July 17, 2017

Santa Clara County Jurisdictions Take Action on Housing Impact Fees



Over the last few weeks, three jurisdictions – the County of Santa Clara, the City of Los Altos, and the City of Santa Clara – took steps toward adopting housing impact fees for both non-residential development (AKA commercial linkage fees) and residential development (both rental and for-sale housing).  

SV@Home and many of our partner organizations have advocated for new housing impact fees in these jurisdictions for several months, and these recent actions bring us one step closer to our goal.  

Housing impact fees generate new sources of much-needed funding for the creation of new affordable housing – which is critical, as the County is forecasted to add over 500,000 new residents and 200,000 new jobs by 2040.  We need to work together as a region to create new sources of funding for affordable housing to make sure that all of these new individuals and families will have an affordable place to live!

Source: Metropolitan Transportation Commission, Plan Bay Area 2013

Five cities in Santa Clara County already have housing impact fees on the books – Cupertino, Mountain View, Palo Alto, San Jose, and Sunnyvale. Six others were part of an effort spearheaded by the Silicon Valley Community Foundation to consider adopting new housing impact fees – Campbell, Milpitas, Los Altos, Santa Clara, Saratoga, and the County of Santa Clara.  The cities of Campbell and Saratoga decided not to move forward with an ordinance at this time.  The County, Los Altos, Milpitas, and Santa Clara have continued to consider fee adoption.  Learn more about SV@Home’s policy recommendations for housing impact fee ordinances in the Policy Solutions section of SV@Home’s Resource Hub.

In case you missed it, here is a rundown of the recent progress made by Santa Clara, Los Altos, and the County:

Santa Clara City Council

At the July 11th meeting of the Santa Clara City Council, the Mayor and Council moved one step closer to adopting new impact fees and increasing its inclusionary housing requirement.  After hearing public testimony, Council directed staff to come back with a draft ordinance that largely reflects the recommendations developed by the Ad Hoc Affordable Housing Working Group, which included SV@Home and several of our partners.  

This action is a major step forward – and it wouldn’t be possible without the leadership of many individuals who took part in the working group meetings leading up to the July 11th meeting – over 15 hours of discussion and deliberation!  Much gratitude to those who stepped up to the plate, including Vice Mayor Dominic Caserta, Councilmembers Patricia Mahan and Pat Kolstad, and the 15 other members of the Working Group who represented a range of sectors and stakeholders, including business, builders, labor, market rate housing, affordable housing, and realtors.

With leadership from Vice Mayor Dominic Caserta (who served as Chair of the Ad Hoc Working Group) and Councilmember Teresa O’Neill, the Council passed the following Working Group recommendations with near unanimous approval:

Non-Residential Fees:
  • Retail: <5,000 square feet: No Fee; >5,000 square feet: $5 per square foot
  • Hotel: $5 per square foot
  • Office (including Industrial Office, R&D and Commercial Office): <20,000 square feet: $10 per square foot; >20,000 square feet: $20 per square foot
  • Other Commercial: $5 per square foot
  • Light Industrial: <20,000 square feet: $5 per square foot; >20,000 square feet: $10 per square foot; Low-Intensity Uses (e.g., Data Centers and Warehouses) – $2 per square foot
For-Sale Residential Fees and Inclusionary Housing:

Council recommended an inclusionary housing requirement of 12.5% (an increase from the City’s current 10% requirement), along with the following in-lieu fee levels:

  • Single-Family House: $30 per square foot
  • Townhome: $25 per square foot
  • Condominium: $20 per square foot
Rental Residential:

For these provisions, the Council voted to recommend the higher end of the ranges proposed by the Working Group.

  • A fee of $20 per square foot to be phased in over 12 months:
    • 0 – 6 months: Fee waived
    • 6 – 12 months: ⅓ of the fee
    • After 12 months: full fee
  • An alternative for developers to provide 15% affordable housing units instead of paying the impact fee (the Working Group recommended a range of 10-15%).
Additional Details

Council referred the City Attorney to analyze a proposed concept of offering a 25% reduction of fees for development projects that voluntarily pay area standard wages.  The Council also approved several other details related to implementation and exemptions.  Read a full recap of the Council’s decision.

Next Steps

Staff will draft an ordinance for Council’s consideration based on the above recommendations.  SV@Home will post the schedule of public hearings on our Events page as soon as it is published.

Santa Clara County Board of Supervisors

At their June 19th meeting, the Board of Supervisors voted to direct staff to conduct outreach to the public and interested parties to solicit input on the adoption of affordable housing impact fees for new for-sale residential and non-residential development in unincorporated Santa Clara County.  They also decided to extend the countywide Nexus Study to include for-sale residential and non-residential development on the Stanford University Campus.  The County is not planning to consider fees on rental residential development.

Next Steps

The Board asked staff to return in November 2017 with the results of public outreach, the Stanford supplement to the Nexus Study, and recommendations for further action for adoption and implementation of affordable housing impact fees.  SV@Home will continue to track the County’s work on this issue; stay tuned for information on how to participate in the public engagement process!

Los Altos City Council

At its May 19th meeting, the Los Altos City Council recommended the following fee levels for housing impact fees on residential and non-residential development:

  • Non-Residential
    • Office: $25 per square foot
    • All other non-residential: $15 per square foot
  • Residential Rental (multi-family): $45 per square foot

SV@Home supports the use of impact fees, but we have concerns that fees set too high could deter development and ultimately exacerbate the existing housing supply problem.  

Next Steps

Council also directed staff to come back with a proposal for for-sale residential developments, with a goal of finding a fee level that is equivalent to the cost of meeting the City’s inclusionary housing requirement (10% affordable units for developments with 5 or more units).  Staff will bring their recommendations on this back to the Council, along with a draft ordinance that reflects the May 19th recommendations.  SV@Home will post the details for this next meeting on our Events page as soon as it is published.