St. Charles lowers developers' fee on affordable housing

Affordable housing became much more affordable in St. Charles Monday night - for developers - as aldermen felt the need to keep the city at least as marketable as neighboring Batavia.

Both communities have engaged in public discussions about what a reasonable charge to developers would be in lieu of providing affordable units in new housing projects. Batavia recently zeroed in on a fee in the neighborhood of $10,000 per affordable housing unit that isn't provided on site.

That number is far less than St. Charles' fee of $72,819 per affordable housing unit. City officials created the fee a number of years ago with the idea of trying to push developers to think creatively about incorporating affordable units into their projects. When the bottom fell out of the housing market, St. Charles officials put the fee on hiatus without ever having imposed it on a developer. With signs of a housing rebound, the city reactivated the fee last year.

A few weeks ago, a Big Rock-based development company pitched plans to build 250 apartments on the west side of town. That set the project up as the first to have to pay the fee. It was also the first time the aldermen who created the fee saw the fee formula applied. They immediately expressed sticker shock, as did the developer, when they saw a $1.8 million affordable housing bill resulting from the fee formula. On Monday, aldermen agreed the fee is much too high, especially in light of Batavia possibly becoming a trendsetter for such a fee.

"Batavia, if it passes, is setting the bar," said Alderman William Turner. "We are just literally pricing ourselves out of the market. We want to develop commercial and retail. To do that, we've been told we need rooftops. This isn't going to make them go. Do I think (Batavia's fee) is cheap? Yes, but if that's what the competition is, we're going to have to match it."

They did better than match it. Aldermen tentatively agreed to a fee of $5,000 per affordable housing unit, at least as it would apply to multifamily projects. Aldermen accepted the fee after struggling to balance out a desire to spur housing developments with a need to keep a certain amount of affordable housing stock in the city. The fee pours into an affordable housing trust fund, which can be used to help finance affordable housing projects and rehabilitation of existing affordable housing.

Alderman Todd Bancroft said having an affordable housing fee accomplishes nothing if no one brings development projects to the city.

"If you set that fee to an amount where nobody does anything, then you get no money," Bancroft said. "You get no unit. You get nothing."

Alderman Rita Payleitner urged city staff to deliver a clear message that aldermen aren't interested in developers just walking in and writing a check to the fund now that they are lowering the fee by more than 90 percent.

"The intention of the housing commission is to make sure we keep a good supply of affordable units," Payleitner said. "Money added to the housing trust is whatever. My heart is in supplying those units. But I understand sometimes that's not possible."

Aldermen must take one final vote to lock the lower fee in. The deep discount already had one developer smiling.

Jeff Ratzer is part of the team looking to bring the 250-unit Prairie Winds of St. Charles project to the west side.

"It's a good discount," Ratzer said. "I think it's reasonable what they did, and we're still looking at moving forward with the project."