Napa seeks to boost building fees for affordable housing

But building industry officials told the City Council a solution to the housing crunch cannot be built solely on their backs.

The city proposal would overhaul a slate of fees for affordable housing that have become among the Bay Area’s lowest. Fees for single-family homes and condominiums would jump from $2.20 per square foot of new construction to $10.50, in line with the $9 to $12.25 range in the unincorporated county, while the $3.75 charge for multi-family construction would be brought up to the county’s $5.50 level.

City planners arguing for hikes say that current developer fees – some of which have been unchanged for as long as 16 years – fall far short of levels needed to cut into a housing shortage that confronts residents with soaring rents and home prices on the one hand, and small vacancy rates on the other.

The presentation of higher rates, however, drew protests from development figures who said the city did not consult them on the plan or consider other steps to address housing shortages. Amid such complaints, council members held off on a vote until the city can meet with developers, nonprofit groups and others.

“Since there have been no stakeholder meetings on (the fee increase), I see this as the beginning of a conversation,” said Councilwoman Juliana Inman.

Kevin Skiles, an architect with two building projects pending with the city, argued the jump in affordable housing fees would slice builders’ profit margins enough that many will await higher real estate prices before entering the market – thus defeating the purpose of fee increases.

“Instead of building homes ASAP, I have to wait for the market to get less affordable so I can afford to pay the fees,” said Skiles. “It’s a negative feedback loop.”

However, the leader of the nonprofit Napa Valley Community Housing argued an increase in fee money actually will pay off for Napa’s economy in the long run by enabling more families to live close to their Napa jobs rather than outside the county.

“Workers living close to their work helps productivity and retention,” executive director Kathleen Dreessen told the council. “When they live locally they spend locally; they’re more invested in their community, they’re more invested in civic matters, and they’re invested in their schools and churches.”

California cities and counties in recent years have lost two key tools for increasing stocks of lower-cost housing. A developer’s lawsuit against Los Angeles led to a 2009 appeals court ruling that barred local governments from requiring a percentage of low- and middle-income units in new developments, while California’s shutdown of local redevelopment agencies in 2012 shut off their flow of money, a fifth of which were required to pay for affordable housing efforts.

Among the few points of agreement for many speakers and staff was the need to phase in the higher rates over a period of several months, a process that would allow some developers with projects under review to pay current housing fees instead of future ones.

“There’s not ever a good time to look at fee increases,” said Lark Ferrell, the city housing manager. “It’s tough to raise fees in a recession, and it’s tough to raise them when there are projects in the pipeline.”

Attacking the shortage of lower-cost housing will demand multiple solutions instead of one, said Councilman Scott Sedgley, who called for a fresh look at the recommendations offered by a 2013 city-county housing task force of creating 60 units of lower-cost housing per year.

The task force aimed to raise an extra $5 million for affordable housing subsidies by 2018 while easing zoning and permitting for developers, but its efforts have made little headway. Besides a boost in housing impact fees, other recommendations the task force offered included higher hotel room taxes, mitigation fees, a real estate transfer tax, and a higher property tax assessment on grapegrowers to pay for farmworker housing.