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A couple weeks ago when the city decided not to increase the business license tax or the transient occupancy tax, business owners asked council to consider that fee increases across the board are affecting business costs in the region—they referred to insurance, rent and other fees. Their concerns were not without merit, as one such business fee has just increased—the housing mitigation fee.
The housing mitigation fee is based on the ratio of the square feet of a building to the size of the land. A business is only charged the mitigation fee if the ratio of building to land is more than 35 percent.
At the Aug. 19 city council meeting, the council voted 4-3 to increase this fee from $7.19 to $8 per square foot that exceeds the allowable floor-area ratio.Mayor Julia Miller and councilmen Jack Walker and John Howe voted against the increase.
The housing mitigation fee was initiated in 1983 to address the impacts of high-density developments and prevent the city's jobs/housing imbalance from becoming increasingly severe. The idea is that if companies are going to create jobs, they must help to create housing for their employees. The fee had not been increased or indexed since 1984.
Planning officer Trudi Ryan cited a recent nexus study that shows that the cost of providing affordable housing to low- and moderate-income households that is directly attributable to new industrial development has increased significantly since the fee was established.
The study indicates that a maximum of $17.63 per square foot could be imposed on high-density development.
But members of the community had differing opinions on the housing situation. James Brady, a member of the St. Cyprian Peace and Social Justice Committee, told the council, "The lack of affordable housing in Sunnyvale is an important issue for us." Brady said the $8-per-square-foot fee did not sufficiently move forward the cause of affordable housing and asked that the council increase the fee to $12.41 per square foot.
Tom Bryant of Network Appliance asked the council to establish a five-year moratorium on raising housing mitigation fees. "With 65 million square feet of vacant space in the region, what is the likelihood of new development in the city?" Bryant asked, saying the council should remove barriers to redevelopment because the fee increases could act as a drag on growth and subsequently generate less revenue for the city to spend on affordable housing.
Walker voted against the fee increase because he said it did not include a stipulation for the fee to be indexed annually.
Before voting Miller said, "I'm really concerned with our businesses leaving town, particularly our businesses that seem to pay for everything."
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