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Lafayette hears study that would raise affordable-housing fees for new development; council debates mitigation rates and incentives
Summary
Consultants presented a nexus study showing a defensible residential linkage fee and recommending a mitigation rate range (15–25%) that would translate to roughly $5–$10 per square foot for many residential projects; councilors questioned assumptions and asked for tiering, incentives and further feasibility detail.
City consultants presented preliminary findings of an affordable-housing linkage (impact-fee) study at the March 17 council meeting and recommended ways the city could update its fee ordinance to generate more revenue for affordable housing while minimizing harms to development feasibility.
"That translates into a maximum defensible fee of around $34 to $38 per square foot," said Matt Prosser, principal with Economic and Planning Systems, summarizing the study's linkage calculations for residential development. Prosser explained that the study estimates the per‑unit impact of new development and then models a mitigation rate (a percentage of the maximum legally supportable fee) to identify practical fee levels.
On the recommendation side, Prosser said the study’s development-feasibility work suggests a mitigation-rate range of about 15%–25% for for‑sale residential that would result in fee levels in the range of roughly $5 to $10 per square foot; for rental development the recommended supportable range was about $5–$8 per square foot, and staff suggested starting modestly on commercial with a 1% mitigation rate. "If you were to increase them, [a mitigation rate] of 15 to 25% would put you in line with your peers," Prosser said.
Council members pressed staff on assumptions behind the different rates for rental and ownership products, the possibility of a graduated (tiered) fee to encourage smaller units and community priorities, and how Lafayette's market compares with Boulder and Denver. Councilor Johnson framed the policy choice succinctly: "What I am taking from this... is that we have a gap between what people can afford and what we offer in the way of housing. This mitigation rate is how far towards closing that gap do we want to go. $5 gets us a 15% closing of the gap."
Staff and the consultant emphasized that the study is a tool for policy discussion and that additional analysis, public input and legal review would accompany any ordinance change. The consultant recommended updating the fee ordinance to reference the nexus study, consider using an inclusionary housing ordinance for larger projects, and deploy incentives or waivers for projects the city wants to encourage.
Next steps: finalize the linkage models and feasibility appendix, release the draft report for public review, and bring ordinance language and adoption hearings back to council.
