Publication Date: Friday, March 16, 2001
We're obviously trying to incentivize retail and hotel, but at $2, I think that's realistic."
-Planning Commissioner Paul Lesti
You don't charge impact fees on businesses when the economy is slowing down.
-Mayor Mario Ambra
EPC recommends housing impact fee
EPC recommends housing impact fee
(March 16, 2001)
Business developers would pay for contributing to jobs-housing imbalance
By Justin Scheck
Silicon Valley's latest economic boom has made Mountain View a place where many people work, but an increasingly small number can afford to live.
And with just about everyone attributing this phenomenon to the low supply of-- and high demand for-- moderately priced housing units, the city's Environmental Planning Commission has recommended that the city council impose a fee on developers of new business properties to offset their contribution to this jobs-housing imbalance.
The planning commission has been considering this idea for months, holding a number of late-night study sessions to analyze a detailed study of whether new jobs do, in fact, impact the cost of housing.
Last week they unanimously approved a plan that would have developers of new hotel and retail properties pay $2 per square foot of space, while developers of office and high-tech space would pay $6 per square foot. Nonprofit and religious group projects would be exempt from the fee.
The funds will go toward developing low to moderately priced housing for members of Mountain View's work force.
The plan awaits consideration by the city council.
Commissioners were satisfied that they were able formulate a fee, but had concerns about the timeliness and effectiveness of the measure.
Commissioner Carol Moholt said that while the fee can only take a relatively small bite out of the housing crunch, it will help.
"I have always thought that the housing impact fee, along with the BMR ordinance (which requires residential developers to build below market rate housing, or else pay an in-lieu fee) together were two really good tools that would help us add to our housing stock in Mountain View," said Moholt.
But, she added,"they certainly will not the solve the problem we have."
The planning commission's recommendation took this into account, and is prefaced with a statement to the effect that the fee is intended to preserve the diversity of Mountain View by helping residents being pushed out by high housing costs.
This statement is followed by a recommendation that the city consider additional broad-based measures to mitigate the housing crisis, such as a parcel tax that would have all property owners pay into an affordable housing fund.
Moholt said that four years ago, the commission identified four goals to meet that could help ease the housing crisis: 1) the BMR ordinance; 2) an efficiency studio development; 3) outreach to senior citizens to aid them in the search for affordable housing; and 4) the housing impact fee.
The first three goals were completed earlier this year, when the council voted to build the efficiency studios on the San Antonio Loop. Moholt said she was pleased to have met these goals.
The fee structure approved by the commission differed from that recommended by city staff in various respects.
The staff recommended the commission adopt a fee between $3 and $5 per square foot, with hotels and nonprofit projects or those to be used by religious groups being exempt.
Mike Percy, the city's principal planner, said the staff recommended the hotel exemption because hotel financing is extremely difficult get, and the city is working to attract an upscale hotel to a city-owned site in North Bayshore area.
But commissioners objected to the fact that this exemption would, in effect, give the city a loophole to escape a fee that it is imposing on other developers.
"That is not a message we want to be sending," said Commissioner David Greene.
The city staff report also recommended that retail buildings of 25,000 square feet or less, and office/high-tech projects of 10,000 square feet or less, be exempted from the fee.
The commission decided instead to have retail pay 50 percent of the fee for retail projects of less than 25,000 square feet, and for offices of less than 10,000 square feet.
Commissioner Paul Lesti said the commission wanted to allow as few exemptions as possible, in order to send the message that "everyone should pitch in."
Lesti said the process of formulating the fee was "a balancing act" between coming up with an amount that would make a significant contribution to the city's housing fund, and, at the same time, not turn developers away from Mountain View.
"We're obviously trying to incentivize retail and hotel, but at $2, I think that's realistic," said Lesti.
Commissioner Bob Weaver said he does not like the impact fee because it targets a single type of business--developers--for a fee the entire community should pay.
But Weaver said he approved the fee because "it's the only game in town. Right now there's nothing else we can do."
"I would support a broad-based community approach, such as a parcel tax or an affordable housing district," said Weaver, adding that he would like to explore the option of a collaborative project with Los Altos.
Any such broad-based tax, Weaver said, would have to be approved by voter referendum, which would require a two-thirds majority.
Weaver said that such a vote would allow Mountain View to "see if the community as a whole wants affordable housing, or see if it is a few very vocal individuals."
"Overall," Weaver explained, "I'm not in favor of a tax, but if it is going to be a tax, I'd rather have it be something we all approve."
The fee structure was a source of discussion, as commissioners worked toward developing a consensus, even when it was possible to pass a motion to approve a higher fee with a 4-3 vote.
Moholt did not say whether she favored a consensus decision, but Lesti said that with potentially contentious issue, a unanimous recommendation to the city council could be a more powerful statement than a split vote.
The city staff report was based on a jobs housing nexus analysis prepared by the consulting firm Keyser Marston Associates. This study is required by state law before an impact fee can be imposed.
Council member Rosemary Stasek said that while she had read the nexus study, she had not yet reviewed the commission's recommendation.
"In principle, I could support a housing impact fee," said Stasek. But, she said, "one of the things that I'm going to ask for is examples of things we have approved... What would they have translated into in terms of the housing impact fee?"
Mayor Mario Ambra had a different take on the fee.
"It's going to put a stranglehold on our businesses," said Ambra.
He said the planning commission is "killing the golden goose. You don't charge impact fees on businesses when the economy is slowing down."
Ambra said he would rather tackle the housing crisis with tax incentives for landlords who keep rent low, which, he said, would allow for the free market to solve the crisis.
"You've got to let this whole thing play out. The economy will balance itself out. We as officials shouldn't be charging fees," said Ambra.