Oakland Development Fee Update

March 11, 2016

Important changes to Oakland’s proposed new development impact fees are scheduled to be reviewed by the Oakland City Council’s Community and Economic Development Committee on March 22. If approved, the full City Council is expected to review the fee proposal on April 19. City staff issued a report detailing the most recent changes today (March 11). These changes are the result of specific direction given by the committee after initial recommendations were released. Key proposed changes are as follows:

Earlier Start Date:  The fees would be imposed sooner—September 1, 2016 instead of December 1, 2016.

Higher Fees in Most Areas:  Fees in North and West Oakland will increase over those previously proposed, while fees in East Oakland will start lower than previously proposed. See details below.

Slightly Altered Fee Zones:  Small changes create pockets of slightly higher fees in specific areas of East Oakland (see map).

On or Off-Site Option:  A development project would not be subject to an affordable housing impact fee if it provides affordable housing within the development project. Staff proposes that minimum percentages for on/off site be a choice of the following: Moderate Income: 10 percent; Low Income: 10 percent; Very-Low Income: 5 percent. Building affordable housing at an off-site location would only be allowed on a case-by-case basis subject to City Council approval.

The fees are intended to pay for affordable housing, transportation infrastructure and other capital improvements. Oakland has been a notable exception among large Bay Area cities for not imposing affordable housing fees. The City has proposed a phased approach and different fee levels based on three geographic zones. While the fees are expected to apply to market-rate multifamily construction, townhomes, single-family homes and commercial development, our summary below focuses on multifamily projects.

The staff recommendations follow more than a year of study on the “nexus” between fees and the impacts of new development, and the economic feasibility of imposing fees on new development.  The staff report breaks the City generally into three geographic zones:  Zone 1—Downtown, parts of North Oakland and the Oakland Hills; Zone 2—West Oakland, parts of North Oakland, neighborhoods located directly east of Lake Merritt and the Coliseum area; and Zone 3—The East Oakland neighborhoods not included in Zone 1 or Zone 2.

The report identifies lower fees for Zone 2 and Zone 3 to account for market differences and related wherewithal to pay fees. According to the proposal, fees would increase over three phases starting on September 1, 2016. Staff recommends that fees be imposed when projects submit a building permit application—a critical detail for projects already in the pipeline, but lacking building permits.  The payment of affordable housing fees would be 50 % at building permit issuance and 50% at certificate of occupancy. 100% of capital improvement and transportation fees would be due at permit issuance.

The key points for proposed multifamily residential projects in Zones 1-3 are set forth below.

Zone 1

• Building permit application filed by August 31, 2016: No impact fee
• Permit filed between Sept. 1, 2016—June 30, 2017: $7,000 per unit
• Permit filed between July 1, 2017—June 30, 2018: $13,000 per unit
• Permit filed after July 1, 2018: $24,000 per unit

Zone 2

• Building permit application filed by August 31, 2016: No impact fee
• Permit filed between Sept. 1, 2016—June 30, 2017: $5,500 per unit
• Permit filed between July 1, 2017—June 30, 2018: $10,500 per unit
• Permit filed after July 1, 2018: $19,250 per unit

Zone 3

• Building permit application filed by August 31, 2016: No impact fee
• Permit filed between Sept. 1, 2016—June 30, 2017: $710 per unit
• Permit filed between July 1, 2017—June 30, 2018: $710 per unit
• Permit filed between July 1, 2018—June 30, 2019: $3,750 per unit
• Permit filed between July 1, 2019—June 30,2020: $6,750 per unit
• Permit filed after July 1, 2020: $13,000 per unit

Note: Staff proposed delaying the start of all fees in Zone 3 until July 1, 2018, with the exception of a $710 administrative fee

To access the full staff report, click the button below, then click on 1. View Report.

                                                  Read Full Staff Report