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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 04/14/2020 - AFFORDABLE HOUSING PRIORITIES.DATE: STAFF: April 14, 2020 Sue Beck-Ferkiss, Social Policy and Housing Program Manager Jeff Mihelich, Deputy City Manager WORK SESSION ITEM City Council SUBJECT FOR DISCUSSION Affordable Housing Priorities. EXECUTIVE SUMMARY The purpose of this item is to report on progress of the City's affordable housing goals and discuss the scope and timing of the next Affordable Housing Strategic Plan. Also, an update on requested specific policies and programs will also be included. These are: Home Buyers Assistance, partnership with Elevation Community Land Trust, the Impact Fee nexus study and the feasibility study for an Inclusionary Housing Ordinance. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Do Councilmembers have guidance on the scope for the update of the Affordable Housing Strategic Plan? 2. Do Councilmembers agree with staff’s recommended approach to Inclusionary Housing? 3. Do Councilmembers want to continue to pursue an Affordable Housing Impact Fee? BACKGROUND / DISCUSSION At the October 15, 2019 City Council Work Session on Council Priorities, staff was asked to report out on four items at this Affordable Housing Priorities Work Session. These are: • Home Buyer Assistance Program • Partnership with Elevation Community Land Trust • Feasibility of Inclusionary Housing Ordinance • Nexus Study for Affordable Housing Impact Fee Staff will provide an update on the City’s affordable housing strategic goals and planning options moving forward. Affordable Housing Strategic Planning Beginning in 1999, the City began strategically planning for stimulating the production of housing for the City’s lowest wage earners. Developing housing that is affordable to low wage earners often needs subsidy or incentives. This has been true for many decades. In the past, the real estate market provided options for middle earners and above. It is becoming harder for middle income earners to find good housing options that are affordable to them. The City has used iterative 5-year plans focused on housing for earners making less than 80% of the area median income (AMI). The most recent Affordable Housing Strategic Plan incorporated many policy recommendations from the Housing Affordability Policy Study (HAPS) conducted in 2014. Many of those recommendations have been implemented, such as: • Remove minimum house size from the Land Use Code • Expand waiver eligibility to all developers of qualifying units • Activate Land Bank by selling one or more parcels April 14, 2020 Page 2 • Support Construction Defect Claim Reform by advocating for State level change • Use Incentive Policy to negotiate affordable housing when providing a public benefit (i.e., Metro Districts) • Increase revenue through a dedicated sales tax. Affordable Housing Capital Fund is part of the Community Capital Improvement Program and was passed by voters to provide $4 million over 10 years. HAPS also reviewed both Inclusionary Housing Ordinances and affordable housing impact fees. The conclusion at that time was that the Inclusionary Housing ordinance was not a good fit for the City’s housing needs. Impact fees and alternative revenue sources were seen as impactful in addressing the City’s need for affordable housing but was not recommended due to lack of support. The Affordable Housing Strategic Plan calls for periodic reviews of these tools to determine when and if they are appropriate for the City. This plan also established an overarching goal of having 10% of the City’s housing inventory be Affordable Housing by City’s buildout, which is anticipated to be in the next 20-25 years. A goal to increase the ratio from 5% to 6% was set for the term of the Affordable Housing Strategic Plan, 2015-2019. While the City’s partners added 373 affordable homes in the past 5 years, and there are 248 currently under construction, the goal of 940 new homes was not met. Plus, because there was so much market rate housing production during this time period, the ratio did not increase from 5%. While the City’s housing partners are planning on bringing many projects forward, without new programs, policies, and/or incentives, it is not likely the City will achieve its goal. See figure below: Staff was preparing to update the City’s Affordable Housing Strategic Plan for another 5-year cadence targeting the 80% AMI and lower demographic. However, this is an opportunity to decide if this scope and cadence is the best for the City moving forward. There are many approaches to strategic planning for housing. Many places simply plan for the affordable income range as Fort Collins as traditionally done. Others plan for the entire housing spectrum. Greeley has this type of plan. Boulder has a separate Middle-Income Housing Strategy that complements their affordable housing plan. Wilsonville Oregon is drafting an Equitable Housing Strategic Plan that combines the equity lens with strategic planning for housing. Some plans use a master planning approach looking out 20 years and building in regular updates. The new Housing Manager and the ad hoc City Council committee may want to help guide the conversation on the scope and cadence of the next Housing Strategic Plan document. See example chart attached. (Attachment 1) April 14, 2020 Page 3 Home Buyer Assistance (HBA) Program History The Home Buyer Assistance Program (HBA) was initially established in 1995 to help low- to moderate-income renter households (earning below 80% Area Median Income) stabilize their housing costs through affordable ownership. The target population for Home Buyer Assistance is a household which is: • financially ready to purchase their first home • qualifies for a mortgage with affordable monthly payments • but lacks the additional out-of-pocket funding necessary to cover the down payment and closing costs required to close the purchase. Initial funding for the program came from the City’s annual grant fund allocation from the Department of Housing and Urban Development (HUD). The HOME Investment Partnership Program (HOME) and the Community Block Grant Program (CDBG) both identify down payment assistance as a strategy to help low-income households stabilize housing costs and achieve home ownership. The funding sources also prescribe the income limits, maximum purchase price and additional eligibility requirements associated with the use of federal funds. Since inception, City staff has applied for program funds in the annual Competitive Grant process. The program has competed for funding against other housing applications for both HUD funding and City’s Affordable Housing Funds. From 1995–2000, funding was issued as a grant that was forgiven after five years of owner occupancy. In 2000, the Community Development Block Grant (CDBG) Commission recommended that the program change to a “due on sale” loan where the buyers repaid the funding to the City upon sale or transfer of the property, or if they refinanced to cash out their equity. In 2014, the maximum amount of assistance was increased from $10,000 to $15,000 to address the higher purchase prices and required increases in down-payment and closing costs. Performance: Since the inception of the program, over 1,100 households have moved from rental housing to affordable homeownership with assistance from the HBA program. Currently, there are 188 households with active loans totaling $1.8 million that will be repaid to the City upon sale or transfer. The repaid funding will be returned to the HUD line of credit and allocated to future affordable housing projects in the City’s Competitive Funding Process. Program performance has been steadily declining since 2012, with only one loan issued in 2019. This was for a condominium purchased by a 1-person household for $175,000. See figure below for history of loans provided since 2012. April 14, 2020 Page 4 Current trends The HBA Program worked well when there were homes for sale at affordable prices to low-income buyers. As prices have outpaced earnings, the program is no longer able to achieve the same results since low-income buyers are no longer qualifying for mortgages or finding affordable properties to purchase. Example of effect of market change: In 2012, a 2-person household could receive HBA assistance to purchase a modest, entry-level house for $185,000. From 2012 to 2019, incomes increased 12.5% while the median purchase prices increased 85%. If the household that used HBA to purchase in 2012 had earnings growth at the reported average, they would’ve needed $18,000 in additional subsidy to purchase the same home at an affordable purchase price in 2013, $95,000 of additional subsidy in 2016 and $132,000 of additional subsidy in 2019. The home has essentially appreciated out of the affordable inventory and would only be affordable to a household of 6 today. The following chart illustrates this: April 14, 2020 Page 5 $150,000 $185,000 $185,000 $185,000 $200,000 $40,000 $18,000 $95,000 $132,000 $190,000 $185,000 $203,000 $280,000 $332,000 $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 2005 2012 2013 2016 2019 Home Values Incomes Affordable Purchase Price (80% AMI) Affordability Gap Median Income (2 person household) Income Required to Qualify Home Value A recent questionnaire sent to the lenders who are registered to participate in the HBA program yielded the following responses: (Attachment 2) 1. The program no longer works for two primary reasons: (A) The HUD income limits are too low and (B) income eligible households aren’t finding affordable inventory. 2. For buyers who are finding properties they can afford, there are other market products available that are less restrictive. 3. Only 33% of the responding lenders believed the program still fills a gap in the market. Other HUD funded down payment programs in Colorado have suspended their programs as a result of the changes in the housing market, such as Larimer Home Ownership Program and Arapahoe County. A non-profit partner, Impact Development Fund (IDF), formerly known as Funding Partners for Housing Solutions, was recently awarded a $1.8 million grant from the Colorado Division of Housing to develop a down payment assistance program that can serve all of Larimer and Weld Counties. The amount available through this program will be up to $25,000 per household. They expect to be ready to implement in July. Given the changes in the housing market and the emergence of other down-payment programs, the City’s HBA program no longer meets its intended purpose. There isn’t a programmatic change that can be made to the existing program that can overcome the purchase price affordability gap. A new program with different funding would be necessary to serve households with higher incomes who can qualify for mortgages for current sales prices. Currently, the HBA program has an unspent funding allocation of approximately $70,000. This can be returned to the Spring Competitive Process. IDF is establishing a down payment program that can serve all of Larimer/Weld counties with down payment assistance. If they can successfully deploy their funding and create demand, they would be eligible to apply to the City for subsequent program funds to serve Fort Collins. It will be much simpler for income eligible buyers to apply April 14, 2020 Page 6 HUD and Affordable Housing Funds can still support homeownership through partnerships that help with development and/or acquisition of housing restricted to low-income ownership such as Habitat for Humanity, and Elevation Community Land Trust. The City’s funding and partnership is best used to help partners achieve affordable purchase prices, since income-eligible buyers can utilize other market programs for down-payment. Partnership with Elevation Community Land Trust Community Land Trusts (CLT) separate ownership of land from a home creating affordable homeownership and maintain the units as affordable permanently. They sell the home to qualified low income buyers and keep the ownership of the land A land lease with the homeowner establishes a formula for sharing appreciation in the house so some is left as subsidy to keep the price low for subsequent buyers. The CLT qualifies buyers, certifies resale prices, and stewards the communities and the homeowners in perpetuity. Elevation Community Land Trust (Elevation) was established in 2017 to be a statewide CLT. Its mission is permanent affordable homeownership. It is capitalized by philanthropic funders and expects to be self-sustaining when it manages 1,068 properties, which it believes will take 7 years. Fort Collins is one of nine local jurisdictions currently working with Elevation. The City formalized the partnership with Elevation in 2019. Elevation is currently working on two projects in Fort Collins: • Public Housing Repositioning: Elevation and Housing Catalyst have come together in a unique way that is a win-win-win. Through this partnership, 44 aging, underfunded public housing units will be renovated by Elevation to become permanently affordable homeownership opportunities for families earning 70% of area median income; Housing Catalyst will receive 44 new vouchers to serve the existing families in ways that support family stability and mobility; and Housing Catalyst will then be able to leverage the sales proceeds to build or preserve approximately 130 affordable rental apartments. • Kechter Land Bank Parcel: After the City issued two Requests for Proposals for the development of a homeownership 60-unit townhome community on the 5-acre land bank parcel on Kechter Road, an Exclusive Negotiating Agreement was entered into with TWG, Inc as developer. Feasibility analysis for such a community is under way and moved forward with formation of partnership between TWG, Inc. as developer, Elevation Community Land Trust as acquirer, and with Housing Catalyst providing construction tax abatement and local development entitlement process technical assistance. This partnership structure allows Elevation to apply for Division of Housing funding which is the needed subsidy to make this home ownership project feasible. This application will be heard by the State Housing Board on April 14, 2020. Feasibility of Inclusionary Housing Ordinance What is Inclusionary Housing? Inclusionary Housing is a land use regulation, adopted through ordinance, that requires new residential development to build a portion (also called a set-aside) of housing units as affordable to a specified income affordability level (e.g., requiring a residential development to provide 10 percent of its housing units as affordable to households earning 80 percent of the area’s median income, or 20 percent of units at 100 percent of median income). Policies lay out a variety of provisions, such as: • Type and amount of incentives (e.g., density bonus, fee reductions or waivers, subsidies) • Length of the affordability term • Local residency requirement • Price appreciation limits • Applicability threshold (i.e., the policy applies only to project with 30 units or more) • Alternative satisfaction options (e.g., building units off-site, dedicating land, or making a cash contribution to a housing fund – a fee in-lieu). While most policies in practice make set-asides mandatory, a substantial portion are voluntary, meaning that if a development chooses to meet the specified affordability requirement, it can access identified incentives. April 14, 2020 Page 7 Fort Collins has periodically evaluated the use of this policy, as well as the imposition of an affordable housing impact fee several times since 2001. This year, City Council approved an interim budget request to hire a consultant to consider these tools again under current conditions. The City hired Economic & Planning Systems, Inc. (EPS) who authored the 2014 HAPS report to conduct a feasibility study for a potential Inclusionary Housing Ordinance and a nexus study for a potential affordable housing impact fee. Where are Inclusionary Housing Policies Active? Nationwide, there are approximately 900 jurisdictions with inclusionary zoning policies, 45 percent of which are in New Jersey, 27 percent in Massachusetts, 17 percent in California, and 11 percent scattered throughout the rest of the U.S. There are 12 IHO policies in Colorado (1 percent of programs nationwide). How Many Units do Inclusionary Housing Policies Create? One of the more recent comprehensive reviews of IHO policies in the U.S. was completed in 2017 by the Lincoln Institute of Land Policy, which identified a total production yield of 173,700 units nationwide among these 900 jurisdictions since the inception of all policies – an average of 190 units per program since adoption. Considering that 70 percent of programs were created between 2000 and 2010, it could be estimated that, that the average policy adopted in 2005 has generated 12 units per year nationwide. • Denver (CO): in for-sale projects of 30 units or more (but not more than 1,000), the program requires a 10 percent set-aside of units priced at 80 percent AMI or at 95 percent AMI (in high cost structures, e.g., multifamily steel and concrete construction); in for-sale projects of more than 1,000 units, affordability is negotiated with developers; incentives include a cash subsidy up to $25,000 per unit; alternative satisfaction options exist; since 2002, the program has produced approximately 100 units in projects (not including more than 1,000 created through negotiations with developers). • Chapel Hill (NC): in for-sale projects, the program requires a 15 percent set-aside (10 percent in the Town Center) of units priced between 65 and 80 percent AMI; a state rent control prohibition also exists in North Carolina; since 1995, the program has produced approximately 300 units. • Cambridge (MA): in for-sale and rental projects, the program requires a 15 percent set-aside of units at 65 percent AMI; incentives include a 30 percent density bonus; since adoption, the program has created approximately 12 units per year. • Boulder (CO): in for-sale projects (and for rental projects through voluntary compliance), the program requires a 25 percent set-aside of units at as an incentive, affordable units may be smaller than market-rate units, but must meet the City’s livability standards–i.e., that the units must be “functionally equivalent”; since adoption, the program has created (through onsite construction, offsite construction or financing) approximately 80 units per year. • Montgomery County (MD): in for-sale and rental projects, this program requires a 15 percent set-aside of units priced at 80 to 120 percent AMI (for-sale projects) or 65 percent AMI (garden-style apartments) and 70 percent AMI (high-rise apartments); incentives available include the waiver of certain impact fees; between its adoption and 2004, the program had created more than 400 units per year (nearly 12,000 total); because the affordability term was only 10 years, however, all 12,000 affordable units are no longer affordable. To What Type of Developments do Inclusionary Housing Programs Apply? Throughout the U.S., many inclusionary housing programs cannot apply to new rental developments. Many states, like Colorado, have statutory prohibitions against “rent control”, meaning communities are prohibited from enacting IHOs applied to rental developments. Nearly two decades ago, the State Supreme Court’s “Telluride Decision” made such a determination. Since then, the Colorado State Legislature, has made limited provisions for housing authorities or similar entities to own and manage deed-restricted affordable housing under HB10-1017, which has left room for rental housing to be provided through voluntary agreements. Aspen and Boulder, two of the more prominent examples of communities with such policies, continue to apply their inclusionary housing policies to rental housing projects, although the processes by which these agreements are accomplished require complex legal ownership and operational agreements and are not easily replicable. It also requires substantial April 14, 2020 Page 8 administrative support. As such, inclusionary housing policies in Colorado generally apply to for-sale residential developments. Study Methodology EPS conducted its economic feasibility study and nexus analysis grounded in local market data and based on best practices. The feasibility study evaluated the impact that a variety of inclusionary housing provisions would have on the financial feasibility of “prototypical” developments in Fort Collins. The feasibility evaluation calculated financial performance metrics for developments under four scenarios: • no requirements • with incentives • with onsite affordable housing • and the payment of a fee in-lieu of onsite affordable housing. EPS also performed sensitivity analyses on different aspects of the policy (i.e., incentive amounts, density bonus, set-aside, affordability level, etc.) to understand whether and at what point an optimal policy could be structured to retain baseline financial performance (i.e., with no inclusionary housing). They engaged stakeholders by convening four meetings and conducted interviews with developers and City Councilmembers. These Stakeholder meetings and interviews informed both the inclusionary housing feasibility study and the nexus study for the affordable housing impact fee. Stakeholders from the following organizations were invited to participate: Banner Health Bohemian Brinkman CARE Housing CBRE (Commercial Real Estate) Fort Collins Chamber of Commerce Community Foundation Colorado State University Downtown Development Authority Neighbor to Neighbor Colorado Division of Housing Elevations Community Land Trust Fort Collins Board of Realtors Hartford Homes Home Builders Association Housing Catalyst Impact Development Fund Larimer County (Economic Development, Health Department and Housing Work Group representatives) MAVD – Harmony Technology Park Montava Developer Neenan Archistruction Poudre School District Ripley Design Feasibility Study results Draft feasibility modeling results demonstrate that an inclusionary housing policy could be established with the following elements: • Onsite Set-Aside and Affordability o Single-family: 4 percent at 60 percent AMI or 7 percent at 80 percent AMI o Townhome: 8 percent at 60 percent AMI or 23 percent at 80 percent AMI April 14, 2020 Page 9 o Multifamily structures (3+ floors): n/a (market-rate price points don’t exist to support this product in the Fort Collins market yet) o The recommended set asides would range between 5-15% depending on prototype because conventional practice is to generalize these numbers in increments of 2.5 or 5%. • Density Bonus o Single-family: 20 percent o Townhome: 20 percent o Multifamily: modeled at 20 percent • Fee In-Lieu of Onsite Affordable Housing Construction o Single-family: $8 per square-foot of gross building area o Townhome: $10 per square-foot of gross building area o Multifamily: $10 to $15 per square-foot of gross building area • An applicability threshold was not discussed In EPS’s presentation of draft feasibility findings, they identified the following conditions would be necessary for this policy, as structured, to be successful. The City has control over some, but not all of these conditions, making the likelihood of success a greater challenge. • Density bonus must be (a) perceived as valuable to the development (City does not have control over this); (b) possible under the Land Use Code (City does have control); and (c) any additional density must be achieved through an increase of density on the same acreage of land (City does have control over the land use aspect, but not over whether the market (i.e., buyers) will respond positively to such a change). o Many, if not all, of these conditions are not viable under the current market and regulations • Market would need to accept an inclusionary housing policy that applied only to single-family and townhome development. (City does not have control over this). It was noted that this would not mirror most policies in practice. Active policies typically apply to multifamily scale developments (e.g., 3+ floors), in part because the marginal financial gains of additional density can be achieved without the purchase of additional land. o The Fort Collins market does not currently exist to support 3+ story for-sale product. • The end-user (i.e., homebuyer) would need to be indifferent to deed restrictions. (City does not have control over this). That is, in high-priced markets (like Aspen or San Francisco) with a wide gap between market rate price points and affordable housing, buyers have no affordable options in the existing housing market. There is still an overlap of pricing for some market rate homes and restricted homes. • In Fort Collins, a new market-rate townhome, for example, is likely to be priced at $300,000, whereas an affordable townhome for a household earning 80 percent AMI is $225,800. • Furthermore, when this policy was evaluated in 2013, 22% of existing home sales were affordable to households earning 100 percent of area median income. Today, 21% of all market rate sales were priced affordably to households earning 100% AMI. Possible consequences • Could negatively impact land values, • Could limit developer profit, • Could cause cost shifting to market-rate unit buyers/renters, • Comes with a heavy administrative burden Conclusion: Based on lack of required conditions for success, current suitability for Inclusionary Housing for Fort Collins is questionable. Staff will continue to monitor conditions and periodically evaluate policy appropriateness. April 14, 2020 Page 10 Nexus Study for Affordable Housing Impact Fee What is an affordable housing impact fee? Linkage fees are sometimes referred to as “affordable housing impact fees”, and they can be applied to new residential and/or commercial development. While inclusionary housing policies are typically structured to prioritize onsite affordable housing construction with an alternative option to pay a fee in-lieu, linkage programs are structured to prioritizing the generation of revenues for a variety of affordable housing purposes with an alternative option to build onsite or offsite affordable housing. Linkage fees are implemented under a legal framework similar to traditional capital impact fees. Therefore, linkage fees must be: • Legislatively adopted • Generally applicable to a broad class of property • Intended to defray impacts of proposed development, and • Must not be greater than necessary to mitigate impacts of proposed development. Nexus study methodology Because there must be a legal “nexus” or relationship between the linkage fee and the impact that a development places on community needs for affordable housing, a nexus study is legally required to establish a maximum supportable fee. As such, EPS performed the following tasks in conformance with national practices in conducting a nexus study: 1. Calculate jobs by industry and wage level generated by both residential and commercial development. a. This utilizes an economic impact model that quantifies jobs generated by new household spending (i.e. residential development). b. The model also quantifies the layers of direct, indirect and induced jobs generated by new commercial development: jobs related to the space itself (direct); those that result from business-to-business relationships (indirect), and jobs generated by spending of households related to direct and indirect jobs (induced). 2. Estimate the number of households representing new jobs generated by either new residential or new commercial development. a. This calculation involved adjusting for multiple job-holdings and adjusting for multiple earners per household (also using local data). These steps are necessary to avoid overestimating the impact of development on affordable housing as there are often people with more than one job, and multiple workers in a household. b. Households were categorized by income level (e.g. 30, 60, 80 percent AMI), excluding any households generated with incomes higher than 80 percent AMI. 3. Estimate the cost to build housing for these households, assumed to be a multifamily (apartment) prototype. 4. Establish a maximum supportable fee amount based on the difference (i.e. gap) between the cost of construction and a target household’s ability to pay for housing (at the 30, 60, and 80 percent AMI categories). a. The maximum supportable fee is calculated as the aggregate gap divided by the total square feet in the new residential or commercial development. b. This establishes a per-square foot fee for each residential and commercial development prototype identified. 5. Adopted fees cannot exceed these maximum supportable fees, but fees are often adopted as a lesser amount. a. Double-counting need for affordable housing mitigation must also be avoided when contemplating the adoption of a residential and commercial fee, particularly as it relates to retail expenditures and their impacts. b. These fees are commonly set at 10% or less of the maximum supportable fee. Linkage fees can apply to residential development, nonresidential development, or both. If linkages fees are applied to both major land use types, it is strongly advised that the fees adopted are at a considerable discount from the maximum fee calculated by the nexus Study to ensure that there is no double counting of impacts from April 14, 2020 Page 11 residential and nonresidential development. In other words, a person living in a new home may also be working in a new business subject to fees. Results of nexus study: In EPS’s presentation of draft findings of the nexus study, the maximum supportable fees were presented as based on the mitigation of affordable housing demand generated only up to 80 percent AMI from new residential and commercial development. The following are maximum supportable fees: • Residential • Single-family: maximum supportable fee is $16.38 per square-foot. • Townhome: maximum supportable fee is $17.14 per square-foot. • Multifamily: maximum supportable fee ranges between $22.24 and $26.21 per square-foot depending on project scale (i.e. 3- and 5-story projects, respectively). • Weighted average of $21.15 per square foot. • Commercial • Office: maximum supportable fee is $7.86 per square-foot. • Industrial: maximum supportable fee is $7.62 per square-foot. • Restaurant: maximum supportable fee is $16.37 per square-foot. • Retail: maximum supportable fee is $7.60 per square-foot. • Hotel: maximum supportable fee is $3.27 per square-foot. Revenue Yield EPS prepared planning level revenue estimates for linkage fees as follows. • Residential o Growth Assumptions: 400 new single-family homes and 450 new multifamily units annually. o Maximum fee: $27.2 million/year. o 5% of maximum fee: $1.4 million/year o 10% of maximum: $2.7 million/year o 15% of maximum: $4.1 million/year o Additional feasibility testing is needed to determine the impact of linkage fees at different levels on the market. • Nonresidential o Growth Assumptions: 15,000 sq. ft./year retail; 25,000 sq. ft./year office; 25,000 sq. ft./year industrial and flex. o Maximum fee: $500,000/year o 5% of maximum fee: $25,000/year o 10% of maximum: $50,000/year o 15% of maximum: $75,000/year o Additional feasibility testing is needed to determine the impact of linkage fees at different levels on the market. Linkage Fees in other Communities The linkage fees in a selection of other communities are summarized below. Denver adopted its fees at 6.6 to 8.1 percent of the maximum for residential, and 1.5 to 2.1 percent of the maximum for nonresidential. Boulder’s maximum fees from its 2016 nexus study have been adopted at 22 to 23 percent of the maximum and are among the highest in Colorado and represent a significant increase to construction costs. In Seattle, nonresidential linkage fees were adopted at roughly 18 to 20 percent of the maximum. April 14, 2020 Page 12 City Residential Non-Residential Denver Max $9.60-$19.44 $28.51-$83.02 Adopted $0.63-$1.57 $0.42-$1.78 % of Max 6.6%-8.1% 1.5%-2.1% Boulder Max N/A (IZ) $44.79-$129.49 Adopted N/A (IZ) $10.00-$30.00 % of Max 22%-23% Lafayette Max No nexus study completed Adopted $0.60/SF Under consideration Summit County $2.00 (excise tax) N/A Seattle, WA Max N/A (IZ) $45.30-$80.00 Adopted N/A (IZ) $8.00-$17.50 % of Max 17.7%-21.9% Conclusion: The nexus analysis establishes the relationship between new development and the need for affordable housing below 80 percent of AMI. If the maximum fee levels are adopted however, they could be expected to have a negative impact on development in the City as it may be less costly to develop in neighboring communities. In addition, the total impact fee “stack” in northeast Fort Collins is considerably higher than in established areas of the City. However, staff does recommend continuing to evaluate the imposition of an affordable housing impact fee in conjunction with the 2021 scheduled update of development impact fees. The total impact fee levels would need to be considered with the potential affordable housing linkage fees. EPS recommends conducting additional feasibility testing on linkage fees in conjunction with all other impact fees imposed on either residential or commercial development for final calibration. Also, phasing in the fee can mitigate negative affect on projects currently being developed. Initial Stakeholder Feedback: In addition to the 4 Stakeholder meetings, EPS sent out a survey to stakeholders and conducted multiple interviews with developers. The Stakeholders contributed to the following list, in no particular order at their final meeting. Also attached are survey result and polling results as well as specific feedback from multiple stakeholders individually and in groups. (Attachment 3 – Engagement packet). • Affordable and attainable housing is a critical issue • Stakeholders are committed to working with City to help find workable solutions and a broad range of tools • Frustrated with unrealistic timeline and focus on only two potential tools • These two tools and associated data are complex; stakeholders cannot support at this time • Cannot support impact fees: o incomplete financial analysis which fails to account for all costs and externalities April 14, 2020 Page 13 o would result in unintended consequences o lack of success stories from similar cities • Punitive approach of shifting cost burden to developers would: o result in less development (Economics 101) o shift costs to market-units o consequently, force more people to live outside city limits o defeat the purpose • City should also consider how to incentivize development of affordable housing • Policy discussion should begin with agreement about city goals (what would success look like for Fort Collins?) and consider wider context (current policy, design standards, fees and payment schedule, land use & planning regulations - density, parking, height - and transportation impacts) • Question how policy change would impact projects already committed to affordable housing and/or prior agreements with developers? • Particular concern about NE Fort Collins (fees already higher) • Commercial impact fee does not appear worthwhile Health Impact Assessment of Inclusionary Housing Ordinance and Impact Fee policies: Larimer County Department of Health and Environment (LCDHE), in partnership with the City of Fort Collins Home2Health grant, conducted a Health Impact Assessment (HIA) on two policies: Impact fees and Inclusionary Housing. This was done as a parallel process to the Inclusionary Housing and Impact Fee study done by EPS. Housing and Health Research shows that housing is a key factor of good health; health is influenced by housing affordability, safety and quality, stability, and by neighborhood quality. HIA Recommendations As a result of the HIA process, below are recommendations for Inclusionary Housing and Impact Fees: • To increase affordable housing options, implement variation of inclusionary housing and impact fees as recommended by EPS, City Staff, City Council, and stakeholders • Utilize Impact Fees and/or inclusionary housing as a way to leverage and/or establish funding sources to increase development of future affordable housing, including the Land Bank Program, community land trusts, and/or funding of supportive housing services and programs • If implemented, combine the use of Impact Fee and/or Inclusionary Housing with other developer incentives (like upzoning or density bonuses) to locate affordable housing close to community amenities and within a quarter mile of transit. • In order to grow the range of policy options available for affordable housing development, align the review of Impact Fees and Inclusionary Housing with other strategic planning efforts, including the Affordable Housing Strategic Plan. Process and Summary To create the recommendations, LCDHE conducted a Health Impact Assessment (HIA). A Health Impact Assessment (HIA) is a standardized practice that aims to protect and promote health and reduce inequities in health during a decision-making process. The HIA provides recommendations to mitigate the health effects of a policy, program, or process. HIA is a combination of procedures, methods, and tools that systematically judges the intentional and unintentional effects that a program, plan, or policy has on the health of a population and the distribution of those effects. LCDHE followed a standardized 6 step HIA process, which included reviewing research and published literature on the topic, creating a community engagement plan, disseminating a community questionnaire, reviewing health and housing data, and receiving input from a highly qualified Advisory Committee. April 14, 2020 Page 14 It was identified through LCDHE's HIA process: 1. Research shows that housing influences health outcomes and that affordable housing positively impacts health. 2. The research is unclear about the direct link of Impact Fees and Inclusionary Housing on health. These policies are implemented differently across the nation, so there is limited research and evidence showing these policies are successful at mitigating negative health impacts that are associated with housing that is too expensive, low quality, unstable, or in poorer quality neighborhoods. 3. Based on our questionnaire, it is difficult for low-income individuals in Fort Collins to find housing that is within their budget (rent or purchase). Goals of HIA A key process of the HIA is to appropriately scope the HIA through the creation of goals. The goal of this HIA was to: • Identify health impacts (unintended and intended) of inclusionary housing and impact fees • Provide recommendations on how to best implement the two policies, based on health impacts Literature Review LCDHE staff reviewed 50 best practices and peer reviewed articles which identified that health is impacted by housing; however, there is inconclusive evidence to define the relationship between health and the explored policies, inclusionary housing and impact fees. Questionnaire LCDHE staff created a questionnaire hosted on the Our City website that received 115 responses; 60% were completed in Spanish. From the questionnaire it was determined that many residents feel like their health is impacted by their inability to find affordable rental or ownership opportunities. Advisory Committee LCDHE facilitated an HIA advisory committee to provide feedback, review of community engagement plan, reviewed questionnaire, and to provide feedback on the recommendations included above. Report Final HIA report will be made available in May. ATTACHMENTS 1. Housing Plan Examples (PDF) 2. 2020 HBA Participating Lender Questionnaire Results (PDF) 3. Engagement Feedback Packet (PDF) 4. Powerpoint presentation (PDF) Where? Plan Name Scope of Plan How often updated Populations covered Fort Collins, CO Affordable Housing Strategic Plan (2015) Targets affordable housing only Every 5 years 80% AMI and below Atlanta, GA Housing Affordability Action Plan (2020) Creation/Preservation of 20,000 affordable homes by 2026 6 year goal (2026) Up to 120%, focus on 60% and below Greeley,CO Strategic Housing Plan (2018-2019) Diversify housing types and increase housing affordability 5 year housing target (2024) Households between 80% and 120% of AMI Boulder County, CO Regional Housing Strategy (2017) Housing Boulder Action Plan (2019/2020) follows Regional Housing Implementation Strategy. Focuses on acquisition, redevelopment and new construction of affordable housing. 15 year goal (2035) 12% of housing achieve affordable housing standards. Boulder, CO Middle Income Housing Strategy (2016) Create/Preserve 3,500 middle income homes (15% Affordable Housing goal) 14 year goal (2030) Residents making between 80% to 150% of Boulders AMI Denver, CO Housing an Inclusive Denver (2018) Targets affordable housing only 5 year housing target (2023) 40-50% for Populations 30% below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` 9$ Public Engagement Packet Table of Contents: 1. Economics & Planning Systems Stakeholder Survey Results 2. Results from Polling at 3rd Stakeholder meeting 3. Compilation of messages from 4th Stakeholder meeting 4. Comments from Fort Collins Chamber of Commerce 5. Comments from the Home Builders Association 6. Comments from Bill Swalling Materials based on targeted Stakeholder engagement largely consisting of 4 Stakeholder meetings conducted between January and March 2020. Stakeholders from the following organizations were invited to participate: Banner Health Bohemian Brinkman CARE Housing CBRE (Commercial Real Estate) Fort Collins Chamber of Commerce Community Foundation Colorado State University Downtown Development Authority Neighbor to Neighbor Colorado Division of Housing Elevations Community Land Trust Fort Collins Board of Realtors Hartford Homes Home Builders Association Housing Catalyst Impact Development Fund Larimer County (Economic Development, Health Department and Housing Work Group representatives) MAVD – Harmony Technology Park Montava Developer Neenan Archistruction Poudre School District Ripley Design ATTACHMENT 3 #1 Economics & Planning Systems Stakeholder Survey Results #2 Results from Polling at 3rd Stakeholder meeting A total of 13 questions was asked of participants and they responded using smart devices. Following is a transcript of the responses submitted to the questions asked. 1. Which category best describes your perspective? 14 people responded as follows. Response options Count Percentage Builder/developer 2 14% Aﬀordable housing developer/provider 1 7% Real estate 2 14% Business/economic development 1 7% State or local government 3 21% Philanthropy/non-profit 3 21% None of the above 3 14% 2. EPS shared their research into Affordable Housing Linkage Fees and how they would work in Fort Collins. What is your reaction? 15 people responded as follows. Response options Count Percentage I understand and agree with their research 3 2% I don’t understand their research well enough to agree or disagree 12 80% I understand and disagree with their research 0 0% 3. What additional information about Affordable Housing Linkage Fees do you need to help you understand EPS's conclusions and/or recommendations? The following responses were submitted: • Research data which shows that the implementation of increasing fees actually provides significant housing ownership in the AMI categories • More time is needed to better understand and interpret the information to make an informed decision. • The potential negative impacts does not indicate a viable solution with IZ and LF • What has been done in other communities that would be considered "successful"? • Broaden the scope • I would like to understand the impact on other segments of the economy. How many people will be negatively impacted by this. Who will be negatively impacted? • Case studies • Add more information about decision thresholds from other communities to presentations • How it relates to additional housing affordability tools relative to overall housing system, not just a specific project • Would like more real examples from our local economic conditions. • More case studies. Understand the other impacts as a result of the fee. • Greater understanding of methodology. Impacts across housing spectrum. Impacts to commercial development • More details. Digging in. How are people living outside community contributing? • Examples from other municipalities 4. Looking at the potential configuration of a linkage fee, what is your initial reaction? 15 people responded as follows. Response options Count Percentage Support 1 7% Oppose 13 87% Don’t understand 1 7% 5. If Fort Collins moves forward with a Linkage Fee, which option is most appropriate in your opinion? 15 people responded as follows. Response options Count Percentage Residential only 2 13% Commercial only 1 7% Both 1 7% Neither 11 73% 6. If Fort Collins moves forward with a Linkage Fee, which of the phasing options are most important from your perspective? 5 people responded as follows. Response options Count Percentage Adopt a lower fee than maximum supportable 2 13% Phase in fee over time 3 7% Adopt maximum supportable 0 7% 7. EPS shared their research into Inclusionary Zoning and how it would work in Fort Collins. What is your reaction? 15 people responded as follows. Response options Count Percentage I understand and agree with their research 3 20% I don’t understand their research well enough to agree or disagree 12 80% I understand and disagree with their research 0 0% 8. What additional information about Inclusionary Zoning do you need to help you understand EPS's conclusions and/or recommendation? The following responses were submitted: • Research data which shows the implementation of IZ would provide significant benefits of increasing home ownership in the AMI categories • More data from peer cities to the negative impact caused by IZ. Also, a true unit achieved goal with data to support. • What is the Council's expected outcome/impact for this vs what's realistically achievable given the current market and what can be developed? • More context. More comp case studies • I don't need any additional information. I strongly disagree with inclusionary zoning • Examples where it has worked with great success. • How it relates to additional housing affordability tools relative to overall housing system, not just a specific project • Need to see acknowledgement that existing zoning already allows generous densities, i.e. LMN & MMN & Downtown. • The unintended consequences. How many units get built in successful cities • Methodologies and assumptions. Impacts across housing spectrum. What, if any beneficial impacts have been demonstrated in other markets • What zoning within the City would need to change? • Everywhere it has worked, and define "worked". • Other municipal examples in detail. What have been the results in market rate home prices and affordability increase 9. Looking at the potential configuration of an Inclusionary Zoning policy for single family and townhomes, what is your initial reaction? 14 people responded as follows. Response options Count Percentage Support 1 7% Oppose 12 79% Don’t understand 2 14% 10. If Fort Collins moves forward with inclusionary zoning, which of the phasing options are most important from your perspective? 9 people responded as follows. Response options Count Percentage Policy applies to projects over a certain size initially 2 22% Grandfathering projects in the pipeline for a period of time 2 22% Exempt the first SS units from the policy for a period of time 0 0% Establish the sale (mandatory) policy first 0 0% Establish the rental (voluntary) policy first 3 33% Start with a smaller fee in lieu and phase in over time 2 22% 11. In your opinion how much support or interest is there on the part of buyers/renters for additional density (plus 10-20%) in Fort Collins? 8 people responded as follows. Response options Count Percentage Response options Count Percentage Complete support 2 25% Moderate support 4 50% Neutral 1 13% Moderate opposition 0 0% Complete opposition 1 13% 12. What other policy options should the City of Fort Collins explore to add affordable housing options? The following responses were submitted: • Expanding funding sources, opening up the possibility to expand opportunity zones, density consideration • Occupancy limit elimination. Adjust fee stack allocation. Tiered water tap fees • Prioritize empty nester housing, update city plan to relax regulations for townhouse and condos. Look at reducing fees and other costs including water • Unit size reduction • ¼ cent sales tax • Annex more land within GMA (northwest fc, for example). Expand land bank program. Raise sales tax. Raise mill levy. • Increased fee reductions. Expand funding sources • Cost drivers, including all zoning, design standards, impact fees, certainty of policy allowances, etc. Voluntary participation • Land use code audit • Sales tax. Property tax. Accessory dwelling units • Significant fee reduction for affordable. Relaxing of land use codes for affordable projects. Expectations for the Fourth Meeting A final question in the polling asked participants about their expectations for the 4th meeting, scheduled for March 16, 2020. 13. What should the 4th (final) meeting be designed to accomplish? The following responses were submitted: • Fully understand council presentation • Big effing ordeal • Development of other tools for council to consider at work sessions • For example, if EPS was presenting at a professional conference and giving advice to participants what would they advise as the ideal scope of services. #3 Compilation of messages from 4th Stakeholder meeting Other Policy Options the Stakeholder Group would like the City to Consider in Moving Forward with its Affordable Housing Strategic Plan The following ideas were submitted by individual members of the Affordable Housing Policy Stakeholder Group during and following the March 16, 2020 meeting. They were not approved by the group as a whole and each submission reflects the views of the individual who submitted them. Contents Other Policy Options the Stakeholder Group would like the City to Consider in Moving Forward with its Affordable Housing Strategic Plan ................................................................................................................ 9 Submitted by Sam Coutts at the meeting ................................................................................................. 9 Submitted by Kelly Evans, Executive Director, Neighbor to Neighbor via email ...................................... 9 Submitted by Jennifer Fairman via email ............................................................................................... 10 Submitted by Ann Hutchison, Executive Vice President, Fort Collins Chamber of Commerce via email ................................................................................................................................................................ 11 Submitted by Max Moss, Montava Development via email ................................................................... 12 Submitted by Matt Roebenalt via email ................................................................................................. 12 Submitted by Bill Swalling (at the meeting) ............................................................................................ 12 Submitted by Sam Counts at the meeting • Provide real incentives for building height and parking Submitted by Kelly Evans, Executive Director, Neighbor to Neighbor via email • It’s important to gather recommendations on all possible solutions to positively impact our affordable housing crisis, as singling out two policies for review will not suffice. • Additional suggestions like addressing density limits and building incentives have been recommended by the developers in our community for years. • Our occupancy limit of 2+you is overly conservative. It would be encouraging to be able to move to a more typical 4-person occupancy standard for communities our size. • While Inclusionary Housing does increase costs, it would seem there are variables in how it’s implemented that could make some level of implementation a success without being really extreme and increasing the missing middle gap. • The slides Sue showed to the stakeholders showed limited impact of 25-50 units per year from implementation of this policy, so I agree with the staff’s recommendation to pass. https://www.citylab.com/equity/2016/06/what-we-know-about-inclusionary- zoning-thus-far/485072/ • Not ensuring balanced housing access across income levels is truly exclusionary housing, demonstrated by our current market with 5% affordability and 17% poverty. It would seem this could also be addressed by approving/prioritizing/incentivizing affordable development proposals to keep affordable inventory in balance with market and luxury development. We need to implement multiple solutions in order to really be successful. • We should consider policies that incentivize affordable development to achieve balance for all income levels. Reducing fees and expediting the approval process for affordable developments are strategies sure to receive support. • Giving priority to proposals form local developers will keep the investment in affordable housing local. I recommend setting a priority to keep the developer fee of affordable developments with local organizations to preserve the longterm investment and support future development. • Linkage fees – $25-$50,000/yr from commercial linkage fees is not worth it but $1.4- $1.7million in annual revenue from residential linkage fees may very well be worth it if the fees were limited and paired with many other solutions. • Water - Tiered tap fees would allow for tap and impact fees to be tiered based on unit type – single family, ADU, duplex, multi-family, etc - Currently the tap fee per unit does not differentiate between all of the different unit types. ADU should not have to pay the same tap fee as a single-family home, for example. -Recalculate water usage assumption for housing types based upon actual usage, plus a more reasonable slip factor. Tap fees would then be based upon a more realistic projection of impact. • Higher density allowances – especially in LMN parcels, changes to energy requirements, and zoning standards/neighborhood requirements are all needed along with other policies. • Increase LMI zoning and increase the density bonus from 12-20. Housing Catalyst is the Submitted by Jennifer Fairman via email Can you please be sure to note that my comments are NOT the official position of Larimer County, but rather as a workgroup participant? That being said, a few other policies the City could evaluate include: • Eliminating the "you plus two" policy (https://www.fcgov.com/neighborhoodservices/occupancy) • Restructuring rules for ADU's to something less restrictive such as what the City of Windsor has done • Enforcing stricter rules for water-friendly landscaping for new developments, both commercial and residential • I anticipate that the City will be doing a complete review of all land use codes and building regulations as part of their comprehensive housing strategy to identify what could be modified to incent development of smaller homes. The City of Berthoud and the Mission Homes project is a good case for them to review as an example. Submitted by Ann Hutchison, Executive Vice President, Fort Collins Chamber of Commerce via email Areas of Opportunity Toward A More Balanced Fort Collins Housing Inventory • Increase base density and provide density bonus. Increase density allowance under all zoning designations. o Reconsider U+2 o Education on density o Review Actual Zones o City should look at self-insuring to reduce condo development risk. • Provide relief from certain development standards o Height o Setbacks o Parking o number of units per building o Low Impact Development (LID) o Poudre Fire Authority Requirements o others that the City would be willing to offer • Expand fee waivers and reconsider the city policy that backfills fee waivers. • Delay fee payments – Don’t pay sales tax at the front end. • Water o Tiered tap fees based on unit type Tiered tap fees would allow for tap and impact fees to be tiered based on unit type – single family, ADU, duplex, multi-family, etc - Currently the tap fee per unit does not differentiate between all of the different unit types. ADU should not have to pay the same tap fee as a single-family home, for example. o Recalculate water usage assumption for housing types based upon actual usage, plus a more reasonable slip factor. Tap fees would then be based upon a more realistic projection of impact. o Alignment with districts in the growth management area. • Impact fees based on unit type • Increase priority of general fund allocations to housing through BFO process. • Acquiring more data through broader analysis: o Initiate cost-benefit analysis of zoning and code requirements o Initiate analysis of impact fees through the lens of affordability and inclusiveness o Moratorium on any new fees or escalations until completion of the impact analysis o Create and rely on a broader housing strategic plan. o Do a GAPS analysis to determine what dials are best to turn. o Do an analysis on the remaining land mass in the growth management area and opportunities created. o Do analysis of rent versus sale permits over the last 5 years. Submitted by Max Moss, Montava Development via email o Balanced funding source that reflects the same community wide impact of Natural Areas. o This balanced funding source would reflect the impact of everyone impacting the community, residents and non-residents alike. Submitted by Matt Roebenalt via email • The September 14, 2014 EPS Report: Fort Collins Housing Affordability Policy Study highlighted an array of Recommendations in Chapter 5.0 that represent policy solutions that were deemed feasible and could meet local objectives if tailored to local and regional conditions, the regulatory and political environment, and achieve balance with the requirements of a policy tool with the positive impacts to address housing issues. • The 2014 Report also identified policy tools that were not recommended as they lacked sufficient support at that time. Among those were IHO. • The City should strongly consider next steps to include a more comprehensively scoped discussion that takes into account the variety of tools presented in the 2014 report again (less IHO) for compatibility and balance with the Fort Collins community's needs and ability to positively influence an outcome, and any new tools that were not available in 2014. • The City should report on what has been implemented from the 2014 list of report recommendations, the status and effectiveness of the program tools to date. Submitted by Bill Swalling (at the meeting) • Prioritize appropriate housing for 55+ by charging fees for water and sewer • Expedite the updating of City Plan focusing on affordable housing forms as well as condos • Lobby harder for construction defect regulation relief • Form public-private partnership to tackle this issue #4 Comments from Fort Collins Chamber of Commerce #5 Comments from the Home Builders Association #6 Comments from Bill Swalling Bill Swalling 3/17/2020 TOPIC: HOW TO IMPROVE FORT COLLINS HOUSING AFFORDABILITY POLICY RECOMMENDATIONS 1. Develop a simple model to prepare a triple bottom line [sustainability (environmental, social) economic and connections] assessment. Two common models are Maslow’s Hierarchy of Need for sustainability (social, environmental) and connections and Macroeconomics 101, pure competition, for this recommendation. This suggestion is used for two alternative policy proposals below (2&3). 2. a) Inclusionary Zoning b) Affordable Housing Linkage Fees Macro Economics 101: The supply curve shifts up and to the left and will result in less housing at a higher price. Inclusionary Zoning Increase Fees Sustainability Economic Connections Model Maslow’s Hierarchy of Need Pure Competition Econ 101 Maslow’s Hierarchy of Need Social: see connections FoCo Businesses Loneliness Environmental Home Builders Family Water Citizens Friends Air Nature Food Parks Shelter Schools Price Quantity S 2020 + fee + inclusionary zoning S 2020 D 2020 55+ Business GenX Community Millennial CSU Challenged Lottery winners Others will move into challenged. Challenged who do not get selected. 3. Increase supply of housing a. Increase the supply of used housing by giving 55+ housing a priority i. Fees, etc. b. Regulation c. Interest costs Macro Economics 101: The supply curve shifts down and to the right and will result in more housing at a lower price. Sustainability Economic Connections (Social Sustainability) Model Maslow’s Hierarchy of Need Pure Competition Econ 101 Maslow’s Hierarchy of Need Social: see connections FoCo Businesses Loneliness Environmental Home Builders Family Water Citizens Friends Air Nature Food Parks Shelter Schools 55+ Business Stop Go Caution Price D 2020 S 2020 S 2020 + empty nester house free up GenX Community Millennial CSU Challenged 4. Expedite the updating of City Plan and focus on: a. Affordable housing forms for i. Seniors b. Affordable housing forms: i. Condos ii. Apartments iii. Townhomes c. Improving: i. Affordability ii. Processing time iii. Appeals d. Waters’ Edge example 5. Lobby harder? for construction defect regulation 6. Private Public Partnership to address Affordable Housing https://uli.org/wp-content/uploads/ULI-Documents/Successful-Public-Private-Partnerships.pdf Stop Go Caution April 14, 2020 Affordable Housing Priorities Sue Beck-Ferkiss and Tom Leeson ATTACHMENT 4 Questions for Consideration 2 1. Do Councilmembers have guidance on the scope for the update of the Affordable Housing Strategic Plan? 2. Do Councilmembers agree with staff’s recommended approach to Inclusionary Housing? 3. Do Councilmembers want to continue to pursue an Affordable Housing Impact Fee? Strategic Alignment 3 Affordable Housing Council Priority City Plan, SSD Strategic Plan, City Strategic Plan Affordable Housing Strategic Plan Neighborhood Livability & Social Health 1.1 and 1.3 Budget $75,000 Interim BFO $60,000 Home2Health Affordable Housing Goals 4 Housing Attainability Fundamentals 5 Median Home Price Median Income of a Family of 4 Median Income of All Households 6 Housing Affordability Along the Income Spectrum AMI 0% Below 80% AMI is City’s Definition of Affordable Housing 80% $69.7K/yr 100% 200% $87.2K/yr 120% $105K/yr $415K Market Housing Purchase Price $320K Goal is defined by AHSP (188-228 units/year) Fewer attainable options are available to the “Missing Middle” Goal is harder to define & City influence may be outweighed by market forces City Actions Housing Affordability Policy Study 2014 - 2019 Minimum house size Waiver eligibility Land Bank Incentive Policy Affordable Housing Capital Fund (CCIP) Council Priorities 2019 Manufactured Housing Impact Fee/ Inclusionary Housing Study Appropriation for Land Bank purchase Home2Health Mason Place Affordable Home Ownership Committee Next Steps 2020+ AHSP update Buy and Sell Land Bank parcels Housing Manager Fee Waiver Process Improvements Ad Hoc Council Committee 7 Council Direction from October 15, 2019 Work Session Council requested information on 4 items: 1. Homebuyer’s Assistance Program 2. Update on Elevation Community Land Trust partnership 3. Inclusionary Housing Feasibility Study 4. Impact Fee Nexus Study 8 These opportunities can also be explored further in next Housing Strategic plan City Administered HBA Program 9 • Established in 1995 to use HUD funds • 1,175 households assisted • Deployments slowing due to increase in market prices • Other assistance programs for qualified buyers are available 0 2 4 6 8 10 12 14 16 18 20 2012 2013 2014 2015 2016 2017 2018 2019 HBA Deployed per Year Recommendation: Reposition current funding into competitive process Supporting Affordable Home Ownership • Non-City Down Payment Assistance City Mechanisms: • Land Bank Program • Competitive Process Funding • Metropolitan Districts – special taxing districts • Community Land Trusts 10 Elevation Community Land Trust • Formalized partnership in 2019 • Separates ownership of land from home creating affordable homeownership • Steward the houses and relationships in perpetuity • Current Fort Collins projects • 44 Housing Catalyst homes • 60 homes on Kechter Land Bank parcel 11 Inclusionary Housing All new communities include some affordable housing • Land use regulation • Alternative satisfaction: fee in-lieu, land dedication • Only applies to homeownership 12 Inclusionary Housing Considerations Conditions required for success: • High Density for sale development (3-5+ story condos) • Market must exist for many housing types • Significant differentiation between market rate and restricted housing prices • Constrained market Possible consequences: • Negative impact to land values • Limited developer profit • Cost shifting to market-rate units • Heavy administrative burden Inclusionary Housing Feasibility in Fort Collins Inclusionary Housing Feasible for: • Single family and townhomes only • Set aside range from 5-15% • Requires 20% more density than status-quo Estimate yield: • 25-50 units per year Questionable viability for Inclusionary Housing in Fort Collins 14 Impact Fee Generates revenues for Affordable Housing to mitigate impact of new development • Can be commercial or residential linkage fee • Fees must have established nexus • Can apply to rental or ownership 15 Impact Fees Considerations Conditions required for success: • Established nexus for residential or commercial • Amount calibrated to avoid disrupting new development • Pipeline of new development Possible Consequences: • Adds cost to development 16 City Residential Non-Residential Denver Boulder Lafayette Summit County Seattle (WA) Impact Fee Feasibility in Fort Collins Impact Fee Feasibility: • Nexus established for new commercial and residential development • Ability to calibrate fees specific to commercial and residential • Legal to charge up to 100% Estimate yield dependent on level: • 5-10% yields $1.4M to $2.7M for residential annually • 5-10% yields $25K to $50K for commercial annually 17 Meets initial requirements for success. Recommend exploring in context of all development fees Stakeholders - Organizations invited to participate • Banner Health • Bohemian •Brinkman • CARE Housing • CBRE (Commercial Real Estate) • Chamber of Commerce • Community Foundation • Colorado State University • Downtown Development Authority • Neighbor to Neighbor • Colorado Division of Housing • Elevations Community Land Trust • Fort Collins Board of Realtors • Hartford Homes • Home Builders Association • Housing Catalyst • Impact Development Fund • Larimer County (3 Departments) • MAVD – Harmony Technology Park • Montava Developer • Neenan Archistruction • Poudre School District • Ripley Design 18 Stakeholder Feedback Affordable and attainable housing is a critical issue Stakeholders are committed to working with City to help find workable solutions and a broad range of tools Frustrated with unrealistic timeline and focus on only two potential tools City should also consider how to incentivize development of affordable housing Policy discussion should begin with agreement about city goals and consider wider context Question how policy change would impact projects already committed to affordable housing and/or prior agreements with developers? These two tools and associated data are complex; stakeholders cannot support at this time Cannot support impact fees: • incomplete financial analysis which fails to account for all costs & externalities • would result in unintended consequences • lack of success stories from similar cities Punitive approach of shifting cost burden: • result in less development (Economics 101) • shift costs to market-units • force more people to live outside city limits Particular concern about NE Fort Collins (fees already higher) 19 Planning Journey March/April 2020 • Two Council Priority Work Sessions • Housing Manager •Ad Hoc committee • Home2Health August 2020 • Work Session for AHSP • Deadline for Moratorium December 2020 • Status Report and/or Draft Plan 20 Housing Plan Options Historically, City used Affordable Housing Strategic Plans • Targeting Lowest Wage Earners – market could not provide options • 5-year planning cadence Examples: • Plan for Low Income segment • Separate plan for middle earners (Boulder) • Entire housing spectrum (Greeley) • Innovative new approach (Wilsonville, Ore.) Opportunity to open scope and timing of plan 21 Summary of Policy Considerations  Inclusionary Housing  Impact Fee  Scope of Affordable Housing Strategic Plan 22 Questions for Consideration 23 1. Do Councilmembers have guidance on the scope for the update of the Affordable Housing Strategic Plan? 2. Do Councilmembers agree with staff’s recommended approach to Inclusionary Housing? 3. Do Councilmembers want to continue to pursue an Affordable Housing Impact Fee? !"# $, %&'()&%*+ - $% .&'( )& % /0 1 2 -3 4 8! 8 $ %&'()&%*+ 9 9 $5 : :%&'( 0 )& 6 % / 1 / 5 .1 .7./ . /11 11 01 0 ; 1 /;< /1 9 = >; " B ;1 C // ? 0 @1 1A / /0 A /; 2 -3 4 #'($$% ) ,!-".*$ + ' /0 1)123 2 45124 2 426 1(57 ) 14' 1 (8& 9$:$%;- #$:$%< G F =B !> ?@/C+A +0+0+D D -,!--".- /$ E * *0H1I) 434 4 )1J& + 1 (4 ) ( 4 ( ( ' 14 KED4 5 L 1 5)(2 447 /D M N (( O/PI+++ )2 Q) 5)51 RS *T+ + U+ E+ /++ =1 !> (4 4 ( () ( ?@EE0CD A --- /U ATTACHMENT 2 serve residents experiencing homelessness, 20- 30% for resident earning 31-80% AMI, 20-30% residents seeking to be homeowners. Minneapolis, MN Unified Housing Policy (2020) Diversification and creation of affordable housing only 20 year housing target (2040) Below 30% and 60% of AMI Tacoma, WA Affordable Housing Action Strategy Creation and retention of affordable housing only 10 year project (2028) below 30% AMI for 1 person household, 50% for 2 person, 80% for three, 100% for 4 person household. Boise, ID Grow Our Housing Targets affordable housing units only 20 year project (2040) Residents at or below 80% AMI dǇƉĞƐKĨĨĨŽƌĚĂďůĞ,ŽƵƐŝŶŐWůĂŶƐ ATTACHMENT 1 with one local provider which serve the entire region, so staff recommends supporting this as the regional down- payment assistance program.