Affordable Housing Mitigation Fee Ordinance (Below Market Rate Rental Housing)
Frequently Asked Questions for Project Sponsors
The following information is intended to give market rate housing project sponsors a starting point for understanding affordable housing requirements in Berkeley. This is not a comprehensive statement of City of Berkeley requirements.
What below-market-rate (BMR) / affordable housing requirements apply to new ownership housing?
The Inclusionary Housing Ordinance, BMC 23C.12. Those requirements are not addressed in this FAQ.
What below-market-rate (BMR) / affordable housing requirements apply to new rental housing?
The Affordable Housing Mitigation Fee ordinance, BMC 22.20.065. The City adopted the Affordable Housing Mitigation Fee ordinance to replace the rental housing requirements in BMC 23C.12.
How much is the Affordable Housing Mitigation Fee on new market-rate rental housing?
For projects that have not yet obtained a Use Permit, the fee is $34,000 per market rate unit of housing in the development. This fee was set in Resolution 67,614-NS, July 12, 2016.
For already entitled projects, consult with City staff to determine the fee level that applies to your project, since fees have changed over time.
Do market rate rental projects need to include below market rate (BMR) units?
Market rate rental projects are not required to provide BMR units. Many elect to provide BMR units in-lieu of all or part of the mitigation fee. Many elect to provide BMR units to qualify for a density bonus.
I expect my project to receive a density bonus. Will the units in the bonus be exempt from paying the Affordable Housing Mitigation Fee?
No, all market rate units in the project are subject to the Mitigation Fee, whether in the base project or the bonus project. Very low income and low income rental units which qualify the project for a density bonus will offset fees owed.
Can my project provide affordable rental housing units in lieu of paying the Affordable Housing Mitigation Fee?
Yes, subject to the conditions in BMC 22.20.065.
When do I have to make my decision between providing affordable rental housing units or paying the Affordable Housing Mitigation Fee?
Unless the Use Permit specifies something different, the decision about units and fees must be made prior to issuance of the Certificate of Occupancy or Temporary Certificate of Occupancy, if any. If any units will be provided, the regulatory agreement must be recorded prior to issuance of the Certificate of Occupancy.
How long does the project need to provide the BMR units?
For the life of the project.
How many units does a project need to provide to avoid paying the fee completely?
If the project is already entitled, please consult with staff on the specific requirements that apply to your project, since requirements have changed. For projects that have not yet received a Use Permit -
To avoid the fee completely, a project needs to provide 1 BMR unit affordable to households with very low income (VLI or50% of area median) and 1 BMR unit affordable to households with low income (LI or 80% of area median) for every 10 units of market rate housing.
For projects providing fewer than 1 VLI BMR units and 1 LI BMR unit in addition to every 10 market rate units, the fee will be reduced proportionally according to the formula established in BMC 22.20.065
What is the formula for calculating the number of in-lieu units?
The formula was established in BMC 22.20.065:
[(A-B-C) x Fee]- [(B+C)/((A-B-C) x 20%)) x ((A-B-C) x Fee)]
Fee = $34,000
A = Total number of units in the project
B =Number of Very-Low Income Units provided in the project.
C =Number of Low-Income Units provided in the project.
What is an example of the formula applied to a project?
12 unit project example:
• A 12-unit project providing no affordable units would owe a fee of $408,000.
• A 12-unit project including 1 VLI unit, 1 LI unit, and 10 market rate units would not owe any fee.
• A 12-unit project providing 1 VLI unit would owe $204,000.
10 unit project example
• A 10-unit project providing no affordable units would owe a fee of $340,000.
• A 10-unit project providing 1 VLI, 1 LI, and 8 market rate units would not owe a fee.
• A 10-unit project providing 1 VLI unit would owe $136,000
Can my project provide only low income units, and no very low income units, in lieu of paying the fee?
No. Under BMC 22.20.065, for projects providing more than one BMR unit in lieu of the fee, at least 50% of the units must be affordable to households with incomes at or below very low incomes. If there is an odd number of BMR units, the majority must be VLI units.
If your project already has a use permit, it may have been subject to different requirements. Consult your Use Permit and City staff with questions.
Can BMR units provided to satisfy the Affordable Housing Mitigation Fee requirements also help the project qualify for a density bonus?
Generally speaking, yes, they may. Planning staff will review the project details to determine how state density bonus law applies in your situation.
Will the project be required to accept Section 8 or Shelter Plus Care?
Yes. Projects that receive Use Permits on or after September 21, 2016 must reserve 40% of the VLI BMR units for Section 8 / Housing Choice voucher holders and 40% of the VLI BMR units for Shelter Plus Care certificate holders. The project’s marketing plan must include outreach to voucher and certificate holder, and establish how they will be given priority in leasing up. The owner may accept each subsidy program’s full contract rent as long as the tenant portion is within the applicable BMR program rent limit.
Where can I see the applicable requirements?
The Affordable Housing Mitigation Fee ordinance, BMC 22.20.065, is available online. Related resolutions are available at the following links:
2016-07-02 Resolution 67,614-N.S.
2015-04-07 Resolution 66,986-N.S.
2014-10-07 Resolution 66,809-N.S.
2013-02-19 Resolution 66,015-N.S.
2012-10-16 Resolution 65,920-N.S.
How can I find out more about the requirements for operating BMR units?
Program guidelines and forms are available online at:
Owners and property managers can contact AffordableHousing@cityofberkeley.info with questions and to set up a meeting to go over the requirements.
If I choose to provide units, how should I follow up?
If you wish to provide affordable rental housing units in lieu of the fee, contact Be Tran at email@example.com at least 6 weeks before expected completion to start working on the regulatory agreement to avoid delays.