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PLANNING ACADEMY

PLANNING ACADEMY ECONOMIC IMPACTS OF AFFORDABLE HOUSING AND EXTENDED PERMIT DURATION TO A RESIDENTIAL DEVELOPMENT OCTOBER 22, 2013 JAY HIGGINS, AICP. PERMITTING VARIABLES CAN IMPACT A PROJECT’S FINANCES DESIGN – VARIOUS BOARDS OF ARCHITECTURAL REVIEW WILL ASK

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PLANNING ACADEMY

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  1. PLANNING ACADEMY ECONOMIC IMPACTS OF AFFORDABLE HOUSING AND EXTENDED PERMIT DURATION TO A RESIDENTIAL DEVELOPMENT OCTOBER 22, 2013 JAY HIGGINS, AICP

  2. PERMITTING VARIABLES CAN IMPACT A PROJECT’S FINANCES • DESIGN – VARIOUS BOARDS OF ARCHITECTURAL REVIEW WILL ASK • YOU TO … ‘GET YOUR CLIENT’S WALLET OUT’ • DENSITY – QUANTITY DRIVES REVENUE + TRAFFIC, ETC. IMPACTS • IMPACT FEES CAN BE IN THE +$$$100K PER UNIT • PERMIT DURATION CAN BE DECADES = +$$$ • AFFORDABLE HOUSING – +$$$...BUILD ON SITE OR PAY FEES?

  3. AFFORDABLE HOUSING • RELATIVELY UNIFORM REQUIREMENT ON THE SOUTH COAST • BUILD THEM ON SITE – OR PAY OUT? • IT DEPENDS … ON THE AMOUNT OF THE FEES PER UNIT OR THE PERCENTAGE REQUIRED TO BE BUILT ON SITE • IN LIEU FEES CAN RANGE FROM SEVERAL $100K PER UNIT ON THE SOUTH COAST TO JUST UNDER $100K IN THE SANTA MARIA MARKET • PERCENTAGES OF HOMES THAT NEED TO BE PRICE RESTRICTED – IF THEY ARE GOING TO BE BUILT ON SITE AS A PART OF A DEVELOPMENT PROJECT CAN RANGE FROM 10% - 30% DEPENDING ON LOCATION

  4. SUMMARY • BUILDING THE AFFORDABLE UNITS ON SITE REALLY IMPACTS REVENUE – EVEN ON THE MARKET RATE UNITS • DEVELOPERS WILL USUALLY BE OK WITH PAYING THE IN LIEU FEES UP TO THE PER UNIT LOSSES – BUT THAT’S A LEVEL OF FINANCIAL INTIMACY THAT IS UNUSUAL WITH PUBLIC AGENCIES. • IN ORDER TO MAKE PROJECTS PENCIL THAT HAVE AFFORDABLE UNITS, OTHER FUNDAMENTALS OF THE P&L NEED TO CHANGE – TYPICALLY THESE ARE IN THE FORM OF REDUCED CONSTRUCTION COSTS (AND PROJECT QUALITY) OR DRASTICALLY REDUCED LAND COSTS • PERMIT DURATIONS THAT MERELY DOUBLE WILL REALLY HURT YOUR ECONOMICS… AND IT DOESN’T TAKE TOO MUCH OF A DELAY (THINK – DECADES) FOR DEVELOPERS TO GO BELLY UP

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