The mantra became that any residential growth must pay its own way with staff time and other fees. Those fees, imposed by a variety of agencies have climbed steadily over the years, particularly as government agencies maintained their generous (to understate it) benefits and then started to pay salaries equivalent to or more than the private sector.
Affordable housing has been a buzzword and sought after goal for decades with cities such as Pleasanton imposing mandates that developers set aside a portion of their projects for affordable units or pay a fee.
This came to mind late last year when the Pleasanton school district trustees, fresh off a successful bond measure campaign, raised their developer fees to the state maximum of $4.79 per square foot for residential construction and 78 cents for commercial and industrial projects.
Consultants delivered a report that found the schools were over capacity so there was a need for additional facilities.
What piqued my interest is that district enrollment has fallen by about 700 students over the past several years. When a prior bond measure passed in 2016, part of the money was targeted for an additional elementary school or an expansion at Donlon School. Given the enrollment trend, the district has shelved that project.
School fees are paid directly to the school district, while the city collects all other fees such as those for water (Zone 7) or sewer (Dublin San Ramon Services District). I asked Pamela Ott, assistant city manager, what Pleasanton fees total and she responded in 2020, it was $160,000 for a 3,000-square-foot new home. School fees add nearly $15,000 to that cost or about 10% more.
In San Ramon, for a 2,000-square-foot home, they were about $78,000. In Dublin, the newer eastside with more improvements fees were $52,000 versus about $43,500 on the westside, Again, these do not include school fees or costs of staff to review the project.
If a developer is building a home designed to sell for $2 million, the hefty fees can be folded into the cost without blinking. If the goal is to build something more affordable, then fees figure in directly.
Some cities will waive them for affordable units to encourage construction and to strive to diversify the pricing in their housing stock. With the soaring interest rates housing prices have come down because there’s less purchasing power and potential buyers are leery.
The reality is that in desirable communities such as the Tri-Valley there needs to be more construction to keep pace with job growth in this vibrant area. Units may well need to be smaller with costs lowered that way. Builders already are building both attached and single-family units on much smaller lots than were routinely used in the 1970s-1990s when many of the older subdivisions were developed.
During the lockdown, these were highly desirable to people leaving the densely populated cities because they had backyards.
Moving forward, here’s hoping the Federal Reserve’s latest interest hike tames the inflation and the focus can shift back to constructing more units to increase supply.