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ADMINISTRATIVE REVIEW DRAFT There are no easy solutions to the school capacity issue. The impact fees collected from new housing are not adequate to cover the true cost of adding new facilities. Moreover, much of the increase is not coming from new development, but from larger households occupying the existing housing stock in San Leandro. The San Leandro Unified School District continues to search for potential school sites, but there are very few suitable options in the City particularly in residential areas. Recent projections by the School District indicate that enrollment increases should taper off after the Cherrywood and Wood Creek subdivisions are completed. Most of the future housing sites in San Leandro are designated for multi -family units. Based on past projects, these units will yield about half as many students as an equivalent number of single family homes would.s Conclusions. School capacity will remain a constraint to housing development for the foreseeable future. The City must work in partnership with both School Districts to address capacity issues and explore ways to reduce overcrowding and develop new facilities. Land and Construction Costs Analysis. The cost of land is a constraint to the production of affordable housing in San Leandro. Residentially zoned infill sites typically range from $25 to $35 per square foot, or about $150-200,000 for a standard -sized city lot. Costs for multi -family sites may be even higher, exceeding $1,000,000 per acre. On some sites, there may be added expenses associated with demolition and clean-up. Construction costs in San Leandro are also expensive, as they are throughout the Bay Area. Typical new construction costs average about $100 per square foot, although the costs may be much higher on hillside sites or in other areas where special foundations are required. The City's Building Department indicates that a 2,000 square foot home with a two -car garage would cost approximately $206,000 to construct. A 60 x 100 lot would cost approximately $150,000, with a resulting home price of $356,000. Adding impact and permitting fees, design costs, and other "soft costs," the total cost would be almost $400,000. The cost of building a multi -family unit is about half that amount, although the actual amount varies depending on the size of the project and the size of the unit. Conclusions. The high cost of land and construction, coupled with other factors, makes it difficult for the private sector to build housing that is affordable to lower income households. Subsidies and other forms of financial assistance are usually required to close the gap between actual costs and affordable sales or rental prices. Financing and Related Factors Analysis. The affordability of housing is affected by the availability of financing and prevailing interest rates. Today, mortgage interest rates of 7 to 8 percent make financing a less serious constraint than it was during the late 1980s, when rates exceeded 10 percent. At 7 percent, the monthly principal and interest cost for the median -priced home in San Leandro would be about $2,000. At 10 percent, the payment would be about $2,600. 5 The San Leandro Unified School District estimated a student yield of 0.55 from each single family unit and 0.24 from each multi family unit. Using these multipliers, the San Leandro General Plan EIR estimated that new housing 46 development consistent with the Plan would generate 277 new students. HOUSING ELEMENT 5-23 SAN LEANDRO GENERALLAi