AGENDA #10

MEMORANDUM

TO: Mayor and Town Council

FROM: W. Calvin Horton, Town Manager

SUBJECT: Land Use Management Ordinance Text Amendment, Adjusting Size Restricted/Affordable Housing Calculations

DATE: December 6, 2004

REISSUED: January 10, 2005

INTRODUCTION

Enactment of the attached Ordinances A and B would adjust the rounding provisions of the size restricted/affordable housing provisions of Sections 3.8.5 and 3.8.6 of the Land Use Management Ordinance. Ordinance A would round up for all numbers and Ordinance B would round up only when the resulting fraction is one-half or above.

BACKGROUND

On October 11, 2004, the Town Council called a Public Hearing to consider changes to how calculations are performed for size restricted or affordable housing unit requirements in the Land Use Management Ordinance. The changes would impact how resulting fractions are dealt with when the required percentages are applied.

Current Land Use Management Ordinance regulations specify that, for major subdivisions or Planned Developments with 5 or more single-family or two-family lots, at least 25% of the dwelling units shall be restricted in size to no more than 1,350 square feet of floor area for a 30-month period. The regulations specify that, in calculating how many such houses are to be required, the total number of lots is multiplied by .25, and resulting fractions are dropped.

In lieu of providing size restrictions for 25% of the homes in a new subdivision, a developer may offer and the Council may choose to accept 15% affordable units. If the Council authorizes the provision of 15% affordable units, at least 15% of the dwelling units of a major subdivision must be priced to be affordable to individuals and families who have incomes at or below 80% of the area median income for a family of four. The regulations currently state that resulting fractions of units are dropped in making the calculation.

For major subdivisions or Planned Developments which propose 5-12 residential lots, the applicant may propose and the Town Council may authorize a payment to the Town to fund affordable housing initiatives (in lieu of small or affordable houses on the ground). Current regulations specify that the resulting fractions are not dropped in calculating the payment. For example: In a 10-lot subdivision, if a developer proposed and the Council authorized a payment-in-lieu of providing affordable housing, 15% would be 1.5 houses. And, if the estimate of funding that would be needed to make an affordable homeownership opportunity available in the proposed development were to be $100,000, then the payment amount would be $150,000. Resulting fractions would not be dropped in calculating the payment.

On November 15, the Council held the Public Hearing to consider changes to how calculations are performed for size restricted or affordable housing unit requirements in the Land Use Management Ordinance.

DISCUSSION

Current regulations specify that resulting fractions are dropped for calculating the required number of size-limited units and also when affordable units are substituted. The regulations state that for smaller subdivisions (5-12 residential lots), the payment-in-lieu of affordable housing option does not drop resulting fractions. At the Public Hearing on November 15, we presented Ordinance A.

Proposed Ordinance A: Rather than dropping the resulting fractions for the size-limited units and when affordable units are substituted, we recommend that the language be changed to state that at least (15% or 25%) of the units must be subject to the restrictions. This would have the effect of rounding-up for resulting fractions. For example: In a 10-lot subdivision, 25% of the lots must have size restricted units. That would mean, under current regulations, that two size-restricted houses are required (2.5 rounds down to 2.0). Under the proposed change, 3 of the lots would require restrictions (because 2 lots would not be “at least 25%” and it is not possible to construct a portion of a house).

Comments were offered at the Public Hearing, from Orange Community Housing and Land Trust and from the Chapel Hill-Carrboro Chamber of Commerce. Comments from both organizations are attached, both expressing concerns regarding the “rounding-up” proposal presented at the Hearing. In response to these comments, we have drafted an Ordinance B for the Council’s consideration.

Proposed Ordinance B: Ordinance B would provide the following instructions for resulting fractions: If the number of units is less than one-half, the resulting fraction shall be dropped. If the number of affordable units is one-half or greater, the resulting fraction shall be rounded up.

For payment-in-lieu (available option for 5-12 residential lots), because resulting fractions currently are not dropped, no change is proposed with either Ordinance.

RECOMMENDATIONS

Planning Board Recommendation: The Planning Board reviewed the proposal on November 9, 2004. The Planning Board voted 9-0 to recommend enactment of Ordinance A. Please refer to the attached Summary of Planning Board Action.

Manager’s Recommendation: We continue to recommend that the Town Council enact the attached Ordinance A which would adjust the rounding provisions for the size restricted/affordable housing provisions of the Ordinance. With Ordinance A, resulting fractions be rounded up.

Ordinance B would provide the following instructions for resulting fractions: If the number of units is less than one-half, the resulting fraction shall be dropped. If the number of affordable units is one-half or greater, the resulting fraction shall be rounded up.

We do not recommend a change to the method of calculating payments-in-lieu of affordable housing where the resulting fractions are not dropped, with either Ordinance A or Ordinance B.

ATTACHMENTS

Summary of Planning Board Action (p. 10).
Letter from Orange Community Housing and Land Trust (p. 11).
Proposal from Chapel Hill-Carrboro Chamber of Commerce (p. 12).
Town Council Memorandum from November 15 , 2004 (p. 13).

ORDINANCE A

AN ORDINANCE AMENDING THE CHAPEL HILL LAND USE MANAGEMENT ORDINANCE to ADJUST THE ROUNDING PROVISIONS FOR THE SIZE RESTRICTED/AFFORDABLE HOUSING PROVISIONS (2005-01-10/O-4a)

WHEREAS, Section 3.8.5 of Chapel Hill’s Land Use Management Ordinance provides regulations regarding housing floor area restrictions for major subdivisions and Planned Developments and Section 3.8.6 offers substitution of affordable housing or a payment-in-lieu of affordable housing for the floor area restrictions; and

WHEREAS, Council of the Town of Chapel Hill has brought forward concerns about the method for rounding up or down used in the regulations; and

WHEREAS, the Town Council has found that adjustments to the rounding provisions for the size restricted/affordable housing provisions of the Ordinance is desirable, and finds that the amendments are appropriate due to changed or changing conditions in a particular area or in the jurisdiction generally and achieve the purposes of the Comprehensive Plan;

NOW, THEREFORE, BE IT ORDAINED by the Council of the Town of Chapel Hill as follows:

Section 1. Section 3.8.5 and Section 3.8.6 of the Chapel Hill Land Use Management Ordinance is hereby revised to read as follows:

“3.8.5 Housing Floor Area Restrictions for Major Subdivision and Planned Development

(a) Major Subdivisions and Planned Development-Housing proposals which create residential building lots shall restrict the floor area of single- and two-family dwelling units in the following manner:

(b) For a Major Subdivision or a Planned Development-Housing proposal with 5 or more single-family or two-family residential lots, at least 25% of the dwelling units shall contain no more than 1,350 square feet of floor area at the time that the units are initially conveyed.

(c) 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 size-limited units 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 ~~(resulting fractions shall be dropped)~~.

(d) The subdivision preliminary and final plats and the Planned Development-Housing proposals minor subdivision plats shall indicate clearly each lot on which a size-limited unit must be constructed, and the builder, developer and purchaser shall be bound by that limitation.

(e) No Zoning Compliance Permit or Building Permit shall be issued for the construction of any dwelling unit on any lot that has been designated as a lot on which a size-limited unit must be constructed unless the proposed dwelling conforms to the limitation of this Section. Notwithstanding the foregoing, this Section shall not prevent the purchaser of any size-limited unit, or any successor to such purchaser, from enlarging the dwelling unit at any time following thirty (30) months after the issuance of the initial Certificate of Occupancy for the Unit.

(f) This Section shall not apply to any major subdivision or Planned Development proposal that has been approved by the Town Council prior to the effective date of this Chapter.

(g) For purposes of this Section, “floor area” means floor area, as defined in Appendix A to this Ordinance, whether or not such floor area is intended for or suitable for immediate occupancy.

(h) For purposes of this Section, an Accessory Apartment associated with a “Two-Family Dwelling including an Accessory Apartment” shall not be used to satisfy the requirement of (b) above as a dwelling unit containing no more than 1,350 square feet of floor area.

3.8.6 Alternatives to Floor Area Restrictions

3.8.6.1 Substitution of Affordable Housing for Floor Area Restrictions

With the approval of the Town Council, for a major subdivision or a Planned Development Housing proposal with 5 or more single-family or two-family lots, an affordable housing component, as defined below, may be substituted for the floor area restrictions described in Section 3.8.5.

The affordable housing component shall provide initial and continued affordability of at least 15% of the dwelling units. The dwelling units shall be priced to be affordable to individuals and families who have incomes at or below 80% of the area median income for a family of four. Restrictive covenants shall be recorded with the dwelling unit(s) to ensure the continued and ongoing compliance with these requirements and shall be sold to individuals ad families who have incomes at or below 100% of the area median income by family size, and published periodically by the U.S. Department of Housing and Urban development.

The minimum number of affordable units shall be determined as described in Section 3.8.5 with the number of units based on the permissible units on each lot ~~and with resulting fractions dropped~~.

The subdivision preliminary and final plats and the Planned Development-Housing proposals minor subdivision plats shall indicate clearly each lot on which an affordable unit must be constructed, and the builder, developer and purchaser shall be bound by the restriction. The recorded plat shall cross-reference the restrictive covenants.

3.8.6.2 Substitution of Payment-in-Lieu of Affordable Housing for Floor Area Restrictions

As an alternative to providing the affordable housing components option in Section 3.8.6.1, a developer of a Major Subdivision or a Planned Development Housing which proposes 5-12 single-family or two-family residential lots may, with the approval of the Town Council, make a payment to the Town whereby the Town may fund affordable housing initiatives.

The Town shall use such payment only for the funding of affordable housing initiatives.

The amount of the payment shall be calculated by multiplying the number of affordable housing 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 and approved by the Town Manager. The developer shall make the payment 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 payments consistent with the approved phasing of the subdivision.

A developer may make a partial payment in combination with the partial provision of an affordable housing component if the Town Council determines that the combination is appropriate.”

Section 2. That all ordinances and portions of ordinances in conflict herewith are hereby repealed.

Section 3. That these amendments shall become effective upon adoption.

This the 10^th day of January, 2005.

ORDINANCE B

AN ORDINANCE AMENDING THE CHAPEL HILL LAND USE MANAGEMENT ORDINANCE to ADJUST THE ROUNDING PROVISIONS FOR THE SIZE RESTRICTED/AFFORDABLE HOUSING PROVISIONS (2005-01-10/O-4b)