley Core-Based Statistical Area (CBSA), which includes Dublin.5 For example, EPS evaluated the occupation categories within the lodging industry to determine the proportional distribution of occupations for the land use category “Lodging.” Using JobsEQ, the North American Industry Classification System (NAICS) sector 721000 (“Accommodation”) for San Francisco-Oakland-Berkeley MSA shows that 9.36 percent of the jobs in the Lodging industry nationwide are filled by managers, while 32.80 percent are in the category of buildings and grounds cleaning and maintenance (see Table B-3). The occupational distribution for all designated employment categories is provided in Appendix B. In addition to the distribution by occupation, JobsEQ provided the average wage for each occupation in each land use category.
• The wages for each occupation were multiplied by 1.70, the average number of workers per working household in the City.6 While certainly there will be some variation in wages per employee within a household, in the absence of more specific data, this analysis assumes comparable levels of education and training and thus hourly earnings among all workers in a household.7
• Each occupation is placed into its income category and the distribution is calculated based on JobsEQ’s reported percent of each industry’s jobs that is in the income category. This sorting uses HCD’s income classifications for a 3-person household because there are
3.29 people per working household in the City of Dublin. For consistency, the affordability gap calculation uses a 2-bedroom multi-family unit, which assumes three occupants.
Table 4 presents an example of how household income is calculated for each occupational category and the corresponding income category for that household. 5 The San Francisco-Oakland-Berkeley Core-Based Statistical Area (CBSA) includes Alameda County, Contra Costa County, Marin County, San Francisco County, and San Mateo County. 6 From the Census Bureau’s American Community Survey.
7 This assumption is consistent with “Assortative Mating” theory. See National Bureau of Economic Research, “Marry Your Like: Assortative Mating and Income Inequality.” 832
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Economic & Planning Systems, Inc. 9 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Table 4 Illustration of Employees' Household Income Calculation Item Source Example
Employment Category City of Dublin and EPS Lodging
Industry JobsEQ Accommodation (NAICS Code 721000)
Occupation Category JobsEQ Buildings and Grounds Cleaning and Maintenance Median Wage for the San Francisco-Oakland-Berkeley MSA
for Occupation within Industry JobsEQ $46,100
Workers per Household American Community Survey 5-Year Estimates 2021 1.70 Median Income per Household Workers per HH Multiplied by Med. Annual Wage $78,370 Income Category for 3-person Household California Housing and Community Development (HCD) Low Sources: City of Dublin; California Housing and Community Development (HCD); JobsEQ, 2022; U.S. Census American Community Survey 5-Year Estimates 2021; Economic & Planning Systems, Inc.
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Economic & Planning Systems, Inc. 10 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Distribution of Workers by Land Use Type
After identifying income ranges for each occupation category, EPS summed the percentages of the households in each income bracket across all occupations represented in the land use categories. These estimates of the proportion of worker households in each income brackets by land use category are presented in Table 5.
As illustrated, only Lodging is expected to generate a very small number of households at the very low-income levels. Commercial, Lodging, and Industrial are expected to generate significant numbers of households at the low-income level, while jobs in the Office/R&D uses are expected to yield more households with incomes at or above moderate-income levels. See Appendix B for details regarding the distribution of occupations and wages within each land use type.
Employment Densities
Different land use categories operate with varying levels of employment densities. A 100,000 square foot industrial development, for example, typically has fewer employees than an office building of the same size. The number of building square feet anticipated for an employee is termed the “employment density” of each land use category.
Based on input from City staff, independent research, and experience with other comparable cities, EPS estimated the employment density for each of the land use categories (detailed in Appendix Table C-1). Using these employment density assumptions, EPS estimated the number of employees that would occupy a prototype 100,000-square foot building for each land use category, as shown in Table 6.
Household Formation
After calculating the estimated number of new employees generated for each land use category, EPS estimated the number of households represented by these new employees, detailed in Table 6. To calculate new households, EPS first adjusted the number of workers expected to form new households, accounting for those workers who are typically too young (aged 16 to 19) to form their own households.8 The resulting adjusted estimate of new workers was divided by
1.70, which represents the average number of workers per households in Dublin.9 8 Data from the Bureau of Labor Statistics indicate this age cohort represents about 2.0 percent of the overall workforce. This proportion was applied to all industries except Commercial, which represents retail and food service industries, where the younger worker cohort represent 7.7 percent of the overall industry employment. 9 Based on the Census Bureau’s American Community Survey 2017-2021 data regarding the number of Dublin residents who are defined as “workers” in households that have workers. 834
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Economic & Planning Systems, Inc. 11 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Table 5 Income Distribution of Worker Households by Employment Category Very Low Low Moderate Above Moderate
50% AMI 80% AMI 120% AMI >120% AMI
Commercial 0.0% 90.5% 3.5% 6.0%
Lodging 0.5% 87.1% 3.0% 9.4%
Office/R&D 0.0% 26.3% 14.0% 59.7%
Industrial 0.0% 43.4% 36.2% 20.4%
Income Level
[1] Designation of household income assumes a 3-person household and 1.7 w orkers per household, based on American Community Survey data.
Employment
Category1
Sources: JobsEQ, 2022; California Housing and Community Development (HCD); Economic & Planning Systems, Inc.
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Economic & Planning Systems, Inc. 12 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Table 6 Household Generation Rates by Employment Category % of Workers Total Total
Employment Sq.Ft. per Total Workers Forming Households per Very Low Low Moderate Above Moderate Households per Category Worker1 per 100k Sq.Ft. Households2 100k Sq. Ft.3, 4 50% AMI 80% AMI 120% AMI >120% AMI 100k Sq. Ft.3, 4 Commercial 472 212 92.3% 115 0 104 4 7 115
Lodging 3,000 33 98.0% 19 0 17 1 2 20
Office/R&D 307 326 98.0% 188 0 49 26 112 187
Industrial 862 116 98.0% 67 0 29 24 14 67
[1] See Appendix Table A-1 for sources on employment densities in different land uses. [3] Assumes 1.70 workers per household based on Census data; rounded. [5] Figures are rounded to nearest whole number.
Sources: U.S. Census American Community Survey 5-Year Estimates 2021; JobsEQ, 2022; California Housing and Community Development (HCD); Economic & Planning Systems, Inc.
Households by Income Level5
[2] U.S. Bureau of Labor Statistics data indicates that 7.7% of retail/restaurant workers are aged 16-19, but an average of only 2% of workers in other industries fall into that age cohort. EPS has assumed that workers aged 16-19 do not form their own households. [4] This maximum nexus-based fee calculation assumes that Dublin fees account for all worker households generated by new employers in City of Dublin, though some workers and their households may choose to reside outside of Dublin. Total number of households may not match sum of households by income level due to rounding. 836
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Economic & Planning Systems, Inc. 13 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Housing Development Costs and Affordability Gap
To calculate the maximum justifiable fee for each land use category, EPS estimated the “affordability gap” related to developing residential units affordable to very-low, low, and moderate-income households. The average household size in Dublin is 3.03 people per household according to 2021 Five-Year Estimates from the American Community Survey (ACS), but the average number of people, per working household (households with earnings – not including retired households, etc.) is 3.29. Thus, this analysis estimates the costs of providing affordable housing for a three-person household, to represent the average size of working households (rounded). California State law (California Health and Safety Code Section 50052.5) assumes that a three-person household would occupy a two-bedroom unit, and this assumption is used in this analysis.
The assumed prototype reflects multifamily construction at 85 dwelling units to the acre with podium parking, reflecting the highest allowable residential density in the Dublin Downtown Specific Plan Area, and consistent with City staff representations of the general type of multifamily projects being built in Dublin. This building prototype is relatively cost-effective to construct, as it makes efficient use of land and does not involve overly expensive construction materials or techniques. Based on comparable recent projects in the vicinity of Dublin, EPS assumes that the typical gross square footage of a two-bedroom rental unit in Dublin will be approximately 1,000 square feet.
Development Cost Assumptions
Affordable housing development costs include land costs, direct costs (e.g., labor and materials), and indirect or “soft” costs (e.g., architecture, entitlement, marketing, etc.). Data from recent land transactions in and around Dublin have been combined with EPS’s information from various market-rate and affordable housing developers in the surrounding region to estimate appropriate development cost assumptions for use in Dublin. A developer fee is also estimated and represents the compensation to the developer for their efforts, investment, and risk. These assumptions are shown on Table 7 and indicate that the total cost per unit for rental apartments is about $692,000. By necessity, this figure represents a “prototypical” project; the actual costs for a given project will vary by location and project design characteristics.
Revenue Assumptions
Assumptions must be made regarding the applicable income level (very-low, low, and moderate) and the percentage of household income spent on housing costs to calculate the values of the affordable units. In addition, translating these assumptions into unit prices and values requires estimates of operating expenses and capitalization rates. The following assumptions were used in these calculations:
• Income Levels—This analysis estimates the subsidy required to produce units for households falling into the very low, low, and moderate-income categories for a three-person household.
While these categories are generally defined as a percentage of area median income (AMI) by HCD. In Alameda County, the dollar amount thresholds for each category are in line with 837
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Economic & Planning Systems, Inc. 14 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx the percentage thresholds.10 EPS has assumed the maximum income level allowable for the Very Low category but has defined Low as “Lower” at 60 percent AMI and Moderate at 110 percent AMI, consistent with State Density Bonus guidelines. This assumption is conservative in that it does not assume households earn at the very top of the income range. • Percentage of Gross Household Income Available for Housing Costs— HCD standards on overpaying for rent indicate that households should pay no more than 30 percent of their gross income on housing cost.11 For this analysis, EPS has assumed that all households shall spend 30 percent of their gross income on housing costs, including the cost of utilities stated by the Alameda County utility allowance schedule.
• Operating Costs for Rental Units—This analysis assumes that apartment operators incur annual operating costs of $7,500 per unit for below market rate housing for units affordable for those falling into the very low and low-income categories. EPS has assumed the units for moderate-income households would have similar operating costs but would be built by forprofit builders and thus also subject to property taxes, increasing their annual operating cost to $10,000 per unit.
Affordability Gap Results
Table 7 shows the costs and values for developing rental apartments in the City for households at various income levels. Across all categories, the cost of constructing the unit is higher than the supportable value of the unit. This is considered the “affordability gap,” and serves as the basis for calculating the subsidies required to provide housing for the lower-wage worker households generated by new nonresidential development. The results of the analysis illustrate that rents affordable to households earning moderate incomes and below cannot support the costs of new construction without subsidy.
10 See HCD State Income Limits 2023 for Alameda County, https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/income-limits-2023.pdf 11 See HCD standards for Overpayment and Overcrowding, Building Blocks: Housing Needs - Overpayment and Overcrowding (ca.gov)
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Economic & Planning Systems, Inc. 15 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Table 7 Affordability Gap Analysis – Rental Product Type Item
Very Low
Income
Lower
Income [1]
Low
Income
Moderate
Income [2]
50% AMI 60% AMI 80% AMI 110% AMI
Development Program Assumptions
Density/Acre [3] 85 85 85 85
Gross Unit Size 1,000 1,000 1,000 1,000
Number of Bedrooms 2 2 2 2
Occupants per 2-bedroom Unit [4] 3 3 3 3
Parking Spaces/Unit [5] 0.75 0.75 0.75 0.75
Project Development Cost Assumptions (per acre)
Land Acquisition and Site Improvement [6] $9,350,000 $9,350,000 $9,350,000 $9,350,000 Direct Development Costs [7] $33,787,500 $33,787,500 $33,787,500 $33,787,500 Indirect Development Costs [8] $8,446,875 $8,446,875 $8,446,875 $8,446,875 Developer Fee $7,221,813 $7,221,813 $7,221,813 $7,221,813 Total Development Costs $58,806,188 $58,806,188 $58,806,188 $58,806,188 per Unit Development Costs $691,838 $691,838 $691,838 $691,838 Maximum Supported Home Price
Household Income [9] $66,600 $79,860 $93,170 $146,410
Income Available for Housing Costs/Year [10] $16,014 $19,992 $23,985 $39,957 (less) Operating Expenses per Unit/Year [11] ($7,500) ($7,500) ($7,500) ($10,000) Net Operating Income $8,514 $12,492 $16,485 $29,957
Capitalization Rate [12] 5.0% 5.0% 5.0% 5.0%
Total Supportable Unit Value [13] $170,280 $249,840 $329,700 $599,140 Affordability Gap $521,558 $441,998 $362,138 $92,698
[1] Assuming the State Density Bonus is used, the rents for Lower-income households will need to be affordable to households with earnings of not greater than 60% AMI.
[2] A stand-alone Moderate-income rental project would not qualify for the State Density Bonus, but as part of a 100% affordable project that includes Lower-income units, moderate-income rental units are allowed. The rents for Moderate-income households are assumed to be affordable to households with earnings of not greater than 110%.
Multifamily Rental Apartments
with Podium-style, Above-grade, Structured Parking
[3] Reflects highest allowable densities in Dublin's Downtown Specific Plan area (85 dwelling units per acre) [4] Consistent with guidance in State law (Health and Safety Code Section 50052.5), a 2-bedroom unit should be assumed to be occupied by a 3- person household.
[5] Typical parking requirement in high-density residential zone is 1.5 spaces per unit plus guest parking. This analysis assumes state density bonus parking concession is used to improve development economics. [8] Includes costs for architecture and engineering; project management; appraisal and market study; marketing, commissions, and general administration; financing and charges; insurance; and contingency. [6] Includes land acquisition, site preparation costs, entitlement consultants, and fees/permits. Land acquisition value reflects a weighted average, based on vacant, residentially-zoned land transactions in Tri-Valley during the past four years, as reported by CoStar. Estimate aligns with figures provided by local developers but can vary widely. [7] Includes on-site work, offsite work, vertical construction, general requirements, overhead and builder fees. The cost estimate reflects woodframe construction. Assumes workers are paid prevailing wage.
Sources: City of Dublin; Alameda County Housing Authority; California Housing and Community Development (HCD); CoStar; Economic & Planning Systems, Inc.
[13] The total supportable unit value is determined by dividing the net operating income by the capitalization rate. [9] Incomes are based on 2023 HCD Income Limits for three-person households in Alameda County and revised to reflect State Density Bonus Law affordability requirements.
[10] Assumes that no more than 30% of a household's income should be spent on housing-related costs for housing to be considered affordable, subtracting cost of utilities for 3-person household based on the Alameda County Housing Authority. [11] Operating expenses are generally based on EPS feasibility studies in the region and are inclusive of utility costs; lower-income units (at or below 80% of AMI) are assumed to be built as non-profit and are, therefore, exempt from property taxes. Property taxes are assumed to comprise a share of the operating expenses for the moderate-income category. [12] The capitalization rate is used to determine the current value of a property based on estimated future operating income, and is typically a measure of estimated operating risk.
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Economic & Planning Systems, Inc. 16 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Fee Calculation
Table 8 through Table 11 provide the maximum nonresidential housing fee calculations for each of the three land use categories.
The fee is calculated by the following steps:
1. Estimate the number of new households by income category generated by a prototype 100,000-square foot building in the land use category.
2. Multiply the number of households generated by the per-unit affordability gap (as calculated in Table 7) to determine the level of subsidy required to provide housing in Dublin for all new worker households.
3. Divide the total affordability gap by 100,000 square feet (the size of the prototype building) to determine a maximum fee per building square foot.
The “Maximum Fee per Square Foot” calculated in the following tables represents the maximum justifiable linkage fee that the City can charge for each land use category based on the required nexus findings. The City may, however, decide to adopt fees below the maximum justifiable levels based on economic or policy considerations. For example, EPS has calculated an “Adjusted Maximum” fee reflecting the idea that not every employee of newly developed workplaces will in fact reside in Dublin. According to the most recently available data from the US Census Bureau’s Longitudinal Employer-Household Dynamics program, only 9.4 percent of people who work in Dublin also live in Dublin. EPS has applied that proportion to the “Maximum Fee” to calculate an “Adjusted Maximum” for each land use category. To be clear, however, this type of adjustment is not legally required, but does yield a lower fee.
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Economic & Planning Systems, Inc. 17 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Table 8 Fee Calculation – Commercial
Worker
Households Affordability Gap Total Gap
Item per 100k sq. ft. per household
Table References: Table 6 Table 7
Aggregate Financing Gap per 100K Sq. Ft
Affordability Level
Very Low Income 0 $521,558 $0
Low Income 104 $362,138 $37,662,300
Moderate 4 $92,698 $370,790
Total 108 $38,033,090
Fee Calculation formula
Total Financing Gap a $38,033,090
Total Building Sq. Ft. b 100,000
Maximum Fee per Sq. Ft. c = a / b $380.33
Adjustment for % of Workers Living in Dublin [1] 9.4%
Adjusted Fee per Sq. Ft. $344.44
Sources: US Census Bureau "On The Map"; Economic & Planning Systems, Inc. [1] The US Census Bureau indicates that 9.4% of people working in Dublin also lived in Dublin in 2020 (most recent data available).
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Economic & Planning Systems, Inc. 18 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Table 9 Fee Calculation – Lodging
Worker
Households Affordability Gap Total Gap
Item per 100k sq. ft. per household
Table References: Table 6 Table 7
Aggregate Financing Gap per 100K Sq. Ft
Affordability Level
Very Low Income 0 $521,558 $0
Low Income 17 $362,138 $6,156,338
Moderate 1 $92,698 $92,698
Total 18 $6,249,035
Fee Calculation formula
Total Financing Gap a $6,249,035
Total Building Sq. Ft.1 b 100,000
Maximum Fee per Sq. Ft. c = a / b $62.49
Adjustment for % of Workers Living in Dublin [1] 9.4%
Adjusted Fee per Sq. Ft. $56.59
Sources: US Census Bureau "On The Map"; Economic & Planning Systems, Inc. [1] The US Census Bureau indicates that 9.4% of people working in Dublin also lived in Dublin in 2020 (most recent data available).
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Economic & Planning Systems, Inc. 19 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Table 10 Fee Calculation – Office/R&D
Worker
Households Affordability Gap Total Gap
Item per 100k sq. ft. per household
Table References: Table 6 Table 7
Aggregate Financing Gap per 100K Sq. Ft
Affordability Level
Very Low Income 0 $521,558 $0
Low Income 49 $362,138 $17,744,738
Moderate 26 $92,698 $2,410,135
Total 75 $20,154,873
Fee Calculation formula
Total Financing Gap a $20,154,873
Total Building Sq. Ft. b 100,000
Maximum Fee per Sq. Ft. c = a / b $201.55
Adjustment for % of Workers Living in Dublin [1] 9.4%
Adjusted Fee per Sq. Ft. $182.53
Sources: US Census Bureau "On The Map"; Economic & Planning Systems, Inc. [1] The US Census Bureau indicates that 9.4% of people working in Dublin also lived in Dublin in 2020 (most recent data available).
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Economic & Planning Systems, Inc. 20 231009_Dublin_Commercial Linkage Fee_Draft_2023Oct23.docx Table 11 Fee Calculation – Industrial
Worker
Households Affordability Gap Total Gap
Item per 100k sq. ft. per household
Table References: Table 6 Table 7
Aggregate Financing Gap per 100K Sq. Ft
Affordability Level
Very Low Income 0 $521,558 $0
Low Income 29 $362,138 $10,501,988
Moderate 24 $92,698 $2,224,740
Total 53 $12,726,728
Fee Calculation formula
Total Financing Gap a $12,726,728
Total Building Sq. Ft.1 b 100,000
Maximum Fee per Sq. Ft. c = a / b $127.27
Adjustment for % of Workers Living in Dublin [1] 9.4%
Adjusted Fee per Sq. Ft. $115.26
Sources: US Census Bureau "On The Map"; Economic & Planning Systems, Inc. [1] The US Census Bureau indicates that 9.4% of people working in Dublin also lived in Dublin in 2020 (most recent data available).
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APPENDICES:
Appendix A: Survey of Commercial Linkage Fees
in Other Jurisdictions
Appendix B: Occupation Distribution by
Employment Category
Appendix C: Assumptions and Sources
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APPENDIX A:
Survey of Commercial Linkage Fees
in Other Jurisdictions
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Table A-1
Survey of Commercial Linkage Fees as of August 2023
City of Dublin Commercial Linkage Fee Study; EPS #231009 Commercial (Retail) Lodging Office/R&D Industrial
Dublin $1.35 $0.57 $1.09-1.68 $0.65
San Ramon $4.32 $4.32 $4.32 $3.24
Danville
Pleasanton $5.21 $3.59 $8.68 $14.42
Livermore $2.38 $3.34 $1.53 $0.21-1.52
Fremont $11.33 $11.33 $11.33 $5.67
Hayward
Walnut Creek $5.00 $5.00 $5.00 $5.00
Concord
no commercial linkage fee program
no commercial linkage fee program
no commercial linkage fee program
Commercial Linkage Fee per Sq. Ft.
847
APPENDIX B:
Occupation Distribution
by Employment Category
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Table B-1
Occupation and Wage Distribution - Commercial (without Lodging) City of Dublin Commercial Linkage Fee Study; EPS #231009 Occupation Category [1] 1.70 workers/HH
Management Occupations $101,153.66 4.05% $171,961.22 Above Moderate Business and Financial Operations Occupations $79,403.97 1.26% $134,986.75 Moderate Computer and Mathematical Occupations $107,491.80 0.33% $182,736.05 Above Moderate Architecture and Engineering Occupations $107,765.50 0.02% $183,201.36 Above Moderate Life, Physical, and Social Science Occupations $84,624.70 0.01% $143,861.99 Moderate Community and Social Service Occupations $51,467.04 0.04% $87,493.97 Low Legal Occupations $108,695.65 0.02% $184,782.61 Above Moderate Educational Instruction and Library Occupations $56,927.36 0.03% $96,776.52 Low Arts, Design, Entertainment, Sports, and Media Occupations $55,439.53 0.65% $94,247.19 Low Healthcare Practitioners and Technical Occupations $96,029.88 1.62% $163,250.79 Above Moderate Healthcare Support Occupations $56,312.85 0.53% $95,731.85 Low Protective Service Occupations $48,022.99 0.29% $81,639.08 Low Food Preparation and Serving Related Occupations $39,487.58 38.88% $67,128.89 Low Building and Grounds Cleaning and Maintenance Occupations $44,801.74 0.76% $76,162.96 Low Personal Care and Service Occupations $41,373.20 5.12% $70,334.45 Low Sales and Related Occupations $43,598.88 27.03% $74,118.09 Low Office and Administrative Support Occupations $49,440.79 4.89% $84,049.33 Low Farming, Fishing, and Forestry Occupations $42,092.71 0.14% $71,557.61 Low Construction and Extraction Occupations $66,877.97 0.19% $113,692.54 Moderate Installation, Maintenance, and Repair Occupations $59,658.15 2.05% $101,418.85 Moderate Production Occupations $44,744.93 2.20% $76,066.38 Low
Transportation and Material Moving Occupations $42,359.83 9.88% $72,011.71 Low Total or Weighted Average $46,493.40 100.00% $79,038.78 [1] Includes NAICS Sectors: 44 and 45 - Retail Trade; 532000 - Rental and Leasing Services; 812000 - Personal and Laundry Services; and 722000 - Food Services and Drinking Places.
Sources: JobsEQ, 2021; U.S. Census American Community Survey 5-Year Estimates 2021; Economic & Planning Systems, Inc.
Income Category
HH Income at
Commercial
San Francisco-OaklandBerkeley, CA MSA
Average Wage
% of Industry Jobs in
Occupation Category
849
Table B-2
Occupation and Wage Distribution - Lodging
City of Dublin Commercial Linkage Fee Study; EPS #231009 Occupation Category [1] 1.70 workers/HH
Management Occupations $108,000.00 9.36% $183,600.00 Above Moderate Business and Financial Operations Occupations $64,800.00 2.42% $110,160.00 Moderate Computer and Mathematical Occupations $78,700.00 0.18% $133,790.00 Moderate Architecture and Engineering Occupations $119,800.00 0.07% $203,660.00 Above Moderate Life, Physical, and Social Science Occupations $70,700.00 0.01% $120,190.00 Moderate Community and Social Service Occupations $65,300.00 0.02% $111,010.00 Moderate Legal Occupations $164,600.00 0.01% $279,820.00 Above Moderate Educational Instruction and Library Occupations $57,700.00 0.08% $98,090.00 Low Arts, Design, Entertainment, Sports, and Media Occupations $71,700.00 0.21% $121,890.00 Moderate Healthcare Practitioners and Technical Occupations $95,100.00 0.01% $161,670.00 Above Moderate Healthcare Support Occupations $35,500.00 0.46% $60,350.00 Very Low Protective Service Occupations $42,800.00 1.87% $72,760.00 Low Food Preparation and Serving Related Occupations $42,000.00 17.00% $71,400.00 Low Building and Grounds Cleaning and Maintenance Occupations $46,100.00 32.80% $78,370.00 Low Personal Care and Service Occupations $41,000.00 3.41% $69,700.00 Low Sales and Related Occupations $49,800.00 2.39% $84,660.00 Low Office and Administrative Support Occupations $42,900.00 20.45% $72,930.00 Low Farming, Fishing, and Forestry Occupations $48,000.00 0.08% $81,600.00 Low Construction and Extraction Occupations $68,500.00 0.21% $116,450.00 Moderate Installation, Maintenance, and Repair Occupations $56,400.00 6.33% $95,880.00 Low Production Occupations $43,200.00 1.94% $73,440.00 Low
Transportation and Material Moving Occupations $39,400.00 0.70% $66,980.00 Low Total or Weighted Average $51,586.65 100.00% $87,697.31 [1] Includes NAICS Sector: 721 - Accommodation.
Sources: JobsEQ, 2022; U.S. Census American Community Survey 5-Year Estimates 2021; Economic & Planning Systems, Inc.
Lodging
San Francisco-OaklandBerkeley, CA MSA
Average Wage
% of Industry Jobs in
Occupation Category
HH Income at
Income Category
850
Table B-3
Occupation and Wage Distribution - Office/R&D
City of Dublin Commercial Linkage Fee Study; EPS #231009 Occupation Category [1] 1.70 workers/HH
Management Occupations $186,928.04 12.43% $317,777.67 Above Moderate Business and Financial Operations Occupations $112,199.26 14.53% $190,738.75 Above Moderate Computer and Mathematical Occupations $137,383.52 15.98% $233,551.99 Above Moderate Architecture and Engineering Occupations $124,474.22 4.33% $211,606.18 Above Moderate Life, Physical, and Social Science Occupations $113,363.11 4.45% $192,717.29 Above Moderate Community and Social Service Occupations $71,506.82 0.79% $121,561.59 Moderate Legal Occupations $152,823.83 2.25% $259,800.50 Above Moderate Educational Instruction and Library Occupations $73,603.93 0.25% $125,126.68 Moderate Arts, Design, Entertainment, Sports, and Media Occupations $93,142.15 3.84% $158,341.65 Moderate Healthcare Practitioners and Technical Occupations $145,114.86 5.75% $246,695.26 Above Moderate Healthcare Support Occupations $54,417.72 2.49% $92,510.13 Low Protective Service Occupations $48,276.53 2.26% $82,070.10 Low Food Preparation and Serving Related Occupations $40,479.47 0.22% $68,815.10 Low Building and Grounds Cleaning and Maintenance Occupations $46,638.02 3.79% $79,284.63 Low Personal Care and Service Occupations $45,934.07 0.34% $78,087.93 Low Sales and Related Occupations $92,511.49 6.74% $157,269.53 Moderate Office and Administrative Support Occupations $57,904.91 13.84% $98,438.35 Low Farming, Fishing, and Forestry Occupations $51,397.31 0.12% $87,375.43 Low Construction and Extraction Occupations $80,538.98 0.52% $136,916.27 Moderate Installation, Maintenance, and Repair Occupations $69,607.82 1.84% $118,333.29 Moderate Production Occupations $48,922.47 1.30% $83,168.21 Low
Transportation and Material Moving Occupations $44,803.83 1.95% $76,166.51 Low Total or Weighted Average $110,011.04 100.00% $187,018.77 Sources: JobsEQ, 2021; U.S. Census American Community Survey 5-Year Estimates 2021; Economic & Planning Systems, Inc.
Office/R&D
[1] Includes NAICS Sectors: 51 - Information; 52 - Finance and Insurance; 53 - Real Estate and Rental and Leasing (excluding 532000 -Rental and Leasing Services); 54 - Professional, Scientific, and Technical Services; 55 - Management of Companies and Enterprises; 561 - Admin. and Support Services; 6211 - Offices of Physicians; 6212 - Offices of Dentists; 6213 - Offices of Other Health Practitioners; 6214 - Outpatient Care Centers; and 621500 - Medical and Diagonostic Laboratories.
Income Category
HH Income at
San Francisco-OaklandBerkeley, CA MSA
Average Wage
% of Industry Jobs in
Occupation Category
851
Table B-4
Occupation and Wage Distribution - Industrial
City of Dublin Commercial Linkage Fee Study; EPS #231009 Occupation Category [1] 1.70 workers/HH
Management Occupations $158,147.54 8.23% $268,850.81 Above Moderate Business and Financial Operations Occupations $103,392.89 6.03% $175,767.91 Above Moderate Computer and Mathematical Occupations $139,076.43 2.41% $236,429.93 Above Moderate Architecture and Engineering Occupations $112,828.89 3.54% $191,809.12 Above Moderate Life, Physical, and Social Science Occupations $92,162.61 1.05% $156,676.44 Moderate Community and Social Service Occupations $78,359.68 0.00% $133,211.45 Moderate Legal Occupations $199,705.44 0.08% $339,499.25 Above Moderate Educational Instruction and Library Occupations $69,094.23 0.01% $117,460.18 Moderate Arts, Design, Entertainment, Sports, and Media Occupations $72,251.41 0.78% $122,827.40 Moderate Healthcare Practitioners and Technical Occupations $112,353.32 0.15% $191,000.64 Above Moderate Healthcare Support Occupations $59,860.28 0.02% $101,762.47 Moderate Protective Service Occupations $59,228.02 0.11% $100,687.63 Low Food Preparation and Serving Related Occupations $41,556.54 0.42% $70,646.12 Low Building and Grounds Cleaning and Maintenance Occupations $49,462.99 0.57% $84,087.08 Low Personal Care and Service Occupations $47,499.67 0.01% $80,749.44 Low Sales and Related Occupations $84,554.44 6.22% $143,742.54 Moderate Office and Administrative Support Occupations $57,812.72 9.52% $98,281.63 Low Farming, Fishing, and Forestry Occupations $46,613.34 0.27% $79,242.67 Low Construction and Extraction Occupations $78,336.07 20.78% $133,171.31 Moderate Installation, Maintenance, and Repair Occupations $71,292.15 7.31% $121,196.66 Moderate Production Occupations $54,838.13 19.41% $93,224.82 Low Transportation and Material Moving Occupations $51,202.17 13.10% $87,043.69 Low Total or Weighted Average $78,713.23 100.00% $133,812.48 [1] Includes NAICS Sectors: 22 - Utilities; 23 - Construction; 42 - Wholesale Trade; 484 - Truck Transportation; 493 - Warehousing & Storage; and 811 - Repair and Maintenance % of Industry Jobs in
Occupation Category Income Category
HH Income at
Industrial
San Francisco-OaklandBerkeley, CA MSA
Average Wage
852
APPENDIX C:
Assumptions and Sources
853
Table C-1
Assumptions and Sources
City of Dublin Commercial Linkage Fee Study; EPS #231009 Item Total Unit Source
Demographic Assumptions
Total Population 71,680 persons American Community Survey 5-Year Estimates 2021 Total Employed 37,116 persons American Community Survey 5-Year Estimates 2021 Households 23,688 households American Community Survey 5-Year Estimates 2021 Households with Earnings 21,819 households American Community Survey 5-Year Estimates 2021 Workers per Household with Workers 1.70 persons American Community Survey 5-Year Estimates 2021 Persons per Working Household 3.29 persons American Community Survey 5-Year Estimates 2021 Dublin Workers Living in Dublin 9.4% of workers US Census Bureau "On The Map" 2020 data Employment Density Assumptions
Commercial 472 sq. ft. per employee Draft Public Facilities Fee study, City of Dublin, 2023 Office/R&D 307 sq. ft. per employee Draft Public Facilities Fee study, City of Dublin, 2023 Lodging 3,000 sq. ft. per employee Draft Public Facilities Fee study, City of Dublin, 2023 Industrial 862 sq. ft. per employee Draft Public Facilities Fee study, City of Dublin, 2023 Sources: U.S. Census American Community Survey 5-Year Estimates 2021;US Census Bureau "On The Map"; City of Dublin 854
INCLUSIONARY ZONING REGULATIONS
8.68.010 Purpose.
The purpose of this cChapter is to:
A. eEnhance the public welfare and assure that further housing development contributes to the attainment of the City’s housing goals by increasing the production of residential units affordable by households of very low, low, and moderate income.
B. aAssure that the limited remaining developable land in the City’s planning area is utilized in a manner consistent with the City’s housing policies and needs. Rev. Ord. 1-03 (January 2003); Ord. 8-02 (May 2002)
8.68.020 Definitions.
As used in this cChapter, each of the following terms shall be defined as follows:
A. “Affordable unit” means an ownership or rental-housing unit, including senior housing, affordable to households with very-low-, low-, or moderate-incomes as defined in this Chapter.
1. Rental units are deemed affordable units if the annual rent does not exceed 30% of maximum income level for very low-, low- and moderate-income households, adjusted for household size and as defined below.
2. Owner-occupied units are deemed affordable units if the sales price results in annual housing expenses that do not exceed 35% of the maximum income level for very-low-, low-, and moderate-income households, adjusted for household size and as defined below.
B. “Applicant” means any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities that seeks city real property development permits or approvals.
C. “Dwelling unit” means a dwelling designed and intended for occupancy by one household.
D. “Very-low-, low-, and moderate-income levels” means those income and eligibility levels determined periodically by the California Department of Housing and Community Development based on Alameda County median income levels adjusted for family size. Such levels shall be calculated on the basis of gross annual household income considering household size and number of dependents, income of all wage earners household members eighteen years of age and older, elderly or disabled family members, and all other sources of household income and will be recertified as set forth by local standards, and state and federal housing law.
Attachment 6
855
1. “Very-low-income” means 50% or less of the median income, adjusted for actual household size.
2. “Low-income” means more than 50% and up to 80% of the median income, adjusted for actual household size.
3. “Moderate-income” means more than 80% and up to 120% of the median income, adjusted for actual household size.
E. “Resale controls and/or rent restrictions” means legal restrictions by which the affordable units shall be restricted to ensure that the unit remains affordable to very-low-, low-, or moderate-income households, as applicable, for a period of not less than 55 years. The 55 year period will reset with each time ownership of the unit is transferred through a bona fide sales transaction with a third party during the resale restriction period sale of the unit. With respect to rental units, such rent restrictions shall be in the form of a regulatory agreement recorded against the applicable property. With respect to owner-occupied units, such resale controls shall be in the form of resale restrictions, deeds of trust, and/or other similar documents recorded against the applicable property.
F. “Residential development” includes, without limitation, detached single-family dwellings, multiple-dwelling structures, groups of dwellings, condominium or townhouse developments, condominium conversions, cooperative developments, mixed use developments that include housing units, and residential land subdivisions intended to be sold to the general public. Rev.
Ord. 43-08 (December 2008); Ord. 8-05 (March 2005); Ord. 1-03 (January 2003); Ord. 8-02 (May 2002)
8.68.030 General Requirements.
A. 12.5% Affordability Requirement for Rental Units. All new rental residential rental development projects of with 20 10 units or more designed and intended for permanent occupancy shall construct 12.5 10.0% of the total number of dwelling units within the development as affordable units, except as otherwise provided by this cChapter, and except when all of the dwelling units (excluding units reserved for property management) within the project are affordable. The foregoing requirement shall be applied no more than once to an approved residential development (and generally at the tentative map stage), regardless of the changes in the character or ownership of the development, except as provided by this Chapter, provided the total number of units does not change. In applying and calculating the affordability requirement, any decimal fraction less than or equal to 0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be construed as one unit.
B. Affordability Requirement for Ownership Units. All for-sale (ownership) residential development projects of 10 units or more designed and intended for permanent occupancy shall construct 12.5% of the total number of dwelling units within the development as affordable units, except as otherwise provided by this Chapter. The foregoing requirement shall 856
be applied no more than once to an approved residential development (and generally at the tentative map stage), regardless of the changes in the character or ownership of the development, except as provided by this Chapter, provided the total number of units does not change. In applying and calculating the affordability requirement, any decimal fraction less than or equal to 0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be construed as one unit.
BC. Allocation of Units to Income Levels. Affordable units provided pursuant to this section shall be allocated to households with very-low, low-, and moderate-income levels as follows:
Rental Units Owner-Occupied Units
Very-low-income households 030% 0%
Low-income households 10020% 40%
Moderate-income households 050% 60%
Where the calculation of the allocation results in fewer units than would otherwise be required pursuant to subsection A of this section, one additional unit should be allocated to the income level with a decimal fraction closest to 0.50.
CD. Conditions of Approval: Any tentative map, conditional use permit, or site development review approving residential development projects subject to this cChapter shall contain conditions sufficient to ensure compliance with the provisions of this cChapter. Such conditions shall detail the number of affordable units required, specify the schedule of construction of affordable units, set forth the applicant’s manner of compliance with this cChapter, and require the execution of an agreement imposing appropriate resale controls and/or rental restrictions on the affordable units.
DE. Concurrent Construction. All affordable units in a project or phase of a project shall be constructed concurrently with market-rate units, unless the City Manager determines in writing that extenuating circumstances exist that make concurrent construction infeasible or impractical.
EF. Design and Distribution of Affordable Units. All affordable units shall reflect the range of numbers of bedrooms provided in the project as a whole and shall not be distinguished by exterior design, construction, or materials. Affordable units may be of smaller size than the units in the project and may have fewer amenities than the market rate units in the project. All affordable units shall be reasonably dispersed throughout the project. Rev. Ord. 43-08 (December 2008); Ord. 1-03 (January 2003); Ord. 8-02 (May 2002)
8.68.040 Exceptions to 12.5% Affordability Requirement. 857
Developers of projects subject to Sections 8.68.030A and 8.68.030B shall construct 12.5% of the total number of affordable dwelling units within the development as affordable units, unless subject to an exception set forth in this section. All exceptions require City Council approval, which shall be obtained at or prior to the last discretionary approval for the project.
A. Payment of Fees In Lieu of Creation of Affordable Units. Upon request of the applicant, the City Council shall permit the applicant to pay a fee in lieu of constructing up to 40% of the affordable units that the developer would otherwise be required to construct pursuant to Sections 8.68.030A and 8.68.030B. The amount of the fee shall be as set forth in a resolution of the City Council, which may be amended from time to time to reflect inflation and changed conditions in the City and the region. In lieu fees shall be paid at the time and in the amount set forth in the in lieu fee resolution in effect at the time of issuance of the building permit.
B. Off-Site Projects. An applicant may construct the affordable units not physically within the development in lieu of constructing some or all of the affordable units within the development, with the approval of the City Council, if the City Council finds:
1. that cConstruction of the units off-site in lieu of constructing units on-site is consistent with the cChapter’s goal of creating, preserving, maintaining, and protecting housing for very low-, low- and moderate-income households.
2. that the uUnits to be constructed off site are consistent with Section 8.68.030EF above.
3. that it wWould be infeasible or impractical to construct affordable units on-site.
4. that cConditions of approval for the project require that the off-site affordable units would be governed by the terms of a deed restriction and, if applicable, rental restrictions similar to that used for the on-site affordable units.
5. that the cConditions of approval for the project, or other security such as a cash deposit, bond, or letter of credit, are adequate to require the construction of the off-site affordable units concurrently with the completion of the construction of the residential development or within a reasonable period (not to exceed 5 five years).
C. Land Dedication. An applicant may dedicate land to the City or city-designated local nonprofit housing developer in lieu of construction of some or all of the required affordable units, if the Council finds that:
1. that dDedication of land in lieu of constructing units is consistent with the cChapter’s goal of creating, preserving, maintaining, and protecting housing for very-lowvery low-, low- and moderate-income households.
858
2. that tThe dedicated land is useable for its intended purpose, is free of toxic substances and contaminated soils, and is fully improved, with infrastructure, adjacent utilities, grading, and all development-impact fees paid excluding any inclusionary zoning ordinance fees.
3. that tThe proposed land dedication is of sufficient size to meet the following requirements:
a. tThe dedication includes land sufficient to construct the number of units that the applicant would otherwise be required to construct by Section 8.68.030.A, based on the size of lots in the subdivision for which the applicant is meeting its obligation; and b. iIn addition, the dedication includes such additional land the market value for which is equal to or exceeds the difference between the value of a market-rate, 1200-square foot unit and the price at which such a unit could be sold as an Affordable Unit (which amount shall be set forth in a resolution adopted from time to time by the City Council) times the number of units required.
D. Credit tTransfers. An applicant may fully or partially satisfy the requirements of Sections
8.68.030A and 8.68.030B through the use of transfer credits created pursuant to Section 8.68.060. Credit certificates shall be presented to the Community Development Director, who shall note at the time of project approval the credit certificate by number. Credit certificates may only be used to satisfy the requirements for Inclusionary Units for the income category (i.e., very low-, low-, or moderate-income) and number of bedrooms for which they are issued.
E. Waiver of Requirements. The City Council, at its discretion, may waive, wholly or partially, the requirements of this ordinance and approve alternate methods of compliance with this Chapter if the applicant demonstrates, and the City Council finds, that such alternate methods meet the purposes of this Chapter. Rev. Ord. 1-03 (January 2003); Ord. 8-02 (May 2002)
8.68.050 General Procedures for
Implementing Inclusionary Zoning Requirements.
A. Agreements. Prior to the issuance of a building permit for an affordable unit, resale restrictions or rental controls, or both, as the case may be, shall be set forth in an agreement between the City and the developer, in a form consistent with the City Council-adopted form agreement, which agreement shall be recorded against the property containing the affordable units. The agreement shall be executed by the City Manager, and its requirements shall run with the land and bind the applicant’s successors.
B. Rental Units; Occupancy; Annual Report. Agreements involving rental units shall require the owner of the affordable units to ensure that the units are occupied by tenants whose monthly income levels do not exceed very low-, low-, or moderate incomemoderate-income 859
levels, as the case may be, and shall preclude tenants from subletting or subleasing the unit.
The agreement shall also require the owner of the affordable unit to submit an annual report to the City Manager, in a format approved by the City. The report shall include, but not be limited to the following information: an identification of the affordable units within the project; the monthly rents charged and proposed to be charged; vacancy information for the prior year; and the monthly income for tenants of each affordable unit throughout the prior year.
C. Ownership Units; Occupancy; City’s Right of First Refusal. Agreements for ownership units shall specify that the inclusionary units must be occupied by the owner or owners and may not be leased or rented without the written approval of the City. The resale restrictions shall provide that in the event of the sale of an affordable unit, the City shall have the right to purchase any affordable owner-occupant unit at the maximum price that could be charged to an eligible household.
D. Selection Criteria. No household shall be permitted to occupy a unit that is required under this cChapter to be affordable unless the City or its designee has approved the household’s eligibility. Eligible potential occupants of affordable units will be qualified on the basis of household income, the median combined household income statistics for Alameda County published periodically by the California Department of Housing and Community Development, all sources of household income and assets, the relationship between household size and the size of available units, and any further criteria required by law as defined by this Chapter. The developer shall use an equitable selection method established in conformance with the terms of this chapter. The selection criteria for a qualified household may not distinguish between adults and children. Selection of qualified person should be based on priorities established using the point system described below:
• Employed within the boundaries of the City of Dublin (3 points maximum, one per household member)
• Public Service employee working in the City of Dublin (1 additional point) • Dublin resident (3 points maximum, one per household member) • Seniors (1 point, one per household)
• Permanently disabled (1 point, one per household)
• Immediate family member of Dublin resident (1 point, one per household) • Required to relocate from current Dublin residence due to demolition of dwelling or conversion of dwelling from rental to for-sale unit (1 point, one per household) To qualify as a “Public Service Employee”, the person shall be employed by a Public Agency. 860
To qualify as “Employed within the boundaries of the City of Dublin”, the person shall have been employed within the City of Dublin for at least six months.
To qualify as a “Dublin resident,” the person shall have been a resident of the City of Dublin for at least a one-year period prior to the eligibility determination. Rev. Ord. 8-05 (March 2005); Ord. 1-03 (January 2003); Ord. 8-02 (May 2002)
8.68.060 Affordable Unit Credits.
A. Creation. Affordable unit credits may be created by the City Council. One affordable unit credit certificate shall be issued for each affordable unit constructed in excess of the number of affordable units required to be constructed for the project by Sections 8.68.030A and
8.68.030B. The certificate shall designate a specific income category (i.e., very-low-, low-, or moderate-income) and number of bedrooms for which they are issued.
B. Ownership and uUse of cCredits. Affordable unit credit certificates are issued to and become the possession of the project owner, who may then use them to satisfy the requirements of this cChapter for another project in the City. If a project owner proposes to sell credit certificates, the parties shall first obtain the consent of the Community DevelopmentFinance Director, who will document the transfer by certificate number. Rev. Ord. 1-03 (January 2003); Ord. 8-02 (May 2002)
8.68.070 Incentives to Encourage On-Site Construction of Affordable Units.
The City may, but shall not be required to, offer incentives or financial assistance to encourage the on-site construction of affordable units in excess of 12.5% of the total number of affordable units required by this Chapter to be included in the project to the extent resources for this purpose are available and approved for such use by the City Council or City Manager. Such incentives may include, but shall not be limited to, the following:
A. Fee Deferral.
1. Development Processing Fees. The City Manager may approve deferred payment of City processing fees applicable to the review and processing of the project. The terms and payment schedule of the deferred fees shall be subject to the approval of the City Manager.
2. Development Impact Fees. The City Council may authorize the deferred payment of development impact fees applicable to the affordable units. Approval of this incentive requires demonstration by the Applicant that the deferral increases the project’s feasibility. The applicant must provide appropriate security to ensure future payment of such fees.
861
B. Design Modifications. The City Council may approve design modifications to affordable units that increase the feasibility of the construction of affordable units, including but not limited to, the following:
1. Reduced lot size.
2. Reduced setback requirements.
3. Reduced open space requirements.
4. Reduced landscaping requirements.
5. Reduced interior or exterior amenities.
6. Reduction in parking requirements.
7. Height restriction waivers. Rev. Ord. 1-03 (January 2003); Ord. 8-02 (May 2002)
8.68.080 Inclusionary Zoning In Lieu Fees Fund.
The fund previously known as the “Inclusionary Zoning In Lieu Fee fund” is hereby renamed the “Affordable Housing Fund” (“Fund”) and all In Lieu Fees shall be deposited into the Fund. In Lieu Fees shall be deposited into a fund known as the “Inclusionary Zoning In Lieu Fees Fund” (“Fund”).
A. Use. All monies in the Fund, together with any interest earnings on such monies less reasonable administrative charges, shall be used or committed to use by the City for the purpose of providing very low-, low-, and moderate-income ownership or rental housing in the City of Dublin.
B. Annual rReport. The City Manager shall prepare an annual report to the City Council identifying the balance of monies in the Fund and the affordable units provided and any monies committed to providing very low-, low-, and moderate-income housing. The annual report shall also include a review of administrative charges. Rev. Ord. 1-03 (January 2003); Ord. 8-02 (May 2002)
8.68.090 Violations.
It shall be unlawful for any person, firm, corporation, partnership or other entity that is subject to this ordinance pursuant to Sections 8.68.030A and 8.68.030B to violate any provision or to fail to comply with any of the requirements of this cChapter. A violation of any of the provisions of or failingure to comply with any of the requirements of this Chapter shall constitute a misdemeanor; except that notwithstanding any other provisions of this Code, any such violation constituting a misdemeanor under this cChapter, may in the discretion of the 862
enforcing authority, be charged and prosecuted as an infraction. Any person convicted of an infraction under the provisions of this Code shall be punishable as provided by the Government Code of the State of California. Rev. Ord. 1-03 (January 2003); Ord. 8-02 (May 2002)
8.68.100 Enforcement.
A. General. The City Manager shall enforce this cChapter, and its provisions shall be binding on all agents, successors, and assigns of an applicant. The City Manager may suspend or revoke any building permit or approval upon finding a violation of any provision of this cChapter. No land-use approval, building permit, or certificate of occupancy shall be issued for any residential development unless exempt from or in compliance with this cChapter. The City may institute any appropriate legal actions or proceedings necessary to ensure compliance herewith, including, but not limited to, actions to revoke, deny, or suspend any permit or development approval.
B. Excessive rRents/lLegal aAction. If the City Manager determines that rents in excess of those allowed by operation of this cChapter have been charged to a tenant residing in an affordable unit, the City may take appropriate legal action to recover, and the project owner shall be obligated to pay to the tenant, or to the City in the event the tenant cannot be located, any excess rents charged. Rev. Ord. 1-03 (January 2003); Ord. 8-02 (May 2002)
8.68.110 Appeals.
Decisions of the City Manager under this Chapter may be appealed as provided in Chapter 8.136. Rev. Ord. 1-03 (January 2003); Ord. 8-02 (May 2002) 863
Attachment 7
STAFF REPORT
CITY COUNCIL
Agenda Item 7.1
DATE: August 15, 2023
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: Inclusionary Zoning and In-Lieu Fee Feasibility Study and Commercial Linkage Fee Nexus Study
Prepared by: Jason Earl, Senior Management Analyst
EXECUTIVE SUMMARY:
The City Council will receive a report on the Inclusionary Zoning and Affordable Housing In-Lieu Fee Feasibility Study and the Commercial Linkage Fee Nexus Study. The City Council will be requested to provide feedback and direction on key policy decisions. This feedback will be used to prepare updates to the Inclusionary Zoning Regulations, Affordable Housing In-Lieu Fee, and Commercial Linkage Fee programs in accordance with the City’s Two-Year Strategic Plan. The updates to these programs will be considered for adoption at a future meeting.
STAFF RECOMMENDATION:
Receive the report and provide feedback and direction.
FINANCIAL IMPACT:
The cost for this project will be charged to the City’s Affordable Housing Fund. There are sufficient funds allocated in the Fiscal Year 2023-24 Adopted Budget for this purpose.
DESCRIPTION:
Background
The City of Dublin Two-Year Strategic Plan includes Strategy 2: Housing Affordability, with the following two specific objectives:
Objective 2.b: Ensure the City’s inclusionary zoning regulations incentivize targeted housing production; and
Objective 2.c: Prepare a nexus study to evaluate the affordable housing commercial linkage fee and affordable housing in-lieu fee for for-sale and rental housing. 864
The consulting firm Economic and Planning Systems (EPS) was selected through a competitive process to assist Staff with addressing these Strategic Plan Objectives.
The City’s current Inclusionary Zoning Regulations (DMC Chapter 8.68) and Affordable Housing In-Lieu Fee were adopted by the City Council on May 21, 2002 (Ordinance 08-02 and Resolution 56-02 respectively). The Inclusionary Zoning Regulations (IZR) has been amended from time to time, while the In-Lieu Fee is adjusted annually on July 1 based on an inflationary index. The IZR apply to projects with 20 or more units. The City’s current inclusionary requirement is 12.5%, meaning that 12.5% of the units in a market-rate residential project are to be set aside as affordable to lower-income households. A developer may satisfy 40% of this obligation through the payment of in-lieu fees. The current Affordable Housing In-Lieu Fee is $241,131 per affordable unit.
The Commercial Linkage Fee was adopted by the City Council on May 03, 2005 (Resolution 70-05) and is adjusted each year by an inflationary index. The current fees are shown in Table 1 below.
The Commercial Linkage Fee serves to increase funding for affordable housing due to the nexus between non-residential development and the need it generates for affordable housing.
Table 1: Commercial Linkage Fee
Land Use Category Commercial Linkage Fee
Industrial $0.65
Office $1.68
Research & Development $1.09
Retail $1.35
Services & Accommodations $0.57
Staff and the consultant team have reviewed these programs, interviewed market-rate and affordable housing developers who are active in the City and the region, and conducted a survey of the inclusionary requirements, In-Lieu Fees, and Commercial Linkage Fees in other jurisdictions to provide context. Market conditions have changed, and development costs have increased since these programs were initially adopted. As a result, it appears that the inclusionary requirements and the in-lieu fee levels are no longer aligned, and the commercial linkage fees are below what other cities are charging.
The City Council will receive a presentation that outlines the findings from this review. The presentation will also highlight how the inclusionary requirement and in-lieu fee programs work from a market and economic perspective, and the implications and tradeoffs of updating these programs. Additionally, the results of the Commercial Linkage Fee nexus analysis, current land use categories, and potential changes to the land use categories will be discussed. This will include a review of the maximum fees that the City could charge, a comparison of fees in peer cities, and a discussion of potential approaches to setting these fees since the nexus-based maximums often exceed what most cities want to charge.
The City Council will be requested to provide feedback and direction on key policy decisions. This feedback will be used to prepare updates to the Inclusionary Zoning Regulations, Affordable 865
Housing In-Lieu Fee, and Commercial Linkage Fee programs for future consideration and adoption.
ENVIRONMENTAL REVIEW:
Receiving this informational report and providing direction is not subject to the requirements of the California Environmental Quality Act (CEQA), pursuant to CEQA Guidelines Section 15306 (Information Collection).
STRATEGIC PLAN INITIATIVE:
Strategy 2: Housing Affordability.
Objective 2B: Ensure the City’s inclusionary zoning regulations incentivize targeted housing production.
Objective 2C: Prepare a nexus study to evaluate the affordable housing commercial linkage fee and affordable housing in-lieu fee for for-sale and rental housing.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
The City Council Agenda was posted.
ATTACHMENTS:
None.
866
Attachment 8
STAFF REPORT
CITY COUNCIL
Agenda Item 7.1
DATE: September 19, 2023
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: Inclusionary Zoning and In-Lieu Fee Feasibility Study and Commercial Linkage Fee Nexus Study
Prepared by: Jason Earl, Senior Management Analyst
EXECUTIVE SUMMARY:
The City Council’s Two-Year Strategic Plan includes a review of the Commercial Linkage Fee and the Inclusionary Zoning and In-Lieu Fee programs. On August 15, 2023, the City Council received an informational report and provided feedback regarding updates to these programs. Staff has further refined this information and is seeking the City Council’s feedback and direction regarding the recommendations. This feedback will be used to prepare updates to the programs that will be brought back to the City Council for consideration at a future public hearing.
STAFF RECOMMENDATION:
Receive the report and provide feedback and direction regarding the recommendations presented in this report.
FINANCIAL IMPACT:
There are sufficient funds allocated in the Fiscal Year 2023-24 Adopted Budget in the Affordable Housing Funds for this purpose.
DESCRIPTION:
Background
The City of Dublin Two-Year Strategic Plan includes Strategy 2: Housing Affordability, which includes the following two objectives:
Objective 2b: Ensure the City’s inclusionary zoning regulations incentivize targeted housing production; and
Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage fee and affordable housing in-lieu fee for for-sale and rental housing. 867
The consulting firm Economic and Planning Systems (EPS) was selected to assist Staff with addressing these objectives. On August 15, 2023, the City Council received an informational report on the Inclusionary Zoning and Affordable Housing In-Lieu Fee Feasibility Study and the Commercial Linkage Fee Nexus Study. The City Council provided initial feedback and directed Staff to do the following:
Review the overall impact fee burden on non-residential development with adjustments to the Commercial Linkage Fee.
Provide comparative information about the affordable housing requirements and their impact on production in the Tri-Valley cities.
Lower the threshold for projects that are subject to the Inclusionary Zoning Regulations.
The City Council has also prioritized the collection of fees that can be leveraged to facilitate the production of lower income units to satisfy the City’s Regional Housing Needs Assessment (RHNA) while providing on-site units where feasible. The recommendations presented in this Staff Report seek to align the Commercial Linkage Fee, Inclusionary Zoning, and In-Lieu Fee programs with those priorities.
Analysis
Commercial Linkage Fee
The Commercial Linkage Fee is a fairly modest tool, in terms of fee revenue generation, the City uses to collect money that can be used towards affordable housing and related programs. The fee is based on the nexus between non-residential development and the need it generates for affordable housing. The maximum amount the City could assess is based on that nexus, while the actual amount assessed is set at the City Council’s discretion.
The current fee was adopted by the City Council in 2005 (Resolution 70-05) and is adjusted annually based on an inflationary index. The amount was set to ensure that it does not overburden the economic development priorities set by the City Council. New non-residential development is assessed this fee on a per-square-foot basis at the time a building permit is issued. The amount collected is based on the category of development. Since 2015, the City has collected $779,141, the majority of which ($470,114) is attributed to just two projects: the Kaiser Medical Office Building and the Zeiss Innovation Center projects. Table 1 reflects the current fee by use category along with the maximum amount the City could assess.
Table 1. Commercial Linkage Fee
Category
Maximum Fee
per Sq. Ft. Current Fee
Commercial $344 $1.35
Lodging $57 $0.57
R&D / Office $183 $1.09 / $1.68
Industrial $115 $0.65
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The current fee represents 4% to 7% of the total impact fee burden for a commercial project.
Table 2 below provides a hypothetical example of increasing the Commercial Linkage Fee to $5 per square foot for a new office development and the impact to the overall impact fee burden.
Table 2. Impact Fee Burden
Category
Existing
Commercial
Linkage Fee
Hypothetical
New
Commercial
Linkage Fee
Existing
Impact Fee
Burden
Hypothetical
New Impact Fee
Burden
Percentage
Increase
Office $1.68 $5.00 $23.50 $26.80 14%
Staff Recommendation: 1) Retain the existing Commercial Linkage Fee amount and annual inflationary index; and 2) Combine the Research & Development and Office use categories and set the fee at $1.39 per square foot, which is the average of the current fee for those two use categories.
Inclusionary Housing Requirements and In-Lieu Fee Analysis The Inclusionary Zoning Regulations (Zoning Ordinance Chapter 8.68) were first adopted by the City Council in 2002 and have been amended periodically. These regulations help to achieve the stated purpose of contributing to the attainment of the City’s housing goals, including the production of units to satisfy the RHNA, by increasing the production of residential units affordable to very low-, low-, and moderate-income households. This includes successfully leveraging in-lieu fees collected through this program to facilitate the production of lower income rental units, including units for special needs populations, and requiring the production of on-site units where feasible. Table 3 provides an overview of key aspects of these regulations.
Table 3. Dublin Inclusionary Zoning Regulations
Overall
Inclusionary
Requirement
Income Targets
(Ownership)
Income Targets
(Rental)
Project
Size
Threshold
Must Build
Requirement
In-Lieu Fee
12.5% 60% Moderate
40% Low
50% Moderate
20% Low
30% Very Low
20 Units 60% of
Inclusionary
Requirement
$241,131 per
Inclusionary
unit
The current program does not differentiate the overall inclusionary requirement (12.5% or the affordable housing in-lieu fee of $241,131) between projects with ownership and rental units.
However, the development economics of these two types of development vary dramatically. The average for-sale, single-family development requires a subsidy of $620,000 to produce an affordable unit under the City’s current inclusionary program. The current in-lieu fee of $241,131 is lower than the subsidy required to build an affordable unit and thus incentivizes the payment of in-lieu fees. However, there is room to increase this fee while continuing to incentivize payment of in-lieu fees. The average subsidy to produce an affordable rental unit under the City’s current inclusionary program is $187,000. Even without the inclusionary requirement, multifamily rental development is at the limits of feasibility, and the subsidy required for affordable rental units pushes that limit even further. Reducing the inclusionary requirement and in-lieu fees would help improve the financial feasibility of such projects.
869
Each of the Tri-Valley cities has unique inclusionary zoning regulations which helps it achieve the goals of its community. However, there are certain commonalities, including an average project size threshold of approximately 10+ units, collection of in-lieu fees on a per-square-foot basis, and separate regulations for ownership and rental developments including more of a focus on producing ownership units affordable to moderate income households and production of rental units affordable to very low- and low- income households. Each of the Tri-Valley cities has had unique experience with the production of affordable housing, but generally each has found that its inclusionary zoning regulations, combined with State laws such as Density Bonus Law, SB 35 and SB 330, have resulted in the production of on-site units and the collection of in-lieu fees.
Staff Recommendation: 1) Lower the Inclusionary Zoning Regulations applicability threshold to projects of 10+ units; 2) Assess in-lieu fees on a per-square-foot basis for each market-rate unit; 3) Establish separate regulations for ownership and rental developments as follows in Table 4:
Table 4. Ownership and Rental Policy Recommendations
Overall
Very
Low Low Moderate
Fee per Sq. Ft. MarketRate Unit
Ownership 12.5% 0% 5% 7.5% $9.08 (equivalent to
$400,000 per
affordable units)
Rental 10% 0% 10% 0% $9.17 (equivalent to
$236,915 per
affordable units)
These recommendations align the Inclusionary Zoning and In-Lieu Fee program with the City Council’s priorities. They also continue to incentivize both on-site production of housing affordable to low- and moderate-income households and collection of in-lieu fees that can be leveraged to produce units affordable to lower income and special needs households.
The City Council is being asked to provide feedback and direction regarding Staff’s recommendations to be used to prepare updates to the Commercial Linkage Fee and the Inclusionary Zoning and Affordable Housing In-Lieu Fee programs. The amendments to the Inclusionary Zoning Regulations require a review and recommendation by the Planning Commission. The updates to these programs will then be brought back to the City Council for adoption at a future public hearing.
ENVIRONMENTAL REVIEW:
Receiving this informational report and providing direction is not subject to the requirements of the California Environmental Quality Act (CEQA), pursuant to CEQA Guidelines Section 15306 (Information Collection).
870
STRATEGIC PLAN INITIATIVE:
Strategy 2: Housing Opportunities
Objective 2B: Ensure the City’s inclusionary zoning regulations incentivize targeted housing production.
Objective 2C: Prepare a nexus study to evaluate the affordable housing commercial linkage fee and affordable housing in-lieu fee for for-sale and rental housing.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
The City Council Agenda was posted.
ATTACHMENTS:
None.
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Reso. No. 23-12, Item 6.2, Adopted 12/12/2023 Page 1 of 2 RESOLUTION NO. 23 12
A RESOLUTION OF THE PLANNING COMMISSION
OF THE CITY OF DUBLIN
RECOMMENDING CITY COUNCIL APPROVAL OF AMENDMENTS TO DUBLIN MUNICIPAL CODE CHAPTER 8.68 (INCLUSIONARY ZONING REGULATIONS) EFFECTIVE CITYWIDE PLPA-2023-00032
WHEREAS, the City occasionally initiates amendments to the Dublin Municipal Code to clarify, add, or amend certain provisions to ensure that it remains current with federal and state law, internally consistent, simple to understand and implement, and relevant to changes occurring in the community; and
WHEREAS, Staff initiated amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) consistent with the City of Dublin Two-Year Strategic Plan, which
zoning regulations incentivize targeted housing production and Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage; and WHEREAS, the City selected the consulting firm Economic and Planning Systems (EPS) to prepare an Inclusionary Zoning and Affordable Housing In-Lieu Fee Feasibility Study and Commercial Linkage Fee Nexus Study to inform the proposed amendments; and WHEREAS, on August 15, 2023, and September 19, 2023, the City Council received informational reports on the Commercial Linkage Fee and Inclusionary Zoning and In-Lieu Fee programs and provided direction to staff to prepare updates to the programs; and WHEREAS, proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) include changes to the affordability requirements for rental and ownership development projects, modifications to the provisions for the payment of fees in-lieu of constructing affordable units, revisions to the allocation of units to income levels, and revisions to the exceptions to the affordability requirements; and
WHEREAS, the California Environmental Quality Act (CEQA), together with the State Guidelines and City of Dublin CEQA Guidelines and Procedures require that certain projects be reviewed for environmental impacts and that environmental documents be prepared; and WHEREAS, the Planning Commission recommends that the City Council find the proposed amendments exempt from the requirements of CEQA pursuant to CEQA Guidelines Section 15061(b)(3) as the amendments would not result in any physical changes and it can be seen with certainty that the amendments would not have a significant effect on the environment; and WHEREAS, the Planning Commission held a duly noticed public hearing on December 12, 2023, during which all interested persons were heard; and WHEREAS, proper notice of said hearing was given in all respects as required by law; and Attachment 9
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Reso. No. 23-12, Item 6.2, Adopted 12/12/2023 Page 2 of 2 WHEREAS, a Staff Report dated December 12, 2023, was submitted to the Dublin Planning Commission recommending approval of the proposed amendments to Dublin Municipal Code Chapter 8.68; and
WHEREAS, the Planning Commission did hear and consider all said reports, recommendations and testimony herein above set forth and used its independent judgment to evaluate the recommendations.
NOW, THEREFORE, BE IT RESOLVED that the foregoing recitals are true and correct and made a part of this Resolution.
BE IT FURTHER RESOLVED that the City of Dublin Planning Commission does hereby recommend that the City Council adopt the Ordinance attached hereto as Exhibit A, and incorporated herein by reference.
PASSED, APPROVED AND ADOPTED this 12th day of December 2023, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Planning Commission Chair
ATTEST: ______________________________________ Assistant Community Development Director 873
Attachment 2
Ord. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 1 of 10 ORDINANCE NO. XX – 23
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING AMENDMENTS TO DUBLIN MUNICIPAL CODE CHAPTER 8.68 (INCLUSIONARY ZONING REGULATIONS)
PLPA-2023-00032
The Dublin City Council does ordain as follows:
SECTION 1. RECITALS
A. The City occasionally initiates amendments to the Dublin Municipal Code to clarify, add, or amend certain provisions to ensure that it remains current with federal and state law, internally consistent, simple to understand and implement, and relevant to changes occurring in the community.
B. Staff initiated amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) consistent with the City of Dublin Two-Year Strategic Plan, which includes Strategy 2: Housing Affordability, Objective 2b: Ensure the City’s inclusionary zoning regulations incentivize targeted housing production and Objective 2c: Prepare a nexus study to evaluate the affordable housing commercial linkage.
C. The City selected the consulting firm Economic and Planning Systems (EPS) to prepare an Inclusionary Zoning and Affordable Housing In-Lieu Fee Feasibility Study and Commercial Linkage Fee Nexus Study to inform the proposed amendments.
D. On August 15, 2023, and September 19, 2023, the City Council received informational reports on the Commercial Linkage Fee and Inclusionary Zoning and In-Lieu Fee programs and provided direction to staff to prepare updates to the programs.
E. The proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) include changes to the affordability requirements for rental and ownership development projects, modifications to the provisions for the payment of fees in-lieu of constructing affordable units, revisions to the allocation of units to income levels, and revisions to the exceptions to the affordability requirements.
F. The Planning Commission held a duly noticed public hearing on December 12, 2023, during which all interested persons were heard, and adopted Resolution No. 23-xx recommending that the City Council approve the proposed amendments to Dublin Municipal Code Chapter
8.68 (Inclusionary Zoning Regulations).
G. A Staff Report was submitted to the Dublin City Council recommending approval of the proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations).
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Ord. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 2 of 10 H. The City Council held a public hearing on the proposed amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) on _________, at which time all interested persons had an opportunity to be heard.
I. Proper notice of said hearing was given in all respects as required by law.
J. The City Council did hear and consider all said reports, recommendations and testimony herein above set forth and used its independent judgement to evaluate the project.
SECTION 2. FINDINGS
A. Pursuant to Dublin Municipal Code Section 8.120.050.B., the City Council hereby finds that the amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) are consistent with the General Plan and any applicable Specific Plan in that they would provide an update to the City’s affordable housing requirements. Specifically, the amendments would implement Housing Element Program B.4, which calls for a review of the Inclusionary Zoning Regulations and preparation of a nexus study reviewing the affordable housing in-lieu fee.
B. The California Environmental Quality Act (CEQA), together with the State Guidelines and City of Dublin CEQA Guidelines and Procedures require that certain projects be reviewed for environmental impacts and that environmental documents be prepared. The City Council hereby finds that the amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) are exempt from the requirements of CEQA pursuant to CEQA Guidelines Section 15061(b)(3) as the amendments would not result in any physical changes and it can be seen with certainty that the amendments would not have a significant effect on the environment.
SECTION 3. AMENDMENT OF CHAPTER 8.68.
Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations) is amended to read as follows:
“Inclusionary Zoning Regulations”
8.68.010 Purpose.
The purpose of this Chapter is to:
A. Enhance the public welfare and assure that further housing development contributes to the attainment of the City’s housing goals by increasing the production of residential units affordable by households of very low, low, and moderate income.
B. Assure that the limited remaining developable land in the City’s planning area is utilized in a manner consistent with the City’s housing policies and needs.
8.68.020 Definitions.
As used in this Chapter, each of the following terms shall be defined as follows:
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Ord. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 3 of 10 A. “Affordable unit” means an ownership or rental-housing unit, affordable to households with very low-, low-, or moderate-incomes as defined in this Chapter.
1. Rental units are deemed affordable units if the annual rent does not exceed 30% of maximum income level for very low-, low- and moderate-income households, adjusted for household size and as defined below.
2. Owner-occupied units are deemed affordable units if the sales price results in annual housing expenses that do not exceed 35% of the maximum income level for very low-, low-, and moderate-income households, adjusted for household size and as defined below.
B. “Applicant” means any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities that seeks city real property development permits or approvals.
C. “Dwelling unit” means a dwelling designed and intended for occupancy by one household.
D. “Very low-, low-, and moderate-income levels” means those income and eligibility levels determined periodically by the California Department of Housing and Community Development based on Alameda County median income levels adjusted for family size. Such levels shall be calculated on the basis of gross annual household income considering household size and number of dependents, income of all household members eighteen years of age and older, and all other sources of household income and will be recertified as set forth by local standards, and state and federal housing law.
1. “Very low-income” means 50% or less of the median income, adjusted for actual household size.
2. “Low-income” means more than 50% and up to 80% of the median income, adjusted for actual household size.
3. “Moderate-income” means more than 80% and up to 120% of the median income, adjusted for actual household size.
E. “Resale controls and/or rent restrictions” means legal restrictions by which the affordable units shall be restricted to ensure that the unit remains affordable to very low-, low-, or moderate-income households, as applicable, for a period of not less than 55 years. The 55 year period will reset each time ownership of the unit is transferred through a bona fide sales transaction with a third party during the resale restriction period. With respect to rental units, such rent restrictions shall be in the form of a regulatory agreement recorded against the applicable property. With respect to owner-occupied units, such resale controls shall be in the form of resale restrictions, deeds of trust, and/or other similar documents recorded against the applicable property.
F. “Residential development” includes, without limitation, detached single-family dwellings, multiple-dwelling structures, groups of dwellings, condominium or townhouse developments, condominium conversions, cooperative developments, mixed use developments that include housing units, and residential land subdivisions intended to be sold to the general public. 876
Ord. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 4 of 10
8.68.030 General Requirements.
A. Affordability Requirement for Rental Units. All new rental residential development projects with 10 units or more designed and intended for permanent occupancy shall construct
10.0% of the total number of dwelling units within the development as affordable units, except as otherwise provided by this Chapter, and except when all of the dwelling units (excluding units reserved for property management) within the project are affordable. The foregoing requirement shall be applied no more than once to an approved residential development (and generally at the tentative map stage), regardless of the changes in the character or ownership of the development, except as provided by this Chapter, provided the total number of units does not change. In applying and calculating the affordability requirement, any decimal fraction less than or equal to 0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be construed as one unit.
B. Affordability Requirement for Ownership Units. All for-sale (ownership) residential development projects of 10 units or more designed and intended for permanent occupancy shall construct 12.5% of the total number of dwelling units within the development as affordable units, except as otherwise provided by this Chapter. The foregoing requirement shall be applied no more than once to an approved residential development (and generally at the tentative map stage), regardless of the changes in the character or ownership of the development, except as provided by this Chapter, provided the total number of units does not change. In applying and calculating the affordability requirement, any decimal fraction less than or equal to 0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be construed as one unit.
C. Allocation of Units to Income Levels. Affordable units provided pursuant to this section shall be allocated as follows:
Rental Units Owner-Occupied Units
Very low-income households 0% 0%
Low-income households 100% 40%
Moderate-income households 0% 60%
Where the calculation of the allocation results in fewer units than would otherwise be required, one additional unit should be allocated to the income level with a decimal fraction closest to
0.50. D. Conditions of Approval: Any tentative map, conditional use permit, or site development review approving residential development projects subject to this Chapter shall contain conditions sufficient to ensure compliance with the provisions of this Chapter. Such conditions shall detail the number of affordable units required, set forth the applicant’s manner of compliance with this Chapter, and require the execution of an agreement imposing appropriate resale controls and/or rental restrictions on the affordable units.
E. Concurrent Construction. All affordable units in a project or phase of a project shall be constructed concurrently with market-rate units, unless the City Manager determines in writing that extenuating circumstances exist that make concurrent construction infeasible or impractical.
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Ord. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 5 of 10 F. Design and Distribution of Affordable Units. All affordable units shall reflect the range of numbers of bedrooms provided in the project as a whole and shall not be distinguished by exterior design, construction, or materials. Affordable units may be of smaller size than the units in the project and may have fewer amenities than the market rate units in the project. All affordable units shall be reasonably dispersed throughout the project.
8.68.040 Exceptions to Affordability Requirement.
Developers of projects subject to Sections 8.68.030A and 8.68.030B shall construct the total number of affordable dwelling units within the development, unless subject to an exception set forth in this section. All exceptions require City Council approval.
A. Payment of Fees In Lieu of Constructing Affordable Units. Upon request, the applicant shall be permitted to pay a fee in lieu of constructing up to 40% of the affordable units that the developer would otherwise be required to construct pursuant to Sections 8.68.030A and
8.68.030B. The amount of the fee shall be as set forth in a resolution of the City Council, which may be amended from time to time to reflect inflation and changed conditions in the City and the region. In lieu fees shall be paid at the time and in the amount set forth in the in lieu fee resolution in effect at the time of issuance of the building permit.
B. Off-Site Projects. An applicant may construct the affordable units not physically within the development in lieu of constructing some or all of the affordable units within the development, with the approval of the City Council, if the City Council finds:
1. Construction of the units off-site in lieu of constructing units on-site is consistent with the Chapter’s goal of creating, preserving, maintaining, and protecting housing for very low-, lowand moderate-income households.
2. Units to be constructed off site are consistent with Section 8.68.030F above.
3. Would be infeasible or impractical to construct affordable units on-site.
4. Conditions of approval for the project require that the off-site affordable units would be governed by the terms of a deed restriction and, if applicable, rental restrictions similar to that used for the on-site affordable units.
5. Conditions of approval for the project, or other security such as a cash deposit, bond, or letter of credit, are adequate to require the construction of the off-site affordable units concurrently with the completion of the construction of the residential development or within a reasonable period (not to exceed five years).
C. Land Dedication. An applicant may dedicate land to the City or city-designated local nonprofit housing developer in lieu of construction of some or all of the required affordable units, if the Council finds:
1. Dedication of land in lieu of constructing units is consistent with the Chapter’s goal of creating, preserving, maintaining, and protecting housing for very low-, low- and moderateincome households. 878
Ord. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 6 of 10
2. The dedicated land is useable for its intended purpose, is free of toxic substances and contaminated soils, and is fully improved, with infrastructure, adjacent utilities, grading, and all development-impact fees paid excluding any inclusionary zoning ordinance fees.
3. The proposed land dedication is of sufficient size to meet the following requirements:
a. The dedication includes land sufficient to construct the number of units that the applicant would otherwise be required to construct by Section 8.68.030.A, based on the size of lots in the subdivision for which the applicant is meeting its obligation; and b. In addition, the dedication includes such additional land the market value for which is equal to or exceeds the difference between the value of a market-rate, 1200-square foot unit and the price at which such a unit could be sold as an Affordable Unit (which amount shall be set forth in a resolution adopted from time to time by the City Council) times the number of units required.
D. Credit Transfers. An applicant may fully or partially satisfy the requirements of Sections
8.68.030A and 8.68.030B through the use of transfer credits created pursuant to Section 8.68.060. Credit certificates shall be presented to the Community Development Director, who shall note at the time of project approval the credit certificate by number. Credit certificates may only be used to satisfy the requirements for Inclusionary Units for the income category (i.e., very low-, low-, or moderate-income) and number of bedrooms for which they are issued.
E. Waiver of Requirements. The City Council, at its discretion, may waive, wholly or partially, the requirements of this ordinance and approve alternate methods of compliance with this Chapter if the applicant demonstrates, and the City Council finds, that such alternate methods meet the purposes of this Chapter.
8.68.050 General Procedures for Implementing Inclusionary Zoning Requirements.
A. Agreements. Prior to the issuance of a building permit for an affordable unit, resale restrictions or rental controls, or both, as the case may be, shall be set forth in an agreement between the City and the developer, in a form consistent with the City Council-adopted form agreement, which agreement shall be recorded against the property containing the affordable units. The agreement shall be executed by the City Manager, and its requirements shall run with the land and bind the applicant’s successors.
B. Rental Units; Occupancy; Annual Report. Agreements involving rental units shall require the owner of the affordable units to ensure that the units are occupied by tenants whose monthly income levels do not exceed very low-, low-, or moderate-income levels, as the case may be, and shall preclude tenants from subletting or subleasing the unit. The agreement shall also require the owner of the affordable unit to submit an annual report to the City Manager, in a format approved by the City. The report shall include, but not be limited to the following information: an identification of the affordable units within the project; the monthly rents charged and proposed to be charged; vacancy information for the prior year; and the monthly income for tenants of each affordable unit throughout the prior year.
C. Ownership Units; Occupancy; City’s Right of First Refusal. Agreements for ownership units shall specify that the inclusionary units must be occupied by the owner or owners and may not be leased or rented without the written approval of the City. The resale restrictions 879
Ord. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 7 of 10 shall provide that in the event of the sale of an affordable unit, the City shall have the right to purchase any affordable owner-occupant unit at the maximum price that could be charged to an eligible household.
D. Selection Criteria. No household shall be permitted to occupy a unit that is required under this Chapter to be affordable unless the City or its designee has approved the household’s eligibility. Eligible potential occupants of affordable units will be qualified on the basis of household income as defined by this Chapter. The selection criteria for a qualified household may not distinguish between adults and children. Selection of qualified person should be based on priorities established using the point system described below:
• Employed within the boundaries of the City of Dublin (3 points maximum, one per household member)
• Public Service employee working in the City of Dublin (1 point) • Dublin resident (3 points maximum, one per household member) • Seniors (1 point, one per household)
• Permanently disabled (1 point, one per household)
• Immediate family member of Dublin resident (1 point, one per household) • Required to relocate from current Dublin residence due to demolition of dwelling or conversion of dwelling from rental to for-sale unit (1 point, one per household) To qualify as a “Public Service Employee”, the person shall be employed by a Public Agency.
To qualify as “Employed within the boundaries of the City of Dublin”, the person shall have been employed within the City of Dublin for at least six months.
To qualify as a “Dublin resident,” the person shall have been a resident of the City of Dublin for at least a one-year period prior to the eligibility determination.
8.68.060 Affordable Unit Credits.
A. Creation. Affordable unit credits may be created by the City Council. One affordable unit credit certificate shall be issued for each affordable unit constructed in excess of the number of affordable units required to be constructed for the project by Sections 8.68.030A and
8.68.030B. The certificate shall designate a specific income category (i.e., very low-, low-, or moderate-income) and number of bedrooms for which they are issued.
B. Ownership and Use of Credits. Affordable unit credit certificates are issued to and become the possession of the project owner, who may use them to satisfy the requirements of this Chapter for another project in the City. If a project owner proposes to sell credit certificates, the parties shall first obtain the consent of the Finance Director, who will document the transfer by certificate number.
8.68.070 Incentives to Encourage On-Site Construction of Affordable Units. 880
Ord. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 8 of 10 The City may, but shall not be required to, offer incentives or financial assistance to encourage the on-site construction of affordable units in excess of the total number of affordable units required by this Chapter to be included in the project to the extent resources for this purpose are available and approved for such use by the City Council or City Manager. Such incentives may include, but shall not be limited to, the following:
A. Fee Deferral.
1. Development Processing Fees. The City Manager may approve deferred payment of City processing fees applicable to the review and processing of the project. The terms and payment schedule of the deferred fees shall be subject to the approval of the City Manager.
2. Development Impact Fees. The City Council may authorize the deferred payment of development impact fees applicable to the affordable units. Approval of this incentive requires demonstration by the Applicant that the deferral increases the project’s feasibility. The applicant must provide appropriate security to ensure future payment of such fees.
B. Design Modifications. The City Council may approve design modifications to affordable units that increase the feasibility of the construction of affordable units, including but not limited to, the following:
1. Reduced lot size.
2. Reduced setback requirements.
3. Reduced open space requirements.
4. Reduced landscaping requirements.
5. Reduced interior or exterior amenities.
6. Reduction in parking requirements.
7. Height restriction waivers.
Section 8.68.080 Inclusionary Zoning In Lieu Fees.
The fund previously known as the “Inclusionary Zoning In Lieu Fee fund” is hereby renamed the “Affordable Housing Fund” (“Fund”) and all In Lieu Fees shall be deposited into the Fund.
A. Use. All monies in the Fund, together with any interest earnings on such monies less reasonable administrative charges, shall be used or committed to use by the City for the purpose of providing very low-, low-, and moderate-income ownership or rental housing in the City of Dublin.
B. Annual Report. The City Manager shall prepare an annual report to the City Council identifying the balance of monies in the Fund and the affordable units provided and any monies committed to providing very low-, low-, and moderate-income housing. The annual report shall also include a review of administrative charges.
Section 8.68.090 Violations.
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Ord. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 9 of 10 It shall be unlawful for any person, firm, corporation, partnership or other entity that is subject to this ordinance pursuant to Sections 8.68.030A and 8.68.030B to violate any provision or to fail to comply with any of the requirements of this Chapter. A violation of any of the provisions of or failure to comply with any of the requirements of this Chapter shall constitute a misdemeanor; except that notwithstanding any other provisions of this Code, any such violation constituting a misdemeanor under this Chapter, may in the discretion of the enforcing authority, be charged and prosecuted as an infraction. Any person convicted of an infraction under the provisions of this Code shall be punishable as provided by the Government Code of the State of California.
8.68.100 Enforcement.
A. General. The City Manager shall enforce this Chapter, and its provisions shall be binding on all agents, successors, and assigns of an applicant. The City Manager may suspend or revoke any building permit or approval upon finding a violation of any provision of this Chapter.
No land-use approval, building permit, or certificate of occupancy shall be issued for any residential development unless exempt from or in compliance with this Chapter. The City may institute any appropriate legal actions or proceedings necessary to ensure compliance herewith, including, but not limited to, actions to revoke, deny, or suspend any permit or development approval.
B. Excessive Rents/Legal Action. If the City Manager determines that rents in excess of those allowed by operation of this Chapter have been charged to a tenant residing in an affordable unit, the City may take appropriate legal action to recover, and the project owner shall be obligated to pay to the tenant, or to the City in the event the tenant cannot be located, any excess rents charged.
Section 8.68.110 Appeals.
Decisions of the City Manager under this Chapter may be appealed as provided in Chapter 8.136.
SECTION 4. EFFECTIVE DATE. This Ordinance shall take effect and be enforced 30 days following its final adoption.
SECTION 5. SEVERABILITY. The provisions of this Ordinance are severable and if any provision, clause, sentence, word or part thereof is held illegal, invalid, unconstitutional, or inapplicable to any person or circumstances, such illegality, invalidity, unconstitutionality, or inapplicability shall not affect or impair any of the remaining provisions, clauses, sentences, sections, words or parts thereof of the Ordinance or their applicability to other persons or circumstances.
SECTION 6. POSTING. The City Clerk of the City of Dublin shall cause this Ordinance to be posted in at least three public places in the City of Dublin in accordance with Section 36933 of the Government Code of the State of California.
PASSED, APPROVED AND ADOPTED this __th day of _______ 2024, by the following vote:
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Ord. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 10 of 10 AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Mayor
ATTEST:
_________________________________
City Clerk
883
Amendments to the Dublin
Municipal Code Inclusionary
Zoning Regulations, Adopting
a Methodology for
Determining Affordable
Housing In-Lieu Fees, and
Adopting Non-Residential
Development Affordable
Housing Impact Fees
City Council
January 9, 2024
884
Background
• Strategic Plan Strategy 2: Housing Affordability
• August 15, 2023, & September 19, 2023
– Information Report and Recommendations:
• Inclusionary Zoning Regulations (IZR)
• Affordable Housing In-Lieu Fee
• Non-Residential Development
Affordable Housing Impact Fee
(“Commercial Linkage Fee”)
885
City Council Direction
• Lower the Inclusionary Zoning Regulations applicability threshold to projects of 10+ units;
• Assess in-lieu fees on a per-square-foot basis for each market-rate unit; • Establish separate regulations for ownership and rental developments; • Retain the existing Commercial Linkage Fee amount with an annual inflationary index; and
• Combine the Research & Development and Office use categories – Set fee at $1.39 per square foot, which is the average of the current fee for those two use categories.
886
Inclusionary Zoning Regulations (IZR)
Project Size
Threshold
Overall
Inclusionary
Requirement
Income Targets
(Ownership)
Income Targets
(Rental)
Must Build
Requirement
Ownership
& Rental
20+ Units 12.5% 60% Moderate
40% Low
50% Moderate
20% Low
30% Very Low
60% of Inclusionary
Requirement
- Current IZR
- Proposed IZR
Project Size
Threshold
Overall
Affordability
Requirement
Income
Targets
Very Low
Income
Targets
Low
Income
Targets
Moderate
Must Build
Requirement
Ownership 10+ Units 12.5% 0% 40% 60% 60% of IZR
Rental 10+ Units 10% 0% 100% 0% 60% of IZR
For Ownership Units
• 55-year affordability requirement would reset upon each sale of an affordable ownership unit • Preference points would apply to the resale of affordable ownership units 887
Inclusionary Zoning Regulations (IZR)
Project Size
Threshold
Overall
Inclusionary
Requirement
Income Targets
(Ownership)
Income Targets
(Rental)
Must Build
Requirement
Ownership
& Rental
20+ Units 12.5% 60% Moderate
40% Low
50% Moderate
20% Low
30% Very Low
60% of Inclusionary
Requirement
- Current IZR
- Proposed IZR
Project Size
Threshold
Overall
Affordability
Requirement
Income
Targets
Very Low
Income
Targets
Low
Income
Targets
Moderate
Must Build
Requirement
Ownership 10+ Units 12.5% 0% 40% 60% 60% of IZR
Rental 10+ Units 10% 0% 100% 0% 60% of IZR
888
Inclusionary Zoning Regulations (IZR)
Project Size
Threshold
Overall
Inclusionary
Requirement
Income Targets
(Ownership)
Income Targets
(Rental)
Must Build
Requirement
Ownership
& Rental
20+ Units 12.5% 60% Moderate
40% Low
50% Moderate
20% Low
30% Very Low
60% of Inclusionary
Requirement
- Current IZR
- Proposed IZR
Project Size
Threshold
Overall
Affordability
Requirement
Income
Targets
Very Low
Income
Targets
Low
Income
Targets
Moderate
Must Build
Requirement
Ownership 10+ Units 12.5% 0% 40% 60% 60% of IZR
Rental 10+ Units 10% 0% 100% 0% 60% of IZR
889
Inclusionary Zoning Regulations (IZR)
Project Size
Threshold
Overall
Inclusionary
Requirement
Income Targets
(Ownership)
Income Targets
(Rental)
Must Build
Requirement
Ownership
& Rental
20+ Units 12.5% 60% Moderate
40% Low
50% Moderate
20% Low
30% Very Low
60% of Inclusionary
Requirement
- Current IZR
- Proposed IZR
Project Size
Threshold
Overall
Affordability
Requirement
Income
Targets
Very Low
Income
Targets
Low
Income
Targets
Moderate
Must Build
Requirement
Ownership 10+ Units 12.5% 0% 40% 60% 60% of IZR
Rental 10+ Units 10% 0% 100% 0% 60% of IZR
890
Inclusionary Zoning Regulations (IZR)
Project Size
Threshold
Overall
Inclusionary
Requirement
Income Targets
(Ownership)
Income Targets
(Rental)
Must Build
Requirement
Ownership
& Rental
20+ Units 12.5% 60% Moderate
40% Low
50% Moderate
20% Low
30% Very Low
60% of Inclusionary
Requirement
- Current IZR
- Proposed IZR
Project Size
Threshold
Overall
Affordability
Requirement
Income
Targets
Very Low
Income
Targets
Low
Income
Targets
Moderate
Must Build
Requirement
Ownership 10+ Units 12.5% 0% 40% 60% 60% of IZR
Rental 10+ Units 10% 0% 100% 0% 60% of IZR
For Ownership Units
• 55-year affordability requirement would reset upon each sale of an affordable ownership unit • Preference points would apply to the resale of affordable ownership units 891
Changes to Affordable Housing In-Lieu Fee
Current Fee
• On a per Affordable Housing
unit basis
• $241,131 per affordable unit
Proposed Fee
• On a per-square-foot basis for
each market-rate unit
• $9 per square foot
892
Changes to Non-Residential Development
Affordable Housing Impact Fee
• Retain existing fee structure
• Combine Research & Development and Office category
– Fee set at $1.39 per square foot (average of the two categories) • Updated the names of the land use categories
893
Planning Commission Review
On December 12, 2023, the Planning Commission
• Unanimously recommended City Council approval of the proposed amendments
• Recommended periodic review of the Inclusionary Zoning Regulations 894
Historical Context
On September 19, 2023, the City Council received a presentation from EPS
895
Recommendation
Conduct the public hearing, deliberate, and take the following actions:
1) Waive the reading and INTRODUCE the Ordinance Approving Amendments to Dublin Municipal Code Chapter 8.68 (Inclusionary Zoning Regulations);
2) Adopt the Resolution Establishing the Methodology for Determining the Affordable Housing In-Lieu Fee for Future Residential Units Subject to the City of Dublin Inclusionary Zoning Regulations; and 3) Adopt the Resolution Approving the Non-Residential Development Affordable Housing Impact Fees.
896
Economic & Planning Systems, Inc.
The Economics of Land Use
1330 Broadway, Suite 450 Oakland, CA 94612
510.841.9190 www.epsys.com
INCLUSIONARY HOUSING
PROGRAM UPDATE
Prepared for the City of Dublin
City Council
January 9, 2024
897
Economic & Planning Systems City of Dublin | 2
6TH CYCLE RHNA
Dublin’s 6th Cycle RHNA requires that Dublin identify zoning/regulatory capacity for 3,719 units.
– 61% of total allocation = affordable to Moderate and Lower-income households Income Category Percent of Area Median Income (AMI) * RHNA Very Low Income 0-50% 1,085
Low Income 51-80% 625
Moderate Income 81-120% 560
Above Moderate Income >120% 1,449
Total 3,719
* AMI in Alameda County is $147,900 for a household of four, according to 2023 HCD Income Limits
How do affordable housing programs like the Commercial Linkage Fee program and Inclusionary Housing Ordinance contribute to meeting this goal? 898
Economic & Planning Systems City of Dublin | 3
MARKET CONDITIONS CHANGE OVER TIME
This chart demonstrating price index since 2002 offers a partial explanation as to why in today’s market:
(1) higher inclusionary requirements are difficult to meet; (2) in-lieu fees fail to align with the requirement despite inflationary adjustments. -30
-10
10 30
50 70
90 110
130
150
2000 2005 2010 2015 2020
Price Index
Price Index - Construction Costs, Multifamily Rents, Single Family Home Sales Construction Cost Index (ENR) Multi-family Market-Rate/Affordable Rents (Costar) Single Family Home Sales (Zillow) 899
Economic & Planning Systems City of Dublin | 4
The total cost of construction is $613,295.
GAP ANALYSIS FOR MARKET-RATE MULTIFAMILY RENTAL
65 DU/ACRE (1,100 SQ. FT. UNITS), 3-BEDROOM
$170,280
$376,380
$569,280 $599,140
$443,015
$236,915
$44,015
$14,155
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Very Low
Income
(50% AMI)
Low
Income
(80% AMI)
Median
Income
(100% AMI)
Moderate
Income
(110% AMI)
Total Supportable Unit Value Affordability Gap
900
Economic & Planning Systems City of Dublin | 5
RENTAL - IN-LIEU FEE OPTION
Comparison between Existing and Proposed Fee Structures Based on a hypothetical 100-unit project, each unit being 1,100 sq ft Current Rental Fee
• 12.5% Inclusionary Requirement
• 60% Must Build (7 units)
• 40% Fee out Option (5 units)
• Fees based on 5 affordable units
($241,131 per affordable unit)
• 7 affordable units + total fee
revenue of $1,205,655
Proposed Rental Fee
• 10.0% Inclusionary Requirement
• 60% Must Build (6 units)
• 40% Fee out Option (4 units)
• Fees based on 94 market-rate
units built ($232,440 per
affordable unit)
• Equivalent to $9 per market
rate square foot unit
• 6 affordable units + total fee
revenue of $929,760
901
Economic & Planning Systems City of Dublin | 6
MULTIFAMILY RENTAL - FEASIBILITY
Target 5.5% yield on cost for a feasible project
With inclusionary program, development yield falls below threshold but recommended requirement is improved over current.
5.56%
5.30%
5.32% 5.31%
5.35%
5.15%
5.20%
5.25%
5.30%
5.35%
5.40%
5.45%
5.50%
5.55%
5.60%
No Inclusionary
Requirement
Current Inclusionary
Requirement
Current In-Lieu Fee Recommended
Inclusionary Requirement
Recommended Target
Fee ($9/sq. ft.)
902
Economic & Planning Systems City of Dublin | 7
The total cost of development is $1,137,288.
GAP ANALYSIS FOR MARKET-RATE SINGLE-FAMILY DETACHED
10 DU/ACRE (2,400 SQ. FT. UNITS), 4-BEDROOM
$217,100
$353,500
$558,300 $626,600
$920,188
$783,788
$578,988 $510,688
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Very Low
Income
(50% AMI)
Low
Income
(70% AMI)
Median
Income
(100% AMI)
Moderate
Income
(110% AMI)
Supportable Home Price Affordability Gap
903
Economic & Planning Systems City of Dublin | 8
OWNERSHIP - IN-LIEU FEE OPTION
Comparison between Existing and Proposed Fee Structures Based on a hypothetical 100-unit project, 2,400 sq. ft. per unit.
Current Ownership Fee
• 12.5% Inclusionary Requirement
• 60% Must Build (7 units)
• 40% Fee out Option (5 units)
• Fees based on 5 affordable units
($241,131 per affordable unit)
• 7 affordable units + total fee
revenue of $1,205,655
Proposed Ownership Fee
• 12.5% Inclusionary Requirement
• 60% Must Build (7 units)
• 40% Fee out Option (5 units)
• Fees based on 93 market-rate
units built ($401,333 per
affordable unit)
• Equivalent to $9 per market
rate square foot
• 7 affordable units + total fee
revenue of $2,006,665
904
Economic & Planning Systems City of Dublin | 9
40.55%
29.91%
32.70%
29.91% 30.65%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
No Inclusionary
Requirement
Current Inclusionary
Requirement
Current In-Lieu Fee Recommended
Inclusionary Requirement
Recommended Target Fee
($9/sq. ft)
SINGLE FAMILY DETACHED – FEASIBILITY
Target 15% profit margin for a feasible project
With inclusionary program, development remains feasible under recommended requirement and fee/build scenarios.
905
Economic & Planning Systems City of Dublin | 10
EVALUATION OF INCLUSIONARY PROGRAMS
Each of the Tri-Valley cities has unique inclusionary zoning regulations which helps it achieve the goals of its community.
DISCUSSIONS WITH OTHER TRI-VALLEY CITIES
• Project size threshold average of 10 units
• In-lieu fees charged per market rate square foot
• Different requirements between ownership and rental projects o Ownership tends to target Moderate income levels
o Rental tends to target Very Low and Low
• Inclusionary zoning in combination with State laws have resulted in the production on on-site units
906
STAFF REPORT
CITY COUNCIL
Agenda Item 6.2
DATE: January 9, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: Downtown Dublin Specific Plan Amendments – Parking Requirements (PLPA-2023-00019)
Prepared by: Gaspare Annibale, Associate Planner
EXECUTIVE SUMMARY:
The City Council will consider amendments to the Downtown Dublin Specific Plan to eliminate parking requirements in the Downtown. The proposed amendments implement recent changes in state law and the recommendations of the Urban Land Institute. They also extend the elimination of parking requirements beyond the state-required one-half-mile radius of the BART station to include all properties within the Downtown Dublin Specific Plan area.
STAFF RECOMMENDATION:
Conduct the public hearing, deliberate, and adopt the Resolution Amending the Downtown Dublin Specific Plan to Eliminate Parking Requirements in the Retail District, Transit-Oriented District, and Village Parkway District.
FINANCIAL IMPACT:
None.
DESCRIPTION:
Background
The overarching goal of the Downtown Dublin Specific Plan (DDSP) is "to create a vibrant, dynamic commercial and mixed-use center that provides a wide array of opportunities for shopping, services, dining, working, living, and entertainment in a pedestrian-friendly and aesthetically pleasing setting that attracts both local and regional residents." The DDSP established three distinct districts, each including its own set of parking standards tailored to the envisioned uses. A map of the DDSP area and districts is provided in Figure 1. 907