County second guesses $46K subdivision fee

09/01/2011

Three years ago, Inverness resident Jack Matthews set out to accomplish what would seem a simple task: split his land in two and give half to his next of kin. Matthews, 65, a self-described working-class man, had received the 5.3-acre parcel from his parents and saw the act as a way to both keep the land in the family and provide his daughter and her husband a means to stay in West Marin. 

County officials were supportive of the land division, but there was an expensive catch: a $46,000 development fee to support affordable housing projects and land trusts in Marin. 

Matthews was confused. Why should he be subject to a fee that would support affordable housing when his division was intended to, in part, create just that? “Although the county claims to want affordable housing they’re doing nothing to make it enticing for someone like me to build affordable housing,” Matthews said.

Others, including county officials, are similarly perplexed. Last week, the Marin County Board of Supervisors voted unanimously to waive the affordable housing fee for an 84-year-old Sleepy Hollow resident who had argued that the section of the code requiring it was in conflict with another section. 

Pursuant to the ruling, supervisors are now considering if and how to revise the code to exempt owners such as Matthews, who said he has already paid upwards of $60,000 in surveying and appraisal fees. Until the supervisors make a decision—expected to occur in October—county staff said that Matthews and one other county homeowner, both of whom have already submitted subdivision proposals, are likely to have their fees waived as well. 

The “in-lieu fee” was established in the early 80s as part of a code that required land development projects of 10 or more units to designate at least 20 percent of the overall development as affordable housing or as land to be eventually developed as such.

In 2003, hoping to sustain affordable housing funds as fewer and fewer large-scale projects were being proposed, officials revised the code to include developments resulting in as few as two units. 

But since 20 percent of two-unit developments would result in fractional parcels, owners were instead subjected to an “in-lieu fee” of 20 percent of $230,020—the average cost of building a low-income house—for each unit. The money raised was to be directed to an affordable housing fund. 

Officials again revised the code in 2006, this time exempting from the 20 percent fee units with an existing home. “For the purposes of complying with the purposes of this chapter, an existing lot that is developed with a primary residence as of July 13, 2006, is not counted in the total number of developable parcels,” the code states. Thus, only the newly created unit on a two-unit division was liable to one $46,000 fee.

But last week, that section was called into question for unfairly subjecting one unit and not the other to the fee. “The language is conflicting intent,” said Marin County Planning Commissioner Wade Holland. “Only one new house can be built here, so what’s the difference of that house and the house that is already built and not included in the fee?”

County officials said they created the code with good intentions, and did not set out to preclude single-home owners such as Matthews from developing his property as intergenerational housing. “This is a classic case of no good deed going unpunished,” said Thomas Lai, assistant director for the Community Development Agency. “We thought we fixed it in 2006 by reducing it down to two.” 

Leelee Thomas, a principal planner for the county development agency, agreed that the code had unintended consequences, but said that the supervisors’ recent ruling brought about a larger question of legislative consistency. “I think it’s hard to write a policy that can address every single situation, and that this is an unusual case,” she said. “I think the Matthews family is in a difficult spot and that there was no intent to prevent people from being able to stay on their family homes, but the policy does have to be applied the same, from a fairness perspective.” 

According to Lai, while the money generated by the fee is directed to the affordable housing fund, there is no guarantee that a fee paid by a homeowner in West Marin, for example, would be used for affordable housing projects in West Marin. 

Furthermore, cases involving two-unit divisions are so infrequent—Holland said there have been roughly seven since 2003—that they are arguably irrelevant to the fund’s overall impact on affordable housing projects. Most of the fund’s resources, Holland added, are generated through a supplemental “affordable housing impact fee,” which charges new housing developers $5 for every square foot over a total 2,000 square feet area.   

Holland said he has been arguing for revision of the code for over a year, but has been unable to convince fellow commissioners. “These [single-unit] sort of houses are usually the mom-and-pop-inherited-down-to-the-kids sort of thing,” he said. 

Sam Grant, director of the Community Land Trust Association of West Marin, which receives financial support from the affordable housing fund, said his organization feels conflicted about the code. 

“From [the Matthews family’s] perspective, they are just trying to keep the whole family together. But that funding is also critical for us, so instead of saying it’s this or that, I think it’s important to realize that this is one of those blindsides of policy,” he said. “When the intergenerational extension of housing is affordable housing, should the impact fee apply? It’s a good question.”