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Uploaded: Thursday, November 15, 2012, 11:58 AM
Council looks to double housing fees
Consultants say city can justify huge increase in commercial development fees for affordable housing
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by Daniel DeBolt
Mountain View Voice Staff
In a city soon to be flooded with building proposals from Google and Intuit, council members said Tuesday that commercial developers of commercial buildings should pay more towards affordable housing.
In a study session Tuesday, Nov. 13, council members showed support 5-2 to double the fees commercial building developers pay towards subsidized housing projects, such as the 50-unit family home project under construction at the corner of Evelyn and Franklin streets. Members Tom Means and John Inks were opposed.
In a presentation, San Francisco-based consultants from Keyser-Marsten painted a portrait of a growing "affordability gap" between low-wage workers and most office workers in the city. Consultants said their 25-year-old model showed justification for some maximum fees that were quite surprising, most notably a hike from $2.47 to $243.61 per square foot for the development of retail and entertainment buildings above 25,000 square feet. They said it was because such workers' wages had risen the least amid rising costs of housing in Silicon Valley, creating a higher need than ever for low-income housing.
"All of us who prepared this asked ourselves, 'How did this come out so high?" said Kate Funk, senior principle for Keyser Marsten. "We don't recall anything like this in the past."
Despite a big increase in median income, from $74,000 to $105,000 since 2000, the wages of low-income workers in Silicon Valley remained relatively stagnant, and are the same as those who live in lower rent areas like Sacramento and Los Angeles.
"You are in the Silicon Valley and you have two to three families living in one bedroom -- that is some of my neighbors," said Elaine Pacheco, a teacher and member of Rengstorff neighborhood group Community Action Team. "It is pretty sick to think we are in such an incredibly wealthy place and we have people that are so poor."
Despite the numbers supporting higher fees, council members expressed support for merely doubling existing fees in light of what cities like Palo Alto and Menlo Park were charging. The study said the council could justify a jump from $7.43 to $59.32 per square foot for most office development and a hike from $2.47 to $44.69 for hotel buildings.
Members supported $15 per square foot for office and tech development over 10,000 square feet and $5 per square foot for retail, entertainment and hotel buildings over 25,000 square feet. Palo Alto charges a housing fee of $18.44 a square foot for all commercial development, while Menlo Park charges $14.71 a square foot for office and $7.98 a square foot for retail, hotel and hotel buildings.
The new revenues would add to funds generated by fees paid by housing developers.
"To me, it make a lot of sense to do this fee on the commercial side," said member Margaret Abe-Koga. "The commercial side is creating buildings that create more jobs and create a need for more housing."
In light of the numbers, council members and affordable housing developers admitted that they could never meet what council member Jac Siegel called an "insatiable demand" for affordable housing.
"In my career I've never seen a jurisdiction that could produce as much affordable housing as it needed," Funk said.
Former Mayor Matt Pear spoke against the fee, saying that the solution was to allow the development of "micro apartments" that would be "very affordable."
Also expressing support for such housing was outgoing council member Means, an economics professor at San Jose State University.
"We always have a shortage of affordable housing," Means said. "There's always a shortage of things that are price controlled. You could say there's a shortage of affordable Ferraris. If people think there is a shortage of housing, the solution is to let people build those houses."
Means expressed impatience with the consultants and grilled them on their methodology and what he saw as their proposed fees, which they insisted were not proposals.
"You are suggesting we should," Means said about charging the maximum fees supported by the study. "I don't think there's anything in this analysis that says 'should,'" Funk replied.
A vote on a new fee on rental housing development was set for Tuesday, but was delayed to Dec. 11 so that it could be considered along with the commercial development fee in the same meeting. Council members have supported a new fee equal to 3 to 6 percent of the assessed value of an apartment building. Are you receiving Express, our free daily e-mail edition? See a sample and sign-up for Express.
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Posted by George, a resident of the Rex Manor neighborhood, on Nov 15, 2012 at 3:10 pm As Oblahbla care comes closer to bankrupting the nation, let us now give give give more to the Po Folks and take take take from the taxpayers. Let's get everyone into houses, medical care, etc so we will all be equally dependent on the govt.. be it National or LOCAL.
Matt Pear spoke the truth in a tasteful and honest way. Let's stop being the Nanny City, let private business and supply and demand take charge of wages and of housing.
The Soviets had equal housing for all.. We are headed that way.
bye george
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Posted by local citizen, a resident of the Castro City neighborhood, on Nov 15, 2012 at 4:55 pm Affordable housing? Well, lets just say we want ghetto/slum districts in our town (excuse me, an expansion of ghetto/slum/barrios).
We need low paid workers to serve us inexpensive KFC, Taco Bell and hopefully in the future, Chick-Fil-A!
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Posted by USA, a resident of the Old Mountain View neighborhood, on Nov 15, 2012 at 5:03 pm "San Francisco-based consultants from Keyser-Marsten"
Let me take a wild guess -- they arrived to the meeting in a Japanese-made Prius with a bumper sticker blaming Romney for outsourcing.
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Posted by OMV Resident, a resident of the Old Mountain View neighborhood, on Nov 15, 2012 at 5:15 pm I think the concept of 'micro-apartments' is a great way of helping address the affordability gap in Mountain View. Not everyone needs an 800 or 1000 square foot unit, especially if they're young and unattached. Other cities including Seattle, San Francisco and San Jose have approved developments like this recently and have had good experiences with them. One of the biggest challenges in making sure they really are more affordable is the cost of providing parking. Reducing the parking requirements so the private market can say how much parking is actually needed would be a good first step. If you approve some 'micro-apartment' developments near the train stations or along El Camino, fewer renters will opt to have a car than you'd think.
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Posted by Cate, a resident of the The Crossings neighborhood, on Nov 15, 2012 at 7:45 pm "You are in the Silicon Valley and you have two to three families living in one bedroom -- that is some of my neighbors," said Elaine Pacheco..."To me, it make a lot of sense to do this fee on the commercial side," said member Margaret Abe-Koga. "The commercial side is creating buildings that create more jobs and create a need for more housing."
I'm frustrated with this article, because I'm not sure who we're talking about in terms of the need for affordable housing. Is Abe-Koga suggesting we need more housing for the people that commercial businesses are hiring, or that we need housing for the people who are doing the actual building? "Affordable" is a sliding scale. Are we talking about families who want houses with yards where they can raise kids for the long-term, or young singles who would be very happy with micro-apartments in the short-term? Also not explained is how the fees work. This seems like a more complex problem than the space this article affords it.
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Posted by Garrett , a resident of another community, on Nov 16, 2012 at 8:26 am What is affordable, is it some magic number, or something that is free market based. Who decides, the city, the voters or the developer. If you make 100,000 dollars a year, 33 percent should be your housing costs.
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Posted by Does anyone connect the dots?, a resident of the Cuesta Park neighborhood, on Nov 18, 2012 at 4:29 pm If we enforced our immigration laws then
•More jobs would be available for legal residents and US citizens.
•Our schools would not be overcrowded, our resources would not be in short supply, and taxes to support our schools could be reduced.
•Our health care system would not be struggling with massive amounts of people needing care, our emergency rooms would not be overburdened, and costs would not be rapidly increasing.
•Housing would not be sharply increasing and we would not need low-income housing. (Rents and housing costs would drop as fewer people would be driving up the costs of renting an apartment and/or buying a home.)
•Wages would increase as fewer people were competing for the same job. (Obama’s executive order allowing illegal immigrants under the age of 30 to get jobs hurts the hardest hit group of unemployed people.)
•Our roads and freeways would be less crowded.
•Our prisons would be less crowded and would cost less thus reducing the need for more taxes.
•Our colleges and universities would be less crowded and students could complete a degree in four years and there would be more scholarships and financial aid for US citizens.
•The US economy would be doing much better, unemployment would be dramatically reduced, and we could cut spending, as fewer people would need social programs.
In the same issue of the MV Voice that announced Jose Vargas, an illegal immigrant, was speaking on amnesty, a letter to the editor by Jeffrey Middlebrook stated that VA funding has been cut so severely that the VA cannot provide the basics for in-patient vets. Meanwhile the Mountain View City Council wants to double the affordable housing fees on commercial development. (Does the city council really believe this is the way to increase the number of companies coming to Mountain View and thus more jobs? Why doesn’t the city council demand that our immigration laws are enforced?)
Why are we discussing amnesty, paying for in-state tuition and low-income housing, as well as many other social and welfare programs for illegal immigrants when we cannot afford the basics for US citizens and legal residents? Why are we putting the needs of illegal immigrants ahead of any US citizen especially our vets? Enforcing our immigration laws including the use of e-verify would help ameliorate many of the toughest economic and social issues the United States faces.
Yes, we are a nation of immigrants, but so are all nations if humankind originated in Africa. We are also a nation of laws and we need to enforce our immigration laws if we are to survive.
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