Campbell Municipal Code Ch. 19.04 Commercial Linkage Fee

A. The purpose of this Chapter is to facilitate the development and availability of housing affordable to a broad range of households with varying income levels within the City of Campbell by adopting a Commercial Linkage Fee that will supplement other public funding sources for affordable housing.

B. The City's Housing Element recognizes that Affordable Housing is a critical component to the City's economic and social health. Establishing a Commercial Linkage Fee to assist in financing Affordable Housing production is consistent with and will implement the City's Housing goals, policies, and programs for Affordable Housing which include, but are not limited to, the following:

1. Goal 1: Improve Housing Affordability in Campbell - Encourage the Production of Affordable Housing;

2. Program H-1b (Commercial Linkage Fee); and

3. Program H-1a (Inclusionary Housing Ordinance Implementation).

C. Providing Affordable Housing for new employees in lower- and moderate-income jobs locally (rather than leaving those employees to obtain housing in lower cost areas far from Campbell employment centers and transit corridors) helps minimize housing's contribution to greenhouse gas emissions and locating housing to reduce vehicle miles traveled and auto dependency. If the increased demand for Affordable Housing is not addressed within Campbell it will cause such housing to be built elsewhere, in areas with lower land values that are far from city employment centers and transit corridors, and the resulting commuting will cause increased traffic and transit demands and consequent noise and air pollution.

D. If the increased demand for Affordable Housing is not addressed within Campbell it may also impact economic growth in that businesses within the city may find it more difficult to attract and retain the variety of workers that they need.

E. Development of Affordable Housing using Commercial Linkage Fee funds to increase the supply of Affordable Housing also implements policies of the State of California to: (1) provide sufficient capacity for new housing affordable at all income levels necessary to accommodate the State's future economic growth; and (2) by providing housing for lower- and moderate-income retail and service workers, long commutes from less expensive housing markets can be avoided and thus contribute to the implementing the Global Warming Solutions Act of 2006 and the Sustainable Communities and Climate Protection Act of 2008.

F. State housing policy requires the City to assist in the development of adequate housing to meet the needs of extremely low-, very low-, low- and moderate-income households. There is a significant shortage of housing affordable to low- and moderate-income households, which will only increase as the finite number of residentially zoned parcels within the city are purchased and developed for market rate residential developments. This loss of residential land available for Affordable Housing is another impact of market rate residential development.

G. The requirements of this Chapter are based on a number of factors including, but not limited to, the City's long-standing commitment to economic diversity; the serious need for Affordable Housing as reflected in local and State housing laws, regulations, and policies; the demand for Affordable Housing created by Non-Residential Development; and the impact that the lack of Affordable Housing production has on the health, safety, and welfare of the City's residents including its impacts on traffic, transit and related air quality impacts, and the demands placed on the regional transportation infrastructure. Imposing a fee that is reasonably related to the burdens created by new Non-Residential Development on the City's need for Affordable Housing will enable the City to fund development of Affordable Housing units that will contribute to addressing these impacts and fulfilling these goals.

H. The City has prepared a Nexus Study which shows, and the City Council finds, that there is a reasonable relationship between the purpose for which the fees established by this Chapter are to be used and the type of development projects on which the fees are imposed, between the need for affordable housing and Non-Residential Development and between the amount of the fees and the cost of the Affordable Housing units or portion of the units attributable to the development on which the fees are imposed. The Nexus Study complies with the requirements of California Government Code section 66001(A)(4) by establishing the reasonable relationship between the need for affordable housing and Non-Residential Development.

I. It is the intent of the City Council that the fee required by this Chapter shall be supplementary to any conditions imposed upon a development project pursuant to other provisions of the Municipal Code, the City Charter, the Subdivision Map Act, the California Environmental Quality Act, and other state and local laws, which may authorize the imposition of project specific conditions on development.

(Ord. No. 2319, § 1(Exh. A), 9-3-2024)

A. Fee established. The Commercial Linkage Fee shall be specified by resolution of the City Council and shall be exempted, reduced, or adjusted in accordance with the provisions of this Chapter.

B. Fee adjustments. To account for inflation in Affordable Housing development costs, the Commercial Linkage Fee specified in Section 19.04.020.A. (Fee established.) shall be increased by the DGS California Construction Cost Index (CCCI) as published by the California Department of General Services Real Estate Service Division, or its successor, on July 1 of every year, to account for the annual percentage increase in the preceding year.

C. Imposition of fee. Compliance with this Chapter is a requirement for Non-Residential Projects, whether or not a condition of approval is expressly included in the land use permit where a land use permit was required.

D. Payment. Unless otherwise specified by the City Council in its resolution adopting the schedule of fees, the Commercial Linkage Fee shall be paid prior to the issuance of a building permit for new Non-Residential Projects in the city. The Applicant shall pay the amount due based on the fees in the fee schedule:

a. In effect on the date the fee is paid for a ministerial permit application;

b. The date an application was deemed complete for a development project application; or

c. The date the complete preliminary application was submitted for a project submitted pursuant to California Government Code Section 65941.1, as automatically adjusted in accordance with Subsection 19.04.020.B. (Fee adjustments).

If a permit meets more than one of the above criteria, the fee shall be based on the fee schedule in effect on the date that results in the lowest fee from the list above.

E. Failure to Pay. Failure to pay the Commercial Linkage Fee within the time specified in this Chapter shall result in the imposition of additional charges as set forth by resolution of the City Council.

(Ord. No. 2319, § 1(Exh. A), 9-3-2024)

The regulations, requirements, and provisions of this Chapter and Council resolutions adopted pursuant to this Chapter shall apply to any Non-Residential Project submitted one year following the effective date of this Chapter.

(Ord. No. 2319, § 1(Exh. A), 9-3-2024)

The Commercial Linkage Fee charged pursuant to Section 19.04.020.A (Fee established) shall be calculated for all Non-Residential Projects by multiplying the Commercial Linkage Fee by the useable commercial area.

(Ord. No. 2319, § 1(Exh. A), 9-3-2024)

The Applicant may request, and upon such request receive, a reduction or exemption from the Commercial Linkage Fee established by Section 19.04.020.A (Fee established.) as follows:

A. Fee reductions. The following fee reductions may be combined to reduce the Commercial Linkage Fee obligation for a project:

1. Small projects. The fee shall be reduced by fifty percent for projects that result in five thousand sq. ft. or less of net new non-residential floor area after accounting for any useable commercial area to be removed in accordance with Section 19.04.50.A.3 (Existing building areas.) or recently demolished useable commercial area in accordance with Section 19.04.050.A.4 (Recently demolished building areas.).

2. Large projects. The fee shall be reduced by fifty percent for any non-residential floor area over one hundred thousand square feet in a project.

3. Existing building areas. Legally existing useable commercial areas that are proposed for removal as part of a Non-Residential Project shall be deducted from the total commercial and covered commercial areas specified in Section 19.04.040 (Fee calculation.).

4. Recently demolished building areas. Recently demolished legal useable commercial areas shall be deducted from the total commercial and covered commercial areas specified in Section 19.04.040 (Fee calculation.) provided that less than three years elapses between the date of demolition permit final and the date of fee payment.

B. Fee exemptions. The following fee exemptions may be

1. Commercial Component of Mixed-Use Projects. Fifteen percent of the useable commercial area, cumulatively, in a mixed-use building with residential units on upper floors shall be exempt from the Commercial Linkage Fee. The area exempted by this section shall not, however, be excluded from other calculations used to determine eligibility for fee reductions specified in this Chapter.

(Ord. No. 2319, § 1(Exh. A), 9-3-2024)

A. Request for refund. If a Commercial Linkage Fee is collected on a Non-Residential Project and the permit for that Project later expires, is vacated, or voided before commencement of construction, the Applicant shall, upon request, be entitled to a refund of the unexpended housing commercial linkage fee paid, less a portion of the fee sufficient to cover costs of collection, accounting for and administration of the fee paid. Any request for a refund shall be submitted in writing to the Community Development Director within one year of the date that the permit expires or is vacated or voided. Failure to timely submit a request for a refund shall constitute a waiver of any right to a refund.

B. Unexpended fees. Fees collected pursuant to this Chapter which remain unexpended or uncommitted for five or more fiscal years after deposit into the Commercial Linkage Fee Fund shall be accounted for or may be refunded as provided by State law.

(Ord. No. 2319, § 1(Exh. A), 9-3-2024)

The amount of the Commercial Linkage Fee and the formula for the automatic annual adjustment established by this Chapter may be reviewed and revised periodically by resolution of the City Council. This Chapter shall be considered enabling and directive in this regard.

(Ord. No. 2319, § 1(Exh. A), 9-3-2024)

A. There is hereby created and established the Commercial Linkage Fee Fund.

B. The fees paid to the City pursuant to the provisions of this Chapter shall be deposited into the Commercial Linkage Fee Fund and used solely for the purpose described in this Chapter.

C. All interest which accrues from monies in the Commercial Linkage Fee Fund shall be credited to this fund.

D. Any repayments of loans made from the Commercial Linkage Fee Fund shall be deposited into the Commercial Linkage Fee Fund.

E. The Commercial Linkage Fee Fund, shall be subject to all of the applicable provisions of California Government Code section 66000 et seq.

(Ord. No. 2319, § 1(Exh. A), 9-3-2024)

All monies in the Commercial Linkage Fee Reserve Fund shall be expended solely on the production or refurbishment of Affordable Housing to help fulfill the need identified in the Nexus Study to increase the supply of housing affordable to households of extremely low, very low, low, or moderate income, or such other report as may be prepared from time to time to document the reasonable fair share of the costs to mitigate the increased need for Affordable Housing that is created by new Non-Residential development. Such expenditures may include, but are not necessarily limited to the following:

A. Reimbursement of or payment for, for all direct and indirect costs incurred by the City to fund the production of Affordable Housing pursuant to this Chapter, including but not limited to, the cost of land and right-of-way acquisition, planning, legal advice, engineering, design, construction, construction management, materials and equipment, or issuing loans to nonprofit Affordable Housing developers to acquire land and/or to rehabilitate existing buildings or build new developments to increase the supply of Affordable Housing units.

B. Costs of issuance or debt service associated with bonds, notes or other security instruments issued to fund Affordable Housing.

C. Reimbursement for the reasonable and necessary administrative costs incurred by the City in establishing or maintaining the Commercial Linkage Fee Fund, including but not limited to the cost of studies to establish the requisite nexus between the fee amount and the use of fee proceeds and yearly accounting and reports.

D. No portion of the Commercial Linkage Fee Fund may be diverted to other purposes by way of loan or otherwise.

(Ord. No. 2319, § 1(Exh. A), 9-3-2024)

The meaning of terms used in this Chapter shall be as defined by Section 19.04.100 (Definitions) and Chapter 19.07 (Definitions). Where a conflict may exist between these sections, the definitions provided in Section 19.04.100 (Definitions) shall prevail.

"Applicant" means any person or entity who is an applicant, developer, owner, or appellant with a property interest in a Non-Residential Project subject to the terms of this Chapter, and the authorized representative of any such person or entity.

"Building Permit" includes full structural building permits as well as partial permits such as foundation-only permits.

"Commercial Linkage Fee" means the fee adopted by the City Council pursuant to this Chapter to be paid to the City.

"Construction Cost Index" means the California Construction Cost Index (CCCI) published by the California Department of General Services, Real Estate Service Division. If that index ceases to exist, the community development director shall substitute another construction cost index which in his or her judgment is as nearly equivalent to the original index as possible.

"Useable Commercial Area" means the total horizontal floor area in square feet of all stories of all non-residential building areas measured to the inside surface of exterior walls as well as any covered non-residential area outside of the building envelope that is covered or partially covered by structures, beams, slats, or projections when viewed from above. This area specifically includes hallways, lobbies, elevators, stairwells, and mechanical rooms. This definition specifically excludes parking areas (including covered parking areas), areas shared with residential use in a mixed-use development, as well as areas covered by cornices, eaves, sills, and canopies cumulatively measuring less than thirty-inches in depth as measured to the outside surface of exterior walls, as well as ground level paving, pools, spas and decks, landscape features, and light wells.

"Nexus Study" means the fee study entitled: "Affordable Housing Nexus Study" prepared by BAE Urban Economics, dated July 15, 2024, accepted by the City Council on August 20, 2024, and on file with the City Clerk.

"Non-Residential Project" means any development having a non-residential use component and gross new or additional floor area or that applies for a permit to change an existing residential use to a different non-residential use category that increases the demand for Affordable Housing.

"Uninhabitable" means areas that are not considered habitable as defined by the California Building Code.

(Ord. No. 2319, § 1(Exh. A), 9-3-2024)