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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/04/2020 - FIRST READING OF ORDINANCE NO. 137, 2020, MAKING C Agenda Item 8 Item # 8 Page 1 AGENDA ITEM SUMMARY November 4, 2020 City Council STAFF Sue Beck-Ferkiss, Social Policy and Housing Program Manager Ingrid Decker, Legal SUBJECT First Reading of Ordinance No. 137, 2020, Making Certain Amendments to the Codes of the City of Fort Collins to Eliminate Affordable Housing Fee Waivers and Instead Authorize a Discretionary Credit for Certain Affordable Housing Units to be Constructed in the City. EXECUTIVE SUMMARY The purpose of this item is to amend the City Code and Land Use Code to simplify the way affordable housing fee waivers are used to support the development of affordable housing units targeting the city’s lowest wage earners. Instead of calculating precise fee amounts for waivers on a project by project basis, flat amounts of credit will be established and codified for qualifying new construction and adaptive reuse homes targeting households making no more than 30% Area Median Income (AMI). This support will still be subject to Council discretion and appropriation of funding. Not only will this provide greater certainty to the developer and be more efficient to administer by the City, it will also allow all City departments’ fees to be paid in full either by the developer or by the credit that has been appropriated. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION Historically, the City has provided financial subsidy and forgone certain development fees for affordable housing projects to incentivize the creation of affordable housing. The City has long been committed to affordable housing, and the need for financial support continues to be demonstrated by the increase in the number of applications for local and federal funds in the City’s Competitive Process and the oversubscription of available affordable housing in our City. Fee waivers have been one of the consistent incentives available to developers of affordable housing in the City. In fact, before 2013, most development fees of the Fort Collins Housing Authority were traditionally waived. In March 2013, Council amended its policies on fee waivers for affordable housing to allow for more discretion in determining the kinds of projects for which City fees should be waived. This was after a large waiver was granted to a project that was being developed primarily by CARE Housing, a local non -profit, with the housing authority having only a very small interest. This change limited waiver eligibility to only the housing authority, and then only for projects constructed for: • persons experiencing homelessness; • disabled persons; or • households whose income is no greater than 30% of the area median income (AMI) of all City residents. Agenda Item 8 Item # 8 Page 2 Furthermore, waivers of only certain fees were to be granted at the discretion of Council upon a determination that the proposed waiver will not jeopardize the financial interests of the City or the timely construction of the capital improvements to be funded by the fees for which a waiver is sought. While the City’s waiver policy greatly restricted the types of projects that qualify for waivers, this policy recognizes that households earning no more than 30% AMI cannot afford market rate housing in our City at this time. The fee waiver program offered by the City is currently the City’s only mechanism to specifically incentivize units which serve households that earn 30% or less of AMI. These units are the hardest to obtain since they have the largest cost gap to construct. Further, the median rent in the City is almost $1,400 a month. A one-person household at 30% AMI would have a total monthly income of about $1,650 - meaning 85% of that person’s income would go to rent for an unsubsidized unit. Ideally, renters would never pay more than 30% of their income on housing. Developers need public subsidy in some form to produce housing that this demographic can afford. Recognizing that housing units targeting household’s earning no more than 30% AMI require public support to be offered at rates affordable to such a low income level, in 2017, Council expanded this incentive to include all developers bringing 30% AMI units to the City. While this allows all developers of units targeting this income bracket to request affordable housing fee waivers, granting fee waivers is still at the discretion of Council and subject to a showing that granting the request will not jeopardize the finances of the City or delay any capital improvements funded by impact fees. Further, the City’s practice has been to reimburse City departments for certain waived capital expansion fees and enterprise fees from either General Fund Reserves, the Affordable Housing Capital Fund, or both. Fees historically considered eligible for waiver include: • City Development Review Fees • Building Permit Fees • City Capital Expansion Fees (Fire, Police, Streets, General Government and Parks) Under the current program, fee waivers are calculated using the sum of eligible fees, prorated by the percent of the development’s total units which are restricted to serve ≤30% AMI. The process to determine the exact amount of each fee waiver request has been labor intensive and administratively difficult. It involves several City departments and, depending on when in the process the request is made, all fee calculations may not be final. Proposed Process Improvements To improve the process, City staff initiated a LEAN program evaluation. This kicked off an effort to simplify the process to allow more certainty to developers early in their project and to alleviate needing to have all fees finally calculated before a fee waiver amount could be accurately communicated. The proposed process would include a flat amount per qualifying unit. This amount would be deposited as a credit into a trust account owned by the City and used by the developer to pay any balances owed to the City. By providing an offset to fees in this manner, all fees are paid and therefore there is no need to reimburse City departments with backfill funding. For staff, there would be no need to do iterative calculations on waiver amounts nor create a different financial model for each development. The processing time involved is also greatly reduced by using the trust account method which also benefits developers. Units would still need to serve persons experiencing homelessness, disabled persons or those households making no more than 30% AMI to qualify. This credit would still be discretionary with Council upon a finding that the affordable housing support will not jeopardize the finances of the City. The amount of the credit will be based on those fees that have been historically waived and will be updated whenever any of those fees are updated. For 2020, staff is recommending flat fees of $14,000 per unit for new construction and $5,500 for adaptive reuse of buildings that have already paid impact fees. Agenda Item 8 Item # 8 Page 3 CITY FINANCIAL IMPACTS The change is intended to be financially neutral to both the City and Affordable Housing developers and improves the accuracy and administration of Affordable Housing support in relation to development review fees which have traditionally been waived. BOARD / COMMISSION RECOMMENDATION Council Finance Committee, Affordable Housing Board and Planning and Zoning Board have all approved of this process improvement. (Attachments 1, 2 and 3) PUBLIC OUTREACH In addition to the Committee and Board considerations referenced above, staff conducted informal consultation with several affordable housing developers who have or will apply for fee waivers. All supported the process improvement. ATTACHMENTS 1. Council Finance Committee Minutes - March 2020 (PDF) 2. Affordable Housing Board Minutes - July 2020 (PDF) 3. Planning and Zoning Board Minutes (Draft) (PDF) Finance Administration 215 N. Mason 2nd Floor PO Box 580 Fort Collins, CO 80522 970.221.6788 970.221.6782 - fax fcgov.com ATTACHMENT 1 6 7 8 9 AFFORDABLE HOUSING BOARD REGULAR MEETING July 7, 2020, 1:00-3:00pm Remote/Online via Zoom due to COVID-19 7/7/2020 – MINUTES Page 1 1. CALL TO ORDER: 1:02 2. ROLL CALL • Board Members Present: Jen Bray, Catherine Costlow, Diane Cohn, Bob Pawlikowski, Tatiana Zentner, Kristin Fritz • Board Members Absent: None • Staff Members Present: Lindsay Ex, Victoria Shaw, JC Ward, Ryan Mounce, Yaz Haldeman, Noelle Currell, Sue Beck-Ferkiss, Brittany Depew • Guests: Marilyn Heller, Mark Bishop 3. AGENDA REVIEW 4. CITIZEN PARTICIPATION - NONE 5. APPROVAL OF MINUTES Diane moved to approve May minutes. Bob seconded. Approved unanimously 6-0-0. 6. NEW BUSINESS A. Introduce Lindsay Ex, Interim Housing Manager City was in process of hiring a Housing Manager, and Lindsay was appointed when the hiring freeze (due to COVID-19) took effect. Lindsay introduced herself, shared information about her background and experience working for the City for the past 10 years. Former board member for CARE Housing. B. Update on Manufactured Housing Community Livability and Preservation work—Ryan Mounce and JC Ward, Planning and Neighborhood Services Departments Manufactured homes represent a significant portion of Fort Collins’ affordable housing stock. Council initiated a moratorium on development in manufactured housing communities (MHC) to implement mitigation and preservation strategies. In 2019-2020, the team worked on MHC Resident’s Rights Handbook, neighborhood liaisons, neighborhood mini grants, website, and local complaint system. JC reviewed state and municipal legislation relevant to MHC, as well as ways MHC are empowered to organize, build leadership, access resources. Ryan presented on Manufactured Housing (M-H) Zone District, which is meant as preservation measure. Would encourage manufactured housing as primary goal of the zone. Challenging to balance priorities from various perspectives (Council, community, landowners, etc.) • Option A: more limited set of uses, greater preservation potential DocuSign Envelope ID: B0D478E7-7F7C-4C53-96A7-3951D9DFA245 AHB Chair AHB Staff Liaison ATTACHMENT 2 AFFORDABLE HOUSING BOARD REGULAR MEETING 7 /7 /2020 – MINUTES Page 3 • Sue: What are you hearing from property owners? o Ryan: Not all the property owners are local. Some are private, some are part of corporations, and we haven’t spoken directly with everyone. There is recognition what the City is trying to do but they also recognize the restrictions it places on them. • Jen: It sounds like there is support for this, though we recognize property owners’ rights and have concerns about affordability not being directly addressed. Diane moved to recommend manufactured housing preservation through a new zone district. Tatiana seconded. Motion passed 5-1 Diane moved to support the staff’s recommendation on livability issues. Bob seconded. Motion passed 6-0 C. Process Improvement for Affordable Housing Fee Waivers—Victoria Shaw, Sustainability Services Area Fee waivers are the only development incentive at the 30% AMI level, so they are critically important for affordable housing. Victoria spoke about current fee waiver process (% of project) and specific benefits to making change to flat fee waiver amount. Proposed new structure: Grant a lump sum amount per unit, deposit that amount into trust account held with the City which the developer may draw from. Amount per unit would be updated every 4 years and would require code updates to implement. Recommend flat fee amount of $13,500 per new development unit and $5,500 per re- development unit. Comments/Q&A: • Diane: What happens when the fees rise? o Victoria: We revisit the amount with the same cadence as other fees. o Diane: Is that language built into this change? o Victoria: We haven’t begun writing the code change, but that language will be in there. • Kristin: This is a great process improvement. Is there a different process for applying for fee waivers? o Victoria: Approval at Council would still happen on an individual development basis, but the amount will be predictable ahead of time. o Kristin: Will the backfill be budgeted? o Victoria: Council could direct the funds come from the same places they have in the past (general fund, affordable housing capital fund, etc.). It would be a case- by-case basis. Kristin moved to support process improvements and the board would also welcome specific budget allocation as the next step in the process. Diane seconded. Motion passed 6-0. DocuSign Envelope ID: B0D478E7-7F7C-4C53-96A7-3951D9DFA245 Jeff Hansen, Chair Hybrid Hearing Michelle Haefele, Vice Chair City Council Chambers Per Hogestad 300 Laporte Avenue David Katz Fort Collins, Colorado Jeff Schneider Ted Shepard Cablecast on FCTV Channel 14 & William Whitley Channel 881 on Comcast The City of Fort Collins will make reasonable accommodations for access to City services, programs, and activities and will make special communication arrangements for persons with disabilities. Please call 221-6515 (TDD 224- 6001) for assistance. Regular Hearing October 15, 2020 Chair Hansen called the meeting to order at 6:00 p.m. Roll Call: Haefele, Hansen, Hogestad, Katz, Schneider, Shepard, Whitley Absent: None Staff Present: Sizemore, Yatabe, Stephens, Claypool (list Staff from Planning, Traffic, Engineering & Others), and Manno Chair Hansen provided background on the board’s role and what the audience could expect as to the order of business. He described the following procedures: • While the City staff provides comprehensive information about each project under consideration, citizen input is valued and appreciated. • The Board is here to listen to citizen comments. Each citizen may address the Board once for each item. • Decisions on development projects are based on judgment of compliance or non-compliance with city Land Use Code. • Should a citizen wish to address the Board on items other than what is on the agenda, time will be allowed for that as well. • This is a legal hearing, and the Chair will moderate for the usual civility and fairness to ensure that everyone who wishes to speak can be heard. Agenda Review Interim PTD Director Sizemore reviewed the items on the Consent and Discussion agendas, stating that all items will be heard as originally advertised. Planning and Zoning Board Minutes ATTACHMENT 3 Planning & Zoning Board October 15, 2020 Page 2 of 2 Public Input on Items Not on the Hearing Agenda: None noted. Consent Agenda: 1. Draft Minutes from November 16, 2017, P&Z Hearing 2. Draft Minutes from September 3, 2020, Special P&Z Hearing 3. CSU Raw Water Site Plan Advisory Review 4. Affordable Housing Fee Waiver Process Update 5. Maple Hill Park Minor Amendment Public Input on Consent Agenda: None noted Chair Hansen did a final review of the items that are on consent and reiterated that those items will not have a separate presentation unless pulled from the consent agenda. Member Whitley made a motion that the Planning and Zoning Board approve the Consent agenda which consist of the Draft Minutes from the September 3, 2020 hearing, the CSU Raw Water Site Plan Advisory Review, the Affordable Housing Fee Waiver Process Update and the Maple Hill Park Minor Amendment. This approval is based on the agenda materials, the information that was presented during the work session, this hearing discuss and the information, analysis, finding of fact and conclusion contained in the staff report including the agenda materials and the hearing that are adopted by this Board. Member Shepard seconded the motion. Vote: 7:0. -1- ORDINANCE NO. 137, 2020 OF THE COUNCIL OF THE CITY OF FORT COLLINS MAKING CERTAIN AMENDMENTS TO THE CODES OF THE CITY OF FORT COLLINS TO ELIMINATE AFFORDABLE HOUSING FEE WAIVERS AND INSTEAD AUTHORIZE A DISCRETIONARY CREDIT 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, the City Code currently provides that the City Council can waive, by ordinance, fees that would otherwise be imposed for any affordable housing project 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 or the timely construction of the capital improvements to be funded by the fees for which a waiver is sought; and WHEREAS, the general categories of fees that the City Council can consider waiving include capital expansion fees, development review fees and building permit fees; and WHEREAS, the fee waiver program is based on the recognition that households earning less than 30% AMI cannot afford market rate housing in Fort Collins, and that developers need public subsidies to produce housing that residents in this demographic can afford; and WHEREAS, the process to determine the exact amount of fees eligible for waiver early in a development project is labor intensive and administratively difficult, so City staff used a LEAN program evaluation to develop a simplified process that would provide developers more certainty early in their projects about what amount of financial support they will receive; and -2- WHEREAS, the proposed new process would develop a flat, per-unit amount per qualifying affordable unit (a “Credit”) that the City would fund and deposit in a trust account owned by the City, and the developer could then direct that amount to be spent on fee balances owed to the City during the development of the project; and 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 WHEREAS, whether to grant a Credit for a particular project would still be in the discretion of the City Council and subject to a finding that granting the request will not jeopardize the City’s financial interests; and WHEREAS, the amount of the Credit would be based on those fees that have historically been waived under the City’s fee waiver program, and would be updated whenever the City Council approves updates to such fees; and WHEREAS, the initial amount of the Credit would be $14,000 per each new qualifying affordable unit, and $5,500 per unit for adaptive reuse of existing units for which impact fees were already paid when the units were first constructed; and WHEREAS, the City Council believes it is in the best interests of the City to amend the City Code and Land Use 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 7.5-19(b) of the Code of the City of Fort Collins is hereby repealed and the remaining subsections are renumbered accordingly. Section 3. That Section 7.5-48(e) of the Code of the City of Fort Collins is hereby repealed and the remaining subsections are renumbered accordingly. Section 4. That 7.5-71(c) of the Code of the City of Fort Collins is hereby repealed and the remaining subsections are renumbered accordingly. Section 5. That Chapter 7.5 of the Code of the City of Fort Collins is hereby amended by the addition of a new Article VIII to read as follows: -3- ARTICLE VIII. FEE CREDITS FOR AFFORDABLE HOUSING Sec. 7.5-100. Declaration of purpose. There is hereby established a program to provide funding that the City may use to pay all or a portion of City development and capital expansion fees on behalf of a developer when such developer is constructing affordable housing units for rent or for sale that meet the requirements of this Article. Sec. 7.5-101. Definitions. The following words, terms, and phrases, when used in this Article, shall have the meanings ascribed to them in this Section: Affordable housing unit shall mean an affordable housing unit for rent or an affordable housing unit for sale, or both such units. Affordable housing unit for rent and affordable housing unit for sale shall have the same meanings as set forth in § 26-631 of this Code. Credit shall mean funds designated and appropriated by the City Council to be applied towards the payment of fees as described in this Article. Sec. 7.5-101. Application for credit. (a) A developer of affordable housing units wanting to apply for a credit must do so in accordance with City application requirements established by the City Manager prior to the City’s issuance of any certificates of occupancy for the project that is the subject of the credit request. (b) The City Council may, by ordinance, 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; (2) the proposed credit will not jeopardize the financial interests of the City. -4- Sec. 7.5-102. Amount of credit and payment process. (a) The maximum credit shall be $14,000 per eligible affordable housing unit for new construction projects and $5,500 per eligible affordable housing unit for adaptive reuse projects. This amount is calculated based on the current amount of the development review fees and capital expansion fees the City has historically waived for affordable housing projects, and shall be updated annually with City fee updates that are approved by the City Council. (b) If a credit is approved by the City Council 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 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. Section 6. That Section 10-28(h) of the Code of the City of Fort Collins is hereby repealed. Section 7. That Section 2.2.3(D)(3) of the Land Use Code of the City of Fort Collins is hereby repealed. Section 8. That Section 2.13.3(E) of the Land Use Code of the City of Fort Collins is hereby repealed. Introduced, considered favorably on first reading, and ordered published this 4th day of November, A.D. 2020 and to be presented for final passage on the 17th day of November, A.D. 2020. __________________________________ Mayor ATTEST: _____________________________ City Clerk -5- Passed and adopted on final reading on this 17th day of November, A.D. 2020. __________________________________ Mayor ATTEST: _____________________________ City Clerk