Sunnyvale — Housing & Park Impact Fees

Chapter 19.75 — Housing Impact Fees

Purpose and use of revenue

Chapter 19.75 responds to the City’s finding that certain new development creates demand for affordable housing and can worsen the shortage of housing affordable to lower-income households. The City’s nexus finding specifically identifies new commercial, industrial, research and development, retail, hotel/motel, and market-rate rental housing development as demand-generating categories. § 19.75.010(a)

Housing impact fee revenue goes into the City’s housing mitigation fund and is used to support affordable-housing development within Sunnyvale. § 19.75.010(b) The chapter is distinct from the City’s Sunnyvale Below Market Rate Housing requirements, although rental projects that later convert to ownership may receive a specified credit against BMR ownership obligations. § 19.75.040(a)

Projects subject to the housing impact fee

New nonresidential construction and new market-rate rental housing construction are subject to Chapter 19.75, and payment must be made a condition of approval for covered development projects. § 19.75.020(a)

For nonresidential projects, the chapter applies to new commercial, industrial, research and development, office, retail, and hotel/motel construction regardless of the project site’s zoning designation, unless the project qualifies for an exemption in the chapter. § 19.75.030(a) This is especially important for mixed-use or unusual sites: the relevant question is the actual development/use category and net new floor area, not simply the zone label.

For rental housing, a fee applies to new market-rate rental housing developments of four or more units, unless the applicant elects an approved alternative under § 19.75.040(d). A development with a recorded condominium map is still treated as new market-rate rental housing if the developer intends to rent the units initially. § 19.75.040(a)

All Sunnyvale zoning districts — nonresidential development

For the listed nonresidential uses, Chapter 19.75 applies regardless of zoning designation. Thus, a qualifying commercial, industrial, R&D, office, retail, or hotel/motel project cannot avoid the fee merely because it is located in a district where that use is allowed through a special planning framework. § 19.75.030(a)

• Purpose: mitigate the affordable-housing demand generated by qualifying new nonresidential development. § 19.75.010(a)–(b)
• Typical covered uses: commercial, industrial, R&D, office, retail, and hotel/motel new construction. § 19.75.030(a)
• Key measurement standard: fee is based on net new gross floor area multiplied by the applicable per-square-foot fee. § 19.75.030(b)
• Where it applies: every zoning designation, subject to Chapter 19.75 exemptions. § 19.75.030(a)
• Dimensional standards: Not found in source materials. Project setbacks, height, FAR, and building placement should be reviewed separately under Sunnyvale Development Standards, and project design approvals may involve Sunnyvale Design Review.

All Sunnyvale zoning districts — market-rate rental housing

The rental-housing fee applies citywide to qualifying new market-rate rental development of four or more units; Chapter 19.75 does not assign a different fee threshold by district. § 19.75.040(a)

• Purpose: mitigate the affordable-housing impact of new market-rate rental development. § 19.75.010(a)–(b)
• Typical covered development: new market-rate rental projects with 4+ units, including condominium-mapped projects intended for initial rental operation. § 19.75.040(a)
• Key size standards: 4–7 units = 50% fee; 8+ units = full fee. § 19.75.040(b)
• Where it applies: citywide; no district-specific limitation is stated. § 19.75.040(a)
• Dimensional standards: Not found in source materials. Verify development capacity, Sunnyvale Parking, and any applicable Sunnyvale Overlay Districts separately.

Calculating the Housing Impact Fee

Nonresidential calculation

For covered nonresidential development, the fee is calculated on a per-square-foot basis using net new gross floor area:

Gross nonresidential floor area − existing floor area × applicable per-square-foot fee = total housing impact fee. § 19.75.030(b)

The code affords a reduced fee for the first 25,000 square feet of commercial, industrial, and R&D projects. It does not state a comparable reduced-fee rule for office, retail, or hotel/motel development. § 19.75.030(b)

The following are excluded from the net-new-gross-floor-area calculation:

• Incidental/accessory storage, structures, and appurtenances, including sheds, trash enclosures, ground-mounted equipment enclosures, garden features, trellises, and shade structures. § 19.75.030(c)(1)
• Architectural design features not used for occupancy or storage. § 19.75.030(c)(2)
• For industrial, R&D, and office uses only: on-site employee child-care facilities; freestanding employee amenity buildings such as cafeterias, recreation/athletic facilities, gyms, showers, and locker rooms; and buildings used exclusively to store hazardous materials. § 19.75.030(c)(3)
• Existing floor area of structures vacated or demolished no more than 12 months before filing the development application. § 19.75.030(c)(4)

Rental housing calculation

For covered rental housing, the measure is habitable square foot area, not gross building area:

New habitable square foot area of all market-rate units − existing habitable square foot area of all units × applicable per-square-foot fee = total housing impact fee. § 19.75.040(b)

“Habitable square foot area” means a dwelling unit’s total interior living area. It excludes common areas, corridors, parking facilities, outdoor storage lockers, and shared laundry facilities. § 19.75.040(c)

The ordinance does not state the current dollar-per-square-foot rate. The City Council establishes fee amounts through a fee resolution, may amend them, and adjusts them annually using the San Francisco–Oakland–San Jose CPI for all urban consumers unless Council provides otherwise. § 19.75.020(c)

Payment Timing, Phases, and Pipeline Rules

The housing impact fee is calculated when a complete building permit application is submitted and is due before the first building permit is issued. An applicant may voluntarily pay all or part of the fee earlier, at the rate in effect on the payment date. § 19.75.020(d)

For a phased development, the total obligation is allocated pro rata across the entire square footage of the approved project. The portion assigned to each phase must be paid before issuance of that phase’s building permit. § 19.75.020(d)

Projects with an application filed and deemed complete by September 14, 2015 are exempt from the Chapter 19.75 housing impact fees. Likewise, projects with final approval by that date are exempt when later modified, except that any increase in floor area beyond the already approved amount is subject to the Chapter 19.75 fee. A pipeline project that is not subject to the new fee must still pay any housing mitigation fee that applied when its application was deemed complete. § 19.75.020(b)

Alternatives to Cash Payment

A nonresidential developer may ask the City Council to accept an alternative affordable-housing mitigation: construction of affordable units on an appropriate housing site, land dedication for affordable housing, or other resources that provide affordable housing. The City Council may approve an alternative only if it furthers affordable-housing opportunities in Sunnyvale equal to payment of the housing mitigation fee. § 19.75.030(d)

A rental-housing applicant may request to provide affordable units on-site, dedicate land for affordable housing, or provide affordable units off-site instead of paying the rental housing impact fee. § 19.75.040(d) The available materials state that on-site rental units may serve very-low-income households, low-income households, or a combination, and must provide mitigation equivalent to the fee-resolution standard. § 19.75.040(d)(1)

A developer that pays the rental housing impact fee and then sells the units within 55 years of fee payment receives a credit for the paid housing impact fees against the project’s BMR ownership obligations, as further described in the BMR Developer Guidelines. § 19.75.040(a) The source materials do not establish the mechanics, amount, or procedural requirements of that credit; verify with the jurisdiction.

Waiver or Constitutional Adjustment

The City Council may waive, adjust, or reduce a Chapter 19.75 housing impact fee if the applicant presents substantial evidence that there is no reasonable relationship between the proposed project’s impact and the fee requirement. Relief is also available where applying the chapter would create an unconstitutional taking or another unconstitutional result. § 19.75.050

This is not an automatic hardship exemption. The ordinance requires an applicant-supported showing based on substantial evidence, and the decision authority is the City Council. § 19.75.050

Information Gaps

The following items are not found in source materials and should be verified with the jurisdiction:

• Current dollar amounts for housing impact fees and park dedication/in-lieu fees.
• The current City Council fee resolution and the nonresidential-use matrix incorporated into it.
• The full Chapter 19.74 park dedication formula referenced in § 19.74.070.
• The full standards and approval process for off-site rental affordable units and land dedication under § 19.75.040(d).
• Whether a particular rehabilitation, replacement building, mixed-use component, or conversion is treated as new construction.
• Project-specific coordination with Sunnyvale ADUs, including whether a proposed unit is an ADU rather than a four-or-more-unit rental development.

Checklist

• Identify whether the proposal is a multifamily residential housing project, covered new nonresidential construction, or new market-rate rental housing. § 19.74.050; § 19.75.020(a)
• For a nonresidential project, classify the proposed use as commercial, industrial, R&D, office, retail, or hotel/motel and calculate net new gross floor area. § 19.75.030(a)–(b)
• Exclude only floor area expressly excluded by the code, including eligible existing/demolished area within the 12-month rule. § 19.75.030(c)
• For rental housing, count units and determine whether the project has 4–7 units or 8+ units. § 19.75.040(a)–(b)
• Calculate rental fee area using dwelling-unit interior living area, excluding common areas, corridors, parking, outdoor lockers, and shared laundry. § 19.75.040(c)
• Obtain the current Council fee resolution because fee amounts are set and may be annually adjusted. § 19.75.020(c); § 19.74.060
• Submit a complete building permit application with a documented fee calculation. § 19.75.020(d); § 19.74.060
• Pay the required housing impact fee before the first permit—or the phase-specific portion before that phase’s permit—and pay the park in-lieu fee before permit issuance. § 19.75.020(d); § 19.74.060
• If seeking an in-lieu affordable-housing alternative or fee adjustment, submit the request and supporting evidence for City Council consideration. § 19.75.030(d); § 19.75.040(d); § 19.75.050
• Confirm the project’s separate land-use, design, and entitlement requirements; these fee chapters do not establish zoning dimensional standards. § 19.74.050; § 19.75.030(a)

Risks & Ambiguities

Plain-English Summary

If you build a qualifying new commercial project or a new market-rate rental project with four or more units in Sunnyvale, expect a housing impact fee before permits issue; larger rental projects pay more, and multifamily rental projects may also have a park dedication or park in-lieu obligation. The exact dollar amount comes from the City’s current fee resolution, so confirm it before filing a complete building permit application. § 19.75.020(c)–(d); § 19.75.040; § 19.74.060

Source References

• Sunnyvale Municipal Code, Park Dedication Fees for Rental Housing Projects — § 19.74.010, § 19.74.050, § 19.74.060, § 19.74.080
• Sunnyvale Municipal Code, Housing Impact Fees — § 19.75.010, § 19.75.020, § 19.75.030, § 19.75.040, § 19.75.050, § 19.75.070
• Sunnyvale Municipal Code, accessory-dwelling-unit impact-fee provision — § 19.79.090
• Sunnyvale Municipal Code online publication: https://ecode360.com/SU5020