HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/15/2016 - FIRST READING OF ORDINANCE NO. 034, 2016, AMENDINGAgenda Item 9
Item # 9 Page 1
AGENDA ITEM SUMMARY March 15, 2016
City Council
STAFF
Sue Beck-Ferkiss, Social Sustainability Specialist
SUBJECT
First Reading of Ordinance No. 034, 2016, Amending Section 23-354 of the Code of the City of Fort Collins
Regarding Income Targets for the Land Bank Program.
EXECUTIVE SUMMARY
The purpose of this item is to amend City Code to allow communities developed on parcels from the Land
Bank Program to be targeted to rental households making 60% area median income, as long as the overall
community targets still average no more than 50% area median income. While this does increase the
allowable income limits for some units to add flexibility, it requires the resulting community to meet the original
target range overall.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
Following a City-commissioned feasibility study in 2000, City Council passed the Land Bank Ordinance in 2001
establishing the City’s Land Bank Program (Attachment 1). The primary goal of the program is to have an
inventory of property available for the development of additional affordable housing units in the future. Land
banking allows the City to acquire, hold, and eventually sell property for the sole purpose of assisting housing
providers in providing affordable rental housing. This program is intended to serve low-wage earners that the
real estate market does not serve well.
While in general, the City considers housing serving households with incomes of no more than 80% area
median income (AMI) to be affordable housing, the Land Bank Program standard is lower than that.
Specifically, the Land Bank Ordinance requires development under the program to be targeted to rental
households at or below 50% AMI and homeownership housing for households at or below 60% AMI.
The City has entered into a partnership with the Fort Collins Housing Authority to develop the land bank parcel
of 8.3 acres at 1506 West Horsetooth Road. City Council adopted Ordinance No.025, 2016, authorizing the
conveyance of this land bank holding to the Fort Collins Housing Authority (FCHA) after 3 applicants competed
for the development opportunity. The Ordinance states staff would bring forward an ordinance for City Council
consideration that would amend the Land Bank Ordinance to permit rental housing affordable to households at
60% AMI under certain circumstances, which is the purpose of the Ordinance now proposed.
The Request for Proposal (RFP) selection committee chose FCHA as the development partner for this parcel.
FCHA’s proposal contained three alternative options, with the variables of demographic served, purchase
price, and additional funding needed to build the development. (Attachment 2) The most favorable option to
the City was Option 3. This option does not require additional federal grant dollars from the City; it provides
units for households in the 30% AMI; and it offered a sales price close to 90% of the fair market value of the
property. The preliminary conceptual proposal as submitted in the RFP process proposed 96 units of
affordable rental housing with one to four bedrooms and community facilities, with density of 12 units per acre.
Agenda Item 9
Item # 9 Page 2
The AMI range in this proposal target households making no more than 60% AMI. However, since 46 of these
units are targeted to no more than 30% AMI, the overall demographic composition of the community remains
under 50% AMI, which is the standard set in the original ordinance.
The pertinent City Code language establishing the Land Bank Program in 2001 set AMI targets as follows:
Sec. 23-354. - Disposition of land bank property.
In addition to the criteria established for the disposition of property in Article IV of this Chapter, no
property acquired pursuant to this Article shall be sold by the City except in accordance with the
following criteria:
(1) Any disposition/sale of such property shall be to a housing provider legally bound to the City
under the terms of such sale to provide rental housing for households at or below fifty (50) percent of
AMI and/or homeownership housing for households at or below sixty (60) percent of AMI ("affordable
housing") as the sole development purpose. Such sale shall not be made to any person for the
purpose of land speculation or appreciation or for the development of nonresidential uses or the
provision of market rate housing.
While this City Code language has not changed from 2001, price escalation in both home sales prices and
rental rates has caused an ever increasing demand for affordable housing. The Land Bank Program has
served the City well in preserving development opportunities. Because the first land bank parcel is now being
deployed, staff is reviewing the disposition criteria carefully.
It is clear this program is designed to acquire and hold land for between 5-15 years, ultimately sell to a
development partner, and recycle the sales proceeds into more land for the Land bank Program. Also, this
program is designed to reach low wage earners who cannot rent market rate housing affordably. The concept
is that the City discounts the sale price to the developer who can offer then resulting housing units at under
market rates. Most market rate housing in Fort Collins targets households with incomes at or above 80% AMI.
The proposed ordinance would amend Section 23-354 to keep the 50% AMI standard for rental housing but
provide an exception for rental housing targeted to 60% AMI and lower as long as the overall affordability in
the development averages less than 50% AMI.
By providing limited flexibility to the AMI targets established for the Land Bank Program, the City improves the
program by:
Creating a larger range of income in the resulting community and serving the lowest and most difficult to
house demographic;
Lining up the AMI range permitted with the targets allowable for Low Income Housing Tax Credit programs
which is how most affordable housing is being developed;
Still providing under market rate housing for the future;
Allowing the highest permissible purchase price for the land without committing additional City funding; and
Maintaining the original intention of providing a community that serves people making an average of 50%
AMI.
This change brings immediate flexibility to the original program language. Since this is the first opportunity
to develop pursuant to the Land bank Program criteria, staff believes additional changes could be considered.
Staff intends to bring additional code changes for City Council consideration later in 2016 after a holistic review
of the program is conducted.
CITY FINANCIAL IMPACTS
While the City will be paid close to $1.1 million for the parcel, this Ordinance change does not affect the City
financially.
Agenda Item 9
Item # 9 Page 3
BOARD / COMMISSION RECOMMENDATION
At its March 3, 2016, meeting, the Affordable Housing Board voted to recommend adoption of the City Code
amendment to allow for housing up to 60% AMI when the average served by the overall community is no more
than 50% AMI. (Attachment 4)
PUBLIC OUTREACH
While there has not been public outreach specifically on this proposed change, the Land Bank Program was
part of the extensive outreach conducted on the 2015-2019 Affordable Housing Strategic Plan. The Land bank
Program was also analyzed as part of the Housing Affordability Policy Study, which included extensive public
outreach and engagement.
ATTACHMENTS
1. Ordinance No. 048, 2001 (PDF)
2. Proposed Purchase Options (PDF)
3. Work Session Summary, September 8, 2015 (PDF)
4. Affordable Housing Board memo, March 3, 2016 (PDF)
ATTACHMENT 1
ATTACHMENT 2
ATTACHMENT 3
ATTACHMENT 4
-1-
ORDINANCE NO. 034, 2016
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING SECTION 23-354 OF THE CODE OF THE CITY OF FORT COLLINS
REGARDING INCOME TARGETS FOR THE LAND BANK PROGRAM
WHEREAS, on April 17, 2001, the City Council adopted Ordinance No. 048, 2001,
enacting Article XIII of Chapter 23 of the City Code (Sections 23-350 to 355) regarding land
banking; and
WHEREAS, the purpose of the land bank program is to enable to the City to acquire,
hold and sell real property to assist housing providers in providing affordable rental and
homeownership housing for low-income residents; and
WHEREAS, Section 23-354 of the City Code currently requires that land bank property
be conveyed only to a housing provider legally bound to the City to provide rental housing for
households at or below 50% of area median income (“AMI”) and/or homeownership housing for
households at or below 60% of AMI; and
WHEREAS, in December 2015, the City issued a request for proposals to find a
developer for the City’s land bank property on West Horsetooth Road (the “Property”); and
WHEREAS, through that process the City selected the Housing Authority of the City of
Fort Collins (“FCHA”) to purchase and develop the Property; and
WHEREAS, FCHA’s preferred option for development of the Property, which is also the
option City staff recommends, would include rental housing at 60% of AMI, although the
average affordability level across the entire development would still be less than 50% of AMI;
and
WHEREAS, on January 26, 2016, the City Council adopted Resolution 2016-008
expressing the Council’s support for FCHA’s proposed project, including a willingness to amend
the City Code to adjust the rental housing affordability requirements if necessary, and stating an
intent to convey the Property to FCHA subject to the Council’s authorization by ordinance; and
WHEREAS, on March 1, 2016, the City Council adopted Ordinance No. 025, 2016,
authorizing the conveyance of the Property to FCHA; and
WHEREAS, the City Council now wishes to amend Section 23-354 of the City Code to
adjust the affordability requirements for rental housing developed on land-banked properties.
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 contained in the recitals set forth above.
-2-
Section 2. That Section 23-354 of the Code of the City of Fort Collins is hereby
amended as follows:
Sec. 23-354. Disposition of land bank property.
In addition to the criteria established for the disposition of property in Article IV of this
Chapter, no property acquired pursuant to this Article shall be sold by the City except in
accordance with the following criteria:
(1) Any disposition/sale of such property shall be to a housing provider legally
bound to the City under the terms of such sale to provide, as the sole development
purpose, “affordable housing”, defined as:
a. rental housing for households at or below fifty (50) percent of AMI, except
that rental housing may be provided for households at up to sixty (60) percent
of AMI so long as the average affordability of all rental housing developed on
such property shall not exceed fifty (50) percent of AMI, and/or
b. homeownership housing for households at or below sixty (60) percent of
AMI (“affordable housing”) as the sole development purpose.
Such sale shall not be made to any person for the purpose of land speculation or
appreciation or for the development of nonresidential uses or the provision of market
rate housing.
…
Introduced, considered favorably on first reading, and ordered published this 15th day of
March, A.D. 2016, and to be presented for final passage on the 5th day of April, A.D. 2016.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
-3-
Passed and adopted on final reading on the 5th day of April, A.D. 2016.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk