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Housing and Community Services Department
Housing and Community Services Department

Affordable Housing Mitigation Fee Ordinance (Below Market Rate Rental Housing)
Frequently Asked Questions for Applicants
Updated 9/21/2018

This information is provided as a courtesy to the public to assist in understanding the Affordable Housing Mitigation Fee and its requirements. The City of Berkeley makes every effort to ensure this information is accurate and up to date, but it should not be used in lieu of professional legal advice. Applicable state and local laws will prevail in any instance of a discrepancy or inaccuracy.

 

What below-market-rate (BMR) / affordable housing requirements apply to new ownership housing?
The Inclusionary Housing Ordinance, BMC 23C.12.  These requirements are not addressed in this FAQ.

 

What below-market-rate (BMR) / affordable housing requirements apply to new rental housing?
The Affordable Housing Mitigation Fee (AHMF) ordinance, BMC 22.20.065.  The City adopted the Affordable Housing Mitigation Fee ordinance to replace the rental housing requirements in the Inclusionary Housing Ordinance BMC 23C.12. The City no longer enforces the requirements in BMC 23C.12 for new rental developments.

 

How much is the Affordable Housing Mitigation Fee for new market-rate rental housing? 
Effective July 1, 2018, the AHMF is $37,962 per new unit of rental housing, payable at the issuance of Certificate of Occupancy. If the AHMF is paid in its entirety no later than issuance of the building permit, the fee is $34,884 per new unit of rental housing. Resolution 68,074-NS established the fee and the method to adjust the fee.

For entitled projects, consult with City staff to determine the fee level that applies to your project, as fees have changed over time.

 

Are market rate rental projects required to include Below Market Rate (BMR) units?
Market rate rental projects are not required to provide BMR units.  Many applicants elect to provide BMR units in-lieu of all or part of the Affordable Housing Mitigation Fee.  Many applicants elect to provide BMR units to qualify for a density bonus.  

 

Can BMR units provided to satisfy the Affordable Housing Mitigation Fee requirements also help the project qualify for a density bonus?

Generally speaking, yes, they may.  Planning staff will review the project details to determine how the State density bonus law applies in your situation.

 

I expect my project to receive a density bonus.  Will the units in the bonus be exempt from paying the Affordable Housing Mitigation Fee?
No, all market rate units in the project are subject to the Mitigation Fee, whether in the base project or the bonus project.  Very low-income and low-income rental units which qualify the project for a density bonus will offset fees owed.

 

Can my project provide affordable rental housing units in lieu of paying the Affordable Housing Mitigation Fee?
Yes, subject to the conditions in BMC 22.20.065.

 

When do I have to make my decision between providing affordable rental housing units or paying the Affordable Housing Mitigation Fee?
Unless the Use Permit specifies something different, the decision about units and fees must be made prior to issuance of the Certificate of Occupancy or Temporary Certificate of Occupancy, if any.  If any units will be provided, a Regulatory Agreement must be recorded prior to issuance of the Certificate of Occupancy. 

 

How long does the project need to provide the BMR units if I decide to provide them?
For the life of the project.

 

How many units does a project need to provide to avoid paying the fee completely?
To avoid the Affordable Housing Mitigation Fee completely, 20% of the units in the development must be provided to qualified households at rental rates affordable to Low-Income and Very Low-Income households.  Half of the affordable units must be provided to households with rents and incomes no greater than Low Income (80% of Area Median for the household and unit size) and half at Very Low- Income (50% of Area Median).  If an odd number of affordable units are provided, the majority must be Very Low-Income. 

In addition, of the total Very Low-Income units, 40% of the units must be reserved for holders of Berkeley Housing Authority Section 8 vouchers and 40% must be reserved for holders of City of Berkeley Shelter + Care certificates.

For projects designating fewer than 20% of their total units as affordable, the AHMF will be reduced proportionally according to the formula established in BMC 22.20.065

If the project is already entitled, please consult with staff on the specific requirements that apply to your project, since requirements have changed. 

 

If I designate less than 20% of my units as Affordable, what will my Affordable Housing Mitigation Fee be?
Projects that include Low-Income and Very Low-Income Units, including Qualifying Units, will qualify to pay a discounted Mitigation Fee if providing fewer than the number of units equal to 20% of the total units in the project.


The following equation will be used to calculate the proportional discount to the fee based on the portion of units provided at Low-Income and Very Low-Income rents.

[A x Fee] – [(B+C)/(A x 20%) x (A x Fee)]  

Where:
Fee = $37,000
A = Total number of units in the project
B =Number of Very-Low Income Units provided in the project.
C =Number of Low-Income Units provided in the project.

 

What is an example of the formula applied to a project?
20 unit project example:
• A 20-unit project including 2 VLI units, 2 LI units, and 16 units would not owe a fee.
• A 20-unit project providing 1 VLI unit and 1 LI unit would owe $ $370,000.
• A 20-unit project providing no affordable units would owe a fee of $740,000.

15 unit project example
• A 15-unit project providing 2 VLI, 1 LI, and 12 units would not owe a fee. 
• A 15-unit project providing 1 VLI unit, 1 LI unit, and 13 units would owe $185,000.
• A 15-unit project providing no affordable units would owe a fee of $ $555,000.

 

Can my project provide only Low-Income units, and no Very Low-Income units, in lieu of paying the fee?
No. BMC 22.20.065 states at least 50% of the units must be affordable to households with incomes at or below the Very Low-Income designation if the project is providing more than one BMR unit in lieu of the Mitigation Fee.  If there is an odd number of BMR units, the majority must be Very Low-Income units.

If your project already has a Use Permit, it may have been subject to different requirements.  Consult your Use Permit and City staff with questions.

 

Will the project be required to accept Section 8 or Shelter Plus Care?
Yes. BMC 22.20.065 states that your project must reserve 40% of the Very-Low Income BMR units for Berkeley Housing Authority Section 8 vouchers and 40% of the Very-Low Income BMR units for City of Berkeley Shelter + Care certificates. 

The project’s marketing plan must include outreach to voucher and certificate holders, and establish how they will be given priority in leasing up.  The owner may accept each subsidy program’s full contract rent as long as the tenant portion is within the applicable BMR program rent limit.


Where can I see the applicable requirements?
The Affordable Housing Mitigation Fee ordinance, BMC 22.20.065, is available online.  Related resolutions are available at the following links:

2017-06-27 Resolution 68,074-N.S.

2015-04-07 Resolution 66,986-N.S.

2014-10-07 Resolution 66,809-N.S.

2013-02-19 Resolution 66,015-N.S.

2016-07-02 Resolution 67,614-N.S. (Rescinded)

2012-10-16 Resolution 65,920-N.S. (Rescinded)

 

How can I find out more about the requirements for operating BMR units?
Program guidelines and forms are available online at:
http://www.ci.berkeley.ca.us/BMRrentalownerspropertymanagers.aspx
Applicants and property managers can contact AffordableHousing@cityofberkeley.info with questions and to set up a meeting to go over the requirements.

 

If I choose to provide units, how should I follow up?
If you wish to provide affordable rental housing units in lieu of the fee, contact Be Tran at btran@cityofberkeley.info at least 6 weeks before expected completion to start developing a regulatory agreement. This timeframe is necessary to avoid delays in obtaining a Certificate of Occupancy.




 

 

 

 

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