Santa Rosa City Council slashes development fees for downtown housing projects

Santa Rosa is set to slash fees charged to builders in a bid to spur a new wave of high-rise housing development, part of a long-term overhaul of the city’s core envisioned more than a ?decade ago.

The City Council voted 6-0 on separate resolutions Tuesday night that together will result in immediate, sharp reductions in development fees tied to new housing for parks and infrastructure. The measures will also delay payment of fees charged for city utility hookups until the back end of a project, a sweetener that developers say makes it easier for new housing to pencil out.

It was the latest step in a series of City Council actions this year that are intended to speed the production of multi-family housing in the downtown area, now with a renovated transit center and a reunited Old Courthouse Square.

Council members were united in their praise for the measures, which come amid a housing crisis exacerbated by wildfires that last year wiped out more than 3,000 homes in Santa Rosa and 5,300 countywide.

“I am ecstatic that this is before us,” said Councilman John Sawyer. “I’ve been waiting for decades to be able to support this kind of proposal. It will be a game changer.”

The council authorized reducing development fees over a five-year period as part of its downtown housing strategy, which envisions 3,400 apartment and condo units in the city center, mirroring a benchmark from a 2007 city plan. To date, only ?100 of those downtown units have been built.

Developers claim that’s the result of high costs and a lengthy city process for proposing and permitting projects.

Earlier this year, the city took action to streamline its approval process, expediting design review from 18 months to about?6 months. The city is also ?pushing for a revised downtown plan that would lighten environmental review for high-density housing. Reducing development fees was the last component proposed to entice new downtown projects.

“There’s a fundamental problem with what’s going on,” David Guhin, the city’s planning and economic development director, said to the council, addressing the lack of new housing downtown.

Moving forward, housing projects capped at five floors, where at least two are dedicated to housing, would see a 40 percent cut in fees. Apartment buildings of up to 10 stories would see the park and infrastructure fees apply only to the first three floors, resulting in as much as a 67 percent reduction in fees.

The full cost of water and sewer costs will still apply, but the deferred payments are seen as a way to assist developers in qualifying for loans and getting projects off the ground. To boost projects that incorporate affordable units, the city is poised to offer additional discounts of $2 per square foot each on the park and infrastructure fees.

It remains unclear how much money the incentives could cost the city in foregone revenue because of the potential variability of each development, according to Guhin.

For developers of larger projects, the savings are considerable. On a six-story, 100-unit building, it could amount to paying $520,000 in fees that would normally total $1.31 million.

The new policy could affect discussions underway on the future of large downtown properties, officials said, including Railroad Square land owned by the Sonoma-Marin Area Rail Transit agency as well 427 Mendocino Ave., site of The Press Democrat building and an adjacent parking lot, both owned by Cornerstone Properties.

Two other pending projects that could benefit from the incentives are the Pullman Lofts, a 72-unit complex just a few blocks north of the Railroad Square Station, and a six-story project with 128 one- and two-bedroom studios proposed at 420 Mendocino Ave.

Building upwards is seen as a solution for meeting the growing need for housing around Santa Rosa, which is now the Bay Area’s fifth-largest city, with a population approaching 200,000 people. Developers have told city officials they hope to eventually be allowed to build above 10 stories to make projects even more cost-effective.

“The way you stop doing sprawl is to stop doing 2-D growth,” said Councilwoman Julie Combs. “So we have to go up if we’re going to preserve the quality of life in Santa Rosa and Sonoma County.”

Building and business representatives lauded Tuesday’s unanimous action as a boon for the city’s long-term economic vitality. Mayor Chris Coursey was the lone council member not in attendance.

“This seems like it makes all the sense in the world,” said Peter Rumble, CEO of the Santa Rosa Metro Chamber. “It has a greater positive impact for our tax revenues, and just a greater economic activity downtown. When people come, they’ll want to visit (downtown), so it attracts tourism as well to our local economy.”