Fremont to let market-rate developers defer impact fees

The city of Fremont may give apartment developers a break.

The East Bay city is considering bringing back a Great Recession fee-deferral program for multifamily developers to make it easier for projects to pencil out, the San Francisco Business Times reported

The City Council was expected to vote Thursday to allow developers working on market-rate multifamily projects to defer the payment of impact fees. 

Under the proposal, developers could postpone payment of the fees by up to 18 months after the issuance of building permits or until the project reaches completion, whichever is sooner. 

The city now requires developers to pay the fees, which support various aspects of city infrastructure, before building permits can be issued. 

The deferral program, which is already available for affordable housing and commercial projects in the city, would effectively lower upfront development costs and make market-rate residential projects more feasible, advocates say. 

Fremont previously established a fee deferral program in 2009, when the fallout from the Great Recession slowed residential development significantly, according to city documents. The city revoked the deferral program in 2019 for market-rate residential developments with more than two units.

The program’s potential reinstatement comes a few months after Fremont approved raising development fees by more than 13.5 percent beginning July 1. 

The fee hike was designed to keep pace with the cost of construction, which has skyrocketed over the last three years, the city has said.

But the increased fee could challenge residential developers looking to work in Fremont, Dennis Martin, a representative for the Building Industry Association of the Bay Area trade group, told councilmembers in December, when it was approved. 

He said the hike came on top of a 6.6 percent increase in the city’s impact fees last year.

“Fees, in basically a calendar year, are going up 20 percent,” Martian had said, adding he hoped council members would consider whether that was “the right policy for housing” in Fremont.

The building association had asked the city to “at least” consider reinstating the fee deferral program to soften the blow for developers.

Fremont collected $21.3 million in impact fees across 124 projects in fiscal year 2021-2022, compared to $35.5 million across 168 projects a year earlier. The number of projects contributing impact fees in the city has steadily declined from a high of 450 in the 2016-2017.

— Dana Bartholomew