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HomeMy WebLinkAbout19466 Bridger View Redevelopment Affordable Housing Plan PB staff memo MEMORANDUM ------------------------------------------------------------------------------------------------------------ TO: Tom Rogers, SENIOR PLANNER FROM: Tanya Andreasen, COMMUNITY HOUSING PROGRAM MANAGER RE: Bridger View Redevelopment Affordable Housing Plan DATE: 4/24/2020 ----------------------------------------------------------------------------------------------------------- Recommendation: The Affordable Housing Plan and other requirements regarding affordable housing have been satisfied conditioned on the final recordation of documents and the payment of cash in lieu. The applicant requests the City not record the down payment and non-cash subsidy lien usually applied to affordable home sales by the Affordable Housing Ordinance. Staff recommend that a non-cash subsidy lien not be recorded for these homes. Staff do recommend a lien be recorded with properties purchased by home owners receiving down payment assistance for the City’s Workforce Housing Fund. Discussion of this recommendation is in section “Community land trust model of home development”. These comments are provided on the April 21, 2020 Affordable Housing Plan and Preliminary Plat application materials. Project Location: 28 Bridger View Drive. Bridger View Mobile Home Court No.1 shown on retracement survey COS 2547, located in Sections 31, Township One South (T1S), Range Six East (R6E), P.M.M., City of Bozeman, Gallatin County, Montana. Description: The Bridger View Redevelopment Subdivision is a redevelopment of an existing parcel of land within the Bozeman City Limits. The development application includes 63 dwelling units on 57 lots, with 52 single household detached or attached townhomes subject to the Affordable Housing Ordinance (AHO), Article 38.380 of the Bozeman Municipal Code (BMC). The applicant is proposing to build 5 affordable homes and provide a cash-in-lieu payment for the remaining 0.2 units to meet the requirements of the AHO. Discussion: The AHO applies to certain types of development applications, including subdivisions which propose ten or more market-rate homes. Section 38.380.030, BMC. A development subject to the AHO is required to build 10% of the dwelling units to be sold as lower priced homes or 30% as moderate priced homes, or a combination. Condominium dwelling units are not subject to the AHO, and are not included in the calculations that determine the required number of affordable homes built. If the calculation of the required number of affordable homes results in a fraction, applicants may satisfy the AHO by payment of cash-in-lieu. Section 38.380.060, BMC. As noted above, the applicant proposes to meet the required number of affordable homes by providing five Lower-priced homes and a cash in- lieu payment for the remaining 0.2 units. Section 38.380.090 Minimum design and construction standards for affordable homes, requires the developer to build affordable homes with a mix of bedrooms per dwelling unit as similar as possible to the mix of bedrooms per dwelling unit of the market-rate homes. The mix of bedrooms per affordable dwelling unit to be built is based on the total bedrooms in the market rate and affordable homes. Of the 52 total, 9 are estimated to be 3/+ bedroom dwelling units and 32 are estimated to be 2-bedroom units and 11 are estimated to be 1/studio bedroom units. This would require the construction of .86, 3/+ bedroom units, 3.1, 2-bedroom units, and 1.1, 1/studio bedroom units. The applicant has proposed to build one 3/+ bedroom unit, three 2-bedroom units, and one 1/studio bedroom unit. The 5 proposed affordable units proposed are attached townhome style and are laid out in an initial unit distribution diagram attached to the application materials. Construction on the homes will be completed in a phased approach. The affordable homes will be constructed and sold as described in the Affordable Housing Plan and meeting the requirements of Sec 38.380.100 C.8 which describes the timing of delivery of affordable homes in phased construction. Phase 1 will include one affordable home and the cash-in-lieu payment for 0.2 units. Phase 2 will include two affordable homes, and phase 3 will include two affordable homes, satisfying the 5 total affordable homes and .2 homes paid as cash-in-lieu of a built structure. It is important to note that the developer does not know the exact mix of bedrooms per dwelling unit of the market rate homes and is relying on a best estimate at time of final plat application. Therefore, the exact mix of homes being built may differ from what is in the current Affordable Housing Plan. In addition, at this time, the City does not track incoming building permits and cross reference to a subdivision to determine the actual mix of bedrooms per dwelling unit at time of completion of a project. The applicant is requesting incentives for the Affordable Housing Units described in Section 38.380.130 Procedural Adjustments and Subsidies to include the following: 1. Reduced minimum lot size; 2. Down payment assistance of up to $10,000 per homebuyer per home; and 3. Impact fee reimbursement for each of the 5 units reimbursed upon sale at a sales price meeting the Affordable Housing Pricing Schedule The applicant will work with HRDC and the City of Bozeman to develop a marketing and outreach plan to recruit certified eligible buyers from the HRDC wait list to purchase the five affordable homes in this project. Community Land Trust model of affordable home development Applicant plans to include the affordable homes proposed in this application in a community land trust (CLT) subject to long-term ground leases. According to the Affordable Housing Plan, the inclusion of the homes in a CLT is to ensure they remain affordable in perpetuity. The AHO does not address the CLT ownership model, where the home is sold separate from the land, which is held in a Community Land Trust, with the home subject to a long-term ground lease and, in this case, includes restrictions on resale. These restrictions include a prescribed formula for pricing the home if it is resold, limiting the equity gain realized by the homeowner. The applicant plans to price the 5 proposed affordable homes according to the City’s published pricing schedule as described in Section 38.380.070. While this proposed pricing meets the letter of the AHO, homebuyers of these homes will not receive the value of the land, unlike a traditional Lower-priced home purchase. As noted above, the AHO does not presently address homes proposed to be sold in a CLT. The AHO requires recapture of the City’s investment in Lower-priced homes, so that the investment is perpetuated and that buyers of the homes do not receive a windfall financial benefit upon resale. Section 38.380.160. Because the CLT ownership model includes resale restrictions ensuring perpetual affordability, the applicant requests the City not record the down payment and non-cash subsidy lien usually applied to affordable home sales by the AHO. Staff recommend that no non- cash subsidy lien be recorded for these homes. Staff do recommend a lien be recorded with the property of home owners receiving down payment assistance from the City’s Workforce Housing Fund. The objective of the City’s down payment assistance program is to assist individual home buyers purchase their home. Should they make the choice to sell their home in the future, the Workforce Housing Fund is replenished with that amount for another home buyer. Recording a lien for the amount of down payment assistance received at the time of purchase ensures the return of the funds. This revolving system extends the benefit of those scarce funds to future home buyers in need. Cash-in-lieu Calculations across proposed Phases of development Cash in lieu rates are set at the time of Certificate of Occupancy for the first building in the subdivision, based on the then-current City cash-in-lieu fee schedule. The current rate for a 1-2 bedroom home is $55,239. The cash in lieu calculations submitted by the developer in the Affordable Housing Plan (Form AH) have been reviewed by staff and meet the requirements for the number of units proposed. As noted above, the applicant proposes to pay cash-in-lieu for 0.2 units, which at the current rate is $11,048. The cash-in-lieu fee will be paid in Phase 1 of the development. The developer must pay the approved cash in lieu amount at the time of the first Certificate of Occupancy for any building in the subdivision. Other recording directions and requirements are noted for the Affordable Housing Plan and plat for this subdivision in the code provision comments below. Conditions of approval required with preliminary plat 1. The approved affordable housing plan must be recorded concurrent with the final plat and a reference to the recorded document must be provided on the conditions of approval page of the final plat. The reference on the conditions of approval sheet must be “This subdivision is subject to affordable housing requirements. The subdivision’s requirements and obligations can be found in the Bridger View Redevelopment Affordable Housing Plan recorded as document no.___________ at the Gallatin County Clerk and Recorders Office.” The conditions of approval sheet includes the required notation. This condition is satisfied with the recording of the final plat mylars and the affordable housing plan for the subdivision. The Clerk and Recorder should write in the document number for the recorded affordable housing plan on the conditions of approval sheet prior to the filming/scanning of the final plat. Required code provisions. All citations are to the Bozeman Municipal Code (BMC). 1. BMC 38.380.100.A 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. The affordable housing plan and associated written agreement must be recorded at the time of final plat approval. The affordable housing plan has been updated with the final plat application and is complete and correct. This document must be recorded with the final plat documents following final plat approval by the City Commission. 2. BMC 38.380.100.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. Per this section see recommended condition number 1 related to affordable housing. This code provision is satisfied with the recording of the final plat and associated affordable housing plan. 3. BMC 38.380.140.B.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 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. 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. This code provision will be satisfied with the payment of cash-in-lieu as outlined below and prior to the recording of the affordable housing plan (Form AH). 4. BMC 38.380.140 C.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. Per the affordable housing plan (Form AH) submitted with the preliminary plat application $11,048 is required to be paid at the time of Certificate of Occupancy for the first building in the subdivision. This amount is payable to the City of Bozeman. Payment may be made at the Community Development front counter. The final plat must not be approved until this amount is received by the City of Bozeman. Additional Review Affordable housing plans are also submitted to the Community Affordable Housing Advisory Board (CAHAB) for their review and recommendation. The City Commission is the final approval authority for the affordable housing plan and the overall subdivision approval. Because CAHAB has been unable to meet pursuant to the City’s Emergency Declaration regarding the Covid-19 pandemic CAHAB members will be given the opportunity to review applicant materials and staff memo via email and may provide their individual recommendations by submitting or giving them as public comment to the City Commission for consideration at the hearing on the preliminary plat and PUD. Fiscal Effects: The total fiscal effects for the project will be up to $50,000 in down payment assistance and up to $50,000 in Impact Fee Reimbursement to be paid out from the Workforce Housing Fund, if approved. Attachments: - Bridger View Redevelopment Affordable Housing Plan Form AH submitted April 21, 2020 - Affordable Housing Unit Distribution Diagram - Appendix 10.c. Affordable Housing Plan (submitted 10-1-2019, narrative)