HomeMy WebLinkAbout11-19-18 City Commission Packet Materials - A5. Ord 2012 Provisional, Affordable Housing Ordinance Zone Text AmendmentPage 1 of 15
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 1978 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 Adopted Motion of Recommendation: Having reviewed and
considered the staff report for project 18484, public comment, staff
recommendations, 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.
Planning Board Adopted Motion of Recommendation: Having reviewed and considered
the staff report, application materials, public comment, and all information
presented, I hereby adopt the findings presented in the staff report for project 18484
and move to approve Ordinance 2012, with the proposed amendments to Ordinance
1922 with an amendment I do wish to specifically state that that text is modified as
indicated because were it to go forward as it is, someone could come after us and say
well you should be making $84,000 dollar houses and that wouldn’t be good.
City Commission Recommended Motion: Having reviewed and considered the project
materials, public comment, Zoning Commission/Planning Board recommendations,
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: November 8, 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 ............................................................................................................... 5
Zoning Commission/Planning Board Recommendation .................................................... 5
City Commission Alternatives ............................................................................................ 6
SECTION 1 - MAP SERIES .................................................................................................... 7
SECTION 2 - RECOMMENDATION AND FUTURE ACTIONS ........................................ 9
SECTION 3 - STAFF ANALYSIS AND FINDINGS ............................................................. 9
Section 76-2-304, MCA (Zoning) Criteria ......................................................................... 9
PROTEST NOTICE FOR ZONING AMENDMENTS ......................................................... 12
APPENDIX A - PROJECT BACKGROUND ....................................................................... 13
APPENDIX B - NOTICING AND PUBLIC COMMENT .................................................... 14
APPENDIX C - APPLICANT INFORMATION AND REVIEWING STAFF .................... 14
FISCAL EFFECTS ................................................................................................................. 15
ATTACHMENTS ................................................................................................................... 15
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 provisions of the AHO were initially voluntary, with contingencies
in place that a certain number of lower-priced homes be built by a certain date or the provisions would become mandatory. The contingencies were not met and the ordinance became mandatory on July 12, 2017. The AHO was recodified as section 38.380 of the
Bozeman Municipal Code in January of 2018 with the adoption of the revised Uniform
Development Code (UDC).
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The AHO has been mandatory in the City for more than one year, during which time city
staff has been identifying and working with challenges in implementation of the ordinance.
Based on the changes of the regulations from voluntary to mandatory, and on the experience
of staff, CAHAB, and the development community working with the AHO, zone text amendments 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
CAHAB to begin the text amendment process. The draft of Ordinance 2012 was presented to
CAHAB and discussed at their meetings on July 11, 2018 and August 8, 2018 for recommendations on the amendments. They made a recommendation to the city commission
on September 12, 2018.
The proposed amendments include the following changes to the AHO. The attached
Ordinance 2012 shows original AHO language proposed to be deleted in strike-through, and proposed new language is underlined. In addition, for reference purposes a copy of the
complete section 38.380 with proposed changes highlighted is attached.
1. Section 38.380.040 – Definitions
• F. Lower-priced home. Revised to redefine lower-priced homes as a home
priced to be affordable to households with incomes at or below 70% of Area
Median Income (AMI).
• H. Moderate-priced home. Revised to redefine moderate-priced homes as a
home priced to be affordable to households with incomes from 70.1% to a
maximum of 90% of AMI.
2. Section 38.380.70 – Pricing of affordable homes
• A.1. Lower-priced homes. The maximum sales price for a lower-priced home
is proposed to be set at a price affordable to buyers with incomes at or below
80% of AMI, rather than 65-80% as previously defined.
• 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 – The term “incentives” is proposed to be changed to “procedural
adjustments and subsidies” to reflect the change from voluntary to mandatory
compliance with the AHO. The chart of “procedural adjustments and subsidies” is
proposed to be amended as follows:
• Remove the distinction between incentives that were available for homes
priced to be affordable to buyers with incomes at 70%, 80% and 90% of AMI.
The chart as proposed will have two columns to include lower-priced homes
and moderate-priced homes.
• Revise the definition of “reduced minimum lot sizes” to reference the UDC
section 38.320 (form & intensity standards) which define the available
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reductions in lot size for affordable homes based on zoning and type of
dwelling unit.
• The following incentives are proposed to be removed from the AHO:
o Waiver of subdivision pre-application since this is a required step in
the subdivision process
o Removal of the reduction of parkland as this was directly tied to the
voluntary implementation of the ordinance
o Removal of the expedited building permit review for affordable
housing as the city’s chief building official advises it is not feasible.
4. Section 38.380.140 – Alternative means of compliance; payments of fees-in-lieu
• B.1. Payment of cash in lieu – this section is proposed to be amended to
define the process for calculating and 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 certain criteria. The proposal, changes the criteria for
household income to be at or below 80% of AMI as certified and verified by
the city or its agent, rather than at 65-80% as previously defined
• A.4.c. The buyer must be a “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 clarify the process of calculating the non-cash subsidy amount:
o The community development director determines the 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
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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 that adds a process to request reconsideration
of the director’s determination of the non-cash subsidy amount:
o 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.
Unresolved Issues
1) On October 10th the CAHAB recommended an additional change to the ordinance. This
change is not included in the proposed Ordinance 2012. It could be added by action of the
City Commission. See discussion below and Appendix A for additional detail.
2) No others identified at this time.
Community Affordable Housing Advisory Board (CAHAB) Recommendation
The CAHAB held a public meeting on September 12, 2018 to consider the text amendment.
The CAHAB recommended approval of Ordinance 2012.
The CAHAB held a public meeting on October 10, 2018 and made an additional recommendation to include allowing the construction of homes priced at a mortgage that is
affordable to buyers at 80% AMI. That recommendation is included in Appendix A for
commission review.
Zoning Commission/Planning Board Recommendation
The City of Bozeman Zoning Commission/Planning Board held a joint public hearing on October 16, 2018 to consider the text amendment. Zoning Commission on a vote of 2:1
recommended approval of Ordinance 2012. The Planning Board on a vote of 6:0
recommended approval of Ordinance 2012. Exact motion language is on page 1 of this
report.
One planning board member made the recommendation that the wording in section 38.380.040 Definitions be rewritten to state that homes be priced at a price that is affordable
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to a buyer of a certain AMI and not priced at or below a specific AMI. Staff concurred with
this suggestion and the changes were made and are reflected in Ordinance 2012. Discussion
ensued around the number of dwelling units constructed and the current state of the
Affordable Housing Program. To see the full meeting, click on this hyperlink.
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 of Ordinance 2012 as submitted.
The Zoning Commission and Planning Board held 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. Zoning Commission recommended approval by a vote of 2:1
and Planning Board recommended approval by a vote of 6:0.
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
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detailing community context, land use, community quality, arts and culture, economic
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 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. The proposed
amendment therefore advances the goals and objectives of the growth policy.
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
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City has extensive experience with these standards and monitors and amends standards as
needed. The standards meet this criterion.
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 were not met. Ordinance 1978 was passed on January 4,
2018 and repealed and replaced all existing forms of the AHO.
The Affordable Housing Ordinance 1922/1978 was in place for one 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 affordable Housing Program Manager with the City of Bozeman Legal
Department and the CAHAB worked on the proposed ordinance 2012.
Ordinance 2012 with all of the proposed text amendments to AHO 1978/1922 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 1978/1922. 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. The proposed additional text amendment was presented to the Zoning Commission
/Planning Board on October 16, 2018.
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Zoning Commission recommended approval by a vote of 2:1 and Planning Board recommended
approval by a vote of 6:0. The October 10, 2018 CAHAB amendment was discussed but not
mentioned in the motions by either body. The Zoning Commission and Planning Board
recommendations will be presented to the City Commission on November 19, 2018 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
• 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. (currently exists but is a part of the CAHAB recommendations)
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. (currently exists but is a part
of the CAHAB recommendations)
It is important to note that Ordinance 2012 is proposed as a short-term rewrite, not a
comprehensive overhaul. 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
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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.
Ordinance 2012
Division 38.380 – Exhibit text
CAHAB supplement public comment
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Page 1 of 11
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 (“UDC”), 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 Commission’s legislative findings in Ordinance 1922 still apply in the
City and adjustments to the AHO are necessary to ensure that article 38.380 of the UDC fulfills its
purposes as stated in section 38.380.020; 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;
and
WHEREAS, the amendments to the AHO were reviewed by the Zoning Commission and
Planning Board at a joint meeting on October 16, 2018. The Zoning Commission voted 2:1 to
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recommend approval of the proposed amendments and the Planning Board voted 6:0 to
recommend approval of the proposed amendments.
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.
. . .
F. Lower-priced home. Newly created dwelling for purchase, priced at a price affordable to
buyer with an income at 70 percent of Area Median Income (AMI) as determined by the city in
accordance with section 38.380.070 of this article to be affordable to a household with an income
between 65 percent and 80 percent of AMI.
. . .
FH. Moderate-priced home. Newly created dwelling for purchase, priced at price affordable to
a buyer with an income from 70.1 percent to a maximum of 90 percent of AMI as determined by
the city in accordance with section 38.380.070 of this article affordable to a household with an
income between 81 percent and 100 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.
. . .
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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.
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 Proce
dural
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
X X
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Incentives Proce
dural
adjustments and
subsidies
Description
Lower-priced
Homes
Moderate-
priced
homes
70%
AMI
80%
AMI 90% AMI
qualifying homebuyer. This assistance shall be
secured with a lien instrument due upon sale,
transfer or non-rate/term refinance of the home.
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
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 for lots for qualifying homes.
X X X
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
X X
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Incentives Proce
dural
adjustments and
subsidies
Description
Lower-priced
Homes
Moderate-
priced
homes
70%
AMI
80%
AMI 90% AMI
infrastructure and meets all applicable criteria in
38.270.030.D.
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.
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.
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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 two years prior to
the adoption of the schedule. 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
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
. . .
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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 98% of the
nonsubsidized fair market the appraised value of the lower-priced home 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. Determination of non-cash subsidy amount. The community development director determines the
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 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 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 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. Reconsideration of director’s determination of fair market value. 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
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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.
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.
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.
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Section 11
Effective Date.
This ordinance shall be in full force and effect thirty (30) days after final adoption.
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PROVISIONALLY ADOPTED by the City Commission of the City of Bozeman,
Montana, on first reading at a regular session held on the 19th day of November, 2018.
____________________________________
CYNTHIA L. ANDRUS
Mayor
ATTEST:
____________________________________
ROBIN CROUGH
City Clerk
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 3rd day of
December, 2018. The effective date of this ordinance is January 2, 2019.
_________________________________
CYNTHIA L. ANDRUS
Mayor
ATTEST:
_______________________________
ROBIN CROUGH
City Clerk
APPROVED AS TO FORM:
_________________________________
GREG SULLIVAN
City Attorney
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DIVISION 38.380. - AFFORDABLE HOUSING (For illustrative purposes only)
Part 1. - Findings and Purpose
Sec. 38.380.010. - Legislative findings.
The city commission hereby finds:
A. The Bozeman Community Plan establishes a goal to encourage an adequate supply of affordable housing and land for affordable housing in Bozeman. A lack of affordable housing affects the ability of many residents to find housing which is adequate for their
basic housing needs. A lack of adequate housing affects health, social stability, and other
issues which can have negative and intergenerational effects. To fulfill this goal, the
community plan establishes an objective to promote the development of a variety of housing types, designs, and costs to meet the wide range of needs of Bozeman residents.
B. The Affordable Housing Action Plan: 2012—2016 (Action Plan) analyzed housing needs
and existing market conditions and determined housing affordability has become an acute
problem as demonstrated by the number of households paying over 30 percent of their
incomes for housing. A 2015 update to the city's housing needs analysis (Action Plan Update) concluded that the group of homebuyers with significant affordability gaps have incomes at or below 80 percent of the area medium income and are in need of subsidies
and/or below-market home prices. The Action Plan Update also determined that buying
opportunities are increasingly scarce for homebuyers with incomes between 60 percent and
100 percent of AMI, and that housing and land prices have increased faster than incomes for many of Bozeman's residents.
C. Since the adoption of the Bozeman Community Plan and the Action Plan, the median sales
price of housing has continued to climb. According to the Action Plan Update, as of the end
of November 2014, the median home price was $287,000.00.
D. The Action Plan Update states that the number of detached homes priced below $250,000.00, a rough indicator of housing affordability for a family of three at 100 percent of AMI, has fallen from 48.4 percent of the market in 2012 to just 18.6 percent in 2014.
E. There is a critical shortage of for-sale housing affordable to Bozeman households with
incomes at and below the area median income, as currently calculated by the U.S.
Department of Housing and Urban Development. As a result, some residents pay excessive amounts of income for housing, reducing the amounts available for other necessities and a
decent and adequate standard of living.
F. Limited housing opportunities within the city requires households to seek housing outside
of the city limits which has a negative impact on transportation infrastructure by adding
unnecessary trips to the network. Increased driving distance to affordable housing also negatively impacts air and water quality. To maintain a sufficient resident workforce in all
fields of employment, and to ensure the public safety and general welfare of the residents of
the city of Bozeman, affordable housing needs must be addressed..
G. The city can achieve its goals of providing more affordable housing and its goal of
achieving an economically balanced community only if part of the new housing built is affordable to households with low and moderate incomes.
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H. The inclusionary housing regulations codified in this ordinance will substantially advance
the city's legitimate interest in assuring that additional housing is built in the city that is
affordable to residents, including low- and moderate-income households and dispersed
throughout the city in order to encourage economic integration of the city's residents.
I. This ordinance is adopted pursuant to the city's self-governing powers and the city's
independent general police power to protect public health, safety, and welfare. Requiring
affordable housing within certain developments is consistent with the community's housing
goals of protecting the public welfare by fostering an adequate supply of housing for persons
at all economic levels and maintaining both economic diversity and geographically dispersed affordable housing.
J. Requiring developers of newly created market-rate housing to provide some housing
affordable to low and moderate-income households is reasonably related to the impacts of
their projects because:
1. Rising land prices are a key factor in preventing development of new affordable housing. New market-rate housing construction in Bozeman has generally created
strong and increasing demand for a finite stock of unbuilt land within the city, and thus
continues to drive up the price of remaining land. New development without affordable
units reduces the amount of land development opportunities available for the
construction of affordable housing.
2. New residents of market-rate housing place demands on services provided by both
public and private sectors, creating a demand for new employees. Some of these public
and private sector employees needed to meet the needs of the new residents earn
incomes only adequate to pay for affordable housing. Because affordable housing is in
short supply in the city, such employees may be forced to live in less than adequate housing within the city, pay a disproportionate share of their incomes to live in adequate
housing in the city, or commute ever increasing distances to their jobs from housing
located outside the city. These circumstances harm the city's ability to attain
employment and housing goals articulated in the community plan and place strains on
the city's ability to accept and service new market-rate housing development.
Sec. 38.380.020. - Purpose.
The purpose of this article is to promote the public health, safety, and welfare by ensuring
that the affordable housing needs of the residents of Bozeman are addressed. In addition, the
purpose of this article is to ensure that quality housing is dispersed throughout Bozeman's
neighborhoods for households of a variety of income levels including low- and moderate-income residents to meet the goals of the community plan and the action plan by encouraging a mix of
housing types throughout the city and integrating affordable housing so as to not concentrate
affordable housing in a particular area.
In addition, the ordinance is intended to alleviate the impacts that would result from the use
of available residential land solely for the benefit of households that are able to afford market-rate housing and to mitigate the service burden imposed by households in new market-rate
residential developments by making additional affordable housing available for service
employees. The ordinance is also intended to mitigate environmental and other impacts that
accompany new residential development by reducing traffic, transit and related air quality
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impacts, promoting jobs/housing balance and reducing the demands placed on transportation
infrastructure.
The ordinance provides residential developers with a menu of options from which to select
alternatives to the construction of inclusionary units on the same site as market-rate residential developments, and provides incentives for housing developers to ensure houses are constructed
and sold in a manner that furthers the city's affordable housing goals.
Finally, the ordinance provides incentives for housing developers who are not legally
required to comply with the requirements for construction of inclusionary housing, but
nevertheless choose to construct affordable housing.
Part 2. - Applicability and Definitions
Sec. 38.380.030. - Applicability.
A. This article applies to:
1. Subdivisions and site plans which propose ten or more market-rate homes, to be created
through development, new construction, substantial improvement or reuse.
2. Annexations where the net developable area of the annexing parcel when considering the applicable zoning could result in ten or more dwellings. In such a case, the
annexation agreement shall require the provision of affordable housing pursuant to this
article.
3. Developments seeking to use incentives to develop affordable housing.
B. Contiguous tracts under common ownership and control. A developer may not avoid the requirements for construction of affordable homes by submitting piecemeal applications for
development. At the time of the initial application for approval of a subdivision or site plan,
the developer shall identify all contiguous property under common ownership and control in
the affordable housing plan required by section 38.380.100.
C. Development applications approved prior to the effective date of this article. A site plan or subdivision having received sufficiency approval as of the effective date of this article or a
preliminary site plan or preliminary plat granted approval prior to the effective date of this
article may apply for one or more of the incentives described herein. Only that portion of the
amended preliminary plat or site plan pertaining to the request for approval of one or more
incentives will be subject to review. The requirements of section 38.19.130 for the amendment of plans will not apply.
D. Newly proposed residential developments which include affordable housing in excess of
this article's requirements for building affordable homes are eligible for incentives as
provided in section 38.380.130. Such request shall require the preliminary plat or site plan to
evidence compliance with all other requirements of this article.
E. Exemptions. Developments comprised exclusively of rental housing units are exempt from
this article.
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Sec. 38.380.040. - Definitions.
A. Affordable housing or affordable home. A dwelling for purchase by an owner-occupant that
requires no more than 33 percent of a household's income for housing payments and meets
the definition of a lower-priced home or moderate-priced home. For purposes of 38.380,
"affordable housing" or "affordable home" does not include condominium units.
B. Area median income or AMI. As calculated by the U.S. Department of Housing and Urban
Development (HUD), AMI is the median income for a family of four within a specific
geographical area, such as Gallatin County. For each such region, HUD adjusts this AMI
calculation for households of different sizes and updates the calculations annually based on estimated changes in area incomes. For purposes of this article, the city hereby adopts
HUD's AMI calculations as an equitable and reasonable method to determine affordability,
based on percentages of AMI specified in this article.
C. Common ownership or control. "Common ownership or control" refers to property owned
or controlled by the same person, persons, or entity, or by separate entities in which any shareholder, partner, member, or family member of an investor of the entity owns ten
percent (10%) or more of the interest in the property.
D. Developer. For purposes of this article, a developer is the person or legal entity, or their
successor(s) in interest who: (a) submits an affordable housing plan for a subject property
along with other submissions required for land use approvals, zoning, or permit reviews by the city, and/or (b) is the owner of property subject to this article during the development
phase or a successor in title, such as a builder, obligated to implement the affordable housing
plan required by this article with respect to one or more lots or parcels of land and/or (c)
receives incentives for the production of affordable housing.
E. Liquid Assets. Assets such as cash, stocks, bonds or similar that can readily be converted to cash with no significant loss in value, but excluding long retirement assets such as IRA
accounts, 401K accounts, pension funds, etc. Explicitly excluding retirement
F. Lower-priced home. Newly created dwelling for purchase, priced at a price affordable to a
buyer with an income at or below 70 percent of Area Median Income (AMI) as determined
by the city in accordance with section 38.380.070 of this article to be affordable to a household with an income between 65 percent and 80 percent of AMI.
G. Market-rate home. Any dwelling for purchase subject to this article which is not an
affordable home. The number of market-rate homes in a development is used to determine
the required number of affordable homes, as described in this article. For the purposes of
38.380, "market rate home" does not include condominium units.
H. Moderate-priced home. Newly created dwelling for purchase, priced at a price affordable
to a buyer with an income from 70.1 percent to a maximum of 90 percent of AMI as
determined by the city in accordance with section 38.380.070 of this article affordable to a
household with an income between 81 percent and 100 percent of AMI.
Part 3. - Requirements
Sec. 38.380.050. - Requirement to build and sell affordable homes.
All development subject to this article must include affordable homes.
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Sec. 38.380.060. - Number of affordable homes required.
The number of affordable homes a developer is required to build is a percentage of the total
market-rate homes proposed in the development plan.
A. The developer may:
1. Build and sell lower-priced homes. Ten percent of the total dwellings constructed within the subdivision or site plan must be lower-priced homes built and sold at
price targets as established by the city pursuant to section 38.380.070 to households
with incomes at or below 80 percent of AMI; or
2. Build and sell moderate-priced homes. Thirty percent of the total dwellings proposed must be moderate-priced homes sold at price targets as established by the
city pursuant to section 38.380.070 to households with incomes from 81 percent to
100 percent of AMI; or
3. Build and sell a mix of both types of affordable homes. If a developer proposes a
mix of both lower-priced and moderate-priced homes, the developer starts with the ten percent calculation for lower-priced homes. For each lower-priced home
eliminated from the resulting number, the developer may substitute three moderate-
priced homes.
The distribution of homes between the two categories of affordable homes will be identified in
the affordable housing plan required by section 38.380.100.
B. Fractions. If the calculation of the required number of affordable homes results in a fraction of a home, this obligation will be satisfied by payment of a fee-in-lieu pursuant
to section 38.380.140 or by providing an additional moderate-priced home.
C. Calculating number of affordable homes in phased developments. It is anticipated that
in developments being built in phases, the number of market-rate homes may not be certain at the time the developer submits the affordable housing plan pursuant to section 38.380.100. In such cases, the developer must estimate the number of market-rate
homes and number of affordable homes required for all phases. If the number of homes
in the first phase of such development is certain at the time of the city's approval of the
affordable housing plan, a separate affordable homes pricing and delivery schedule for that phase shall be incorporated in the affordable housing plan at the time of development or construction of each subsequent phase. As the number of homes in
future phases becomes certain, the affordable housing plan shall provide for subsequent
affordable homes pricing and delivery schedules for future phases of the development,
consistent with the affordable housing plan and section 38.380.070.B.
Sec. 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.
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2. Moderate-priced homes. The sales price for moderate-priced homes affordable to
buyer-households with incomes from 81 percent to 100 percent of AMI will be
calculated based on a household income of 90 percent of AMI.
B. Affordable home sales price schedule.
1. The city will annually publish a schedule of sales prices for low-priced homes and
moderate-priced homes within 30 calendar days of the HUD's annual publication of
updated AMI calculations. The sales price schedule will be effective on the date of
publication by the city. The new sales price schedule will apply to applications for
building permits received after the effective date of the new sales price schedule. A developer may request that a new sales price schedule apply to the sale of an affordable
home approved under a previous sales price schedule.
2. The city, at the city's sole discretion, may recalculate the sales price schedule if
prevailing mortgage interest rates have adjusted by 50 basis points or more over the
assumption used for the previous schedule.
3. Considerations. The following factors will be considered by the city in calculating the
sales price schedule. The Director of community development may make de minimis
exceptions to application of these factors:
a. AMI for the Bozeman area;
b. Gross monthly income will be calculated as the appropriate HUD AMI calculations income divided by 12;
c. The maximum monthly payment will be 33 percent of gross monthly income. The
maximum monthly payment will include costs directly applicable to a mortgage
such as payment of principal, interest, as well as assumptions for typical costs of
taxes, public assessments, property insurance premiums, mortgage insurance premiums (assuming the higher of either government or private mortgage
insurance), and homeowner association fees;
d. The interest rate will be determined by the city by a survey of at least three local
mortgage lenders, averaging their current rates for loans for homes with price
ranges within the low-priced homes range and the moderate-priced homes range;
e. The financing will be a conventional or government-insured fixed-rate loan with a
term of 15 to 30 years; and
f. A borrower will typically contribute $1,000.00 toward the purchase price.
C. Household occupancy assumptions. To determine the maximum sales prices 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.
Sec. 38.380.080. - Timing of delivery of affordable homes.
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Required affordable homes must be provided in accordance with the following:
A. In each development in which more than one affordable home is required to be sold,
the affordable housing plan shall specify that affordable homes are to be sold
concurrently and in proportion to the sale of unimproved lots or market-rate homes. Such timing of compliance will be represented in an affordable homes pricing and
delivery schedule as described in section 38.380.100.
B. A developer may build and sell affordable homes earlier than required in an affordable
housing plan.
Sec. 38.380.090. - Minimum design and construction standards for affordable homes.
A. Required number of bedrooms in affordable homes. In each development subject to the requirements of this article, affordable homes shall represent a mix of bedrooms per unit as
similar as possible (given rounding of numbers) to the mix of bedrooms per unit of the
market-rate homes in the development.
B. Standards for design and construction. The city shall define reasonable standards for the design and construction of affordable homes to ensure livability and compatibility with nearby market-rate homes in the development. Affordable homes may have different interior
finishes and features than other dwellings within the development, as long as the finishes
and features are functionally equivalent and of good quality. Finishes include, but are not
limited to, design and materials, the provision of appliances, cabinets, and floor treatment. Features include, but are not limited to, the numbers of bathrooms, garages and parking areas, mechanical equipment and hookups, and green building features.
C. Amenities. Affordable homes shall have the same amenities as the market-rate homes in the
development, including the same access to and enjoyment of common open space and
facilities in the development.
Sec. 38.380.100. - Submission of affordable housing plan; approval.
A. Affordable housing plan. The applicant for any development seeking to utilize the
incentives to create affordable housing or subject to the requirements of this article must
submit an affordable housing plan in a form provided by or approved by the city that
describes how the requirements of this article will be satisfied. When approved by the city,
the affordable housing plan must be incorporated by reference in the recorded subdivision plat, site plan or annexation agreement. The applicant will provide only one affordable
housing plan to meet the requirements of this article.
B. Affordable housing plan as binding agreement. An affordable housing plan approved by the
city will be considered a binding contract between the developer and the developer's
successors in interest to the lot or dwelling. Such plan will be included in a separate recorded written agreement between the developer and the city, or incorporated into another
recorded document wherein the developer is required to implement the affordable housing
plan.
C. Contents of affordable housing plan. The affordable housing plan submitted by the
developer must include, at a minimum:
1. Number of affordable homes proposed in each affordable home category;
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2. The number of bedrooms in each affordable home;
3. Number of market-rate homes in the development;
4. The number of bedrooms in each market-rate home;
5. Location of affordable homes in the development (lots in the plat or units within a site plan);
6. Timing of delivery of the affordable homes in relation to the market-rate homes in the
development;
7. Marketing plan describing how affordable homes will be offered to the public;
8. Plan for construction of affordable homes in phased developments. It is anticipated that in developments being built in phases, the number of market-rate homes may not be
certain at the time the developer submits the affordable housing plan. In such cases, the
developer must estimate the number of market-rate homes and number of affordable
homes for each phase. If the number of homes in the first phase of such development is
certain at the time of the city's approval of the affordable housing plan, a separate affordable homes pricing and delivery schedule for that phase shall be incorporated in
the affordable housing plan at the time of development or construction of each
subsequent phase. As the number of homes in future phases becomes certain, the
affordable housing plan shall provide for subsequent affordable homes pricing and
delivery schedules for future phases of the development, consistent with the affordable housing plan; and
9. Any other information that is reasonably necessary to evaluate the compliance of the
affordable housing plan with the requirements of this article.
D. Pricing and delivery schedules in affordable housing plans. The affordable homes pricing
and delivery schedule shall be in the form of a chart that contains the numbers of required affordable homes by bedroom count and affordable home category, and shall indicate the
current affordable home prices as calculated by the city.
E. Approval of affordable housing plan. The affordable housing plan will be reviewed as part
of the initial application approval process for the type of development proposed. A condition
shall be attached to the approval of any subdivision plat or site plan to require recordation of the affordable housing plan or other separate agreement obligating the developer to meet the requirements of this article.
Sec. 38.380.110. - Marketing, sales and occupancy of affordable homes.
Developers subject to this article shall market and sell affordable homes in accordance with
provisions described in the city's published instructions for preparing affordable housing plans. These provisions will address factors such as waiting list management, marketing materials, responsibilities for marketing affordable homes, actions to be taken in the event of inability to
identify qualified buyers, procedures for certification of buyer eligibility, purchase contracts, and
full disclosures to buyers of their obligations and rights under this article. If after 120 calendar
days of marketing efforts on the part of the developer of an affordable home in compliance with the city's published instructions the developer has not executed a purchase contract with a qualified buyer, the developer may enter into a purchase contract with a buyer at a sales price
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that shall not be subject to the maximum sales prices established pursuant to section 38.380.070.
In such a case, upon closing of the sale the developer must pay the city the difference between
the sales price and the price of the affordable home as set out in the approved affordable housing
plan in accordance with section 38.380.180.B.
Sec. 38.380.120. - Recording requirements upon sale of affordable home.
The developer, or the city or its agent if the city is involved in the sale of an affordable home
shall cause to be recorded in the offices of the Gallatin County Clerk and Recorder,
simultaneously with the recording of the deed of conveyance, a restrictive covenant, deed of trust
or other legal instrument, approved as to form by the Bozeman City Attorney that fulfills the resale and recapture requirements described in section 38.380.160.
Part 4. - Incentives
Sec. 38.380.130. - Incentives available for affordable housing.
Developers may apply for incentives 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
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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 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 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 for lots for qualifying homes.
X X X
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
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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.
Part 5. - Alternative Means of Compliance
Sec. 38.380.140. - Alternative means of compliance; payments of fees-in-lieu.
A. Alternatives to building lower-priced homes. The city may authorize a developer otherwise
required to provide affordable homes within a development to provide an alternative means of compliance of equal value to the affordable homes otherwise required to be constructed pursuant to this article.
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 two years prior to the adoption of the schedule. 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.
2. Donation of land. Credits for donation of house lots or multi-family parcels. The city may accept donations to a city-designated community housing nonprofit entity of: (a)
ready-to-build house lots; or (b) parcels of land suitable for construction of affordable
multifamily housing. Restrictions on the donated lots or parcels will run with the land.
Such donations, if approved, will provide credits against this article's requirements for building lower-priced homes. The credits will be determined as follows:
a. House lots. The value of the lot or lots, as determined by a professional appraisal
paid for by the developer, will be divided by the city's then-current average of cash-
in-lieu payments for homes of different sizes. The product of that division to two
decimal points will constitute the credit against the otherwise required number of lower-priced homes.
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b. Parcels of land. The city shall periodically adopt a valuation for donation of
parcels of land intended for multifamily development, for purposes of determining
credits against the number of affordable homes that would otherwise be required in
a development subject to this article. The parcel of land must be zoned for the development of multi-family housing, such as R-3, R-4 and REMU.
C. Timing of delivery of alternative means of compliance.
1. Timing of providing in-lieu contributions. In-lieu contributions when permitted shall be
due and deliverable to the city before the recordation of the affordable housing plan. A
developer may propose an alternative to this requirement in which staged contributions are made upon the predicted occurrence of certain events, such as the sale of lots, which
alternative may be approved at the sole discretion of the city.
2. Staged delivery of in-lieu contributions. In the case of staged delivery of in-lieu
contributions, when permitted, the city's determination of the value of each contribution
shall take into account the differential financial value of payments that are made later than recordation of the affordable housing plan using conventional methods of
discounting future cash flows to present value.
Part 6. - Buyer Qualification and Subsidy Recapture
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
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 no more than one
year prior to the closing date of the purchase. Income verification will be performed
using 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.
2. Maximum liquid assets of $25,000.00 at the time of income certification. Exceptions
may be granted by the Director of community development based on extraordinary
circumstances.
3. The household occupying the lower-priced home must meet the definition of "Household" in section 38.700.090.
4. The buyer must meet one of the following definitions of "first-time homebuyer":
a. An individual who has had no ownership interest in a principal residence during
the three-year period ending with the date of purchase; or
b. A single parent whose only prior home was owned with a former spouse while married; or
c. An affected individual who is, defined by HUD as a displaced homemaker, who
and has only owned with a spouse; or
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d. An individual who has only owned a principal residence not permanently affixed
to a permanent foundation in accordance with applicable regulations; or
e. An individual who has only owned a property that was not in compliance with
state, local or model building codes and which cannot be brought into compliance for less than the cost of construction a permanent structure.
5. The buyer must contribute at least $1,000.00 towards the purchase of the home unless
waived in writing by the city because of extraordinary circumstances, such as death of
primary or secondary income earner or qualification as displaced homemaker.
6. The buyer must utilize conventional or government-insured fixed-rate first-mortgage financing with a term of 15 to 30 years.
7. The household in a lower-priced home must occupy the home as its primary residence.
Lower-priced homes may not be rented to another party, since the intent of the program
is to provide these homes only for income-qualified owner occupants, with the
exception of rentals for a limited period of time necessitated by a family hardship or a temporary move for one year or less, if approved in advance by the city.
B. Moderate-priced homes. To purchase a moderate-priced home, a buyer must occupy the
home as a primary residence. The developer must provide evidence satisfactory to the city
verifying the initial owner will use the home as their primary residence at time of sale.
Sec. 38.380.160. - Subsidy recapture for lower-priced homes.
To ensure that the community investment in affordable housing is perpetuated and that
beneficiaries of affordable housing programs do not receive a windfall financial benefit, the city
requires repayment of subsidies as follows:
A. Requirement for repayment of cash subsidy. The buyer of a lower-priced home that
received cash support in the form of funds from the Affordable Housing Fund or other funding through the city, including but not limited to down payment assistance, impact
fee payment, or other funding shall be required to repay the subsidy, at zero percent
interest, when the dwelling or property is sold, transferred, refinanced with equity
converted to cash out or when the initial buyer who qualified for the subsidy has failed
to abide by the requirements of this article. The subsidy will be recorded as a lien against the property at the Gallatin County Clerk and Recorders office.
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
98% of the nonsubsidized fair market the appraised value of the lower-priced home 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.
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C. Determination of non-cash subsidy amount. The community development director
determines the 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 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 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 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. Reconsideration of director’s determination of fair market value. 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.
Part 7. - Administration and Enforcement
Sec. 38.380.170. - Administration.
A. Director of community development authority. The director of community development or an agent designated by the city commission shall have authority to promulgate and enforce
all reasonable rules and regulations and take all actions necessary to the effective operation
and enforcement of this article, unless such authority is expressly reserved to the city
commission or another city official, including but not limited to:
1. Reviewing a developers' affordable housing plan for compliance with this article;
2. Adopting all forms and prescribing the information to be given therein;
3. Monitoring developers' compliance with this article, notifying the developer of
noncompliance, and ordering compliance;
4. Imposing any and all sanctions permitted by this article; and
5. Calculating the annual pricing targets for affordable homes and causing a sales price schedule to be published. The director of community development may make de
minimis exceptions to the factors considered in calculating the price targets.
B. Administrative manual. The city will publish administrative rules and instructions approved
by the city commission, including but not limited to instructions for completing the affordable housing plan, valuations required by this article, and the distribution of the required number of affordable homes between the two affordable home categories and
required number of bedrooms. Such distribution by affordable home category shall be based
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primarily upon an assessment by the city of housing needs among the income groups
corresponding to each affordable home category, but shall take into account the economic
impact on developments subject to the requirements of this article.
C. Verification of sales prices and income certification prior to closing. The city manager may create standards for documentation the city will use to verify the sale price of a home
created pursuant to this article. For the initial sale of an affordable home, the seller must
provide the city with a copy of the HUD-1 form prepared by an attorney or title company
indicating the sales price. The final sales price on the HUD-1 form may not exceed the
maximum price for a specific affordable home as described in the current price schedule pursuant to section 38.380.070 plus an allowed maximum of $3,000.00 in buyer selected
upgrades, if allowed by the first mortgage lender underwriters. In addition, the city shall
require certification satisfactory to the city of homebuyer income qualification.
D. Monitoring completed sales. Upon receipt of a settlement statement for an affordable home,
the city will determine if the completed affordable home sale complies with the approved affordable housing plan and the requirements of this article, and if not, respond to the
noncompliance as provided in section 38.380.180.
Sec. 38.380.180. - Noncompliance; sanctions.
A. Discovery of noncompliance. If the city determines a developer subject to an affordable
housing plan has failed to comply with any terms or conditions of the affordable housing plan or this article, the Director of community development or authorized agent shall notify
the developer of the noncompliance in writing and order compliance by the most reasonable
and expeditious means as determined by the city. Notification shall describe a date certain
by which the developer must be in full compliance (which may not be less than one week or
more than one year from the date of the notice), and shall describe: (i) the exact nature of the noncompliance; and (ii) the possible sanctions for noncompliance with this notification.
B. Cancellation of incentives provided. If a developer sells a home for a price not in
compliance with the approved affordable housing plan or any other recorded documentation
obligating developer to comply with this article, the developer must, prior to the release by
the city of the dwelling from the affordable housing plan or binding agreement, pay the city the difference between the sale price and the price of the affordable home as set out in the
approved affordable housing plan.
C. Sanctions for noncompliance. In addition to other remedies available to the city pursuant to
this article, if on a date certain by which compliance has been ordered by the director of
community development or authorized agent, the developer remains in noncompliance, the director of community development or authorized agent shall notify the city attorney of the
noncompliance and request that sanctions be imposed. The city shall have the authority to
impose one or more sanctions including but not limited to the following which the city
deems most effective and appropriate considering the nature of the noncompliance:
1. Withholding or revoking building permits,
2. Issuing stop-work orders, and/or
3. Withholding certificates of occupancy.
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MEMORANDUM
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
TO: Community Affordable Housing Advisory Board (CAHAB)
FROM: Matthew Madsen, AFFORDABLE HOUSING PROGRAM MANAGER
PLANNING
RE: Affordable Housing Ordinance 38.380 Text Amendment
DATE: 10/10/2018
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
Project Description: This amendment is in addition to the original text
amendments that were approved unanimously by CAHAB at the August 11th
meeting. The amendment presented today includes the following language and
changes to sections with Article 38.380 Affordable Housing.
Developers/Builders may price and sell homes at 80% of Area Median Income
(AMI) as a way to satisfy the requirements of Article 38.380.
1. Homes that are priced at 80% AMI will meet the quantity requirements of
moderate‐priced homes (30% of total dwelling units) as described in Section
38.380.060 Subsection A.1.
2. Homes that are built at priced at 80% AMI will be eligible for the subsidies
and procedural adjustments that lower‐priced homes receive as described in
Section 38.380.130.
3. Homes that receive any city subsidies will be required to adhere to Section
38.380.160 subsidy recapture for lower‐priced homes
4. 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.
Recommendation:
1. At this time, staff does not recommend either approval or non‐approval of
this item but will pass the CAHAB recommendation on to the City
Commission at time of presentation of the Affordable Housing Ordinance
Text Amendment
2. Staff recommends that CAHAB make a motion to either approve or
disapprove this addition to the AHO Ordinance 38.380 to be brought to
commission as an additional consideration to the text amendment.
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