Opportunity Housing Ordinance Planning Commission February 14, 2019 - PowerPoint PPT Presentation

Opportunity Housing Ordinance Planning Commission February 14, 2019

Housing Opportunity Ordinance – Primary Goal Incentivize creation of new affordable housing units while furthering private market development

Ordinance Highlights • Requirements (9% minimum) based on economic study (Nexus Study) • Provides flexible compliance options • Flexibility/incentives increase with increase in affordability • Phase in period – to test, evaluate, and educate • Routine evaluation to respond to market changes

Ordinance Overview Six month phase-in period Applicability • Possible exemption for concept • City wide with transit area focus plans received during phase-in • New or major rehabilitation projects with 20 or more units period that are approved w/in 24 months Minimum Requirement s • Mandatory 9% of total units developed affordable at Creation of affordable housing trust 60% AMI and below. fund • Note: SF threshold = 110% AMI • Funds a wide range of eligible activities to Flexible compliance options support unit production & preservation • Onsite, offsite, in-lieu, NOAH preservation Program evaluation Menu of tools and incentives • Annual performance reporting with five year evaluation • Designed to support unit production and the creation viable projects

Compliance Options: Four Approaches Compliance Approach Housing Plan Access to Tools & Required? Incentives • Build units on-site Yes Yes Affordable Housing Track 1 Agreement • Track 2 Payment in lieu – no affordable units No No Payment ($9.60/SF) to built Trust Fund prior to certificate of occupancy • a) Build off-site Yes Only for Affordable Housing Track 3 b) Land dedication approaches that Agreement c) Partner w/affordable housing create/preserve developer affordable units d) Convert existing market rate to affordable • Track 4 NOAH Preservation Yes Yes Affordable Housing (purchase/preserve existing NOAH Agreement • property) Deed Restriction

Documentation & Evaluation • Affordable housing plan - Submit with development application. Describes compliance approach and proposed tools and incentives. • Affordable housing agreement – Submit prior to issuance of building permit. Establishes commitments and obligations of City and applicant/developer. • Applicant/developer must submit annual report to City demonstrating compliance with agreement. • Evaluation • Staff provides annual report on implementation to City Council. • Ordinance provisions evaluated at least every five years.

Regulatory Tools and Incentives – Building & Site Design • Density Bonus • Height Bonus • Floor area ratio bonus • Parking reductions • Enclosed parking space conversion allowance • Minimum unit size reduction • Alternative exterior materials allowance • Storage space reduction

Tools and Incentives – Process & Fees • Development fee waivers • Development fee deferment • Landscape fee in-lieu reduction • Expedited plan review

Tools and Incentives - Financial • Land write down on city owned land • Housing TIF • Project based housing vouchers • Housing Trust Fund

Implementation Strategy: Use regulatory tools before fiscal tools Market Expectation With OHO 1. REGULATORY TOOLS $300k notional loss Test value of regulatory TESTING from pure market incentives before • Lower parking req’mts • Density /FAR/Height bonuses units applying any fiscal • Reduced unit sizes incentives to balance • Alternative exterior materials Development project costs • Reduced storage req’mts project $1M notional 2. FISCAL TOOLS (if needed) profit $700k notional • Tax increment financing profit • Development fee waivers • City owned land write downs

1. Calculating Value of Incentives (using actual developer numbers) EXAMPLE PROJECT • 100 units • 9% Affordable (60% AMI) • Unit size 1,176 (2 BR) • Dev cost psf: $2.21($25.9m) SMALLER UNITS REDUCED PARKING TOTAL VALUE CREATED • 1,176 SF � 940 SF / Unit • 200 stalls required Note: Not all • $52,156 per unit saved • 60 stalls waived (30%) • $2.57M VALUE OFFSET developments • 9 units • $35k / stall are the same. DEVELOPMENT COSTS • $469K OFFSET VALUE • $2.1M OFFSET VALUE Incentives applied reflect the context of 7.8% lower each project. 20% smaller 30% fewer development costs affordable units parking stalls under the OHO

2. Compare Cost of 9% to Value of Incentives Regulatory Cost of affordable units Regulatory tool value with no regulatory relief incentive offset $260k per unit Smaller unit size + +$260k parking reduction = Cost for 9% affordable $2.6M offset to the 9% Value to project units = $2,340,000 requirement million Note: Not all developments are the same. Incentives application reflect the context of each project

Anticipated Timeline 12/20/18 1/8/19 1/14/19 1/22/19 NOAH Work PC City Council HRA Group (Study Session) (Study Session) 2/14/19 1/24/19 1/28/19 1/22/19 PC PC HRC Board of Health (open public hearing ) (public hearing) 2/25/19 City Council Phase In Period Effective Date (public hearing & (6-months) (@ Sept 1, 2019) adoption)

Next Steps: What happens after the OHO adopted? Three primary steps during six month phase in period 1 2 3 Training & Education Implementation Guidelines Monitoring & Feedback • Create master table of • Refine ordinance, if needed External focus applicability and incentives • Refine & publish a project check • Conduct demonstrations of potential • Draft guidelines for financial tool to verify what (if any) software options incentives apply to a given project implementation • Set goals for the monitoring and Hold public informational sessions • Build financial modeling tool for feedback process with developers development testing • Confer with other jurisdictions to Internal focus • Draft evaluation and performance discuss their approaches and • Draft conceptual process flows metrics challenges • Test projects against ordinance tools • Create training materials, target • Implementation and ongoing (New construction and NOAH) audience and education goals refinement • Create web based communication • Create checklist for use by tool internal and external parties • Hold staff sessions around potential application challenges and responses

Next Steps: Two options for incorporating comments •Critical modifications Revise before •Straight-forward adoption modifications Revise •Items needing further after effective evaluation and testing date

Staff Recommendation Motion: In Case PL2019-2, I move to recommend approval of an Ordinance amending Chapters 2, 9, and 14 of the City Code to encourage creation of opportunity housing units and preservation of existing affordable housing buildings, attached to this report, for City Council consideration.

QUESTIONS ?

Designated Transit Areas

Incentives for Affordable Housing - Summary