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Uploaded: Thursday, December 13, 2012, 8:18 AM
Council compromises on housing fees
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by Daniel DeBolt
Mountain View Voice Staff
Editor's note: This story has been updated and corrected. In the original story, the Voice incorrectly reported that 84 percent of residents make less than 80 percent of the Area median income. It is 84 percent of "low-income households working in the commercial sector" that do.
Facing an unprecedented demand for more affordable housing in Mountain View, City Council members voted Tuesday to increase funds for affordable housing through fee hikes on commercial building and rental housing developers.
After much disagreement, council members voted 4-3 in favor of the new fees, designed to increase the number of subsidized homes for lower-income residents in Mountain View. Mayor Mike Kasperzak and council members Ronit Bryant and Jac Siegel sought even higher fees and opposed the motion.
The new fees are expected to generate millions every year for affordable housing projects such as the 50 apartments under construction downtown at Evelyn Avenue and Franklin Street. It is costing the city over $12 million and provides homes to families making less than 60 percent of the area's median income.
Though he opposes subsidized housing, council member Tom Means succeeded in passing a motion intended, he said, to "minimize the pain" on developers. Council member Laura Macias was the swing vote, supporting the fees when an implementation date was set for February 9, 2013, five months earlier than Means proposed.
The move raises the amount paid by developers of office and high-tech buildings from $7.43 to $10 per square-foot, less than the $15 per square-foot proposed by city staff and supported by council members in a recent study session. The average in nearby cities for such a fee is $11.87. Fees for retail, entertainment uses and hotel buildings were left at $2.47 per square-foot.
The need for affordable housing has increased dramatically in the last 10 years, said city staff members. In 2001, only 33 percent of the city's "low-income households working in the commercial sector" earned less than 80 percent of the region's median income. A decade later, 84 percent make less than 80 percent of the area's median income.
"Minimum-wage workers would need to work 164 hours per week to afford to rent a two-bedroom apartment" in Mountain View, said resident Bruce England. "Wages have stagnated but rents haven't."
Council member Bryant supported higher fees on commercial developers, and expressed disappointment that other members did not, such as Margaret Abe-Koga, who had supported $15-per-square-foot fee but voted for $10. That will mean millions less in housing funds as companies like Google are set to expand rapidly in coming years.
"With the new general plan allowing quite a bit of intensification of office, I do think that increases demand for housing," Bryant said. "To say we're afraid people won't make more offices here -- that makes absolutely no sense to me. There's always been development in Mountain View because this is a very desirable place to be. It's not clear why we are lowering fees on office when office is a very important generator of the need for affordable housing."
Little was said by anyone to oppose a higher fee on office development.
Opposition was much more apparent to fees on rental-housing development, which the council ended up also setting at $10 per square-foot, less than half of the $21.94 recommended by city staff. "Rental housing is the most affordable housing product that exists in our community," said resident and real estate veteran Jim Pollart. "Additional apartments doesn't exacerbate our housing crisis, it improves it."
After a court decision struck down a previous fee on rental-housing developers, the city commissioned a court-required "Nexus Study" to prove the need for such a fee. The study determined that a fee as high as 11 percent of the project's value could be supported. The city previously had a fee of 10 percent, while Palo Alto had charged 25 percent. The new fee is equivalent to less than 3 percent of the project's value.
The proposed fee of $21.94 per square-foot would have been equal to 4.6 percent, high enough to encourage developers to take the option of including affordable units in a project rather than pay a fee.
"I want units -- the money is too difficult to handle," said council member Siegel, expressing a similar sentiment to other council members who say the city hasn't been able to build enough affordable housing projects. "I don't want projects, I want the (affordable) housing sprinkled throughout the city."
Groups representing the rental housing industry opposed new fees on rental-housing development, some noting that rental housing could not be blamed for the "affordability gap" because no apartments were built over the last decade. There are now over 1,000 apartment units in the planning pipeline.
Pollart said the cost of the fees would be passed onto landowners and wouldn't hurt developers.
"If you pass this ordinance it's not the developers that are going to be incurring this cost; it's the landowners," Pollart said. "What all developers do is the same: net out all project costs" before making an offer on the land. "Dollar for dollar, land value decreases."
Joan McDonald of Advocates for Affordable Housing said the cost of the fees would not be passed onto renters because the market drives rents, not development costs. "Developers are not philanthropists and will charge the highest price the market will bear," she said.
Mayor Kasperzak supported the higher fee on rental housing, but lamented not being able to get enough votes.
"I suffer from no delusions of grandeur but I wish I had some patronage to get a vote here or two," he said, referring to scenes from the movie "Lincoln."
Macias gave her support when the date for both fees was set for February 9, 2013, instead of July 2013. The delay would have spared six apartment projects in the planning pipeline -- 930 units -- potentially worth $15.3 million in affordable housing fees, Lauzze noted in her report.
It was the last meeting for both Macias and Means, who each served eight years on the council.
This story corrects errors in the print version.Are you receiving Express, our free daily e-mail edition? See a sample and sign-up for Express.
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Posted by Steven Nelson, a resident of the Cuesta Park neighborhood, on Dec 13, 2012 at 9:14 am Thanks for great coverage again Daniel! This is exactly why I've loved this Council so much! The art of public debate and compromise on a significant public issue. In real time, before your eyes, as a governing body takes the recommendation from staff and slowly fashions it into a compromise. The limits are pushed - how you tell, 4-3 decision, amendment, switching sides, those who are for BMR in fact voting against 'this measure'. My hat is off to Macias and Means, who have different spheres of interest, but have both improved the process of "the public's business" in Mountain View.
S.N. is one on the three new Trustees of the MVWSD (elementary schools) and is still in favor of a small general parcel tax to support BMR. Several good school teacher families have taken advantage of this program and so have been able to stay in our community and continue teaching our children.
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Posted by Political Insider, a resident of the Old Mountain View neighborhood, on Dec 13, 2012 at 9:46 am "The need for affordable hostage has increased dramatically in the last 10 years, said city planner Linda Lauzze."
I really doubt she used the word hostage
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Posted by Political Insider, a resident of the Old Mountain View neighborhood, on Dec 13, 2012 at 9:48 am "I suffer form no delusions of grandeur but I wish I had some patronage to get a vote here or two," he said, referring to scenes from the movie "Lincoln."
Form no delusions? IS there an editor in the house?
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Posted by BD, a resident of the Cuesta Park neighborhood, on Dec 13, 2012 at 12:28 pm It's pretty bad when the newspaper has so many typos! Here's one short paragraph:
"The need for affordable **hostage** has increased dramatically in the last 10 years, said city planner Linda Lauzze. In **2011,** only 33 percent of the city's households earned less than 80 percent of the **regions'** median income. A decade later, 84 percent make less than 80 percent of the area's median income, she said."
Should be "housing," "2001," and "region's," I think.
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Posted by Editor, a resident of the Old Mountain View neighborhood, on Dec 13, 2012 at 1:36 pm Sorry folks. The wrong version of the story got in. It's been updated.
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Posted by Political Insider, a resident of the Old Mountain View neighborhood, on Dec 13, 2012 at 2:06 pm @Editor, Now just get rid of the silly comments and this would be an excellent article.
"I suffer from no delusions of grandeur but I wish I had some patronage to get a vote here or two," he (Mayor Kasperzak) said, referring to scenes from the movie "Lincoln."
"Minimum-wage workers would need to work 164 hours per week to afford to rent a two-bedroom apartment" in Mountain View, said resident Bruce England.
Bryant said. To say we're afraid people won't make more offices here -- that makes absolutely no sense to me.
Joan McDonald of Advocates for Affordable Housing said the cost of the fees would not be passed onto renters because the market drives rents, not development costs
"I want units -- the money is too difficult to handle," said council member Siegel,
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Posted by Steve, a resident of the Sylvan Park neighborhood, on Dec 13, 2012 at 2:54 pm How insightful of Ms. Mcdonald to acknowledge that the market drives rents. Next epiphany might be realizing the futility in trying to prevent that.
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Posted by USA, a resident of the Old Mountain View neighborhood, on Dec 13, 2012 at 5:36 pm Classic liberal thinking.
Unlike the Federal government, companies cannot just print money; they must pass their costs onto the consumer. Raising taxes increases the cost of goods and services in Mountain View provided by those companies being taxed.
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Posted by News Junkie, a resident of another community, on Dec 14, 2012 at 10:46 pm @Editor: Thanks for this article! I attended the session and I think it's a good description. On the other issue that was debated and decided on that evening (McKelvey Park), will we get an article as well? I saw one in the Mercury News, but have not seen anything by the Mountain View Voice yet. Thanks!
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Posted by Scott Lamb, a resident of the Monta Loma neighborhood, on Dec 16, 2012 at 10:31 pm
Scott Lamb is a member (registered user) of Mountain View Online The statistics Linda Lauzze gave are unbelievable, so I checked them. They're wrong. Here's how I checked:
1. I went to the US Census Bureau's American Fact Finder (Web Link)
2. I selected topic: People - Income & Earnings - Income/Earnings (Household)
3. I selected Geographies - Place Within State - California - Mountain View city, Claifornia. Also select your basis of comparison. Linda Lauzze was vague (what is "area"?) so I guessed "Metro Statistical Area - San Francisco-Oakland-Fremont CA Metro Area" and "San Jose-Sunnyvale-Santa Clara CA Metro Area".
4. I selected B19001 - household income in the past 12 months (in 2010 inflation-adjusted dollars)" from the "2010 ACS 1-year estimates" dataset.
5. I hit view.
This showed me a table of incomes. I plugged it into Google Spreadsheets and added a column with a cumulative count to find which bracket the 50%ile and 84%ile incomes were in. In 2010, Mountain View's 84%ile income was in the "$150,000 to $199,999" bracket. The San Francisco metro area's 50%ile household was in the "$60,000 to $74,999". The San Jose metro area's 50%ile household was in the "$75,000 to $99,999" bracket. (Okay, there are error bars on this, so it might be off by a bracket or so. Doesn't change the final answer.)
So could it possibly be true that in 2011 (a decade after 2001), 84 percent [of Mountain View households] make less than 80 percent of the area's median income? No. The 84%ile Mountain View household makes somewhere between $150,000 and $199,999, not somewhere between $48,000 and $79,999. It's not even close. I refuse to believe that so much changed between 2010 and 2011. Is there some reason to believe the American Community Survey has a systematic underreporting of low incomes in Mountain View but not in the broader area? Or is it that I'm using the ACS data incorrectly? (Maybe "Income & Earnings (Household)" is counting the total household income of each person within a household, essentially weighing large households more than her statement - but that would probably throw the conclusion off in the other direction if anything. Or is she using some underhanded definition of "area"? (I tried using posh Los Altos Hills as a basis for comparison. Nope, she's STILL wrong.) No, this just can't be right.
I'm hoping that the Mountain View Voice has completely misquoted her so completely as to change the entire meaning of her statement. That would be less disturbing than the City Planner being so grossly incompetent as to make decisions based on complete nonsense. Even if it were "just" a misquote, it's disturbing that apparently no one's noticed. Didn't that smell wrong? Mountain View is not the slum of the Bay Area. There are low income households here, and it's great that we're offering subsidized housing for them, but they're not most of the city; the dramatic increase she's talking about simply didn't happen. It's important to understand this stuff to know how much subsidized housing to offer and how large the subsidies should be.
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Posted by Scott Lamb, a resident of the Monta Loma neighborhood, on Dec 17, 2012 at 12:36 pm Aha! There's a video of the actual council meeting online. Linda Lauzze was misquoted quite badly.
The bottom bullet on her slide read "In 2001, 33% of worker households in commercial jobs earned less than 80% AMI - by 2012 the percentage had increased to 84%."
A woman [from context, either Linda Lauzze or Regina Adams] said "a comparison was done on low-income households working in the commercial sector, using data from the 2001 and 2011 nexus studies. This data showed that in 2001, 33% of these worker households earned less than 80% median income, and by 2011, this percentage had increased to 84% of the worker households."
The Voice turned this into "The need for affordable housing has increased dramatically in the last 10 years, said city planner Linda Lauzze. In 2001, only 33 percent of the city's households earned less than 80 percent of the region's median income. A decade later, 84 percent make less than 80 percent of the area's median income, she said."
By dropping the important qualifiers "low-income" and "commercial sector" [which I believe means something like "retail"], the Mountain View Voice turned her words into a dramatic statement which is completely wrong. They also may have mixed her up with someone else. Two people were presenting: Administrative and Neighborhood Services Manager Linda Lauzze and "senior planner" Regina Adams.
Always interesting to see how accurately news is being reported. And a relief to see that our city is making decisions based on real data rather than dystopian fantasies.
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