RECORD OF PROCEEDING OF CITY COUNCIL
CITY OF BELLINGHAM, WASHINGTON
Tuesday, November 23, 2010, 09:00 AM
Book: 64, Page: 1
Called To Order The meeting was called to order by Planning and Community Development Committee Chair Terry Bornemann
Michael Lilliquist, Council Member, Sixth Ward
AB 18686 COUNCIL WORK SESSION TO DISCUSS DRAFT ORDINANCE REGARDING INCLUSIVE AFFORDABLE HOUSING
Staff presented 9 questions posed at the October 11, 2010 Council meeting, for Council discussion and consideration.
QUESTION 1. Should the ordinance exempt urban villages?
STAFF: Staff has recommended that urban villages be exempt from the provisions of this ordinance as an incentive to develop these infill areas. The draft ordinance inclusionary requirement is only triggered on a rezone where residential density is increased or annexation, so existing urban village plans are not impacted by the ordinance.
COUNCIL DISCUSSION: Existing UV’s may have too much base density for incentives to work. Existing UV’s have bonus density options, not mandates. New urban villages may not end up with affordable housing. Council committee wanted to look at the results of the economic analysis before answering this question. There was not a clear consensus on staff recommendation to exclude new urban villages.
QUESTION 2. Should additional economic analysis be undertaken?
STAFF: The work completed to this point does not include any analysis as to whether the incentive package (rezone, annexation, density bonuses, regulatory modification) fully offsets the cost of including the affordable units. The study would also look at the implications of requiring affordability in perpetuity. A study could be done using Block Grant and unspent professional services funds.
COUNCIL DISCUSSION: Council committee wanted to do this analysis.
QUESTION 3. Should the ordinance be allowed on a voluntary basis in other areas?
STAFF: Staff drafted a provision in Section .020 C that allows this ordinance as an option in other single and residential multi zoned areas. The flexibility and incentives that are offered in the ordinance might attract other interest in providing affordable housing. Some infill toolkit forms could be available to developers that are not currently allowed, including in single family zones. Neighborhoods would have to be notified of a proposal in the subdivision process.
COUNCIL DISCUSSION: Council committee agreed, but also wanted to make sure that the incentive would only be available for 10 plus unit projects.
QUESTION 4. Should the ordinance provide an incentive for lower income housing?
STAFF: Staff has recommended that an incentive be provided for affordable housing that targets lower income brackets. There is a demand for these housing units, and long-term costs are higher due to reduced revenues. The cost to the initial development is lower because of greater density bonuses, which might provide the incentive for choosing a lower income bracket.
COUNCIL DISCUSSION: Council committee agreed with staff recommendations in draft ordinance. Economic analysis could lead to some changes to formulas.
QUESTION 5. What is the appropriate length of affordability?
STAFF: City Council guidelines directed that the length of affordability be in perpetuity. State law (RCW 36.70A.540(2)(e)) sets the standard at fifty (50) years at minimum. The draft ordinance does have provisions to enter into an agreement for monitoring and implementing this ordinance. The city or a non-profit could administer the program.
For owner-occupied housing, monitoring and enforcement includes ensuring that the owners are occupying the home, and not renting it out at a profit. This is usually an annual process. Deed restrictions and covenants ensure that future owners will be income restricted. Someone will need to monitor those transactions and ensure that future owners are income-qualified.
For rental-occupied housing, monitoring and enforcement is an ongoing process. When tenants move out, new tenants must be certified as being income eligible. Existing tenants also need annual review of income to determine whether they still qualify for lower rents, or if the rents might be adjusted.
During review of this issue with stakeholders, concerns were raised whether banks would finance a project with an ongoing obligation to manage, as well as the costs for the ongoing responsibility. Some suggested that the city take on this responsibility without cost to the development. Staff agreed to bring back additional research on this question including results of the economic analysis to another session of Council.
COUNCIL DISCUSSION: Discussion on whether we could look to other jurisdictions as to how this could work. Also, if we can do it 50 years, why not more? Administration of a program could be done by an outside agency. Concern was expressed on whether 50 years could reduce incentive for upkeep, or result in ill-gotten gains. One option would be perpetuity for ownership and 50 years for rentals. Council committee did not reach final direction on this issue, but wanted to see the results of the economic analysis.
QUESTION 6. Should rental housing options have different standards?
STAFF: As discussed above, rental housing has a significant on-going administration issue. Enforcement and management of income levels of tenants would be a responsibility in perpetuity (or, alternatively, for fifty years under state statute). Some other areas such as Seattle do have for-profits do that management but there are more and larger management firms available in that part of the state. Should an alternative provision be developed that would require any rental units to be transferred to the ownership of a qualified non-profit housing provider?
COUNCIL DISCUSSION: Council committee felt that it would be reasonable to have rental projects transferred to ownership or management of a qualified non-profit housing provider. This would take some amendment to the draft ordinance.
QUESTION 7. Are the incentives proposed consistent with Council intent?
STAFF: Staff has recommended density bonuses and flexible regulatory options to offset the costs for providing the affordable housing. Are these incentives appropriate? Additional information on this will result from the economic analysis.
COUNCIL DISCUSSION: Council committee agreed to use the ordinance draft as a baseline for the economic analysis, but reserved the option of making adjustments. Some concerns were expressed that incentives may be enough for ownership housing but not rental housing. Upzones may provide enough incentives in some cases. Alternatives discussed included doing appraisals on a project-by-project basis to determine value gained and affordable housing that would be required.
Council requested information from staff on whether annexations usually result in the case of an upzone. Staff replied that limitations on number of lots available without urban services when land is in the County does lead to a substantial upzoning with annexation.
QUESTION 8. How should land dedication at time of land division be addressed?
STAFF: Issues arise when land is dedicated in lieu of providing affordable housing and vesting to the existing regulations at the time of dedication. If not associated with a recent subdivision, the parcel may be subject to any new and more stringent regulations that may cause the parcel to be unbuildable. Also, state law vests certain newly created subdivisions for 7 years, after which the land is subject to any new and more stringent regulations. Again, if the land dedication is within the plat, but not developed within the vested period of the plat, the same issue arises should any new and more stringent regulation be adopted that cause the parcel to be unbuildable. Design and construction standards in the ordinance help require equivalency for in-lieu options, and staff will look at the ordinance to make sure language reflects this for land dedication.
COUNCIL DISCUSSION: Council committee wanted to make sure that the ordinance section on land dedication was strong enough in the “equal or better than” section, especially the guarantee that the units would actually be built, and that units will be built in or near other units.
QUESTION 9. Relating to issues 3 and 7 above, should the Infill Toolkit (BMC 20.28 Infill Housing) be allowed in single family zoned areas when affordable housing is provided consistent with this draft ordinance?
STAFF. The Infill Toolkit, adopted in 2009, currently is not permitted in single family zoned areas. A benefit of the Infill Toolkit is that it allows for more flexible and efficient use of land, which is highly desirable for purposes of providing affordable housing. The ordinance has been written to allow the Infill Toolkit housing in single family zoned areas both when affordable housing is required, and when it is provided on a voluntary basis. Any allowance of Infill Toolkit as proposed would require corresponding changes to BMC 20.28 Infill Housing Chapter. A public benefit of the Infill Toolkit, if adopted as proposed, is that it has strong design standards which do not otherwise exist under single family zoning. And the flexibility allowed by the Infill Toolkit provides an incentive to developers to provide affordable housing on a voluntary basis.
COUNCIL DISCUSSION: Council committee agreed that the infill toolkit should be allowed with projects involving 10 or more units.
Additional Issues and Questions from Council:
NOTE: Council committee wanted to see the results of the economic analysis, and any staff recommendations for adjustments based on that analysis, before moving forward.
There being no further business, the meeting adjourned at 10:35 AM.
Terry Bornemann, Chair, Planning and Community Development Committee
ATTEST: Mark Gardner, Council Policy Analyst
Terry Bornemann, Council Member, Fifth Ward
Jack Weiss, Council Member, First Ward
Seth Fleetwood, Council Member, At Large
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