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HomeMy WebLinkAboutCAHAB Minutes 07-12-2017 Community Affordable Housing Advisory Board Wednesday, July 12th, 2017 8:00 AM, Commission Room, 121 N. Rouse Ave. A. Call meeting to order Present Were:  Brian Guyer  David Magistrelli  Keven Thane  Anders Lewendal  Commissioner I-Ho Pomeroy  Brian LaMeres B. Changes to the Agenda C. 08:09:21 AM (00:00:06) Public Comment – Please state your name and address in an audible tone of voice for the record. This is the time for individuals to comment on matters falling within the purview of the Committee. There will also be an opportunity in conjunction with each action item for comments pertaining to that item. Please limit your comments to three minutes. D. Minutes Approval: none E. Action Items: 1. 08:09:40 AM (00:00:40) Provide recommendations to the City Commission regarding Affordable Housing Ordinances  Ordinance 1922  Ordinance 1954  Update on Affordable Homes as required by Ordinance No. 1954 Board member Kevin Thane stated that he would like CAHAB as a board to work more closely with the City Commission to have a larger discussion on what will work regarding affordable housing as opposed to making a recommendation with specific points, which he felt that they have already done. 08:17:04 AM (00:07:49) Board member Lewendal displayed pictures of homes sold at the target affordable housing price point and asked whether the City had met its affordable housing goals. While there were homes sold within the affordable housing price point, they were not tracked through the City’s affordable housing program and were not considered. The homes displayed in the pictures are detached condos. Board member Anders Lewendal asked why these homes would not be considered within the affordable housing mandate. 08:20:14 AM (00:10:59) Board member Brian Guyer stated that he was not confident that the financing is the same for detached condos, but stated that HRDC is in full support of including condominiums in the affordable housing ordinance rather than only considering single family homes. The board discussed the fact that financing is the most difficult piece in providing affordable housing, particularly when dealing with condos. For affordable housing, it is ideal to provide a 0-7% down payment as opposed to the traditional 20% down payment required by banks. 08:27:20 AM (00:18:05) Thane argued that simplifying the development code would assist in making it possible for detached condos to be considered single family homes by changing the lot line adjustment process. 08:29:51 AM (00:21:35) Commissioner I-Ho Pomeroy stated that she would like to see condos and townhomes included in the affordable housing ordinance going forward. 08:32:34 AM (00:23:18) Board member Brian Guyer argued that because the homes within the affordable price point were built without verifying that they were occupied by qualifying individuals within the income limitations, they do not qualify as meeting the affordable housing ordinance. 08:33:03 AM (00:24:47) Board member David Magistrelli stated that availability is the biggest issue here and it’s necessary to determine what affordability is and for whom. 08:36:35 AM (00:27:19) Commissioner Pomeroy asked who would be willing to build a home under the affordable housing ordinance with the high cost of land and availability issues they’re facing? 08:38:12 AM (00:28:56) Guyer argued that postponing the mandatory affordable housing ordinance was not the solution, but that the incentives need to be re-examined to find something that will attract developers and builders to provide affordable housing. 08:40:03 AM (00:31:47) Commissioner Pomeroy raised the point that builders may not have the cushion to offer homes at a lower price point, but that developers may have more room. 08:41:32 AM (00:33:16) Board member Thane argued that modifying the Unified Development Code and some Engineering standards is what is required in order to make affordable housing easier for builders and buyers. 08:45:05 AM (00:35:49) Anders Lewendal agreed with Thane that more flexibility in the code would be helpful, he continued to state that including all types of home would be helpful in addition to considering existing homes sold as opposed to only considering new construction. 08:47:56 AM (00:38:40) Lewendal provided an example of how the profit margin would be affected by the affordable housing mandate with a ten unit development, assuming a 6% profit margin on each unit. He then considered the required affordable unit. He asked a bank if they would be willing to finance the project - the bank stated that they were not willing to provide funding for the project due to the risk associated with the lower profit margin. 08:52:27 AM (00:43:11) Lewendal then provided the example utilizing the developer’s profit margin rather than the builder. The developer builds ten lots, selling them at 80K each. They then donate one of the lots to adhere to the ordinance. He argued that the investors would not be willing to swallow the $80K donation and would build somewhere else as most of them are not members of the community in which they’re developing. 08:55:14 AM (00:45:58) Guyer stated that he has experience living in a community where mandatory affordable housing exists. He said that they did provide more affordable units, or an in-lieu fee that would contribute to the affordable housing fund. He argued that the communities that have mandatory affordable housing were more successful than voluntary affordable housing mandates in producing affordable housing. Guyer argued that there are some communities such as Jackson Hole that waited too long to act on affordable housing and the problem became much more acute. He thought that Bozeman could be on the front end of the affordable housing problem currently and that the mandatory affordable housing will bring the proper people to the table. 09:01:06 AM (00:54:50) Anders Lewendal explained that the board voted to terminate the affordable housing ordinance because the way it is drawn now, it will work against affordability due to poor design. He argued that it is necessary to provide incentives to help fund the ordinance as the current incentives offered have almost no value. He asked whether the city was willing to provide $40K for each unit to enable builders to provide these affordable units. 09:04:43 AM (00:55:27) Thane reminded the board that the vote regarding the affordable housing ordinance recommendation was to terminate and replace rather than solely terminate. He stated that he agreed that there should be a mandatory ordinance to provide affordable housing. Thane stated that he was concerned with taking action that would increase home prices for everyone. He stated that he felt they should do something to bring home prices down for everyone and to continue to work to bring prices down even further, which would have a cost. He discussed the concept of a real estate transaction tax – while that type of tax is no longer allowed, he discussed similar concepts that would ask higher priced homes to contribute to the affordable housing fund. He suggested developers donate lot(s) based on the home price that an organization such as Habitat for Humanity can build on. 09:10:09 AM (01:01:53) Lewendal discussed the idea of the community contributing through mills. If the developer was willing to discount the lots, the city could purchase them and help promote affordable housing. He argued that it is not the builder’s responsibility, but the community’s responsibility to determine the tolerance and willingness to provide affordable housing. 09:12:18 AM (01:04:02) Commissioner Pomeroy agreed that the affordable housing issue was an issue that needs to be resolved by the community, not only the builders involved. 09:15:32 AM (01:06:17) Thane responded that there is a cap on the city budget and that it was not possible to go over that cap to add more mills. Thane continued to argue that it is the builders, developers, home buyers and banker’s issue. He argued that a portion of the cost needs to be directly carried by those parties, but that it was necessary to determine how much of that cost. 09:18:32 AM (01:09:16) Lewendal argued that there is a reason banks would like builders to build 2400 sq. ft. homes – because that is what is in demand. He asked if there was a demand for the smaller, more affordable homes. He argued that less than 1% of home buyers are interested in a home that is smaller than 1000 sq. ft. He explained that this would make it more difficult to receive financing for the type of home that is less in demand and as a result. 09:20:39 AM (01:12:23) Thane responded by saying that he felt that if the smaller homes were built, the demand would follow. He felt that the bankers could be convinced of this. 09:23:54 AM (01:14:38) Guyer informed the board that HRDC was just approved for a minor subdivision that would provide a 600 and a 300 [sq] ft. [home] and are working with CSI on the plans to make sure they’re reputable. He hoped that the demand for these homes would be significant and that the homes would be able to be used as comps. He argued that it would be difficult to blame rapidly increasing housing prices on mandatory affordable housing requirements. He argued that the affordable housing policies were a response to rapidly rising housing prices. 09:26:34 AM (01:17:19) Lewendal reviewed the most recent recession and argued that it is incredibly risky to be a builder due to a slim profit margin, roughly 6% or work for wages. He stated that there is not enough margin for builders to contribute to the affordable housing. 09:29:27 AM (01:20:11) Chair LaMeres shared that there were some layoffs in the City during the recession and a hiring freeze in the Planning Division. 09:28:51 AM (01:20:35) Board member David Magistrelli argued that all of the players in the building industry are connected and that affordable housing is everyone’s issue as it affects all who are involved. He stated that habitat for humanity could build 5 homes per year and that they could do it for a much lower cost than typical builders due to their ability to leverage resources. Lewendal recommended that the City purchase 20 lots per year to donate to organizations like Habitat for Humanity and HRDC to leverage their resources to provide affordable housing. 09:31:54 AM (01:22:39) Thane argued that the board has already made their motion to the board and suggested things could be made better for affordable housing and asked that the Commissioners ask the Community Development Department to revise the ordinance so that it works. He stated that it needs to be a workable ordinance that makes affordable housing as ubiquitous as possible and look at where the incentives come from. The list of items that he felt should be discussed with the City Commission include:  Land at the cemetery and Laurel Parkway for affordable housing  Ralph Johnson at MSU to create Memo of Understanding to move forward with student Kara Baldwin to present her ideas on more affordable homes  Land at the extension of Davis that the city has purchased right-of-way for  Re-write of the UDC  Housing Development Toolkit  Looking at tax rates for large chunks of land considered to be agricultural  Gallatin County Rest home 09:37:20 AM (01:29:04) Thane asked the board members to all reach out to their commissioners to ask to be part of the affordable housing discussion rather than contributing through public comment. 09:39:49 AM (01:30:33) Thane shared the information that there is a statute that discusses municipal providing less expensive. Public Comment: 09:40:01 AM (01:30:46) Amy Harris (410 N. Willson) shared that the Heaston homes were detached condos, conventionally financed, sized at 1000 sq. ft. and were sold at $265K or under. 17 of the 37 homes built were cash sales, 3 were FHA loans and 1 was a VA loan. Lewendal asked what traditional financing meant. Harris explained that they typically require a larger down payment. Lewendal also asked if there was a difference in financing between detached condos and single family homes. Harris explained that the detached condos must go through a process to be approved for FHA financing. Amy also shared that these detached condos do come with a $110/month association fee that may affect affordability. MOTION to recommend that the City Commissioners facilitate the creation of 20 lots per year through public funding and donate lots to: Anders Lewendal MOTION SECONDED: none Motion Fails 09:43:07 AM (01:34:51) The board discussed previous motions to the Commission. F. FYI/Discussion 1. HRDC Monthly update (Brian G.) 09:46:14 AM (01:36:58) Hoover Way town homes are under way and received approval from the Commission. The project received feedback from neighboring property owners – HRDC will work to include those neighbors in the design aspects so that they are supportive of the project. HRDC understands that the Baxter/Davis intersection issue has been resolved and the property in question, preventing right of way, has been purchased. 2. GAR Gallatin Assoc. of Realtors Summary (Hattie) 3. CAHAB Member updates and future agenda items 09:48:54 AM (01:39:38) Thane brought up the fact that the Mayor pointed out that the board has 3 open vacancies that need to be filled on CAHAB. They require a member in banking, someone who resides in lower/moderate housing and an individual who has interest in special needs housing. Out of the 9 member board, they have 3 board vacancies and need a staff liaison. Board member Magistrelli stated that he would reach out to some of their lenders to see if there is interest in joining the board. G. 09:52:31 AM (01:43:15) Adjournment For more information please contact Brian LaMeres at blameres@bozeman.net This board generally meets the second Wednesday of each month at 8:00 AM Committee meetings are open to all members of the public. If you have a disability and require assistance, please contact our ADA coordinator, Mike Gray at 582-3232 (TDD 582-2301).