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HomeMy WebLinkAbout6.5 AffordHousImpactFee CITY CLERK File # D[!l1~[QJ-[ß][Q] 3<10 -~o AGENDA STATEMENT CITY COUNCIL MEETING DATE: MAY 3,2005 SUBJECT: ATTACHMENTS: RECOMMENDATION: ~ FINANCIAL STATEMENT: PA 01-039, Nonresidential Development Affordable Honsing Impact Fee Ordinance 2nd Reading and Revised Fee Rcsolntion Report Prepared by: Eddie Peabody, Community Development fJO Director, and Pierce Macdonald, Associate Planner 1. Ordinance Adding Chapter 7.86 ofthe DlIblin MlInicipal Code Establishing a Nonresidential Development Affordable Housing Impact Fcc 2. Resolution Adopting a Nonresidential Development Affordable Housing Impact Fee Amount for Future Development in the City of Dublin with Exemptions, with The Nonresidential Development Affonlable HOllsing Impact Fee Stlldy, dated March 25, 2005, included as Exhibit A 1. Open Public Hearing; 2. Receive the Staff presentation and public testimony; 3. Close the public hearing and deliberate; 4. Waive the second reading and adopt an Ordinance Adding Chapter 7.86 of the Dublin Municipal Code Establishing a Nonresidential Development Affordable Housing Impact Fee (Attachment 1); and 5. Adopt the Resolution (Attachment 2) Establishing Nonresidential Development Affordable Housing Impact Fee Amount for Future Development in the City of Dublin with Exemptions, with The Nonresidential Development Affordable Housing Impact Fee Study, dated March 25, 2005, included as Exhibit A. ·The Nonresidential Development Affordable Housing Impact Fee will be used to finance affordable housing programs pursuant to the Affordable Housing Implementation Plan to further the goals ofthe Dublin General Plan Housing Element. Based on the projected development of new commercial floor area in the City (to build-out of the City in 2025), the total estimated cost of affordable housing linked to commercial development is $ 83,016,877 and the Nonresidential Development hupact Fee Resolution, as revised, has been sized to collect an estimated $ 5,359,574 in fee payments to provide affordable housing. ~-" Applicant/Property Owner PAFile 6·5 COPIES TO: IDb v DESCRIPTION: Background: On April 19,2005, the City Council hcld a public hearing to consider the Nonresidential Development Affordable Housing Impact Fee Ordinance first reading and two Fee Resolutions. The difference between the two Fee Resolutions related to application of the Impact Fee to pipcline projects. "Pipeline projects" were defïned in the Fee Resolution and in the Agenda Statement as projects which had complete final discretionary land use entitlement applications (usually a complete Site Development Review application). The purpose of the Nonresidential Development Affordable Housing Impact Fee is to fund housing affordable to persons in the household income categories of workers employed in new nonresidential (i.e. commercial) devclopment in Dublin. At the public hearing on April 19, 2005, the City Council disenssed the importance of affordable housing to the commllnity, as well as the City's long-range plans to revitalize the Dublin downtown areas. In addition, City Council members discussed the fairness of applying the Impact Fee to development that was currently under City review and that may not have anticipated additional fees. The City Council passed a motion to waive the reading and introduce the Nonresidential Development Affordable Housing Impact Fee Ordinance, and directed Staff to return at the next meeting with a revised Fee Resolution that would include an exemption for projects with gross floor area of 20,000 square feet or less, as well as an exemption for pipeline projects. The Nonresidential Development Affordable Housing Impact Fcc Resolution has been revised per City Council's direction and is included as Attachment 2. An analysis ofthe Fee Resolntion's revisions is included below. ANALYSIS: Revisions to the Nonresidential Development Affordable Housi/lg Impact Fee Resolution: Per City Council's direction on April 19, 2005, the Fcc Resolution (Attachment 2) has been revised to exempt pipeline projects and projects with gross floor area of 20,000 square feet or less. The Fee Resolution exempts "pipeline projects," described as applications for final discretionary land uSe approvals that are deemed complete before the effective date of the Fee Resolution. "Deemed complete" is a fonnal process by which the City reviews an application for inclusion of all required materials, such as architectural plans and public noticing materials. Table 3 from the April 19,2005 City Council Agenda Statement, included on page 3 (Jfthis Agenda Statement, provides information on current project applications that mayor may not be deemed complete prior to the effective date oflhe Fee Resolution and, therefore, may be exempted by the Resolution_ Page 2 ~ Table 3: Current Commercial Pipeline Projects (April 19, 2005 Agenda Statement) Projeet Name Type Size Potential Applieation Payment Status Exempt Projects Enea Vil1agc Omce I Oftìee ($1) 5,707 $ 5,707 SDR Approved GM Hummer 2 Retail ($.80) 9,500 $ 7,600 SDR Comolctc GM Saturn 2 Retail ($.80) 23 ,000 $ 18,400 SDR Comoletc Ikea J Retail ($.80) 265,842 $212,674 SDR Aooroved KolllGateway Phase I 2 Omce ($1) 120,000 $ 120,000 SDR Aooroved KolllGateway Phase II 2 Office ($1 ) 58,849 $ 58,849 SDR ADDroved Sees Candies I Retail ($.80) 7,905 $ 6,324 SDR CornDlete Shamrock Vil1age RClail ($.80) 3,000 $ 2,400 SDR ADDroved Tralee Pak-n-Sav I Retail ($.80) 35,000 $ 28,000 SDR AODroved Transit Center Commercial Retail ($.80) 15,000 $ 12,000 SDR Approved Avalon Bav J TOTAL $ 471,954 FOllr projects (the IkealBlake Hunt Rctail Lifestyle Center, the IkealBIake Hunt Restaurant, the Micro Dental Labs Phase 11 building, and the West Dublin BART Hotel) would only be exempt if applications including a final discretionary land LIse entitlemcnt, such as a Site Development Review application, were received and deemed completc prior to the effective date ofthe Fee Resolution (date of adoption oJ" the Fcc Resolution by the City Council). Current) Not Exern t IkealB1akc Hont Retail 3 Ikea/B1akc Hunt Restaurant3 Micro Dental Labs Phase II 2 Wcst Dublin BART HOlell Retail ($.80) Services and Accommodations R&D ($.64 Services and Accommodations ($.34 109,360 25,860 $ 87,488 $ 8,792 I'D A oved PD Approved 125,000 79,500 $ 80,000 $ 27,030 I'D A roved PO Approved TOTAL $ 203,310 Two projects (the New Dublin Place Leasehold and the West Dublin BART Restaurant) would be exempt even if Site Development Review applications were not received prior to the effective date ofthe Fee Resolution, because they are smaller in size than the 20,000-square-foot threshold established in the revised Fcc Resolution. Exem t for Size New Dublin Place Leasehold ) Wes) Dublin BART Restaurant I TOTAL Retail ($ .80) 17,000 $ 13,600 Pre-application 7,500 $ 2,550 I'D Approved $ 16,150 Services and Accommodations ($.34 One project (Ihe Legaey/ AMB Office Building) would not be exempted because the dcvelopment agreement for the project expressly states that it will pay the Impact Fcc. NOI Exem t er Develo ment A reement Legacy/ AMB Office 4 Office $1 TOTAL 150,500 $ 150,500 $ 150,000 Page 3 ªb I Pmjeet~ could have heen !iubjcct to Fcc: because no Development Agreement exists, 2 Pl"újects could ]la"e been ur' could be subjcct to Fcç becausc tcrm of Development Agreement hl:ls t:xpi~J. Pr(ljcct.~ could have oe¡::n !;uhjcct tD the ¡::t:e becaust: umler lht: Conditions of Approval, Project's Developer is haole to pay all applicable ft:t:s in effed at tht: time ofhuilùing pemÜt issuance, 4 Pmjt:d subjel::t tl) Pee bt:cause Dt:vetùper explicitly agreed to pay thc ¡";cc. Procedure/or Applying Revi.~ed Fee to New Development: As revised, tile Nonresidential Development Affordable Housing Impact Fee would be imposed on proposed development projects that involve discretionary action for approval. The appropriate fee would be collected for all nonresidential development including new bllildings over 20,000 square feet in size and expansion of existing buildings over 500 square feet in size. New buildings of20,000 square feet or less and building expansions of 500 square feet or less would be exempted from the hnpact Fee. If the combined existing building floor area and proposed expansion is less than 20,000 square feet, then no Impact Fee would apply. The fees would be collected at the time ofthe first building permit issuance according to the types of development specified in the Nonresidential Development Affordable Housing Impact Fee Resolution (Attachment 2), as established by the Fee Stlldy. The following scenarios describe the process under the specific conditions ofthe revised Fee Resolution: Scenario 1: An application for Site Development Review is received for a new building adjacent to an existing shopping center, consisting of a 15,000-square-foot retail tenant space and a 2,000- square-foot restaurant and bakery. The ApplieantlDeveloper requests an estimate of the Nonresidential Development Affordable Housing hnpact Fee from City Staff. Because the building size is less than 20,000 square feet, City Staff would exempt the project from the Nonresidential Development Affordable Housing hnpact Fee. The fee estimate would total $ 0.00. Scenario 2: An application is received for a 450-square-foot expansion to an existing neighborhood office building. The ApplicantlDeveloper requests an estimate of tile Nonresidential Development Affordable Housing hnpaet Fee from City Staff. City Staff note that the expansion is less than 500 square feet, based on the definition of gross floor area in the Dublin Zoning Ordinance, and, therefore, it is exempted from the Nonresidential Development Affordable Housing Impact Fcc. The fee estimate wou.ld total $ 0.00. Scenario 3: An application is received for a 2,000-square-foot expansion to an existing shopping center building, for the purpose of housing a major retail tenant. The ApplicantlDeveloper requests an estimate of the Nonresidential Development Affordable Housing Impact Fee from City Staff. City Staff ealeulate the total gross floor area of the existing building as 30,000 square feet. City Staff calculate the total gross floor area for the expansion at 2,000 square feet at the retail fee category rate ($ .80), based on the definition of the fee categories in the Nonresidential Development Affordable Housing Impact Fee Resolution and the definition of gross floor area in the Dublin Zoning Ordinance. The fee estimate would total $ 1,600, which would be due prior to issuance of the first building permit. Page 4 CIb Public Review: A public hearing notice for the meeting of April 19, 2005 was published in the Vallev Times 14 days prior to the City Council mccting date and posted at several locations throughout the City_ In addition, a courtesy notice was sent to all persons requesting notice of fee increases and to all commercial real estate devclopers and property owners responsible for the projects inclLlded in Table 3, to make them aware of the pending City Council consideration. As of the writing ofthis report, one letter was received from Mr. Michael Durkee on behalf ofthe Ikea Corporation opposing the fee. City Staff have informed Mr. Durkee that the portion ofthe projcct that has an approved Site Development Review (the 265,842-sqLlare-foot lkea retail huilding) would be exempt from the Impact Fee under the current Fee Resollltion. The portions of the Ikea project that are being developed by the Blake Hunt Ventures development company do not havc final discretionary land use applications submitted to the City at this time. ENVIRONMENT AL REVIEW: The proposed Nonresidential Development Affordable Housing Impact Fee Ordinance and Fcc Resolutions would facilitate the collection offees from new development to implement the Affordable Housing Implementation Program to provide affordable housing to Dublin workers. Establishment ofthc Nonresidential Development Affordable Housing Impact Fee Ordinance and Fee Resolutions docs not constitute a discretionary approval of any application to build or construct any residential or nonresidential project. Therefore, the impact fee does not cause physical changes to the environment. Therefore it is not a "project" according to the CEQA Guidelines; and, it is exempt from environmental review pursuant to CEQA Section 15061.b(3). RECOMMENDATION: Staff recommends that the City Council 1) open Public Hearing; 2) receive the Staff presentation and public testimony; 3) close the Public Hearing and deliberate; 4) waive the second reading and adopt an Ordinance (Attachment 1) of the City of Dublin Adding Chapter 7.86 of the Dublin Municipal Code Establishing a Nonresidential Development Affordable Housing Impact Fee; and 5) adopt a Resollltion (Attachment 2) Establishing a Nonresidential Development Affordable Housing Impact Fee Amount for Future Development in the City of Dublin with Exemptions, with The Nonresidential Development Affordable Housing Impact Fee Study, dated March 25, 2005, included as Exhibit A. Page 5 ~ 1~3S DRAFT ORDINANCE NO. . 05 AN ORDINANCE OF THE CITY OF DUBLIN ADDING CHAPTER 7.86 OF THE DUBLIN MUNICIPAL CODE ESTABLISHING A NONRESIDENTIAL DEVELOPMENT AFFORDABLE HOUSING IMPACT FEE The City Council of the City of Dublin docs hereby ordain as follows: Section 1. Findings; The City ofDLlblin finds that: A. The citizens of Dublin are experiencing a hOLlsing shortage for very low-, low- and moderate-income households. B. A goal of the Housing Element of the City's General Plan is to achieve a balanced community with housing avai.lable for households of a range of income levels. C. Persons with very low-, low-, and moderate-incomes that currently live and/or work in the City are increasingly unable to locate housing at prices they can afford, and often become excluded ITom living in the City. D. Federal and State housing subsidy programs are insufficient by themselves to satisfy the housing needs of very low-, low- and moderate-income households. E. The newly constructed housing market does not, to any appreciable extent, provide housing affordable by very low-, low-, and moderate-income households, except as required by the City's InelLlsionary Zoning Regulations, and continued new nonresidential development that does not include affordable housing to meet such demand will serve to further aggravate the current housing shortage by reducing the supply of developable land. F. Increased nonresidential development has the effect of creating an increased demand for affordable housing. G. The courts have upheld fees imposed on nonresidential development to mitigate the impacts of such development on the alTordability of housing based on studies that demonstrate the relationship between nonresidential development and an increased demand for affordable housing. H. It is a public purpose ofthe City, and a public policy of the State as mandated by the requirements of the Housing Element of the City's General Plan, to make available an adequate supply of housing for persons of all economic segments of the community. To that end, the Council adopts this ordinance. Page 1 of 3 A TT ACHMENT 1 6-3-o.Ç¿""Ç 21J~ .ç, Section 2. Addition of Chapter 7.86 to Municipal Code. Chapter 7.86, entitled "Nonresidential Development Affordable Housing Impact Fcc," is added to the Dublin Municipal Code to read as follows: CHAPTER 7.86 NONRESIDENTIAL DEVELOPMENT AFFORDABLE HOUSING IMPACT FEE 7.86.10 Purpose. The Purpose of this chapter is to: In order to implement goals and objectives of the City of Dublin's General Plan and Spccifie Plans, and to mitigate the impacts caused by future development in the City, affordable housing units must be constructed. The City COllneil has detennined that a nonresidential development atTordablc housing impact fee is needed in order to finance affordable housing at income levels affordable to the workforce for such nonresidential developments, and to pay for each nonresidential developer's fair share of the construction and acquisition costs of such affordable housing. In establishing the fee described in the following sections, the City Council has found the fee to be consistent with its General Plan and Specific Plans and, pursuant to Government Code Section 65913.2, has considered the effects of the fee with respect to the City's housing needs as established in the Housing Element of the General Plan. The goal of this chapter is to impose a fee on new nonresidential developmellt that funds or partially funds the need for affordable housing created by the workforce of this new development. 7.86.20 Nonresidential Development Affordable Housing Impact Fee Established. A. A nonresidential devclopment affordable housing fee ("fee") is established to pay for housing affordable to households of very low, low and moderate income. B. The City Council shall, in a Council resolution adopted after a duly noticed public hearing, from time to time set forth the amoullt of the fee, identify the purpose of the fee and the use to which the fee is to be put, and, detennine how there is a reasonable relationship between the fee's use and the need for affordable housing and determine how there is a reasonable relationship between the amount of the fee and the cost ofthe affordable housing. 7.86.030 Use offee revenues. A. The revenues raised by payment of the nonresidential development affordable housing impact fee shall be accounted for in the City's Affordable Housing Fund. Separate and special accounts within the fund shall be used to account for revenues, along with any interest earnings on such account. These monies shall be used solely to increase the supply of housing affordable to households of very low, low and moderate income. Section 3. Compliance with California F:nvironmental Quality Act ("CEQA "): The City Council declares that this ordinance is exempt from CEQA based on the following findings: This ordinance is not a "project" within the meaning of Section 15378 ofthe State CEQA Guidelines, because it has no potential for resulting in physical change in the environment, directly or ultimately. This ordinance does not, in itself, allow the construction of any building Page 2 of 3 =3 vb 35" or structure. This ordinance, therefore, has no potential for resulting in physical change in the environment, directly or ultimately. Section 4. Severability: In the event any section or portion of this ordinance shall be determined invalid or unconstitutional, such section or portion shall be deemed severable and all other sections or portions hereof shall remain in full force and effect. Section 5. Savings Clause: An code provisions, ordinances, and parts of ordinances in conflict with the provisions ofthis chapter are repealed. The provisions of this chapter, insofar as they are substantially the same as existing code provisions relating to the same subject matter shall be construed as restatements and continuations thereof and not as new enactments. With respect, however, to violations, rights accrued, liabilities accrued, or appeals taken, prior to the effective date of this ordinance, under any chapter, ordinance, or part of an ordinance shan he deemed to remain in full force for the purpose of sustaining any proper suit, action, or other proceedings, with respect to any such violation, right, liability or appeal. Section 6. Effective Dale and Posting of Ordinance: This ordinance shall take effect and be in force thirty (30) days from and after the date of its passage. The City Clerk ofthe City of Dublin shall cause the Ordinance to be posted in at least three (3) public places in the City of Dublin in accordance with Section 36933 of the Government Code of the State ofCalifomia. PASSED AND ADOPTED BY the City Council of the City of Dublin, on this _day of , 2005, by tile following votes: AYES: NOES: ABSENT: ABSTAIN: MAYOR ATTEST: CITY CLERK 733ti89,1;114.3001 Page 3 of 3 I L ~C' ítrtJ-'-" RESOLUTION NO. -05 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN ********* ADOPTING A NONRESIDENTIAL DEVELOPMENT AFFORDABLE HOUSING IMPACT FEE FOR FUTURE DEVELOPMENT IN THE CITY OF DUBLIN RECITALS WHEREAS, the City Council has adopted Dublin Municipal Code Chapter 7.86 creating and establishing the authority for imposing and charging a Nonresidential Development Affordable Housing Impact Fee ("Fee") to mitigate the impacts of nonresidential devclopment on the affordability of housing within the jurisdictional limits of the City of Dublin; and WHEREAS, on October 2,2001, the City Council adopted Resolution No. 173-01 to allthorize a fee to mitigate the impacts of nonresidential development on the affordability of housing in the City of Dublin (the "Fee"); and WHEREAS, in August, 2001 the City undertook a study to prepare a report on nonresidential development as linked to increased demand for affordable housing. The report, entitled City of Dublin Nonresidential Development Affordable Housing Impact Fee Study, has been updated by City Staff as of March 25, 2005 and is attached herein as Exhibit A. ("Report"). The City relies upon and incorporates the Report; and WHEREAS, the Report was available for public inspection and review for ten days prior to this public hearing; and WHEREAS, in accordance with the Government Code, at least fourteen (14) days prior to the public hearing at which this resolution was adopted, notice of the time and place of the hearing was mailed to eligible interested parties who filed written requests with the City for mailed notice of meetings on new or increased fees or service charges; and WHEREAS, the City of Dublin Nonresidential Development Affordable Housing Impact Fee Ordinance (Chapter 7.86 of the Municipal Code) ("the Ordinance") provides as follows: 1. That a nonresidential development affordable housing fee ("fee") is established to pay for housing affordable to households of very low, low and moderate income housing ("affordable housing"). (Section 7.86.020.) 2. That the City Council shall, in a Council resolution adopted after a duly noticed public hearing, ITom time to time set forth the amount of the fee, identify the purpose ofthe fee and the use to which the fee is to be put, and, determine how there is a reasonable rclationship between the fee's use and the need for affordable housing and determine how there is a reasonable relationship between the amount of the fee and the cost of the affordable housing. (Section 7,86.020.) 732640v7 DRAFT 4/25/05 ATTACHMENT ¡ 500"35 3. That the revenues raised by payment of the nonresidential development affordable housing impact fee shall be accounted for in the City's Affordable Housing Fund. Separate and special accounts within the fund shall be used to account for revenues, along with any interest earnings on such account. These monies shall be used solely to increase the supply of housing affordable to households of very low, low and moderate income. (Section 7.86.030.). FINDINGS WHEREAS, The City Council finds as follows: A Persons of very low, low and moderate income are experiencing increasing difficulty in locating and maintaining adequate, safe and sanitary affordable housing within the City of Dublin. As noted in the City's Report, a regional shortage of affordable housing and projected job growth will contribute to an increased need for affordable housing accommodations. According to the Report projections, the City of Dublin needs to provide housing affordable to persons of very low, low and moderate income who are expected to become residents of the City due to the significant gains anticipated in job and population growth; and B. Development of new nonresidential projects encourages new residents to move to the City. Some of the employees needed to meet the needs of new nonresidential development earn incomes only adequate to pay for affordable housing. Because affordable housing is in short sLlpply within the City, these employees now may face a lack of choice in where they may live within the City, pay a disproportionate share of their incomes to live in adequate housing within the City, or commute ever"inereasing distances to their jobs from housing located outside the City. These circumstances harm the City's ability to attain goals articulated in the City's Affordable Housing Implementation Plan, Specific Plans and General Plan's Housing Element; and C. Prices and rents for affordable housing remain below the level needed to attract adequate new construction. At the same time, escalating land costs and rapidly diminishing amounts ofland available for development hinder the provision of affordable dwelling units solely through private action. The City's Inclllsionary Zoning Ordinance is not sufficient by itsclfto satisfy the affordable housing needs; and D. The Report documents the linkage between projcctedjob growth, and the resulting nonresidential development and the employees, employee households, and the housing demands ofthese households resulting fÏ"om the projcctedjob growth. New housing affordable to persons identified in the Report is not now being added to the supply in sufficient quantity to meet the needs of the new employee households associated with projected job growth and resulting nonresidential development. The Report also identifies the gap between the City's affordable housing goals and the anticipated revenue generated by the Inclusionary Zoning Ordinance that needs to be filled to meet the needs for affordable housing for the additional workers. The City is imposing the Fee established by the Ordinance in order to partially close this gap by using the Fee to provide for increased affordable housing; and E. In adopting the Fee, the Council is exercising its powers under Section 7 of Article XI ofthe California Constitution; and 732640v7 DRAFT 4/25/05 2 løfb ~.. F. The record establishes: L The purpose of the Fee is to implement the goals and objectives of the Housing Element ofthe City's General Plan by mitigating the impacts offLlture nonresidential development; and 2. The Fee collected pursuant to this resolution shall be lIsed to increase and maintain the supply of housing affordable to households of very low, low and moderate income; and 3. There is a reasonable relationship between the need for affordable housing and the impacts of the types of development for which the corresponding Fee is charged in that new nonresidential development in the City of Dublin will result in additional persons who work in DLlblin who generate or contribute to the need for affordable housing; and 4. There is a reasonable relationship between the Fee's use and the impacts of nonresidential development as development of new nonresidential projects encourages new residents to move to the City who are not able to afford market rate housing; and 5. There is a reasonable relationship between the amount ofthe Fee and the cost of the affordable housing or portion thereof attributable to nonresidential development in the City of Dublin in that the Fee is calculated based on the number ofresidents or employees generated hy specific types ofland uses, the total amount it will cost to construct the affordable housing, and the percentage by which nonresidential development within the City of Dublin contributes to the need for the affordable housing; and 6. That the cost estimates set forth in the Report are reasonable cost estimates for constructing the affordable housing, and the Fees expected to be generated by future nonresidential development will not exceed the projected costs of constructing the affordable housing; and 7. The method of allocation of the Fee to a particular nonresidential development hears a fair and reasonable relationship to, and is roughly proportional to, each development's burdcn on, and benefit from, the affordable housing to be funded by the Fee, in that the Fee is calculated based on the number ofresidents or employees each particular nonresidential development will generate; and 8. The empirical data as set forth in the Report demonstrates that anticipated nonresidential development and job growth would justify fees that are approximately thirteen times higher than the Fee imposed by this Resolution; and WHEREAS, the City Council's intent in adopting this resolution is that the Fee adopted by this resolution shall apply to projects that have not received final discretionary land use entitlements for which the application was deemed complete prior to the effective date ofthis Resolution. 732640v7 DRAFt 4/25105 3 Î ~ ~:;;. ADOPTION OF FEE NOW THEREFORE, the City Council of the City of Dublin docs RESOLVE as follows: 1. Definitions. I. "Affordable Housing" shall mean housing affordable to households of very low, low and moderate income as defined in Chapter 8.68 of the City of Dublin's Zoning Ordinance. 1\, "Development" shall mean the construction, alteration or addition of any building or structure within the City of Dublin. iii. "Light Industrial" shall mean devclopment constructed for the manufacture, production, assembly, and processing of consumer goods and other space uses incidental to these activities. Industrial land uses include but are not limited to: assembly, concrete and asphalt batehing plants, contractor's storage yards, fabrication, lumber yards, manufacturing, outdoor stockyards and service yards, printing, processing, warehouse and distribution, and wholesale and heavy commercial uses. IV "Office" shall mean any development constructed for general business offices, medical and professional offices, administrative or headquarters offices for large wholesaling operations and other space uses incidental to these activities. Office land uses include but are not Jimited to: administrative or corporate headqLlarters, banks and savings and loans, business parks, finance offices, insurance offices, legal offices, medical and health services offices, offices and office buildings, professional and administrative offices, professional associations, real estate and aeeountil1g offices and travel agencies. v. "Research & Development" shall mean any facilities devoted ahnost exclusively to research and development activities. Research & Development land uses include but are not limited to: biotechnology, technology and other products and services research facilities. VI. "Retail" shall mean establishments that are constructed for the purchase and sale of commodities and the sale, servicing, installation, and repair of such commodities and services and other space uses incidental to these activities. Retail land uses include but are not limited to: apparel and clothing stores, auto dealers and malls, auto aeeessorics stores, book stores, discOLlnt storcs and centers, drug stores, furniture stores and outlets, home furnishings and improvement centers, service stations, supermarkets, hardware stores, pharmacies and video rentals. 732640\17 DRAFT 4/25105 4 7s rib?;§' vii. "Services and Accommodations" shall mean any dcveJopment constructed as a hotcl, motel, bed-and-breakfast, inn, restaurant, bar, theater, other entertainment, recreation, cultural facilities, and personal services such as laundries, dry eleaners and beauty salons. 2. Nonresidential Development Affordable Housing Impact Fee Imposed. I. A Nonresidential DeveJopment Affordable Housing Impact Fee ("Fee") shall be charged and paid for non-residential buildings or structures within the City of DubJin when the building pennit is issued for construction of such bui ¡ding or structure. 11, A Fee shall be charged and paid for non-residential development for any alteration or addition to an exiting building or structure if the alteration or addition is greater than 500 square feet and results in the building or structure's combined floor area being greater than 20,000 square feet. The Fee shall be charged only against that area of the alteration or addition that is over 20,000 square feet. Square footage shall be calculated as gross floor area, as defined in the Dublin Municipal Code, Chapter 8.08. 111. Any nonresidential use ofland which is SLlbstantially similar to, but not included in the definitions of "Light Industrial," "Office," "Research and DeveJopment," "Retail," and "Services and Accommodations" shall be allocated by the Community Development Director to one of the five categories, maintaining as much consistency as possible with the definitions of such tenns. IV. In the event that a nonresidential use ofland is not substantially similar to the definitions of, "Light Industrial," "Office," "Research and Development," "Retail," and "Services and Accommodations" the Community Development Director may establish a new category and calculate the appropriate fee for such category based upon the assumptions as used in the Report. The Community Development Director will calculate the fee based on employment gencration rates adjusted for commuting, income distribution ofhouscholder and the affordability gap for apartments and condominiums as set forth in the Report at respectively, charts 3-1 and 3-2, 3-3 and 3-4, and 3-7 and 3-8. The Community DeveJopment Director shall detennine the appropriatc employment density per square foot by utilizing data from the City of Dublin Community Development Department, the Institute of Transportation Engineers Trip Generation Manual, 732640v7 DRAFT 4/25/05 5 qtJJ35·- 5th Edition, 1997 and the San Diego Association of Governments Trip Generator Study or other sources as deemed appropriate by the Connnunity Development Director. 3. Amount of Fee. I. The Nonresidential Development Affordable Housing Impact Fee authorized by Municipal Code section 7,86.020 is hereby set as follows: Future Land Use Fee Der square foot Light Industrial $ .40 Office $ 1.00 Research & Devclopment $ .64 Retail $ .80 Services and $ .34 Accommodations 4. Exemptions from Fee. I. The Fcc shall not apply to any project that has received final discretionary land use entitlements for which the application was deemed complete prior to the effective date of this Resolution. Notwithstanding the forcgoing, this exemption ITom the Fee shall not apply to any proj eet whereby the applicant explicitly agreed to pay the Fee. This exemption ITom the Fee shall cease to apply to any project for which Site Development Review approval expires. 11. Any nonresidential building or structure that is 20,000 square feet or less. Square footage shall be ealculatcd as gross floor area, as defined in the Dublin Municipal Code, Chapter 8.08. , Any alteration or addition to a nonresidential building or i Ill. structure, except when the alteration or addition results in an increase of greater than 500 square feet and the building or structure's combined floor area is greater than 20,000 square feet. The Fee shall be charged only against that area of the alteration or addition that is over 20,000 square feet. Square footage shall be ealeulated as gross floor area, as defined in the Dublin Municipal Code, Chapter 8.08. IV. Any replacement or reconstruction of an existing nonresidential bLlilding or structure that has been destroyed or dcmolished, provided tl1at the building permit for new reconstruction is 732640v7 6 DRAFT 4/25/05 732640v7 DRAFT 4/25/05 IOr;¡:?,r:,; -U.......· ~, obtained within three (3) years after the building was destroyed or demolished and there is no change in the land use designation of the property (as betweenLight Industrial, Office, Research & Development, Retain and Services and Accommodations). v. Any nonresidential building or structure constructed on property on which a building or structure was demolished for which the Fee has been paid within the prior twenty year period, provided the exemption shall be in the amount of the previously-paid Fee only, and the applicant shall pay any additional amount based on the then-current Fee. The new development shall not accrue any unused credit or reimbursement rights, in the event that the replacement project results in a lower Fee. v!. A partial exemption will be granted based on prior Fees paid, if within 20 years of paying the Fees for a specific development project, the project is demolished or replaced by a new type of devclopment in which case an exemption from payment of the Fee will be given for up to the amount which was paid by the prior development project. The new development shall not accrue any unused credit or reimbursement rights, in the event that the replacement project results in a lower Fee. 5. Use of Revenues. 1. The revenues raised by payment of the Fee shall be placed in the Affordable Housing Fund. Separate and special accounts within the Affordable Housing Fund shall be used to account for such revenues, along with any interest earnings on each account. The revenues (and interest) shall be used for the following purposes: 1. To increase the supply of housing affordable to households of very low, low and moderate income; and 2. To pay for design, engineering, land acquisition and building, subsidizing and rehabilitation of affordable housing and reasonable costs of outside consultant studies rclated thereto; and 3. To reimburse the City for affordable housing constructed by the City with funds rrom other sources including funds from other public entities, unless the City funds were obtailled from grants or gifts intended by the grantor to be used for affordabJe housing; and 7 732640v7 DRAFT 4/25/05 Ilnt "3£; 4. To pay for and/or reimburse costs of program development and ongoing administration of the Fee program. 11. Fees in these accounts shall be expended only for affordable housing and only for the purpose for which the Fee was collected. 6. Periodic Review. 1. During each fiscal year, the City Manager shaH prepare a report for the City Council, pursuant to Government Code section 66001(b), determining how there is a reasonable relationship between the amount of the Fcc and the cost of affordable housing, or portion ofthe affordable housing attributable to the development on which the Fee is imposed. 11. During the fifth fiscal year following the first Nonresidential Development Affordable Housing Impact Fee deposit into the Affordable Housing Fund, and every five years thereafter, the City Manager shall prepare a report for the City Council, pllrsuant to Government Code section 6600l(d), regarding the di&"osition of any unexpended portion of the Fund, whether committed or uncommitted. 111. DLlring each fiscal year, the City Manager shaH prepare a report for the City Council, pursuant to Govemment Code section 66006, identifying the balance of Fees in each account. 7. Subsequent Analvsis and Revision of the Fee. I. The Fee established herein is adopted and implemented by the Council in reliance on the record identified above. The City will continue to conduct further study and analysis to detennine whether the Fee should be revised. When additional infonnation is available, the City Council shall review the Fee to detennine that the amounts are reasonably related to the impacts of development within the City of Dublin. The City Council may revise the Fee to incorporatc the findings and conclusions of further studies and the General Plan and Specific Plans. 8. Automatic Fee Adiustments, TIle purpose of this Section is to provide for mmual adj lIstments of the Fee for inflation, beginning July 1, 2005 and each July 1 thereafter. 8 12 Ob=3,1;:; - Annually each July, the City Manager shaH adjust the Fcc by applying the thcn current Consumer Price Index for all urban consumers for the San Francisco/Oakland bay area for the months of March or ApriL The City Manager may round the adjusted Fee to whole dollars. 9. Administrative Guidelines. The Council may, by resolution, adopt administrative guidelines to provide procedures for calculation and other administrative aspects of the Fee. 10. Effective Date. This resolution shaH become effective immediately. The Fee provided in Sections 2 and 3 of this resolution shaH be effective sixty (60) days ITom the adoption of the resolution. 11. Severabilitv. The Fee and all portions of this resolution are severable. Should thc Fee or other provision ofthis resolution be adjudged to be invalid and unenforceable, the remaining provisions shall be and continue to be fully effective, and the Fee shall be fully effective except as to that judged to be invalid. PASSED, APPROVED AND ADOPTED this _ day of following vote: 2005, by the AYES: NOES: ABSENT: ABSTAIN: MAYOR ATTEST: CITY CLERK 732640 6.DOC 732640v7 DRAFf 4/25105 9 13 "t)3C; City of Dublin Nonresidential Development Affordable Housing Impact Fee Study March 25. 2005 City of Dublin Nonresidential Impact Fee Final Report PA 01-039 EXHIBIT A Introduction H~!3; III This chapter provides an introduction to the Nonresidential Development Affordable Housing Impact Fee Study, including the purpose of the study, the methodology of the study, and data sources used to generate the analysis. A. IntroductIon The State of California, Bay Area, and Tri-Valley region have experienced unprecedented economic growth during the latter half of the 1990s. Concurrent with this economic growth, the region continues to have a significant demand for new housing. Because the supply of housing has not kept pace with the demand for housing created by new jobs, single-family home prices and apartment rents have increased dramatically, making housing less affordable to low and moderate income households. In 2000, the Dublin City Council recognized that affordable housing would continue to be an important issue in Dublin. In February 2001, the City of Dublin adopted an Affordable Housing Implementation Plan which ultimately resulted in an Inclusionary Housing Program that requires developers to set aside 12.5% of all new residential development as affordable to very low, low, and moderate income households. In the Affordable Housing Implementation Plan, the City Council also expressed a desire to examine the relationship between job growth and housing, as the second important factor of affordable housing demand. The City of Dublin retained an outside consultant, Cotton/Bridges/Associates ("Consultant"), to perform an analysis of the impact of job growth on the affordability of housing and to recommend an impact fee program to mitigate this impact. The analysis reviews the types of industries projected to locate in Dublin, the number of employees those industries will attract (reduced for commuting patterns), and the income ranges those employees would receive as salaries, wages and other income. In addition, the analysis reviews the cost of constructing housing in the Tri-Valley area, as it relates to the number of employees whose household incomes fall within the very low, low and moderate-income ranges. The analysis determines the price of closing the gap between what employees can afford to pay for housing and what new construction costs, and the analysis links that price to the size of the business' facility, as an impact fee. City Staff and the Consultant began work on the Nonresidential Development Affordable Housing Impact Fee Study (Fee Study) in August 2001. Soon thereafter, it became clear that current data on household income, employment, and industries in the Tri- Valley area was limited. Although the U.5. Census 2000 was gradually being released, detailed cross tabulations needed for the analysis were not readily forthcoming. City of Dublin Nonresidential Impact Fee 2 Final Report _.')~. lSðQ-:;'~') Moreover, alternative data sources also proved to be less than satisfactory for the study. Therefore, the Fee Study was suspended in June 2002 until U.S. Census data becarne available. In late 2002, the Census Bureau indicated that staff was available to perform the detailed cross tabulations necessary for the Nonresidential Development Affordable Housing Impact Fee Study. The Consultant requested the appropriate cross tabulations from the U.S. Census Bureau, which were provided in May 2003. The report findings herein provide the results of the analysis. B. Legal Requirements In recent years, as municipalities have struggled to address their residents' needs for affordable housing, cities have imposed fees on proposed nonresidential developments to help finance the production of affordable housing for the employees that the nonresidential development attracts. The U.S. Court of Appeals, Ninth Circuit, upheld one such fee against a Constitutional challenge in its decision, Commercial Builders of Norlhern California v. City of Sacramento (941 F2d 872). In short, the Appellate Court upheld a fee on nonresidential development to offset burdens created by such development, based on a housing impacts study. Commercial impact fees are subject to two overlapping sets of legal requirements. The Federal constitutional requirements of "nexus" and "rough proportionality" set forth under Nollan v. California Coastal Commission (1987) 483 U.S.825 and Dolan v. City of Tigard (1994) 512 U.S.374 are generally inapplicable to fees imposed on a legislative basis on all similarly situated development. (See Ehrilieh v. City of Culver City (1996) 12 CalA!h 854; City of Monterey v. Del Monte Dunes (1999) 5267 U.S. 687.) California's "reasonable relationship" requirements are set forth in California case law and codified in sections 66000-66010 of the California Government Code, which the Legislature adopted in 1987 (known alternatively as the Mitigation Fee Act or AB 1600). Although distinct, these two standards are substantively similar and the California Supreme Court, in Ehrlich v. City of Culver City (1996) 12 CalA!h, concluded that the two standards in the context of legislatively enacted and generally applicable development fees for all practical purposes have merged. The Mitigation Fee Act also requires that the City adopt certain findings prior to imposing a development impact fee, such as the nonresidential development affordable housing fee proposed by this study. The required findings are as follows: (1) Identify the purpose of the fee. (2) Identify the use to which the fee is to be put. If the use is financing public facilities, the facilities shall be identified. (3) Determine how there is a reasonable relationship between the fee's use and the type of development project on which the fee is imposed. (4) Determine how there is a reasonable relationship between the need for the public facility and the type of development project on which the fee is imposed. Final Report City of Dublin Nonresidential Impact Fee 3 11.o"b3 ç The Fee Study provides support for these required findings. The Sacramento decision affords considerable deference to local agencies to develop a reasonable methodology for establishing the nexus between commercial development and affordable housing and the appropriate fee amount. The courts do not require mathematical precision in developing a commercial impact fee, provided that the fee meets the requirements of the Mitigation Fee Act. The fee upheld in the Sacramento case met the reasonable relationship standard by demonstrating that non-residential development has an impact on the affordability of housing, by (a) creating new low-income jobs in the City, which (b) create additional demand for low-income housing. The amount of the fee upheld in Sacramento was based on the difference between the incomes of such low-income workers available for housing expenses and the cost to produce housing to house them. A portion of this deficit was imposed on non-commercial development as the fee. Therefore, if a local jurisdiction follows the aforementioned principles in developing a commercial impact fee, the courts generally have upheld the fees as justifiable. To develop the fee structure, the Task Force, City Staff and the Consultant examined five commercial impact fee models used by surrounding jurisdictions. These included the cities of Oakland, Livermore, Pleasanton, Menlo Park, Mountain View. and Sonoma County. The cities of Danville, Hayward. San Ramon, San Leandro, and Union City and counties of Alameda and Contra Costa were not examined because these jurisdictions do not have impact fees for nonresidential development. The Consultant examined the assumptions and data sources used by each jurisdiction and then developed a hybrid approach tailored for the City of Dublin. Chapter 3 provides the methodology used to meet the aforementioned legal requirements. C. Methodology Based on the survey, the Task Force, City Staff and the Consultant developed a five- step approach to examining the nexus between new nonresidential development in Dublin and the demand and cost of producing affordable housing. The methodology is summarized below. Step 1: Determine total employees generated by future nonresidential development based on employment generation rates for projected land uses in Dublin. Calculate the distribution of household income generated from jobs/industries likely to migrate into the Tri-Valley area. Determine the number of employees by income generated by land use designation who would be likely to seek housing in Dublin. Determine the cost of producing market rate single-family residences and apartments and the gap between that cost and what very low, low, and moderate income households could afford to pay for such housing (known as the "affordability gap"). Step 2: Step 3: Step 4: City of Dublin Nonresidential Impact Fee Final Report 4 11 ïJb~1:; Step 5: Determine the maximum impact fee per square foot by multiplying employment generation factors by the afford ability gap for households of different income levels and by the contribution of the Inelusionary Zoning Ordinance housing program, and, lastly, examine the feasibility of the impact fee(s). D. Data Sources Data for the Nonresidential Development Affordable Housing Impact Fee Study is drawn from a variety of sources, which are cited in Chapter 3. These data sources are as follows: · Employment, population, and households growth projections from the Association of Bay Area Governments (ABAG Projections Series); · Demographic data, economic data, and housing production trends from the 1990 and 2000 Census, including special tabulations for the Tri-Valley region related to household income by industry, number of people in occupations by industry groups, household income by occupation, and number of workers per household by income, and other detailed information; · Inventory of available sites for residential and nonresidential development as well as the type of industry or project anticipated for each site based on an analysis by the City of Dublin Community Development Department; · Employment generation data from the City of Dublin Community Development Department, the Institute of Transportation Engineers, Trip Generation Manual (1997), and San Diego Association of Governments Trip Generator Study; · Comparable commercial impact fee studies from the City of Oakland, Pleasanton, Livermore, Sonoma County, Menlo Park, and Mountain View; · Housing sales price trends from Dataquick Real Estate Services, and apartment rents from Real Facts, the 1990 and 2000 Census, and other city survey data; · Housing production cost information for apartments and single-family homes in Dublin from developers and from the Home Builders Association of Northern California. E. Committee Review To develop the commercial impact fee, the City Council appointed a six-member task force to oversee the development of the nexus study and commercial impact fee analysis. The City Council and Planning Commission each had one member in attendance. Developers and the local business community were also represented. Members were as follows: · Don Johnson, Imprint Works, for the Dublin Chamber of Commerce · Adib Nassar, the Dublin Planning Commission · Janet Lockhart, Mayor of Dublin · Brad Kaune, Home Marketing Alternative Project Services · Pat Cashman, Alameda County Surplus Property Authority · Michael Parker, KolI Development Corporation Final Report City of Dublin Nonresidential Impact Fee 5 l'6qyÇ The Task Force met on four occasions, December 13, 2001, February 27,2003, July 31, 2003, and September 4, 2003. The first two meetings focused on an introduction to the key economic and housing issues facing Dublin over the next decade, as well as a discussion of the methodology to be used to calculate the nexus study. At the July 31, 2003 meeting, the Fee Study preliminary findings were distributed to the Task Force for comment. City Staff returned at the last meeting on September 4, 2003, with further information in response to the Task Force's comments. Based on the information provided and the Task Force discussion, the Task Force passed a motion expressing the Task Force's recommendation to the Dublin City Council. F. Findings Summary As detailed in Chapters 2 and 3, a strong demand for housing in Dublin, fueled in part by strong employment growth in the Tri-Valley region, has resulted in a growing gap between housing costs and the ability of area workers to afford housing. While median housing costs increased between 55 and 120 percent from 1990 to 2000 (depending on the type of housing), the median income in Dublin increased by 44 percent (see Chart 2- 1 and discussion on page 2-2 for additional detail). Dublin has the potential to create 30,120 additional jobs between 2005 and 2025. A significant percentage of these jobs will be filled by individuals living in very low-, low-, and moderate-income households. It is these households that experience the greatest difficulties in finding affordable housing in Dublin. A portion of the future affordable housing need will be met through the City's inclusionary housing program, in which 12.5 percent of new housing units constructed in Dublin must be affordable to very low-, low-, and moderate-income households. Of the affordable units constructed under the City's inclusionary program, 30 percent must be affordable to very low-income households, 20 percent to low-income households, and 50 percent to moderate-income households. Nevertheless, a significant gap will remain between the need and demand for affordable housing in Dublin and the number of affordable housing units available to very low-, low-, and moderate-income residents. One method of bridging that gap is to charge an affordable housing fee to nonresidential developments. Nonresidential developments create employment that generates a need and demand for affordable housing based on the anticipated income levels of the workforce in those developments. Revenues from the affordable housing fee would be used to build housing in Dublin that very low-, low-, and moderate-income households can rent or own_ This maximum justifiable fee, however, could be modified to a rate that is comparable to non-residential development rates of adjacent communities, so that Dublin can continue to attract new employment generation in the future (see Chart 3-10 for comparable rates). Recent economic conditions have slowed commercial development in the Tri- Valley and any potential fee could be reviewed for its effect on the viability of commercial projects. At the September 4, 2003 meeting, the Nonresidential Development Affordable Housing Impact Fee Task Force made the following recommendations: that the City Council City of Dublin Nonresidential Impact Fee Final Report 6 IqJb~ç adopt a Nonresidential Development Affordable Housing Impact Fee Ordinance; that due to current economic conditions, the City Council adopt a fee resolution capped at $1 per square foot of new nonresidential development floor area, which is scaled to the impacts of different industries; and that the City Council consider exempting projects which are currently under City review. City of Dublin Nonresidential Impact Fee Final Report 7 2Dq}Ç Employment/Housing Trends This chapter provides a general background and history of the Tri-Valley area, and then focuses on economic and housing market changes in Dublin. A. Tri- Valley PlannIng Area The City of Dublin is situated in the Tri-Valley area, an area encompassing more than 350 square miles in the Diablo, San Ramon, and Livermore/Amador valleys. The Tri-Valley includes the cities of Danville, Dublin, Livermore, Pleasanton, and San Ramon, and the surrounding parts of Alameda and Contra Costa counties. ", -', "\f\-vo/ley Areo Over the past fifty years, cities in the Tri-Valley area have developed in a consistent pattern. Each has shown similar demographics, housing markets, and economic conditions. Understanding the changes and transition of the Tri-Valley area are therefore important in that these changes will likely occur in Dublin as well. Until the 1950s, the Tri-Valley area was primarily agricultural in nature_ Pleasanton and Livermore incorporated in the 19'h century, providing services for the local agricultural economy_ However, the establishment of the Lawrence Livermore Laboratory and other major research facilities during the 1950s began a new direction that would shape the future character of the Tri-Valley. The completion of the freeway systems in the 1960s and 1970s (Interstates 580 and 680) opened the area to extensive single-family suburban development in unincorporated areas. With the rapid suburbanization of the Tri-Valley area, the cities of Dublin in Alameda County and Danville and San Ramon in Contra Costa County incorporated in the early 1980s. These cities also included large tracts of land within their spheres of influence. During the 1980s, the Tri-Valley area became a major center of employment for the region, with the development of the Bishop Ranch Office Park in San Ramon and the Hacienda Business Park in Pleasanton. Employment development accelerated through much of the 1990s_ City of Dublin Nonresidential Impact Fee Final Report 8 B. Dublin Market Trends Dublin experienced substantial population and employment growth during the 1990s. ABAG's Projections 2003 show that the City of Dublin experienced a 70% increase in job growth from 1990 through 2000 (Chart 2-1)'. However, according to the U.S. Census Bureau, the City experienced a 41 % increase in housing units and a 29% increase in population during the same period of time'. As a result, the jobs-housing ratio in Dublin significantly increased since 1990 from 1.84 jobs per housing LInit in 1990 to 2.2 jobs per housing unit by 2000'. Dublin's rapid growth and demand for housing is evident in the changes in housing prices over the decade as well. Chart 2-2 details housing price trends from 1990 to 2000. According to Dataquick, the median sales price of a condominium rose 55% to $291,0004. Meanwhile, the median sales price of a single-family home increased 120% to more than $450,0005. Although long- term trends on apartment rents are not available, the Census Bureau reports that the median contract rent for apartments and single-family residences has increased by approximately 54% to $1,245 in 2000". -2Iùb~> Chart 2- 1 Population, Job, and HousIng Growth City of Dublin, 1990-2000 80% 70% 70% 60% 50% . 40% 30% 201% . 10% 0%· Population Job Growth Housing Chart 2-2 Housing Price Increases 140";; 120% '20% '00%- BO% 60% 40% 0% Ccr'1dominium Cttllrad AmI Single-fanily Heme 1 According to ABAG's Projections 2003, the total number of jobs in Dublin in 2000 was 21,870, The 1990 figures from ABAG's Projections 2002 totals 12,870 jobs. , U.S, Census Bureau figures for housing total 9,872 units in 2000 and 6,992 units in 1990. Population totals 29,973 people in 2000 and 23,229 people in 2000, 2000 U.S. Census 4 Condo median starting price of $187,500 in 1990 , Single-family home median starting price of $210,000 in 1990 · Median contract rent starting price of $811 in 1990 City of Dublin Nonresidential Impact Fee Final Report 9 2.'"J'b~ In contrast, the 1990 and 2000 Census reports that the median household income of Dublin residents increased 44%, considerably slower than housing prices'. Changes in household income are largely affected by two conditions: 1) The pace of net migration and turnover among households. For example, new households moving to Dublin tend to have higher incomes, on average, than existing residents, including those moving out of the community. The rate at which higher income households replace lower~ineome households will affect the pace of income growth in a community. 2) The rate of increase of incomes among existing residents. Most workers experience significant gains in income as they progress in their careers, and average incomes rise with age, at least through retirement. The rate of income growth in a community will also be affected by the percentage of workers who stay in a community through their peak earning years (typically ages 45 to 54). According to the City of Dublin Community Development Department projections, Dublin is expected to continue its rapid pace of development through 2025. Dublin's employment is expected to increase 154% from 19,500 jobs in 2002 to 49,620 jobs in 2025. other indicators, such as Association of Bay Area Governments (ABAG), also point towards rapid development. According to ABAG projections for Dublin for the period of 2000 to 2025, Dublin's population is projected to increase 120% to 65,900 persons, and households are expected to increase 138% to 22,220 (Projections 2003). These changes will significantly increase the demand for suitable housing. These growth projections have long-term implications for the City of Dublin. Lower- income residents often live in subsidized units and have limited choices to move elsewhere. This creates a condition where upper income households who have homes or lower-income persons who have subsidized units remain in the City. However, moderate income families and the workforce of the City, including teachers. public safety workers, nurses, and others leave the community entirely, or find affordable housing elsewhere and commute to work in Dublin. This trend affects traffic and commuting patterns, impacts quality of life, and makes it difficult for employers to attract and retain employees '. Based on these market trends and the methodology outlined in this Study, the Task Foree in consultation with City Staff and the Consultant developed the following fee categories to be used in calculating the Nonresidential Development Affordable Housing Impact Fee: "L.ight Industrial" shall mean development constructed for the manufacture, production, assembly, and processing of consumer goods and other space uses incidental to these activities. "Retail" shall mean establishments that are constructed as regional and community-serving retail facilities for the purchase and sale of commodities and services and the sale, I Median Income for Dublin residents was $53,710 In 1990 and $77,283 in 2000, accordln9 to the U.S. Census Bureau. Section 4.6.3 of the Eastern Dublin Spe(:/flc Plan discusses the advantages of a jobs/housing balance (page 30). Final Report City of Dublin Nonresidential Impact Fee 10 2.3~Ç servicing, installation, and repair of such commodities and services and other space uses incidental to these activities. "Office" shall mean any development constructed for general business offices, medical and professional offices, administrative or headquarters offices for large wholesaling operations and other space uses incidental to these activities. "Research & Development" shall mean any facilities devoted almost exclusively to research and development activities. Research & Development land uses include but are not limited to: biotechnology, technology and other products and services research facilities. "Services and Accommodations" shall mean any development constructed as a hotel, motel or bed-and-breakfast inn, restaurants and bars, theaters, personal services such as laundries, dry cleaners and beauty salons, and entertainment, recreation, and cultural facilities. Final Report City of Dublin Nonresidential 1m pact Fee 11 2~-3Ç" Jobs-Housing Demand Linka e This chapter analyzes projected employment growth and evaluates the impact of this growth on the need for affordable housing. This analysis is intended to demonstrate the nexus between employment growth and the demand for housing, and calculate the maximum justifiable fee that could be charged for affordable housing. Ä. Employment Growth Population growth in Dublin is attributable, in part, to nonresidential development. A£; available land is gradually developed with commercial and industrial businesses, new job opportunities are created. New jobs will attract a workforce, many of whom may wish to live in Dublin if suitable housing is available. The first step in determining the demand for housing is therefore to estimate the number of new jobs generated from nonresidential development in Dublin. The calculations are illustrated to the right and in Charts 3·1 and 3·2 on the following page. Employment Available Acreage x Industry Employee Generation Rate x Commuting Rates Employees to live in Dublin To that end, City Staff provided an inventory of developable nonresidential land in Dublin. For each, City Staff determined the type of use (e.g., commercial, industrial, school, parkland, etc.) expected to occupy each site and trip generation rates. Using recognized data sources, the Consultantcaleulated the total amoLlnt of developable acreage and the number of jobs generated from different types of commercial, industrial, retail, and other uses. Taken together, Dublin can expect to accommodate 30,120 additional jobs by build- out (projected to be 2025). Regardless of employment projections, not all employees will choose to live in Dublin. Households choose a community for a variety of reasons, including quality of schools, availability of affordable housing, proximity to family and relatives, public service levels, etc. According to a 1990 study by the Tri-Valley Planning Committee2, an association of planning directors and other public agency officials in the Tri-Valley area, only 48% of all employees will eventually choose to live within the Tri-Valley area. This factor was applied to projected employment to estimate the demand for housing in Dublin. The employment generation rates and the projected employment generation totals are shown in Charts 3-1 and 3-2. The total projected building floor area is approximately 10.78 million square feet. "Working Paper #3, Tri-Valley Planning Committee, ABAG 1990 Census Transportation Package (According to ABAG, the Tri-Valley Planning Committee was formed out of the Trl-Valley Transportation Council with a one-time grant from ABAG to produce a subregional planning strategy.) City of DLlblin Nonresidential Impact Fee Final Report 12 Chart 3-1 Employment Generation Rates Em 10 ment Generation Rates ITE Average Adj, Rate for land Uses In Industrial Density Commuters Code 1 per KSF2 per KSF3 110 1.69 0.81 710 3.85 1.85 760 2.47 1.19 814 2.04 0.99 310 0.47 0.23 Future Dublin Light Industrial Office Research & Development Retaii Services & Accommodations' Notations 1. Institute of Transportation Engineers Trip Generation Manual, 5th Edition, 1 997 2. Eastern Dublin Specific Plan, survey, Information, and Institute of Transportation Engineers, Trip Generation Manual, 5 h Edition, 1997 3. Employment density adjusted for average 52% commute factor for T ri-Valley (Tri. Valley Planning Committee) 4. Services & Accommodations rate of .47 per KSF adjusted for a 240-room hotel at 508 square feet per room (based on survey of Monarch Hotel, Amerlsuites and Holiday Inn Extended Stay hotels; Regal Cinemas: and the Applebee's, Mimi's, Black Angus, Casa Orozco, EI Torlto, and Macaroni Grill Restaurants.) Chart 3-2 Employment Generation Totals F rom 2003 to Build Out Em 10 ment Gene ration Totals Future land Uses In BlIilding New Employees Dublin Size (KSF) 1 2 to Live in Em ployees Dublln3 Light Industrial 840.37 1.4 20 681 Office (with Transit Clr.) 5,303.50 20,4 18 9,811 Research & Development 985.50 2,4 34 1,173 Retail (with Transit Ctr.) 2,633.13 5,3 72 2,607 Services & Accommodations 1,012.52 4 76 233 Total 10,775,02 30,1 20 14,505 Notations 1. City of Dublin provided building size capacity by different land uses 2. Total employment determined by calculating employment generation rate by building size. 3. Employees expected to live in Dublin determined by adjusting employment generation for average 52% commuting factor for Tri-Valley (Tri.Valley Planning Committee). City of Dublin Nonresidential Impact Fee Final Report 13 zsvç '2LoVO'3Ç B. Job-Related Earnings and Income Having calculated the additional jobs created by projected non-residential development, the question that arises is: How does one determine the wages and salaries of anticipated future jobs? To that end, the U.S. Census Bureau provided specialized cross tabulations of earnings of householders working in the Tri-Valley area (2000 Census). Since many households have more than one worker, the Census Bureau also provided information in its cross-tabulations on the income of all members of the household, called "Household Income." As shown in Chart 3-3, the Task Force, City Staff and the Consultant first calculated the median earnings of householders employed in various industries, as well as the income of the entire household of that employee. Household income is a broad measure of all monetary gains reported by a household. Many households have more than one worker and sources of income in addition to earnings, which increases their ability to pay more for housing. For this reason, household income is used as the basis of the nonresidential development impact fee. Industry categories were collapsed into broader categories in order to match the types of industries likely to occupy the particular general plan land use designations in Dublin. Chart 3-3: Median Earnings and Income by Industry, Census 2000 Median Median Median Class Industry HOllseholder Householder Household Earnings Earnings Income (Averaged) 1 Manufacturing $ 77,216 $77,216 $107,320 2 Construction $61,213 Transport.. Warehouse, and Utility $58,904 Wholesale Trade $64,759 $62,440 $91,416 3 Retail Trade $49,923 $49,923 $85,072 4 Information $71,618 Finance and Insurance $67,609 Real Estate, Rental and Leasing $57,848 Professional, Scientific, and Tech. $76,116 Administrative Support $42,571 $69,801 $99,960 5 EdLleational Services $48,824 Healthcare and Social Assistance $49,112 $48,984 $79,703 6 Arts, Entertainment. and Rec. $31,737 Accommodations and Food $29,468 Other Services $41,609 $35,482 $65,427 7 Public Administration $65,343 $65,343 $95,957 City of Dublin Nonresidential Impact Fee Final Report 14 Chart 3-4 summarizes the household incomes b very low, low and moderate income groups. For ex calculate that out of 100 employees or jobs within the Tri-Valley, 14 employees or jobs could be e range set by the State's Department of Housing an Chart 3-4: Tri-Valley Household Incom Very Low- Industry Income Manufacturing 4.5% Other Industrial 3.8% Retail Trade 8.5% Professional 5.7% Education/Social 7,8% Sves & Accommodations 18.2% Public Administration 3.7% Source: U,S. Census, 2000 adjusted for income thr c. Employment Generation by Land Section A calculated the total number of jobs expected to be generated in Dublin from nonresidential development. Section B then calculated the expected distribution of household income of a householder working in each industry. This section determines the employment densities, by income, associated with each land use. The calculations for this step are illustrated in the sidebar to the right. 15 - ;2.1 Jb~3Ç y householder industry distributed to ample, using the chart below, one can the Serviee/Accomodation industry in xpected to be within the low-income d Community Development (HCD)'. e By Industry Distribution lIsehold Income Low-Income Moderate- Income 6.5% 216% 4.4% 155% 9.8% 21.2% 6.2% 17.1% 10.1% 25.4% 14.3% 21.7% 4.6% 16.6% esholds developed by HCD. Use Employees Per land Use djusted Employee Generation Rate x Square footage of each land use (weighted for different industries) x orne Distribution Profile (weighted for different industries) mber of very low, low, and moderate income employees per land use esignations and the North American d by the U.S. Census Bureau. For estimated that the site would contain rviees and accommodations (arts, information uses (professional and sted using the Waterford commercial ercial project in the Eastern Dublin opment (HCD) determines income ranges for sted for household size. Very low income e means more than 50% to 80% of the he median income. Final Report Ho A Ine Nu Based on the developable land remaining in Dublin, the Study estimated the distribution of industries likely to occupy a particular site based on Specific Plan land use d Industry Classification System (NAICS) aiso use example, on commercial-designated sites, the City 60 percent retail industry uses, 26 percent se entertainment, and food uses), and 14 percent administrative offices). This mix of uses was foreca center as the model, because it is a recent comm Specific Plan area. , The California Department of Housing and Community Devel Alameda County based on the median household income, adJu means 50% or less of the County's median income. Low incom median income. Moderate meanS mora than 80% to 120% of t City of Dublin Nonresidential Impact Fee 23~ Chart 3-5: Employment Generation Per Land Use Llg ht Office Res & Retail Svcs & Industry Mix Industry Dev Accom Goods 100% 0% 0% 0% 0% Manufacturing 0% 0% 0% 0% 0% Retail 0% 0% 0% 100% 0% Professional 0% 100% 100% 0% 0% Education/Social 0% 0% 0% 0% 0% Svcs & Acorn. 0% 0% 0% 0% 100% Having estimated the mix of industries on each land use, it is possible to determine the number of future employees by household income that can be expected to work and live in Dublin. The Study developed by the Task Force, City Staff and the Consultant multiplied the employee generation rate (adjusted for commuting) by the amount of developable land to yield the total number of employees per land use. This total was then multiplied by the distribution of household income generated by householders working in those industries. This calculation yielded the number of employees by household income, generated per 1,000 square feet of floor area. Chart 3·6 provides a summary of the calculations. Chart 3·6: Employment Generation Per Land Use Number of Employees Per 1,000 Square Feet Very Low Income Low Income Moderate- Land Uses Income Light Industrial 0.04 0.05 0.17 Office 0.11 0.12 0.32 Research & Development om om 0.20 Retail 0.08 0.10 0.21 Services & Accommodations 0.04 0.03 0.05 Note: Figures refer to employees per 1,000 square feet of floor area. D. Housing Prices and Affordablllty Gap Having determined the number jobholders by industry and income projected to locate in Dublin, the focus turns to the housing market. This section develops the average cost of producing market rate housing in Dublin and contrasts that with the amount that can be afforded by very low, low and moderate income households (the "afford ability gap"). The City of Dublin's Consultant developed an apartment proforma based on three recent projects built in Dublin between 2001 and 2003 for the analysis. In addition, the Study City of Dublin Nonresidential Impact Fee Final Report 16 C16/:; 3S~- used the single-family home proforma (essentially a small-lot condominium) developed by the Homebuilders Association for the City's inelusionary program in 2001. Chart 3-7 provides a summary of the cost of producing affordable rental projects and the market prices of a condominium development in Dublin. Chart 3-7: Housing Proformas In Dublin HouÎlrf'i,Qó.$î$<,1 Land Costs Soft Costs Construction Costs Avera e Cost Notes: 1. Based on average of three proformas of apartment projects buiit in Dublin (2001-2003), average unit siLa of 793 square fMt 2. Data provided by HomeBuilder Association for tha City's Incluslonary program (2001), unit siLa of 1,200 square feet The Task Foree determined the breakeven rent and sales price for these projects using residential industry standards for financing, operating costs, and vacancies based on information provided by the Consultant and Task Force members' knowledge and expertise. The Study calculated the maximum amount that could be afforded by households of different income levels_ The difference (called the "affordability gap) was annualized and discounted using a 7 percent capitalization rate, which is the market interest rate for permanent loans. This calculation provides the lump sum amount necessary to compensate a property owner for renting at below market rents. Calculating the "affordability gap" for single-family residences was more straightforward. The maximum affordable payment for moderate~income households was calculated based on standard assumptions regarding annual property taxes and insurance, a 5 percent down payment, and a 30-year fixed loan at a 7 percent interest rate. The difference between the sales price and maximum affordable price represented the lump sum amount necessary to compensate a property owner_ It should be noted that the sales price of a single-family home used in the above analysis ($282,000) is substantially below the market rate price for single-family residences being built in Dublin today_ The difference could be due to the small lot size for the unit (3,500 square feet) as well as the higher densities allowed. Still, even with those qualifications, the $282,000 price used for the inelusionary analysis is probably more reflective of the sales price of condominiums. Chart 3-8 summarizes the results of the affordability gap analysis. City of Dublin Nonresidential Impact Fee Final Report 17 Chart 3-8: Affordability Gap Analysis 3D~ ?Ç" Affordability Apartment Project Single-familv Residence ICondo) CalclIlation Very Low Low Moderate Very Low Low Moderate Annual HH Income $ 32,200 $48,450 $77,300 $35,800 $57,280 $85,920 Max. Affordable Rent $730 $1,136 $1,858 $81,166 $166.129 $279,414 I Price" Breakeven $1,668 $1,668 $1,668 $282,000 $282,000 $282,000 Rent/Sales' Affordability Gap/Unit 0 $938 $532 $1189\ $200,834 $115,871 $ 2,586 Annualized $11,259 $6,384 $(2,271) N/A N/A N/A Affordability Gap Lump Sum to Compensate Property $160,838 $91,195 $(32,448) $200,834 $115,871 $ 2,586 Owner6 Notes: 1. Annual Income determined by HCD income limits. For apartments, a three-person household was assumed; a four-person household was assumed for a single-family residence (three-bedroom size). 2. Maximum affordable rent refers to payments of no more than 30% of income toward housing after utility payments. 3. Maximum affordable sales price assumes a 5% down payment, 30 year loan at 7% interest rate and standard assumptions regarding property Iaxes and Insurance. 4. Breakeven rent was determined by calculating the likely financing costs of a 100% financed loan for 30 years at an Interest rate of 7%. The Institute of Real Estate Management provided standard assumptions for calculating the operating costs of apartment projects. For single-family residences, the breakeven price was assumed to be the sales price. 5. Difference between the breakeven rent for an apartment unit or home sales price and the maximum that could be afforded by a very low, low, and moderate income household. 6. The lump sum payment needed to compensate the property owner for renting or selling a unit at beiow market rates is determined by a 7% capitalization rate. E. Maximum Justifiable Fee The final step was to determine the maximum justifiable commercial impact fee, and the fee's feasibility. To maximize the utility of the fee, the fee was based on very low and low-income households living in apartments and moderate income households living in small lot single-famiiy homes. The fee calculation methodology is represented in the sidebar to the right. City Staff and the Consultant also surveyed one dozen jurisdictions to compare their maximum justifiable fees with the results of the analysis. From this pool, three jurisdictions were selected from Alameda County (Pleasanton, Livermore, and Oakland) and three were City of Dublin Nonresidential Impact Fee Maxlmllm JlIstifiable Commarclallmpact Fee ~------------------~~-------------------- Step A: Employment Generation Rate for Each Industry Adjusted for Commuting x Step S: Income DistribLltion 01 Householder employed by Industry x Step C: Affordability Gap for Apartments and Condominiums Final Report 18 3\1PÇ outside the County (Sonoma County, Menlo Park, and Mountain View). The adjacent cities of Danville, Hayward, San Ramon, San Leandro, Union City and counties of Alameda and Contra Costa were not selected because these jurisdictions do not have housing impact fees for nonresidential development. Dublin's fee methodology is comparable to the latter four studies, conducted after 2000. Fees for the first two, Livermore's study (DMG, 2001) and Pleasanton (EPS, 1990 updated in 2000), were the lowest. The Livermore study derived the lowest fees, primarily due to significantly lower construction costs estimated at approximately $77,000 for a multi-family apartment unit and low proportions of very low and low-income jobs. Chart 3·10 shows the comparable jurisdictions with maximum non-residential affordable housing impact fees, below. Chart 3-10: Maximum Justifiable Fee (Per Square Feet) Industries :>akland Mountain Menlo Park Sonoma Livennore Pleasanton View County Light $12.85 16.97 $24.72 $20 $.07 - $.26 $4.58 Industrial Office $35.11 16.97 45.32 $31 $.52 $13.62 Corp. HQ $24.72 $.52 Rand D 16.97 45.32 $4 $5.37 Retail $32.39 14.84 $24.72 $36 $.81 $6.26 Commercial $24.72 Hotel/A&E/Svcs $12.91 13.90 $24.72 $32 $397/room $7.46/room Public/Semi- $24.72 $31 Public In most cases, except for the City of Livermore, the cities surveyed did not adopt the maximum fees established in their studies, but opted instead to adopt fees that were on average 9 to 34 percent of the maximum justifiable fee. For example. the City of Pleasanton recently adopted an impact fee of $2.31 per sqLlare foot for new commercial development. The City of Livermore adopted the maximum fee, which was calculated as totaling between $0.7 and $.81 per square foot. City of Dublin Nonresidential Impact Fee Final Report 19 32fò3>Ç· F. Dublin's Maximum Justifiable Fee The City of Dublin's maximum justifiable fee is calculated in a manner similar to the jurisdictions above. In addition, the Task Force recommended that the contributions of the City's Inclusionary Zoning Ordinance in meeting the City's housings needs, including workforce housing, be considered when calculating the maximum justifiable fee. The Fee Study recognizes that the maximum justifiable fee by industry could be adjusted for the percentage of very low-, low- and moderate-income housing units anticipated to be produced under Dublin's inelusionary housing program. The inclusionary program requires that 12.5 percent of all new units produced be affordable to low- and moderate- income households, of which 30 percent should be affordable to very low-income households, 20 percent to low-income households, and 50 percent to moderate-income households. The number of units affordable to very low, low and moderate income level residents, expected to be produced under the Inclusionary Zoning Ordinance is approximately 1,260 units'. These units could house 2,772 employed residents within the City of Dublin or approximately 52 percent of the very low, low and moderate income jobholders projected to be employed by businesses locating in Dublin. The City of Dublin's housing needs and the contribution of the Inclusionary Zoning Ordinance are described in Chart 3-11 below. Chart 3-11, Contribution of Inclusionary Program to Housing Employed Residents Remaining 12.5% Number of Employed State of Units Inclusionary Workers at 2.2 Residents within California to Build by Year Requirement per Unit Very Low, Low Regional 2025 and Moderate Housing Needs Income Ranges Assessment To Year 20254 (1999 - 2006) 10,084 1,260 Units 2,772 5,303 5,436 The Study recommends that by reducing the maximum justifiable fee by the percentage of affordable housing that will be created by the City's Inclusionary Program, the non- residential development fee program would not duplicate the Inclusionary Zoning Ordinance's contribution to providing affordable housing to jobholders. Using this formula, the maximum justifiable fees to provide affordable housing to jobholder residents, as a direct result of commercial development in Dublin, are as follows (Chart 3-12): , Affordable Housing Pliorlty Areas map approved May 7, 2002 by City Council Resolution 57-02, totals 10,084 units remaining to be built in Dublin. Inclusionary requirement of 12.5% produces 1,260.5 units. 4 Employed Residents are the percentage of workers who would desire to move to Dublin at 48%. Average of Very Low, Low and Moderate Income workers Is approximately 35.3% of total employed residents. City of Dublin Nonresidential Impact Fee Final Report 20 33t>?,:s Chart 3-12, Maximum Justifiable Fees Future Land Use Fee Li ht Industrial Office R&D Retail $ 5.46 $ 13.72 $ 8.81 $ 10.99 $ 4.70 age exempted from the fee G. Task Force Recommendation At the September 4, 2003 meeting, the Nonresidential Development Affordable Housing Impact Fee Task Force made the following recommendations: that the City Council adopt a Nonresidential Development Affordable Housing Impact Fee Ordinance; that, due to current market conditions, the City Council adopt a fee resolution capped at $1 per square foot of new nonresidential floor area, which is scaled to the impacts of different industries; and that the City Council consider exempting projects which are currently under City review. The Task Force approved a motion to make the following recommendations to the City Council: 1.) That an ordinance be adopted for charging a commercial linkage fee. 2.) That, due to current market conditions, a fee be capped at $1.00 per square foot , of new nonresidential floor area and that it be scaled to the impacts of different industries. 3.) That the City Council consider exempting certain categories of projects that are currently in the pipeline and under City review. As recommended, the adopted fees would range from $.34 to $1.00 per square foot of commercial development based on the type of commercial use or business tenant, as outlined in Chart 3-13, below. The fee would be collected prior to issuance of a building permit. The fee would be levied one time, with the construction of new commercial floor area. 5 KSF symbolizes 1,000 square feet of floor area. City of DLlblln Nonresidential Impact Fee Final Report 21 3 ft)05- Liaht Industrial Office R&D Retail Svcs&Accommodation Total Chart 3-13, Recommended Fee Future land Use Building Size (KSF)6 840.37 3,840.8 125 1,936.43 712.78 7,455 38 Fee' Impact Fees $ .40 $ 1.00 $ .64 $ .80 $ .34 $ 336,148 $ 3,840,800 $ 80,000 $ 1,549,144 $ 242,346 $ 6,048,438 The City estimates that there is approximately 10.78 million square feet of commercial development remaining to be built, including the Transit Center Master Plan and the Dublin Ranch commercial development. Due to the terms of some development agreements, approximately 7.5 million square feet of commercial development would be subject to the potential nonresidential development fee". H. Definitions To aid in the implementation of the Nonresidential Development Affordable Housing Impact Fee, the following definitions provide the meanings of the fee categories, as they were developed in the fee methodology. "Light Industrial" shall mean development constructed for the manufacture. production, assembly, and processing of consumer goods and other space uses incidental to these activities. Industrial land uses include but are not limited to: assembly, contractor's storage yards, fabrication, lumber yards, manufacturing, outdoor stockyards and service yards, printing, processing, warehouse and distribution, and wholesale and heavy commercial uses_ "Office" shall mean any development constructed for general business offices, medical and professional offices, administrative or headquarters offices for large wholesaling operations and other space uses incidental to these activities. Office land uses include but are not limited to: administrative or corporate headquarters, banks and savings and loans, business parks, finance offices, insurance offices, legal offices, medical and health services offices, offices and office buildings, professional and administrative offices, professional associations, real estate and accounting offices and travel agencies_ "Retail" shall mean establishments that are constructed for the purchase and sale of commodities and the sale, servicing, installation, and repair of such commodities and services and other space uses incidental to these activities. Retail land uses include but are not limited to: apparel and clothing stores, auto dealers and malls, auto accessories stores, book stores, diseount stores and centers, drug stores, furniture stores and outlets, 6 Total building floor area projections include areas within the Dublin Ranch development which have been exempted from any potential nonresidentiai development impact fee. 7 Fee calculated per square foot of new commercial development floor area. a Total floor area subject to the fee is reduced by the approximately 3.3 million square feet of commercial floor area exempted by the Fairway Ranch development agreement. City of Dublin NonresidentiallmpaGt Fee Final Report 22 "?J'S"Øf)3 S" home furnishings and improvement centers, service stations, supermarkets, hardware stores, pharmacies and video rentals. "Research & Development" shall mean any facilities devoted almost exclusively to research and development activities. Research & Development land uses include but are not limited to: biotechnology, technology and other products and services research facilities. "Services and Accommodations" shall mean any development constructed as a hotel, motel, bed-and-breakfast, inn, restaurant, bar, theater, other entertainment, recreation, cultural facilities, and personal services such as laundries, dry cleaners and beauty salons. I. Conclusion A strong demand for housing in Dublin, fueled in part by strong employment growth in the Tri-Valley region, has resulted in a growing gap between housing costs and the ability of area workers to afford housing. This trend may continue as Dublin has the potential to create 30,120 additional jobs between 2005 and 2025. According to Census data for the Tri-Valley area, a significant percentage of these jobs will be filled by individuais living in very low-, low, and moderate-income households. It is these households that will experience the greatest difficulties in finding affordable housing in Dublin. The City of Dublin has established an Inclusionary Zoning Ordinance which requires 12.5 percent of all residential units be made affordable to very low, low and moderate income families and individuals. Nevertheless, a significant gap will remain between the need and demand for affordable housing in Dublin and the number of affordable housing units available to these residents. One method of bridging that gap is to charge an affordable housing impact fee to nonresidential developments. A justification for such a fee is that nonresidential developments create employment that generates a need and demand for affordable hOLlsing based on the anticipated income levels of the workforce in those developments. Revenues from the Nonresidential Development Affordable Housing Impact Fee would be used to build, subsidize, and rehabilitate housing in Dublin that very low-, low-, and moderate-income households can rent or own. Final Report City of Dublin Nonresidential Impact Fee 23