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Housing Opportunity Ordinance September 7, 2021 Page 13 Table 2: Estimated Financial Impact of Skilled and Trained Workforce Requirement Range of Per Range of Percentage of Square Foot Range of STW at HOO In -Lieu Financial Increase on Cost of Labor 5% Per Square Foot Fee Per Hard Construction and Materials Square Foot Costs Without STW (STW + HOO) $15 21 % - 27% $130 - $250 $19.50 - $37.50 $5 17% - 19% As shown in the table above, the conservative estimated impact of including a skilled and trained workforce requirement ranges between $19.50 and $37.50 per square foot of hard construction costs. When combined with the HOO per square foot fee at $5 or $15, the two amounts increase hard construction costs between 17 to 27 percent depending on the project's baseline hard costs. Using the lowest estimates, even reducing the HOO in - lieu fee to $0 will not fully offset the estimated amounts. Given benefits such as living wages, a better quality of life for residents who work on the projects, a stable workforce, and other social and economic benefit information shared by the labor unions, the City Council may want to consider a sliding scale for the in -lieu fee wherein projects with 20 or more units provide an enforceable commitment to use a skilled and trained workforce would pay the current fee of $5 per square foot and projects that do not agree to an enforceable commitment will pay the $15 per square foot or an amount in between as determined appropriate by the City Council. The requirement to incorporate a STW would not apply to projects with less than 20 units as it will be challenging for small projects to meet the additional requirements. Similarly, the City Council can also consider a requirement for projects with an enforceable STW commitment to include a local hire requirement. A development with an enforceable STW commitment will be able to negotiate and rely upon the STW labor organizations to draw from the local labor pool. Next Steps If the City Council desires to move forward with these proposed amendments to the HOO, it is feasible to complete the final drafting of the ordinance and initiate the ordinance adoption process within 30 to 45 days upon receiving final direction. Following approval of the amendments to the HOO, the Housing Ad Hoc Committee will reconvene and continue to discuss the remaining topics below and may return in the future with recommendations for each topic: a. Rent stabilization/rent control b. Rental protections for tenants City Council 35 — 13 9/7/2021