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Home My WebLink AboutCD Request to Waive the Building Permit Fees____________________________________________________________________________________ FOR CITY CLERK ONLY Council Meeting: July 19, 2021 Disposition: Resolution 14948 Agenda Item No: 7.c Meeting Date: July 19, 2021 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: Community Development Prepared by: Alicia Giudice, Community Development Director Don C. Jeppson, Chief Building Official City Manager Approval: ______________ TOPIC: REQUEST TO WAIVE THE BUILDING PERMIT FEES SUBJECT: RESOLUTION DENYING THE REQUEST FOR WAIVER OF BUILDING PERMIT FEES FOR THE VIVALON HEALTHY AGING AFFORDABLE HOUSING PROJECT AT 999 THIRD STREET (PREVIOUSLY WHISTLESTOP) (APN: 011-265-01) RECOMMENDATION: Adopt resolution to deny the request for waiver of building permit fees. BACKGROUND: In January 2020, the City Council adopted Resolution No. 14760, which established guidelines for the administration of the Affordable Housing Trust Fund (AHTF), with the intent of maximizing opportunity for development of affordable housing projects. The guidelines provide an opportunity to receive AHTF funding through a competitive process that begins with a Notice of Funding Availability (NOFA) or through a rolling application process. On March 23, 2020, the City Council approved a General Plan Amendment (GPA18-001), Zoning Text amendment (ZO18-003), and Use Permit (UP18-034) allowing development of a Research and Development building for BioMarin, and a 67-unit, 70-foot tall, six-story senior center and affordable senior housing building for Whistlestop/EDEN Housing on a 133,099 sq. ft. parcel. On June 5, 2020, the City issued a Notice of Funding Availability (NOFA) for $1.6 Million of initial funding to spur the creation of affordable family rental housing. The City received four (4) applications totaling $3.25 million in funding requests, one of which was from Eden Housing requesting $1.0 Million to help fund the senior housing project at 999 Third Street. On October 5, 2020, the City Council approved funding for Eden Housing for the Whistlestop/Vivalon affordable housing project at 999 Third Street, in the form of a residual receipts loan of $800,000. At the same time, the City Council approved a $750,000 grant for Homeward Bound for a supportive housing project at 190 Mill Street. On January 19, 2021, Eden Housing submitted an application for building permits to the City of San Rafael Community Development Department. The City began the plan review process and retained InterWest to provide plan review. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 On May 3, 2021, Eden Housing submitted a letter to the San Rafael City Clerk requesting a waiver for building permit fees associated with the above referenced application for the Vivalon Healthy Aging Affordable Housing Project at 999 Third Street. Eden cited the following as reasons for the requested fee waiver: 1. Prices in the lumber supply chain have significantly increased, by 230% over the last 12 months. 2. Commercial insurance estimates from insurance providers have more than doubled within the last year, amounting to an additional $500,000 in cost. 3. Long-term lending rates are increasing and will have increased by more than 0.04% by the time construction begins. The estimated building permit fees to provide plan review and building inspections, as required by the California Building Codes, total $214,963, including third party plan review. As mentioned above the City is currently under contract for these services with InterWest, a professional codes service contractor. ANALYSIS: The applicant has submitted a request for a waiver of building permit fees pursuant to City Council Resolution No. 11025. The applicant has estimated total project costs (valuation) to be $28.3 Million, and $2.5 Million gap in their project funding. However, the $2.5 Million gap includes building permit fees that were expected to be between $1,132,000 and $1,415,000. The requested fee waiver is for the full amount. However, as shown in Table 1 below, total building permit-related fees will be approximately $561,844. Only $214,963 (shown in bold) are eligible to be waived under City Council Resolution No. 11025. TABLE 1 Building Permit Related Fees Fee Type Fee Building Permit Plan Review Fire Plan Check Fee S.M.I.P. CA Green Building Fund MEP Fees Plan Retention Development Impact Fee (Res) Development Impact Fee (Com) General Plan Maintenance Fee Long Range Planning Fee Street Maintenance $122,836 $92,127 TBD $7, 924 $1,132 $375* TBD $8,543 $2,400 $11,792 $31,814 $282,900 Total Fees $561,844.28 *Does not include itemized fees California Building Codes require that, as part of the building permit process, project plans are reviewed for substantial compliance with the building codes and once a building permit is issued, inspections are conducted to ensure the work is in conformance with the codes and the approved plans. Building permit SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 fees are typically borne by the applicant and are intended to recover 100% cost of plan review and inspections. The applicant paid an initial plan review fee of $92,127. The plan review work has already been contracted to InterWest. However, the applicant is requesting a fee waiver of both plan review fee and the building permit fee. Fee waivers are intended to off-set development cost and create a path for development of affordable housing projects. The City has previously approved $800,000 in funding for this affordable housing project to also off-set the cost of development. One of the criteria for receiving the funds is stated in the application forms “Successful applicants will be responsible for all entitlements, construction and long- term management of the housing.” Fee waivers such as the one proposed by Eden have not been requested or granted by the City. The few exceptions include the following: • In 2020, Homeward Bound was approved for a fee waiver of $30,473.00. However, this project was associated with a state grant (SB2) that earmarked funding for planning projects that paved the way for affordable housing. This project was identified as a pilot project to receive a portion of the grant. • In 2014, the City approved a significant reduction in traffic impact fees of $254,500 for the San Rafael Corporate Center. The fee waiver was approved due to an unusually inflated valuation resulting from the unique plumbing and mechanical units needed for the BioMarin laboratory facilities. The reduction in impact fee resulted in an fee that was proportionate to the impact fee associated with a similarly sized building. Fees waived for this project would be allocated from the AHTF. The intent of allocations from this fund is to maximize the opportunity for development of affordable housing projects. In 2020, the City received four (4) applications in response to a NOFA. Eden Housing/Vivalon was one of only two applicants who were awarded funding. While there may be an opportunity for additional allocation of funding through this fund, the City would want to release a NOFA and provide other applicants an opportunity to be considered for funding. For this reason, staff is recommending denial of the request for fee waiver. FISCAL IMPACT: Staff is recommending denial of the requested fee waiver and there is no fiscal impact associated with this action. However, if the fee waiver is approved, the total amount of the fee waiver ($214,963) would need to be funded by the AHTF. OPTIONS: The City Council has the following options to consider on this matter: 1. Adopt the resolution as proposed by staff denying the request for waiver of building permit fees. 2. Adopt the resolution with modifications. 3. Direct staff to return with more information. 4. Take no action. RECOMMENDED ACTION: Adopt the resolution to deny the request for waiver of building permit fees. ATTACHMENTS: 1. Resolution 2. Eden Housing Correspondence 3. Public Hearing Notice 1 RESOLUTION NO. 14948 RESOLUTION OF THE CITY OF SAN RAFAEL CITY COUNCIL DENYING THE REQUEST FOR WAIVER OF BUILDING PERMIT FEES FOR THE VIVALON HEALTHY AGING AFFORDABLE HOUSING PROJECT AT 999 THIRD STREET (PREVIOUSLY WHISTLESTOP) (APN: 011-265-01) WHEREAS, Vivalon, formerly known as Whistlestop, has provided a full range of services and activities for seniors at the former Southern Pacific depot in downtown San Rafael for the past 44 years; and WHEREAS, on March 23, 2020, the City Council approved a General Plan Amendment (GPA18-001), Zoning Text amendment (ZO18-003), and Use Permit (UP18-034) allowing development of a Research and Development building for BioMarin, and a 67-unit, 70-foot tall, six-story senior center and affordable senior housing building for Whistlestop/Vivalon/EDEN Housing on a 133,099 sq. ft. parcel; and WHEREAS, on October 5, 2020, the City Council approved funding for Eden Housing for the Whistlestop/Vivalon affordable housing project at 999 Third Street, in the form of a residual receipts loan of $800,000 with the understanding that applicant would be responsible for all entitlements, construction and long-term management of the housing; and WHEREAS, on January 19, 2021, Eden Housing submitted an application for building permits to the City of San Rafael Community Development Department; and WHEREAS, the estimated building permit fees to provide plan review and building inspections, as required by the California Building Codes, are $214,963, and includes third party plan review currently under contract with InterWest, a professional codes service contractor; and WHEREAS, the costs of conducting plan reviews, and inspections are offset by building permit fees; and WHEREAS, the City recognizes the important role building codes, plan reviews and inspections have in protecting the public every day and in times of disaster, by guiding the safe construction of built environment through the California Building Codes, which include safeguards from natural disasters such as wildland fires, floods, and earthquakes; and WHEREAS, City Council Resolution No. 11025 established a policy for evaluating requests for fee waivers for certain projects, including affordable housing projects; and WHEREAS, on May 3, 2021, Eden Housing submitted a letter to the San Rafael City Clerk requesting a waiver for building permit fees associated with the above- referenced application for the Vivalon Healthy Aging Affordable Housing Project at 999 Third Street; and 2 WHEREAS, the funding awarded to Eden Housing on October 2020 was intended for development of an affordable housing project; and WHEREAS, the requested fee waiver would need to be off-set by monies allocated for that purpose such as the Affordable Housing Trust Fund. While the City intends on releasing additional Notices of Funding Availability to support additional funding for affordable housing projects, a NOFA has not been released in 2021; and WHEREAS, on July 19, 2021, the City Council held a duly noticed public hearing on the proposed project, accepting and considering all oral and written public testimony and the written report of the Department of Community Development; and WHEREAS, the City Council finds that waiver of the building permit fees in this case is inappropriate because the applicant was previously awarded funding from the affordable housing trust fund with an understanding that they would be responsible for entitlements, construction and long-term management of the project; and WHEREAS, the City Council further finds that the building permit fee estimate is significantly lower than what the applicant was expecting to pay, therefore the applicant’s funding gap appears to be smaller than suggested in the request for the fee waiver; NOW, THEREFORE BE IT RESOLVED that the San Rafael City Council does hereby deny the request for waiving the building permit fees associated with the Vivalon Health Aging Affordable Housing Project at 999 Third Street. I, Lindsay Lara, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the San Rafael City Council held on the 19th day of July 2021, by the following vote to wit: AYES: COUNCILMEMBERS: Bushey, Hill, Kertz & Mayor Kate NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: Llorens Gulati LINDSAY LARA, City Clerk 22645 Grand Street | Hayward, CA 94541 | Tel: 510-582-1460 | edenhousing.org Broker License No. 872400 Lindsay Lara, City Clerk City of San Rafael 1400 Fifth Ave, Rm. 209 San Rafael, CA 94901 May 3rd, 2021 Subj: Vivalon Health Aging Affordable Housing Project Consideration of Fee Waiver Requests for Planning and Building Permits Dear Ms. Clark, I am writing on behalf of San Rafael Senior, L.P, an affiliate entity of Eden Housing, involved with the development and eventual construction of the 67-unit Vivalon Healthy Aging Campus that will be located at 999 3rd Street in downtown San Rafael. It will be a mixed-use new construction development that includes a health facility and senior center on the bottom two floors that will be owned and managed by Vivalon (formerly known as Whistlestop) and four floors of affordable senior housing above that will be owned by San Rafael Senior, L.P. and managed by Eden Housing. In regards to the City Council’s resolution No. 11025 (see attached) concerning consideration of a fee waiver request for planning and building permits, Eden Housing would like to request a waiver of the building permit fee. The Vivalon Healthy Aging Campus meets the following criteria for this building permit fee waiver request: 1. 100% of the project’s 67 units are restricted to 25-50% AMI for at least 55 years, ensuring long- term affordability. 2. Vivalon, our non-profit partner, is a senior targeted community organization that provides services to lower income residents of San Rafael. The building permit is valuated as 4-5% of the entire valuation for the development. That would be 4-5% of $28,300,000, therefore our building permit fee would approximately be between $1,132,000 and $1,415,000. The reasons we are requesting a waiver of the building permit fee are the following: 1. Prices in the lumber supply chain have soared over the last 12 months to a staggering increase of 230%. There is no ceiling in sight and we foresee a need to absorb subsequent increases in the approximate amount of $1M.1 2. Commercial insurance estimates from insurance providers have more than doubled within the last year amounting to an additional $500,000 in cost with additional increases around 15% on the horizon for a wildfire ravaged California.2 3. Long-term lending rates are increasing and will have increased by more than 40 bps (.04%) by the time we begin construction. This will directly impact the amount of mortgage proceeds the property can raise for financing the project.. We would like to thank the City of San Rafael for their already generous loan of $800,000 from their Housing Trust. These funds from the City’s Housing Trust, coupled with a building permit fee waiver will help offset these anticipated cost increases and will ensure financial viability for this project. If we can 1 Lumber prices have soared 230% in the last year, pushing timber and homebuilding ETFs to record highs | Markets Insider (businessinsider.com) 2 Commercial insurance rates set to continue rising in 2021 | Business Insurance close the gap on our financing for the project, we will be able to begin construction in 2022. We are also currently in our second round of plan check comments and expect permits to be ready by the end of the summer. If you have any questions or require any more information please contact the project developer, Tamar Saunders, at tamar.saunders@edenhousing.org or cell phone (510) 861-6129. Sincerely, Andrea Osgood Vice President of Real Estate Development Eden Housing CITY OF SAN RAFAEL NOTICE OF ONLINE PUBLIC HEARING You are invited to attend an online City Council hearing on the following project: DATE/TIME/PLACE: Monday July 19, 2021 at 7:00 P.M. COVID-19 ADVISORY NOTICE: Consistent with Executive Orders No.-25-20 and No. N-29-20 from the Executive Department of the State of California and the Marin County March 16, 2020 Shelter in Place Order, the San Rafael City Council hearing WILL NOT be physically open to the public and the meeting will be streamed liv e to YouTube at: www.youtube.com/cityofsanrafael. Instructions on how to participate online, will be available on the YouTube channel. PROJECT: 999 Third Street – Request for waiver of building permit fees pursuant to City Council Resolution 11025. APN: 011-265-01 Biomarin Pharmaceutical, owner; EDEN Housing, applicant; File Nos.: P21-010. This project qualifies for exemption from the provisions of the California Environmental Quality Act Guidelines pursuant to 15061(b)(3), which states that as a ‘general rule’ the California Environmental Quality Act (CEQA) applies only to projects which have the potential to cause a significant, physical environmental effects WHAT WILL HAPPEN: You can comment on the project. City Staff will present the requested modifications to the project approval to the City Council. The City Council will hold a public hearing and may take action to approve, deny, or continue a decision on the requested modifications. IF YOU CANNOT ATTEND: You can send written correspondence by email to city.clerk@cityofsanrafael.org, or by mail/hand delivery to the Office of the City Clerk, City of San Rafael, 1400 5th Ave., San Rafael, CA 94901. FOR MORE INFORMATION: Contact Don Jeppson at Don.Jeppson@cityofsanrafael.org. You may also view the staff report after 5:00 p.m. on the Friday before the meeting at http://www.cityofsanrafael.org/meetings. SAN RAFAEL CITY COUNCIL /s/ Lindsay Lara Lindsay Lara CITY CLERK (Please publish in the Marin Independent Journal on Friday, July 9, 2021