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HomeMy WebLinkAboutAmendment to AHO - Ordinance 2012 - draft 9-5-18 Ordinance 2012 Page 1 of 9 ORDINANCE NO. 2012 AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA AMENDING CERTAIN AFFORDABLE HOUSING PROVISIONS OF CHAPTER 38, ARTICLE 380 OF THE BOZEMAN MUNICIPAL CODE WHEREAS, the City adopted Ordinance 1922 adding a new article to Chapter 38, Unified Development Code, regarding affordable housing (“Affordable Housing Ordinance” or “AHO”) on December 7, 2015; and WHEREAS, since the adoption of Ordinance 1922 homes have been built and sold pursuant to the AHO, and the builder has suggested amendments to the AHO to improve its workability; and WHEREAS, since the adoption of Ordinance 1922 the Community Affordable Housing Advisory Board (“CAHAB”) has suggested amendments to the AHO; and WHEREAS, in 2018 the City hired an Affordable Housing Program Manager who has suggested amendments to the AHO; and WHEREAS, the amendments to the AHO were reviewed by CAHAB on July 11, 2018 and August 8, 2018, and CAHAB recommended adoption of the amendments on August 8, 2018. NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA: Section 1 That Section 38.380.040 of the Bozeman Municipal Code be amended as follows: Sec. 38.380.040. – Definitions. Ordinance 2012 Page 2 of 9 . . . F. Lower-priced home. Newly created dwelling for purchase, determined by the city in accordance with this article to be affordable to a household with an income between 65 percent and at or below 80 percent of AMI. Section 2 That Section 38.380.070 of the Bozeman Municipal Code be amended as follows: 38.380.070. – Pricing of affordable homes. A. The city will calculate on an annual basis the maximum sales price a developer may charge for each category of affordable home required by this article as follows: 1. Lower-priced homes. The sales price for lower-priced homes affordable to buyer- households with incomes from 65 percent to at or below 80 percent of AMI will be calculated based on a household income of 70 percent of AMI. . . . C. Household occupancy assumptions. To determine the maximum sales price of affordable homes with different numbers of bedrooms, the city will base its calculation on the AMIs for households of different sizes, as follows: 1. Zero bedroom or studio unit – AMI for a one person household; 2. One bedroom unit – AMI for a two-person household; 3. Two bedroom unit – AMI for a two three-person household; and 4. Three bedroom unit or larger – AMI for a four-person household. Section 3 That Section 38.380.130 of the Bozeman Municipal Code be amended as follows: Sec. 38.380.130. – Incentives Procedural adjustments and subsidies available for affordable housing. Ordinance 2012 Page 3 of 9 Developers may apply for incentives procedural adjustments and subsidies in conjunction with a development application by submitting an affordable housing plan pursuant to section 38.380.100. Incentives Procedural adjustments and subsidies Description Lower-priced Homes Moderate- priced homes 70% AMI 80% AMI 90% AMI Impact fee subsidy Full or partial subsidization of impact fees, paid from municipal funds if such funds are available; such subsidization must be secured with a lien instrument due upon sale, transfer or non-rate/term refinance of the home. X X Down payment assistance Subject to the availability of funds, the city will provide on a first-come first-served basis, down payment assistance not to exceed $10,000.00 per home benefiting households. Down-payment assistance will only be provided directly to the qualifying homebuyer. This assistance shall be secured with a lien instrument due upon sale, transfer or non-rate/term refinance of the home. X X Waiver of subdivision pre- application Waive pre-application for subdivision when 10% of units are designated for lower price homes. X X Reduction of parkland 1 Allow a 1:1 square foot reduction in the amount of parkland dedication required per square foot of lot size for lower homes. If a developer provides more than the required number of lower priced homes, the lot area square footage of the additional lower priced homes shall not further reduce the required parkland dedication. X Reduced minimum lot sizes Per the provisions in this chapter, affordable homes may utilize reduced setback requirements and reduced sized lots. The reduction in lot size shall be allowed to create an increase in maximum unit X X X Ordinance 2012 Page 4 of 9 Incentives Procedural adjustments and subsidies Description Lower-priced Homes Moderate- priced homes 70% AMI 80% AMI 90% AMI density beyond the maximum currently allowed in a given zoning district. A subdivision satisfying the requirements of this article 38.380 through the construction of affordable homes (not by cash in lieu or land donation) may use any of the minimum lot area, lot width, and floor area reductions as described in article 38.320 Form and Intensity Standards. Concurrent infrastructure housing construction Concurrent construction of infrastructure and housing development at the installation of gravel- base roads, provided the developer has provided assurance through a performance bond, letter of credit or other financial security acceptable to the City Attorney ensuring the completion of infrastructure. X X Expedited review for affordable housing 1+1 Detached homes and attached homes in groups of less than 6 units will receive expedited (3 business day) building permit review for affordable housing. For each building permit for an affordable home, a market rate unit will receive the same expedited review. X X X Reduced parking requirements Reduced parking requirement of two spaces per three-bedroom dwelling. X X 1 This incentive is available only until the city has approved affordable housing plan(s) that include the number of lower-priced homes at 70 percent AMI as established by commission resolution. In addition, a developer seeking to use this incentive may only do so if the affordable homes at 70 percent AMI constitute no more than ten percent of the total units in a development or the unit is to be constructed on a single lot wherein the parkland dedication requirement has not previously been provided. Ordinance 2012 Page 5 of 9 Section 4 That Section 38.380.140 of the Bozeman Municipal Code be amended as follows: Sec. 38.380.140. – Alternative means of compliance; payments of fees-in-lieu. . . . B. Allowable alternative means of compliance. If approved by the city, a developer may satisfy the affordable housing requirements of this article by providing (i) a cash or in-kind payment in lieu or (ii) a donation of land. 1. Payment of cash in lieu. Payment shall be made to the city of a payment of cash-in-lieu per a fee schedule adopted annually by the city commission. For each required affordable home not built, the cash-in-lieu amount will be the difference between the sales price of a lower-priced home according to the then-current schedule of affordable home prices and the sales price of a market-rate home average of the median sales price of homes within the city with the same number of bedrooms over the last two years. The sale price for the market-rate home will be based on a median sale price of dwellings of a similar type, location and square footage for the prior two years. Cash-in-lieu payments shall be paid prior to issuance of a certificate of occupancy for any dwelling or building in the development subject to this article. . . . Section 5 That Section 38.380.150 of the Bozeman Municipal Code be amended as follows: Sec. 38.380.150. – Qualification of buyers of affordable homes. A. Lower-priced homes. To qualify for purchase of a lower-priced home, a buyer must meet all the following criteria: 1. A household income in the 65 percent to at or below 80 percent AMI range, as verified and certified by the city; such certification must have been provided n more than one year prior to the closing date of the purchase. Income verification will be performed using Ordinance 2012 Page 6 of 9 HUD’s online income certification tool or a similar method that meets Code of Federal Regulations (CFR) 24 part 5, as amended, which adjusts gross incomes based on extraordinary expenses and imputation of assets to income. . . . 4. The buyer must meet one of the following definitions of “first-time homebuyer”: . . . c. An affected individual who is, defined by HUD as a displaced homemaker, who and has only owned with a spouse; or . . . Section 6 That Section 38.380.160 of the Bozeman Municipal Code be amended as follows: Sec. 38.380.160. – Subsidy recapture for lower-priced homes. . . . B. Requirement for repayment of non-cash subsidy. Because most or all lower-priced homes will be sold at a discount from market value, defined as the difference between the appraised value and the maximum allowed price of a lower-priced home at the time of the initial sale to a qualified buyer, the city commission finds that it gives a subsidy with cash value to the initial buyer which may be recaptured under certain circumstances. Therefore, upon resale or transfer of a lower- priced home, the city aims to further its housing affordability goals by recapturing the principal amount of the subsidy by use of a lien in favor of the city in that amount, which will be due and payable to the city, at zero percent interest, when the home is sold or transferred or when the initial buyer who qualified for the affordable home has failed to abide by the terms of this article. C. Requirements for appraisal to set non-cash subsidy amount. The appraisal used to calculate the amount of subsidy may be the appraisal obtained by the buyer's mortgage lender or, if that is not available, a professional appraisal provided by the purchaser, or such other professional appraisal as may be acceptable to the Director of Community Development for this purpose. The appraisal report must provide the fair market value of the lower-priced home. The commitment letter instructions Ordinance 2012 Page 7 of 9 provided to the appraiser must include a requirement that the appraiser not use as comparables other homes that have received subsid(ies) pursuant to this article 380, or through any affordable housing assistance from the city, State of Montana or federal program. If such property must be used as a comparable in the appraisal report, the appraiser must clearly indicate and adjust for the value of such subsidy in determining the fair market value of such property. D. Dispute of appraisal. Any party involved in the lower-priced home sale transaction, including buyer, seller, lender, the Director of Community Development or his designee, or the city’s agent may dispute the initial appraised fair market value of a lower-priced home. In the event of such a dispute, the disputing party must obtain and provide the city with a second appraisal that meets the requirements of subsection C of this section. Upon completion of the second appraisal, the fair market value of the lower-priced home for purposes of this section will be determined by the Director of Community Development in his sole discretion as either (i) the fair market value provided by the second appraisal, or (ii) the average of the fair market values provided in the two appraisals. Section 7 Repealer. All provisions of the ordinances of the City of Bozeman in conflict with the provisions of this ordinance are, and the same are hereby, repealed and all other provisions of the ordinances of the City of Bozeman not in conflict with the provisions of this ordinance shall remain in full force and effect. Section 8 Savings Provision. This ordinance does not affect the rights and duties that matured, penalties that were incurred or proceedings that were begun before the effective date of this ordinance. All other provisions of the Bozeman Municipal Code not amended by this Ordinance shall remain in full force and effect. Section 9 Severability. Ordinance 2012 Page 8 of 9 That should any sentence, paragraph, subdivision, clause, phrase or section of this ordinance be adjudged or held to be unconstitutional, illegal, or invalid, the same shall not affect the validity of this ordinance as a whole, or any part or provision thereof, other than the part so decided to be invalid, illegal or unconstitutional, and shall not affect the validity of the Bozeman Municipal Code as a whole. Section 10 Codification. This Ordinance shall be codified as indicated in Sections 1-6. Section 11 Effective Date. This ordinance shall be in full force and effect thirty (30) days after final adoption. PROVISIONALLY ADOPTED by the City Commission of the City of Bozeman, Montana, on first reading at a regular session held on the _____ day of ________ ___, 2018. ____________________________________ CYNTHIA L. ANDRUS Mayor ATTEST: ____________________________________ ROBIN CROUGH City Clerk Ordinance 2012 Page 9 of 9 FINALLY PASSED, ADOPTED AND APPROVED by the City Commission of the City of Bozeman, Montana on second reading at a regular session thereof held on the ___ day of _________________, 2018. The effective date of this ordinance is __________ __, 2018. _________________________________ CYNTHIA L. ANDRUS Mayor ATTEST: _______________________________ ROBIN CROUGH City Clerk APPROVED AS TO FORM: _________________________________ GREG SULLIVAN City Attorney