Add Sunnyvale to the list of cities that have opted to take a look at adopting a rental impact fee.
After much deliberation March 17, Sunnyvale city council members decided on a fee of $17 per square foot for new rental developments.
The fee will be paid by developers building new apartment projects. Funds collected from the fee go toward affordable housing developments, according to the staff report.
The majority of community speakers, many of whom know the need for low-income units all too well, urged the council to adopt a fee of $21.
Community speakers also noted the need for affordable housing units to be located near public transit.
Some council members encouraged their colleagues to adopt fees of $26 or more. Though the council agreed there is a definite need for added affordable housing, they also saw the danger of scaring away potential developers with too high a fee.
The fee could legally go as high as $55 per square foot for one-bedroom dwellings and a whopping $98 per square foot for studio apartments.
Councilman Jim Davis, an advocate for affordable housing, said that $60 per square foot would be adequate in successfully addressing the problem of sparse housing resources for low income individuals and families.
The rationale for the fee is when new market-rate rental housing is built in an area, the residents of the new development patronize nearby businesses, creating a demand for more workers to accommodate the influx of business. Increased affordable housing units, for those employees hired to accommodate more business, is needed as a result.
Monthly income for an individual making $10 an hour is $1,733, while average rent in Sunnyvale is $2,385, according to a study presented to the council in February.
According to the study, surrounding cities that also have adopted rental impact fees include Cupertino ($3), Mountain View and San Jose (both $17).
Other cities in the Bay Area charge quite a bit more. Berkeley’s fee is approximately $28 and San Carlos’ goes up to $28.27.
The ordinance will be reviewed and decided upon in June. If the fee is adopted, it is likely to go into effect in September or October and will only affect developers applying for permits after the effective date.
If approved, the council will return to the issue for review in two years.
