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HomeMy WebLinkAbout04-16-24 Public Comment - S. Boyd - Public comment on action item H.1. for 4_16 commission meetingFrom:Scott and Frances Boyd To:Bozeman Public Comment Subject:[EXTERNAL]Public comment on action item H.1. for 4/16 commission meeting Date:Tuesday, April 16, 2024 11:32:00 AM Attachments:Staff Report Aff-Housing Incentives.pdf CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe. There are many objections filed thus far opposing the proposed Guthrie development and more importantly, to the deep incentives of the city’s Affordable Housing Ordinance (AHO) that could allow for the Guthrie’s construction. Setting aside the opposition to the demolition of a historic- eligible building within the Neighborhood Conservation Overlay District and the justification for that for a moment, the protests are primarily centered around how the tradeoffs of the deep incentives benefit the developers while negatively impacting the neighborhood, rather than effectively fulling their intended purpose of providing affordable housing. The city should impose a moratorium and reconsider the use of deep incentives altogether. Necessary improvements include: 1. Engage the public. Virtual meetings held post-COVID and outdated notice methods did not provide enough opportunity for public feedback to such an important and impactful change. The AHO was rushed through because our state legislature outlawed Bozeman’s previous affordable housing implementation. Only two written public comments were filed on the updated AHO, and both opposed its adoption. Additionally, the Community Development Board opposed the AHO as proposed. With one board supporting (the Economic Development Board) and another opposing, why didn’t the city commission resolve that situation before adopting the ordinance? 2. Reconsider where these incentives can apply. Proximity to schools, places of worship, and neighborhoods already burdened with heavy parking loads should be off-limits for these incentives. Parking districts around the university and Bozeman High School along with neighborhoods adjoining the Midtown Redevelopment District will be doubly impacted by the “no-parking necessary” relief. These areas should be protected from having to absorb the cost of these developer incentives. 3. Extend the time for which the community receives these benefits. Instead of expiring in 30 years, they should be extended significantly, if not permanently. Seattle, for example, requires a minimum of 50 years. As it stands, in 30 years these affordable units will convert to market-rate units and the city will lose this inventory. Additionally, when that happens the developer will gain property value in the millions of dollars. 4. Provide dignified minimums of housing. Include a per-square-foot standard to measure affordability. Consider adopting the State of Montana Housing Trust Fund program standards for new construction. 311 square feet for $1,684 per month with a hotplate for cooking is neither dignified nor affordable. 5. Include more regulations for rental properties. The regulations were clearly written with a focus on home buyers and not renters. 6. Mandate accountability measures and third-party verifications. Eliminate the use of 'may' and instead use 'shall' in the ordinance as it pertains to standards. The impact and effectiveness of the incentives must be reviewed annually in a public report; if objectives are not met, the city should require changes. In this way, the city is holding projects, and the incentives themselves, accountable. Project management should be overseen by independent third parties or city staff. The developer's attestations are not sufficient. 7. Increase the parking requirements for bicycles. This is an obvious oversight when these regulations were passed and needs to be corrected. With 111 units, the Guthrie is only obligated to provide parking for 11 bikes and zero cars. 8. Reconsider the areas for no-parking relief. We live in Montana. People have cars, boats, rafts, and campers. We recreate in the mountains and rivers surrounding Bozeman and we need the means to get there. It is foolish to suggest that parking isn’t needed where people live. Montanans own the highest number of vehicles per capita in the country at 1.9 vehicles per household. In the case of the Guthrie, the developer, HomeBase, is saving $3-4 million by not providing parking. 9. Adjust the Area Median Income (AMI) standard to use the City of Bozeman’s income instead of Gallatin County’s. The latter is much higher and doesn’t reflect the lived experience of our residents. 10. Reduce the percentage of AMI from 80% back to 60%, as city staff and Clarion Associates recommended in the City of Bozeman’s staff report for this ordinance. Indeed, the staff report references the Arrowleaf and Perennial Park projects as examples of multifamily developments offering rents at 60% of AMI or better to be expected from the deep incentives. However, there is a significant difference between the $1,684 per month as proposed versus the $1,263 originally contemplated. HDRC currently estimates that there are 103 rental units available for every 100 people at 80% of AMI versus only 40 units at 60% of AMI. If we already have an oversupply at the 80% level, then why do we need the deep incentives? 11. Reconsider the areas and amount of bonus height. Are the residents of Bozeman aware that the deep incentives will allow for buildings to reach a height of 130 feet along Main Street, 7th Avenue, and other areas zoned B3, B2M, and REMU with no onsite parking? With the proposed rewrite to the Unified Development Code that rises to 173 feet. Is that the vision we all share for Bozeman? The commission should reconsider the narrative that further building will reduce rents. Absent serious negative migration and/or employment shocks to the area and economy, rents on the whole trend up over time. Unfortunately, rents go up like a rocket and down like a feather. We should not expect to see material decreases in area rents as a result of new development. Looking further back in time reinforces this notion: Source: ipropertymanagement.com Data & Research Average Rent by Year Nationwide Think about this from the perspective of the for-profit developer. Would you really continue to build additional apartment buildings to the extent that you’ve overbuilt for the demand of the community, such that you realize lower effective rents? Of course not! Developers simply seek to maximize their profits, not to maximize community utility or to minimize affordable housing issues. If too many units are projected to be built, they will put those projects on hold until such time as demand warrants their profitable construction. Financial models used to justify new construction are based on the expected rent, and if rents are decreasing developers will not build new units. According to Sterling CRE Advisors' (sterlingcreadvisors.com) most recent report on Bozeman’s Multifamily Market our vacancy rate is just above 5%. 5%-8% is considered an equilibrium rate, allowing for local migration and sufficient capacity to absorb interstate migration. Further, Sterling notes two years’ worth of supply currently under construction and 4 years between permitting and planning. They conclude that some groups are giving up on their planned projects due to the slowdown in rent growth and the increasingly competitive market. The idea that we can sufficiently incentivize developers to act against their own interests is equivalent to pushing on a string. We are addressing the wrong side of the equation. Rather, because rents will not be decreasing, we should instead look to increase wages on the demand side. If folks are making more money, then the local rents will become more affordable. Let’s put more resources behind our Economic Development Strategy and attract higher-paying jobs. While we should continue to support the tourism industry as our largest local employment group, we should focus on diversifying our economy and do whatever it takes to bring in employers for higher-paying careers. Lastly, the commission should recognize that ordinances drafted to address extreme situations such as those we encountered during the pandemic are likely to be short-sighted and not robust. We had our money supply increase by $6 trillion dollars, employers undergo dramatic changes with remote working, and serious disturbances to folks’ normal behaviors. Throw on top of that our natural beauty and the popularity of the TV show ‘Yellowstone’ and we found ourselves in a unique, chaotic situation. Extreme economic dislocations such as these take time to reverse themselves and establish a new normal. Legislation crafted during that time of disarray, while sympathetic, is likely to not produce the desired outcome. We should not throw things against the wall to see what sticks. The impacts are not commensurate with the benefits in this case. Housing affordability has been a long-term, complicated issue with complex causes that are mostly beyond the city’s control, and these efforts, while well-intentioned, are misguided. The better use of our resources and scarce dollars absent public ownership of housing is to continue to support projects that use the Federal tax credit system like the Arrowleaf, Perennial Park, and Larkspur Commons which offer rents at 50-60% of AMI. The proposed “affordable” units in the Guthrie, with an average of 385 square feet at a rent of $1684 per month ($4.37 per square foot) are not “move-up opportunities” as some have suggested, and these units will do nothing to address our affordable housing shortage. In fact, they will exacerbate the problem, signaling to other landlords that people will pay higher rents per square foot than are currently charged and raise rents accordingly. The present implementation of the deep incentives is simply a wealth transfer from the residents of Bozeman to the development community. The current city commission should not only rewrite the AHO, but they should not allow the Guthrie to proceed as proposed. Two wrongs do not make a right. Scott Boyd Bozeman Enc: Staff Report Aff-Housing Incentives Page 1 of 20 22133 Staff Report for the Division 38.380 Affordable Housing Text Amendment, Ordinance 2105 Public Hearings: Community Development – August 1, 2022. City Commission – August 23, 2022. Project Description: Repeal Division 38.380, Affordable Housing, and amend associated standards and replace with a new Division 38.380 Affordable Housing. See Appendix A for the detailed description. Project Location: Revision to the text is applicable City-wide. Recommendation: Meets applicable criteria. Community Development Board Recommended Motion: Having reviewed and considered the staff report, draft ordinance, public comment, and all information presented, I hereby adopt the findings presented in the staff report for application 22133 and move to recommend approval of Ordinance 2105. City Commission Recommended Motion: Having reviewed and considered the staff report, draft ordinance, public comment, recommendation from the Community Development Board, and all information presented, I hereby adopt the findings presented in the staff report for application 22133, and move to provisionally adopt Ordinance 2105. Report: July 26, 2022 Staff Contact: Chris Saunders, Community Development Manager David Fine, Economic Development Program Manager for Housing Agenda Item Type: Action - Legislative EXECUTIVE SUMMARY This report is based on the proposed ordinance text and public comment received to date. Unresolved Issues Policy decisions surrounding what kinds and amounts of affordable housing public benefits are acceptable in exchange for the flexibility allowed by the incentives. Project Summary The City is replacing its existing affordable housing regulations, located in Division 38.380, to address recent state law changes. Division 38.380 is being replaced entirely. Many other Staff Report for the Planned Development Zones Text Amendment 22133 Page 2 of 20 sections which are affected are being amended to match up with the new incentives based approach and clarify related wording. See Appendix A of this staff report and the full text of the Ordinance for more details. Elements of the proposed amendments include: 1. Repeal Division 38.380, Affordable Housing, in its entirety. Replace with a new Division 38.380, Affordable Housing, changing the division from a required creation of affordable housing during subdivision development to an incentive based program for creation of affordable housing. The amendments are required by and consistent with recent changes in state law. The new wording describes how and when incentives can be used, how the program is administered, and what incentives are provided. Incentives are applicable to both rental and purchased housing. Incentives include, but are not limited to more permissive form and intensity standards, such as increased building height and decreased lot sizes, decreased parking requirements, and the ability to concurrently construct homes and infrastructure. 2. Remove references to the old affordable housing standards throughout the rest of Chapter 38 of the Unified Development Code. This requires amending multiple individual sections of the municipal code. Each amended section is addressed in the replacement affordable housing code. 3. Revise requirements for residential uses to aggregate all references to incentives to the new 38.380, and reduce land area requirements for all residential districts. All incentives are now located in the new text of 38.380. 4. Amend the required lot area for each home in a development, Table 38.320.030.A. 5. Create new standards for building height transitions for developments that use height incentives under the new division 38.380, and section 38.320.060. 6. Remove requirement for owner occupancy for accessory dwellings in the residential suburban and residential low density zoning districts, Table 38.360.040. 7. Amend required parking standards for residential uses to require fewer parking spaces per dwelling, in Table 38.540.050. 8. Amend several definitions in Division 38.700 to conform to the proposed amendments. Ordinance 2105 does not change any incentive or support for affordable housing outside of Chapter 38, Unified Development Code. Strategic Plan Implementation 4.2 High Quality Urban Approach - Continue to support high-quality planning, ranging from building design to neighborhood layouts, while pursuing urban approaches to issues such as multimodal transportation, infill, density, connected trails and parks, and walkable neighborhoods. Staff Report for the Planned Development Zones Text Amendment 22133 Page 3 of 20 4.5 Housing and Transportation Choices - Vigorously encourage, through a wide variety of actions, the development of sustainable and lasting housing options for underserved individuals and families and improve mobility options that accommodate all travel modes. 7.3 Best Practices, Creativity & Foresight- Utilize best practices, innovative approaches, and constantly anticipate new directions and changes relevant to the governance of the City. Be also adaptable and flexible with an outward focus on the customer and an external understanding of the issues as others may see them. Public Comment Written public comment will be archived and available through the project folder in the City’s Laserfiche archive. Comments provided orally at public meetings will be available through the recordings of those public meetings. Links to recordings will be added to this report as the review of the project moves forward. Economic Vitality Board The Economic Vitality Board (EVB) has the duties of the former Community Affordable Housing Advisory Board. The EVB will be presented the draft on August 3rd. Their recommendation will be provided to the City Commission. Alternatives 1. Recommend ordinance not be approved based on findings of non-compliance with the applicable criteria contained within the staff report; 2. Recommend with directed amendments prior to adoption; or 3. Open and continue the public hearing on the application, with specific direction to staff to supply additional information or to address specific items. Staff Report for the Planned Development Zones Text Amendment 22133 Page 4 of 20 TABLE OF CONTENTS EXECUTIVE SUMMARY ...................................................................................................... 1 Unresolved Issues ............................................................................................................... 1 Project Summary ................................................................................................................. 1 Strategic Plan Implementation ............................................................................................ 2 Public Comment.................................................................................................................. 3 Economic Vitality Board .................................................................................................... 3 Alternatives ......................................................................................................................... 3 SECTION 1 - RECOMMENDATION AND FUTURE ACTIONS ........................................ 4 SECTION 2 - TEXT AMENDMENT STAFF ANALYSIS AND FINDINGS ....................... 5 Section 76-2-304, MCA (Zoning) Criteria ......................................................................... 5 Spot Zoning Criteria ......................................................................................................... 12 PROTEST NOTICE FOR ZONING AMENDMENTS ......................................................... 12 APPENDIX A - DETAILED BACKGROUND AND PROJECT DESCRIPTION .............. 13 APPENDIX B - NOTICING AND PUBLIC COMMENT .................................................... 20 APPENDIX C - APPLICANT INFORMATION AND REVIEWING STAFF .................... 20 FISCAL EFFECTS ................................................................................................................. 20 ATTACHMENTS ................................................................................................................... 20 SECTION 1 - RECOMMENDATION AND FUTURE ACTIONS Having considered the criteria established for a text amendment, the Staff finds the amendments meet the minimum criteria for approval as proposed. The Community Development Board in their capacity as the Zoning Commission will hold a public hearing on these amendments on August 1, 2022, at 6 pm. The Economic Vitality Board will hold a public meeting to discuss these amendments on August 3, 2022. The City Commission will hold a public hearing on the text amendment on August 23, 2022 at 6:00 p.m. Staff Report for the Planned Development Zones Text Amendment 22133 Page 5 of 20 SECTION 2 - TEXT AMENDMENT STAFF ANALYSIS AND FINDINGS In considering applications for plan approval under this title, the advisory boards and City Commission must consider the following criteria (letters A-K). As an amendment is a legislative action, the Commission has broad latitude to determine a policy direction. The burden of proof that the application should be approved lies with the applicant. A zone text amendment must be in accordance with the growth policy (criteria A) and be designed to secure safety from fire and other dangers (criteria B), promote public health, public safety, and general welfare (criteria C), and facilitate the provision of transportation, water, sewerage, schools, parks and other public requirements (criteria D). Therefore, to approve a zone text amendment the Commission must find Criteria A-D are met. In addition, the Commission must also consider criteria E-K, and may find the zone text amendment to be positive, neutral, or negative with regards to these criteria. To approve the zone text amendment, the Commission must find the positive outcomes of the amendment outweigh negative outcomes for criteria E-K. In determining whether the criteria are met, Staff considers the entire body of plans and regulations for land development. Standards which prevent or mitigate negative impacts are incorporated throughout the entire municipal code but are principally in Chapter 38, Unified Development Code. The existing development review processes and standards were previously found to satisfy all of the following criteria during earlier reviews. The focus of this report is only on the amendments proposed. Where a finding of Neutral is presented it represents that the criteria is either not applicable to the proposed amendments or that the change does not materially advance or detract from compliance. Therefore, a finding of Neutral is not necessarily an indication of a deficiency in the proposed amendments or the existing standards. Section 76-2-304, MCA (Zoning) Criteria A. Be in accordance with a growth policy. Criterion is met. A growth policy provides a high level vision of how a community hopes to develop over time. As a key tool to implement the growth policy, zoning must be in accordance with the growth policy per 76-2-304(1) (a), MCA. The new Division 38.380, Affordable Housing, and other associated changes are amendments to the zoning text and therefore must conform to the growth policy. Bozeman adopted a new growth policy in November 2020. The Bozeman Community Plan 2020 (BCP2020) establishes the City’s policies for land development. It continues concepts and community priorities that were established in several prior growth policies. As early as 1972, the community’s planning documents identified affordable housing as a concern. Affordability of housing is influenced by many issues. Only a few of them are under control of the city. Lending practices, personal housing preferences, Staff Report for the Planned Development Zones Text Amendment 22133 Page 6 of 20 labor and materials availability, and land costs are examples of material housing cost influences that the city doesn’t control. Bozeman’s policy for many years has been to provide a location where housing can be created with access to centralized services. This enables construction at economies of scale and obtains maximum use of property. This approach lessens outward expansion pressure and keeps not only initial construction costs lower but also constrains operational costs over time. These approaches are continued in the BCP2020 on pages 8-15. The BCP2020 also includes priorities for sustainability and transportation that interact with housing. Theme 1, A Resilient City, emphasizes the benefits of coordinating implementation of community policy. Examples of applicable objectives include: R-1.4 Be integrated: bring together a range of distinct systems and institutions. R-2.4 Social Equity: Provide solutions that are inclusive with consideration to populations that are often most fragile and vulnerable to sudden impacts. R-2.4 Social Equity: Provide solutions that are inclusive with consideration to populations that are often most fragile and vulnerable to sudden impacts. R-2.4 Social Equity: Provide solutions that are inclusive with consideration to populations that are often most fragile and vulnerable to sudden impacts. R-2.6 Innovation: Advance new approaches and techniques that will encourage continual improvement and advancement of best practices. R-2.8 Harmonize with Existing Activity: Expand, enhance, or leverage work being done to build on existing efforts. The City’s Climate Action Plan includes aspirations to encourage compact development and higher development densities. There is discussion on housing affordability beginning on BCP2020 page 21. The discussion identifies national and local trends and issues affecting affordability and housing needs. The affordability incentives are to encourage construction of homes at prices that the market rate construction generally cannot reach. The incentives can be paired with other housing support such as Low Income Housing Tax Credits. Providing a tool encouraging construction of housing focused at the lower cost range supports several goals including: R-2.4 Social Equity: Provide solutions that are inclusive with consideration to populations that are often most fragile and vulnerable to sudden impacts. N-1.1. Promote housing diversity, including missing middle housing. N-3.3 Encourage distribution of affordable housing units throughout the City with priority given to locations near commercial, recreational, and transit assets. Staff Report for the Planned Development Zones Text Amendment 22133 Page 7 of 20 EE-1.4 Support employee retention and attraction efforts by encouraging continued development of affordable housing in close proximity to large employers. Sustainability and mobility options can also support housing affordability. Examples of community plan objectives that integrate with housing affordability include: DCD-1.9 Promote mixed-use developments with access to parks, open space, and transit options. EPO-3.3 Support water conservation, use of native plants in landscaping, and development of water reuse systems. EPO-3.5 Update land development standards to implement the Integrated Water Resources Plan. M-1.1 Prioritize mixed-use land use patterns. Encourage and enable the development of housing, jobs, and services in close proximity to one another. M-1.4 Develop safe, connected, and complementary transportation networks for pedestrians, bicyclists, and users of other personal mobility devices (e-bikes, electric scooters, powered wheelchairs, etc.). The character of the community is also a subject of BCP2020 goals, objectives, and actions. See also discussion under Criterion H. Goal N-4: Continue to encourage Bozeman’s sense of place. Goal DCD-2: Encourage growth throughout the City, while enhancing the pattern of community development oriented on centers of employment and activity. Support an increase in development intensity within developed areas. DCD-2.9 Evaluate increasing the number of stories allowed in centers of employment and activity while also directing height transitions down to adjacent neighborhoods. Preserving the existing character of the community is raised in public comments and other community feedback. There is a tension between preserving what is already here, addressing what is needed under today’s conditions, and preparing for the future. New development under today’s housing preferences, development pressures, and economics are not the same as what existed many years ago. Attempting to lock away portions of the community from change is both unsuccessful and contrary to the express intent of the growth policy. It is also appropriate for standards, like height transitions, to address where boundaries between different elements of the community exist. The incentives allow higher densities, taller buildings, and smaller roadways than the historical norm in Bozeman. This will result in a different character for those projects than the baseline standards in place now. Bozeman’s development standards steadily evolved over the past 30 years as community needs changed. It is expected that the community will continue to evolve. It is expected that most development will continue to follow the baseline Staff Report for the Planned Development Zones Text Amendment 22133 Page 8 of 20 standards. Therefore, the majority of the community will continue to evolve as the baseline standards are revised. Constant change is expected in a growing community. The individual projects that use the affordable housing incentives will fit within the overall community framework. They in turn will create their own local character and sense of place. No element of the proposed ordinance affects the future land use map as the incentives do not change zoning district boundaries. Therefore, no analysis of correspondence to the future land use map is provided. B. Secure safety from fire and other dangers. Criterion is met. Building code standards for fire resistance, exiting, and other protection remain in place and will continue to protect the public. The requirements to avoid floodplains and similar physical hazards remain in place. Therefore, access by emergency services, suitable water and sewer services, and other safety features remain. Review of individual applications will provide an opportunity to check for function. The incentives wording in 38.380.030 specifically states that the City can impose conditions to address identified safety and other concerns. General language to impose conditions where needed and justified remains in the unamended portions of Division 38.100. C. Promote public health, public safety, and general welfare. Criterion is met. The existing standards addressing this criterion remain in place such as floodplain protections, provision of water and sewer services, and similar. See also responses to Criteria B and D. The incentives do authorize construction on smaller lots and in taller buildings. Such allowances are not inherently counter to this criterion. Standards remain for setbacks, light and air, emergency services, and other issues to protect public health and physical safety. Housing access is a factor in public safety and wellness of individuals. Cost of housing is a significant influence on housing access. The incentives provided are intended to encourage creation of homes available to persons with lower incomes. Bozeman has experienced very high price escalation for homes over the past two years. The prices are increasingly beyond the income of many of Bozeman’s workers. Loss of employees due to lack of housing has been identified by many employers as a barrier to success and growth. In turn, lack of economic opportunity damages the community as a whole. D. Facilitate the provision of transportation, water, sewerage, schools, parks and other public requirements. Criterion is met. The City conducts extensive planning for municipal transportation, water, sewer, parks, and other facilities and services provided by the City. The adopted plans allow the City to consider existing conditions and identify enhancements needed to provide additional service needed by new development. The City implements these plans through its Staff Report for the Planned Development Zones Text Amendment 22133 Page 9 of 20 capital improvements program (CIP). The CIP identifies individual projects, project construction scheduling, and financing of construction. Considering the code as a whole, the standards requiring provision of the infrastructure listed in this criterion are not being changed with these amendments. E. Reasonable provision of adequate light and air. Criterion met. Adequate light and air are provided by a mix of site development standards including park dedication, on-site open space, and setbacks; as well as building code requirements for air for combustion and ventilation. Each standard addresses a different functional element. There is no specified quantity of day light or other physical outcome required by this criteria. The standard is for reasonableness and adequacy, which vary by type of use and other specifics of development. Building codes also address this criteria through requirements for ventilation and lighting. The incentives provide for smaller lot sizes. Setbacks remain the same so even on the smaller lots there is opportunity for light and air to reach individual rooms. Building code requirements for emergency exit windows in sleeping areas will also help ensure there is access to light and air. The incentives provide for additional building height ranging from one to four stories depending on the depth of price control for the homes and the zoning district. This can create a substantial additional building height. Especially at zoning district boundaries this can create shading and other impacts on adjacent properties. To lessen and mitigate potential impacts a new requirement at zone edge transitions for buildings using the height incentive has been created. This provides a step back requirement that leaves visual access to the sky. It does not entirely remove all visual impacts of the taller allowed buildings. At this time there is no evidence of lack of compliance by a future application. F. The effect on motorized and non-motorized transportation systems. Criterion is not met. The City conducts extensive planning for municipal transportation, trails, and parks related to this criterion and services provided by the City. The adopted plans allow the City to consider existing conditions and identify enhancements needed to provide additional service needed by new development. The proposed amendments do not alter these plans. The existing standards for collector and arterial streets are not changed. The requirements for multiuse paths and recreational trails are not changed. The proposed incentives include reduction of required parking, to as little as zero in some circumstances, and reduction in street cross section for a new street class called a yield street. Consequently, there will be additional pressure for parking and transportation. Persons constructing affordable housing can choose to provide more than the minimum parking required. Local parking use studies have found that price limited housing in the 60% or less AMI range does use less parking than market rate homes. The incentives do not require AMI as low as 60%. Staff Report for the Planned Development Zones Text Amendment 22133 Page 10 of 20 Minimum parking requirements for most homes is also proposed to be modified as in Ordinance section 15. The most recent available census data from 2010 shows a high proportion of homes in Bozeman are occupied by one person. This supports a lower parking requirement. The definition of Household to implement federal fair housing law allows for much larger numbers of occupants which may need greater parking areas. The amendment to general parking standards strives to find a reasonable balance between the highs and lows. The reduction does increase the probability that a high occupancy home will be under parked for the number of users on site. There are other tools to manage on-street parking and congestion. The City has been investigating those. Some parking districts are already in place around MSU and Bozeman High School. Active parking management could be expanded to address possible impacts from the reduced parking requirements. The nature of an incentive is that it inevitably involves a trade-off of one good thing for another. In this case, the City is willing to accept some additional risk of overflow parking and street congestion in order to support the desired outcome of increasing low and moderately priced housing stock. G. Promotion of compatible urban growth. Criterion is met. The City has defined compatible development as: “The use of land and the construction and use of structures which is in harmony with adjoining development, existing neighborhoods, and the goals and objectives of the city's adopted growth policy. Elements of compatible development include, but are not limited to, variety of architectural design; rhythm of architectural elements; scale; intensity; materials; building siting; lot and building size; hours of operation; and integration with existing community systems including water and sewer services, natural elements in the area, motorized and non-motorized transportation, and open spaces and parks. Compatible development does not require uniformity or monotony of architectural or site design, density or use.” There is no one pattern or method in which to build a community. Many different configurations of uses and buildings can coexist well. The City has adopted many standards to identify and avoid or mitigate demonstrable negative impacts of development. Most of those standards will remain as presently adopted. The adoption of the incentives is a legislative determination that under the new standards as well as the old, compatibility can be maintained. At this time there is no evidence of lack of compliance by a future application. Therefore, staff concludes the criterion is met. H. Character of the district. Criterion is not met. Section 76-2-301 MCA says “Municipal zoning authorized. For the purpose of promoting health, safety, morals, or the general welfare of the community, the Staff Report for the Planned Development Zones Text Amendment 22133 Page 11 of 20 city or town council or other legislative body of cities and incorporated towns is hereby empowered to regulate and restrict the height, number of stories, and size of buildings and other structures; the percentage of lot that may be occupied; the size of yards, courts, and other open spaces; the density of population; and the location and use of buildings, structures, and land for trade, industry, residence, or other purposes.” Section 76-2-302, MCA says “…legislative body may divide the municipality into districts of the number, shape, and area as are considered best suited to carry out the purposes [promoting health, safety, morals, or the general welfare of the community] of this part.” Emphasis added. The City has adopted form and intensity standards in Division 38.320 as part of the implementation of the zoning enabling language cited above. The City has adopted building and site design standards in Divisions 38.510 and 38.530 also as part of the implementation of the zoning enabling language cited above. These are applied to all development according to the district in which the development is located. Part of the incentives offered in the new Division 38.380 for construction of price limited homes is to waive or reduce portions of these standards. The waiver applies to all applicable buildings within the development, not just those which include price limited homes. Character of a district is made up of many different elements; including but not limited to uses, size of lots, and building features. There is no one pattern or method in which to build a community. The City has adopted a range of zoning districts to address different needs. The zoning districts are amended from time to time as needs of the City and its residents change. Many different configurations of uses and buildings can coexist well and the City does not restrict specific architectural styles. The City’s growth policy and allowed land uses per zoning district encourage mixed uses. Incentives inevitably involve a trade-off of one good thing for another. In this case, the City is willing to accept some difference in the otherwise required character of the various districts in order to support the desired outcome of increasing low and moderately priced housing stock. Depending on the district and depth of commitment to price limited homes an additional 1-4 stories are permitted. Minimum lot sizes are reduced or waived. Parking requirements are reduced. Depending on how incentives are applied it will result in a different and more intensive character of development than would otherwise be possible within the specific district. Any development proposing housing may elect to use the incentives. It is not possible to predict how many or on what distribution they will occur. Any residential district and most non-residential districts may see a project use the incentives. This proposal amends the text only and not the zoning map. The proposal does not add or delete zoning districts. Staff Report for the Planned Development Zones Text Amendment 22133 Page 12 of 20 I. Peculiar suitability for particular uses. Neutral. The proposed amendments are not changing the zoning map or the uses allowed within zoning districts. The amendments do relocate some existing uses from the tables in 38.310 to 38.380 so all the incentives are located in 38.380. Therefore, no detailed analysis regarding this criterion can be performed. J. Conserving the value of buildings. Neutral. The proposed amendments are not changing the zoning map or the uses allowed within zoning districts. No standard is being created which will reduce allowed building areas or otherwise restrict the development capacity of a specific property. Staff does not find that the amendments are likely to have negative impacts on existing buildings. It is premature to consider specific proposals. K. Encourage the most appropriate use of land throughout the jurisdictional area. Criterion is met. The zoning map and future land use map of the growth policy identify areas where specific uses are generally appropriate. However, both occur at a coarse level of detail and do not authorize construction. Both residential and most non-residential districts contain the opportunity for housing construction in some form. The proposed amendments do not materially alter the allowed uses in zones. This amendment is consistent with the growth policy including the future land use map, see Criterion A. Therefore, the criterion is met. Spot Zoning Criteria Amendments to the zoning map may, in certain factual circumstances, constitute impermissible “spot zoning.” The proposed amendments do not alter the zoning map in any way at this time. Spot zoning is therefore not a review criteria. 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. The City will accept written protests from property owners against the proposal described in this report until the close of the public hearing before the City Commission. Pursuant to 76-2-305, MCA, a protest may only be submitted by the owner(s) of real property within the area affected by the proposal or by owner(s) of real property that lie within 150 feet of an area affected by the proposal. The protest must be in writing and must be signed by all owners of the real property. In addition, a sufficient protest must: (i) Staff Report for the Planned Development Zones Text Amendment 22133 Page 13 of 20 contain a description of the action protested sufficient to identify the action against which the protest is lodged; and (ii) contain a statement of the protestor's qualifications (including listing all owners of the property and the physical address), to protest the action against which the protest is lodged, including ownership of property affected by the action. Signers are encouraged to print their names after their signatures. A person may in writing withdraw a previously filed protest at any time prior to final action by the City Commission. Protests must be delivered to the Bozeman City Clerk, 121 North Rouse Ave., PO Box 1230, Bozeman, MT 59771-1230. APPENDIX A - DETAILED BACKGROUND AND PROJECT DESCRIPTION The recent pandemic amplified existing housing and work trends and housing prices have greatly increased. An article by Tim Ford in the May 1, 2022, Bozeman Magazine shows median single home sale prices in the Bozeman area increasing over the first quarter 2020 to first quarter 2022 by $389,000. This is an increase of 76% in two years. Chapter 1 of the Bozeman Community Plan 2020 includes a section titled “To Grow Or Not To Grow, If So How?” This section considers the question of whether or not the City should continue policies encouraging development within City limits. Several different related issues are discussed and the section concludes that construction within the City is a better outcome. Affordable housing is a long standing community concern. It was first addressed in the 1972 Master Plan for the community and then all subsequent community land use plans. Several reports, studies, and plans including the Community Housing Action Plan and the One Valley Community Foundation, Gallatin County Regional Housing Study, document the needs for housing and the challenges in providing housing at costs affordable to residents. The state legislature has limited the tools the City has to support affordable housing construction. The City is required to use incentives to encourage construction rather than mandating the construction of affordable housing. The proposed ordinance places an increased emphasis on affordable housing as a public benefit in exchange for the flexibility allowed through the updated Division 38.380. The City has many ongoing efforts to support creation of housing overall including: o supporting and completing infrastructure construction, o primarily of-right development review except where required by state law, o use of tax increment financing in support of housing, o general fund support for affordable housing projects, and o many others. Staff Report for the Planned Development Zones Text Amendment 22133 Page 14 of 20 The City consistently reviews and updates its regulations to keep them relevant and effective. Over the past 20 years, the City has increased allowed development intensity and removed possible cost barriers by the following and other actions: • reduced standards such as land area per home by up to 60%, • reduced setbacks from property lines by as much as 58%, • removed requirements for minimum home sizes, • increased maximum allowed heights, • authorized accessory dwellings for all residential zoning and reduced standards related to accessory dwelling several times, • simplified landscaping standards and encouraged lower water use plantings, • approved dozens of zone map amendments to allow more intensive uses, and • simplified review processes. Despite this work, the cost of housing has continued to escalate, especially compared to wages. The gap between cost of construction and wages is not limited to Bozeman city limits. The One Valley Foundation prepared a housing study in 2021 looking at the entire county and affordable housing issues. Across all housing types and locations they found consistent gaps in available wages and cost of construction. The following image is from that report. Staff Report for the Planned Development Zones Text Amendment 22133 Page 15 of 20 There are no regulations that have such impact that their removal could be even close to offsetting such large increases in home prices and capital gaps between wages and cost of construction. The City can, and is, examining what it does control to identify such incremental improvements as may help. To do so, the City retained Clarion and sub consultants to review the City’s land use regulations. Clarion provided a report with recommendations of possible changes. The City Commission considered that report on March 1st and directed staff to begin drafting amendments to regulations. The first of these amendments was the Housing Departures for Housing Creation text amendment, Ordinance 2111. Ordinance 2111 completed final adoption on June 28, 2022. The effective date of the ordinance is July 28, 2022. The second amendment was a replacement of Division 38.430, Planned Unit Development, and associated amendments to other sections. The Commission held a public hearing on Ordinance 2104 on July 12, 2022 and directed an amendment before moving forward. The amendment wording is being developed. A final date for adoption is not set. The City of Bozeman engaged Clarion Associates and their sub-consultant, Root Policy Research, a firm specializing in housing economics, to propose changes to the unified Staff Report for the Planned Development Zones Text Amendment 22133 Page 16 of 20 development code (UDC) to incentivize the production of community housing units. A key way to evaluate any incentive is to apply a “but for” test: The incentive must enhance the feasibility of providing affordable housing units that would not be financially feasible “but for” the application of the incentive. The team developed prototype proformas of for-sale and rental housing types from single household detached housing units to multi-household units based on regional housing prototypes and costs, market data and interviews. These proformas create base case scenarios for evaluating the financial feasibility of affordable housing production within existing code. The consultants modeled the following base case scenarios: • 3-story rental residential with standard parking requirements (2.0 spaces for a 2- bedroom unit); • 3-story multifamily condo development with standard parking requirements (2.0 spaces for a 2-bedroom unit) • For-Sale townhomes with a 3,000 square foot lot size • Single-household units with a 4,000 square foot lot size The UDC currently allows for these base case scenarios in applicable zoning districts, where townhomes and multifamily, respectively, are currently allowed. The consultants applied code incentives to these base case scenarios to see how the incentives change the feasibility of providing affordable housing units. These incentives constitute a bonus on what is currently allowed by the code. The proposed code changes include the following incentives: • Reduced lot size requirements • Reduced parking requirements • Increased building height allowances The consultants adjusted the base case scenarios by allowing smaller lot sizes, increased building heights, and/or parking reductions in exchange for the inclusion of income- restricted, affordable, units in the development. They evaluated the impact of these bonuses on project feasibility and projected the percentage of affordable housing units these incentives would facilitate that would likely not exist “but for” the incentive. Staff Report for the Planned Development Zones Text Amendment 22133 Page 17 of 20 Shallow Affordability Incentives Clarion found that incentives that would ordinarily enhance affordability had only modest impact in the Bozeman market. Yet, long-term affordable housing units remain community assets and every unit counts. The consultants found that the application of height, lot size, and parking incentives would feasibly produce between 1.5% affordability, and 13% affordability, depending on the housing type. Based on these projects Staff and Clarion are recommending the following Shallow Incentives: Staff Report for the Planned Development Zones Text Amendment 22133 Page 18 of 20 These Shallow Incentives would allow the market to produce long-term affordability with a range of housing unit types without the provision of cash or another subsidy. Deep Affordability Incentives Clarion recommended larger code-based incentives for developments that produced affordability well-beyond what the market would produce with code-based incentives alone. These projects, like GMD’s Arrowleaf and Perennial Park low-income housing tax credit (LIHTC - “Li-Tech”) development and the Bridger View development near Story Mill Park, produced affordability in 50% or more of their units by harnessing federal monetary subsidy, social impact investing, and private philanthropy. In exchange for this depth of affordability, Staff and Clarion recommend the following Deep Incentives: Staff Report for the Planned Development Zones Text Amendment 22133 Page 19 of 20 Given the massive public and private incentives required to produce deep affordability, Staff believes providing more significant incentives are appropriate, and likely necessary, to make more projects like these possible. The amendments proposed in Ord. 2105 replace requirements in code that certain subdivisions include a percentage of price limited homes. The state legislature prohibited such requirements in 2021. The legislature does allow communities to provide incentives to encourage creation of affordable housing. The incentives provided in the new Division 38.380, section 12 of the ordinance, occur in two tiers. See proposed section 38.380.030 beginning on page 19 of the ordinance for details. Developments providing a greater number of homes meeting price caps have additional incentives. The incentives apply throughout the entirety of a development including qualifying residential buildings, even if some buildings in the development contain no price limited homes. The provisions of 38.380 do not affect other incentives or tools the City has to support affordable housing, like direct funding. Home prices are keyed to the Area Median Income (AMI). AMI is established each year by the U.S. Department of Housing and Urban Development. AMI is a standard measure used for many functions including determination of housing affordability. A home is considered affordable if a household pays 33% or less of its income for housing. AMI is the amount of money where half of the households earn more and half less in the county. The AMI includes adjustments for households with more or fewer members. A larger and more comprehensive code review is beginning and is expected to conclude by the end of 2023. Staff Report for the Planned Development Zones Text Amendment 22133 Page 20 of 20 APPENDIX B - NOTICING AND PUBLIC COMMENT Notice for text amendments must meet the standards of 38.220.410 & 420. Notice was published in the Bozeman Daily Chronicle on 7/17/2022, 7/24/2022, 8/07/2022, and 8/14/2022 and contained all required elements. The notice and text was also provided through the City’s Community Development web viewer and news feature on the City’s website. Notice was provided at least 15 days before the public hearing before the Community Development Board in their capacity as the Zoning Commission, and not more than 45 days prior to the City Commission public hearing. The City exceeded the required notice provision. Hearing dates are on the first page of this report. No written public comment has been received so far on this Ordinance. Comments are available through the Laserfiche archive. If comments are received they will be placed in the project folder in Laserfiche. APPENDIX C - APPLICANT INFORMATION AND REVIEWING STAFF Applicant: City of Bozeman, PO Box 1230, Bozeman MT 59771 Representative: Department of Community Development, City of Bozeman, PO Box 1230, Bozeman MT 59771 Report By: Chris Saunders, Community Development Manager FISCAL EFFECTS No unusual fiscal effects have been identified. No presently budgeted funds will be changed by this Amendment. ATTACHMENTS The full application and file of record can be viewed at the Community Development Department at 20 E. Olive Street, Bozeman, MT 59715. Ordinance 2105 Public information sheet