Pleasanton says no to higher affordable housing fees

'Kicking can down the road,' Cook-Kallio says

With the local economy still recovering and competition increasing for large new retail and commercial investments, the Pleasanton City Council joined with the city's Housing Commission Tuesday to keep current low income housing fees that are charged to developers in place.

That came as good news to developers after a consulting firm hired to review Pleasanton's fee structure recommended raising fees by thousands of dollars.

Builders of homes over 1,500 square feet in floor space must now pay $10,713 into Pleasanton's lower income housing fund. Apartment developers must pay $2,655 for every unit in the planned complex and even developers of large and small businesses, both industrial and retail, must pay $2.83 per square feet.

Representatives of Economic & Planning Systems, Inc., the consulting firm, told council and Housing Commission members in a joint meeting that current fees are inadequate for providing low income housing to meet state guidelines. Instead of $10,713, EPS recommended charging $27,187. Fees for apartment builders would go from $2,655 to $15,694 per unit, and fees for retail and commercial developers would nearly double to $4.67.

"We're just coming out of a recession and vacancy rates in our office parks are going in the right direction," said Mayor Jerry Thorne. "We don't want to mess with that."

Although the EPS study showed nearby cities are charging higher fees, it was also reported Tuesday that some of these cities, including Dublin and Livermore, are waiving all fees for new commercial and retail developments.

The fees collected in Pleasanton go into a special fund that the city uses to help finance housing projects for those with low- to very-low incomes. In recent years, these funds have been used to acquire land for rebuilding Kottinger Place, housing rehabilitation and second mortgage loans for lower income households and loans and grants for special needs housing such as REACH.

The state requires updated information periodically on what cities are doing in terms of providing affordable housing. Pleasanton often allows developers to pay cash into the affordable housing fund instead of actually building affordable units, which are often dedicated as low-rent, subsidized housing in perpetuity.

Recent projects approved as part of a court-ordered rezoning in Pleasanton to allow more high density housing have mostly chosen to make the payments rather than tie up 15-20% of their apartment complexes with affordable units.

Steve Bocian, assistant city manager who has charge of the affordable housing program, said Pleasanton's fee structure was last evaluated in 2003. Prior to that, in 1989, a provision was incorporated to annually adjust the fee amounts based on the Consumer Price Index (CPI). That was done in 1998 and 2003, but there have been no changes since then.

Affordable housing advocates have complained numerous times when new developments are under consideration that there are too few homes and apartments that are affordable to Pleasanton's workforce.

But Bocian pointed out that by having developers pay into the city's special fund in lieu of building affordable units, the millions of dollars given allow the city to fund major projects, such as Ridge View Commons and the Promenade and Parkview. Those developments provide special housing for seniors, the disabled and individuals with dementia.

Today, Bocian pointed out, the affordable housing fund balance is $7.9 million, which may not be enough to finance the redevelopment of Kottinger Place and Pleasanton Gardens, where cost estimates are at least $8 million.

Although Tuesday night's joint meeting was considered a workshop with no formal action taken, the council and commission reached a consensus to keep fees as they are, but to ask city staff to review all the options in six months or so and report back.

Councilwoman Cheryl Cook-Kallio said the council has talked about affordable housing for the seven years she's been a member "and we still don't have a substantive plan for dealing with it.

"To some degree, we're kicking the can down the road again," she added.


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Posted by Timothy T
a resident of Downtown
on Oct 24, 2013 at 8:05 am

Thank God we were able to protect the ultra-rich developers that build over-priced housing in our community! What a great day for striking down The Proletariat!!

Our city council is a shining example of what it really means to not care about the people around us. I wish we could abolish the term limits so they could continue to make such wise decisions!

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Posted by Becky Dennis
a resident of Foxborough Estates
on Oct 24, 2013 at 1:12 pm

I was disappointed in the conclusions and recommendations coming out of this workshop. From their comments, I'm not sure, for instance, that Mayor Thorne or Councilmember Brown, or the Housing Commission understand that a fee increase would only impact new development, and that existing businesses would not be impacted at all - except, perhaps beneficially, with higher occupancy rates due to less competition from newly built commercial properties. Existing businesses in existing buildings would actually have an advantage, and that trend towards lower vacancy rates that Mayor Thorne likes so much would continue.

Here's the problem the Council majority has created for our community.

By failing to address policy deficiencies in Pleasanton's current Housing Element, all of the land the City Council zoned at 30 units/acre to meet Pleasanton's affordable housing requirements, will, instead, build out as expensive luxury apartment complexes. Although they will include a few affordable units, the service and retail needs of the wealthier residents of these luxury complexes will create a much greater demand for more affordable workforce housing than the complex provides. (The recent Nexus Study the City commissioned shows this.) The proposed new office buildings near the Mall will bring in an additional 4000 to 5000 new employees, which further increases Pleasanton's lower income workforce housing deficit by another 1000 affordable units or so. Thanks to the Council majority, the developer won't pay an adequate fee to compensate for the cost of housing that California requires Pleasanton to bring on line for those additional employees. Ironically, while these Councilmembers give lip service to not wanting Pleasanton "to look like Dublin", they think that maybe Pleasanton should embrace the "no fee for commercial" policy that created the Dublin look.

I conclude that the Council majority is intent on supportiing high density luxury residential and commercial development that will result in Pleasanton having even higher workforce housing needs, and a requirement to zone even more land for high density residential development to meet that need.

Pleasanton residents have always supported having new development pay it's way to mitigate impacts on texisting redidents. We require it for traffic, water, sewer, parks, and other facilities. If a development couldn't meet this requirement, the development didn't happen. Yet Pleasanton seems to always have plenty of new development, and certainly more development than most people desire. Why should the Council suddenly make an exception when new development increases Pleasanton's obligation to plan for and facilitate workforce housing?

By the way, with regard to the comment about Dublin getting a Whole Foods, Pleasanton has a number of excellent smaller, neighborhood organic grocers with much better prices than Whole Foods. In fact, I've encountered Councilmember Brown shopping at the New Leaf on Bernal, which is also my family's new favorite place to food shop. Higher fees for new retail development will give some stability to our neighborhood retailers like New Leaf who move into existing buildings, provide high quality products, and great, walkable convenience. Let's hear it for that small town, neighborhood feel!

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Posted by Right
a resident of Parkside
on Oct 24, 2013 at 5:25 pm

Becky, that's very magnanimous of you to offer your property and the adjacent lots near your home in the estates to low income and section eight tenants. Until you put your money where your mouth is and are willing to sacrifice your quality of life to assuage your bleeding heart, don't look to the rest of us long time residents to seed your vision of utopia that resembles a third world barrio.

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Posted by Joe
a resident of Another Pleasanton neighborhood
on Oct 24, 2013 at 6:33 pm

The Housing Commission and Council made the best decision for continued managed growth in Pleasanton.

First, a fee is just a tax with another name, which is ultimately borne by (in this case) by developers. Higher taxes = higher development costs = less development.

Second, these taxes go towards development of higher-density housing. Higher tax rate = higher taxes = more money available for higher-density housing. I, for one, am not in favor of blocks and blocks of multi-story high-density housing here in Pleasanton. If I wanted that, I could go to East Dublin, Santa Clara, or plenty of other places.

The net result is lower taxes which attracts development, but not of the high-density kind.

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Posted by Hal
a resident of Parkside
on Oct 24, 2013 at 6:34 pm

Nice touch, Right. You really dismantled Becky's argument, top to bottom, point by point. You're a real prize. Are you the guy who's always shooing kids off your sidewalk?

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Posted by 26 yrs and counting
a resident of Kottinger Ranch
on Oct 25, 2013 at 8:11 am

Anyone who thought that this mayor and this council would do anything but kneel before the throne of realtors wasn't paying attention. If you had bothered to educate yourselves before voting perhaps it would be different, this along with a couple of other recent votes was bought and paid for courtesy of the real estate sector. Well done Karla, you are doing what many of us knew you would, at least your consistent in how you make your money.

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Posted by Matt Sullivan
a resident of Another Pleasanton neighborhood
on Oct 25, 2013 at 9:58 am

Development fees have not been adjusted in Pleasanton since the 1980’s and the costs for infrastructure and ongoing maintenance of public facilities to support development does nothing but increase. The City of Pleasanton has performed a long-term fiscal analysis that concluded new sources of revenue will be needed to maintain the quality of life we have come to expect. That is why the previous City Council authorized the fee nexus study. The residents (i.e. taxpayers) have been subsidizing developers and businesses for years and picking up the tab for their development impacts. The price for houses and apartments sell at whatever the market will bear and this public subsidy goes straight to the developer or business owner’s bottom line. This is nothing short of corporate welfare. If the city truly wants to be fiscally sustainable, it will have to abandone the Chamber of Commerce mentality and make these people pay their fair share.

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Posted by Right
a resident of Another Pleasanton neighborhood
on Oct 26, 2013 at 3:43 pm

Who decides what is their 'fair share'? You? Your compatriots that tried to stop yet another taxpaying business that benefits our community, like walmart? You tried and failed, along with your looney left comrades. Take your social welfare bleeding heart rants to the Berkeley Patch or some other fringe socialist publication, Matt. No one is buying that claptrap here.
And, don't insult us with your faux concern about our quality of life, when you advocate low income hovels in our city.

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Posted by Henry
a resident of Pleasanton Valley
on Oct 28, 2013 at 10:48 am

Adding almost $17,000 of fees to the cost of a new home in Pleasanton - almost all new homes are over the 1,500 square foot threshold and fees become embedded in the sales price - only drives up all home prices and makes homes even more unaffordable for larger classes of potential home buyers and renters. Those of us who have lived in other areas of the U.S. know that comparable home prices can be one-third or one-half of those in Pleasanton, and in a community with at least the same quality of schools, shopping, libraries, civic amenities. Fees are nothing other than hidden taxes. As for new sources of revenue, why not put tax issues on the ballot and let the residents choose how much they want to spend for city services? Development fees to pay for new roads, new water and sewer and other necessities in new developments are fine. Fees to promote social welfare should be eliminated and left to the voters in elections.

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Posted by Jill
a resident of Birdland
on Oct 28, 2013 at 12:53 pm

We have development impact fees. This makes total sense for items like traffic, schools, sewer, water and other things that by adding more development puts a strain on the resource. The impact fees are set by a nexus study which shows what the financial impact is on these services for each home/commercial/sq foot of development.

The 'affordable housing' fee is a different animal.

If you add a new house, I cannot see how the new house negatively affects the need for 'affordable housing'. One could argue the opposite as the more houses you have generates more supply which should bring prices down. Charging a new house affordable housing fees is really a way to finance a social program.

However, for commercial development it could be different. Depends on the business. Although this is still a social program. One could argue that if you add a business that pays low, you are increasing the need for low-income housing. If you are adding a business that pays well, you are not increasing the need for low-income housing.

To be fair, maybe only commercial development pays affordable housing fees but the rate is determined differently. Instead of looking at square feet and everything we should be looking at the average wage being paid. If your average pay is over the median income (or whatever your benchmark is), you pay nothing. If you are paying less than that, you have to pay and the lower your average wage is, the more you pay. This would also have the affect of encouraging higher paying jobs to the area as they would not have to pay the tax. However, the problem with this is different companies can move in and out of the building, each having a different average pay. So perhaps the fee should be charged annually instead of on development for business. I admit this adds complexity and also opens the doors of companies having to release their average salaries (and supporting data to government to prove it) and that is not something that government should be privied to (IMHO). So maybe it is based on the zoning of the property. I realize this idea has not been thought all the way through and has challenges but I would argue that the current method of collecting low-income housing is wrong.

Related to this, I am pretty sure the California courts have recently ruled that requiring inclusionary housing is illegal. This is the method we have been using in Pleasanton. Would be great if somebody had more information on this.

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Posted by Becky Dennis
a resident of Foxborough Estates
on Oct 28, 2013 at 2:48 pm

Hi, Jill - Here's a link to the Nexus Study and the related materials from the City Council's workshop with the Housing Commission. Web Link

The information on housing need generation by residential and commercial development is based on US Census and Bureau of Labor Statistics data. Your instincts are correct that commercial development does create more housing need than residential. A rental apartment generates less need than a 5000 sqare foot house.

Inclusionary zoning, where the City requires market rate apartment developers to make a certain percentage of units affordable to households earning below 50% of Alameda County's median income, is not currently legal. The Governor recently vetoed legislation to make inclusionary zoning allowable. Not a great loss, however, since Pleasanton's inclusionary zoning requirement of 15% affordable has never met the need generated by our mall, business parks, etc., and the 49.6% of people employed in Pleasanton that earn below 50% of the County median. Pleasanton would be better served by combining nonprofit affordable and market rate apartments 50/50 as we have in the Promenade complex across from Hearst Elementary School and PMS.

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Posted by Jill
a resident of Birdland
on Oct 28, 2013 at 9:43 pm

I do not see how you can say that the more expensive a house it, the more mitigation is required for a low-income housing fee. Sounds like the low-income housing fee is really a luxury tax and not an impact tax. In other words, a tax to finance a social program.

It could also be counter-intuitive to charge job providers a tax because they could hire lower paid workers. You are essentially saying that it is better to not provide a job. This is saying that it is better to keep people on welfare than to provide entry-level jobs.

Becky, you state "49.6% of people employed in Pleasanton that earn below 50% of the County median". Is the County median per family or per person? Everything I have seen takes about the median family income. Actually, the more I read this the more outrageous this argument is. You are essentially saying that 50% of the people make below the average income! DUH! That is why they call it the average. If 30% made below the average then I would say that you cannot do math.

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Posted by Jack
a resident of Downtown
on Oct 28, 2013 at 9:55 pm

I realize they are two different entities, but where did all the Ruby Hill school fee money go? It was collected in the name of building the Neal School. So who is subsidizing who? By jamming all the Ruby Hill students into existing schools all the while collecting large fees from them, are they not subsidizing the school district?

Sorry, but further commenting on this topic has been closed.

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