Question: Can staff estimate the costs that would come from utilizing the authority granted to Alexandria in section 15.2-958.4 of the Code of Virginia to waive “building permit fees and other local fees associated with the construction, renovation, or rehabilitation of housing by a private-sector entity that is pursuing an affordable housing development”? What are the cost implications of implementing before December? (Mayor Gaskins, Councilman McPike)

Response: 

As part of the Housing 2040 Master Plan study of financial tools, a comprehensive review regarding development fee relief for affordable housing is underway. This project includes the review and cost of fees collected by the Departments of Planning & Zoning (PZ), Transportation & Environmental Services (TES), and Code Administration (Code). Some fees, like the Building Permit, Development Special Use Permits (DSUPs), and Site Plan, are paid for processing applications. Other fees are paid for public facilities, like Sewer Tap, Right-of-Way, Small Area Plan/Open Space, Crown Cover Tabulation, and Water Quality. Based on preliminary review the development and permitting fees (including fees for use of public facilities) collected by individual departments throughout the stages of development are estimated to cumulatively be $15,000 per residential unit. In some cases, there is also a per square foot fee associated with development in a particular neighborhood or small plan area, (e.g. the Braddock Fund) into which affordable housing development also pays. Also under review is the type of affordable unit that would qualify for fee relief, such as a certain level of affordability and/or ownership structure. Currently Alexandria Redevelopment and Housing Authority (ARHA) owned units receive fee relief. As a result of current policy, in most cases involving affordable housing where the City helps sponsor development, the City’s housing loan is sized to include payment of these fees.   

Providing fee waivers prior to the FY 2027 budget means that foregone fee revenue from the projects in the development and site plan process would need to be allocated to cover operating costs within PZ, TES and Code. Some fees when collected are allocated into special revenue accounts (such as Sanitary Sewer) to be used for specific purposes. And some fees impact General Fund revenues. With development fees being paid at different times during a project's development timeline the waiver of fees impact multiple fiscal years. To maintain current service levels, either the fee for remaining users would need to increase, and/or there would be an impact on general fund revenues. Fiscal impacts are not yet finalized and are under review as part of the Housing 2040 Master Plan. CLI’s Elbert Ave project is an example of a current project in the pipeline where some fees still remain to be paid. The project is at final site plan and would have an estimated $1.3M in costs savings for the project, and loss of revenue for the fee collecting departments. 

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