COUNTY ADMINISTRATION OFFICE - R. ESPINOSA

1. Hold a public hearing to implement Inclusionary Housing  in-lieu fee in Master fee schedule ordinance.
2. Adopt resolution adopting new in-lieu fees; 
3. Accept introduction, waive further reading, and adopt Ordinance entitled "An Ordinance of the San Benito County Board of Supervisors Amending Appendix "A" of Section 5.01.000, the County's Master Fee Schedule to Add An In-Lieu Fee for Affordable Housing" ; and
4. Discuss chapter 21.03 affordable housing regulation and If desired, provide staff direction on changes the board would like to implement if desired. 

SBC FILE NUMBER: 425

RESOLUTION NO: 2022-51

ORDINANCE NO: 1042

In 2016 the Board of Supervisors reestablished an Inclusionary Housing Ordinance, Ch. 21.03, which set specific percentages required for inclusionary housing based on the number of units. At the time of approval, an in lieu payment for the inclusionary housing was not determined, and a study to establish an appropriate price was conducted.

No in-lieu fees have been established; however, developers have voluntarily agreed to pay affordable housing fees. Through development agreements, developers have historically agreed to pay an affordable housing fee of $4,500.00 per residential unit, paid to the County on a per-unit basis before the issuance of each Building Permit. An example of this would be the Sunnyside Estate. For additional information, please view the  agreement at : 

https://www.cosb.us/home/showpublisheddocument/4900/637309310391800000

The County has contracted with Vernazza Wolfe Associates to provide professional services to complete an affordability gap analysis and in-lieu fee feasibility study. For the last two years, County staff and Vernazza Wolfe Associates, housing consultant, have worked together also to develop a long-term Housing Strategy. Rental housing was added to the Affordable Housing Regulations Ordinance, and an In-Lieu Fee was calculated that could be implemented to cover the development situation in which the requirements from the Inclusionary Ordinance would result in less than a whole unit (referred to as fractional units).The County’s Housing Advisory Committee, Planning Commission, and the Board of Supervisors have been kept informed about the progress of this work and have provided guidance.

The Inclusionary Housing Study provides detailed information on the Affordability Gap calculated for San Benito County, the Inclusionary Housing in-lieu fee calculated based on this gap, and the financial feasibility of the in-lieu fee.

The attached report provides the background information and in-lieu fee calculations for rental and for-sale housing. The maximum in-lieu fees were calculated for three different housing product types – single-family houses (scattered site), a single-family subdivision, and rental apartments. The information presented in this report will assist public officials in deciding what fees to adopt and provide guidance regarding additional inclusionary housing policies.

The following in-lieu fees based on the analysis explained in this study are as follows:

This work is now completed, and it is up to the Board of Supervisors to approve or modify policy recommendations supported by this research effort.

County code chapter 21.03 affordable housing regulations govern the county in-lieu fee. In § 21.03.008 in-lieu payment and other alternative compliance mechanisms describes how fractional units are charged. Residential developments that require the construction of a fractional unit may pay an in-lieu fee in an amount corresponding to the fractional unit, which would be computed and determined by staff. To qualify for an in- lieu payment, the development must demonstrate that specific characteristics of the development site, such as lack of access to services, zoning which requires large lot development, or potentially high site maintenance costs, make the site unsuitable for affordable units at the required income levels. The Planning Commission must review the evidence for first approval, and the Board must approve the qualification for an in-lieu payment of Supervisors. Payment of in-lieu fees shall be made in full to the County prior to issuing a certificate of occupancy and final inspection unless an affordable housing agreement otherwise provides.

FISCAL IMPACT: There is no fiscal impact associated with the County implementing an in-lieu fee. The Inclusionary Housing regulations require developments to include the inclusionary to pay an in-lieu fee; specific characteristics must be present and require approval from the planning commission and the Board of Supervisors.