Sam Moss, executive director of Mission Housing Development Corporation in San Francisco, forwards the notion that allowing developers to pay an off-site fee in lieu of including affordable units within new developments, has been unfairly demonized. Under inclusionary zoning, a percentage of apartments need to be designated as affordable. In many instances, the developer has the option of paying a fee to support affordable units off-site of their development.
When a developer selects the “fee out” option, the collected funds are disseminated to nonprofit affordable housing developers through a housing trust fund or an affordable housing fund. Moss contends that this is the most efficient and valuable use of the fee. Usually, the developer fees are leveraged to turn each $1 into $3 by affordable housing nonprofits through tax credits and bonds.
Those opposed to the developer fee-out option believe that it dilutes the opportunity to build in areas with NIMBY (“Not In My Back Yard”) opposition. It promotes socio-economic segregation by relegating affordable housing developments outside of the desirable, at times gentrifying urban core. Furthermore, there are concerns regarding the proper management and distribution of the developer fees, with funds not being spent to support affordable housing or being raided for other purposes.
Discussion Question: Do you support developers paying an off-site fee in lieu of including affordable units?
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