The Goleta Planning Commission passed a resolution on Monday to formalize its system of in-lieu fees for affordable housing, which developers pay when they do not build the required number of affordable residential units in a project.
An inclusionary housing program within Goleta’s Housing Element requires 20% of units within a new residential development to be affordable housing units, including units for each of five income categories: extremely low, very low, low, moderate and above moderate.
Four-person households with an annual income of $100,050 or less and two-person households with an income of $80,050 or less are considered low-income.
“As you feel it, probably every day, housing is an ever-present need in California, especially here on the South Coast and in Goleta, where land and housing are particularly expensive,” said Anne Wells, the city’s advance planning manager.
While the city prefers that developers build on-site affordable units, developers for some projects may instead pay an in-lieu fee, which is deposited into the city’s affordable housing trust fund that goes toward developing future affordable units.
In-lieu fee payments have been an option for developments since the Housing Element was adopted in 2010; however, they have been implemented on a case-by-case basis, with no specified amount or schedule.
“We’ve been collecting these fees; they’re not new,” senior planner J. Ritterbeck said. “There just has not been a structured program that allows city staff and developers to be able to predict (the payment amounts).”
Developments that are eligible to pay in-lieu fees include residential developments with two to four units, and larger projects if the Goleta City Council determines that providing the required affordable housing units on-site would be infeasible.
While the Planning Commission supported the structure of the in-lieu fees, some commissioners were concerned about the fee amounts.
“I think the fees are too low. I think we’re making a case for financial infeasibility,” chair Katie Maynard said. “We’ve seen a number of projects come in where the above moderate and moderate are getting built and the very low-income and low-income are not getting built. The argument seems to be it’s infeasible to build things when we could build them so much cheaper by paying the in-lieu fee and not doing it on-site.”
Concerns about the pricing for very-low and low-income fees were also brought up, saying that they should be comparable to the size and quality of other units. Otherwise, many commissioners said, it will lead to more small apartments and studio apartments.
“It’s one of our core values — equal value (in affordable housing units) — and yet, we’re not building the same size or quality of unit when we’re going with the in-lieu fee versus on-site,” Maynard said. “We’re not even budgeting it at equal value in terms of size and quality, so I think that’s problematic.”
Ultimately, the Planning Commission approved the resolution, with the revisions that the nonresidential impact fee for hotels will be analyzed by square footage rather than by the amount of rooms, and that the total for the in-lieu fees will be kept the same, but the amount per category will be rebalanced.
The Planning and Environmental Review Department proposed in-lieu fees for for-sale projects of $5.80 per square foot of the entire development to satisfy the above-moderate income requirements, $12.80 per square foot for moderate-income units, $3.20 per square foot for low-income units, $2.40 per square foot for very low-income units and $3.90 per square foot for extremely low-income units.
For rental projects, the department recommended no in-lieu fee for above moderate-income units, $11.50 per square foot for moderate-income units, $5.40 per square foot for low-income units, $4 per square foot for very low-income units and $6.50 per square foot for extremely low-income units.
Developments with two to four units would have a flat rate of $16 per square foot. The amounts were based on fee studies conducted by consultants.
“Market-rate rentals are generally affordable to the above-moderate income category,” said David Doezema, senior principal for Keyser Marston Associates. “We didn’t identify any in-lieu fee with respect to that component of the inclusionary requirement because the market-rate rentals are serving that category.”
The Housing Element also requires an impact fee from developers of nonresidential projects to “mitigate the impact of nonresidential development on the need for affordable housing,” with the idea that new workplace buildings create new jobs, at least some of which would be lower paying, and would bring even more new demand for affordable housing.
The proposed amounts for the fees were $8 per square foot for office and medical developments, $5 per square foot for warehouse and industrial projects, $2 per square foot for retail and commercial developments, and $4,800 per room for hotels.
The affordable housing fee study results and recommendations for in-lieu and nonresidential impact fees are scheduled to be presented to the Goleta City Council on Oct. 5.
Click here to read the staff report from this week’s meeting.
— Noozhawk staff writer Serena Guentz can be reached at sguentz@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.