September 27, 2018

County of Santa Clara: Supervisors Unanimously Approve New Fees & Inclusionary Zoning for Stanford Housing


After several months of public outreach, committee hearings, proposed ordinances, and revised ordinances, the Santa Clara County Board of Supervisors voted Tuesday to approve an Affordable Housing Impact Mitigation Fee (similar to a Commercial Linkage Fee), and an Inclusionary Housing Zoning Ordinance for the Stanford University Community Plan Area, which is located on County’s unincorporated land.

The approved Affordable Housing Impact Mitigation Fee (AHIMF) will be set at $68.50 per square foot, and could generate as much as $156 million over the next 20 years.  Ahead of Tuesday’s meeting, County staff lowered its recommended fee level from its original proposed level of $143 per square foot, which was the amount identified in the nexus study that would be needed to fully mitigate the housing needs of extremely-low, very-low, low and moderate income workers expected as part of Stanford’s expansion plans.  The approved fee will cover roughly half of the total housing demand, but does address the impacts of most of the lower-income worker households.  It is important to note that fee levels are typically set far below the nexus study numbers.

In an effort to compromise, the County agreed that funds affordable housing development within a six mile radius of the Stanford Area will have first priority, but those planned elsewhere in the County can still be funded.  Similarly, the affordability restrictions were lowered to 55 years from the originally proposed 99.

The AHIMF is also structured in a way that would allow Stanford to significantly reduce its required fees by providing affordable units on campus.  A protocol was adopted that gives greater credit for units affordable to lower-income households.

In addition to the AHIMF, the Board approved an Inclusionary Zoning Ordinance which requires the University to set aside 16% of any new market rate residential development for affordable housing.  The ordinance sets income targets that ensure that lower-income households will benefit from the newly constructed units.

The intent of the higher fees, and the credits for building in-kind units as an alternative mitigation option, is  create incentives for housing production and deeper affordability over the collection of fees.

The Board also reinforced its interest in continued discussion with Stanford regarding alternative ways of mitigating the impact of their new development through a development agreement that would potentially result in development of new homes sooner and could provide resources in various forms for affordable housing.  There was significant discussion about the appropriate timing and scope of these discussions, and the Board asked staff to come back on October 16th with a detailed proposal before negotiations begin.  Stanford submitted a proposal for an alternative approach to addressing the housing needs created by its planned development, and it appears likely that some of these ideas will be included in negotiations that will now take place within the context of the AHIMF and Inclusionary Housing ordinances.