17 - Laserfiche WebLink

Nexus-Based Affordable Housing Fee Analysis for Rental Housing Draft Report 02/26/18 1. The costs to construct housing units affordable to many households exceed those units'values based on the rents or prices that the households can afford to pay. The estimated subsidy required to construct affordable housing units in Pleasanton range from roughly$2,000 for a Moderate Income household earning up to 120 percent of AMI to $265,400 for a Very Low Income household earning up to 50 percent of AML Households with median and above-median incomes do not appear to require subsidies, as affordable prices for such households can support the costs of construction. An "affordability gap analysis"evaluates whether or not the costs to construct affordable units exceed the values of units that are affordable to lower- and moderate-income households. For each affordable housing income level - households with incomes at 50, 60, 80, 100, and 120 percent of Area Median Income (AMI) - this analysis estimates the subsidy required to construct affordable housing units. The affordability gap analysis assumes that the average affordable unit for all income levels will be a 2-bedroom unit in a multifamily development with an average density of 30 dwelling units per acre. The estimated costs to construct the prototypical affordable unit are based on recent Bay Area development projects and transactions, as well as other development cost data sources. The costs of land acquisition are included in these development cost calculations. A household's ability to pay is estimated based on standard percentages of income available for housing costs at each household income level. Income available for housing costs is then converted into a monthly affordable rent and a capitalized unit value or an affordable mortgage payment and supportable home price. This unit value is then compared to the costs of development to determine the subsidy, if any, required to make the unit affordable to each income level. 2. The demand for affordable housing generated by the expenditures of new households in Pleasanton increases along with the market-rate rent price (and related renter income). For example, a 1-bedroom unit that rents for$2,500 per month is estimated to create demand for 0.16 affordable housing units, while a 3- bedroom unit that rents for$3,400 per month creates demand for 0.215 affordable units. Any justified nexus-based fee is based on the total demand for affordable housing units generated by construction of market-rate units. The link (or nexus) between market-rate housing and increased demand for affordable housing is that residents of market-rate units demand goods and services that rely on wage earners (for example, retail sales clerks) who typically cannot afford market-rate housing and thus require affordable housing. Because more expensive housing units require renters to have higher incomes, and higher income households create more jobs through their spending, the nexus impacts and thus the justified fees for rental units vary according to the rental price range of the market-rate units. Typically, larger apartments (i.e., more bedrooms) command higher rents, so their occupants are required to have higher household incomes than renters of smaller units. Thus, larger units create more jobs as a result of their occupants' spending. Consequently, nexus impacts and the justified fees for market-rate rental apartments vary by unit size. Economic&Planning Systems,Inc. 3 P:\]S1000s\151111PIa....Fee\Repor NRorda64_Housing\151111report022618rental.6oa