Council signals support for limited fee‑deferral pilot to spur market‑rate multifamily housing

Council members on July 8 directed staff to prepare a formal fee‑deferral program that would allow selected multifamily projects to defer impact (AB 1600 / PFE) fees past occupancy to address an identified gap in Lincoln’s housing continuum.

Staff explained the policy rationale: single‑family production has outpaced multifamily in Lincoln for decades, and sizable market‑rate apartment projects are rare. Developers told staff that upfront impact fees can present a financing hurdle for apartment projects because fees are due at permit issuance, before rental revenue begins. Staff proposed a pilot modeled on a program used by Oroville, with local modifications: a five‑year deferral period (staff recommended five years over Oroville’s 10), security measures (liens, stipulated judgments and fee‑due‑on‑sale triggers), an interest or index escalator to preserve net present value and tight eligibility limits — staff suggested no more than three projects and a 150‑unit cap per project during a two‑year application window.

City attorney and finance staff said safeguards would be required to protect city revenue and ensure the city can pursue fees in the event of default; staff advised limiting applicability to projects under a firm unit cap and limiting the number of participating projects so the city’s capital program is not materially delayed. Council members indicated support for the concept and suggested five years seemed preferable to a 10‑year term. Council asked staff to prepare formal program documents for future council consideration and to include discretion for finance to exclude fees tied to near‑term critical capital projects (for example, wastewater treatment expansions).

Why it matters: the pilot is intended to lower the initial financial barrier for developers to build market‑rate apartments — housing that, according to staff, Lincoln has had limited supply of for decades — while including contractual protections for the city.

What was decided: council provided direction to draft a formalized pilot program with parameters described above (five‑year deferral recommended by staff, security provisions, indexed escalation and caps on project size and number); the program will return to council for formal approval.

Next steps: staff will prepare the formal program, legal agreements and an implementation process for council consideration; staff also expects applicants would provide security and agreed triggers for payment if property ownership changes.