Editor’s Note: A previous version of this story incorrectly identified the current status of the in-lieu fee rate. The online story has been amended to reflect that at this time, the in-lieu fees have rolled back to $7,000 per unit and will stay at that rate at least until the item is brought to a future council meeting.
The Coronado City Council decided it will stick with the rate of $7,000 per unit for housing developer fees on the island – at least for now.
At a meeting on April 15, the council increased those in-lieu fees, which are paid by developers when they build on the island without setting aside required units for low-income housing.
The fee money is used by the city to develop low-income residences and fund inclusionary housing programs.
It used to cost a flat rate of $7,000 per unit that is not dedicated to low-income housing. And after the May 20 meeting, council members decided to stick with that rate.
Council members considered changing the fee to $59 per square foot. To understand that comparison better, that would invoke a fee of around $133,000 per unit for a 2,254 square foot dwelling. Richard Grunow, the community development director, stated that there is no assumption that future developments would necessarily be that size.
At the May 20 meeting, some developers and residents complained about the steep increase. Council members voted to keep the $7,000 per unit fee for now, but to revisit the decision at a later meeting.
The proposal was developed without input from the very people who know the market best. No local developers, realtors or homeowners were consulted about the impact these fees would have on home prices or housing availability.
Coronado resident Brad Gerbel
“The proposal was developed without input from the very people who know the market best,” said Coronado resident Brad Gerbel. “No local developers, realtors or homeowners were consulted about the impact these fees would have on home prices or housing availability.”
Rick Turner, the CEO of Kappa Surveying and Engineering, who is currently working on projects in the city, admitted what the city was charging before was definitely low.
“It is underfunded,” said Turner. “$7,000 is too low for not only anywhere, but especially this city. It does need to be increased.”
But in the last few projects that Turner had done, he stated the total in-lieu fee was $126,000, which would be for 18 units at $7,000 a unit. Turner said with the new increased rate, it would have been $1.6 million.
“That’s a big, big ask. And I don’t think that’s really where we need to be at,” Turner said.
The city has a rule that homebuilders on the island must set aside 20% of the units for affordable housing. If they didn’t set aside those units, they pay the in-lieu fee, which has not been increased from a flat rate of $7,000 since 1993.
The city charges these fees to be deposited into a dedicated affordable housing fund. This money is only used to provide new affordable housing in the city, according to the staff report provided by city staff at the April 15 council meeting.
However, with a flat fee of only $7,000, the city has been unable to buy land or property for low-income individuals.
“The $7,000 was so low that the result is we basically have no money to buy a lot,” Mayor John Duncan said at the May 20 meeting.
We’ve got to find a way to have funds to pay for those kinds of acquisitions so we can have low-income housing in this community. Now, maybe $59 is too high … I’m willing to look at the fee one more, but I do think we made the right decision to go up higher.
Council member Kelly Purvis
“We’ve got to find a way to have funds to pay for those kinds of acquisitions so we can have low-income housing in this community,” Council member Kelly Purvis said. “Now, maybe $59 is too high … I’m willing to look at the fee one more time, but I do think we made the right decision to go up higher.”
Purvis explained that the city wants to build low-income housing, and she doesn’t think private developers will do it.
“It’s up to us and we need money to do it,” Purvis said. “And the only way we’re going to do it is to charge fees.”
Council member Amy Steward said that she doesn’t want to cut anyone off that was in the process of building on the island and suddenly had the increased in-lieu fee imposed on them, and is open to having the start date of the fee pushed back to 60 or even 90 days out.
The council voted unanimously for city staff to come back with a new report at a later meeting.
