REPORT TO COUNCIL
SUBJECT
Title
Action to Amend Section 17.35.080 of the Santa Clara City Code to temporarily authorize a deferral for the payment of park-in lieu fees of residential developments from building permit to certificate of occupancy or final building inspection, subject to certain conditions and to bring the code into compliance with state law and approve a standard form Park In-Lieu Fee Deferral Agreement.
Report
BACKGROUND
On February 13, 2025, the City Council held a Special Meeting regarding the state of Santa Clara's real estate and development market, which was presented by the San Francisco Bay Area Chapter of the Urban Land Institute. As shared at the Special Meeting, the current economic conditions shaping project feasibility for the new construction of multifamily housing present an extremely challenging environment nationally and locally. Rising labor costs and material costs from tariffs, as well as high interest rates for financing, are the biggest obstacles.
Development projects pay City impact fees to address the capacity or infrastructure needed to support the associated building and population growth. These development impact fees are paid by the project sponsors to the City prior to the issuance of a project's Building Permit, which is the City's regulatory permit that authorizes construction to commence.
In an effort to stabilize housing construction costs, effective as of January 1, 2025, the California legislature passed and Governor Newsom signed into law SB 937. SB 937 amends the Mitigation Fee Act to shift the timing of payment of certain impact fees for "designated residential development projects" to a Certificate of Occupancy. The Certificate of Occupancy is the permit that cities issue to acknowledge that a project's construction is complete and authorizes occupancy of individual units. The period between Building Permit issuance and Certificate of Occupancy essentially reflects a project's construction period.
Senat...
Click here for full text