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Home My WebLink AboutCD Update of Commercial Linkage Fees PPTCOMMERCIAL LINKAGE FEE UPDATE San Rafael City Council December 4, 2023 Background Commercial Linkage Fee New Commercial Space New Workers Affordable Workforce Housing A type of impact fee that charges new commercial development for its role in creating new demand for affordable housing San Rafael’s Current Commercial Linkage Fees Development Type Number of new very low-, low- and moderate-income units (per 1,000 sq ft of gross floor area) Office or Research and Development 0.03 Retail, Restaurant or Personal Service 0.0225 Manufacturing or Light Industrial 0.01625 Warehouse 0.00875 Hotel or motel 0.0075 Projects that Paid >$100k in Commercial Linkage Fees, 2012-2023 Estimated total revenue, 2005-2022: $2,556,106 Average annual revenue: $144,006 Affordable Housing Trust Fund Commercial Linkage Fees Residential In-Lieu Fees Projects recently supported by the Trust Fund 3301 Kerner adaptive reuse Terra Linda Manor rehab Vivalon Healthy Aging Campus, 999 3rd St new construction Jonathan’s Place, 190 Mill St new construction Marin Villa Estates, Novato St renovation Study Overview Nexus Study Three categories of use: •Office / R&D •Retail / restaurant / services •Hotel Addresses two main areas of analysis: 1.the linkage between new jobs and the needed affordable housing, and 2.the affordability gap between what employee households can afford and what new housing costs to build. Land Use Maximum Fee per Square Foot Office/Medical Office/R&D $331 Retail/Restaurants/Services $601 Hotel $267 Maximum Commercial Linkage Fees Study Considerations and Process Maximum Fee (Based on Study) Market Considerations Comparison to Other Jurisdictions Adopted Fees Recommendations Adopt new methodology that expresses fees on a dollar-per-square- foot basis. Recommendation 1 Authorize the Community Development Director to approve alternative timing of developer payment. Recommendation 2 Recommendation 3 Adopt the same fees for Retail/restaurant/services and Hotel/motel development types as other participating jurisdictions. Maintain a higher fee for Office/R&D, in line with consultant recommendations. Fee per square foot Development Type Exemption Office or Research and Development Retail, Restaurant or Personal Service Hotel or motel San Rafael Current (equivalent) $10.32 $7.74 $2.58 Up to 5,000 sq ft Adopted by other Marin jurisdictions $10.00 $8.00 (<2,500 sq ft) $10.00 (>2,500 sq ft) $5.00 None Staff Recommendation $13.33 $10.00 $5.00 Up to 2,500 sq ft Current and recommended commercial linkage fees by development type Recommendation 4 Maintain an exemption across all development types. Modify the square footage covered by the exemption from 5,000 to 2,500 square feet. Commercial Projects 2021-23 Two projects paid commercial linkage fees: •New 5-story hotel •New assisted living development with 103 units Staff identified 11 projects <5,000 sq ft, qualifying for an exemption •For example: office expansions, new grocery market •10 projects <2,500 sq ft •Hypothetical commercial linkage fee would have made up a substantial percentage of total project fees •Combined hypothetical value of exemptions: $130,000 (~$49k/yr) The City intends to spend fee revenues on: •Permanent supportive housing or housing for very low- and/or extremely low- income households •Acquisition and/or rehabilitation of unregulated affordable housing •Publicly owned site for which the City releases a Request for Proposals for affordable housing •Shelter and navigation programs for households experiencing homelessness Commercial Linkage Fee Project List Recommended Action Introduce the ordinance amending San Rafael Municipal Code Section 14.16.030 (Affordable Housing Requirement): •Adopting a commercial linkage nexus study; •Adopting updated commercial linkage fees; and •Adopting a commercial linkage fee project list; and Waive further reading of the ordinance and refer to it by title only. COMMERCIAL LINKAGE FEE UPDATE San Rafael City Council December 4, 2023 Jurisdiction Current Fee Levels (per equivalent sq ft) Corte Madera Office: $4.79 R&D: $3.20 Retail: $8.38 Restaurant: $4.39 Hotel: $1.20 Fairfax No current policy Larkspur No current policy San Anselmo No current policy San Rafael Office/R&D: $10.32 Retail/Restaurant/Services: $7.74 Hotel: $2.58 Sausalito No current policy Unincorporated Marin County Office/R&D: $7.19 Retail/Restaurant/Services: $5.40 Hotel: $2.84