Loading...
HomeMy WebLinkAboutagenda.council.worksession.20180130 CITY COUNCIL WORK SESSION January 30, 2018 4:00 PM, City Council Chambers MEETING AGENDA I. Housing Mitigation and Certificate Program update and discussion P1 Housing Credits Discussion City Council Work Session– 1/30/2018 Page 1 of 4 MEMORANDUM TO: Mayor Skadron and City Council FROM: Jessica Garrow, Community Development Director Mike Kosdrosky, APCHA Executive Director MEETING DATE: January 30, 2018 RE: Certificates of Affordable Housing Credit update and discussion REQUEST OF COUNCIL: The purpose of this discussion item is to provide an update on the nearly eight-year old Certificate of Affordable Housing Credits Program (here after referred to as Housing Credits). Council is asked to weigh in on a number of policy options related to the program and provide staff with feedback on potential changes to the program. BACKGROUND: The City of Aspen created the Certificates of Affordable Housing Credits in 2010 to encourage the private sector to assist in the creation of affordable housing. Five Housing Credits projects have been completed, and another three are approved but not yet completed. To date, the five built projects have created certificates for 66.25 FTEs, with another 99.5 FTEs as part of the approved, but not yet built projects. The program allows a private developer to build voluntary affordable housing units, and then receive a certificate from the City indicating how many FTEs were housed. The developer can then sell those certificates (aka Housing Credits) to other developers who have their own housing mitigation requirements. The developer who purchases the credits would then use them to satisfy their affordable housing mitigation requirement, rather than using a cash-in-lieu payment or building their own affordable housing units. The program currently includes the following limitations: Public Sector Limits: Housing Credits may only be established by a private sector developer or a non- profit that does not receive public funding or whose core mission is not related to the creation of housing. This means, for instance, that Habitat for Humanity is not eligible to create Housing Credits, as their core mission is to create housing. Similarly, any non-profit that is a taxing district is not be eligible, as they receive public funds. Dormitory Units: The code limits Housing Credits to full units (studios or larger), and prohibits dormitory units from being eligible. While dormitory units provide an important housing option for seasonal employees, they do not generally represent a long-term housing solution for full-time employees, so Council in 2015 decided to exclude these types of units from eligibility. Sales and Rental Limitations: As part of a 2015 code amendment, the program was updated to require that any housing which is part of a mixed-use building (i.e. contains affordable housing units and any P2 I. Housing Credits Discussion City Council Work Session– 1/30/2018 Page 2 of 4 other use) be designated as for-sale or be subject to some other form of permanent deed restriction if the housing units are being used to create Housing Credits. This ensure that these units will remain permanently in the inventory, particularly if the building is demolished or redeveloped in the future. Additionally, projects that are 100% affordable housing are eligible to be for-sale or for-rent. Fractional or Additional Housing Units: The Land Use Code allows any additional housing mitigation provided by a developer to be eligible for the creation of Housing Credits. This situation arises when an applicant provides more housing than is required by their development. For instance, a developer may have a requirement to house 2.15 FTEs, and the easiest way to do that is to provide a single 2-bedroom unit that houses 2.25 FTEs, leaving an “overage” of 0.10 FTEs. Similarly, a developer may choose to provide additional affordable housing as part of their project. To be eligible for Housing Credits, these units must comply with the Sales Limitations provision above (e.g. be for-sale or be subject to another long-term agreement guaranteeing the unit will remain permanently in the housing inventory). Category Limitations: The Housing Credits system is based on the Category of the units provided, and the associated cash-in-lieu amounts. There are cash-in-lieu rates established for Categories 1 through 7, and Housing Credits can be established at any of these categories. Cash-in-lieu is used to convert Credits between categories. This is needed because often the available Housing Credits are not at the category a developer needs. For instance, many of the Housing Credits have been established as Category 2 units, but a developer’s housing mitigation is at Category 4. A conversion between these categories is therefore necessary to ensure a developer is providing the correct mitigation. There is cash-in-lieu established for Categories 1 through 7, so Housing Credits can be established at any of these categories. Location Limitations: The code limits where City of Aspen Housing Credits may be established to within city limits. Only development within the City of Aspen can use these credits, as no sister program has been created in surrounding jurisdictions. ISSUES FOR DISCUSSION: Staff requests Council feedback regarding emerging issues related to the Housing Credits Program. A check-in with P&Z was cancelled due to a lack of quorum. A check-in with the APCHA Board occurred on January 17th, and comments from them are included in the discussion below. 1. Location Requirements. Peter Fornell approached City Council in the spring requesting examination of the potential to increase the locations available for the creation of multi-family affordable housing credit units. With the recent changes to the Land Use Code, the number of locations for multi-family housing credits projects has been limited to the multi-family zone districts and the Mixed-Use zone district. Additionally, the residential zone districts (R-6, R-15, R-30, etc.) could develop single family or duplex buildings for housing credits. If the City is interested in expanding locations for multi-family housing credit units, it could consider amendments to the other zone districts to (1) re-introduce housing credits as an option in the other commercial zone districts, or (2) adjust the residential zone districts to allow multi- family development. Alternatively, the city could explore re-zoning specific properties to zone districts that accommodate multi-family housing. Presently, staff does not recommend amendments to the zone districts or major re-zonings. If Council is interested in looking at P3 I. Housing Credits Discussion City Council Work Session– 1/30/2018 Page 3 of 4 additional opportunities for housing, staff suggests including this as part of a larger examination of annexation and future land use mapping, which would be a longer-term project. There is no funding for such a project at this time. Generally, the APCHA Board support exploration of additional locations for affordable housing. Questions for Council: A. Does Council wish to examine additional locations for multi-family housing credits projects? 2. Cash-in-Lieu Rates. As part of the larger housing program, the Land Use Code includes cash- in-lieu rates established in late 2015. The code allows increases based on the Engineering News Record, but requires Council action (Code section 26.470.050.E: “The City may choose to update the fee-in-lieu schedule, by ordinance, based on the change in the Engineering News Record inflation index.”). An increase to the fee was not included in the 2016, 2017 or 2018 fee ordinance, and staff requests direction if the fee amount should be increased. Currently, the cash-in-lieu rates in the code are: Fee-In-Lieu (per FTE): Category 1: $ 356,433 Category 2: $ 320,186 Category 3: $ 286,495 Category 4: $ 223,072 Category 5: $ 157,280 Category 6: $ 132,817 Category 7: $ 104,148 Staff recommends an update to account for the past three years of increased process. A potential increase in the range of 4.5% to 7% is estimated based on the Engineering News Record Construction Cost Index. The APCHA Board agreed that the cash-in-lieu fees should be adjusted annually, and expressed support for an adjustment that addresses the increases in inflation. Additionally, the Board suggested the code be updated to reflect an index that takes into consideration the cost of construction specifically in the Aspen area. Questions for Council: B. Does Council desire an increase to the cash-in-lieu fee, pursuant to the annual Engineering News Record increase referenced in the land use code? 3. Accessory Dwelling Units. When the housing mitigation and cash-in-lieu methodology was updated in late 2015, it eliminated to use of ADUs as a mitigation option. The code included a provision to remove the deed restriction from existing mandatory and voluntary ADUs. Five (5) applications have been processed by the Community Development Department to remove ADUs. Mandatory ADUs may be removed only by extinguishing a housing credit. The ADU then becomes a voluntary unit, and if it received a floor area bonus, which is typical for these ADUs, the building is considered a legally-established non-conformity. Voluntary ADUs may be removed through the landing of a housing credit or by a cash-in-lieu payment. P4 I. Housing Credits Discussion City Council Work Session– 1/30/2018 Page 4 of 4 Staff believes the program is working as originally intended and only recommends clarification changes. Specifically, staff recommends the language be updated to clearly state that the buy-out option takes the ADU’s original mitigation purpose into account. There are a few ADUs that were built as mitigation for 2 free-market residences (a duplex), and it has been staff’s position in administering the program that this fact requires the buy-out equal to two (2) ADUs even though only one (1) ADU was physically built. Questions for Council: C. Does Council support staff’s direction to clarify the ADU buy-out calculation when an ADU was built as mitigation for two free-market units? NEXT STEPS: Staff will return with updated code language, as requested from the work session. In addition, a second work session is currently scheduled for March 5th to review additional housing credits policy items. Staff intends additional check-ins with stakeholders, the APCHA Board, and P&Z prior to that work session. P5 I.