Posted on: December 18, 2023
Scaffolding covers 3301 Kerner Blvd., which is being converted from an office building to apartments, in San Rafael, Calif., on Tuesday, June 13, 2023.
San Rafael has become the latest Marin city to update the fees it charges developers to support the production of low-income homes.
The City Council voted unanimously Monday to adopt an ordinance changing the formula it uses to calculate what is called the “commercial linkage fee.” The fee, which is applied only to construction of commercial buildings, will now be expressed as a dollar amount per square foot to be more in line with other Marin jurisdictions.
“A commercial linkage fee charges new commercial development for its role in creating new demand for affordable housing,” said Alexis Captanian, a housing analyst for the city. “So when commercial development creates new employment, there is an accompanying need for affordable housing for the new workforce whose wages are often not sufficient to afford market-rate housing in Marin.”
The city has had a commercial linkage fee in place since 2005. The original policy applied to only to projects adding 5,000 square feet of new construction.
The fee was calculated through a complicated formula that was based on a percentage of the affordable housing in-lieu fee. The in-lieu fee is what developers of housing projects pay to bypass the city’s inclusionary housing requirement. That ordinance mandates that 5% of homes in large developments be sold or rented at below-market rates.
Over the past decade, the fee has collected about $2.5 million, with the construction of the Target store in 2012 being one of the bigger contributors to the pot at more than $773,000. The fees are placed in the city’s affordable housing trust fund, which is used to support housing for very-low, low- and moderate-income households.
The affordable housing funds have been used to support projects such as the $33 million complex at 3301 Kerner Blvd., a conversion of former office space into permanent supportive housing for people transitioning out of homelessness. The project is under construction and expected to be open for occupancy in 2025.
Captanian said the city’s past fee was unusual. With the intent of aligning its fee structure with the rest of Marin, the city partnered with the county, Corte Madera, Larkspur, San Anselmo, Fairfax and Sausalito to hire two consulting firms to determine to study inclusionary housing and commercial linkage fee requirements.
In San Rafael, the city will charge $13.33 per square foot of office or research-and-development construction; $10 per square foot of retail, restaurant or personal service; and $5 per square foot of hotels. The new fees take effect July 1.
Construction of less than 2,500 square feet is exempt.
“That’s great,” Vice Mayor Maika Llorens Gulati said of the exemption, which she said would give businesses more incentive to come downtown.
Councilmember Rachel Kertz said, “As much as we are really working hard on our affordable housing, I think really focusing on these linkage fees and making it more beneficial on the developing side is also very important.”
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