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To increase the supply of affordable rental units, one strategy calls for the creation of a tiered fee structure that would adjust review and impact fees based on the type of project and affordability. Specific factors that could affect the amount of the fee adjustment include the location of the project, unit type, the number and size of residential units, the number of affordable units and the income level of occupants, and the availability of onsite services. Another strategy to increase affordable apartments is to prioritize those developments in the review process. The plan highlights the benefit of including community development staff in entitlement reviews and neighborhood meetings, as well as in revising land use regulations.
To increase homeownership opportunities, one strategy is to reduce regulatory barriers in the city's land use regulations. This includes allowing higher density residential development such as small lot subdivisions and missing middle housing.
In addition, the plan calls for collaboration with the development community to build mixed-income, mixed-use developments in areas with access to jobs, shopping, health services, transit, and parks. The impending process to revise the city's land development code is identified as a key opportunity for collaboration.
Included are plans for one-bedroom units of 600, 800, and 1,000 square feet and plans for 1,200-square-foot units having two and three bedrooms. The plans are described as being 85 percent complete, which need to be finished with information and design details reflecting site-specific conditions as well as changes to satisfy owner preferences. To complete the plans, the website includes a link to a checklist for required information such as a site plan, stormwater management improvements, and energy calculations. A hyperlink is also provided so that property owners can obtain a property summary report.
AB 670 voids deed restrictions that prohibit the construction of accessory units on lots zoned for single-family residential use in common interest developments. The bill does allow reasonable restrictions on accessory units; the restrictions cannot unreasonably increase construction costs or otherwise effectively prohibit the units.
According to AB 587, the ADU must have been constructed by a nonprofit corporation that has received a welfare exemption under the state tax code to sell properties to low-income households participating in a no-interest loan program. The bill also requires that the property must be held as a tenancy in common that gives the buyer of the ADU an undivided, unequal interest in the property based on the size of the ADU. The buyer, who must earn a low- or moderate-income, must occupy the unit as their principle residence.
In addition, the property must remain affordable for 45 years. The property must also be subject to a repurchase option held by the nonprofit that constructed the building.
The model ordinance permits one accessory apartment or accessory cottage on a residentially zoned lot. The owner of the lot must occupy either the primary or the accessory unit. The building administrator is authorized to approve ADUs, and application fees cannot be more than 30 percent of the fees for a primary dwelling.
An ADU is exempt from residential density standards, but it must comply with the design standards of the ordinance. An ADU cannot exceed the lesser of 800 square feet or the floor area of the primary dwelling. No additional parking is required for an ADU, but the required parking for the primary unit must be maintained.
For accessory apartments, which are located within or attached to the primary building, no fire escape or exterior stairway and only one entrance can be located on the front facade. For accessory cottages, which are detached from the primary building, the lot coverage of the ADU cannot exceed that of the primary residence and the height of cottage must be no higher than the primary building or 25 feet, whichever is lower. The cottage must be set back at least six feet behind the primary building unless an existing secondary building with a smaller setback is converted to a cottage. However, an ADU cannot occupy any part of an existing building that does not comply with minimum yard requirements.
The report calls for land use policies and financing at the state and local level throughout the region to encourage ADUs and conversions. The three states should establish minimum rights to create these units and prohibit local regulations that are excessively restrictive. The states should promulgate guidelines and promote regulations for local governments. Local governments should revise land use regulations that make ADUs and conversions easier to create. These actions could include design incentives, flexible occupancy and dimensional standards, and minimal parking requirements, as well as streamlined approval processes and reduced impact fees. With state support, local governments should offer property owners technical and financial assistance, according to the report.
The report also includes recommendations specific to New York City, including allowing duplexes in six zoning districts where only large single-family detached residences are allowed. Conversely, conversion of multifamily buildings to single-family residences could be discouraged through revised property tax regulations and perhaps zoning and building code standards. A pilot program facilitating safe basement apartments through code changes and no-interest loans should be expanded citywide and revised to address similar issues with attic, garage, and other conversions, according to the report. Revised offstreet parking requirements, especially near transit, should also be considered.
Under the program, the city will select five housing developments. To qualify, all the units in the development must be affordable and at least 20 percent of the units must be restricted to households earning no more than 80 percent of the area median income. In addition, preference is given to developments in areas that have transit service and access to good schools, jobs, and other services and amenities, including parks, libraries, childcare, health care, and grocery stores.
The selected developments will receive several incentives. Fees for construction plan review will be reduced by 50 percent up to $50,000 per project. In addition, site development reviews will be streamlined through coordinated agency reviews and meetings between applicants and city staff to clarify and resolve issues. The city will assign each project a coordinator who will consolidate staff review comments and outline the process for submitting required applications and obtaining permits. In addition, building plan reviews conducted by 5 city departments will be completed within 10 business days for initial submissions and 5 days for resubmittals.
The pilot program provides similar incentives for five commercial developments that reduce environmental impacts by complying with the Denver Green Code or similar sustainable construction guidelines.
For projects not accepted into the program, the city notes that single-family detached and duplex housing projects following the Denver Green Code will receive expedited reviews, and affordable housing projects may also be eligible for a partial fee reduction.
The ordinance applies an inclusionary housing fee on all for-sale residential developments of 25 or more units. The fee is product of 10 percent of the unit count and the greater of $50,000 per unit or the difference between the price of a market-rate and affordable unit multiplied by 67 percent. For rental residential developments of 4 or more units, the fee is the product of 20 percent of the unit count and a fee based on the number of bedrooms in the unit, ranging from $25,000 for 0 bedrooms and $37,250 for 3 or more bedrooms.
The ordinance also requires the Bloomfield Housing Authority to review the fees and recommend adjustments on the first anniversary of the ordinance's adoption and every two years thereafter.
As an alternative to paying the fee, developers may set aside at least 10 percent of their for-sale units to be affordable for households earning up to 80 percent of the area median income. Developers of rental units may provide at least 20 percent of their units as affordable to households earning 60 percent or less of the area median income. Deed restrictions maintaining affordability for this option must remain for 30 years for for-sale units and 40 years for rental units. The affordable units must have comparable exterior finishes comparable to market-rate units, be integrated throughout the development, and have equal access to all recreation, parking, and other amenities.
Another alternative to paying the inclusionary housing fee is dedicating sufficient land to the city to accommodate the units that otherwise would be built onsite, along with necessary offsite infrastructure. The land cannot be located in low- or moderate-income areas, unless the city grants an exception. Other options available to developers are alternative agreements with the city that achieve the purpose and objectives of the inclusionary housing fee, and any combination of the options.
In addition, the ordinance offers incentives for onsite development of affordable housing units and land dedication: a 50 percent reduction in plan review and building permit fees associated with the affordable units and a 50 percent rebate of any use tax paid for the affordable units. These incentives are also available to developers choosing to enter into an alternative agreement, at the prerogative of the city council. The council may also agree to reduced service expansion fees and public land dedications.
The amendments clarify the definition of "source of income" to specify that the term applies to legal sources of money derived from employment, court orders, and benefit and subsidy programs. The last item includes housing vouchers, public assistance, veterans benefits, retirement income, and supplemental security income, as well as rental assistance from any federal, state, or local government program or nonprofit entity.
The amendments also require that a landlord, when using a financial income standard for tenancy, must consider all sources of a tenant's or prospective tenant's income. When determining a tenant's income, housing assistance from governmental and nonprofit sources must be valued at triple the amount of the assistance.
In addition, the amendments insert ethnicity as a protected class. The ordinance defines "ethnicity" as the socially distinguishable heritage of a group "that has developed its own subculture which can include nationality, religion and language."
Ordinance 19-34 amends Section 5.18.6, which provides floor area premiums for developments containing housing, with affordability restrictions lasting 99 years, in 2 mixed use districts in and near the downtown. The smallest premium is in the D2 Downtown Interface District, where additional floor area equal to 100 percent of the lot area is allowed when 15 percent of all residential floor area is dedicated to affordable housing; the development's residential floor area must at least equal the lot area. The largest premium is in the D1 Downtown Core District, where 500 percent of the lot area is allowed as additional floor area when 30 percent of the total residential floor area is set aside for affordable housing; the total residential floor area must equal at least 250 percent of the lot area. For all premiums, at most one-half of the affordable floor area may be used for market-rate housing when a payment in lieu of the floor area is made to the city's housing trust fund. In addition, the affordable housing is exempted from parking requirements.
Section 5.29.10 of the code is amended to allow density bonuses for planned unit developments that contain affordable housing. The maximum residential density stated in the city's master plan may be increased by up to 25 percent when 10 percent of a development's dwelling units are affordable housing; the maximum density may be increased by more than 25 percent when 15 percent of the housing is affordable. Where the master plan does not provide a maximum residential density, a planned unit development may exceed the zoning ordinance's maximum floor area ratio by up to 25 percent if 10 percent of the development's floor area is used for affordable housing; the permitted floor area ratio may be increased by more than 25 percent when 15 percent of the floor area is affordable housing. Cash payments are allowed in lieu of constructing the affordable units within the planned development.
The ordinance amends Section 5.28.1 of the code to reduce application fees by 50 percent for developments that include affordable housing. The ordinance also changes the definition of "affordable housing," which previously meant units for households earning less than 80 percent of the city median income and paying no more than 30 percent of their income on housing. The ordinance redefines affordable housing to be units for households earning up to 60 percent of the area median income and paying no more than the fair market rent.
The bill requires owners of rental multifamily housing consisting of at least five units to notify the county and building tenants when they intend to sell the property. In addition, the owner must offer the county the opportunity to purchase the property within 45 days at substantially the same terms that they will offer the property on the commercial market. If the county decides to purchase the property, a contract must be signed within 180 days.
At least 20 percent of any housing units that the county purchases under this bill must be affordable to households earning a moderate income or less.
An owner of rental multifamily housing does not have to offer the property to the county if the owner agrees to sell the property under an agreement that the existing percentage or at least 20 percent of the units, whichever is greater, are available for at least 40 years at rents affordable to persons with eligible incomes.
The bill requires the county to inform an owner within seven days of the notice to sell if the county does not intend to purchase the property. The bill prohibits the county from acquiring a property through this right to purchase if the acquisition would increase the poverty level in a census block group with a poverty level of at least 10 percent or would increase the poverty rate in a census block group with a poverty rate of at least 10 percent.
The ordinance prohibits rent increases but allows landlords to continue to follow Section 37.3(a) procedures for noticing and petitioning for rent increases. Rent increases that would otherwise take effect during the temporary suspension become effective when the suspension ends and a landlord gives proper notice. The ordinance also prohibits landlords from collecting any rent increase that would have otherwise been applied during the suspension.
Bill No. 200305 amends Section 9-809 by adding provisions related to mandatory hardship repayment agreements for residential tenants. According to the bill, any tenant who has suffered a financial hardship because of the COVID-19 pandemic has the right to enter into a hardship repayment agreement with their landlord. Under an agreement, the tenant agrees to pay the full amount of unpaid rent that is due from March 1, 2020, until the end of the virus emergency period. During that time and for nine months after the emergency period, a landlord cannot require any additional fees or other charges for the past-due rents.
The agreement requires tenants to begin repayments immediately after the virus emergency period. Monthly payments must include the full rent normally due and, at a minimum, the lesser of 30 percent of a month's past-due rent or one-ninth of the full amount of past-due rent.
A landlord may evict a tenant who has not entered into a hardship repayment agreement or who has requested to enter into an agreement but fails to pay the normal monthly rent due after the end of the virus emergency. A tenant may also be evicted if they have entered into an agreement but have failed to pay either the normal monthly rent due after the end of the emergency period or at least four monthly repayments of past-due rent.
The web page also provides information on short-term supports including duration of protections beyond the declared emergency period, protection from utility disconnection, and effect of late payments on credit reports, as well as foreclosure moratoriums. This information is provided in a brief outline and a more detailed report for each state.
Based on this information, the web page scores the level of protection that each state provides based on a weighted five-point scale. The web page also presents the methodology for information collection and scoring and provides a list of other organizations' resources and tools for housing issues related to the pandemic.
The resolution requests the mayor be given authority to forgive three months' rent and fees for residential and commercial tenants through June 2020. The resolution also calls for financially stable renters to pay their rent in a timely manner. In addition, resolution seeks authority for the mayor to require landlords to extend leases at the same rent for the length of the declared emergency.
Acknowledging that cities cannot provide sufficient financial relief, the resolution urges the state legislature to financially assist small landlords and homeowners needing mortgage deferrals.
The bill prohibits sheriffs and court officers from removing tenants and homeowners from their residence through eviction or foreclosure proceedings unless a court determines that the enforcement of an eviction or foreclosure order is in the interest of justice. The bill permits such court proceedings to be started and continued, but enforcement of an eviction or foreclosure order is stayed while an executive order is in effect, unless the court determines that removal would serve justice.
The bill applies to occupants of houses, mobile homes, and apartments but not transient guests, seasonal tenants, or patients in a residential healthcare facility.
This bill is identical to S2276.
Existing law enables counties and municipalities to adopt inclusionary housing ordinances. Except in areas of critical state concern, the bill allows local governments to adopt mandatory inclusionary zoning, requiring the construction of affordable housing or alternatives in lieu of construction, such as a contribution to a housing fund. In exchange, the local government must provide incentives "to fully offset all costs" of the affordable housing or in lieu alternative. Density bonuses, reduced development fees, and reduced water and sewer charges are listed as examples of acceptable incentives.
The bill includes a statement of intent for the state to provide workforce housing in areas of state concern. The bill defines the households to be served by this housing to include safety personnel, child care workers, teachers, healthcare and service workers, and public employees.
In addition, the bill sets maximum timeframes for counties and municipalities to process certain land use applications. Except in areas of critical state concern, a local government must determine the completeness of an application for a development permit -- other than a building permit -- or development order (the local government's decision on an application for a development permit) within 30 days; the applicant has 30 days to address any deficiencies. After an application has been deemed complete, a local government must approve, approve with conditions, or deny the application within 120 days, or 180 days for applications requiring a quasi-judicial or public hearing. All decisions must include written findings supporting the decision.
According to the bill, a county or city comprehensive plan taking effect after January 1, 2019, as well as all subsequent implementing regulations, must incorporate development orders that were issued before the plan's effective date.
Other community development provisions of the bill address such issues as appeals and challenges to development orders, fire code requirements for condominiums, and impact fees. Among the amendments affecting impact fees, the bill allows counties, cities, and special districts to waive fees for affordable housing developments.
The bill requires cities and towns to allow tiny houses with wheels as a primary residence in mobile home communities. The bill also authorizes cities and towns to allow the development of tiny house communities, properties where areas may be rented for the placement of tiny houses with or without a chassis in accordance with an approved site plan.
In counties, cities, and towns, the bill exempts from subdivision requirements a property to be occupied by rental tiny houses and tiny houses with wheels when the property is subject to an approved site plan.
In addition, the bill requires the state building code council to adopt standards for tiny houses by December 31, 2019. The bill also allows public schools and other educational institutions to enter into a contract with nonprofits to use students participating in the institution's training program to build tiny houses for low-income housing.
Under existing law, counties and cities were authorized to impose a real estate excise tax to pay for public works capital projects, parks, and until June 30, 2019, housing for persons experiencing homelessness. This bill extends the authority for using excise tax revenues for homeless facilities to January 1, 2026, and adds affordable housing as an authorized use of the revenues until that date.
Municipalities may use the greater of $100,000 or 25 percent of collected excise taxes up to $1,000,000 for the new purposes. An additional requirement for using the tax revenues for these purposes is that the capital facilities plan element of the municipal comprehensive plan must document that excise tax revenues for two years will be used for public works capital projects.
The governor vetoed Section 1 of the bill, which states the bill's findings and intent. The governor objected to Section 1's implication that the new revenue would be sufficient to provide affordable housing and facilities for persons experiencing homelessness. The governor vowed to work with the legislature to provide counties and cities with a comprehensive set of tools -- including zoning, development fees, tax incentives, and innovative ways to increase density and reduce costs -- to address the housing shortage.
The bill encourages municipalities to adopt various land use policies including allowing developments near rail stations that require at least 50 dwelling units per acre and no more than 1 parking space per 2 bedrooms and allowing developments near bus stations that require at least 25 units per acre and no more than 1 parking space per 2 bedrooms. Other policies include, for single-family zoning districts, regulations that permit duplexes, triplexes, courtyard apartments, cluster zoning, and lot size averaging. In addition, the bill encourages accessory dwelling units on lots containing single-family houses.
Municipalities are encouraged to adopt form-based codes, to set a minimum density of six units per acre in all residential districts, and to classify more residential and mixed-use developments as categorical exemptions under state environmental regulations. The bill also exempts from administrative and judicial appeals certain actions that cities can take to implement these provisions.
In addition, the bill authorizes cities to adopt housing action plans that increase the supply of affordable and market-rate housing and that allow various housing types. The action plans should also minimize displacement of low-income households during redevelopment.
According to the bill, local governments can require no more than one parking space per bedroom for housing near transit stops that is affordable to households earning no more than 50 percent of the area median income. Other than for staff and visitors, no parking can be required for housing near transit stops for seniors or persons living with disabilities. In addition, the bill forbids cities to prohibit permanent supportive housing in areas where multifamily housing can be developed.
The bill also provides a minimum 30-day notice period for rent increases for tenants of subsidized apartments if the rent is based on the tenant's income or other household circumstances.
For tenants who have been served notice of past-due rent, the bill gives renters 14 days to pay the amount due. The bill also grants the court the authority to stay writs of restitution for up to 90 days for good cause after considering if the tenant's failure to pay rent was caused by circumstances beyond their control, if the eviction will cause hardship, and if the tenant can make timely payment, among other considerations.
For such payments, the bill also authorizes the court to determine if the landlord may be reimbursed through the state's landlord mitigation program. The program can be used for unpaid rent, late fees, attorneys' fees, and costs, for which the tenant must repay the state.
In addition to two sets of solutions that address market conditions that limit housing opportunities for the lowest-income households, the report proposes a set of solutions to increase housing production while lowering costs. The solutions include major revisions to zoning ordinances, such as form-based codes and the elimination of single-family zoning districts, and more targeted revisions, such as inclusionary zoning and density bonuses for affordable housing. The solutions also include approval and permitting processes that reduce delays caused by community opposition. To promote innovation, the report calls for new housing designs, including accessory dwellings and micro-units; the report suggests modular housing, design-build programs, less labor-intensive construction, and other new methods and materials should be allowed through revised regulations and encouraged as market adaptations.
The plan also proposes a set of solutions to preserve market-rate affordable housing and protect its occupants from displacement. Tax breaks, in addition to new financing programs for public acquisition, are suggested for preserving "naturally occurring affordable housing." To prevent displacement, the report calls for empowering owner and renter residents to participate in public decisionmaking and enacting protections in a timely manner. Such protections include just cause ordinances, the right to legal counsel in eviction actions, proactive building inspection programs, certification of no harassment, and right of first offer to purchase policies.
The authors note that the four solutions combined make an effective, long-term program to address housing affordability and equity. In addition, the report proposes six priorities to build the knowledge needed to design and enact solutions to the housing crisis. The needed information includes accessible zoning data, an understanding of community opposition to proposed housing, indicators of displacement, and causes of racial disparities in homeownership.
Using census tracts to represent neighborhoods, the researchers look at housing diversity measured by indices of the mix of existing housing types and zoned housing density. The authors postulate that a lack of housing diversity places more financial pressures on homebuyers, which can result in higher rates of foreclosures, measured in the years leading up to the peak of the housing crisis in 2010. Similarly, during the recovery period after the peak, the low- diversity neighborhoods had more available houses and therefore higher rates of home sales.
Based on multivariate and spatial regression analyses, the report concludes that existing diversity and, to a lesser extent, zoned diversity affect neighborhood stability: low diversity yields higher foreclosure and sales rates. The analysis also shows that housing diversity has less influence on the two rates than do other factors, including the percentage of borrowers, the percentage of Hispanic population, and the housing vacancy rate. (p 9, col 1)
The authors state that policies to address foreclosures typically react to the existing situation rather than address structural causes arising from land use policies and existing development patterns. In particular, policies that promote housing diversity can increase community stability throughout a housing market crisis. The article's review of other factors of neighborhood stability also leads to a recommendation that policymakers should ensure that zoning regulations can accommodate the housing preferences and needs of the community's forecasted population. These regulations should ensure fair-share housing at the neighborhood level, according to the report. Recognizing that such a policy would likely be opposed by residents concerned about their property values, the authors offer a rebuttal based on the major conclusion of the article: housing diversity is associated with financially stable neighborhoods.
The report measures effects using three difference-in-differences specifications. One compares rents in a two-block radius of a new building with rents in a one-third mile radius. The second measure compares rents within two blocks of a new building with rents within two blocks of an apartment building that that was proposed but not constructed at the time of the study. The third measure compares rents within both radii of a new building with rents within both radii of a yet-to-be-constructed building.
The researchers find that all three measures indicate that rents in the inner ring around a newly constructed building fell by 5 to 7 percent relative to rents in the outer ring and to rents near buildings that had yet to be constructed. In addition, the authors find that a new building caused more residents from low-income areas to move to apartments near the new building. The authors suggest that this occurred because the market-rate apartments place downward pressure on rents for less costly apartments. New construction thus increased the opportunity for economic mobility for low-income households, according to the report.
The authors also find evidence that the new construction occurred in neighborhoods that had already experienced some change. So the new buildings accommodated existing demand rather than generated new demand.
This report notes that its conclusion about the effect of new construction on local housing affordability reinforces a similar conclusion about regional affordability in a report written by one of the authors, Evan Mast, and published in 2019. Based on both sets of research, the authors conclude that policymakers should include construction of market-rate apartments among their strategies to foster housing affordability.
The report classifies apartment buildings by vintage, the decade within which they were built, and traces the number of units occupied each year by very low-income households. The 1960s vintage period is shown to have the largest share of filtered units; the authors suggest that demolition and gentrification reduced that share for pre-1960s units. The authors also identify the changing effect of filtering across the study period. For example, filtering was most rapid in the 1980s and negative after the recession. In addition, the authors also find considerable variation in filtering among metropolitan areas, which the authors analyze in relation to local job growth, multifamily housing construction, and young adult homeownership.
The report provides data comparing the importance of filtering relative to federal housing subsidies in the boom before the Great Recession, during the recession, and in the recovery afterward. Between 2000 and 2006, 69,000 very low-income households moved into filtered units each year while HUD subsidies added 22,000 affordable units and low-income housing tax credits accounted for 92,000 units annually. After 2011, filtering became negative as middle- and moderate-income households, including some who had previously owned their houses, occupied aging rental units. The change in relative significance highlights the importance of new housing construction for all incomes, according to the report.
The authors conclude that "the housing market is an integrated web of substitutions serving a diversity of people, ... none of whom can be neglected without consequences for the others." Housing subsidies are crucial, although they have never been sufficient to meet demand. The opportunity of affordable housing produced through filtering should be included as part of housing policy to address the housing needs of low-income and now middle-income households. And market-rate housing development is needed to ensure that filtering can contribute to the supply of available housing.
Using data from HUD's Location Affordability Index v. 3 (updated as of March 26, 2019), the authors calculated New York, with the 5th most expensive housing costs being offset by the lowest transportation costs, to be the 10th most expensive city. However, even with the 8th highest median household income, New York is considered unaffordable because the city's ratio of costs to income (45.2%) exceeds the Location Affordability Index's affordability threshold of 45 percent. Only 5 of the 20 cities are affordable based on that threshold, because of the high median incomes in those cities: Washington, DC, San Jose, San Francisco, Boston, and Minneapolis-Saint Paul.
The report also looks at affordability for different categories of households, including dual professional family, single professional family, individual living at the poverty line, single parent family, and retired couple. All 20 cities were affordable for households in higher income categories, such as professional family and single family. New York ranked 8th and 7th most affordable, respectively. All of the cities were unaffordable for the lowest income categories (single-parent family and individual at the poverty line); for the latter category, the cost/income ratio exceeded 100 percent in 6 cities. Only eight cities were affordable for retired couples. New York ranked 6th, 3rd, and 8th most affordable, respectively.
The authors conclude that New York might remain economically competitive in the future in part because of its relative location affordability. The city's competitiveness is subject to possible increased transportation costs, which will be a function of the Metropolitan Transit Authority's ability to manage fiscal and operational deficits without major increases in household transportation costs. Lower-income households are at greater risk of being affected by such increases. Competitiveness is also subject to housing affordability, and the report recommends the city consider policies that increase housing supply and reduce upward pressure on housing costs.
The report recommends the state streamline funding for tax credit projects by reducing the number of funding sources and public agency approvals. In addition, the legislature should consider the cost implications of eligibility requirements -- such as sustainability, wage rates, childcare centers, and location in high-resource areas -- that are incorporated into the state qualified action plan; however, the authors argue against setting a hard cost-limit. New requirements in the state building code and environmental regulations should also be assessed against the need for more housing, according to the report.
The report recommends the state expand upon recent legislation to encourage localities to reform land use regulations and to build capacity for local governments to facilitate affordable housing development. Density, setbacks, parking, open space, and design standards are among the regulations that governments should assess. According to the authors, the state should oversee local development fee requirements and consider alternative funding for infrastructure expansion. For local developers, the state should collect data on approved developments and present best practices for deciding among cost-effective construction and financing alternatives. More generally, the state should invest in construction innovations and skills training to lower labor costs, the most significant driver of increased construction costs.
The report discusses six housing policies that local governments can use to enhance affordable multifamily development: inclusionary zoning, by-right development, tax abatement, public land disposition, rent control, and development incentives. The discussion includes a description of what is needed to make effective policies. Considerations are also presented for structuring policies to address housing market failures and opportunities, and the policy effects on multifamily development financing are discussed.
For example, one of the development incentives is a density bonus in the form of zoning regulations allowing more units per acre, a greater floor area ratio, or increased building height. The bonus provides additional revenue from the increased number of units to cover the reduced rents of the affordable units. The report describes a density bonus as a relatively inexpensive and straightforward incentive to produce additional affordable apartments. If the additional units can be rented at market rates, the density bonus also contributes to the overall supply of apartments. The report notes that this incentive is effective in localities with strong housing markets, where a demand for the additional units exists. The report also warns that the bonus's effectiveness can be diminished if constructing the additional units triggers exceptional costs, such as more expensive building materials for a larger structure.
In addition, the report illustrates the cumulative effect of land use policies on rent, using a hypothetical 200-unit garden apartment project in Atlanta. In this scenario, a rent increase of $315 per month is needed to cover increased development costs (open space fee, delay for extended reviews, and constructing a required stormwater retention system), increased operational costs (a property tax increase), and reduced rent revenues (a density reduction).
The report also includes case studies of housing market trends in eight cities across the U.S.: Atlanta, Denver, Minneapolis, Pittsburgh, Sacramento, San Antonio, Seattle, and Tampa.
The plan recommends offering regulatory incentives to developers who build housing that is affordable to targeted household incomes. The incentives include increasing density bonuses for affordable housing in more zoning districts. Minimum lot size requirements should be reduced for affordable homeownership developments, and development reviews should be expedited for below-market-rate projects. In addition, the plan suggests the city subsidize development costs and support low-interest and deferred loans for affordable housing units.
The plan also recommends changes to the land use code that would reduce housing development costs in general. Such changes include reducing building setbacks, reducing the 3,000-square-foot minimum lot size, and adopting lower parking requirements for housing in areas served by transit. The plan recommends standardized requirements for infrastructure improvements for small infill developments. The city should also advocate that the legislature amend the Subdivision Act to grant cities more regulatory flexibility.
The plan suggests measures specifically to incentivize ADUs. The updated regulations should include revised regulations for parking, setbacks, unit size and height, and owner occupancy. Public education programs should present information about ADU opportunities and approval processes, as well as financial assistance for affordable ADUs.
To promote diverse and equitable neighborhoods, the plan calls for the city to retain a consultant to conduct a zoning audit. The audit should determine how land use regulations can be revised to increase the amount and broaden the distribution of affordable housing. In support of this, the plan also recommends the city engage in conversations with its neighborhood councils.
In its recommendation for the strategic use of city financial resources, the plan suggests establishing special use districts for housing and allocating funds for housing collected through tax increment financing.
The report considers eight types of buildings (office, research and development, retail, entertainment, hotel, medical, institutional, and production, distribution, and repair) and calculates an affordable unit demand factor for each building type. The calculation uses the number of employees (based on the number of square feet per employee for each building type from various sources) and the number of workers per household (based on census data) to determine the number of new households that can be expected from nonresidential development. That number of households is further broken down into household-income categories (using income data from the American Community Survey) to determine the number of extremely low-, very low-, low-, and moderate-income households, as well as above moderate-income households (more than 120% of the area median income).
The affordable unit demand factor derives from the ratio of each of those household numbers and a unit area of each building type. For example, the largest demand factor for extremely low-income households and moderate-income households is, respectively, 0.17037 households per 1,000 square feet of retail and 0.39047 for office. The authors emphasize that the demand factors represent conservative maximums that city council can adjust as it sets regulatory requirements.
In addition, the report compares its nexus analysis with the city's nexus analysis for its inclusionary housing program and concludes that both studies support the city's adopted affordable housing impact fees, even when the potential overlap of the demand calculated for nonresidential and residential development is taken into account.
The report includes an appendix discussing the important factors and assumptions used in the analysis.
The legislation requires certain municipalities and counties to address the housing needs of households earning up to 80 percent of the area median income. The plan encourages towns and counties and requires cities to include in the housing element of their local plans at least three strategies. Among the 23 strategies listed, 15 have been added by SB34. The new strategies include zoning regulations encouraging accessory dwelling units, permitting higher densities for moderate-income housing in mixed-use and commercial areas, allowing single room occupancy buildings, and creating incentives for inclusionary housing.
The strategies also include reduced impact fees for moderate-income housing, as well as policies to preserve existing housing. Higher densities for moderate- income housing and reduced parking requirements near major transit investment corridors are other newly added strategies.
In addition, the legislation requires that the local transportation element addresses housing development around a major transit investment corridor, as well as other transportation facilities for localities without a corridor.
SB34 requires municipalities and counties to prepare an annual report on the locality's progress with moderate-income housing. The report must update the locality's estimated need for affordable housing for the next five years and describe efforts that have been taken to implement the affordable housing strategies.
In addition, the legislation forbids money from the state's Transportation Investment Fund to be used in a municipality or county that has not adopted moderate-income housing goals and strategies as required or has not implemented the strategies. The prohibition includes funding to construct or rehabilitate interchanges on a limited-access facility and stations on a fixed guideway transit project.
Prior to the adoption of Ordinance 296-19, buildings certified for occupancy after June 13, 1979, were exempted from the rent regulations and eviction protections of the Rent Ordinance. Ordinance 296-19 extends the eviction protections to buildings constructed or substantially rehabilitated after June 13, 1979, in response to complaints of increased evictions by landlords trying to evade the tenant protections of the state Tenant Protection Act of 2019. Ordinance 296-19 notes that by extending these protections to newly constructed and rehabilitated units, these local regulations supersede the less protective provisions of the Tenant Protection Act.
The eviction protections include the requirement that landlords must have a just cause for eviction and they must pay relocation costs for certain evictions. In addition, a tenant is protected from eviction because of foreclosure.
Under Ordinance 296-19, recently constructed or rehabilitated units continue to be exempt from the Rent Ordinance's rent regulations. However, the Rent Ordinance protects exempt units from certain rent increases. Landlords are prohibited from imposing rent increases in bad faith, such as increases in excess of market-rate increases for comparable units and increases imposed within six months of an attempt to recover possession of a unit.
The waiver applies to affordable housing developments, multifamily buildings, including ancillary commercial space, in which all units, except the manager's unit, are subject to income-based rent restrictions that ensure affordability. Alternatively, the developments must be funded by a nonprofit and provide permanent housing for homeless or formerly homeless persons. The waiver also applies to the construction of ADUs on properties with no more than four dwelling units or on a nonprofit organization's residential development. The ordinance waives fees for plan review, records retention, site surcharges, and building inspections, except electrical and plumbing.
Referred to as a pilot program, the fee waiver expires on October 13, 2020, one year after the effective date of the ordinance. The fee waiver is retroactive to June 1, 2019, and applies to fees for building permits that were applied for after the retroactivity date even if they are due after the expiration date. Retroactivity also applies to fees that had not been paid before the retroactivity date for applicable developments that had not received a certificate of occupancy by that date.
Before the amendments, state law prohibited housing discrimination based on source of income but excluded government housing subsidies. SB 329 expands the definition by including federal, state, and local public assistance and housing subsidies and specifies Section 8 vouchers as such assistance.
SB 222 further expands "source of income" to specifically include U.S. Department of Housing and Urban Development-Veterans Affairs Supportive Housing (HUD-VASH) vouchers. More generally, this bill added veteran and military status as a class protected against housing, as well as employment, discrimination.
AB 1497 amends the definition of "housing accommodation" subject to protection from discriminatory actions to include housing offered for occupancy on an online housing platform; this refers to internet private residence rental listings, such as Airbnb.
The defense applies to several just causes listed in Section 22.206.C.1, including the tenant habitually failing to pay rent or comply with the lease; the tenant's employment on the property is ended even though such employment is a condition of occupancy; the owner wishes to substantially rehabilitate or demolish the building; and the owner seeks to reduce the number of residents of a unit in order to comply with the maximum occupancy limit.
The ordinance exempts certain just causes listed in Section 22.206.C.1 so that eviction is allowed after required notice where the owner allows a family member to occupy the unit and where the owner wishes to sell a single-family dwelling. Other exempted causes include instances where the owner decides to no longer rent the unit after they have received notice of a zoning violation and have provided the tenant with relocation assistance; where the owner has received an emergency order to correct a health or safety violation; where the owner wishes to discontinue occupancy of an accessory dwelling unit; or where the tenant has allegedly committed a crime on the premises that is a drug-related activity or that affects the health or safety of other tenants.
The ordinance also establishes a rent mitigation fund for low-income households at risk of eviction in the winter because of nonpayment of rent, to be used if no other source of funds is available.
In addition, the ordinance prohibits eviction if the unit is not registered as rental housing with the city Department of Construction and Inspections.
The intent of the regulatory reform is to ensure that local zoning allows more and less-expensive housing. Schuetz says this is particularly needed in high-opportunity areas, where land is expensive. To offset that cost, regulations needs to allow smaller housing units at higher densities than is typically allowed. Areas zoned for single-family houses should be reclassified to allow duplexes, townhouses, and multifamily buildings. Where denser types of housing are permitted, areal and dimensional requirements should not inhibit feasible housing development, according to the report.
The second reform policy would place higher property tax rates on land than on improvements to increase the costs of land and therefore the pressure to generate more revenue through higher value improvements, according to Schuetz. The higher land tax also incentivizes sooner development rather than development that is delayed in hopes of greater future demand. In addition, the land tax captures increased revenues for municipal coffers. This is more equitable where the government increases land value through upzoning and where the government has made significant investments, such as in transit or schools. The author also notes that a land tax is more effective where low density structures occupy expensive land.
The article points out an important relationship between these two regulatory policies. The author notes that the additional development resulting from zoning reforms would happen more quickly and equitably if a community also enacted a land value tax. Schuetz also suggests aligning these with a third, nonregulatory policy: increasing housing subsidies or income supplements to offset housing cost increases that might result from the regulatory reforms. This is especially a concern where increased development opportunities might encourage redevelopment of existing low-rent housing. According to the article, the three policies can interact so that the local housing market operates efficiently, more houses are built in high opportunity neighborhoods, and low-income households receive more financial relief.
The report recommends that municipalities ensure that their impact fee system is transparent. This would entail publishing online nexus studies and fee schedules that are clear, comprehensive, and up to date. Local governments should prepare an annual fee report and include it in the annual progress report for the housing element.
The report suggests the local fee program should be designed to reduce unnecessary costs on developers. Officials should calculate fees as early as possible and collect them as late as possible in the approval process. The fee program should also reflect housing and sustainability goals: for example, whether fees are assessed per unit or by size and whether the fees vary by unit type. Location near transit, on infill sites, or in weak-market areas could be incentivized, as could housing for low-income, special needs, and senior households.
In addition, the report suggests the state could set more effective guidelines for local fee design, such as the desired levels of service for the infrastructure and clear connections between the fees and impacts of a specific development. The state could require local governments to consider how fees affect the feasibility of residential developments. The state might also create a formula that caps the amount of fees on a development, although the report notes that this might not be flexible enough to be politically acceptable.
Given the effect of impact fees on housing costs, the report recommends the state require cities and counties to justify that their fees are the most appropriate funding mechanism for infrastructure improvements. The report also suggests the legislature consider statewide tax reform to provide local governments with funding alternatives for infrastructure and new financial incentives for housing production.
Most of the easy recommendations are to follow existing laws. Local governments should issue certificates of occupancy in accordance with the state building code and should release subdivision bonds as required by the Map Act. The state housing and community development department should initiate investigations and potential loss of funding to local governments for noncompliance with the state housing law. Another recommendation in this category is to require disclosing the identities of plaintiffs in lawsuits brought under the state environmental quality act.
The heavier category address local development impact fees, which should be limited so that they are proportionate to actual costs and should not include so-called discretionary requirements. The regional housing needs assessment should include state funding incentives for local jurisdictions to provide their share of housing, base local housing allocations on job growth, and base compliance on the number of housing units actually built.
In addition, the recommendations call for local jurisdictions to simplify and standardize building codes and design requirements. Cities and counties should set appropriate time periods for receiving comments and making decisions on development proposals and prohibit downsizing project approvals. Another heavier recommendation is to allow only one state environmental quality lawsuit to be brought against a housing project.
The plan calls for the city to reform practices so that the housing market can respond to the city's growing economy. This includes revising the zoning ordinance to provide flexibility for developers, such as mixed-use districts, transit-oriented design, and form-based codes. To accommodate infill development, land use regulations should permit subdividing large lots, allow innovative housing types, and reduce required parking. Streamlined review processes should similarly support housing development, such as expedited permitting for affordable housing developments.
The plan also calls for the city to provide incentives for affordable housing development. Specifically mentioned are inclusionary zoning, with increased development density in exchange for affordable units, and discounts for city-owned land, as well as the city providing infrastructure upgrades where needed. The plan advocates state legislation to allow tax abatements and impact fee waivers for affordable housing, as well as charging real estate recording fees to raise additional funding. To encourage renting to low-income households, local jurisdictions should be enabled to provide insurance programs to cover property damage or unpaid rent.
The plan also includes policies to ensure equitable and fair housing and access to high-opportunity neighborhoods. The plan calls for compliance with the affirmatively furthering fair housing rule to end discriminatory acts and policies. Objectives seek to maintain an equitable citywide ratio of affordable to market-rate units, including building fewer affordable units in low-opportunity areas and providing incentives for more units in high-opportunity areas.
The amendments permit attached and detached accessory dwelling units (ADUs) of at least 800 square feet by right in single-, two-, and multifamily zoning districts, as well as planned development districts and certain low-density cluster developments. ADUs are also permitted on any lot containing a single-family dwelling located in areas with certain designations in the general plan, regardless of its current zoning designation. ADUs must contain kitchen equipment and a full bathroom. However, an ADU can contain no more than one living area, two bedrooms, and two bathrooms.
One onsite parking space is required unless the ADU is within one-half mile of a transit stop, within one block of a car-share parking space, or in a historic district; also, parking is not required if the ADU is part of an existing primary residence or accessory building or if an onstreet parking permit is required but not available to the ADU occupant. Replacement parking is not required when an existing garage or carport is demolished for or converted to an ADU.
The amendments also permit attached ADUs within the nonliving spaces (such as storage rooms, basements, attics, and garages) of existing buildings on two- and multifamily dwelling lots; at least one such ADU is permitted per lot and the maximum number of ADUs cannot exceed 25 percent of the total units on the lot. No more than two detached ADUs are permitted on two- and multifamily dwelling lots and can be no larger than 800 square feet and no higher than 16 feet.
In addition, the amendments require ADUs to comply with various development and design standards. The amendments also prohibit the use of ADUs for incidental transient occupancy.
The amendments permit JADUs no larger than 500 square feet and contained within the existing walls of the primary dwelling, which must be occupied by the owner. A JADU must have at least an efficiency kitchen and may share sanitary facilities. A JADU requires no additional parking, but parking must be replaced when an existing garage is converted to a JADU. Both an ADU and a JADU are allowed on a single lot if the ADU is fully detached, no larger than 800 square feet, and no higher than 16 feet.
One ADU per lot must be approved by right if it complies with the development standards contained in this ordinance. This applies in all zoning districts where residential uses are permitted by right. No minimum lot size, maximum lot coverage, or minimum or maximum unit size that prohibits an ADU of at least 800 square feet and 16-foot height. Otherwise, an attached ADU in an existing primary building cannot exceed 50 percent of the floor area of the building, and a detached ADU cannot exceed 1,200 square feet. One parking space is required for an ADU, except that no space is required if the ADU is part of a primary or accessory structure or is within one-half mile of public transit, within one block of a designated shared vehicle parking space, or in a historic district. A complete application must be acted upon within 60 days.
JADUs must be approved if they comply with applicable state regulations established in AB 13. Those provisions include permitting one JADU on a lot with an existing or proposed single-family dwelling, requiring owner occupancy of either the primary residence or the JADU, requiring the JADU to include an efficiency kitchen, and prohibiting required parking for the JADU.
MTHs must also be ministerially reviewed within 60 days. Only one MTH is permitted per lot, and MTHs must be placed on a paved surface and connected to water, sewer, and electrical services. The undercarriage of MTHs must be hidden from view, and MTHs must comply with design standards for cladding, windows and doors, roofing, and extensions.
In addition, the ordinance exempts ADUs and JADUs from the city's park and recreation impact fee.
The report notes that Chicago's current regime of "patchwork planning" is uncoordinated and lacks control, oversight, and accountability. To address this, the report calls for a citywide comprehensive plan for public investments and community development to bring about environmental and economic sustainability resting on a foundation of equity. The comprehensive plan, which must include a racial equity action plan, according to the report, needs to transparently define and accountably address the different needs and opportunities of Chicago's neighborhoods, aligned with a citywide vision.
The report also states that plan implementation must arise from shared power and community engagement. Chicago's zoning advisory councils, the primary conduit for neighborhood input in development decisions, are not truly representative and act without formal procedures, according to the report. These councils should be replaced with community development action councils that would advise their aldermen in light of policies in the comprehensive plan. All action councils would be subject to uniform standards for membership and procedures developed by the city housing and planning departments, and council representatives would serve on a new Chicago development commission that would replace the city's two commissions on planning and development.
In addition to a new comprehensive plan and meaningful civic participation, the report proposes actions to bring about equitable community development. The city should adopt laws to limit aldermanic approvals, set clear timelines for approval of affordable housing developments, and rezone properties to be consistent with the comprehensive plan. The city should provide fair housing training for staff as well as technical assistance and training for the new development action councils. Also, the city's inspector general should be directed to annually review affordable housing development activities.
The report notes that a 3 to 7 percent cost savings has occurred for modular construction of scattered-site single-family housing in the Twin Cities. Large multifamily developments in California have seen 20 percent cost savings and 30 percent time savings. The authors also state that modular buildings are better engineered by taking advantage of Building Information Modeling (BIM), waste less construction material, produce smaller site disturbance, and are safer for construction workers.
However, modular construction requires major investments to develop a sophisticated and automated production facility. Such a facility also depends on a steady pipeline of housing projects to justify the factory operation, which is difficult to achieve in the notoriously cyclical housing market. The logistics of transporting large modules is a significant challenge, as is balancing the competing needs for standardization and customization of units. Equally challenging is the need for the risk-averse construction industry to adapt to the environment of continuous innovation in the relatively new modular industry, according to the authors.
According to the report, construction costs per square foot are between 20 and 50 percent less for manufactured housing than for site-built houses. A house can be completed in a month or two, using an assembly-line approach that is not interrupted by weather delays. Labor is used efficiently and standardized materials purchased in bulk contribute to cost savings.
The report states the perception that manufactured housing is of inferior quality and low resale value is a significant challenge for manufactured housing, although research is cited that this type of housing has substantially improved in quality and appreciates in value. With higher interest rates and shorter loan terms, financing is often through chattel loans rather than conventional mortgages. Also, the authors note that transportation costs are approximately $5 per mile per house section.
One recommendation to create equitable neighborhoods is to reduce local control over affordable housing decisions, including city council members' authority over development applications and the state requirement in the qualified allocation plan for local support of developers seeking low-income housing tax credits. The report also recommends that the city assess the impacts of proposed development on housing affordability and other concerns and that the assessment of fair housing be coordinated across the Chicago region.
The report calls for the city to provide property tax relief for housing construction and rehabilitation that includes units affordable to households earning up to 60 percent of the area median income, to increase rents eligible for housing choice vouchers to 200 percent of the fair market rent, and to make property tax assessments more accurate and less regressive by using a price-weighted regression model. The report also seeks to improve housing conditions through the expansion of homeownership opportunities using city-owned land in targeted neighborhoods and through fine-tuning the city's Affordable Requirement Ordinance to benefit households who are most in need.
To target economic development for inclusive growth, the report recommends the city adopt an equity performance measure in its transportation planning and target infrastructure, transit, and other investments in areas that have experienced disinvestment. In addition, the report calls for an assessment of the health impacts of proposals that would use government-owned land or financial assistance. Another recommendation is that the city should adopt a graduated real estate transfer tax as a progressive way to raise funds for affordable housing development.
MHA rezones or increases development capacity in all multifamily and commercial zoning districts and 27 urban villages while requiring affordable housing when the rezoned properties are developed. Developers must provide an affordable housing contribution, either by constructing rent-restricted units onsite with the rest of their development or by paying a fee that the city will use to construct or preserve affordable housing elsewhere.
MHA requirements for the number of required affordable units vary according to a property's zoning classification at the time of development, MHA suffix, and MHA payment and performance area. The MHA suffix refers to the scale of the zoning change; three intensities of change are allowed: "standard" changes allowing more intensity within the original zoning category, rezoning to the next highest category, and rezoning by two or more categories. The MHA payment and performance area refers to sections of the city designated high, medium, and low to describe three levels of the required affordable housing contribution relative to the developed amount of floor area or number of units.
According to the amendments, the inclusionary housing requirements apply to residential developments of at least 10 units (previously 2 units) and all condominium conversions of 2 or more units.
In rental developments, at least 10 percent of the units must be affordable to households earning up to 60 percent of the area median income (AMI), and in for-sale developments, either at least 10 percent of the units must be affordable to median-income households or at least 15 percent must be affordable to households earning between 80 and 120 percent of AMI. The inclusionary units must be built at the same time as and be comparable in bedroom mix, design, and quality to the market-rate units. Certain regulations are applied incrementally until June 30, 2024.
As an alternative to building the inclusionary units onsite with the market-rate units, the developer has the option of constructing the units on another site, paying a fee in lieu of construction, rehabilitating dwelling units or single room occupancy hotel rooms, or donating land to the city.
The amendments eliminate development impact fees for inclusionary dwelling units built onsite with market-rate housing. Units constructed onsite may also earn incentives provided by the city's density bonus regulations.
In addition, the amendments create within the city's Affordable Housing Fund an Inclusionary Housing Fund account, in which in-lieu fees are deposited.
Effective January 1, 2020, the amendments require inclusionary housing in amounts specified in the city's Unified Housing Policy. The policy requires 8 percent of a project's units to be affordable for 20 years to households earning up to 60 percent of the area median income (AMI), 4 percent of the units to be affordable for 20 years to households earning 30 percent of AMI, or 20 percent of the units to be affordable for 30 years to households earning 50 percent of AMI. For the last option, the developer can request financial assistance from the city. In addition, fewer affordable units are required in developments of less than 100 units, except for projects receiving city assistance, according to a scaling factor set out in the Unified Housing Policy.
The policy offers alterative compliance options that allow developers to pay a fee in lieu of constructing the affordable units or to construct the units on another site within a half-mile of the project. Effective June 1, 2020, the developer may preserve naturally occurring affordable housing or donate land to the city.
The amendments delay application of the requirements to for-sale units and to projects containing between 20 and 49 units, in accordance with the city's Unified Housing Policy.
Residential uses specified in the Unified Housing Policy (college and university housing and projects with at least 20 percent of the units receiving federal, state, or local assistance) are exempt from the inclusionary requirements. Also, the amendment allows the city council to exempt projects when it finds "extraordinary circumstances and sufficient public benefit."
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