Approve request by Yolo County Housing to waive certain permit fees related to the construction of six affordable housing units in the town of Esparto and allow for a transfer of general fund contingency to the Department of Community Services as part of the mid-year budget update to backfill the waiver of any direct cost fees. (General fund impact: $39,722.62) (4/5 vote required) (Echiburu/Trebec)

On February 26, 2021, Yolo County Housing (YCH) submitted a request for a waiver of fees related to permitting for the construction of six affordable homes in Esparto (Attachment A). The six units are to be located on corner lots among market rate homes on the west side of Esparto. The affordable residential units consist of two 2-bedroom homes of 1,183 square feet (at a cost of $190,073), two 3-bedroom homes of 1,369 square feet (at a cost of $219,957), and two 3-bedroom homes of 1,397 square feet (at a cost of $224,456).
 
Based on this information, Department staff estimated that the fees charged for the building permit applications would be a total of $39,722.62. This a conservative estimate of all potential costs and does not include state fees such as the California Building Standard Commission and seismic fees, or local fees for the Esparto Fire Protection District, Esparto Community Service District, and Esparto Unified School District. The County’s Facilities and Services Authorization (FSA) fees would not be charged for the project per Sec. 3-14.04(h), which exempts affordable housing projects. The following table itemizes the fees applicable to the request:

On June 7, 2011, the Board of Supervisors amended the County’s Administrative Policies and Procedures Manual to include a revised “Policy on Cost Recovery and Fees” ( Attachment B).  The Policy requires any Department receiving a fee waiver request to evaluate the request and prepare a recommendation to the Board of Supervisors. The Department’s evaluation of the request by Yolo County Housing, as required under the Policy, is provided below:
 
1.        The total amount of the reduction requested and approved reductions in the past. The total amount of the reduction requested from the Department is $39,722.62.
 
2.        In regard to fees related to construction projects, a finding that the waiver or reduction does not create a public work. The project is already a public work by the housing authority and is subject to the requirements for public work projects, which are solely the responsibility of Yolo County Housing. Therefore, the proposed fee waiver does not create a public work or otherwise affect the application of state prevailing wage laws.
 
3.         A finding that the waiver or reduction does not create an unconstitutional gift of public funds. An appropriation is an improper gift of public funds when it is not used for public purpose. The requested fee waiver relates to the construction of six affordable homes that would be owned and managed by Yolo County Housing to provide quality affordable housing to the community.  The construction of low-income housing is a public purpose, and the County’s waiver of fees in support of that purpose does not constitute a gift of public funds.   
 
4.        The fees requested for waiver meet at least one of the criteria listed in Section 2.a of the Policy, as follows:  

 
       b. Reasonable regulatory costs incident to the issuance of licenses or permits, performance of investigations, inspections or audits.
 
      c. A fine, penalty, or other monetary charge imposed by the judicial agencies as a result of violation of laws.
 
The fees requested for waiver qualify under the second criterion listed above.  The majority of fees identified on the table above reimburse staff costs directly related to the issuance of permits and performance of inspections. The only exceptions are the Technology Cost Recovery Fee and the General Plan Cost Recovery Fee, which are nonetheless regulatory costs associated with the regulation of housing and development and the processing of permits.    

 
5.        A finding that describes one or more of the following:
 
i. The payment of the fee would cause economic hardship (defined in U.S. Treasury regulations as the inability to meet reasonable basic living expenses) due the financial condition of the payor.
 
Yolo County Housing has limited funds available to fulfill its mission of providing affordable housing in the County. As stated in their request letter, high construction costs and local fees in addition to the County permitting fees hinder their ability to construct much-needed homes for the County, especially for this project, which has floundered for 20 years.
 
ii. The payor is making a net economic contribution to the County that exceeds the amount of the fee; or is providing uncompensated services to the County that are of comparable value to the fee.
 
The combined value of the affordable homes being provided for the County is over $1,268,972.00, which greatly exceeds the $39,722.62 of the fee waiver request.
 
iii. The payor engages in activities that specifically advance the county’s strategic goals.
 
Yolo County Housing provides quality affordable housing and housing assistance throughout the County. This project would provide six new rent-restricted affordable homes for County residents. Waiving County fees would directly advance the County Strategic Plan goal of creating a robust economy by reducing barriers related to the development of affordable housing and implements General Plan policies supporting the development of low-income housing.
 
Based on the above analysis, the Department recommends honoring the request and waiving the fees as follows:

Waive the full requested amount and transfer $39,722.62 from the General Fund to the Department of Community Services budget to backfill direct cost fees.  This would provide Yolo County Housing with the relief they seek, but would not place the burden of subsidizing the waiver onto the Department's budget. The Department would not have the ability to recoup lost direct costs from other fee payers; thus, the General Fund back-fill for direct costs associated with the project would ensure the Department’s budget does not have a funding shortfall.

Waiving the permit fees for the construction of six affordable housing units in the town of Esparto furthers the County's strategic plan goal of 'Robust Economy' by reducing barriers related to the development of affordable housing and increasing the number of available affordable units.