March 14, 2019

Milpitas: Takes Action on Fees for Affordable Housing


At its March 5th meeting, the Milpitas City Council took action to finalize its affordable housing ordinance,  setting in-lieu fee levels for its housing inclusionary ordinance and establishing new non-residential impact fees (otherwise known as Commercial Linkage Fees). Milpitas joins many of its neighboring cities in adopting a CLF. San Jose is in the process of studying a CLF ordinance.

SV@Home was at the meeting to support reasonable fee levels that balance development feasibility with the impact new development has on the need for new affordable homes. One of the keys to setting an in-lieu fee under an inclusionary program is to set it at a level that encourages developers to build affordable homes rather than simply “feeing out.” With CLFs, it is important to set the fee at a level that recognizes the need for homes for jobs without discouraging new employment opportunities.

For its inclusionary program, the council took action to set the per square foot in-lieu fee at $33 for both rental and ownership units. This fee level is would raise sufficient funding, were a developer to choose to pay the fee rather than build the units, that would allow for the financing of a like number of affordable units off site.

For non-residential development, the council set the CLF at $8 per square foot for office/retail and $4 per square foot for industrial retail, with the fees to be phased in over a period of two years. The council action exempted Class A office and R&D development, without clear sunset dates.

We appreciate the work of Milpitas staff and the City Council to respond to the need for more affordable housing resources in the city.