2022 AIA Communities by Design Reimagining Petaluma SDAT - Report - Page 50
Petaluma DAT
We realize that the city has been aggressively pursuing
various state grants and other competitive resources
– which it should continue doing. For the most part,
these sources are not included here as the city is already
familiar with them. It’s also important to keep in mind
that many of the sources listed can be blended on
differing projects to optimize project viability.
Recommended Funding
Sources
Alternative Funding Sources
Requirements, Fees, and Taxes
Petaluma already has funding and financing tools that
rely on land and building values (e.g., property tax,
building permit fees) to fund government expenditures.
Some one-time fees or taxes relate to change in real
estate values, while others collect regular payments
based on land values. Moreover, there are non-financial
requirements that restrict how land can be used. There
also are funding tools that are or may not be used in
Petaluma but have been adopted by other cities and
counties.
Construction or Building Excise Tax
This is a tax on the permit value of new construction
which goes above and beyond permit fees that recoup
the cost of staff review time. This tax captures part of
the value of new construction which is then used to fund
public priorities such as affordable housing and public
facilities (e.g. streets/sidewalks, open spaces). The tax
revenue this generates is flexible and does not have to
be closely related to the actual cost of providing public
facilities to serve the development, nor does it have to be
spent to specifically benefit the properties being taxed.
It can be very effective for denser sustainable multifamily mixed-use projects, and commercial development
projects.
Sole Source Impact Fees
Petaluma currently collects impact fees that are
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imposed on new developments by local government
for the purpose of providing new or expanded public
capital facilities required to address the additional
demand from the new development. This fee income is
allocated for citywide infrastructure improvements. In
some states, sole source impact fees provide an option
that enables the impact fees to be allocated to a smaller
geographic area which could be a few to a few hundred
acres depending on the development project. These fees
are most often used for denser development projects
and can be applied to park and other open space
development as well as hard infrastructure in the impact
fee generating area.
and condominiums – both new and resale – to first-time
homebuyers who have a moderate household income.
This type of requirement would ensure that condo
developers would be adding ownership opportunities to
workforce household.
Land banking & Community Land banks
Public land that is not already programmed for other
uses (schools, parks, firehouses, police stations, etc.)
could be sold or leased to developers to help achieve
development objectives. For example, this land may be
developable as sustainable mixed-income housing once
it is sold or leased to a developer. The public agency
owning the land can place conditions on uses, but this
process can still increase land values as underutilized
properties are redeveloped, thus stimulating local
real estate markets. It can be employed to test
demonstration developments such as using mass
timber construction, or for mixed-use projects requiring
affordable ground floor commercial spaces. If the latter
conditions are required, the land price or lease cost may
be reduced to enable the desired outcome, and other
tools mentioned in this report may be needed.
Land banking and community land banks benefit the
surrounding communities by removing land from the
market and preserving it, ensuring the availability of
long-term affordability and land access (e.g., parks
and other public spaces). Petaluma already has one or
more non-profit land banks, which are a strong asset.
Community Land banks add a significant dimension of
enabling affordable housing tenants and condo/coop
owners to share in wealth creation generated by leasing
some of the land for market rate housing or commercial
facilities. Acquiring and holding land in prime locations,
such as sites that may no longer be used by school
districts, hospitals or counties (e.g., the fair grounds)
could enable considerable affordable multi-family,
mixed-use development and public open space
development. Larger sites may provide a very significant
opportunity for economic equity; a focused community
land banking demonstration project for public open
space could also be incorporated.
Moderately Priced Dwelling Unit (MPDU)
Requirement
Petaluma currently has inclusionary zoning the
requires developers to either provide a percentage of
affordable rental units on site or pay a fee in lieu. MPDU
requirements address inclusionary zoning programs
with the goal of providing affordably priced townhomes
Parking Fees
Parking can be either off-street parking in the form
of garages or lots and metered on-street parking.
Revenue generated could be appropriated to fund public
improvement projects. One example is the use of parking
fees to help fund a core area streetcar line.
Public Land Disposition
Land Swaps
The City is fortunate to have control of many acres of
land. This situation puts the City in a position where it
can, if it and a willing private party have interest, swap
ownerships for sites that the city believes would be
better for it to control while still providing a fair value
exchange of property with the current private owner.
This alternative may be beneficial in moving toward
implementation in the City’s SMART area as well as
waterfront redevelopment interests. It may be in the best
interest of both the City and the private owner of the
SMART area parcel for the latter to swap for other public
land and let the City proceed with redevelopment of
both SMART parcels. Swaps may also be beneficial for
the waterfront redevelopment so that denser mixed-use
projects can be developed there along with a protected
waterfront and public open space. Both public and
private parties would need to complete due diligence on
the parcel exchanges and work to achieve fair values for
their properties based on appraisals.
Targeted Transient Lodging Tax
Petaluma already has a Transient Occupancy Tax that
must be used to promote tourism and tourism related
facilities. Some cities add a targeted lodging pertinent
element to these taxes. This added increment generates
more tourist revenue that could be used for broader
goals around equitable economic development and/
or housing affordability – both of which benefit service
tourism service workers among others.
Development Incentives Combined with
Requirements or Fees
Changes in land use, development rights, or
infrastructure can make certain areas more desirable
for development. Petaluma and Sonoma County
governments can capture the value development
incentives create by combining them with certain
requirements or fees. Public policy goals can be more
easily achieved with the revenue generated from the fees
if the development incentives are large enough to result
in more valuable development.
Fee for Development Rights
If allowed by law, developers can have the option of
paying fees to access additional development rights,
such as an increase in allowed density, a reduction in
parking requirements, or ground/air rights (the latter of
which may be transferable). These development rights
could make projects more feasible. A portion of the
added value is captured in the form of fees, which can
then fund public infrastructure, or be directed toward
off site affordable housing, or equitable economic
development activities.
