IRVINE : Affordable-House Fee May Be Killed
The city will lose up to about $5.4 million for affordable housing if the City Council tonight eliminates a controversial developer fee that was partially put in place in 1989.
The so-called linkage fee would be used to subsidize apartments for low-income residents. The idea behind the fee, part of the city’s long-range affordable-housing plan, is to link the creation of jobs brought by commercial projects with low-cost housing that would allow more workers to live in the city.
The fee plan, adopted by the previous council in October, 1989, would charge a fee to all non-residential projects receiving building permits since that date. City planners have been working for more than a year on a proposal to suggest the fee amount and how the money would be spent.
Several council members have criticized the retroactive fee proposal, including Mayor Sally Anne Sheridan, who has said she wants to let it die. A majority of the council members have said they would like to remove the requirement from all projects until the actual fee system is in place.
After a public hearing scheduled for the 6:30 p.m. session, the council will consider several choices, including eliminating the proposed fee from projects now required to pay it or limiting what the fee eventually will be.
If the fee or its retroactivity is eliminated, the city stands to lose about $1.8 million from previously approved projects if a $1-per-square-foot fee is adopted, or about $5.4 million for a $3 fee, according to a report prepared for the council.
Roger Rhoades, a general partner in Newport Beach-based Rhoades-Ewing Development, said that although he’s not opposed to paying a linkage fee, he is against the way the city has gone about establishing it.
When the council adopted the fee idea 15 months ago, it required non-residential developers to promise to pay the linkage fee in order to receive a building permit. But since the plan is still in the works, no fee amount has been adopted. Developers and their lenders have been left hanging, wondering what the total cost of their projects will be, Rhoades said.
His company bought land in the Irvine Spectrum for a research and development building in August, 1989, two months before the city adopted the fee, he said. When officials of the company went to get a building permit, he said, they learned of the fee and had to promise to pay it.
“Had we known that (a fee was pending), we wouldn’t have bought the property from the Irvine Co., or we would have been able to negotiate a better price,” Rhoades said.
Now, with a 41,000-square-foot building recently completed and the fee still unknown, his company can’t find permanent financing to repay the construction loan and can’t sell the building with its costs still unknown, he said.
“We can’t sell the project and we can’t even lease it,” he said. “We’re getting clobbered.”
Besides the linkage fee, the council will also consider Tuesday whether to begin modifying other aspects of the affordable-housing plan established by the previous council. Following that plan would have undesirable effects on the city, council members have said.
