EBHO Policy Director Jeff Levin sent the following letter to Oakland City Council Community & Economic Development Committee.
September 22, 2020 | We call on the City of Oakland to address the following concerns:
EBHO is a member-driven organization working to preserve, protect, and create affordable housing opportunities for low-income communities in the East Bay by educating, advocating, organizing, and building coalitions. We were a principal advocate for the creation of the Affordable Housing Impact Fee, and as you know we have called for a detailed accounting of fee assessments and revenues compared to residential building permit activity, which first prompted this audit.
Our full comments follow below, but in brief we think the report as it stands does not adequately answer the critical accounting questions that we have raised for the past two years. Accordingly, we urge you to hold this report in committee pending a supplemental report that will provide the additional information needed to address the outstanding issues.
The following comments are offered to provide suggestions about how this report can be improved before it is forwarded to the full City Council, and we are confident that the final result will address these issues.
- The report doesn’t provide sufficient background and context for those who are not already familiar with the details of the impact fee programs. There is no description of the various impact fees (Jobs/Housing, Affordable Housing, Infrastructure, and Transportation), what kind of projects each fee covers, how the fee is calculated, the allowable uses of the fees, etc. For people not familiar with these programs, the absence of this information could lead to incorrect conclusions about the data itself.
- There is no background regarding the impetus for this audit report and the questions and concerns that prompted it, and as a result critical information has not been presented. A principal reason for preparation of this report was concerns first raised by EBHO about an apparent mismatch between the large volume of housing units that have been permitted in recent years and the much smaller amount of fees that has been assessed and collected. We have repeatedly requested a detailed accounting that will shed light on how many projects were exempted from the fee, the reasons for those exemptions, and the extent to which developers chose to include affordable housing units onsite rather than pay the fee, as provided for in the ordinance. Unfortunately, as presented, the audit doesn’t adequately identify or address these concerns.
- The report doesn’t adequately distinguish between activities that are not covered by the fee ordinance at all, because they either don’t meet the definition of “development project” or submitted building permit applications prior to September 1, 2016, and projects that are covered but are exempt for one reason or another. It is one thing if a project is outside the scope of the ordinance, and an entirely different matter if the project meets one of several criteria for exemption despite being a covered development project. The audit has apparently involved an examination of 14,490 records of building permits issued by the City over the audit period, including an enormous number of permits that are for activities not covered by the impact fee ordinances. This includes bathroom remodels, window replacements, tenant improvements in commercial facilities, cell towers, etc. Out of all these records, it turns out that 449 records were correctly assessed fees, 23 were incorrectly not assessed, and 48 were incorrectly assessed when fees were not applicable. Of the 13,970 records that were correctly not assessed fees, we do not know how many were not covered by the ordinances at all, and how many were covered but met the requirements for exemption.
- The report frequently aggregates all fees even though different types of projects are subject to different fees. The Jobs/Housing Fee applies only to office and warehouse/distribution projects, the Affordable Housing Fee applies only to projects that add residential units to the City’s housing stock, and the Transportation and Infrastructure fees apply more generally to a wide range of projects that either add new housing units to the supply or create additional square footage for office, retail, industrial, and other uses. While some financial information is broken out by fee type, much of the data is not. The report should consistently provide data that includes listings of projects by fee type and amount for all projects that were subject to the fee.
- The report should provide essential data elements that are either not present or are not well presented. At a minimum, we think the following information is needed:
- Results should be reported separately for each of the four fees.
- The report should distinguish between building permit types not covered by the ordinance versus permits that qualify as “development project” as defined in the ordinances. The universe that needs to be evaluated should be only those permits that are for qualified development projects.
- The number of projects that were exempted (as opposed to just not covered) should be broken out to distinguish the reasons for exemption. For example, the Affordable Housing Fee provides exemptions for affordable housing projects, secondary units, and projects that obtained vested rights not later than October 31, 2016 (60 days after the ordinance became effective). Currently there is no way to determine how many projects fall under which exemptions except to comb through over 1,800 pages of tables contained in the Appendices.
- Information regarding any fee waivers, reductions, or appeals requested and the outcome of such requests.
- Information regarding the fee calculation for each project – particularly for the Affordable Housing Fee where the per unit fee amount varies based on which of three geographic zones a project falls into and the type of project (single family home, townhome, or multifamily development). For the other fees, the number of square feet subject to the fee, the fee rate, and the total fee.
- Information should be provided for each project that provided affordable housing units rather than pay the fee (this option exists for both the Affordable Housing Fee and the Jobs/Housing Fee). For each project, the report should list the total units, the number of affordable units, and the affordability level that such units are restricted to. This should include an identification of the maximum allowable rents for those units, which vary by both affordability level and the number of bedrooms in each unit. The report should also indicate where the required regulatory restrictions were properly recorded against the property.
- For projects where onsite units were provided in lieu of fees, an identification of which projects utilized the State Density Bonus or any City of Oakland density bonus, and the extent to which the units provided in lieu of fees were already required to be provided as a condition of the density bonus.
- Similar information should be provided for any project that provided off-site affordable housing units, including the location and timing of the off-site projects.
- For projects that have been assessed fees, but have not yet paid the fees in full, the report should indicate whether the project (a) failed to go forward (and thus was no longer subject to the fee), (b) has not yet had its building permit issued (in which case the fee is not yet payable), or (c) in the case of the Affordable Housing and Jobs/Housing Fees, the project has paid the initial installment upon issuance of a building permit but has not yet reached the point at which subsequent installments are due.
- For projects subject to fees paid in installments, the date the permit was issued and the date the certificate of occupancy was issued or the estimated date for that to occur. This would provide information that could allow the City to better determine the amount of revenue that is receivable but not yet payable, and when that revenue can be anticipated.
The full letter is available here: