ATTACHMENT 1
Inclusionary Zoning (draft 11/08/06)
Sec. 1 Purpose.
The purpose of this Chapter is to promote the public health, safety and welfare by promoting housing of high quality located in neighborhoods throughout the community for households of a variety of income levels, ages and sizes in order to meet the Town’s goal of preserving and promoting a culturally and economically diverse population in our community.
Based upon the review and consideration of reports and analyses of the housing supply in the Town, it is apparent that the diversity of the Town’s housing stock has declined for many reasons including increasing property values and construction costs. The Town recognizes the need to provide affordable housing to households of a broad range of income levels in order to maintain a diverse population and to provide housing for those who live or work in the Town. Without intervention, the trend toward rising housing prices will result in an increasingly inadequate supply of affordable housing for town residents and local employees, which will have a negative impact upon the ability of local employers to maintain an adequate local work force and will otherwise be detrimental to the public health, safety and welfare of the town and its residents. Since the remaining land appropriate for new residential development within the Town is limited, it is essential that a reasonable proportion of such land be developed into housing units affordable to low and moderate income households and working families.
The regulations set forth in this Chapter are in furtherance of a key goal of the Town’s Comprehensive Plan: to create and preserve affordable housing opportunities. The regulations also support other goals of the Town including the reduction of traffic congestion and associated air pollution; and the prevention of sprawl through the maintenance of the urban services boundary. The regulations are intended to encourage and provide a structure for cooperative participation by the public and private sectors in the production of affordable housing.
While this Chapter provides specific alternatives to the production of on-site affordable housing units, the intent and preference of this Chapter is for the provision of permanently affordable housing units constructed on-site and privately produced, owned, and managed.
Sec. 2 Covered Development Projects.[1]
The provisions of this Chapter shall apply to all new developments that contain or result in (a) five or more residential dwelling units; or (b) a new subdivision of land that results in (i) five or more single-family lots or (ii) two-family lots with the potential for six [This is based on our discussion of the impracticality of requiring an odd number of duplex units] or more residential units. The types of development subject to the provisions of this ordinance include, without limitation, the following:
(a) A multifamily development that is (i) new residential construction that creates 5 or more dwelling units or (ii) new mixed-use construction with a residential component of 5 or more dwelling units.
(b) A development that is the renovation or reconstruction of an existing multifamily residential structure that increases the number of residential units from the number of units in the original structure by 5 or more dwelling units.
(c) A multifamily development that will change the use of an existing building from non-residential to residential having 5 or more dwelling units.
(d) A new subdivision of land into five or more single-family lots.
(e) A new subdivision of land into two-family lots with the potential for six or more residential units [same comment as above].
Sec. 3 Percentage of Affordable Housing Units or Lots Required.
(a) General requirement. Except as otherwise specifically provided, the affordable housing component shall provide for the permanent affordability (as defined in Sec. 13 below) of [amount to be determined] percent of the approved dwelling units, as further detailed in Sec. 7 below. Further, except as otherwise specifically provided, the affordable units shall be located within the covered development.
(b) Calculation. [To be finalized. This section needs to start by addressing the calculation in multifamily units. Then, the following paragraph.]
For subdivision proposals, each lot that is large enough for only one single-family dwelling unit or that is limited by restrictive covenants to development only with a single-family dwelling unit shall be deemed to house one single-family dwelling unit. Each lot that is large enough for a two-family dwelling unit or that is allowed by restrictive covenants to develop with a two-family dwelling shall be deemed to house two dwelling units. The minimum number of affordable units for a subdivision shall then be determined by multiplying the maximum number of dwelling units permissible within the development proposal as determined herein by the percentage specified above.
(c) Cash payment in lieu of housing units.
(1) General applicability. In accordance with Sec. 9 below, the Council (or Planning Board, if appropriate) may accept a payment in lieu of affordable housing for all or part of the affordable housing obligation imposed by this Chapter. If the calculation of the housing obligation results in a fractional number of units, the fractional amount shall be fulfilled with a payment in lieu (calculated in accordance with subsection (3) below).[2]
(2) Amount and use of cash in lieu. The per unit payment amount shall be determined by the Town Council and set forth in the Town’s annual fee resolution. The per unit amount shall be based on an estimate of the cost of providing an affordable housing unit in Chapel Hill. The Council shall base the annual per unit payment amount on the differential between the cost to produce such a unit and the price it can be sold for, as determined by averaging the actual differentials reported over the previous 12 months by the three nonprofits actively producing affordable housing stock in Chapel Hill: the Orange Community Housing and Land Trust, Habitat for Humanity of Orange County, and Empowerment, Inc. All cash payments received pursuant to this Chapter shall be deposited directly into the Revolving Acquisition Fund [3] for purposes authorized under Sec. ___ [relevant section of the Chapel Hill code].
(3) Calculation. For purposes of determining the total in lieu payment amount, the per unit amount established by the Town pursuant to Paragraph (C)(2) of this Section shall be multiplied by 15 percent of the number of units proposed [proposed or possible or does this mean the base number before density credit?] in the covered development. For purposes of such calculation, if 15 percent of the number of proposed units results in a fraction, the fraction shall not be rounded up or down. If the cash payment is in lieu of providing one or more but not all of the required units, the calculation of required affordable dwelling units shall be prorated as appropriate.
Sec. 4. Application and Inclusionary Housing Plan.
(a) Application. For all covered developments, the applicant or owner shall file an application for approval on a form provided and required by the Town. The application shall require, and the applicant shall provide, among other things, general information about the nature and scope of the covered development, as well as such other documents and information as the Town Manager may require. The Manager shall also have the authority to require, as part of the application submittal, such portions of the inclusionary housing plan required under subsection (b) of this section as the Manager shall deem necessary to properly evaluate the proposed covered development under the requirements and provisions of this Chapter.
If the applicant intends to request permission to provide an alternative to on-site affordable housing units as provided under Sec. 9 of this Chapter, the applicant nonetheless is required to demonstrate with reasonable specificity what the project would look like if the project included on-site integration of affordable housing units, per Sec. 8 of this Chapter. In accordance with Sec. 9, the applicant who seeks to provide an alternative to on-site integration shall demonstrate that the proposed alternative will further affordable housing opportunities in the Town to a greater extent than compliance with the otherwise applicable on-site requirements of this Chapter.
(b) Inclusionary Housing Plan. As part of the approval of a covered development project, the applicant shall present to the Town an inclusionary housing plan that outlines and specifies the covered development’s compliance with each of the applicable requirements of this Chapter. The plan shall be subject to approval by the Town and shall be incorporated into a binding agreement to be called the Affordable Housing Performance Agreement between the applicant and the Town as required pursuant to Sec. 5 of this Chapter. Minor modifications to the plan are subject to approval by the Town Manager; major modifications are subject to Council approval and will be considered promptly upon petition from the applicant. The plan shall specifically contain, at a minimum, the following information regarding the covered development:
Sec. 5. Affordable Housing Performance Agreement and Other Documents.
Prior to issuance of a zoning compliance permit for any covered development, the applicant or owner shall have entered into an Affordable Housing Performance Agreement with the Town regarding the specific requirements and restrictions regarding affordable housing and the covered development. The applicant or owner shall execute any and all documents deemed necessary by the Town, including, without limitation, restrictive covenants and other related instruments, to ensure the permanent affordability of the affordable housing units or lots in accordance with Sec. 13 of this chapter. The agreement shall set forth the commitments and obligations of the Town and the applicant and shall incorporate, among other things, the inclusionary housing plan; it shall also contain the agreements and decisions regarding the applicability of any one or more of the alternatives to the provision of on-site affordable housing units as set forth in Sec. 9 of this Chapter. The agreement and all documents described above shall be recorded in the Orange or Durham County Registry of Deeds as appropriate.
Sec. 6. Development Cost Offsets.
An applicant who fully complies with the requirements of this chapter shall, upon written request, receive from the Town, with regard to the affordable housing units or lots in the covered development, a waiver of all the otherwise applicable application fees, building permit fees, plan review fees, inspection fees, and such other development fees and costs which may be imposed by the Town, except for any fees associated with water or wastewater [stormwater?] which shall be charged at market process.[5]
Sec. 7. Density Credits.
[This section is to be determined; the subcommittee’s report (see Final Report) provides a starting place.] [6]
Sec. 8. Integration of Affordable Housing Units.
(a) Location of affordable housing units. Affordable housing units or lots shall be situated within the covered development, unless the applicant qualifies under Sec. 9 below for an exception or alternative to providing on-site housing. The locations shall be approved by the Town Council or Planning Board, as appropriate.
(b) Phasing of construction. The inclusionary housing plan and the Affordable Housing Performance Agreement shall include a phasing plan that provides for the timely and integrated development of the affordable housing units as the covered development project is built out. The phasing plan shall provide for the development of the affordable housing units concurrently with the market rate units. Zoning compliance permits shall be issued for the covered development project based upon the phasing plan. The phasing plan shall be approved by the Town Council (or Planning Board, if appropriate) prior to the issuance of any zoning compliance permit. Subsequent to approval, the phasing plan may be adjusted by the Town Manager when necessary in order to account for the different financing and funding environments, economies of scale, and infrastructure needs applicable to development of the market rate and the affordable housing units.
(c) Exterior appearance. The exterior appearance of the affordable housing units in any covered development shall be compatible in style and quality with the market rate units in the development.
(d) Interior appearance and finishes. Affordable housing units may differ from market rate units with regard to interior finishes. As a matter of Town policy, the units should be energy-efficient.
(e) Gross floor area. [Needs development.] [7]
Sec. 9. Alternatives to On-Site Affordable Housing Units.
(a) In lieu of the provision of all or part of the affordable housing on the site of the covered development as otherwise required by Sec. 3 of this Chapter, the Town Council, following consideration by and a recommendation from the Planning Board, or the Planning Board, if appropriate, may approve one or more of the three alternatives for affordable housing as set forth in subsection (b) of this section. Utilization and the requirements of the provisions of this section shall be specifically set forth in the Affordable Housing Performance Agreement for the covered development. This section shall not be utilized unless the applicant demonstrates to the satisfaction of the Town Council (or Planning Board, if appropriate) that (i) the alternate means of compliance will further affordable housing opportunities in the Town to a greater extent than compliance with the otherwise applicable on-site requirements of this Chapter, or (ii) the provision of on-site affordable housing is not economically feasible.
(b) Any one or more of the following affordable housing alternatives may be utilized in lieu of all or part of the otherwise applicable on-site requirements of Sec. 3 of this Chapter.
(1) A dedication of land to the Town of Chapel Hill or the Town’s not-for-profit designee.
(2) The provision of affordable housing units at another site within the Town.[8]
(3) A cash payment in lieu of housing, to be deposited directly into the Revolving Acquisition Fund [9] for purposes authorized under [the section of the Chapel Hill code that defines that fund]. The per unit amount payment may not be less than the per unit payment established pursuant to Sec. 3(c)(2) of this Chapter.
(4) An alternative proposed by the applicant that directly provides or enables the provision of affordable housing units within the Town. [To be further discussed.]
Sec. 10. Target Income Levels for Affordable Housing Units or Lots.
(a) Income levels. [To be determined.] [10]
Sec. 11. Price of Affordable Units or Lots.[11]
(a) Affordable housing units. [To be discussed.]
(b) Affordable lots in subdivisions. [To be discussed.]
Sec. 12. Priority of Eligible Households.[12]
Only eligible households with pre-approved loans shall be permitted to make an application for an affordable housing unit or lot for purposes of this chapter. Priority will be given:
(a) First to employees of the Town provided they have been an employee for a minimum of 12 months.
(b) Second to employees of businesses located in the Town, to employees of the University of North Carolina at Chapel Hill, to employees of the Chapel Hill-Carrboro City Schools, and to employees of other governmental agencies of Orange County, provided they have been an employee for a minimum of 12 months.
(c) Third to residents of the Town of Chapel Hill provided they have been a resident for a minimum of 12 months.
(d) Fourth to residents of Orange County, North Carolina, provided that they have been a resident for a minimum of 12 months.
(e) Fifth to residents of Orange County, North Carolina.
(f) Sixth to the general public.
Sec. 13. Period of Affordability.
In covered developments that contain for-sale units or lots, affordable housing units or lots shall be resold to low- and moderate-income households in perpetuity or as long as permissible by law. The owner shall execute and record all documents required by Sec. 5 of this Chapter to ensure compliance with this subsection.
Sec. 14. Affordability Controls; Resale of Affordable Housing Units or Lots.
[To be discussed. Especially the point about how to handle capital improvements.]
[As an idea, here’s what Manteo has in this section:]
[1] The edits in this section are provisional; the point from the task force is that we mean five or more dwelling units in all cases.
[2] There remains a policy question regarding whether there are any further circumstances in which a payment in lieu might be acceptable.
[3] The Revolving Acquisition Fund is provisionally cited because it is where the payments in lieu currently go. Task force members pointed out, however, that the range of available uses for the money is narrow, that it has to be replaced within six months, that the use is at the discretion of the Town Manager, and that for those and other reasons it might be advisable to redesign this fund or even create a different one to use in conjunction with this ordinance. The task force recommends asking the three affordable housing nonprofits to propose the changes they would like to see.
[4] Many questions remain about this section. There is tension between the public’s interest in being assured that the affordable units will be of appropriate size as well as appropriately sited within the development; and the developer’s need to have flexibility as the actual project takes shape. A question also remains for cases in which lots permitted as part of a subdivision application are designated as sites for affordable units in the future, but nothing in the present can be known about that development.
[5] Exactly which fees to waive is a policy determination. The Council may want to request information about the reduced revenue from relevant departments (Planning, Inspections and Engineering) and from the Town Attorney.
[6] A member of the task force raised the question of whether, if the applicant chooses not to take advantage of the density credits, the percentage of that applicant’s affordable housing obligation would be reduced.
[7] The task force wrestled with this issue. While it was reluctant to get too restrictive about the size of the affordable units, it recognized in principle the community’s’ interest in ensuring that the affordable units are sized properly to be marketable and comfortable to the folks who live in them. A related concern is the design of the units: how can the process be constructed so as to avoid the construction of poorly designed (unmarketable as well as uncomfortable) units?
[8] The task force discussed whether it would be appropriate here to indicate to the applicant that, as a matter of policy, the Council prefers that the off-site affordable housing be in a nearby neighborhood.
[9] See note 3 above.
[10] The task force recommends in principle that the affordable housing be targeted to both the 80 percent AMI and the 65 percent AMI. For ideas about how the details of the income targeting could work out, see the subcommittee’s recommendations in the Final Report.
[11] Questions in this section include how much detail here is appropriate, as well as whether, regarding affordable lots, the lots should be required to be sold to a qualifying agency, or the to Town, to be built as permanently affordable housing.
[12] The task force recognizes that these priorities should be subject to further discussion.