HomeMy WebLinkAbout5.1 Housing Prgm& Inclusionry Zn Ord
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CITY CLERK
File # DODD-DO
AGENDA STATEMENT
CITY COUNCIUPLANNING COMMISSION
SPECIAL MEETING DATE: MARCH 19,1996
SUBJECT:
City of Dublin Housing Program & Inclusionary Zoning Ordinance
Report Prepared by: Tasha Huston, Associate Planner ;jtJI-
EXHffiITSATTACHED:
/ Exhibit 1.
" Exhibit 2
Outline of proposed Inclusionary Zoning Ordinance
Summary of methods to maintain affordability of
Inclusionary units
Samples of programs offering alternatives to on-site
construction of Inclusionary units
Summary of model program offering incentives to
developers for constructing Inclusionary units
Exhibit 3.
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/ Exhibit 4.
RECOMMENDATION:
Review issues and information requested at previous study session;
Direct staff to prepare an Inclusionary Zoning Ordinance as
recommended in outline attached as Exhibit 1.
FINANCIAL STATEMENT:
The City Council has authorized obtaining consulting services to assist
staff in evaluating housing programs and in preparing specific
recommendations on the Inclusionary Zoning Ordinance. To date, the
costs associated with consultant services are over $9300. A portion of
these costs will be recovered when future development projects occur
in the Eastern Dublin Specific Plan area.
DESCRIPTION:
At the February 6, 1996 study session on affordable housing, the City Council and Planning Commission
provided staff with direction on several major issues related to the Inclusionary Zoning Ordinance. The
Commission and Council also instructed staff to research model programs for maintaining affordability of
the inclusionary units, consider alternatives to on-site construction of inclusionary units, and offer incentive
programs for constructing inclusionary units. Information on these topics are contained in Exhibits 2-4.
The objective of this Study Session is to give staff final direction on significant elements of a new
Inclusionary Zoning Ordinance, so that staff may prepare a draft Ordinance for public review and hearings.
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COPIES TO:
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ITEM NO.
Planning Director
Senior Planner
Project Planner
Project File
Planning Secret:aty
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PREVIOUS DIRECTION -
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The City's General Plan directs that the Jnclusionary Zoning Ordinance would require developers to
provide a minimum percentage of affordable housing units as part of all new residential developments
of 20 or more units. At the February 6, 1996 study session, the consensus was to uphold this minimum
project size standard. The Council and Commission also indicated that affordable housing should be
provided in the City of Dublin, through the Inclusionary Zoning Ordinance, with the following
parameters:
1. For projects subject to the Inclusionary Ordinance, 5% of the units in the project must be
affordable, with a prorata distribution of these units in the following income categories:
2% of the units targeted toward very low income households,
2% of the units targeted toward low income households,
1 % of the units targeted toward moderate income households.
2. The affordable housing requirements would apply to both rented and owned units
3. The City would use the Department of Housing and Urban Development data on an annual basis for
the purpose of determining affordability.
4. An in-lieu fee would be an option to building the housing. An in-lieu fee of75 cents per square foot
for multi-family and $1.00 per square foot for single family would be charged on all housing that is
being built. There would be no cap on the fee, and the fee adjustment would be based on the annual
CPI or some equivalent.
5. Resale restrictions may be required on the inclusionary units in order to maintain long-term
affordability.
6. Developers could meet their affordable housing obligations off-site.
7. Credit may be allowed for providing more than the required number of affordable housing units.
8. Incentives may be offered to encourage affordable housing (such as modifications to site design
standards).
MODEL PROGRAMS
At the previous study session, the Council and Commission requested additional information on the
following three issues: 1. Maintaining the affordability ofInclusionary units; 2. Offering alternatives to
on-site construction of Inclusionary units; and 3. Offering incentives to developers for constructing
Inclusionary units. These issues are discussed below.
MaintainiD!l the afTordabilitv oflnclusionary units
Once the City has established the period which it will require units to remain affordable, there are various
methods available for ensuring that the units remain affordable. (The City's Density Bonus Ordinance
defines the life of an affordable unit as 30 years). The major objectives for ensuring ongoing affordability are
to maintain the "credit" for meeting the City's affordable housing goals, and to avoid a loss of afford ability
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or subsidy after the initial sale due to "speculation".
Ordinances are listed below:
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The methods most often encountered in Inclusionary
a. Resale Restrictions (Require unit to be passed on to eligible buyer, and/or at maximum price)
b. Recapture Mechanisms (Second Mortgages, Shared Equity programs)
c. Right of First Refusal (City may purchase unit)
Summaries of the objectives, advantages, and disadvantages of each of these methods are contained in
Exhibit 2.
Offerine alternatives to on-site construction of Inclusionary units
The Council and Commission has indicated a desire to offer alternatives to developers to meet the
Inclusionary requirements other than constructing the Inclusionary units on the project site. One example of
an alternative approach would be to allow developers to provide the required Inclusionary units off-site.
Another alternative would be allowing developers to pay a fee to the City in-lieu of constructing the
Inclusionary units. There may be a desire to allow additional alternatives to developers who wish to utilize
creative approaches in providing affordable units. The approaches most commonly used by other agencies
include:
a. Payment of fee in-lieu of constructing units
b. Off-site construction of units
c. Land dedication
d. Credit for providing more than the required number of affordable units
e. Flexible language to allow other creative solutions
A description of each of these methods is attached as Exhibit 3.
Incentives for constructine Inclusionary units
The Council and Commission has indicated they would consider offering incentives to developers in order to
encourage them to construct the Inclusionary units. Incentives are usually offered in order to encourage that
the units be constructed within the project, rather than collecting a fee in lieu of construction. There are also
incentives for producing more than the required percentage of affordable units. Some cities use the
incentives in order to encourage a developer to provide units at a lower income level than normally required.
Some examples of incentives used by other agencies include modifications to typical design standards,
priority processing, and density bonuses. In cases where a city wishes to provide financial assistance to a
developer in order to encourage the development of affordable units, fee waivers or subsidies may be
granted using City general funds or housing funds. Granting financial assistance should only occur in cases
where the City determines it is appropriate considering the benefits of the affordable housing produced.
A sample incentive program description is attached as Exhibit 4.
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ADDITIONAL ISSUES
Once the City has enacted an Inclusionary Zoning Ordinance, the issue of implementation and
administration of the program will need to be considered. For example, assuming the City generates
funds through developer contributions of fees in lieu of constructing the units, consideration will need
to be given to the best use of those funds.
Preliminary calculations show that if the in-lieu fees are charged at $1.00 per square foot for detached
units and $0.75 for multi-family units, approximately $17 million will be generated for the affordable
housing fund. This assumes that all developers choose to pay the fee and not build the inclusionary
units; that 12,356 housing units are built in Eastern Dublin; and that the following unit sizes are built in
the various Eastern Dublin land use categories:
single-family: 2400 square feet
medium density: 1600 square feet
medium-high density: 1360 square feet
high density: 850 square feet
Based upon calculations by the City's housing consultants, a rental project serving very~low income
households would require roughly $45,000 per unit in subsidies (such as local government funds,
CDBG or HOME funds, or non-profit contributions). The $17 million generated through in-lieu fees
could thus result in the construction of approximately 380 units for very-low income households,
meeting 56% of the Very Low Income housing need identified by ABAG for the 1988-1995 period
(678 units).
Alternatively, the City could use the monies generated through in-lieu fees to subsidize ownership units
through silent second mortgage loans to low and moderate income buyers. If second mortgage loans
were offered at $20,000 each, the City could provide 850 loans to low and moderate income buyers,
assuming $17 million was generated for the in~lieu fee fund.
While the City may not wish to budget its entire inclusionary fee income toward only one housing
product, these examples illustrate some of the options available and results which could be expected
based upon the in~lieu funds estimated. However, the costs of producing housing in this analysis does
not include the costs for the City's implementation of the Ordinance, or administration of the program.
The City will need to consider whether to contract with the Dublin Housing Authority to administer the
Ordinance regulations, and to what degree of monitoring will City staff participate. While it is not
necessary to answer all of the administrative questions at this point, it is important for the City to
understand the implications of the Ordinance in terms of administration and monitoring.
Further discussion of common housing programs and projects and the results they achieve is planned
for the Study Session.
RECOMMENDATION
Staff recommends that the Planning Commission and City Council consider the information presented,
and direct staff to prepare a draft Ordinance which contains the following:
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5% inclusionary requirement on all projects of 20 units or more
Restrictions on the rents and initial sales prices, with resale restrictions or recapture
mechanisms on the inclusionary ownership units
Alternatives to constructing inclusionary units on-site, when it is not feasible, including:
contributing fee in-lieu of constructing units
constructing units off-site
transferring credits from another project with excess affordable units
dedication of land
other options if approved by the City
Specific incentives to encourage the affordable units to be built on site, and additional
incentives to encourage more than the required number of affordable units
Administrative details to include the implementation of the ordinance, the means of using in-
lieu fees, and the role of the Dublin Housing Authority in administration of the program
Details of the above components are found in the draft ordinance outline, attached as Exhibit 1.
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RECOMMENDED INCLUSIONARY ZONING ORDINANCE
OUTLINE
I. OBJECTIVE
The purpose of this Ordinance is to enhance the public welfare and assure that further housing
development contributes to the attainment of the above-described housing goals by increasing the
production of residential units affordable by households of very low, low, and moderate income, and by
providing funds for the development of very low, low, and moderate income ownership and rental housing.
A limited and finite amount of land remains for development of housing in the City and extended planning
area. In order to assure that the remaining developable land is utilized in a manner consistent with the
City's housing policies and needs, the City declares that FIVE (5) percent of the total number of units of all
new residential developments constructed within the City as it now exists and as may be altered by
annexation, containing twenty (20) or more units, shall be affordable by households of very low, low, and
moderate income. The inclusionary units shall be targeted to income groups so that 2% of the project units
are affordable to very-low income households, 2% of the project units are affordable to low income
households, and the balance of the inclusionary units (1 %) must be affordable to moderate income
households. The regulations in this Chapter shall apply Citywide, including the extended planning area.
II. FINDINGS
The City of Dublin finds that the citizens of the City are experiencing a housing shortage for lower and
moderate income households. A goal of the City's adopted Housing Element is to achieve a balanced
community with housing available for households ofa range of income levels. Increasingly, persons with
very low, low, and moderate incomes who work and/or live within the City are unable to locate housing at
prices they can afford, and are increasingly excluded from living in the City. Federal and State housing
subsidy programs are not sufficient by themselves to satisfy the housing needs of very low, low, and
moderate income households. The City finds that the high cost of newly constructed housing does not, to
any appreciable extent, provide housing affordable by very low, low, and moderate income households, and
that continued new development which does not include very low, low, or moderate cost housing will
serve to further aggravate the current housing shortage by reducing the supply of developable land. The
City further finds that it is a public purpose of the City, and a public policy of the State of California as
mandated by the requirements for a housing element of the City's General Plan, to make available an
adequate supply of housing for persons of all economic segments of the community.
III. GENERAL PROVISIONS
1. For all new residential development projects in the City which are 20 units or more, at least 5%
of the units shall be affordable to very low, low, and moderate income households. The
affordable units shall be targeted toward these income groups by the following ratios:
2% of the project units must be affordable to very low income families
2% of the project units must be affordable to low income families
1 % of the project units must be affordable to moderate income families
EXHIBIT 1
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2. The units designated as affordable or inclusionary units shall be subject to resale restrictions
and/or recapture mechanisms recorded by deed, for a period of 30 years, in order to maintain
the affordability of the units. The terms of the resale restrictions and/or recapture mechanisms
shall be determined in the Affordable Housing Agreement established for each project.
3. In cases where it is infeasible to construct the affordable units in the ratios required above,
developers will be allowed the following alternatives to constructing inclusionary units on-site:
a. Payment of a fee in-lieu of constructing the units. The amount of the fee to be paid
shall be established by City Council resolution.
b. Constructing units off-site, at a location within the City of Dublin.
c. Exchanging or purchasing "credits" which result in the production of Inclusionary
units at another location within the City
d. Land dedication of a residential site suitable for development of affordable units.
e. Other program, as approved by the City Council, which results in the production of
affordable housing units and furthers the intent of the Inclusionary Zoning
Ordinance.
The terms of any such program utilized shall be determined in the Affordable Housing
Agreement established for each project.
4. Incentives available to developers to encourage construction of the affordable units include the
following options:
- Priority processing
- Deferred payment of impact fees (30% up front; 70% prior to unit sale or occupancy)
- Design Incentives:
- Reduced setbacks
- Reduction in infrastructure requirements, i. e.: narrower streets
- Reduced open space requirements
- Reduced landscaping requirements
- Reduced interior or exterior amenities, i.e.:, asphalt shingles vs. concrete roof tiles
- Reduction in parking requirements
- Height restriction waivers
- Other incentives mutually agreed upon by the developer and the City
5. Incentives available to developers to encourage construction of a greater number or percentage
of affordable units, beyond that required by the Ordinance, include the following options:
- Density Bonus
- Pee waiver, i.e.: 75% of City facility fees waived
- City Subsidies, i.e.: Second Mortgage loan, home buyer downpayment assistance
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6. Any in-lieu fees collected will be placed into an affordable housing fund to be administered by
the Dublin Housing Authority. The fees shall be used for the purpose of providing very low, low
and moderate income ownership or rental housing in the City of Dublin, through land acquisition,
land writedowns, construction, direct loans to non-profit associations or corporations for
construction of very low, low, and moderate income housing, landbanking (including property
exchanges) and any other mechanism available to the City to provide very low, low, and moderate
income housing.
An annual report shall be prepared for the Dublin Housing Authority and the Dublin City Council
identifYing the balance of monies in the Fund and the affordable housing provided or committed
through monies in the Fund, and a review of administrative charges.
IV. DEFINITIONS (to be completed)
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METHODS FOR MAINTAINING AFFORDABLE HOUSING UNITS
Within Inclusionary Zoning Program
RESALE RESTRICTIONS
A. DefinitionlMethod
- Units are initially sold at prices affordable to target income groups, by developer pricing or City contribution or subsidy
- Deed is restricted so that upon resale, unit must again be sold to "eligible" buyer, and/or at "affordable" price
I. "Eligible" buyer would be buyer who is in same income categorv for which the unit was originally targeted, for
example, very low, low, or moderate.
2. "Affordable" purchase price would be that price which is affordable to households in the same income category for
which the unit was originally targeted. (i.e.: monthly payment which requires no more than 30% of income)
- Maximum affordable resale price determined by various methods, such as:
I. Calculating amount of original sales price plus a certain allowable appreciation (Le.: Based upon increase in the area
CPI, or in the median income)
2. Price which could be paid assuming the household pays 30% of income on housing payment
- If City goal is to maintain affordability for 30 years, deed restrictions on resale price could be lifted after that time
B. Obiective! Advantages
1. Affordability stays with the unit
2. Preserves initial "subsidy", whether City contribution or Developer provided
3. City receives "credit" of providing unit under ABAG fair-share target
4. Buyer qualifies for homeownership when normally it would not be possible
C. Disadyantages
I. High administrative involvement; may be difficult to find eligible buyer who qualifies for ownership
2. Buyer does not achieve equity for homeownership (unless City forgives restrictions after 30 years)
3. May have buyer and bank reluctance to accept resale controls - Gap in market price versus affordable price must be
large enough to make it worth a buyer agreeing to restrictions
4. May be infeasible for developer to provide entire "subsidy" or gift, to fill gap between market price and price affordable
to very low and low income groups, unless units are smaller
RECAPTURE MECHANISMS
Second Mortgages
A. DefinitionlMethod
- Units are initially sold at prices affordable to target income groups, through developer contribution or City subsidy to fill the
m between what the household can afford to pav and the market price
- This subsidy is recorded in the deed as a Silent Second Mortgage payable to the City
- The monthly payments of principal and interest for this loan are waived by the City as long as the original eligible buyer
continues to own and reside in the property as his or her primary residence
- Upon resale or transfer, owner must either:
a. Sell unit at market rate and pay off the Second Mortgage to the City
b. Sell unit to "eligible" buyer, and/or at "affordable" price (see above criteria for resale restrictions), so that Second
Mortgage is assumed by new owner
- City may determine goal of maintaining unit affordability for certain number of years, and if owner remains a resident in
home for, say, 30 years, the second mortgage loan is forgiven.
EXHIBIT 2
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B. Obiective/Advantages
1. If owner stays in unit or sells to eligible buyer, affordability stays with the unit
2. If owner sells unit at market rate, and pays off 2nd mortgage, subsidy is returned to City for reuse in housing program
3. Preserves initial "subsidy", whether City contribution or Developer provided
4. City receives "credit" of providing unit under ABAG fair-share target
5. Buyer qualifies for homeownership when normally it would not be possible
C. Disadvantages
I. Possibly high administrative involvement; less involvement if 2nd mortgage is paid off and unit sold at market rate
2. Buyer may not achieve equity for homeownership, unless unit is sold at market rate and 2nd is paid off
3. Upon foreclosure, if market falls and 2nd mortgage cannot be paid off, City may not receive full 2nd mortgage amount
4. Less buyer and bank reluctance due to more flexibility in resale controls
5. May be infeasible for developer to provide entire "subsidy" or gift, to fill gap between market price and price affordable
to very low and low income groups, unless units are smaller
Shared Equity
A. DefinitionlMethod
- The program is a variation of the Second Mortgage program defined above
- Units are initially sold at market prices; the units are affordable to target income groups because a subsidy is contributed by
the City and/or developer to fill the..&m between what the household can afford to pay and the market price
- The subsidy is recorded as a Silent Second Mortgage, which is deferred until sale of the unit
- Upon resale, owner must repay the jurisdiction the amount of the second plus a share in the appreciation (or
depreciation) of the unit.
- The City's share of appreciation could be one of the following:
I. A predetermined percentage (i.e.: 50% of equity to city, 50% to homeowner)
2. Based upon the proportion of the initial second mortgage to the unit's total sales price (i.e. $20,000 subsidy
toward $200,000 home = 10% share of equity to City)
- City may determine goal of maintaining unit affordability for certain number of years, and if owner remains a resident in
home for, say, 30 years, the second mortgage may be forgiven.
B. Obiective! Advantages
I. If owner stays in unit or sells to eligible buyer, affordability stays with the unit
2. If owner sells unit at market rate, and pays off 2nd mortgage, subsidy is returned to City for reuse in housing program
3. Preserves initial "subsidy", whether City contribution or Developer provided
4. City receives "credit" of providing unit under ABAG fair-share target
5. Buyer qualifies for homeownership when normally it would not be possible
6. Buyer retains some equity or appreciation if market value of home rises
C. Disadvantages
1. Possibly high administrative involvement
2. Buyer would not achieve as much equity of appreciation as would be gained by entering market alone
3. Less buyer and bank reluctance due to more flexibility in resale controls
4. May be infeasible for developer to provide entire "subsidy" or gift, to fill gap between market price and price affordable
to very low and low income groups, unless units are smaller
5. If market falls, buyer and City may lose equity
6. If market falls and 2nd mortgage cannot be paid off, City may not receive full 2nd loan amount
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RIGHT OF FIRST REFUSAL OR DESIGNATION OF ELIGIBLE BUYER
A. Definition/Method
- Units are initially sold at prices affordable to target income groups, by developer pricing or City contribution or subsidy
- Deed is restricted so that upon resale, unit must be offered to the City for purchase.
- The City may have a particular program or "eligible" buyer in mind to purchase
I. Eligible buyer would be buyer who is in same income categorv for which the unit was originally targeted, for
example, very low, low, or moderate.
- The City may wish to keep the unit and rent it at an affordable rent in order to maintain the unit's affordability
- If City goal is to maintain affordability for 30 years, resale restrictions could be lifted after that time
B. Obiective/Advantae:es
I. Affordability stays with the unit
2. Preserves initial "subsidy", whether City contribution or Developer provided
3. City receives "credit" of providing unit under ABAG fair-share target
4. City controls who purchases/occupies unit
C. Disadvantae:es
1. High aqministrative involvement; may be difficult to find eligible buyer who qualifies for ownership
2. May have buyer and bank reluctance to accept resale controls
NO RESALE RESTRICTIONS
A. Definition/Method
- Units are initially sold at prices affordable to target income groups, due to design of product or special developer pricing
- Unit may be resold at any time, at market price
B. Objective/Advantages
I. Little or no administrative involvement; market determines resale price
2. Buyer achieves full amount of equity and appreciation/depreciation
3. No buyer/bank reluctance to accept resale controls
4. Buyer qualifies for homeownership without subsidies
C. Disadvantal!es
I. No assurance that unit affordability would be retained over time
2. Any initial "subsidy", whether City contribution or special developer pricing, would not be preserved
3. City may not receive "credit" of providing unit under ABAG fair-share target if market value of units rises
4. Seller may receive windfall
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ALTERNATIVES TO ON-SITE CONSTRUCTION
OF INCLUSIONARY UNITS
Listed below are examples of programs used to provide options other than requiring that all lnclusionary
units be built on-site by the developer. One of the issues facing the City when considering these
alternatives is whether the use of these programs should be at the discretion of the developer, or whether
the City must decide where and when it is appropriate to allow these alternatives.
1. Off-site construction of units
Construction of units off of the project site, but within the jurisdiction, is allowed in a majority of Inclusionary
programs. Some Cities allow developer's discretion in determining whether construction off-site is appropriate, but most
require certain circumstances before allowing off-site construction, such as:
- When construction of affordable units on-site is financially infeasible
- When the Planning Commission or City Council approves of the off.site project
- When the provision of affordable units involves rehabilitation, conversion, or preservation of units (i.e.: placing
restrictions on existing units to ensure long-term affordability).
Usually an agreement is established between the City and developer stipulating the terms of the off-site production of
affordable units. If the construction does not take place at the same time as project development, the agreement requires the
units to be produced within a certain time frame, such as 5 to 10 years. A cash deposit or bond may be required by the City,
refundable upon construction, as assurance that the units will be built.
Examples of Cities in which affordable units have been constructed off-site include Pleasanton, Palo Alto, Irvine, and
Carlsbad.
2. Credit Transfers
The option of transferring credits to meet the Inclusionary unit requirements is offered in at least six jurisdictions.
Under this program, a developer may receive credits or "certificates" for providing more than the required number of
affordable units. These credits may be transferred to meet the requirements of another project in the City, either by the same
developer using the certificates for another project, or selling certificates to another developer. Most likely, the excess units
for which credits are granted are intended to remain affordable for the period of time desired by the City (i.e.: 30 years) and
may have resale controls applied to ensure their ongoing affordability.
One example of a credit transfer would be developers contributing toward a tax credit project which is affordable to very
low or low-income households. The developers would receive credit for the amount of their contribution. The City would
need to determine the value of the credits and whether the contribution meets the inclusionary requirements for the particular
developer project.
The City ofWatsonville uses a simple and flexible approach for credit transfers. The City's policy allows a credit
transfer for any project in the City if the unit transfer is equitable.
The main benefit of allowing credit transfers is that it may enable affordable units to be constructed, rather than
collecting a fee in-lieu of construction
EXHIBIT 3
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3. Land Dedication
Several jurisdictions provide a land dedication option as a mechanism to fulfill inclusionary requirements. Usually this
program involves deeding land to the local government or another entity in place of actual construction of affordable units,
The dedicated land must be appropriately zoned, buildable, and large enough to accommodate the number of affordable units
required.
This option can give the City or a local non.profit housing developer the free land needed to lower the cost of an
affordable housing project and make it feasible for development. The City's acceptance of land dedication may require that
the lots be fully improved, with infrastructure, adjacent utilities, grading, and possibly fees paid.
The location and disclosure of the designated site may need to be addressed in the land dedication agreement. The City
may wish to determine which lots are designated for future affordable housing at an early stage, and require notification to
surrounding buyers, to avoid opposition to affordable housing by neighbors.
4. Pavment of fee in-lieu of constructing units
This option is common in Indusionary programs. Some jurisdictions freely allow a developer to pay fees rather than
build the Inclusionary units, while others require a determination of financial infeasibility to build uruts on.site before in-lieu
fees are allowed. Some Cities, such as Monterey, discourage the use of in-lieu fees, preferring to have units constructed with
and interspersed throughout the project. Other Cities, such as Petaluma, prefer the flexibility of a cash fund to provide the
affordable housing product desired by the City.
Methods of calculating the fees vary. The City Council and Planning Commission have indicated a preference to base
the fees on the square footage of units being built in the residential development.
The policy option of a fee in-lieu of unit construction should address whether a developer would need to pay the entire
fee if a portion of the indusionary requirement was met (Le.: the moderate income units are provided, but the low and very
low are not). At the previous Study Session, there was a discussion about requiring a developer to either provide units in all
three of the target income categories, or pay the in-lieu fee. Another option would be to calculate the entire fee which would
be charged, and then deduct a percentage which is equal to the portion of the Inclusionary requirement met by the developer.
5. Flexible language to allow other creative solutions
One of the most important features evident in Inclusionary programs which are considered successful is the flexibility of
their programs. The option to modify design from the standard market rate units in order to bring down the cost of providing
affordable units can ease the ability to provide units, whether on or off site. Flexibility also encourages compliance with the
program objectives, with less resistance from developers.
Examples of flexibility may be encouraging developers to pool resources to provide indusionary units through joint
projects, or allowing use of a combination of methods and/or funding available to fulfill the requirements.
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INCENTIVES FOR CONSTRUCTING INCLUSIONARY UNITS ON-SITE
Sample Program
The objective of the City's Inclusionary Zoning Ordinance is to result in the construction of affordable
housing units developed within new residential projects. In some cases, it is not feasible for a developer
to construct units which are affordable to all levels of household income. However, the following
incentives are available to encourage the construction of affordable units within the project.
LIST #1
The following incentives are available for applicants who wish to fulfill their inclusionary requirements by
constructing affordable units on-site (rather than off-site, or through contribution ofIn-lieu fee):
- Priority processing
- Deferred payment of impact fees (30% up front; 70% prior to occupancy)
- Design Incentives:
- Reduced setbacks
- Reduction in infrastructure requirements, Le.: narrower streets
- Reduced open space requirements
- Reduced landscaping requirements
- Reduced interior or exterior amenities, Le.:, asphalt shingles vs. concrete roof tiles
- Reduction in parking requirements
- Height restriction waivers
- Other incentives mutually agreed upon by the applicant and the decision makers
LIST #2
Additional incentives are available for developers who wish to provide affordable housing above and
beyond the minimum requirements. Examples would be situations where more than 5% of the units are
affodable, or where a greater number of units are provided at very low or low income levels than would
typically be required. These additional incentives include:
- Density Bonus
- Fee waiver
- City Subsidies, Le.: Second Mortgage loan, downpayment assistance for homebuyers
EXHIBIT 4
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