HomeMy WebLinkAbout2018-05-07 e-packet@3:00Monday, May 7, 2018
3:00 PM
City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
City Hall, City Manager's Conference Room
400 Grand Avenue, South San Francisco, CA
Housing Standing Committee of the City Council and
Planning Commission
Special Meeting Agenda
May 7, 2018Housing Standing Committee of the
City Council and Planning
Commission
Special Meeting Agenda
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of
California, the City Council and the Planning Commission Housing Standing Committee of the City of South San
Francisco will hold a Special Meeting on Monday, May 7, 2018, at 3:00 p.m., at City Hall, City Manager's
Conference Room, 400 Grand Avenue, South San Francisco, California.
Purpose of the meeting:
Call To Order.
Roll Call.
Public Comments.
MATTERS FOR CONSIDERATION
Motion to approve the Minutes from the meetings of March 12, 2018 and March 13,
2018.
1.
Report regarding policy options for inclusionary rental housing and other affordable
housing policies in response to Assembly Bill 1505. (Nell Selander, Economic &
Community Development Deputy Director)
2.
Adjournment.
Page 2 City of South San Francisco Printed on 8/31/2018
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:18-405 Agenda Date:5/7/2018
Version:1 Item #:1.
Motion to approve the Minutes from the meetings of March 12, 2018 and March 13, 2018.
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City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:18-256 Agenda Date:5/7/2018
Version:1 Item #:2.
Report regarding policy options for inclusionary rental housing and other affordable housing policies in
response to Assembly Bill 1505. (Nell Selander, Economic & Community Development Deputy Director)
RECOMMENDATION
Staff recommends that the Housing Standing Committee of the City Council and Planning Commission
(“Committee”)receive a presentation and provide direction to staff regarding:1)inclusionary housing
options for rental and for-sale development;2)the City’s ability to meet its Regional Housing Needs
Allocation (RHNA)given existing affordable housing policies;and 3)other tools that could be considered
to increase the production of affordable housing in South San Francisco.
BACKGROUND
On February 14,2018,City Council held a study session on Assembly Bill 1505,which expanded a
jurisdiction’s ability to require inclusionary affordable housing in rental developments.Staff presented
background information on the City’s existing Inclusionary Housing Ordinance,the need for affordable housing
in South San Francisco,and a recommendation to phase in inclusionary affordable housing in rental
developments, coupled with reevaluating the existing inclusionary requirement for for-sale projects.
The Council referred this matter back to the Housing Subcommittee for more detailed policy discussion,with a
specific focus on several questions (outlined below)as well as the City’s broader effort to address the need for
affordable housing:
·Is the inclusionary requirement for for-sale development the only factor contributing to the lack of for-
sale development in South San Francisco?Or are there other economic factors?Is this a regional
phenomenon or specific to South San Francisco?
·What will it take to be able to require 15 percent affordable units in market rate projects without making
residential development infeasible? Are City fees preventing requiring this level of affordability?
·Does the City have the ability to meet its Regional Housing Needs Allocation (RHNA)?
·What other tools can be used to increase the amount of affordable housing in new development?
To answer these questions,staff explored economic factors impacting the production of for-sale housing in
South San Francisco and compared these findings to other cities in the region.Additionally,staff further tested
the feasibility of residential rental development with a 15 percent inclusionary requirement,changing
assumptions such as fees,land value,rents,and construction costs to determine which impact feasibility most.
The analysis is presented later in the report.
To tackle the larger questions about the City’s ability to meet its RHNA share and tools that can be used to
induce or incentivize affordable housing production,staff considered the following options,which are
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induce or incentivize affordable housing production,staff considered the following options,which are
discussed in greater detail below:
·The City can use its affordable housing funds to partner with affordable housing developers to build
affordable housing utilizing low income housing tax credits and other funding mechanisms.
·The City can impose an affordable housing impact fee on commercial development to use as described
above.
·The City can donate or discount property to affordable housing developers to construct tax credit
projects.
·The City can waive fees or provide subsidies to developers to incentivize construction of more
affordable units, or units at a deeper level of affordability.
Regional Housing Needs Allocation
California requires each jurisdiction to prepare a Housing Element as part of its General Plan to ensure that all
jurisdictions are planning for the projected housing demand throughout the state.The process begins with the
State advising a region of their RHNA,which is the estimated number of housing units that will be needed over
the planning period. South San Francisco’s RHNA share for the planning period, 2015-2023, is 1,864 units.
The City issued 368 building permits for new residential units in 2017,bringing the City’s total during the
planning period to 515 units out of the 1,864 required.This upward trend in permit issuance is promising;
although there is still progress to be made at lower income categories.Attachment 1 shows the City’s progress
toward meeting its RHNA share by income category.
DISCUSSION
Achieving meaningful progress toward meeting the City’s RHNA share at all income levels will require using
more than just one housing program,like inclusionary requirements.A combination of strategies will be
particularly important for producing housing affordable to the community’s lowest earners -those in the very
low income category.Below are a number of approaches that the City can take to generate resources for
affordable housing and maximize utilization of existing resources.
Affordable Housing Funds
The City’s Affordable Housing Trust Fund (Fund 205)was created as a result of developer agreements and the
City’s Inclusionary Housing Ordinance.If developers were unable to incorporate affordable units into their
housing or commercial developments pursuant to the City’s Inclusionary Housing Ordinance,the City accepted
in-lieu fees in limited cases (e.g.Terrabay).In other cases,the City required a housing fee in addition to the
affordable units (e.g.Oak Farms).Most recently,$1.05 million from Fund 205 was set aside to subsidize the
affordable housing units in the Grand &Linden project being undertaken by ROEM Development.Fund 205
can only be used for the development of new affordable housing,serving income levels up to 120 percent of
area median income (AMI). Fund 205 has a balance of $2,579,611.
In 2011,the City established the Housing Successor Agency to manage and dispose of the former South San
Francisco Redevelopment Agency’s (RDA)housing assets;and the City also established the Housing Fund
(Fund 241)in the City Budget.Revenues from housing rental properties,RDA-funded loan repayments,andCity of South San Francisco Printed on 5/3/2018Page 2 of 9
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(Fund 241)in the City Budget.Revenues from housing rental properties,RDA-funded loan repayments,and
interest are deposited into this fund.The fund can be used to develop housing or for any other purposes that
advances the creation or preservation of affordable units,including new construction,first time homebuyer
loans,rehabilitation,and staff expenses consistent with past RDA law.Currently,these funds are being used for
housing related expenses including staff,maintenance,and other incidental expenses.Additionally,$2.45
million of these funds have been set aside as a grant to subsidize the affordable housing units in the Grand &
Linden project being undertaken by ROEM Development.The income levels served by this fund are tightly
controlled by Senate Bill 341;no funds may be spent on households above 80 percent of AMI.Fund 241 has a
balance of $1,120,172.
Typically,cities will release a request for proposals for qualifying projects and programs based on the amount
of money they have in their housing funds.San Mateo County is fortunate to have experienced affordable
housing developers and providers that can work with the City to build new affordable housing or manage
affordable housing programs.An advantage of this approach is that money given to affordable housing
developers and providers can leverage county,state or federal money -one local dollar can often bring in three
to nine outside dollars in matching resources.
Commercial Linkage Fee
A Commercial Linkage Fee is an impact fee on commercial development for affordable housing.They are
generally designed as a per square foot fee assessed on new non-residential construction such as office,hotel,
medical,retail and restaurants.An impact fee like a Commercial Linkage Fee requires drawing a nexus between
the new use and the impact being charged for.In this case,these new uses bring with them new workers,which
create a demand for housing.The primary focus of a Commercial Linkage Fee is to fund construction of
affordable housing to assist workers that make lower or moderate wages -those who cannot afford market rate
housing prices.
In 2015,“21 Elements”-which is a consortium of the County of San Mateo and every city in the County that
focuses on housing policy and implementation of housing element policies and goals -undertook a Grand
Nexus Study.Cities in the consortium could opt into the Grand Nexus Study,which looked at the connection
between commercial development and the need for affordable housing,as described above.South San
Francisco opted to participate;a Draft Commercial Linkage Fee Nexus Study was produced for the City.The
Nexus Study includes the maximum justifiable fee based on the nexus established (on a per square foot basis)
and a range of fees that could be assessed on new commercial development without diminishing the project’s
feasibility.
Use Maximum Justified Fee Recommended Linkage Fee
Hotel $130 $5 - $15
Retail/Restaurants/Services $230 $2.50 - $7.50
Office/Medical Office/R&D $192 $5 - $10
If the Committee recommends that City Council consider a Commercial Linkage Fee,staff would work with a
consultant to update the Nexus Study and feasibility analysis to account for new market conditions.Ultimately,
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consultant to update the Nexus Study and feasibility analysis to account for new market conditions.Ultimately,
if Council directs staff to prepare an ordinance for Council approval,provisions for the following would need to
be considered:
·Threshold for small projects under a certain square footage (10-20,000 square feet is common for
reduced or exemption of fees).
·Exemptions for certain types of space,such as onsite child care centers in office buildings,non-profits,
or public buildings including schools and churches.
·Provisions to address rehabilitation and conversion of space from one use to another.
·Alternative means of meeting the fee requirement, such as provision of land or housing.
·Consideration of incentive to encourage area standard wages.
·Mechanism to adjust fees in the future.
Other cities on the Peninsula who have adopted a Commercial Linkage Fee include:Menlo Park,Palo Alto,San
Carlos, East Palo Alto, Foster City, San Mateo, and Redwood City.
City/Successor Agency Property
Currently,the City has an array of housing and commercial land assets that are underutilized.The City’s
Housing Investment Plan (HIP),which applies to its Housing Successor Agency assets,seeks to provide
strategies to maximize the development of affordable and market-rate housing while aligning these efforts with
the City Council’s goals of improving the Downtown.The City currently owns and manages three residential
properties -a single family home and two small multi-family apartment buildings.Additionally,the Successor
Agency’s Long Range Property Management Plan (LRPMP)outlines the permissible uses for former
Redevelopment Agency properties - many are set aside for future development, which may include housing.
If it is the City Council’s priority to maximize affordable housing at these sites,a strategy can be developed by
staff and presented for Council consideration.HIP properties may be more easily designated exclusively for
affordable housing;whereas LRPMP properties may be mixed-income projects where the City may further
subsidize the affordable units,to deepen the level or affordability or increase the total number of affordable
units (as it did with the ROEM project).
Direct Financial Incentives
Some cities provide direct financial assistance,such as fee waivers,to market rate developers to help reduce or
eliminate the profit lost by creating affordable housing.While there is an intuitive appeal to this,many cities
conclude it is not the best use of resources.Municipal dollars are a limited and costly resource from a city’s
perspective,and often the same benefits for the developer can be achieved at no cost through zoning incentives,
such as density bonuses.Additionally,local contributions may trigger prevailing wage rules,which may
eliminate any benefit from the financial assistance.
Inclusionary Housing Requirements
California State Assembly Bill 1505 (Bloom),also referred to as the “Palmer Fix”for the court decision it
overrules,allows cities to require a portion of new market rate,rental developments to include affordable
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overrules,allows cities to require a portion of new market rate,rental developments to include affordable
housing provided an alternate means of compliance exists,such as in-lieu fees or off-site construction.Local
ordinances requiring more than 15 percent inclusionary units affordable to households earning 80 percent or
less of the area median income may be reviewed by the California Department of Housing and Community
Development (“HCD”)under certain circumstances.The City currently has an inclusionary housing ordinance
that applies to for-sale residential developments.As a result of AB 1505,the City may now consider adopting
an amendment to this ordinance extending the requirement to residential rental developments.
Density Bonus and the Cost of Construction
Often,the inclusionary housing requirements that cities adopt,on their face,appear to have a larger burden on
developers than impact fees.This is mitigated by the fact that by developing a certain percentage of affordable
housing (as required by an inclusionary housing ordinance)a developer can then use the State Affordable
Housing Density Bonus Law to build more market rate units.
A caveat to the benefits of the Density Bonus is that more units may change the construction type required to
build them and therefore increase the cost of construction,negating much of the benefit of the bonus.Wood is
relatively inexpensive to build with while concrete is comparatively costly.If the building codes allow the
developer to add an additional floor using wood construction,the density bonus is very valuable.If an extra
floor to accommodate the bonus units requires the construction of another floor of concrete podium,the
additional costs might eliminate much of the incentive.To reflect this complexity,the City’s consultants
assumed developers would use a 25 percent density bonus,even though they are entitled to a 35 percent bonus,
in the rental inclusionary housing scenarios analyzed.
Inclusionary Housing in For-Sale Developments
One of the challenges associated with the creation of more affordable for-sale housing in South San Francisco
is encouraging the production of more for-sale housing in general.From 2010 through 2016,no for-sale
condominium or townhome projects of any meaningful size were completed in the City.As of 2017,31 for-sale
townhome units were completed or under construction at City Ventures’South City Place development.In
contrast,during the same time period (2010-2016),approximately 2,023 for-sale units were built in San Mateo
County and 6,969 in Santa Clara County.This compares with 5,174 rental units in San Mateo County and
23,335 in Santa Clara County.
There are a variety of reasons for why there is a greater amount of rental apartment development during these
years,but major factors likely include the availability of financing for each product type during the early years
of the recession’s recovery,decreases in national home ownership rates and trends toward “rental-by-choice”
living,which have affected developer investment strategies,and the decreased numbers of for-sale housing
developers active in the real estate market after the impacts of the 2008-2010 recession.
With regard to South San Francisco,it is difficult to pinpoint a single definitive reason for the lack of new for-
sale housing development in the City,but comparisons with similar markets and the economics of project
development provides several insights.The closest relevant city comparisons in terms of population and size
are Redwood City,San Mateo,Mountain View and Daly City.From 2010 to 2017,the following numbers of
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are Redwood City,San Mateo,Mountain View and Daly City.From 2010 to 2017,the following numbers of
residential units were created:
City Rental Units For-Sale Units Total Units
Redwood City 2,019 420 2,439
San Mateo 1,226 578 1,804
Daly City 123 227 350
Mountain View 1,541 678 2,219
South San Francisco 109 31 140
A variety of factors may affect the desirability of developing for-sale residential projects in a given city,but a
major driver of development is sufficient profitability to offset the risks of a project.This profitability is
projected by estimating the cost to build the project versus the net sale proceeds the project is anticipated to
generate from unit sales.In the comparison cities mentioned above,sales prices vary significantly for for-sale
housing. Average sales prices by city for for-sale units built and sold over the last three years are as follows:
City Price per Square Foot Approximate Price per Unit
Redwood City $802 per square foot $1,260,000
San Mateo $818 per square foot $1,340,000
Daly City $623 per square foot $920,000
Mountain View $917 per square foot $1,380,000
Because no projects were completed in South San Francisco during this time period,it is not possible to
compare these prices directly against South San Francisco for-sale housing of the same vintage.However,
South San Francisco does have inventory built from 2007 to 2009 which sold for approximately $658 per
square foot or $706,000 per unit.Assuming these earlier prices,sales costs reflect that if a developer were to
build a unit for the same price in all five markets,South San Francisco would potentially be the least profitable
place (on a per unit basis) relative to its comparable cities on the Peninsula.
Additionally,total project development costs are not the same across these cities.While hard and certain soft
costs are similar in competitive markets,other factors affect the total project development costs,including:land
costs,city fees or requirements,approval timeframes,and soil/ground development costs.One type of city fee
or requirement is the affordable housing requirement for for-sale housing,which varies across the comparison
cites:
City Inclusionary Affordable Housing Requirement
Redwood City None. Since 2015 they have had an affordable impact fee.
San Mateo 15% of units at moderate income or 10% of units at low income.
Daly City 20% of units at moderate income or in lieu alternatives.
Mountain View 10% of units at median income.
South San Francisco currently requires 20 percent of units at a mixture of low and moderate income,which is
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South San Francisco currently requires 20 percent of units at a mixture of low and moderate income,which is
the highest requirement of the group.The additional cost of the requirement is somewhat offset by lower land
costs in South San Francisco;however,the total cost of development relative to sale prices is still not profitable
enough to support new development.
To determine what level of affordability would be feasible in for-sale developments in South San Francisco,the
City’s consultant examined the costs and net sale values of two for-sale prototypes:a 100-unit condominium
project and a 35-unit townhome project.The results of these analyses are summarized below and presented in
Attachment 2.
The 100-unit condominium is only marginally feasible (15.1 percent profit)with no affordable requirements,
and not feasible at all with 10 or 20 percent of the units affordable.Even though the prototype is technically
feasible if there are no affordable requirements,in most cases developers will probably build rental
developments,because they are more profitable.The profit threshold required to induce condominium
development is 15-20 percent for the condominium.With the current inclusionary housing requirement and a
15 percent density bonus,the development cost (without profit)is barely more than the sales price,leaving a
3.5 percent profit.If the inclusionary requirement were 10 percent with a 5 percent density bonus,the
development would still be infeasible (8.7 percent profit).Additionally,the development is infeasible at 20
percent of the units affordable to moderate income households (4.3 percent profit).
For the 35-unit townhome development,the profitability depends heavily on the ability to use the density
bonus.Another factor making it more likely that townhomes will prove feasible is lower profit thresholds.
Townhomes are simple and faster to build,with less risk,so developers are willing to accept lower profits.The
profit needed to induce development of townhomes is 12-17 percent.Additionally,small sites are of less
interest to rental developers because the ongoing management costs are spread between fewer units.
The townhome project is feasible with 10 percent affordable housing requirements with or without a density
bonus (17.9 percent and 14.7 percent profit)or 20 percent affordable requirements and a 15 percent density
bonus (18.1 percent profit).
Generally,it appears that the inclusionary requirements are a factor that limits ownership developments in
South San Francisco.Without the inclusionary requirement,for-sale development may be more feasible,but
there are many factors affecting the likelihood of the City receiving for-sale development proposals.
Potential profits are summarized below:
Profit Target
Condominium Development
No affordable units 15.1%15-20%
Condo - 10% affordable, 5% density bonus 8.7%15-20%
Condo - 20% affordable, 15% density bonus 3.5%15-20%
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Townhome Development
No affordable units 23.0%12-17%
10% affordable, 5% density bonus 17.9%12-17%
10% affordable, no density bonus 14.7%12-17%
20% affordable, 15% density bonus 18.1%12-17%
20% affordable, no density bonus 8.6%12-17%
Inclusionary Housing in Rental Developments
On February 14,2018,staff presented several options for phasing in a ten percent inclusionary housing
requirement on rental developments.Council directed staff to look at achieving a 15 percent inclusionary
housing requirement.
A 15 percent requirement will affect projects in the planning stages differently than theoretical projects,where
the land has not yet been purchased for development.Some developments in the planning stages may be able to
proceed with a 15 percent inclusionary requirement,if they are able to utilize a 25 percent density bonus,while
others may not proceed. The most important factor is if developers could effectively use the state density bonus.
For projects for which the land has not yet been purchased,developers will typically respond to an increase in
the inclusionary housing requirement by paying less for land.That said,it is unlikely land prices will come
down enough to enable housing development because the land can more profitably be utilized for other uses
that are not subject to inclusionary housing requirements.Under today’s market conditions,land prices would
have to drop by 55 percent to maintain the same developer profit with a 15 percent inclusionary housing
requirement (and no density bonus).The City’s consultant believes that some development proposals would be
paused or abandoned with the 15 percent requirement.
In the future,a 15 percent inclusionary requirement may be feasible if rents increase faster than other
development costs,including construction costs.Even small changes in rental rate -i.e.,approximately 4
percent if all other costs stay the same -could make development possible.This,however,is unlikely,given the
unabated rise in construction costs over the past several years.
The consultants modeled a 150-unit apartment complex,which typically would require a minimum of 18-20
percent profit in order to be deemed financially feasible.In this example,and assuming current market
conditions,if a developer were able to use the 25 percent density bonus with no additional costs,then the
development would yield a 17.7 percent profit -which falls just short of the 18 percent feasibility threshold.By
contrast,if the developer can only use a 10 percent density bonus,then the development would only yield a
15.9 percent profit and would not be feasible.However,if rents increase by 4 percent,then the development
becomes more realistic,yielding 20.4 percent profit (with a 10 percent density bonus)and 22.4 percent profit
(with a 25 percent density bonus).The results are further detailed in Attachment 2,with an additional measure
of feasibility, yield on cost, included.
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CONCLUSION
Committee guidance provided at this study session will inform staff’s next steps,which may include some or
all of the following:
·Drafting Zoning Ordinance Amendments to modify the for-sale inclusionary housing requirement.
·Drafting Zoning Ordinance Amendments to extend the inclusionary housing program to rental
developments.
·Drafting an ordinance to adopt a Commercial Linkage Fee.
·Preparation of a Request for Proposals for affordable housing programs or projects.
Attachments
1.RHNA Table
2.Modeling of Inclusionary Housing Requirement Prototypes
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Attachment #2
Large rental, 15% inclusionary at 80% AMI, today’s condition, 25% density bonus
Project Summary Studio 1br 2br 3br Total % Area (sq. feet)
Approximate Unit Size 400 650 900 1,200
Base Market-Rate Units 12 65 44 6 127 67.55% 93,850
Bonus Units 4 19 13 2 38 20.21% 28,050
Total Market-Rate Units 16 84 57 8 165 87.77% 121,900
Affordable Units: 80% AMI 2 12 8 1 23 12.23% 17,000
Total Affordable Units 2 12 8 1 23 12.23% 17,000
Total Project Units 18 96 65 9 188 100% 138,900
Project Size sq. feet
Unloaded Area 138,900
Common Area 34,725
Commercial Space 0
Total Built Area 173,625
Site Area 54,450
Floor Area Ratio 3.19
Dwelling Units/Acre 150.40
Rent Schedule Studio 1br 2br 3br 4br Total %
Market-Rate Units $1,810 $2,601 $3,397 $3,981 $364,139 70.41%
Bonus Unit Total $1,810 $2,601 $3,397 $3,981 $117,589 21.03%
Affordable Level (80% AMI) $1,614 $1,845 $2,075 $2,306 $44,275 8.56%
Gross Potential Income / mo $32,188 $240,621 $210,232 $34,154 $555,492 100%
Rental Income & Project Value
Gross Potential Income (annual) $6,206,354
Less Vacancy $310,318
Gross Rental Income $5,896,037
Less Operating Costs $2,063,613
Net Operating Income (NOI) $3,832,424
Cap Rate 4.25%
Project Value $90,174,679
Cost Analysis $ % of TDC
Construction Costs $50,351,250 65.74%
Residential Impact Fees $5,640,000 7.36%
Soft Costs $15,105,375 19.72%
SubTotal Hard and Soft Costs $71,096,625 92.82%
Land Costs $5,500,000 7.18%
Total Development Cost (TDC) $76,596,625
TDC Per Unit $407,429
Profitability $ Profit as % of TDC Yield on Cost
Estimated Profit $13,578,054 17.73% 5.0%
Minimum Profit $13,787,393
Is Project Feasible? No
Value Capture Opportunity -$209,239
Parking % #
Base Parking Ratio 125% 235
Large rental, 15% inclusionary at 80% AMI, 4% increase in rents, 10% density bonus
Project Summary Studio 1br 2br 3br Total % Area (sq. feet)
Approximate Unit Size 400 650 900 1,200
Base Market-Rate Units 12 65 44 6 127 76.97% 93,850
Bonus Units 1 8 5 1 15 9.09% 11,300
Total Market-Rate Units 13 73 49 7 142 86.06% 105,150
Affordable Units: 80% AMI 2 12 8 1 23 13.94% 17,000
Total Affordable Units 2 12 8 1 23 13.94% 17,000
Total Project Units 15 85 57 8 165 100% 122,150
Project Size sq. feet
Unloaded Area 122,150
Common Area 30,538
Commercial Space 0
Total Built Area 152,688
Site Area 54,450
Floor Area Ratio 2.8
Dwelling Units/Acre 132
Rent Schedule Studio 1br 2br 3br 4br Total %
Market-Rate Units $1,888 $2,713 $3,544 $4,153 $379,88 80.9%
Bonus Unit Total $1,888 $2,713 $3,544 $4,153 $45,469 9.7%
Affordable Level (80% AMI) $1,614 $1,845 $2,075 $2,306 $44,275 9.4%
Gross Potential Income / mo $27,776 $220,223 $190,255 $31,378 $469,633 100%
Rental Income & Project Value
Gross Potential Income (annual) $5,635,590
Less Vacancy $281,780
Gross Rental Income $5,353,811
Less Operating Costs $1,873,834
Net Operating Income (NOI) $4,116,197
Cap Rate 4.25%
Project Value $81,881,815
Cost Analysis $ % of TDC
Construction Costs $44,279,375 65.1%
Residential Impact Fees $4,950,000 7.28%
Soft Costs $13,283,813 19.5%
SubTotal Hard and Soft Costs $62,513,188 91.9%
Land Costs $5,500,000 8.1%
Total Development Cost (TDC) $68,013,188
TDC Per Unit $412,201
Profitability $ Profit as % of TDC Yield on Cost
Estimated Profit $13,868,627 20.39% 5.12%
Minimum Profit $12,242,374
Is Project Feasible? Yes
Value Capture Opportunity $1,626,253
Parking % #
Base Parking Ratio 125% 206
Large rental, 15% inclusionary at 80% AMI, 4% increase in rents, 25% density bonus
Project Size sq. feet
Unloaded Area 138,900
Common Area 34,725
Commercial Space 0
Total Built Area 173,625
Site Area 54,450
Floor Area Ratio 3.19
Dwelling Units/Acre 150.40
Rent Schedule Studio 1br 2br 3br 4br Total %
Market-Rate Units $1,888 $2,713 $3,544 $4,153 $379,88 70.7%
Bonus Unit Total $1,888 $2,713 $3,544 $4,153 $45,469 21.11%
Affordable Level (80% AMI) $1,614 $1,845 $2,075 $2,306 $44,275 8.23%
Gross Potential Income / mo $33,441 $250,071 $218,607 $35,531 $469,633 100%
Rental Income & Project Value
Gross Potential Income (annual) $6,451,805
Less Vacancy $322,590
Gross Rental Income $6,129,215
Less Operating Costs $2,145,225
Net Operating Income (NOI) $3,983,989
Cap Rate 4.25%
Project Value $93,740,929
Cost Analysis $ % of TDC
Construction Costs $50,351,250 65.7%
Residential Impact Fees $5,640,000 7.36%
Soft Costs $15,105,375 19.7%
SubTotal Hard and Soft Costs $71,096,625 92.82%
Land Costs $5,500,00 7.18%
Total Development Cost (TDC) $76,596,625 100%
TDC Per Unit $407,429
Profitability $ Profit as % of TDC Yield on Cost
Estimated Profit $17,144,304 22.38% 5.2%
Minimum Profit $13,787,393
Is Project Feasible? Yes
Value Capture Opportunity $3,356,912
Project Summary Studio 1br 2br 3br Total % Area (sq. feet)
Approximate Unit Size 400 650 900 1,200
Base Market-Rate Units 12 65 44 6 127 67.55% 93,850
Bonus Units 4 19 13 2 38 20.21% 28,050
Total Market-Rate Units 16 84 57 8 165 87.77% 121,900
Affordable Units: 80% AMI 2 12 8 1 23 12.23% 17,000
Total Affordable Units 2 12 8 1 23 12.23% 17,000
Total Project Units 18 96 65 9 188 100% 138,900
Parking % #
Base Parking Ratio 125% 235
Condominium Development, 20% Affordable, No Density Bonus
Project Summary 2br 3br Total %
Approximate Market Unit Size 1,080 1,250
Base Market-Rate Units 40 40 80 80%
Total Market-Rate Units 40 40 80 80%
Approximate Affordable Unit Size 1,050 1,200
Affordable Units: Level Low 5 5 10 10%
Affordable Units: Level Mod 5 5 10 10%
Total Affordable Units 10 10 20 20%
Total Project Units 50 50 100 100%
Project Size sq. feet
Unloaded Area 115,700
Common Area 28,925
Total Built Area 144,625
Site Area 43,560
Sales Prices 2br 3br Total
Market-Rate Units $864K $1 M $74.560 M
Affordable Level Low $264K $299K $3.140 M
Affordable Level Mod $348K $393K $3.550 M
Revenue & Project Value
Gross Sales Proceeds $81,250,000
Sales Marketing Cost $4,062,500
Net Project Value $77,187,500
Cost Analysis $ % of TDC
Construction Costs $55,102,125 72.1%
Residential Impact Fees $3,000,000 3.93%
Soft Costs $14,326,553 18.74%
SubTotal Hard and Soft Costs $72,428,678 94.77%
Land Costs $4,000,000 5.23%
Total Development Cost (TDC) $76,428,678
TDC Per Unit $764,387 Profit as % of TDC
Profitability Profit as % of TDC
Estimated Profit $758,823 0.99%
Condominium, 10% affordable, 5% density bonus
Project Summary 2br 3br Total % Area (sq ft)
Approximate Unit Size 1,080 1,250
Base Market-Rate Units 45 45 90 86% 104,850
Bonus Units 2 3 5 5% 5,910
Total Market-Rate Units 47 48 95 91% 110,760
Total Affordable Units* 5 5 10 10% 11,250
Total Project Units 52 53 105 100% 122,010
*Affordable 2 bedroom is 1,050 sq. feet and 3 bedroom is 1,200 sq. feet
Note: Percentages may not sum to total due to rounding
Project Size acres sq. feet
Unloaded Area 122,010
Common Area 30,503
Total Built Area 152,513
Site Area 1 43,560
Floor Area Ratio 3.50
Dwelling Units/Acre 105.00
Parking % #
Base Parking Ratio 125% 131
Parking Reduction Incentive 0% 0
Net Parking Ratio 124.76% 131
Price Schedule 2br 3br Gross Sales
Proceeds
%
Market-Rate Units $864,000 $1,000,000 $83,880,000 91%
Bonus Unit Total $864,000 $1,000,000 $4,728,000 5%
Affordable $314,000 $355,000 $3,345,000 4%
Gross Sales Proceeds $42,178,000 $49,775,000 $91,953,000 100%
Note: Low and moderate housing prices were averaged for simplicity
Revenue & Project Value
Gross Sales Proceeds $91,953,000
Sales Marketing Cost $4,597,650
Net Project Value $87,355,350
Cost Analysis $ % of TDC
Construction Costs $58,107,263 72.3%
Parking Costs $0 0%
Residential Impact Fees $3,150,000 3.92%
Affordable Housing Fee $0 0%
Condo "Wrap" Insurance $0 0%
Soft Costs $15,107,888 18.8%
Other development costs $0 0%
SubTotal Hard and Soft Costs $76,365,151 95.02%
Financing Costs
Cash Subsidy for Affordable Housing $0 0%
Construction Loan Amount $56,255,606 70%
Interest on Construction Loan $0 0%
Points on Construction Loan $0 0%
Land Costs $4,000,000 4.98%
Total Development Cost (TDC) $80,365,151
TDC Per Unit $765,382
Profitability $ Profit as % of TDC Yield on Cost
Estimated Profit $6,990,199 8.7% 0%
Minimum Profit $12,054,773
Is Project Feasible? No
Value Capture Opportunity $-5,064,573
Condominium, no affordable, no density bonus
Project Summary 2br 3br Total % Area (sq ft)
Approximate Unit Size 1,080 1,250
Base Market-Rate Units 50 50 100 100% 116,500
Bonus Units 0 0 0 0% 0
Total Market-Rate Units 50 50 100 100% 116,500
Total Affordable Units* 0 0 0 0% 0
Total Project Units 50 50 100 100% 116,500
*Affordable 2 bedroom is 1,050 sq. feet and 3 bedroom is 1,200 sq. feet
Note: Percentages may not sum to total due to rounding
Project Size acres sq. feet
Unloaded Area 116,500
Common Area 29,125
Total Built Area 145,625
Site Area 1 43,560
Floor Area Ratio 3.34
Dwelling Units/Acre 100.00
Parking % #
Base Parking Ratio 125% 125
Parking Reduction Incentive 0% 0
Net Parking Ratio 124.76% 125
Price Schedule 2br 3br Gross Sales
Proceeds
%
Market-Rate Units $864,000 $1,000,000 $93,200,000 100%
Bonus Unit Total $864,000 $1,000,000 $0 0%
Affordable $314,000 $355,000 $0 0%
Gross Sales Proceeds $43,200,000 $50,000,000 $93,200,000 100%
Note: Low and moderate housing prices were averaged for simplicity
Revenue & Project Value
Gross Sales Proceeds $93,200,000
Sales Marketing Cost $4,660,000
Net Project Value $88,540,000
Cost Analysis $ % of TDC
Construction Costs $55,483,125 72.14%
Parking Costs $0 0%
Residential Impact Fees $3,000,000 3.9%
Affordable Housing Fee $0 0%
Condo "Wrap" Insurance $0 0%
Soft Costs $14,425,613 18.76%
Other development costs $0 0%
SubTotal Hard and Soft Costs $72,908,738 94.8%
Financing Costs
Cash Subsidy for Affordable Housing $0 0%
Construction Loan Amount $53,836,116 70%
Interest on Construction Loan $0 0%
Points on Construction Loan $0 0%
Land Costs $4,000,000 5.2%
Total Development Cost (TDC) $76,908,738
TDC Per Unit $769,087
Profitability $ Profit as % of TDC Yield on Cost
Estimated Profit $11,631,263 15.12% 0%
Minimum Profit $11,563,311
Is Project Feasible? Yes
Value Capture Opportunity $94,952
Townhome Development, 20% affordable, no density bonus
Price Schedule 3br 4br
Market-Rate Units $845,000 $1,020,000
Number of market units 16 12
Size 1450 1700
Affordable Level Low $299,000 $327,000
Affordable Level Mod $393,000 $428,000
Number of aff units 4 3
Size 1350 1550
Common space 0%
Site Area 1.25 acres
Revenue & Project Value
Gross Sales Proceeds $28,342,800
Sales Marketing Cost $3,967,992
Net Project Value $24,374,808
Cost Analysis $ % of TDC
Construction Costs $10,730,000 47.79%
Residential Impact Fees $1,050,000 4.68%
Soft Costs $1,049,394 4.67%
Other development costs $1,750,000 7.79%
SubTotal Hard and Soft Costs $14,579,394 64.93%
Land Costs $7,875,000
Total Development Cost (TDC) $22,454,394
TDC Per Unit $641,554
Profit $1,920,414 8.55% of TDC
Townhomes, 10% affordable, 5% density bonus
Project Summary 3br 4br Total % Area (sq ft)
Approximate Unit Size 1,450 1,700
Base Market-Rate Units 17 14 31 84% 48,5450
Bonus Units 1 1 2 5% 3,150
Total Market-Rate Units 18 15 33 89% 51,600
Total Affordable Units* 2 2 0 11% 5,800
Total Project Units 20 17 37 100% 57,400
*Affordable 3 bedroom is 1,350 sq. feet and 4 bedroom is 1,550 sq. feet
Project Size acres sq. feet
Unloaded Area 57,400
Total Built Area 57,400
Site Area 1 54,450
Floor Area Ratio 1.05
Dwelling Units/Acre 29.60
Parking % #
Base Parking Ratio 125% 46
Parking Reduction Incentive 0% 0
Net Parking Ratio 124.32% 46
Price Schedule 3br 4br Gross Sales
Proceeds
%
Market-Rate Units $845,000 $1,020,000 $28,645,000 89%
Bonus Unit Total $845,000 $1,020,000 $1,865,000 6%
Affordable $355,000 $387,600 $1,485,200 5%
Gross Sales Proceeds $15,920,000 $16,075,200 $31,995,200 100%
Note: Low and moderate housing prices were averaged for simplicity
Revenue & Project Value
Gross Sales Proceeds $31,995,200
Sales Marketing Cost $4,479,328
Net Project Value $27,515,872
Cost Analysis $ % of TDC
Construction Costs $11,480,000 49.19%
Parking Costs $0 0%
Residential Impact Fees $1,110,000 4.76%
Affordable Housing Fee $0 0%
Condo "Wrap" Insurance $0 0%
Soft Costs $1,122,744 4.81%
Other development costs $1,750,000 7.5%
SubTotal Hard and Soft Costs $15,462,744 66.26%
Financing Costs
Cash Subsidy for Affordable Housing $0 0%
Construction Loan Amount $16,336,421 70%
Interest on Construction Loan $0 0%
Points on Construction Loan $0 0%
Land Costs $7,875,000 33.74%
Total Development Cost (TDC) $23,337,744
TDC Per Unit $630,750
Profitability $ Profit as % of TDC Yield on Cost
Estimated Profit $4,178,128 17.9% 0%
Minimum Profit $2,800,529
Is Project Feasible? Yes
Value Capture Opportunity $1,377,599
Townhomes, 20% affordable, 15% density bonus
Project Summary 3br 4br Total % Area (sq ft)
Approximate Unit Size 1,450 1,700
Base Market-Rate Units 16 12 28 68% 43,600
Bonus Units 3 3 6 15% 9,450
Total Market-Rate Units 19 15 34 83% 53,050
Total Affordable Units* 4 3 7 17% 10,050
Total Project Units 23 18 41 100% 63,100
*Affordable 3 bedroom is 1,350 sq. feet and 4 bedroom is 1,550 sq. feet
Project Size acres sq. feet
Unloaded Area 63,100
Total Built Area 63,100
Site Area 1 54,450
Floor Area Ratio 1.16
Dwelling Units/Acre 32.80
Parking % #
Base Parking Ratio 125% 51
Parking Reduction Incentive 0% 0
Net Parking Ratio 124.39% 51
Price Schedule 3br 4br Gross Sales
Proceeds
%
Market-Rate Units $845,000 $1,020,000 $25,760,000 76%
Bonus Unit Total $845,000 $1,020,000 $5,595,000 17%
Affordable $355,000 $387,600 $2,582,800 8%
Gross Sales Proceeds $17,475,000 $16,462,800 $33,937,800 100%
Note: Low and moderate housing prices were averaged for simplicity
Revenue & Project Value
Gross Sales Proceeds $33,397,800
Sales Marketing Cost $4,751,292
Net Project Value $29,186,508
Cost Analysis $ % of TDC
Construction Costs $12,620,000 51.07%
Parking Costs $0 0%
Residential Impact Fees $1,230,000 4.98%
Affordable Housing Fee $0 0%
Condo "Wrap" Insurance $0 0%
Soft Costs $1,234,236 5%
Other development costs $1,750,000 7.08%
SubTotal Hard and Soft Costs $16,834,236 68.13%
Financing Costs
Cash Subsidy for Affordable Housing $0 0%
Construction Loan Amount $17,296,465 70%
Interest on Construction Loan $0 0%
Points on Construction Loan $0 0%
Land Costs $7,875,000 31.87%
Total Development Cost (TDC) $24,709,236
TDC Per Unit $602,664
Profitability $ Profit as % of TDC Yield on Cost
Estimated Profit $4,477,272 18.12% 0%
Minimum Profit $2,965,108
Is Project Feasible? Yes
Value Capture Opportunity $1,512,164