Campbell to implement developer fees for affordable housing

Campbell is slated to rake in hundreds of thousands of dollars for affordable housing annually, thanks to a decision to collect developer fees from projects without housing.

The Campbell City Council voted 4-1 Tuesday to establish a commercial linkage fee, which is a flat rate of $9 per square foot developers must pay for all new retail and industrial projects that don’t include housing. The city expects it to generate about $300,000 annually and up to $4 million in 15 years. The money will be earmarked for affordable housing costs such as construction, legal advice and loans for affordable housing developers. Vice Mayor Sergio Lopez voted no even though he supported the fees, citing concerns about other aspects to the item that would require small housing projects to convert at least 15% of homes into affordable housing or pay a fee.

The policy has some exceptions for small businesses and mixed-use projects, with developments 5,000 square feet or less required to pay only 50% of the fees. Vertical mixed-use projects will be exempt from the additional cost as long as the commercial space comprises 15% or less of the development. Campbell will implement the policy in about a year.

Community Development Director Rob Eastwood said the city added the exceptions so the policy wouldn’t hinder development in Campbell. He said the money gives a needed lift to the city’s affordable housing efforts, especially for 100% affordable projects.

“(It’s a) very important tool,” he told San José Spotlight. “It’s great that there’s a future dedicated revenue stream in our housing programs.”

The fees could create space for affordable housing developers to bring more homes to the city.

Jacob Billitteri, senior project manager for affordable housing developer Charities Housing, said it helps to have existing funding sources to secure state tax credits that help subsidize affordable developments. He added smaller funding streams are critical in a difficult development landscape, especially since the Bay Area Housing Finance Authority killed a $20 billion regional housing bond earlier this month.

“In this environment where financing for affordable housing is already kind of hyper-competitive, having even small local sources (is) a real boost to the development of affordable housing in the community,” Billitterri told San José Spotlight.

Campbell’s commercial linkage fee is one of the lowest in Santa Clara County. Mountain View, Santa Clara and Sunnyvale’s fees range between $14 and $22, according to data Campbell compiled. Neighboring San Jose has an average fee of $7 per square foot.

Dan Orloff, Campbell Chamber of Commerce board president, said the development community never loves added fees, but he understands the need.

“None of us relish the idea of adding costs to building much-needed commercial real estate,” he told San José Spotlight. “However, there are deficits in funding for much-needed city services and repairs and those funds need to be found somewhere.”

Campbell could further its housing goals under the policy. The city aims to create 3,870 homes by 2031 to meet state mandates, 1,542 of which must be deemed affordable to low-income residents.

Councilmember Dan Furtado supported the fees because he said affordable homes need to come from as many places as possible to address the housing crisis statewide.

“It’s gradually being understood in California, with the high cost of the area and the high cost of housing, that it’s kind of an obligation and it’s important for everyone to contribute to,” he told San José Spotlight.

Contact Annalise Freimarck at [email protected] or follow @annalise_ellen on X, formerly known as Twitter.