If you dig down through the agenda for Tuesday’s Council / Redevelopment Agency meeting, Item J.6 pops out. The Council is being asked to transfer $100,000 from their Blight Reduction Fund to the RDA for work on the Standard “student” housing project. There is no description of what exactly these funds will be used to accomplish.
The summary is pretty interesting – the project doesn’t make financial sense, according to the developer, due to the land acquisition costs, construction costs, and fees. I get a sneaking suspicion that is in not the last time the Standard and land owner Italian Capital will be coming to Council to feed at the trough. Here are some of the abatement that are available to be at least ask for:
- Sewer Connection Fees – Currently $5445 per multifamily unit, this will run the developer $1,393,920 based on the 256 proposed units.
- Transportation Impact Fees – Currently $2457.88 per unit, or $629,217.28.
- Park Fees – 1% of construction with a maximum of $1000 per unit = $256,000.
- TIF – Tax Incremental Financing – The report from the city estimates that the Standard will be paying $600,000 annually in property taxes. This can be reduced based on the future property taxes additional redevelopment will generate. (I not clear why a $54M project will only add $19M to the assessed value of the Redevelopment District).
- Permit Fees – Don’t like them? Ask to have them lowered.
- STAR Bonds – As a residential project, I don’t think the Standard would qualify. But surrounding retail development that “incidentally” improved the infrastructure the Standard will tap into could be fair game.
I heard an interesting observation from a neighbor who attended a NAB meeting and heard the developer’s presentation on the Standard. There is no guarantee that this will be student housing. It could be a mix, or even all market rate depending on market conditions. I would be VERY cautious committing to this initial Blight Reduction funding until we know the specifics of the work planned, and until all Abatements being requested are on the table and publicly vetted. It would set a dangerous precedent for the other downtown developers that are currently shopping subsidy and abatement proposals. Marmot, Dark Horse, Haberae, Gorelick, and S3 all seem committed to infill and blight reducing projects without feeding at the trough. Should we subsidizing private for-profit development, or have we learned any lessons along the way from the Ace’s fiasco?