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18484, Staff Report for the Affordable Housing Ordinance Zone Text
Amendment
Public Hearing Dates: Zoning Commission/Planning Board, October 16, 2018
City Commission, November 19, 2018
Project Description: Zone text amendments initiated by City Commission at request of the
Affordable Housing Program Manager and the Community Affordable Housing
Advisory Board (“CAHAB”) to amend certain sections of the Affordable Housing
Ordinance 1922 and codified as Division 38.380.
Project Location: These amendments apply to the entire City and all zoning districts as
detailed in the text.
Recommendation: Approval
Zoning Commission/Planning Board Recommended Motion: Having reviewed and
considered the staff report for project 18484, public comment, staff recommendation,
and all the information presented, I hereby adopt the findings presented in the staff
report for project 18484 and move to recommend adoption of Ordinance 2012, the
Affordable Housing Ordinance zone text amendment.
City Commission Recommended Motion: Having reviewed and considered the project
materials, public comment, Zoning Commission/Planning Board recommendation,
and all the information presented, I hereby adopt the findings presented in the staff
report for project 18484 and move to provisionally adopt Ordinance 2012, the
Affordable Housing Ordinance zone text amendment.
Report Date: October 5, 2018
Staff Contacts: Matthew Madsen, Affordable Housing Program Manager
Martin Matsen, Community Development Director
Agenda Item Type: Action – Legislative
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TABLE OF CONTENTS
EXECUTIVE SUMMARY ...................................................................................................... 2
Project Summary ................................................................................................................. 2
Unresolved Issues ............................................................................................................... 3
Zoning Commission/Planning Board Recommendation .................................................... 3
City Commission Alternatives ............................................................................................ 3
SECTION 1 - MAP SERIES .................................................................................................... 4
SECTION 2 - RECOMMENDATION AND FUTURE ACTIONS ........................................ 6
SECTION 3 - STAFF ANALYSIS AND FINDINGS ............................................................. 6
Section 76-2-304, MCA (Zoning) Criteria ......................................................................... 6
PROTEST NOTICE FOR ZONING AMENDMENTS ........................................................... 9
APPENDIX A - PROJECT BACKGROUND ....................................................................... 10
APPENDIX B - NOTICING AND PUBLIC COMMENT .................................................... 13
APPENDIX C - APPLICANT INFORMATION AND REVIEWING STAFF .................... 13
FISCAL EFFECTS ................................................................................................................. 13
ATTACHMENTS ................................................................................................................... 13
EXECUTIVE SUMMARY
Project Summary
The City of Bozeman passed and adopted an inclusionary zoning ordinance known as the
Affordable Housing Ordinance 1922 (“AHO”) on December 7, 2015 which became effective
on February 5, 2016. The ordinance was adopted with compliance initially as voluntary with
contingencies in place that a certain number of lower-priced homes be built by a certain date.
The goals set out in the AHO were not met and the ordinance became mandatory on July 12,
2017. The AHO has now been mandatory in the City for more than one year, during which
time city staff has been working with and identifying challenges in implementation of the
ordinance. Based on the changes of the regulations from voluntary to mandatory and on
staff’s, CAHAB’s, and the development community’s experiences working with the AHO,
18484, Staff Report for Affordable Housing Ordinance Text Amendment Page 3 of 13
the zone text amendments in Ordinance 2012 are proposed. See Appendix A for the full
description of each zone text amendment.
Community Development worked with the legal department and a representative from the
Community Affordable Housing Advisory Board (CAHAB) to begin the text amendment
process. The draft of Ordinance 2012 was presented to CAHAB on July 11, 2018 and again
on August 8, 2018 for recommendations on the amendments.
The proposed amendments include:
updating the definitions of lower-priced and moderate-priced homes
adjusting the assumed household size for purposes of setting the maximum price level
for 2-bedroom homes.
changing the term “incentives” to “procedural adjustments and subsidies”
removing subsidies that are no longer required or feasible
defining the process for setting cash-in-lieu
the addition of a process for the Community Development Director to set the non-
cash subsidies through the appraisal process.
For additional details, see Appendix A.
Proposed Ordinance No. 2012, attached to this report, includes all the proposed text
amendments.
Unresolved Issues
1) On October 10th the CAHAB recommended an additional change to the ordinance. This
change is not included in Ord. 2012. It could be added by action of the City Commission. See
Appendix A for additional detail.
2) No others identified at this time.
Zoning Commission/Planning Board Recommendation
The City of Bozeman Zoning Commission/Planning Board will hold a public hearing on
October 16, 2018 to consider the text amendment.
City Commission Alternatives
1) Adopt the ordinance as presented,
2) Direct revisions to the ordinance prior to adoption and request staff to respond with
proposed revision for consideration at a future hearing,
3) Do not adopt the ordinance, or
4) Request additional information and continue discussion on the ordinance.
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SECTION 1 - MAP SERIES
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Zoning Map – Detailed map available at Community Development and on-line
SECTION 2 - RECOMMENDATION AND FUTURE ACTIONS
Having considered the criteria established for a municipal code text amendment, Staff
recommends approval as submitted.
The Zoning Commission and Planning Board will hold a joint public hearing on these text
amendments on October 16, at 5 pm in the City Commission room located at 121 N. Rouse
Avenue, Bozeman, Montana.
The City Commission will hold a public hearing on these text amendments on November 19,
2018 at 6 pm in the City Commission room located at 121 N. Rouse Avenue, Bozeman,
Montana.
SECTION 3 - STAFF ANALYSIS AND FINDINGS
In considering applications for approval under this title, the advisory boards and City
Commission shall consider the following criteria. An amendment is a legislative action;
therefore, the Commission has broad latitude to determine a policy direction. The burden of
proof that the application should be approved lies with the applicant. The criteria below
include separate findings for each text amendment where necessary.
In considering the following criteria, the analysis must show that the amendment
accomplishes zoning criteria A-D or is neutral. Zoning criteria E-K must be considered and
may be found to be affirmative, neutral, or negative. A favorable decision on the proposed
application must find that the application meets all of criteria A-D and that the positive
outcomes of the amendment outweigh negative outcomes for criteria E-K.
Section 76-2-304, MCA (Zoning) Criteria
A. Be in accordance with a growth policy.
Yes. The growth policy does not dictate uses or specific standards to the level of detail
contained in the proposed ordinance. It does identify issues and priorities for consideration
and does contain goals and objectives that are desirable outcomes. There is no prioritization
of one goal or objective over another. In determining appropriateness of a particular zoning
ordinance, the Commission needs to find a balance that best advances the interests of the
community. It is inappropriate to maximize one item to the detriment of the remainder of the
goals and objectives of the document. The City adopted the current edition of the growth
policy, the Bozeman Community Plan, in 2009. The Community Plan consists of 17 chapters
detailing community context, land use, community quality, arts and culture, economic
18484, Staff Report for Affordable Housing Ordinance Text Amendment Page 7 of 13
development to name a few subjects. The text of Chapter 38 as amended is a balance of the
various goals and priorities in the Bozeman Community Plan and advances the plan overall.
A number of goals and objectives in the Bozeman Community Plan apply to this Affordable
Housing Ordinance text amendment:
Goal H-1 which states, “Promote an adequate supply of safe, quality housing that is diverse
in type, density, cost, and location with an emphasis on maintaining neighborhood character
and stability.”
A community needs a variety of housing stock and possible configurations to accommodate
the diversity in personal circumstances and preferences of its population. A healthy
community has a wide range of citizens with differing age, education, economic condition,
and other factors. Stable neighborhoods encourage reinvestment, both financial and
emotional that strengthens and builds the community.
Objective 1.3 states “Promote the provision of a wide variety of housing types in a range of
costs to meet the diverse residential needs of Bozeman residents.”
Goal H-2 which states, “Promote the creation of housing which advances the seven guiding
land use principles of Chapter 3.”
Objective 2.1 states, “Encourage socially and economically diverse neighborhoods.”
Goal H-3 which states, “Encourage an adequate supply of affordable housing and land for
affordable housing. Rationale: There will always be a portion of the population, which earns
less than the median income. This may be for many reasons. This affects the ability to find
market rate housing which is adequate for basic housing needs. Lack of adequate housing
effects health, social stability, and many other issues, which can have severe negative and
inter-generational effects.
Objective 3.3 states, “Promote the development of a wide variety of housing types, designs,
and costs to meet the wide range of residential needs of Bozeman residents.”
The text amendment seeks to encourage the development of affordable housing by adding
one more pricing tier for a 2-bedroom household and increase the availability of homes in
this size into the community. In addition, the current ordinance requires affordable homes to
be built in the new development that match the similar housing type and size to the market
rate homes thus encouraging socially and economically diverse neighborhoods.
B. Secure safety from fire and other dangers.
Yes. All other applicable development standards and building codes will apply to a proposed
affordable housing development application. These standards and codes are designed to
mitigate impacts, provide a safe environment, and protect from fire and other dangers. The
City has extensive experience with these standards and monitors and amends standards as
needed. The standards meet this criterion.
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Setbacks and other development standards facilitate emergency service access. See also
criterion C.
C. Promote public health, public safety, and general welfare.
Yes. The AHO works to improve access to affordable homes for residents at or below 100%
of the Area Median Income. This improves general welfare by providing people with access
to safe and stable housing. The proposed amendments in Ordinance 2012 do not change the
purpose or goal of the original ordinance and works to increase the opportunity to access
two-bedroom homes.
D. Facilitate the provision of transportation, water, sewerage, schools, parks and other
public requirements.
Yes. The essential standards for provision of public services such as water and sewer will not
be modified. The proposed amendment removes the incentive of a reduction of parkland for
affordable housing projects that are built in new development projects. This ensures that
whether homes are being built at market rate or at the affordable rate as determined by City
Commission resolution, they will be required to provide the required parkland per unit. All
site development must demonstrate availability of adequate transportation, water, sewer, and
park facilities prior to approval. The regulations are integrated with other City standards in
Chapter 40 for provision of and operation of utilities.
E. Reasonable provision of adequate light and air.
Neutral. The building code standards apply to all homes that are built through the AHO
which will insure a modicum of light and air. Minimum standards for windows and air
circulation/venting remain in the building codes. As noted in Criterion D, park dedication
requirements will apply to affordable housing.
F. Effect on motorized and non-motorized transportation systems.
Neutral. The proposed ordinance 2012 continues to allow for a parking reduction in the
affordable housing developments. There is no direct impact to any sort of non-motorized
transportation systems. Creation of local and other types of streets will occur during the
subdivision process which creates the lots upon which the homes will be built. The ordinance
does not change this process.
G. Promotion of compatible urban growth.
Yes. The proposed Ordinance 2012 promotes the continued growth of the City by providing
standards that require affordable housing be a part of any development project of 10 units or
more. The standards, as shown in other criteria, are consistent with the development
standards and patterns of the City.
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H. Character of the district.
Yes. The current ordinance requires that affordable homes be built to match the exterior
character of all homes in the development. The amendments do not have any direct impact
on those requirements and have no direct impact on the overall character of the different
zoning districts.
I. Peculiar suitability for particular uses.
Neutral. No changes to the zoning boundaries or uses within zone districts are proposed with
these amendments. The location of zoning districts has previously been found to be
appropriate. The authorized use tables have been reviewed for consistency with the intent and
purpose of individual districts and found to be appropriate. Homes constructed under the
affordable housing ordinance will only occur within areas where residential development is
an authorized use.
J. Conserving the value of buildings.
Yes. The proposed amendments add a section to the ordinance for determining the fair
market value of the affordable homes for the purpose of calculating the non-cash subsidy to
be recaptured by the City. It requires that all homes be appraised at fair market value and not
at the value set using comparable sales of homes that have received governmental subsidies.
No changes to the zoning boundaries are proposed that would cause buildings to become
non-conforming to the district in which they are located. Other portions of the municipal
code require buildings to be maintained in a safe and secure condition to avoid decay and
public hazards. The building design standards of Article 5 minimize negative impacts of
development on adjoining properties. The community design standards of Article 4 ensure
adequate street circulation, parks, and other necessary features.
K. Encourage the most appropriate use of land throughout the jurisdictional area.
Yes. No changes to the zoning boundaries are proposed with these amendments. The uses
authorized in the use tables for each district are consistent with the district purpose. The
zoning boundaries are in substantial compliance with the land use map of the growth policy,
which establishes the broad policy for location of uses. As described in Criterion A, the
proposed zoning is consistent with the growth policy overall. Finally, the amendments allow
greater housing variety to meet the needs of a diverse community.
PROTEST NOTICE FOR ZONING AMENDMENTS
IN THE CASE OF WRITTEN PROTEST AGAINST SUCH CHANGES SIGNED BY THE
OWNERS OF 25% OR MORE OF THE AREA OF THE LOTS WITHIN THE AMENDMENT
AREA OR THOSE LOTS OR UNITS WITHIN 150 FEET FROM A LOT INCLUDED IN A
PROPOSED CHANGE, THE AMENDMENT SHALL NOT BECOME EFFECTIVE EXCEPT
BY THE FAVORABLE VOTE OF TWO-THIRDS OF THE PRESENT AND VOTING
MEMBERS OF THE CITY COMMISSION.
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For this text amendment application the applicable calculation of protesting owners would
include all owners of all properties in all districts of the City for issues affecting the entire city
such as review processes and generally applicable standards. For issues affecting a defined
subsection of the city such as an individual zoning district the calculation of protesting owners
would include all owners within the affected area. This protest does not apply to provisions
relating to subdivision review as there is no state authority for protest of subdivision regulations.
As of the writing of this report, no written protest against the changes have been received.
APPENDIX A - PROJECT BACKGROUND
The City has had zoning since 1934. The City has replaced the entirety of its zoning regulations
fifteen times since then and completed over 250 individual amendments to the text. These
regulations have developed over time as the City has grown from 6,855 in 1930 to over 45,000
today.
The City has enacted various zoning requirements and standards over the years to support
provision of affordable housing. Despite those repeated efforts, the issue of affordable housing
remains a problem for many residents of the community. The City passed and adopted an
inclusionary zoning ordinance known as the Affordable Housing Ordinance 1922 on December
7, 2015. The original ordinance was passed as voluntary with contingencies in place that a
certain number of lower-priced homes be built by certain dates. Those contingencies were
voluntary to start and switched to mandatory on July 12, 2017 when the contingencies in place to
build a certain number of lower-priced homes had not been met.
The Affordable Housing Ordinance 1922 was in place for 1 year and during that time, eight
homes were built as part of the Lakes at Valley West subdivision. This time period provided
staff and CAHAB members the opportunity to work through the current ordinance to develop
some short term text amendments to improve upon the implementation and enforcement of the
ordinance. The following text amendments to the original ordinance known as Section 38.380
of the Bozeman Municipal Code are proposed:
1. Section 38.380.040 – Definitions
F. Lower-priced home. Has been updated to state, homes priced at or below
70% of AMI
H. Moderate-priced home. Has been updated to state anything priced from
70.1% to a maximum of 90% of AMI
2. Section 38.380.70 – Pricing of affordable homes
A.1. Lower-priced homes. Will be set at a price affordable to buyers at or
below 80% of AMI, rather than 65-80% as previously defined.
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C.1. Household occupancy assumptions. The maximum sales price for a two-
bedroom unit will set at the AMI for a three-person household, rather than a
two-person household as previously defined.
3. Section 38.380.130 – Incentives are proposed to be changed to “Procedural
adjustments and subsidies.”
The Procedural adjustments and subsidies chart is proposed to be changed
from having columns of 70%, 80% and 90% to having two columns that will
include Lower-priced homes and Moderate-priced homes.
The definition for Reduced minimum lot sizes has been amended to reference
the Bozeman Municipal Code Section 38.320 Form & Intensity standards
which define the exact reductions in lot size based on zoning and type of
dwelling unit.
The following incentives are proposed to be removed from the ordinance
i. Waiver of subdivision pre-application since this is a required step in
the subdivision process
ii. Removal of the reduction of parkland as this was directly tied to the
voluntary implementation of the ordinance
iii. Removal of the expedited review for affordable housing 1+1
4. Section 38.380.140 – Alternative means of compliance; payments of fees-in-lieu
B.1. Payment of cash in lieu – has been amended to define the process for
setting the cash in lieu fee on an annual basis as the average of the median
sales price of homes within the city with the same number of bedrooms over
the two years prior to the adoption of the schedule.
5. Section 38.380.150 – Qualification of buyers of affordable homes
A.1. Lower-priced homes. To qualify for purchase of a lower-priced home, a
buyer must meet all the following criteria: The proposal, changes the
definition of household income to be at or below 80% of AMI as certified and
verified by the city or its agent, rather than 65-80% as previously defined
A.4.c. The buyer must meet one of the following definitions of “first-time
homebuyer”. The proposal changes the wording of the current definition to
include: an affected individual, defined by the United States Department of
Housing and Urban Development (HUD) as a displaced homemaker, who has
only owned with a spouse
6. Section 38.380.160 – Subsidy recapture for lower-priced homes
B. Requirement for repayment of non-cash subsidy. The proposal clarifies the
definition of the non-cash subsidy to be the difference between 98% of the
nonsubsidized fair market value of the lower-priced home and the lower-
priced home sales price.
C. Determination of non-cash subsidy amount. The proposal adds this entire
section to include. The community development director determines the
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amount of non-cash subsidy based on the difference between 98% of the fair
market value of the lower-priced home and the sales price of the home. To
determine the fair market value the director may rely on market data or
analysis or one or more professional appraisals provided by the buyer's
mortgage lender, a professional appraisal provided by the purchaser, or such
other professional appraisal as may be obtained by the director for this
purpose. An appraisal report used for purposes of this section must provide
the fair market value of the lower-priced home. The commitment letter
instructions provided to the appraiser must include a requirement that the
appraiser not use as comparables other homes that have received subsid(ies)
pursuant to 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. Reconsideration of director’s determination of fair market value. The
proposal adds this entire section to include. Any party involved in the lower-
priced home sale transaction, including buyer, seller, or the city’s agent may
request reconsideration of the director’s determination of fair market value of
a lower-priced home. In the event of such a request, the requesting party may
provide the city with an appraisal that meets the requirements of subsection C
of this section and/or any other written evidence the requesting party believes
the director should consider in his determination.
Ordinance 2012 with all of the proposed text amendments to AHO 1922 was presented and
reviewed by CAHAB and recommended for approval as proposed on July 11, 2018 and
August 8, 2018.
On October 10, 2018, CAHAB recommended for approval, one more proposed text
amendment to Ordinance 1922. This text amendment is not currently included in Ordinance
2012. Staff’s recommendation on the proposed amendment is neutral as of the time this
report was prepared, and staff recommends that the proposed amendment be presented to the
Zoning Board/Planning Commission and the City Commission for discussion and possible
recommendation. The proposed text amendment includes the following to permit the
construction of homes priced at 80% AMI to meet the requirements of the AHO based on the
following sections:
1. Section 38.380.060 – Number of affordable homes required
Homes that are priced at 80% AMI will meet the quantity requirements of
moderate-priced homes (30% of total dwelling units)
2. Section 38.380.100 – Submission of affordable housing plan; approval
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Any subsidies and procedural adjustments must be included in the affordable
housing plan that is submitted by developer/builder at the time of receiving
final plat.
3. Section 38.380.130 – Incentives
Homes that are priced at 80% AMI will be eligible for the subsidies and
procedural adjustments that lower-priced homes receive.
4. Section 38.380.160 – Subsidy recapture for lower-priced homes
Homes that receive any city subsidies will be required to adhere to the subsidy
recapture requirements for lower-priced homes
It is important to note that ordinance 2012 is proposed as a short-term rewrite. The City is in the
process of beginning a Housing Needs Assessment and at the completion of that process; the
Affordable Housing Program Manager and CAHAB may bring forward a proposal for a larger or
full AHO rewrite.
APPENDIX B - NOTICING AND PUBLIC COMMENT
This application is for an amendment to the municipal code. Therefore, the required notice is
publication in the newspaper per Table 38.40.030, BMC. Notice publication is scheduled on
September 30, October 14 and 28, and November 18, 2018 in the Bozeman Daily Chronicle
before the public hearings by the Zoning Commission/Planning Board and City Commission.
APPENDIX C - APPLICANT INFORMATION AND REVIEWING STAFF
Applicant: Bozeman City Commission, PO Box 1230, Bozeman MT 59771
Report By: Matthew Madsen, Affordable Housing Program Manager
Martin Matsen, Community Development Director
FISCAL EFFECTS
No fiscal effects have been identified. No presently budgeted funds will be changed by this
amendment. The City will incur periodic costs to administer the process.
ATTACHMENTS
The full packet of materials and file of record can be viewed at the Community Development
Department at 20 E. Olive Street, Bozeman, MT 59715.
Draft Ordinance 2012
Zoning Commission/Planning Board report