The city is seeking to amend state regulations to incentivize affordable housing projects after implementing a development impact fee this summer.
On Nov. 21, the Savannah City Council approved its legislative agenda, which includes among the priorities a resolution for state lawmakers to allow municipalities to waive development impact fees for affordable housing to help keep development costs low. Currently, the city is required by the state to cover the cost of those exemptions, including the 25 percent reduction available to qualified projects.
The state legislation is being sought after the city council approved the impact fee ordinance in Feb. as a way to help defray the costs of additional infrastructure needed to serve new developments. Alderman Nick Palumbo cast the sole vote against the impact fee at the time, stating the fee was a “blunt tool” and that the city should at least wait until they see whether the legislation exempting affordable housing is passed.
Since the fee was implemented in July, more than $1 million has been assessed, of which $302,845 has been collected as of Nov. 13, according to city officials. From those invoiced fees, the city reported that $601,233 originated from nonresidential or multi-family developments from 19 building permits. The remaining $425,856 of fees was reportedly for single-family, duplex, and townhouse development produced by 223 building permits.
The highest fee assessed so far, amounting to $130,396, was for the Daechange Seat Corp. warehouse building at the Savannah Chatham Manufacturing Center, which is expected to create more than 500 jobs. The next highest fee was assessed for Pinyan/Procida’s planned affordable housing complex at 1700 Drayton St. — property the city sold to the development group for the housing development in 2021. The development group paid a $81,475 impact fee for the project, which is to include 42 affordable apartments.
Affordable housing developments are eligible for a 25 percent reduction of the impact fees and a portion of Pinyan/Procida’s fee will be refunded if the project is awarded low-income housing tax credits issued by the Georgia Department of Community Affairs, according to the city. The developer has been struggling to obtain those crucial credits, however, and was not among the recipients for the third year in a row.
In “broad strokes”, any additional costs or tax makes providing affordable housing more challenging, said Peter Procida, a partner with the development group. However, the city’s impact fee did not hurt the project’s chances to obtain the tax credits, Procida said, while adding the city waived other fees, such as water and sewer “tap-in” costs. Rather the increasing competition throughout the state for the limited amount of credits is what makes getting the housing credits so challenging, he said.
The Pinyan/Procida project was not alone locally in being denied the credits. The three other projects in Chatham County and Savannah also failed to receive awards, including the city supported senior housing planned for the former fairgrounds site at 4801 Meding St. The other two local projects that failed to obtain credits included the second phase of Berwick senior housing in unincorporated Chatham and the rehabilitation of the Ashley Midtown apartments in the Benjamin Van Clark community.
The challenge of obtaining the credits was highlighted by the fact Cave State Development’s 84-unit Berwick senior housing project was not selected, when it was essentially the same as the first phase which had received credits only two years earlier.
The score that it takes one year won't necessarily be the score you need for the next year depending on criteria, quality and quantity of applications, said Jacob Engle, a principal with Cave State.
“You would be hard pressed to point to a community throughout the state and say it met its affordable housing needs,” Engle said. “If anything, I would say it’s a growing thing that folks need to be focused on.”
The city’s impact fee ordinance includes a 3-year phased implementation of the program, stepping up the assessed amount from 50 percent of the fee in the first year, to 75 percent the second and 100 percent in the third year.
Development activity fluctuates from year to year and is reliant on a number of unpredictable variables, but the city estimates it will invoice for around $2.8 million dollars in 2024 if the current pace of development continues, according to a city spokesman.
Top Ten Highest Impact Fees
Daechang Seat Corporation (manufacturing building) – $130,396
Pinyan/Procida Development Group (42-Unit apartment development) – $81,475
Moxy Hotels/Residence Inn by Marriott (6-Story hotel, 242 rooms) – $77,536
Brookwood Capital Partners (warehouse) $59,859.83
Towneplace Suites by Marriott (5-Story hotel, 112 rooms) – $50,121
Capital Development Partners (Warehouse) – $46,542
Four Points by Sheraton (4-Story hotel, 121 rooms) – $38,768
Starland Lounge and Lanes (Bowling Alley) – $33,622
Capital Development Partners (Warehouse) – $27,505
Extra Space Storage (3-Story Self-Service Storage Facility) – $15,024
Total assessed between July 1 and Nov. 13: $1,027,089
Source: City of Savannah