Council weighs long‑term fee deferrals and CFD relief amid warnings about revenue and bond impacts

City staff told the council that long‑term impact‑fee deferrals and reductions in community‑facility district (CFD) assessments can help close financing gaps for affordable projects but carry fiscal trade‑offs that could reduce city revenue and affect capital‑project funding. Stephen Heisler, the city’s housing manager, said impact‑fee deferrals can be structured as long‑term loans tied to a project’s period of income restriction — typically 55 years for affordable projects — and might amount to $2 million to $7 million per project in city fees (roughly $18,000 to $29,000 per unit). Heisler warned that such deferrals “are probably never going to be coming in as revenue to the city” while the project remains income‑restricted and would directly reduce revenue for infrastructure and other uses. Heisler also said reductions in maintenance CFDs can create ongoing operational costs for projects. Staff noted CFDs vary by location and on the high end can add about $2,000 per unit per year to operating expenses, which can approach 10% of a project’s revenue in some cases. Because affordable projects have rent limits set by income restrictions, additional recurring CFD expenses can render operations infeasible. Council members and staff raised fiscal concerns: one councilmember voiced worries that wide use of deferrals could harm the city’s bond rating, affecting long‑term borrowing costs. Heisler said CFD reductions would be “case by case” and that staff is not recommending use of CFD reductions as a regular funding tool without further analysis. During public comment, Chris Hawk of AmeriCorps Development urged the council to support long‑term fee deferrals, describing them as a “strategic investment” that his firm has used to make 100% affordable projects feasible and saying their agreements often provide a 40‑year repayment term. In contrast, council members and staff repeatedly emphasized the difference between a near‑term cash deferral and a long‑term subsidy, and discussed the downstream impacts on the Transportation Development Impact Fee (TDIF) program and the city capital improvement plan. Heisler provided quantification of trade‑offs: the TDIF construction program has an estimated total need of about $1.34 billion while estimated future fee revenue is about $945 million, leaving an existing shortfall that additional fee deferrals would exacerbate; the city also faces roughly $200 million in deferred maintenance outside CFD funding. Staff said any program of fee deferrals or CFD reductions would require annual reporting and careful fiscal analysis to avoid creating unmanageable long‑term liabilities. No formal policy change was adopted; council members instructed staff to continue scrutinizing proposals and to return with more detailed fiscal analyses if the council wishes to pursue fee deferrals for particular projects.