REPORT TO COUNCIL
SUBJECT
Title
Consideration of a Rental Housing Impact Fee for New Market-Rate Rental Housing Developments
Report
REPORT IN BRIEF
In July 2012, Council directed staff to study the nexus between the production of new market-rate rental housing and the demand for affordable rental housing. Staff commissioned Economic & Planning Systems, Inc. (EPS) to conduct this nexus study to assess the impact of new market-rate rental developments on the demand for additional affordable rental housing in the City, and what nexus-based fee would fully mitigate this impact. This rental housing impact fee nexus study, provided in Attachment 1, was originally completed in 2013, at which time it was released for public review, culminating with Council consideration in August 2013. The nexus study was revised in December 2014 to update the income and rent data from 2013 levels.
The nexus study is very similar in format and methodology to the commercial linkage fee (a.k.a. "Housing Mitigation Fee") nexus study considered by Council on December 9, 2014; however the study analyzed the impacts of new rental housing developments, whereas the commercial linkage fee study analyzed those of new commercial developments (such as office, retail, and lodging projects).
The nexus study analyzed the economic impacts of new market-rate rental developments, which tend to generate new demand for neighborhood-serving retail, hospitality, and personal services businesses, which then generate demand for additional affordable housing for the newly hired and primarily lower-income workers in those businesses. In short, the household spending of the residents of the new rental projects creates a need for additional affordable housing for the new employees hired to address increased demand primarily at local neighborhood-serving businesses.
The nexus study determined that an impact fee is warranted to mitigate the impact of new market-rate rental housing on the need for affor...
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