AGENDA #1
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Public Hearing: Land Use Management Ordinance Text Amendment – Modifications to Housing Floor Area Restrictions for Major Subdivisions and Planned Development Regarding Payment-in-Kind for Affordable Housing
DATE: April 19, 2006
PURPOSE
This Public Hearing has been called to consider a text amendment to the Land Use Management Ordinance in response to a text amendment application from the developer of Bradley Green Subdivision, which proposes to modify the Land Use Management Ordinance to allow for payment-in-kind for affordable housing.
The attached ordinances would amend the regulations to make these changes. We recommend that the Town Council enact Ordinance A.
BACKGROUND
On January 9, 2006, the Town Council approved a Preliminary Plat application for the Bradley Green Subdivision. The subdivision, located north of the Chandler’s Green Subdivision, was approved for eight single-family residential lots. In order to comply with Land Use Management Ordinance regulations for Housing Floor Area Restrictions, the application included two lots designated as size-restricted and limited to 1,350 square feet of floor area for 30 months following issuance of Certificate of Occupancy.
During the January 9, 2006 Council meeting, the Bradley Green developer suggested that the Council consider a text amendment to the Land Use Management Ordinance that would allow for a payment-in-kind for affordable housing as an alternative to complying with the floor area restrictions. The applicant suggested that the proposed amendment would allow the applicant to substitute the two size-restricted lots in Bradley Green with an in-kind payment associated with a proposal to pave and improve Ginger Road and a proposal to provide gravity sanitary sewer service to an anticipated development on land owned by Habitat for Humanity.
In the Council approval of the Bradley Green Subdivision, the following stipulation was adopted as an alternative to providing two size-restricted dwelling units:
“Affordable Housing: Payment-In-Kind: That at such time that an amendment to the Land Use Management Ordinance allows an in-kind payment in-lieu of providing floor area restricted dwelling units or affordable housing units, the applicant may improve Ginger Road to include two 11-foot paved travel lanes, shoulders, ditch, and a sidewalk along one side between Amesbury Drive and Sunrise Road. Unless specifically prohibited by the enacted amendment to the Land Use Management Ordinance, this improvement, along with the installation of a gravity sanitary sewer line to the Habitat for Humanity property, may be used to satisfy all or some portion of the in-kind-payment alternative to the floor area restricted requirements for major subdivisions, as then authorized by the Land Use Management Ordinance.”
Prior to the January 9, 2006 Council meeting, the applicant submitted an application which proposed to modify the Land Use Management Ordinance to allow for a payment-in-kind for affordable housing.
CURRENT ORDINANCE
Currently the Land Use Management Ordinance requires major subdivisions, with five or more lots, to provide floor area restricted dwelling units. Floor area restrictions require that 25 percent of the lots contain dwelling units with no greater than 1,350 square feet of floor area for the 30 months following the issuance of a certificate of occupancy. The Ordinance also provides two alternatives to the floor area restrictions:
Current regulations allow the payment-in-lieu alternative to be considered by the Council only with development applications that propose creation of between five and 12 lots. In those cases, the payment-in-lieu amount is to be calculated based on an estimate of funding that would be needed to make a homeownership opportunity in the proposed development available to individuals or families with annual income at or below 80 percent of the area median income. The payment is required to be used for the funding of affordable housing initiatives.
DISCUSSION
We believe that the intent of the application to amend the Land Use Management Ordinance is to allow in-kind payments as an alternative to a cash payment-in-lieu as a substitute for on-site affordable housing (please refer to Attachment 4). A payment-in-kind would include any type of infrastructure improvement direct or indirect, which the Council determines provides benefit towards the funding or encouragement of affordable housing initiatives. The application for the text amendment does not propose specific text.
We believe that if the Council wishes to pursue a payment-in-kind, the amount of the payment-in-kind should be calculated similar to the process used to determine a payment-in-lieu of affordable housing. The applicant’s proposal does not include a provision regarding the value of the payment-in-kind. We recommend the addition of language that would specify that the estimate of value of the payment-in-kind be based on the estimate of funding that would be needed to make a homeownership opportunity in the proposed development available to individuals or families with annual incomes at or below 80 percent of the area median income. Ordinance A includes the following language:
The amount of the payment-in-kind shall be calculated by multiplying the number of affordable units to be provided as calculated in Section 3.8.6.1 (without dropping fractions) by an estimate of funding that would be needed to make a homeownership opportunity in the proposed development available to individuals and families with annual income at or below 80% of the area median income. The estimate shall be developed in consultation with the Town Manager and approved by the Town Council. The developer shall provide the payment-in-kind before approval of a final plat for the subdivision or approval of a minor subdivision for the Planned Development-Housing, provided, however, that the Town Manager may allow phasing of the payment-in-kind consistent with the approved phasing of the subdivision.
Ordinance B, the applicant’s proposal, includes the following language regarding the value of the payment-in-kind:
The estimate shall be developed in consultation with the Town Manager and approved by the Town Council. The developer shall provide the payment-in-kind before approval of a final plat for the subdivision or approval of a minor subdivision for the Planned Development-Housing, provided, however, that the Town Manager may allow phasing of the payment-in-kind consistent with the approved phasing of the subdivision.
We do not recommend enactment of Ordinance B.
We anticipate that the proposed text amendment allowing payment-in-kind for affordable housing may be unnecessary at such time as the Town Council enacts an Inclusionary Zoning Ordinance.
RECOMMENDATIONS
Planning Board Recommendation: The Planning Board reviewed the proposal on March 21, 2006 and voted 8-0 to recommend approval of the text amendment proposal. Please refer to the attached Summary of Planning Board Action (Attachment 3).
Manager’s Preliminary Recommendation: We recommend that the Council enact the attached Ordinance A to amend the Land Use Management Ordinance to modify the requirements for Housing Floor Area Restrictions for Major Subdivisions and Planned Development and to allow an applicant to provide a payment-in-kind in lieu of size-restricted dwelling units. Ordinance A would also provide a mechanism to determine the equivalent amount of the payment-in-kind.
Although we are anticipating that the Town Council will enact an Inclusionary Zoning Ordinance as early as this fall, we recommend the enactment of the in-kind provision. We believe the in-kind payment provisions should reference the amount equal to what would be necessary to make a home available as an affordable unit in the particular development rather than an in-kind payment of an amount that is undefined.
Ordinance B provides the applicant’s proposal.
ATTACHMENTS