In an effort to simplify the planning process at City Hall, San Jose mayor Sam Liccardo is proposing a universal development fee.
The policy proposal—which garnered strong support from the local business community and downtown boosters—would institute a single fee developers would pay the city for an entire residential project. It’s a simpler structure than the current bureaucratic maze developers have to navigate in order to figure out how much in taxes and fees they owe, the mayor explained in pitching the idea to colleagues earlier this month.
As it stands, several city departments have separate fees, all calculated differently and at different times during the permitting and development process. These include affordable housing fees, parking fees and taxes, to name a small sampling. Since each fee is calculated in a silo, it’s challenging for developers and city staff themselves to determine how changes to the project will affect fees across the board.
“This ‘bureaucratic pinball’ creates unnecessary delay, confusion, and barriers to construction,” the mayor’s policy proposal reads.
If the City Council green-lights the idea, San Jose would become the first jurisdiction in California to adopt such a fee, city staff told San Jose Inside.
The universal development fee wouldn’t change the actual amount developers pay. Rather, it would bring all of the city’s separate fees and taxes together. It would also make public how each part of the universal fee is calculated, thereby increasing transparency, according to city staff.
“If we had one straightforward fee where we developers knew how much it was going to cost them at the very beginning of the project, a lot of our members and the developers we talked to would be more inclined to go forward with projects because it would be up front,” Michelle Azevedo, director of policy and operations at the San Jose Downtown Association (SJDA), explained in a recent interview.
It would also make it easier for out-of-state and international developers to invest in San Jose, Azevedo added, because it wouldn’t be as difficult to calculate how much it costs to do business in the city. The goal is to make it so anyone can estimate how much city fees will cost via the city’s website.
The fee is just one part of multi-pronged plan the mayor laid out to meet a lofty housing goal of 15,000 new market-rate units and 10,000 affordable by 2023. Another element of the plan came up for council discussion last week when Liccardo proposed slashing construction taxes in order to entice developers to building more units.
“In general, there are several things the city has to institute in order to actually see more development,” Azevedo said. “It has to be a package deal.”
Last week, the officials from the Silicon Valley Organization (SVO) and SJDA co-authored a letter endorsing the universal fee idea.
“The permitting and entitlement process is complex and can be less than transparent,”SJDA Executive Director Scott Knies and SVO President Matt Mahood wrote in their letter. “Several developers have told us this is the largest deterrent to development in San Jose, therefore, we support Mayor Liccardo’s policy priority of adopting a universal fee. … Investing in technology that allows the developer to check on the project’s permitting process online would also improve transparency.”
But they insisted that more needs to be done.
“While we commend the promise to create 120,000 new housing units by 2040, we are concerned that the city of San Jose currently does not have the appropriate policy framework in place to realize this goal,” they said.
As a fix, they suggested a slew of strategies.
For one thing, they said, the city could beef up its planning division by raising compensation to attract and retain more experienced staff—especially those with knowledge of high-rise development. Mahood and Knies wrote that developers are even willing to offer salary subsidies for employees working on major projects, similar to an arrangement Google worked out with the city of Mountain View.
Another recommendation from Knies and Mahood involves forming a dedicated team to work with high-rise developers. “Having a ‘one-stop shop’ system where developers are assigned a single point of contact for high-rise projects would help remove delays and frustrations that projects are currently experiencing,” they wrote.
The letter goes on to express support for business-aligned Councilwoman Pam Foley’s proposal to figure out ways to streamline San Jose’s environmental reviews while joining other cities in lobbying for more relaxed regulatory standards. Meanwhile, Knies and Mahood say, San Jose can use downtown as a pilot to prove “whether or not fast-tracking projects can include less environmental review.”
Azevedo said the group wants more than piecemeal waivers and concessions.
“There should be a package of adjustments to our current structure to really facilitate development,” she said. “We found that in order to push projects forward we need a few things: costs need to be reduced, timelines need to be shortened, and there needs to be more certainty in the process.”
Jennifer Wadsworth also contributed to this report.