AGENDA #2
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Public Hearing: Development Ordinance Text Amendment regarding Small House, Affordable Housing Options
DATE: February 18, 2002
INTRODUCTION
This Public Hearing has been scheduled for the Town Council to consider a proposed Development Ordinance text amendment. The proposal would provide affordable housing options to the current regulation requiring that a percentage of homes in new residential developments be below a particular size.
BACKGROUND
June, 1998 At a discussion of the Comprehensive Plan Revision, the Council decided to investigate the possibility of devising a new ordinance to require a mixture of housing types for new developments.
October 11, 1999 The Council referred the issue to the Town Manager, with direction that the Manager draft an amendment to the Development Ordinance. The proposal was to require a mix of dwelling unit size in new developments, to be modeled after a recently enacted ordinance in Carrboro.
April 10, 2000 The Town Council adopted an Ordinance which requires a mix of sizes for houses in new residential developments. The April 2000 amendment specifically requires:
· For a major subdivision proposal or a Planned Development-Housing (Special Use Permit) with 13-20 single-family and two-family residential lots, at least 15% of the dwelling units shall contain no more than 1,350 square feet of floor area and an additional 10% of the dwelling units shall contain no more than 1,100 square feet of floor area at the time that the units are initially conveyed.
· For a major subdivision proposal or a Planned Development-Housing (Special Use Permit) with 21 single-family and two-family residential lots or more, at least 15% of the dwelling units shall contain no more than 1,100 square feet of floor area and an additional 10% 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.
November 19, 2001 A Public Hearing was held before the Town Council to consider the Larkspur Cluster Subdivision. At the Public Hearing, the Council discussed the desirability of including an affordable housing component.
January 14, 2002 The Town Council continued the Larkspur Cluster Subdivision application and scheduled a Public Hearing to consider a Development Ordinance text amendment which would provide an affordable housing option to the regulations restricting house size.
PROPOSAL
On January 14, the Council responded to a petition from the Larkspur Cluster Subdivision developer, Ms. Carol Ann Zinn. Ms. Zinn’s proposal would amend Article 13 of the Development Ordinance to allow the following:
“In lieu of restricted floor area, for a major subdivision or a Planned Development Housing proposal with 13 or more residential lots, the applicant may offer and the Council may approve an affordable housing proposal or payment-in-lieu after applicant has demonstrated to the Council how the proposal meets the intent to provide affordable housing.”
DISCUSSION
We have reviewed Ms. Zinn’s proposal and offer alternative language for consideration. We believe that the proposal to allow the Council to accept the substitution of affordable housing for the house size restriction has merit. However, we believe that further clarification is necessary to describe a suitable affordable housing proposal as well as a formula to determine a payment-in-lieu amount. We offer the following language for consideration:
“13.11.1 Substitution of Affordable Housing for Floor Area Restrictions
With the approval of the Council, for a major subdivision or a Planned Development-Housing proposal with 13 or more single-family or two-family lots, an affordable housing component, as defined below, or an affordable housing payment, as defined in Section 13.11.2, may be substituted for the floor area restrictions described in Section 13.11.
The affordable housing component shall provide initial and continued affordability of at least 15% of the dwelling units. The dwelling units shall be affordable to individuals and families who have incomes at or below 80% of the area median income. Restrictive covenants shall be recorded with the dwelling unit(s) to ensure the continued and ongoing affordability of the dwelling unit(s).
The minimum number of affordable units shall be determined as described in Section 13.11 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.
13.11.2 Payment-in-Lieu of Provision of Affordable Housing
As an alternative to providing the affordable housing component option in Section 13.11.1, a developer of a major subdivision or a Planned Development-Housing may, with the approval of the 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 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 Council determines that the combination is appropriate.”
Both of the proposed options, an affordable housing component or the payment-in-lieu of an affordable housing component, would be Council discretionary decisions once an applicant requests it be considered as an alternative to small houses.
With this text amendment proposal to offer an affordable housing option as part of the development, in lieu of a small house requirement, we recommend that the units be affordable to individuals and families who have incomes at or below 80% of the area median income. This figure changes annually as the area median income changes. This definition of housing affordability is normally used as a threshold for participation in federally funded housing programs.
Regarding the payment-in-lieu option, our experience has shown us that the subsidy necessary to ensure the affordability of a dwelling unit is typically $35,000 per unit or more. We have proposed language that we believe would provide the Council with maximum discretion. Ordinance A includes the following language:
“The amount of the payment shall be calculated by multiplying the number of affordable housing units to be provided 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.”
We note that alternatively, the Council could direct the Manager to include language that provided a specific dollar amount for the payment option. This amount could be updated periodically by the Council as a text amendment, if desired.
RECOMMENDATIONS
Planning Board Recommendation: On February 5, 2002, the Planning Board voted 9-0 to recommend that the Council adopt Ordinance A with adjustments to the payment-in-lieu option to better define the payment amount. In addition, the Board believed the payment option should be discouraged and allowed only as a last resort. Please refer to the attached Summary of Planning Board Action.
Comment: The basic Ordinance requirement is to provide 25 percent of size restricted homes. Under the proposed revision, the developer may offer to provide, and the Council may accept, 15 percent of the homes as affordable houses on site, or may offer to make a payment-in-lieu of providing those homes. If the Council is not satisfied with the affordable housing proposal or the payment-in-lieu proposal, the Council does not have to approve either option. The developer would be required to satisfy the small house requirement. Because of the Council’s discretionary authority in the proposed language, we do not believe it is necessary to further define the payment amount.
Manager’s Preliminary Recommendation: Although the Development Ordinance Revision process is underway, the current schedule anticipates adoption of a new Ordinance in October of this year. We recommend making an Ordinance adjustment as provided in Ordinance A, in order to expand the options available to the Town Council during this interim period. We recommend that the Town Council amend the Development Ordinance in accordance with Ordinance A.
Ordinance B would amend the Development Ordinance as proposed by Ms. Zinn.
ATTACHMENTS
ATTACHMENT 1
ORDINANCE A
AN ORDINANCE AMENDING THE CHAPEL HILL DEVELOPMENT ORDINANCE to provide affordable housing options to the current regulation requiring that a percentage of homes in new residential developments be below a particular size
WHEREAS, the Council of the Town of Chapel Hill adopted an amendment to the Chapel Hill Development Ordinance in 2000 to impose restrictions on the size of new dwelling units in new residential subdivisions and Planned Developments; and
WHEREAS the Town Council has considered amendments to provide affordable housing options to that maximum house size requirement, 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:
“13.11.1 Substitution of Affordable Housing for Floor Area Restrictions
With the approval of the Council, for a major subdivision or a Planned Development-Housing proposal with 13 or more single-family or two-family lots, an affordable housing component, as defined below, or an affordable housing payment, as defined in Section 13.11.2, may be substituted for the floor area restrictions described in Section 13.11.
The affordable housing component shall provide initial and continued affordability of at least 15% of the dwelling units. The dwelling units shall be affordable to individuals and families who have incomes at or below 80% of the area median income. Restrictive covenants shall be recorded with the dwelling unit(s) to ensure the continued and ongoing affordability of the dwelling unit(s).
The minimum number of affordable units shall be determined as described in Section 13.11 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.
13.11.2 Payment-in-Lieu of Provision of Affordable Housing
As an alternative to providing the affordable housing component option in Section 13.11.1, a developer of a major subdivision or a Planned Development-Housing may, with the approval of the 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 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 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 __ day of __________, 2002.
ATTACHMENT 2
ORDINANCE B
AN ORDINANCE AMENDING THE CHAPEL HILL DEVELOPMENT ORDINANCE to provide affordable housing options to the current regulation requiring that a percentage of homes in new residential developments be below a particular size
WHEREAS, the Council of the Town of Chapel Hill adopted an amendment to the Chapel Hill Development Ordinance in 2000 to impose restrictions on the size of new dwelling units in new residential subdivisions and Planned Developments; and
WHEREAS the Town Council has considered amendments to provide affordable housing options to that maximum house size requirement, 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:
“13.11.1 Substitution of Affordable Housing for Floor Area Restrictions
In lieu of restricted floor area, for a major subdivision or a Planned Development Housing proposal with 13 or more residential lots, the applicant may offer and the Council may approve an affordable housing proposal or payment-in-lieu after applicant has demonstrated to the Council how the proposal meets the intent to provide affordable housing.”
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 __ day of __________, 2002.