Sebastopol Municipal Code Ch. 3.64 Affordable Housing Linkage Fee Program for Nonresidential Development

This chapter shall be known as the “Affordable Housing Linkage Fee Program for Nonresidential Development.”

A. Mitigation of Affordable Housing Impacts Linked to Nonresidential Development. The purpose of this chapter is to: (1) implement the goals and objectives of the General Plan Housing Element adopted by the City of Sebastopol; (2) mitigate the housing impacts caused by new, changed and expanded nonresidential development in the City of Sebastopol; (3) provide a source of revenue for housing affordable to persons of very low and low income; and (4) recognize the limited amount of affordable housing in the City of Sebastopol as part of a Countywide problem. The City Council has determined that affordable housing requirements are needed, has found the following requirements to be consistent with its General Plan and pursuant to Government Code Section 65913.2 and has considered the effects of the fee with respect to the City’s housing needs as established in the City’s Housing Element.

A. Need for Affordable Housing. The City Council has found that persons of very low and low income are experiencing increasing difficulty in locating and maintaining adequate, safe and sanitary affordable housing.

B. Housing Needs and Impacts Created by Nonresidential Development. Pursuant to the Sonoma County Workforce Housing Linkage Fee Study published by Economic and Planning Systems, Inc., in December 2001, the City Council finds that the construction or expansion of nonresidential development is a major factor in attracting new employees to the City of Sebastopol and the County of Sonoma. A substantial number of these new employees and their families seek residence in the City and County and place a greater strain on an already impacted housing stock. Current residents of the City and County may be priced out of their current homes as prices escalate due to increased housing demand. Current and new employees who are unable to find affordable housing in the jurisdictions in which they work are forced to commute long distances. This situation adversely affects their quality of life, consumes limited energy resources, increases traffic congestion and has a negative impact on air quality. Employers have or will have problems attracting a labor force because of the shortage of housing affordable to many workers.

C. Means of Meeting Affordable Housing Demand. Increasing the production and availability of affordable housing is problematic. Prices and rents for affordable housing remain below the level needed to attract new construction. At the same time, escalating land costs and rapidly diminishing amounts of land available for development hinder the provision of affordable housing units solely through private action. Federal and State housing finances and subsidy programs are not sufficient by themselves to satisfy the affordable housing needs associated with employment resulting from nonresidential development. Programs and activities to expand affordable housing opportunities can be accomplished through public/private partnership action. It is the purpose of this chapter to establish a feasible means by which developers of nonresidential development projects assist in: (1) increasing the supply of very low- and low-income housing and (2) increasing the supply of housing in close proximity to employment centers.

D. Imposing Housing Requirement on Developers Whose Projects Create the Need. It is appropriate to impose some of the cost of the increased burden of providing housing for very low- and low-income people necessitated by such development directly upon the sponsors of a development, and indirectly upon the occupiers. The imposition of an affordable housing unit/fee requirement is an appropriate means to accomplish the purpose of this chapter. In calculating the affordable housing fee/unit requirement, the City Council has taken into account other factors in addition to the simple calculation of contribution. These include impact of the unit requirements and in-lieu fee on construction costs, special factors and hardships associated with certain types of development, and legal issues.

E. Rational Relationship Between Affordable Housing Need Created and Fee/Unit Requirement. The unit requirements and housing fees contained in this chapter are designed to create a rational relationship between the amount of housing need created by the land use and the housing unit requirement or the size of the fee taking into account the effect of such unit or fee requirement on providing affordable housing opportunities and the economic feasibility of imposing such requirements.

As used in this chapter:

“Addition” shall mean adding gross square feet to an existing nonresidential development project subject to this chapter.

“Affordable housing” shall mean the total cost of monthly housing payments does not exceed 30 percent of gross household income.

“Changed nonresidential development” shall mean the transition of existing nonresidential space from one type of use to another that results in a change in use category between industrial, commercial and retail.

“City Manager” shall mean the City Manager of the City of Sebastopol or his/her designee.

“Development” or “development project” shall mean any project undertaken for the purpose of development, including new, expanded, remodeled, or changed nonresidential development. Development includes a project involving the approval of a tentative map or involving the issuance of a permit for construction, but not a permit to operate.

“Expanded nonresidential development” shall mean construction that results in a net increase in the gross square footage of an existing nonresidential development.

“Gross square feet” or “gross square footage” shall mean the area included within the surrounding walls of a nonresidential development as determined by the Planning Director. This area does not include enclosed parking for vehicles.

“In-lieu fee” shall mean a monetary exaction that is allowed by the City in place of the construction or provision of affordable housing units.

“Nexus study” shall mean the Sonoma County Workforce Housing Linkage Fee Study published by Economic and Planning Systems, Inc., in December 2001.

“Planning Director” shall mean the Planning Director for the City of Sebastopol or that individual or designee which has the responsibility of administering the City’s affordable housing development programs.

“Remodeled nonresidential development” shall mean all interior tenant or owner improvements to existing nonresidential space that result in an increase in usable square footage for industrial, commercial, or retail use.

“Very low- and low-income” shall mean a household with a total annual income below 80 percent of the area median income, adjusted for family size, and in accordance with the Area Median Income Schedule as published annually by the Department of Housing and Urban Development for the Santa Rosa MSA.

A. Linkage Fee Requirement. An affordable housing unit requirement is hereby established for new, expanded, remodeled, or changed nonresidential development in the City. These units and funds shall be used for programs and activities to expand affordable housing opportunities for very low- and low-income persons.

B. Payment of In-Lieu Fees. Developers of nonresidential projects shall pay an affordable housing fee. The City Council, by resolution, shall set forth the specific amount of the fee, list the types of programs and activities to be financed, describe the beneficiaries of these programs and activities, describe the reasonable relationship between this fee and the various types of development projects, and the time for payment.

C. As an alternative to the payment of the in-lieu fee, a developer of a nonresidential project may submit a request to mitigate the impacts of such development through the dedication of land. Such requests shall be approved by the City Council, if the City Council determines that such alternative will further affordable housing opportunities in the City to an equal or greater extent than would have the construction of units or the payment of the in-lieu fee.

D. As an alternative to the payment of the in-lieu fee, a developer of a nonresidential project may submit a request to mitigate the impacts of such development through construction of units affordable to very low- and low-income persons. Such requests shall be approved by the City Council, if the City Council determines that such alternative will further affordable housing opportunities in the City to an equal or greater extent than would have the payment of the in-lieu fee or dedication of land.

E. Time of Payment. The requirements of this chapter shall be met by each project prior to the issuance of the building permit or, where a building permit is not required, the use permit for the new, expanded, remodeled, or changed nonresidential development.

F. Annual Review. The City Council shall annually review the fee/unit requirements to determine whether they are reasonably related to the impacts of development and whether the described affordable housing units, programs and activities are still needed.

A. Determination of Development Projects. The in-lieu fee, land dedication or unit construction requirement will be applied to development projects involving the construction of a new building, construction of additional gross square footage to existing buildings, interior remodels that increase the usable square footage of the nonresidential development, and changes in use that do not require interior remodels but that change the existing use to one with a higher in-lieu fee as determined by the Planning Director and in accordance with SMC 3.64.080(B).

B. Determination of Land Uses. For the purposes of the application of this section, nonresidential land uses shall be divided into three classifications: commercial, retail, and industrial. The Planning Director shall determine the land use classification that best describes the nonresidential development for the purposes of assigning the fee to be charged. The Planning Director shall use the applicable table set forth in the City Council resolution establishing the specific affordable unit or in-lieu fee requirements to determine the appropriate classification.

A. Procedures for Nonresidential Development. Upon the effective date of the fee resolution, all applicants for new, expanded, remodeled, or changed nonresidential developments, except those subject to a separate and binding development or owner participation agreement with contrary provisions, and those building permit applications determined to be complete prior to the effective date of the fee resolution shall be required to fulfill their obligations as described herein and by the resolution adopted by the City Council pursuant to the terms of this chapter.

A. Fee Application According to Building Size. The following fees shall be applied to those building projects deemed subject to the fee:

1. For building areas equal to or less than 2,000 square feet, no fee shall be applied.

2. For building areas of 2,001 to 4,000 square feet, 50 percent of the fee shall be applied to that area above 2,000 square feet only.

3. For building areas of 4,001 or greater, 100 percent of the fee shall be all applied to all square footage of area subject to the fee.

B. Change of Use Fee. When the Planning Department determines that a change of use has been requested to convert existing space from (1) commercial to industrial or retail or (2) industrial to retail, a fee equal to the difference in the per-square-foot fee shall be charged in accordance with the terms of the fee resolution. A change of use from residential to nonresidential shall be subject to the same fee calculation as new construction.

A. Fee Adjustment. A developer of any project subject to the affordable housing fee requirement may apply to the Planning Director for a reduction or adjustment to the fee, or a waiver of the fee, based upon the absence of any reasonable relationship or nexus between the impacts of that development and the amount of fee charged. The application shall be made in writing and filed with the Planning Director no later than the time of application for a building permit authorizing construction of the project that is subject to the fee or, where a building permit is not required, a use permit.

The application shall state completely and in detail both the applicant’s factual basis and legal theory for adjustment or waiver and compare its proposal with the analysis set forth in the nexus study. The Planning Director shall consider the application and render a decision in writing within 30 days. The decision of the Planning Director is appealable pursuant to subsection B of this section.

B. Appeal Procedure. A decision of the Planning Director on an application for a fee waiver pursuant to subsection A of this section shall be appealable in accordance with this section. Any person wishing to appeal a decision of the Director shall file an appeal to the City Council in writing with the City Clerk not later than 10 days from the date of the written decision of the Director. The written appeal shall state completely and in detail the factual and legal grounds for the appeal. The City Council shall consider the appeal at a public hearing within 60 days after the filing of the appeal. The decision of the City Council is final.

C. Fee for Adjustment Request or Appeal. The processing charge for the request for a fee adjustment shall be that charged for administrative permit review and the processing charge for appeal shall be that charged for an appeal of staff determination.

D. Refund of Fee. If the affordable housing fee/unit is paid and the building permit is later canceled or voided, or if a use permit which triggers the application of the fee fails to vest within the terms of the use permit, the Planning Director may, upon written request of the developer, order return of the fee less administrative costs if (1) the fees paid have not been committed, and (2) work on the private development project has not progressed to a point that would permit commencement of a new, changed, or expanded use for which a fee would be payable. If the findings required by Government Code Section 66001 are not made, a refund to the then owner of the property for which the fee was paid shall be made pursuant to Government Code Section 66001.

A. Use and Disbursement of Monies in the Fund. Monies in the affordable housing fee fund shall be used in accordance with and in support of activities to implement the City’s adopted Housing Element, Consolidated Plan, and Implementation Plan. Activities shall be limited to direct expenditure for capital projects or incidental noncapital expenditures related to capital projects, including but not limited to land acquisition, construction, rehabilitation, subsidization, counseling or assistance to other governmental entities, private organizations or individuals to expand affordable housing opportunities to very low- and low-income households. Monies in the affordable housing fee/unit fund may be disbursed, hypothecated, collateralized, or otherwise employed for these purposes from time to time as the City Council so determines is appropriate to accomplish the purposes of the affordable housing fund. These uses include, but are not limited to, assistance to housing development corporations, equity participation loans, grants, predevelopment loan funds, participation leases, loans to develop affordable housing or other public/private partnership arrangements. The affordable housing funds may be expended for the benefit of both rental and owner-occupied housing.

B. Accounting of Fees. All affordable housing unit in-lieu fees shall be deposited into a segregated account and all expenditures of funds from the same shall be documented and included in an annual report, which shall be available for public inspection.

A. Public facilities and places of worship.

B. Construction of a structure to replace a previously existing building situated on the same lot if the previous building was demolished or destroyed within five years of the date the building permit application for the replacement building is submitted to the Sebastopol Building Department.

C. The portions of a development project located on property under the ownership of the Sebastopol Community Development Agency are exempt from the provisions of this chapter.

A. The affordable housing fee resolution may provide for an annual adjustment in the amount of the fee to reflect the percentage change in the cost of construction or public improvements as reported in the Engineering News Record Construction Price Index for the San Francisco Bay Area.

B. The affordable housing fee/unit may be adjusted from time to time, based upon amendments or updates to the nexus study.