Affordable Housing Capital
Facilities Fee Pilot Program
City Council Meeting
November 12, 2024
1 Gabe Osburn, Director
Planning & Economic Development
Background
2 • Planning and Economic Development and Finance conducted a study session on April 9, 2024, to review the Development Impact Fee Program • Request from community to waive impact fees or adjust impact fee rates to calculate based on square footage of the new residential units • Provided overview of the existing Park and Capital Facility Fee programs • Direction provided to staff to explore limited waiver program, specifically focusing on Capital Facilities Fee (CFF) only
• Current CFF fees are based on a nexus fee study adopted by the Council on May 22, 2018
• Study updated nexus analysis
• Relationship between development’s impact on infrastructure and fee • Create program guidance on the use of CFF
• Nexus approach based on maintaining existing services levels as growth occurs • Fees can be adopted up to a maximum justified amount that reflects development financial feasibility under current market conditions Development Impact Fee Study
3 Development Impact Fee Study
4 Eligible Use of CFF funds
• Capital projects only
• Specific infrastructure or facility types
• Upgrade or expansion only
• Developer reimbursement
• Fee administration
Fee Study Expenditure
Categories and Allocations
5 Impact Fee Legislation
5 Assembly Bill 602
Beginning January 1, 2022, local agencies conducting an impact fee study must follow specific standards and practices:
1. Impact fee study must be adopted
2. Study must identify and justify level of service
3. Studies adopted after July 1, 2022 must calculate housing development fees proportionately to the square footage
4. Studies should be updated every 8 years, from the period beginning on January 1, 2022
6 Impact Fee Litigation
6 Sheetz v. County of El Dorado
• In April 2024, United States Supreme Court ruled
t
hat local jurisdictions must demonstrate nexus
between proposed development and relative impact
of new developments on the community.
• Rough proportionality to the development’s impact
7 Impact Fee Nexus Study
7 • Prioritize a nexus study update for Park Impact and Capital Facilities Fees
• Align with AB 602
• Address any identified proportionality issues
• Involves multiple departments
• 2-year process
8 • Created in 1969 to require jurisdictions to plan for their share of housing needs at all income levels
• Santa Rosa is included in the Association of Bay Area Governments (ABAG) RHNA methodology process
• Role of local government is to participate in allocation process and update Housing Element to accommodate allocation
• RHNA allocation split into four affordability levels based upon Area Median Income (AMI):
• Very Low – 0-50% of AMI
• Low – 50-80% of AMI
• Moderate – 80-120% of AMI
• Above Moderate – 120% or more of AMI
Regional Housing Needs Allocation (RHNA)
8 9
Regional Housing Needs Allocation (RHNA)
9 • As of December 31, 2023, Santa Rosa had achieved the following from the 2023-2031 Cycle:
Income Category
Percent
Needed
Housing Units
Needed
Permits Issued
in 2022 and
2023*
Percent
Issued
Remaining
Allocation
Very Low 26% 1,218 403 33% 815
Low 15% 701 467 67% 234
Moderate 16% 771 75 10% 696
Above Moderate 43% 1,995 2,167 109% 0
*Data from 2023 General Plan, Inclusionary Housing and Growth Management Annual Review 10 Permit Totals – All Application Types
10 11
New Housing Unit Building Applications
11 Units Applied For in 2024
91 SFDs Applied For
27 Single Family Dwelling (SFD) Units
ADUs Applied For
64 Accessory Dwelling Units (ADU)
MFRs Applied For
0 Accessory Dwelling Units (ADU)
Units Applied For in 2023
357
SFDs Applied For
69 Single Family Dwelling (SFD) Units
ADUs Applied For
95 Accessory Dwelling Units (ADU)
MFRs Applied For
193
Accessory Dwelling Units (ADU)
• Totals include
market-rate and
affordable
projects
• No affordable
deed restricted
building permits
applied for in
2024
As of October 25, 2024
12 New Housing Unit Building Applications
12 As of October 25, 2024
Totals include market rate and affordable units
13 Affordable Housing Pipeline
13 Affordable Units Associated with Planning Entitlements 14 • Funding sources are being affected by budget reductions • Affordable housing development is historically inconsistent year to year due to funding challenges
• Significant amount of affordable housing constructed over the last 5 years and housing development may be in a down
cycle
• Planning entitlements are an indicator permit for future housing construction towards the middle to end of the RHNA cycle
Affordable Housing Pipeline
14 15
• Set CFF fee to zero dollars ($0.00) for new housing units that meet the following criteria:
• Unit is deed restricted through the Housing Authority and Housing and Community Services Department for the Very
L
ow, Low and Moderate affordability categories
• For units in the Low category, the zero fee allowance will sunset once the RHNA allocation is achieved
• Zero fee incentive will apply to eligible projects that obtain a
n issued building permit during the program’s lifespan
Zero Fee Incentive Program
15 16
• Additional eligibility criteria:
• Zero fee will apply to the conversion of existing temporary housing allowed under code section 20-16.030 to permanent housing units, when the proposal meets affordability requirements and approval for the conversion is obtained during program's lifespan
• Residential units receiving locally sourced financial assistance from the City or the Housing Authority’s loan programs will not be eligible for the zero fee
• The program will operate for a limited term of 3 years from the date of adoption, or to the adoption of an impact fee study addressing CFF, whichever occurs first
Zero Fee Incentive Program
16 17
Impacts
17 AMI Category Units
Projected
CFF Amount
Very Low (0%-50%) 3 $210,024
Low (50%-80%) 291 $2,896,010
Moderate 0 $0
294 $3,106,034
Affordable Units Entitled or in Entitlement Review
• Program will reduce funding
t
o capital project program
• Fiscal impact based on
private development timelines
and difficult to predict
• Identified projects may not
meet criteria
• Revenue lost can be
backfilled with other eligible
funding sources, including
competitive infrastructure
grants
18 It is recommended by the Planning and Economic Development Department that the Council, by resolution, adopt an Affordable Housing Capital Facilities Fee Pilot Program reducing the Capital Facilities Fee for certain deed restricted affordable residential unit types to encourage the near-term development of specific affordable housing units needed to comply with the Regional Housing Needs Allocation.
Recommendation
18 19
Gabe Osburn
Director of Planning and Economic Development
[email protected] | (707) 543-3853
Questions
19