Affordable housing fees from Stanford could raise $156 million

Santa Clara County could collect at least $156 million in affordable housing dollars from Stanford University in the coming years if the university opts to build out all the new space it plans for, based on a fee supervisors voiced support for on May 8.

The Santa Clara County Board of Supervisors supported nearly doubling the affordable housing fees that Stanford currently pays – and halving the maximum amount it could require – to address the affordable housing needs Stanford’s ever-expanding campus generates.

The supervisors supported raising the per-square-foot affordable housing fee for new nonresidential development on Stanford’s campus to a floor of $68.50, up from the current $35 per square foot, with the details of further policy points for to be sent through the county’s Housing, Land Use, Environment and Transportation Committee (HLUET) and some matters to the Finance and Government Operations Committee (FGOC).

The matter of whether there is an option for the university to not pay fees if units are built is still up for discussion, according to Stanford spokeswoman Jean McCown.

The university is seeking permission from Santa Clara County to build 2.275 million square feet of new academic space and 3,150 new housing units or dorm rooms on its campus between 2018 and 2035.

Where and how that money will be spent is still a big question, as the San Mateo County Board of Supervisors has expressed a keen interest in ensuring that “an appropriate portion” of the fees cross Santa Clara County’s northern border to address the university’s housing impacts felt in southern San Mateo County.

Nonresidential fee

Setting the fee at $68.50 per square foot means potentially giving up roughly half of the “maximum” supportable amount of $143.10 that a nexus study by Keyser Marston Associates found would be needed to fully mitigate the demand for below-market-rate housing triggered by the university’s planned expansion of its academic spaces.

At that rate, the fees would be intended to cover the housing needs for households making up to 80 percent of the area’s median, or $84,900 for a family of four in the county, instead of the full below-market-rate housing needs of people making up to 120 percent of the area median income ($135,950 for a family of four in Santa Clara County).

At Supervisor David Cortese’s recommendation, the board agreed to use the figure as a floor, while the $143.10 per square foot would be a maximum.

Supervisor Cindy Chavez said that continued housing growth without requisite housing expansion has resulted in a “crisis that’s frankly untenable. … We need service workers in this county.” The $68.50-per-square-foot fee factored in average housing costs in the broader region, not just within six miles of the Stanford campus, she noted.

Residential fee

The nexus study also found that the university’s proposed 3,150 new units of housing would, in turn, create more housing demand. The concept is that new residents in the area increase the demand for services, thereby generating jobs. The people working those new jobs, in turn, generate more demand for housing – especially affordable housing. The study determined that charging $69.10 per square foot of new housing would cover the subsidies needed to help meet the affordable housing demand from new workers earning up to 120 percent of the area’s median income.

But some questioned the logic of levying fees on the university for building housing that it already subsidizes.

In public comment, Matt Regan, senior vice president for the policy advocacy group Bay Area Council, said the group generally supports the creation of affordable housing but opposes taxing housing to pay for housing.

The notion of imposing new housing taxes on an institution like Stanford, which already subsidizes the bulk of its housing, he said, is “a circular firing squad with flamethrowers of a public policy idea.”

For now, the supervisors decided to consider instead addressing the housing demand new housing creates through a different policy: inclusionary housing. Such a policy would require new housing to come with a per-square-foot fee to go toward funding affordable housing, or require that a certain percentage of the new housing be dedicated to affordable housing.

The supervisors opted to hold off on determining what fees should be for residential and commercial development in other parts of unincorporated Santa Clara County until 2019.

Editor’s Note: A previous version of this story inaccurately indicated that the supervisors had voted more formally on the $68.50-per-square-foot non-residential price floor. The matter is expected to be returned to them as an ordinance for a formal vote later, after review by the two county commissions listed above, according to McCown.

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