Stand Up for Neighborly Novato hears this question occasionally when discussing housing with our neighbors.
Owners of property designated for affordable housing pay full property taxes until construction begins. Once it
does, non-profit owners of affordable housing are exempt from property taxes based on assessed value. This
exemption also applies to churches and schools who provide a “public good.” Non-profit owners of housing are
still required to pay parcel taxes for paramedics, schools, libraries, parks and other public services.
Novato could consider requiring all non-profit owners to make a payment to the City to replace lost City
property tax income; however, it would not bring much money to the City. For example, a $10 million housing
complex would have a property tax burden of 1% or $100,000. After the State, County, schools, and special
districts took their share, the City of Novato would receive only 7% of this or about $7,000. That’s not much
money given Novato’s annual budget of $30 million.
While non-profit housing developers are exempt from property taxes, they pay significant one-time impact,
permit and hookup fees to the City, as well as local water and sewer districts.
For example, Eden Housing’s 61-unit Warner Creek Senior Housing Community (now under construction) paid
almost $2.5 million in fees to the North Marin Water District, Novato Sanitary District, Novato Unified School
District, and the City of Novato. Those payments certainly help Novato’s budget and all neighborhoods. Eden
Housing also paid over $165,000 in property taxes before construction began.
For additional revenue, Novato should consider a commercial linkage fee, like the one in San Rafael and Corte
Madera. Developers pay this fee to help cities cope with an expanded workforce due to their new commercial
projects. If those projects contain homes for some workers, then they don’t have to pay. A commercial
linkage fee would go a long way to provide more resources for Novato and encourage big commercial
developers to include some homes for their workers on-site.
Some members of the Novato City Council maybe hesitant to implement a commercial linkage fee for fear it
will lead to fewer commercial projects. However, our neighboring cities who have this policy haven’t suffered
in this way and we believe Novato would not see a reduction in commercial activity either.
Our city's tax structure underscores the advantage of providing more housing options, including reasonably-
priced housing. Novato is heavily reliant on sales taxes for its revenue, but the high cost of rents overburdens
individuals and families leaving too few with the resources to spend locally. Affordable housing means
residents can spend more in Novato, leading to increased tax sales tax revenue for our city.
Thankfully for Novato, fees paid by non-profit developers and housing communities help our annual budget
and our city as a whole. Having some reasonably-priced options in our community for seniors, those with
disabilities and for young working families is a benefit to us all.