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East Palo Alto Vice Mayor Mark Dinan and council member Webster Lincoln denied on Tuesday a fee increase for new developments that do not meet the city’s requirements for producing affordable housing.
Instead, council members agreed by a 5-0 vote to keep fees for rental developments the same, despite staff recommendations.
The city created its Inclusionary Housing Ordinance in November 2019 to ensure that new developments, whether they be rentals or for sale, create some affordable units.
Currently, the ordinance requires developers to make at least 20% of its units affordable for “very low income” renters and make for-sale properties accessible to “moderate income” residents. Developers who do not follow these requirements must pay a fee that changes every fiscal year.
In lieu of creating the affordable units, developers paid a $273,400 fee for market-rate affordable properties for sale and $299,200 for market-rate rental units during the 2024-25 fiscal year.
The fees are altered each year based on the price of the city constructing its own affordable housing units and the money goes toward the city’s affordable housing fund.
Based on staff research, East Palo Alto housing project manager Yajaira Morales proposed that the city decrease for-sale fees to $268,800 and increase rental unit fees to $306,100.
Home-ownership rates have decreased due to rising utility costs, which was reflected in the fee reduction, but construction costs for affordable housing units increased.
Despite staff research and recommendations to update the fees, some council members were wary of the potential changes.
Dinan said he was opposed to the inclusionary housing program altogether.
“You tax things you don’t want and you don’t tax things you do want, and in general, I’m opposed to inclusionary housing fees,” he said.
During the 2025-26 year, the city will be reviewing its inclusionary housing ordinance based on earlier recommendations from Dinan and council member Lincoln.
Lincoln is not in favor of altering fees, he said, before that review is complete.
Mike Kramer, who works with Sand Hill Property Company, one of the most prominent developers in East Palo Alto, said the city’s affordable housing requirements have been difficult to keep up with.
“Please don’t further increase the costs of developing new housing, we urge you to reject the increased inclusionary in lieu fee for rental units,” said Kramer, who added that it is costly to build affordable units.
Council member Romero disagreed, urging the dais to move forward with the changes that would urge developers to build the housing without paying fees.
“There is a development that is going forward right now that can take advantage of this number,” Romero said. “…They have already said they’re interested in building, I believe, it’s 12 or 13 units that would be affordable.”
Romero made a motion to accept the fee changes with council member Ruben Abrica supporting it. Barragan abstained and Dinan and Lincoln denied the proposal. The council then agreed to keep the rental unit fee the same and decrease the fee for properties for sale.
“There are two members on this body that have consistently seemed to try to undermine any community benefits for low-income folks,” Romero said.
As utilities and living costs rise, Morales said, keeping fees the same for developers would impact the residents.
“What we currently have will be outdated,” she said.
