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Feasibility analysis finds most high‑density prototypes currently unviable; council debates fee flexibility to attract development
Summary
Willdan's feasibility analysis found single‑family and some industrial prototypes nearest to feasibility while most denser mixed‑use and vertical projects are infeasible today. Council members urged a balance between fiscal responsibility and flexible fee timing/credits to encourage projects when the market returns.
James Edison of Willdan reviewed a residual land value feasibility analysis for several development prototypes. The analysis assumed a baseline land price of about $2,200,000 per acre, a 12% developer profit margin, and included construction, soft costs, financing and parking assumptions. Edison said single‑family residential and some industrial prototypes were near feasible, while most multi‑story residential and mixed‑use prototypes produced negative residual land values under current market conditions.
Edison emphasized that the infeasibility is driven primarily by high construction costs, parking and cap‑rate/lease assumptions rather than impact fees alone. Council members responded with divergent priorities: some urged the council to keep fees at levels that pay for city infrastructure so taxpayers are not asked to subsidize development; others urged options to spread fee payments, offer credits for on‑site mitigation and consider fee reductions in limited cases to make East Palo Alto more competitive when the market improves.
Council did not adopt a final fee schedule in the provided excerpt; staff noted the resolution before the council would allow the city to adopt fees below the maximum justified amounts and to consider project‑specific credits or offsets.
