Housing fees face scrutiny

A proposed change to the method of calculating fees in lieu of building affordable housing will cost developers more money than they have paid in the past.

The City Council approved at the Sept. 2 meeting an increase in the in-lieu fees from $47,000 to $150,000 per affordable unit. The council also directed staff to hire a consultant to refine the method of calculating the fees, as requested by the Planning Commission.

“Staff recommended a change in the method of calculating the per-unit, in-lieu fees, based solely on the cost of developed lots in the city, rather than including undeveloped lots, which makes a big difference in the fees,” Planning Commissioner Norm Grossman said.

Laguna Beach requires a subdivision of more than two residential dwellings to include 25% “affordable” housing, if feasible. A county formula determines the amount of rent or mortgage payments considered “affordable.”

“‘Feasible’ has yet to be defined,” Grossman said.

If affordable housing is not feasible on the site, the developer has the option of providing the units at another location or paying the in-lieu fee.

In-lieu fees are charged for every unit or lot in a subdivision. Prior to the recommended change in the method of calculation, fees were based on the total value of all vacant residentially-zoned properties, adjusted annually, said Carolyn Martin, principal planner for the city.

Under that formula, the fees were $47,000 per unit or lot in a subdivision, an unrealistic amount that could not provide actual housing, Grossman said.

“Including undeveloped lots skewed the fee standard,” Martin said.

Undeveloped, vacant, residentially zoned lots, some of them not legal building sites, sell for considerably less than the going rate for developed lots.

Developed residentially zoned lots in Laguna cost $6.6 million per acre, Grossman said. The city code allows a maximum of 22 units per acre, which would have come out to $300,000 in-lieu fees, per unit.

“Staff doubled the [22] and applied it to the formula to get the $150,000 per-unit it recommended,” Grossman said.

Martin said the increase only appears to be substantial.

Athens Group might not agree.

“If Athens Group was approved for 50 residential units at Aliso Creek, the in-lieu fees [presuming none would be built on site] would total approximately $7.5 million,” Grossman said.

Under the old calculation, the fee would be roughly $2.35 million.

Martin reported that the previous $47,000 per unit fee would be about the same when based on vacant residentially zoned land because fees are adjusted annually and sale of the designated land was sparse in 2007.

Also, property values have increased since the current housing element was adopted in 2000, she said.

“We want to come up with a figure for the in-lieu fee that does not change radically from year to year, which can happen when the fee is based on the previous year’s sales,” Grossman said.

The Planning Commission will hold a public meeting Nov. 5 on the proposed General Plan amendment, which includes the proposed changes to the housing element.

“We are requesting written comments by Oct. 24 so they can be reviewed ahead of the meeting,” Commissioner Anne Johnson said.

Affordable housing is required by the state.

The state also requires cities to update their Housing Element, usually every five years.

The state will review the draft and if approved, the draft will be returned to the council for adoption prior to state certification.

BARBARA DIAMOND can be reached at (949) 494-4321 or coastlinepilot@latimes.com.