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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 07/05/2022 - SECOND READING OF ORDINANCE NO. 077, 2022, AMENDIN Agenda Item 7 Item # 7 Page 1 AGENDA ITEM SUMMARY July 5, 2022 City Council STAFF Sue Beck-Ferkiss, Social Policy and Housing Programs Manager Ingrid Decker, Legal SUBJECT Second Reading of Ordinance No. 077, 2022, Amending Article VIII of Chapter 7.5 of the Code of the City of Fort Collins to Create an Administrative Process for Awarding Fee Credits for Certain Affordable Housing Units to be Constructed in the City. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on June 22, 2022, simplifies the way affordable housing fee credits are provided to developers of qualifying new affordable homes. Through iterative process improvements, flat amounts for fee credits have been established and codified for new construction and adaptive reuse creating affordable homes targeting households making no more than 30% area median income (AMI) - the lowest wage-earners in the City. This Code change would allow staff to administratively award fee credits up to the amount of funds that are available and t hat have been appropriated for such purpose. Any requests for more than available funds will still be subject to Council discretion and appropriation. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, June 21, 2022 (w/o attachments) (PDF) 2. Ordinance No. 077, 2022 (PDF) AGENDA ITEM SUMMARY June 21, 2022 City Council STAFF Sue Beck-Ferkiss, Social Policy and Housing Programs Manager Ingrid Decker, Legal SUBJECT First Reading of Ordinance No. 077, 2022, Amending Article VIII of Chapter 7.5 of the Code of the City of Fort Collins to Create an Administrative Process for Awarding Fee Credits for Certain Affordable Housing Units to be Constructed in the City. EXECUTIVE SUMMARY The purpose of this item is to simplify the way affordable housing fee credits are provided to developers of qualifying new affordable homes. Through iterative process improvements, flat amounts for fee credits have been established and codified for new construction and adaptive reuse creating affordable homes targeting households making no more than 30% area median income (AMI) - the lowest wage-earners in the City. This Code change would allow staff to administratively award fee credits up to the amount of funds that are available and that have been appropriated for such purpose. Any requests for more than available funds will still be subject to Council discretion and appropriation. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION Fee Credit and Fee Waiver History The City has historically provided fee relief to affordable housing projects. The form of this relief has evolved over time. Fee credits replaced the City’s prior fee waiver program in 2020 and are currently the City’s only mechanism to specifically incentivize units serving households that earn 30% or less of AMI. Most mechanisms to incentivize affordable housing are available for units that serve up to 80% of AMI. Affordable units for households at or below 30% AMI are the hardest to develop. Rents need to be affordable to these extremely low-income households and cannot support the cost of development without substantial subsidy. For instance, a household of two cannot make over $25,800 annually to qualify. The table attached illustrates the 2022 AMI thresholds for the Fort Collins - Loveland MSA. (Attachment 1) Fee waivers were previously calculated based on the sum of eligible fees, prorated by the percent of the development’s total units which are restricted to serve ≤30% AMI. Fees historically considered eligible for waiver include: •Development Review Fees •Building Permit Fee •Capital Expansion Fees (including those for Fire, Police, Streets, and Parks) Other fees collected by the City that were not considered eligible for waivers include fees which are collected on behalf of other agencies (such as Larimer County or Poudre School District) and fees for utilities. ATTACHMENT 1 COPY Agenda Item 12 Item # 12 Page 2 In 2020, Council changed this subsidy from a waiver to a credit and fixed the amounts of subsidy to $14,000 per unit for newly constructed units and $5,500 per unit for adaptive reuse units where the project gets the benefit of prior fees paid on the property. While this greatly simplified the administrative process in determining exact amounts of subsidy, these requests are still subject to Council discretion based upon a finding that the units qualify and that granting the request will not jeopardize the financial interests of the City. Once granted by Council, the credits may be used by the developers for any fees owed the City for that project. This process allows all City fees to be paid and removes the need to reimburse certain departments which was part of the administrative burden of the former fee waiver process. 2022 Appropriation: A specific appropriation of $350,000 for Affordable Housing Fee Credits was approved in the 2022 budget. This amount would cover fee credits for at least 25 homes. That satisfies the requirement that granting requests up to this level will not jeopardize the financial interests of the City. But under current City Code, Council would still need to make a finding that the units do qualify for fee credits. This final step in the process improvement for fee credits is to clarify in the Code that an administrative process can be used to award affordable housing fee credits for qualifying units up to any appropriated amount for this purpose. Requests for more than the available funding would still be subject to Council approval in the Council’s discretion. This streamlined process will save developers time and be more efficient to administer by the City. It allows all City departments to be paid in full either by the developer or by the credit that has been appropriated. Council need only be involved for extraordinary requests. CITY FINANCIAL IMPACTS Funding for this program has already been appropriated in the amount of $350,000. BOARD / COMMISSION RECOMMENDATION The Affordable Housing Board recommends passage of this Ordinance to allow for an administrative process. PUBLIC OUTREACH The Affordable Housing Board May meeting was noticed and open to the public. No additional specific outreach was conducted on this change. ATTACHMENTS 1. Income Limits 2022 (PDF) 2. Affordable Housing Board Minutes (draft) (PDF) COPY -1- ORDINANCE NO. 077, 2022 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING ARTICLE VIII OF CHAPTER 7.5 THE CODE OF THE CITY OF FORT COLLINS TO CREATE AN ADMINISTRATIVE PROCESS FOR AWARDING FEE CREDITS FOR CERTAIN AFFORDABLE HOUSING UNITS TO BE CONSTRUCTED IN THE CITY WHEREAS, by adoption of Ordinance No. 065, 1999, the City Council exempted from the imposition of the City’s capital improvement expansion fees the land development projects of housing authorities formed pursuant to the provisions of Section 29-4-101, et seq., and specified various other City fees from which such projects are also to be exempted; and WHEREAS, on March 19, 2013, the City Council adopted Ordinance No. 037, 2013, which made amendments to the City Code and Land Use Code limiting the types of projects for which housing authorities could request fee waivers, and specifying that those waivers are to be granted at the discretion of City Council upon a determination that proposed waivers will not jeopardize the financial interests of the City or the timely construction of capital improvements to be funded by the fees; and WHEREAS, on November 21, 2017, the City Council adopted Ordinance No. 148, 2017, to create an incentive for all developers to provide units affordable to those making less than 30% AMI by amending the City Code and Land Use Code to allow all developers of units targeting that income bracket, not just the housing authority, to request fee waivers for the affordable portion of their projects; and WHEREAS, on November 17, 2020, the City Council adopted Ordinance No. 137, 2020, eliminating affordable housing fee waivers and instead authorizing a flat, per-unit amount per qualifying affordable unit (a “Credit”) that the City can fund and deposit in a trust account owned by the City; and WHEREAS, a developer awarded a credit can then direct that amount to be spent on fee balances owed to the City during the development of the project; and WHEREAS, the City Code as revised in 2020 still requires that the City Council approve a Credit, by ordinance, only if the City Council determines that: (1) the proposed project is intended to house homeless or disabled persons, as such terms are defined by the Department of Housing and Urban Development (HUD), or households with an annual income that does not exceed 30% of the area median income (AMI) for the applicable household size in the Fort Collins-Loveland metropolitan statistical area, as published by HUD; and (2) the proposed waiver will not jeopardize the financial interests of the City; and WHEREAS, to make the process of issuing a Credit more efficient for developers and City staff, and in the interests of continuous improvement, City staff is recommending that the City Council amend the City Code to allow staff to award credits through an administrative process, rather than requiring City Council approval by ordinance, when the City Council has already appropriated funds specifically for such Credits; and -2- WHEREAS, a developer would be still be required to request a Credit prior to the City issuing any certificates of occupancy for a project, and City staff would ensure the project meets the affordability requirements for receiving a Credit; and WHEREAS, if the City received a Credit request exceeding the amount of funds already appropriated and available to fund the request, City staff would bring the request to the City Council for consideration, findings, and any necessary appropriation, with approval in the City Council’s discretion; and WHEREAS, in the course of preparing this Ordinance, it was noted that Article VIII of Chapter 7.5 also contains a numbering error, which is corrected by the proposed amendments; and WHEREAS, at its regular meeting on May 5, 2022, the Affordable Housing Board voted to support the change to the City Code described in this Ordinance; and WHEREAS, the City Council believes it is in the best interests of the City to amend the City Code accordingly. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS AS FOLLOWS: Section 1. That the City Council hereby makes and adopts the determinations and findings outlined in the recitals set forth above. Section 2. That Section 7.5-101 of the Code of the City of Fort Collins – “Application for Credit” – is hereby renumbered as Sec. 7.5-102 and amended to read as follows: Sec. 7.5-102. - Application for credit. ... (b) If the City Council has already appropriated funds sufficient and intended for the purpose of providing fee credits for affordable housing under this Article, the City Manager or their designee may approve a credit upon determining that the affordable housing units are intended to house homeless or disabled persons, as such terms are defined by the United States Department of Housing and Urban Development, or households with an annual income that does not exceed thirty (30) percent of the area median income for the applicable household size in the Fort Collins-Loveland metropolitan statistical area, as published by the United States Department of Housing and Urban Development. The City Manager or their designee shall notify the developer in writing whether the project will receive a fee credit. (c) If the City Council has not already appropriated funds sufficient and intended for the purpose of providing fee credits under this Article, the City Council may, by ordinance, -3- appropriate additional funds as necessary and approve a credit if the City Council, in its sole discretion, determines that: (1) the affordable housing units are intended to house homeless or disabled persons, as such terms are defined by the United States Department of Housing and Urban Development, or households with an annual income that does not exceed thirty (30) percent of the area median income for the applicable household size in the Fort Collins-Loveland metropolitan statistical area, as published by the United States Department of Housing and Urban Development; and (2) the proposed credit will not jeopardize the financial interests of the City. Section 3. That Section 7.5-102 of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 7.5-103. - Amount of credit and payment process. ... (b) If the City approves a credit for a project, the City shall deposit a lump sum equal to the total amount of the credit into a trust account held by the City for the benefit of the project developer, from which the developer may direct the City to pay balances due to the City for development review fees and capital expansion fees, except as otherwise expressly prohibited or provided in this Code or other applicable law. (c) If any credit remains unused in the trust account one (1) year after the last certificate of occupancy for the project has been issued, or if construction of the project is not commenced within three (3) years of the effective date of the notice or ordinance approving the credit, then the trust account shall terminate and the remaining credit shall be redeposited in the fund or funds from which the credit was originally paid. -4- Introduced, considered favorably on first reading and ordered published this 21st day of June, A.D. 2022, and to be presented for final passage on the 5th day of July, A.D. 2022. Mayor ATTEST: City Clerk Passed and adopted on final reading this 5th day of July, A.D. 2022. Mayor ATTEST: City Clerk