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File #: 16-737    Version: 1 Name:
Type: Staff Report Status: Filed
File created: 10/28/2016 In control: City Council
On agenda: 12/14/2016 Final action: 12/14/2016
Title: BELOW MARKET RATE (BMR) HOUSING IN-LIEU FEE RECOMMENDATONS
Attachments: 1. Attachment A_ Draft BMR KMA In-lieu Fee Report_November 29_2016, 2. Attachment B_ Draft BMR KMA In-lieu Fee Report March 28_2016, 3. 13 presentation.pdf
CITY COUNCIL STAFF REPORT
MEETING DATE: DECEMBER 14, 2016

PREPARED BY: Rebecca Garcia, Housing Manager/Community Development
APPROVED BY: City Manager

TITLE
BELOW MARKET RATE (BMR) HOUSING IN-LIEU FEE RECOMMENDATONS
END

RECOMMENDATION(S)
RECOMMENDATION
1. Receive the Keyser Marston & Associates (KMA) Report entitled "Draft Analysis of Morgan Hill's BMR Program," dated November 29, 2016;
2. Provide direction to staff to return with an Ordinance that:
A. Institutes a $12.92 housing in-lieu fee (based on 8% affordability provision), per square foot of livable space of the entire project, effective with the FY 2019/20 Residential Development Control System (RDCS) competition year;
B. Maintains the existing .5 fractional threshold for payment of fee vs. providing the unit on site; and
3. Institute a below market rate (BMR) minimum size.

BODY
COUNCIL PRIORITIES, GOALS & STRATEGIES:



Ongoing Priorities
Maintaining fiscal responsibility

2016 Focus Areas
Planning Our Community
Participating in Regional Issues
REPORT NARRATIVE:
The City retained KMA to conduct an analysis of the impact of the City's RDCS (BMR) requirements, and to:
1. Estimate the financial cost to developers of providing on-site BMR units;
2. A comparison of the cost of providing on-site BMR units to the RDCS program's in-lieu fee and, if appropriate, recommend changes to the in-lieu fee amount so that it more closely approximates the cost of providing on-site units in today's market; and
3. Recommend program changes that will provide long term support for administration of the City's BMR program.

The first draft report "Analysis of the Impact of the Below Market Rate (BMR) requirements of the City's Residential Development Control System (RDCS) on Development Economics" dated March 28, 2016 (Attachment B) was provided to City Council on June 22, 2016, and included a preliminary analysis of the cost of providing on-site BMR units relative to the City's current housing in-lieu f...

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