Fremont aims to hike fees on developers
City has seen scores of market rate units go up in recent years
In an effort to reach its regional housing goals, the Fremont City Council signaled Tuesday that it would support raising developer fees to help fund affordable housing.
Currently, developers building for-sale homes in the city can satisfy affordable housing requirements in a number of ways, including paying what are commonly referred to as in-lieu fees to the city, building a required percentage of affordable homes or rental units within their project, or some combination of those, among other options the city offers them.
Fees are currently set at $26 per square foot for detached homes projects and $27 per square foot for attached homes. The fees are reduced if some affordable homes are built into the projects. If the developer didn’t want to pay any fees, he would need to make at least 18% of the homes affordable to lowerincome ranges for attached homes, and that increases to 21.6% for detached homes, according to city staff reports.
“I’ve long thought that the inlieu fees must be quite low because it seems that’s almost always the choice that’s made, so I’m glad to see that there’s a potential for the feasibility of higher in-lieu fees,” Vice Mayor Jenny Kassan said at a council meeting Tuesday night.
For rental projects, developers can either include about 13% of the units in the project as affordable or pay fees of $17.50 per square foot for apartments over 700 square feet, and $8.75 per square foot for apartments 700 square feet and smaller.
City staff members say smaller apartments tend to be more “affordable by design,” so lower fees set by the city for those are aimed at encouraging the production of more dense apartment complexes with smaller units.
Keyser Marston Associates, a consultant hired by the city, said in a report that in-lieu fees for single-family homes could be upped to $44.10 per square foot, with town homes bumped to $50.50 and condominium fees as high as $57.80. Apartment fees could be raised to as high as $61.90 per square foot.
City staffers warned, however, that some condominium projects, as well as apartment projects far from transit, were less likely to support fee increases. Staffers also said if fees are raised too high overall, it could suppress housing production in general.
Though city staffers said the council could choose to require developers to build inclusionary units in their projects, the council said it wants to keep the option for in-lieu fees, as that money often can be leveraged by the city to get more federal and state funds to help build homes affordable to people earning very low and extremely low incomes.
Kassan said she supports the maximum level of fee increases recommended by the consultant.
“We’ve produced almost 300% of our (regional housing needs assessment) numbers on market rate housing, so I’m not superconcerned about chilling the development of market rate housing,” she said.
As of the end of 2019, Fremont was more than 2,800 units short of residences it needs to see built
or have issued permits for from 2015 to 2023 that are affordable to people earning very low, low and moderate incomes, though city officials say a few hundred more are in the pipeline.
The city especially has struggled to meet targets for moderate-income-level homes, with only 22 built despite a nearly 1,000-home goal.
Meanwhile, Fremont has seen more than 5,100 abovemoderate homes — essentially market rate — built or permitted since 2015, about 3,300 more than required by the regional housing targets.
The goals are based on housing needs assessments issued from the state and assigned locally by the Association of Bay Area Governments, which are intended to address the housing crisis.
Councilman Yang Shao also said he supports increasing fees to the maximum level, and the council agreed that the fee increases should be phased in to allow developers time to adjust.
Some residents and advocates who called into the meeting, however, disagreed.
“Over and over I have watched Fremont appease the building industry for fear that we wouldn’t get enough housing to satisfy (the regional housing needs
assessment),” resident Alice Cavette said, noting the thousands of market rate homes that have been built in recent years.
“Please do not back off our affordable housing demands and do not phase in our changes,” she said.
“Fremont has had no problem delivering homes for upper-income residents, but the same cannot be said for families making do on very low incomes,” said Alex Werth, a policy associate from the nonprofit East Bay Housing Organizations.
“Low-wage and service sector workers have been taking care of Fremont during and indeed before the pandemic, and this is something Fremont can do to take care of them,” Werth
said.
Dennis Martin, a representative of the Building Industry Association of the Bay Area, said his organization thinks the possible fee increases and the existing inclusionary percentages are too high, but he said builders support a phased in approach to fee increases.
“I want to thank staff and the consultant, it does appear that there is a moderate, conservative tone here that we are supportive of, and that is reflective of Fremont’s approach to business and development in general,” Martin said.
The council also said the city should continue to encourage the construction of smaller, dense apartment complexes.
“We have a lot of young people who are just not able to afford to move out on their own because of the lack of available apartments,” Councilman Rick Jones said. “Whatever we can do to incentivize those types of projects I think would also be a benefit to our residents.”
The city plans to draft an update to its affordable housing ordinance with this week’s input from the council, as well as input from residents and builders that will be collected through the spring, before the Planning Commission and council would review the update in June and July, respectively.