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C. E cc N of v°i O c .� .c N O aXi >, c o 0 c j E ca o- ) c n co a) - - m 2:3 L- — m N oti o c 3 aD Cr Z c cd co E .S in � E .S 3 0- � �t c .� o ti 00 rn Affordable Housing Incentive Programs Prepared for: Growth Management Planning Council King County, WA Prepared by: Bay Area Economics 2560 9'" Street, Suite 211 Berkeley, CA 94710 (510) 549-7310 www.bayareaeconomics.com February 2001 February 12, 2001 Ms. Elsie Crossman City of Seattle Office of Strategic Planning 600 4tn Street, Room 300 Seattle, WA 98104-1826 Dear Elsie: We are pleased to submit the enclosed Affordable Housing Incentive Programs report. We have enjoyed working with you and Council members on this and our prior report regarding community acceptance of housing within King County. We hope these reports assist the GMPC in implementing its Regional Housing Project. Sincerely, Janet Smith-Heimer Managing Principal Paul Peninger Senior Associate Table of Contents ExecutiveSummary...............................................................................................1 Study Purpose and Approach..........................................................................................i ProgramExamples .........................................................................................................i Economic Analysis of Incentive Programs.......................................................................i Summaryof Findings.....................................................................................................ii Conclusions and Next Steps..........................................................................................A Introduction...........................................................................................................1 StudyPurpose............................................................................................................... 1 ReportContents.............................................................................................................1 Overview of Regulatory and Economic Context.................................................2 RegulatoryContext........................................................................................................2 EconomicContext.........................................................................................................2 ProgramExamples................................................................................................5 MontgomeryCounty, MD..............................................................................................5 Pleasanton, CA..............................................................................................................6 KingCounty, WA Programs..........................................................................................7 Summary.......................................................................................................................8 Economic Analysis of Potential Incentives .......................................................10 BaselineScenarios....................................................................................................... 10 Affordable Units and Offsetting Density Bonuses......................................................... 11 Parking Reduction Incentives....................................................................................... 14 Conclusions & Next Steps..................................................................................16 Appendix A: Voluntary Programs in California.................................................17 Appendix B: Baseline & Density Bonus Pro Formas........................................19 Appendix C: Pro Forma with Parking Reductions............................................37 Executive Summary Study Purpose and Approach This report profiles and analyzes the economic implications of voluntary housing incentive programs which can be implemented by local jurisdictions to encourage new affordable housing development. These include primarily local government programs which provide density bonuses in exchange for incorporating affordable units within market rate housing projects. This report also assesses the economic implications of other incentives, such as reductions in required parking, which can further be used in certain markets to encourage private developers to produce affordable housing. Program Examples This report profiles several incentive programs that utilize a combination of incorporating affordable units combined with a market rate density bonus into a new development project. Examples profiled include a mandatory program in Montgomery County, MD; a voluntary program in Pleasanton, CA; and voluntary programs throughout King County, WA. These examples illustrate the range of specific approaches that local governments have used to encourage the production of affordable housing by using incentives designed to appeal to private, for-profit developers. These programs tend to work, and to produce affordable units, when market and economic conditions are aligned to create a strong demand for market rate housing (or, in the case of downtown Seattle, market rate commercial space). Another key ingredient for success is the appropriate mix of affordable units coupled with a density bonus, so that the net loss to a developer of incorporating an affordable unit can be almost or completely offset by the profit margin on each additional market rate unit allowed through the density bonus. Economic Analysis of Incentive Programs To analyze the impacts of density bonus/voluntary affordable housing incorporation into a market rate project, a series of "baseline" pro formas, along with variations in assumptions, were formulated. The results of this first step are included as Appendix B to this report. Baseline scenarios were developed for prototypical projects in Seattle, East County, and South County. For each location, both a rental project and for-sale project that reflect local land use patterns and market conditions were modeled. For East County, an additional for-sale project was modeled to reflect developer input regarding a lower- density townhouse product that has been gaining in popularity and meets developer profit needs. Next, additional pro formas were developed to test the implications of a voluntary affordable housing component coupled with a density bonus, allowing for an offset from the potential financial loss of including affordable units by including additional market rate units to generate additional profit. The analysis incorporates two levels of an affordable i component— one version with five percent of baseline units at affordable rents/sale prices, and one version with 10 percent affordable units; these units would be rented or sold at prices affordable to households at various low income levels as defined by federal standards. Appendix B includes one example of this pro forma for each subregion for each tenure assumption (rental and for-sale) with a 10 percent affordable unit mix. Various density bonuses are also analyzed to determine if the resulting financial return from the combination of affordable units and increased profit from additional market rate units creates a feasible project. The density bonuses analyzed range from 10 to 25 percent of the baseline number of units. The results of this analysis are also shown in Appendix B. To determine project feasibility under various combinations of Area Median Income (AMI) and density bonus, the analysis assumes that a profit margin (on total development costs) achieved through the baseline scenario would need to be maintained after incorporation of affordable units in order to encourage voluntary participation in a program of this type. Summary of Findings The following charts summarize the findings of the economic analysis conducted for this report, with the shaded areas indicating feasible combinations of AMI levels for the affordable units, percent of units included as affordable, and market rate density bonuses that, in combination, can support feasible projects. 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G d E N O C N N tT m O d U N O .� fn EA fR I fR (A S .� (f) EA e N (a EA w Q i Q c ¢ co ¢ V <0 )( e c co Zp D p :3 p 0 cv o 0 00 o 0 0 O O N V ClO N CU O O N = O O N E O CO �- F (O CO - O 00 �- O O Q a o 0 o y o 0 0 0 0 0 M 0 0 0 n LL7 p n n n Q a n n Q n n n O n n n fn (n o � � � W > > > W � � � cn � � � As shown, the approach of incorporating affordable units on a voluntary basis in exchange for a density bonus, allowing additional market rate units to offset the cost to developers, is a workable approach in many parts of King County. Rental Project Findings For Seattle rental projects in"Urban Village"zones, combinations serving 50 percent AMI households, incorporating five percent affordable units, and providing market rate density bonuses of 20 percent or more, appear to be feasible. A density bonus of 15 percent may also be feasible for specific projects with slightly lower development costs than those assumed in the analysis. At higher AMI levels, a five percent affordable unit component appears workable if market rate unit bonuses of 15 percent or more are provided. If the proportion of affordable rental units is increased to 10 percent of the baseline total, density bonuses alone do not appear to completely offset the costs for the 50 percent AMI level. However, increasing the AMI level served to 80 percent and providing 20 percent or more density bonuses appears to create feasible projects. For "urban core" rental projects in East County, a similar pattern is identified, although the overall profitability of the prototype project analyzed is substantially lower than for Seattle. As shown on the summary table, incorporating five percent affordable units, with market rate density bonuses of 20 percent or more, is workable, even for AMI levels of 50 percent. If 80 percent AMI levels are served, incorporation of five percent affordable units offset by a density bonus of 10 percent or more appears feasible. Increasing the amount of affordable units in East County, however, results in a finding that this approach is not workable for 50 percent AMI levels, and would require density bonuses of 20 percent or more to serve 80 percent AMI income levels. In South County, the voluntary inclusionary unit/density bonus approach is not feasible for rental projects in South County because the baseline project analyses resulted in negative profit margins, meaning that without any affordable units, rental projects in many areas of South County face feasibility challenges. For-Sale Project Findings In cases of for-sale projects, various combinations of affordable unit incorporation and corresponding density bonuses also appear feasible throughout King County sub-regions. In Seattle, the prototype analysis indicates that incorporating five percent affordable for- sale units serving households at 80 percent AMI may be feasible if bonuses of 25 percent are provided, and specific project costs can be held to slightly below those assumed in the analysis. This approach, with a five percent affordable incorporation, is clearly feasible for all density combinations for projects including units designed to serve households at the 120 percent AMI level. Increasing the affordable component to 10 percent of baseline units, however, results in profit margins that are lower than the baseline level, indicating that a voluntary approach to incorporating affordable for-sale units in exchange for a density bonus may not be feasible. v In the East County "Core" prototype (60 units per acre), incorporation of five percent affordable units at 50 percent AMI and bonuses of 20 percent or more appears feasible; this approach also appears near-feasible even at lower density bonus levels. Incorporating five percent affordable units at higher income levels (80 percent and 120 percent AMI) also achieve "parity" with baseline profit margins. When the proportion of affordable units is increased to 10 percent, however, this approach achieves profit parity only at the 120 percent AMI level with 20 percent bonuses. An East County Townhouse prototype was also tested, resulting in the finding that most combinations were not feasible; only near-feasibility was reached with five percent affordable units at 120 percent AMI. In South County, the five percent affordable incorporation was feasible or very close to feasible for all income levels with all bonus combinations. In summary, for-sale projects targeted at lower income households in Seattle and in East County townhouses face challenges using the voluntary method. These findings reflect input received from actual developers consulted while preparing this report, who framed the reduction in profit in the more profitable locations(e.g., Seattle)with the incorporation of affordable units as a "loss" to the project compared to the amount returned by developing the baseline market rate project. Conclusions and Next Steps It should be noted that the analyses conducted for this study carry a range of imprecision relative to specific real projects, and will also change over time, depending on the combined effect of land prices, rents/sale prices for units, construction and mortgage interest rates, etc. The analyses in this report has been prepared to illustrate how these types of programs can work, but each jurisdiction must fine-tune these findings to fit its own marketplace and developer needs. Implementation of widespread voluntary programs of this nature, coupled with density bonuses, would allow for some of this variation to be demonstrated by individual developers. In other words, if the analysis indicates a near-even maintenance of"before" and "after" profitability, an actual developer could still opt to use the voluntary program based on his/her own specific project factors which may better accommodate the mix of assumptions in a manner favorable to affordable housing production. The analysis also explored a parking requirement reduction as an enhancement to scenarios where density bonuses did not, by themselves, create sufficient profitability to incentivize projects. An example included in the report, for the East County Rental case with 10 percent of the units affordable to 50 percent AMI and a 10 percent market rate density bonus, shows that with a parking requirement reduction from 1.5 spaces per unit to 1.0 spaces per unit, the enhanced project almost matches original baseline profitability. The combinations of density bonuses and parking requirement reductions can have dramatic vi financial impacts in areas where parking garages or other costly forms of structured parking are needed to fit the project within an urban site. In order to encourage voluntary incentive program implementation throughout King County, the GMPC next plans to disseminate this report and the tools and information developed for it to local jurisdictions, and convene a regional forum on affordable housing incentives to encourage implementation of these programs at the local level. Local jurisdictions are encouraged to fine-tune these economic analyses and program parameters to fit local market and economic conditions. vii Introduction Study Purpose This report profiles and analyzes the economic implications of housing incentive programs which can be implemented by local jurisdictions to encourage new affordable housing development. These include primarily local government programs which provide density bonuses in exchange for incorporating affordable units within market rate housing projects. This report also assesses the economic implications of other incentives, such as reductions in required parking, which can further be used in certain markets to encourage private developers to produce affordable housing. This is a regional planning document for housing, and is intended to serve as a resource for local jurisdictions, the Growth Management Planning Council of King County, and housing organizations throughout King County. This document is part of a larger initiative,The Regional Housing Project, led by the Growth Management Planning Council of King County (GMPC). The purpose of the Regional Housing Project is to identify practices that will help jurisdictions achieve local and regional goals for housing. Based on earlier work prepared for The Regional Housing Project, the GMPC has requested this in-depth look at affordable housing incentive programs and their applicability to local King County jurisdictions. Report Contents This report begins with an overview of the regulatory and economic context of incentive programs for King County jurisdictions. Three example programs are then profiled, including King County's voluntary program. The report then focuses on an economic analysis of how incentive programs would work from the private developer's viewpoint, varied by subregion with King County to account for market and development cost differences. This report concludes with a series of "next steps" for the Growth Management Planning Council to consider regarding this concept. 1 Overview of Regulatory and Economic Context Regulatory Context Many jurisdictions around the U.S. have implemented some form of incentive-based affordable housing production programs. These range from mandatory inclusionary zoning, where market rate housing projects must include a percentage of units affordable to pre-determined lower household income levels or pay an "in-lieu"fee(often in exchange for additional market rate units in the form of a density bonus), to more voluntary programs where the private developer can choose to comply in exchange for a similar bonus incentive and/or other regulatory reductions in parking or impact fees. The following chapter profiles two programs, a relatively well-established inclusionary program in Montgomery County, MD, and a voluntary program in Pleasanton,CA. In Washington State, interpretations of the state constitution and other land use laws have meant varying local approaches to implementing incentive-based programs. Mandatory programs are often considered to have problematic legal consequences if implemented jurisdiction-wide, based on legal reasoning derived from prohibitions on rent control along with various "taking" issues. However, several jurisdictions within King County and elsewhere have implemented mandatory programs that are geographically specific, such as in Urban Centers, or that otherwise effect compliance with Comprehensive Plan goals and policies for a specific area within a jurisdiction. The focus of this report is on economic issues associated with incentive-based programs, and analyzes options for jurisdictions within King County. Legal issues associated with both voluntary and mandatory incentive programs are not addressed. Economic Context Density Bonus and Affordable Housing The economic context of incentive programs to encourage affordable housing is based on the premise that private developers will include affordable units if they receive something of economic value in exchange for this action, but otherwise would not be"incentivized"to incorporate the affordable units. For example, if a parcel of land is zoned to allow a maximum of five residential units, and a voluntary program is implemented, the concept is that incorporation of a unit at an affordable rent or sale price would decrease the developer's overall project profit, because development costs would rise to construct this affordable unit, but without compensating profit on it. The unit, depending on the relationship between its development cost and its rent or sale price level, could bring a small profit, break even, or even incur an absolute loss to the developer. However, if the incorporation of this affordable unit were offset by the ability to incorporate additional market rate units (i.e., density bonus), the additional profit on every market rate unit above the allowable five units originally zoned could offset 2 the incorporation of the affordable unit and its potential loss to the developer. To illustrate this concept numerically, if a developer were to build five market rate units in this example, and the profit on each of these were $20,000, and the incorporation of one affordable unit meant eliminating profit on that unit, then the concept is to allow for one additional market rate unit above the original five allowed (density bonus). This permits the project to achieve "equilibrium". The project would end up with a total of six units built on a parcel zoned for five, with a 20 percent affordable unit mix(e.g. one affordable unit out of the five allowed under existing zoning), and a density bonus of 20 percent(one additional market rate unit). In some jurisdictions around the county, incentive programs allow for a variation of paying an "in-lieu" fee, rather than actually constructing the affordable units within the project. This option is allowed, and sometimes encouraged, in order to provide the developer with the option of paying money rather than impacting the perceived marketability of the project by including mixed household incomes within it. The "in-lieu" fee is often set at a level necessary to serve as equity in an off-site affordable project on a per unit basis, not the entire development cost of that unit. This approach is followed because affordable housing developers can utilize the equity amount to leverage debt on the units, thereby minimizing the payments collected from the market rate developer, and maximizing the number of affordable units built elsewhere. Key to this approach to encourage affordable housing production is the need for a strong residential real estate market, where a developer desires to obtain additional market-rate unit entitlements and is confident that each additional unit will be marketable and contribute the expected profit to the project. In many strong residential markets, land costs also tend to rise — the option of providing affordable units in exchange for additional market rate units at zero additional land cost can therefore be especially attractive in these cases. Also important in this calculus from the developer's point of view is the goodwill that will accrue from following such a voluntary program; if the developer believes that requesting a density bonus will impact project approvals in any case, and/or that incorporating affordable units will cause greater neighborhood opposition to the project, then the developer is likely to opt for not following a voluntary program despite its potential economic offsets or benefits. Conversely, if a developer faces strong project opposition from affordable housing advocates or neighborhood residents with consensus around the need for more affordable housing, or if elected officials have taken the position that solving affordable housing needs through increased mixed income production is a viable direction, then this approach can serve to greatly expand the production and availability of affordable units in strong real estate markets. Interestingly, it is typically just such strong markets which tend to exacerbate the interest in affordable units to begin with (i.e., rents or sale prices are rising and concern exists for providing housing for all income levels), so this concept of"leveraging" the strong market to increase affordable production can serve to benefit multiple interests. 3 Reductions in Parking Requirements Local jurisdictions around the U.S. have implemented tools other than density bonus programs to create incentives for affordable housing production. An approach which can work well in higher density or transit-oriented projects is to reduce the overall parking required per unit in exchange for the provision of affordable units within the project. This approach depends on the economic incentive of reducing relatively high development costs for parking (i.e. within garages or structured parking), and can lead to debates among developers and neighbors regarding the appropriate amount of parking to render the project marketable and/or mitigate surrounding street parking impacts. This report examines the economic implications of reduced parking requirements in the East County subregions. Development Impact Fee Waivers/Reductions In regions where development impact fees are relatively high as a proportion of total per- unit development costs, waiving or reducing such fees for affordable units can contribute to the overall equation. However, this approach is not workable in areas where legal restrictions require equal treatment of all housing developments to ensure that municipal costs of growth are equitably distributed to all those developments that incur increased impacts and costs. Land Assembly Strategies A final type of incentive program involves public agency sponsored land assembly and/or land value write-downs. Land assembly involves a public agency buying one or more parcels to create a larger, more developable parcel under single ownership, and then reselling or creating a long term ground lease with a private developer. Land write-downs would involve the added step of the public agency absorbing some of the cost of buying the land, so that when the land is resold to the private developer,the price is lower than market rate or the payments are deferred to minimize the cost to the private developer. Land write-downs can be a powerful incentive to developers who otherwise will not take the risk of developing a project due to the large up-front cost of purchasing land, which can be as much as 25 to 40 percent of total project costs. These land assembly/land value write-down approaches can work well in situations where a community is otherwise built out, where the pattern of legal lot lines creates small parcels that constrain private development, or where land prices are high relative to unit rents or sale prices. Drawbacks to this approach include the need for expenditure of public resources (either by staff time or actual dollars), as well as restrictions on the use of public powers of condemnation. Nevertheless, land assembly/land write-downs can be a powerful tool for many local jurisdictions to encourage the development of affordable housing units. 4 Program Examples This section describes example programs involving affordable housing and density bonuses. For each program, the history and rules are outlined, and a discussion of the success of each program's production of affordable units is presented. Montgomery County, MD Montgomery County, a suburban county adjacent to Washington, D.C., is an affluent, rapidly developing area facing continued upward home price pressures. In 1989, the median annual household income for the county was $54,089, substantially higher than King County's median of$36,179 and the U.S. median of$30,056. Montgomery County's Moderately Priced Dwelling Unit (MPDU) program is the oldest and one of the most successful inclusionary zoning practices in the U.S. Passed in 1974, the law requires the following: ■ Any development of one-half acre or smaller with 50 or more units must have between 12.5 percent and 15 percent affordable housing. In order to compensate the developer, a density bonus of up to 22 percent is allowed. ■ Developers can apply to pay in-lieu fees to the Housing Initiative Fund (which provides assistance for affordable housing projects) or provide units at another location,but these exceptions are difficult to obtain. ■ MPDUs must be built concurrently with market rate units. ■ The Housing Opportunities Commission as well as recognized nonprofits are allowed to purchase up to one third of the affordable units developed, or five percent of the total for any given development. Rules applied to program participants include: ■ Participants are selected by lottery from a list of about 8,000 families. ■ They are generally between 60 and 80 percent AMI. ■ They can not have owned a residential property in the last five years. ■ For-sale affordable units must maintain affordable prices for 10 years, and rental units for 20 years. If units are sold within those time periods, 50 percent of any profit is recouped by the program and reinvested in affordable housing. Since the law was passed in 1974, more than 10,500 affordable units have been added to the existing housing stock, out of the more than 119,000 housing units developed. The program has also increased homeownership opportunities for minority groups; while about 27 percent of Montgomery County residents are minorities, over 50 percent of MPDU unit were purchased by minority households between 1988 and 1992. 5 From its inception, the intention of the MPDU program has been to increase the opportunity for home ownership in Montgomery County. As a result, the program has targeted a relatively narrow segment of the population (60 to 80 percent AMI). County officials believe that this level is low enough to justify a public program but high enough for households to afford the mortgage payments associated with these units. Due to this income and tenure focus, just under 28 percent of the units created through the MPDU program have been rental units (compared to an overall tenure mix of 28.7 percent of County households renting their unit in 1997). Pleasanton, CA As profiled in Appendix A, at least 23 California jurisdictions have enacted voluntary programs involving incorporation of affordable housing in exchange for density bonuses or other development incentives as one approach to creating additional affordable housing. These voluntary programs have produced at least 10,845 affordable units. Mandatory programs, present in at least an additional 53 California jurisdictions, have produced at least an additional 13,500 units'. In many of these jurisdictions, voluntary programs have achieved limited results due to a combination of market factors (leading to limited interest in selecting this option in exchange for a density bonus), or to poor design and implementation of the specific incentive policy. In areas of California with strong residential markets and escalating land values, however, voluntary programs have resulted in the production of a significant number of below market rate units. Among these programs, the City of Pleasanton's program stands out as particularly successful. Pleasanton is a relatively affluent suburb of the Bay Area, located 40 miles east of San Francisco. As a result, its housing market is closely tied to the real estate situation in the Bay Area, which in the last decade has experienced unprecedented growth and extreme upward price pressures. The median home sale price in Pleasanton in 1999 was $411,700, an increase of more than 30 percent in just three years. According to the Association of Bay Area Governments (ABAG), Pleasanton's population has grown rapidly as well, increasing from 52,035 in 1990 to an estimated 67,800 in 2000. The rapid growth and rising home prices have increased pressure on the City to provide affordable housing options for residents. Until recently, Pleasanton had a voluntary inclusionary housing program aimed at developing Below Market Rate (BMR) units. Since program inception in 1988, 845 affordable units have been created (including 396 units targeted to seniors). The city also accepted in-lieu fees of$2,088 per single-family unit and $933 per multifamily unit. In October 2000,the Pleasanton City Council voted to make inclusionary zoning mandatory for projects with more than fifteen units. 1 Several known incentive programs involving including affordable units are not included in the data profiled by the author of the article summarized in Appendix A,leading to use of the term "at least"in this paragraph. 6 The voluntary program carried out to date was based on a project-by-project negotiation process, whereby the number of BMR units was negotiated in exchange for density bonuses through the planning review process. City planners could also offer developers faster project reviews by putting them first in line to get through Pleasanton's Growth Management Program. In general, BMR units were rented for 20 percent less than comparable market rate units located in the same complex. In September 2000, a city survey revealed a market rate rental range of$800 to $1,900 for one bedroom units and $950 to $2,400 for two bedroom units. As of March 2000, the maximum rent that could be charged for a BMR unit was $1,082 for a one bedroom apartment and $1,352 for a two bedroom unit. The actual rents of some BMR units were below the maximum allowed rent. Residents of non-senior BMR units are generally households between 50 and 80 percent of Area Median Income (AMI). The income cap to qualify for an affordable unit in March 2000 was $37,850 for a one-person household, $43,250 for two people, $48,650 for three people, and $54,100 for a four person household. These income levels are adjusted annually. King County, WA Programs A significant number of King County jurisdictions have enacted incentive programs in order to encourage affordable housing production in line with local comprehensive plan goals. These include voluntary programs in Bellevue, Kent and Renton, as well as mandatory programs in Redmond and Federal Way. King County has also enacted residential density incentives in order to achieve County Comprehensive Plan goals regarding affordable housing, open space protection, historic preservation, and energy conservation. For those residential projects providing a defined affordable housing public benefit, the County offers a menu of density bonuses depending on the number of affordable units provided, level of affordability, target population (senior or non-senior household), and the size of the site area. In general, the maximum density bonus allowed under the ordinance is 1.5 bonus units (e.g., 50 percent) for rental housing designed to serve households earning 50 percent or less AMI, for a maximum of 30 affordable units on sites of less than 5 acres. Senior projects are eligible for significantly higher density bonuses up to one bonus unit per benefit unit for assisted senior housing'. Despite these relatively generous King County program incentives, in the past year only three projects with below market-rate units have utilized the incentives. These projects included 35 ownership units affordable to households earning 80 percent or less of AMI. The average increase in density for these projects was 25 percent over the original permitted density. The County's program has also served as a model for similar incentive programs in Woodenville and other smaller King County jurisdictions. 2 King County Code Sec.21A.34.010,et sec. 7 Seattle Downtown Housing Bonus Program Another example of a geographically specific density program is the well established approach used by the City of Seattle for its downtown. First enacted in 1985, the Seattle downtown housing bonus program encompasses three tiers of density incentives based on floor area ratios (FAR) as outlined in the Seattle downtown density schedule. FAR refers to the amount of building space compared to the amount of land underlying the building, so that a FAR of 4 is a building covering its entire site with four floors, or a taller building with setbacks so that the entire site is not covered by the building's footprint. Assuming a base FAR of 4, downtown office developers have the following three options to increase permitted density: • First Tier. By providing on-site mitigations such as additional open space or a child care center, FAR can increase within the range of 5 to 7. • Second Tier. To boost FAR up to between 7 and 10, developers can provide the equivalent of$20 a square foot directly to a developer of below market-rate units in the downtown area. Office developers do not pay into a trust fund, but work directly with a nonprofit sponsor to provide equity for affordable housing. This program has resulted in four new and two renovated housing projects comprising 103 below market-rate units: 2 for very low income households; 50 for low income households; and 51 for households with moderate income. The program was revised in the past five years to apply only to low and very low income households, and currently the Seattle City Council is considering an additional revision that will allow office developers to pay an amount on the order of$22 a square foot directly into a housing trust fund. • Third Tier. To boost FAR up to between 10 and 14, developers have the option of purchasing development rights from a low-income housing "sending"site in the downtown area. Priced at approximately $13 a square foot,these TDRs have resulted in approximately 416 below market rate units affordable to households earning 80 percent or less of AMI. Summary These example programs in Montgomery County, MD; Pleasanton, CA; and throughout King County, WA profile the range of specific arrangements that various local governments have used to encourage the production of affordable housing by using incentives designed to appeal to private, for-profit developers. These programs tend to work, and to produce affordable units, when market and economic conditions are aligned to create a strong demand for market rate housing (or, in the case of downtown Seattle, market rate commercial space). Another key ingredient for success is the appropriate mix of affordable units coupled with a density bonus, so that the net loss to a developer of incorporating an affordable unit can be almost or completely offset by the profit margin on each additional allowed market rate unit via the density bonus. 8 Jurisdictions around the U.S. have found that in some cases, the market and economic conditions that create this voluntary opportunity are more feasible when applied to market rate for-sale housing, which offers a sufficient, predictable profit margin to incentivize private developers, than for rental housing. Furthermore, these programs tend to be used most when the target affordability range is above 50 percent Area Median Income (AMI), which reduces the gap between revenue collected for the affordable unit and the development costs (i.e., the "loss"to the private developer for incorporating the affordable unit into the project). For market rate rental housing,which in some markets tends to have lower profit margins and/or higher development risk, the incorporation of affordable units is difficult to offset with additional market rate units, when each market rate unit has a limited profit margin. 9 Economic Analysis of Potential Incentives To illustrate the financial implications of an affordable housing incentive program using density bonuses, as well as the implications of a reduction in parking requirements, this chapter presents a series of financial analyses of prototype projects in three subregions of King County: Seattle, the Eastside, and South County. The goal of this section is to illustrate the potential positive impact of allowing incentives such as density bonuses along with affordable housing provision on the "bottom line" return to the developer. The subregional analysis underscores how this works in markets with relatively high land values and rents/sale prices compared to markets with lower land values and lower rents/sale prices. The overall objective of the analysis is to develop a series of"baseline" project scenarios, add affordable units and market rate density bonus units, and test the resulting financial returns to assess if"baseline" profit margins can be maintained through these project changes. Baseline Scenarios Methodology To analyze the impacts of density bonus/voluntary affordable housing incorporation into a market rate project, a series of "baseline" pro formas, along with variations in assumptions, were formulated. The baseline pro-formas illustrate a for-sale and a rental project in each of the three sub-regions, reflecting typical densities and market rate rents/sale prices. The results of this first step are included as Appendix B to this report. In the Seattle case, both the rental and for-sale prototypes are based on the Neighborhood Commercial Three (NC3) zoning designation, areas where the City of Seattle has encouraged housing to promote mixed-use, pedestrian-oriented districts. For single- purpose residential uses in an urban center NO zone, the maximum residential density allowed for a 65-foot building is one unit per 400 square feet of gross lot area. For East County, two for-sale projects are illustrated, an "urban core"example at 60 units per acre, and a "townhouse" example at 16 units per acre (second East County scenario added at the request of local developers who considered this townhouse for-sale product type reflective of current projects experiencing strong market success in many parts of the area). For the all of the for-sale scenarios, the pro forma describes a prototypical project, formulates development cost assumptions, and estimates sales revenues to the developer. This process illustrates the basic financial structure of a prototypical project before the affordable units and density bonuses are incorporated. For rental projects, this analysis constructs baseline pro formas that again formulate a prototypical project for each subregion, generally at the same density and configuration as the for-sale version (except for South County, where it is assumed that a rental product would be marketable at a 25 units per acre, garden style stacked flat configuration, while the sale product would need to be less dense and offer townhouses at a lower density). To 10 estimate developer return, the development costs are subtracted from a capitalized Net Operating Income (NOI) figure, reflecting the value of rental property after lease-up. The capitalized NOI approach, a standard appraisal methodology, first estimates NOI based on gross rents, vacancies, and operating expenses; and then "capitalizes" NOI by dividing NOI by the"cap rate"to determine the stabilized property value of the completed project. Summary of Baseline Results As shown on Table B-1, the results of this baseline series of pro formas indicate that market rate rental projects tend to generally have lower financial returns (expressed as "profit as percent of total development cost")than for-sale projects. This is expected, and must be considered in light of the typical market conditions that also bring higher risk to condominium developers as prices and absorption fluctuate. Table B-1 also indicates that market rate rental housing in South County, based on the assumptions used, is not generally feasible, which explains why a few developers may be able to take this risk; individual circumstances can affect this finding significantly, such as land purchased in prior years at a lower cost, construction costs that are negotiated downward via willing contractors, and/or presumptions on the developer's part that rents will rise by the time the project is built, generating greater return. This South County rental finding is also influenced by the assumed capitalization rate, which published data shows is higher in South County, reflecting a perceived greater risk on rental units. If a lower capitalization rate were used in the Appendix B scenario for this subregion, the project could become financially feasible. Affordable Units and Offsetting Density Bonuses Methodology These pro formas test the implications of a voluntary affordable housing component coupled with a density bonus, allowing for an offset from the potential financial loss of including affordable units by including additional market rate units to generate additional profit. These scenarios incorporate two options for the affordable component — a 5 percent mix and a 10 percent mix of total baseline units. Affordable units would be rented or sold at prices meeting the needs of households at various low income levels (expressed as calculated percentages of the HUD-defined Area Median Income). Appendix B includes one example of this pro forma for each subregion for each tenure assumption (rental and for-sale). Various density bonuses are also analyzed to determine if the resulting financial return from the combination of affordable units and increased profit from additional market rate units creates a feasible project. The density bonuses analyzed range from 10 to 25 percent of the baseline number of units. The results of this analysis are summarized in Appendix B-2 and B-3. To determine the incentive's feasibility under various combinations of AMI and density bonus, the analysis assumes that a combination of affordable mix and density bonus is 11 "feasible" if the program allows maintenance of an overall project profit margin similar to the"baseline"profit margin. It should be noted that the measure does not directly account for the mix of debt and equity (since it is using return on total development costs rather than return on equity). Return on equity was not chosen as the way to measure these analyses because in actual development projects, the amount of equity can vary greatly, depending on the arrangements of the various development partners and landowners; hence, the financial return on equity will also fluctuate substantially as a percentage measurement. Furthermore, it should be noted that the "equilibrium" approach, as measured by percent profit, is relatively conservative. Another measure could be maintenance of the actual dollar amount of profit, spread over more units, rather than a percent of profit. These measures and the overall methodology were tested through a developer forum held in late fall, 2000. According to developers active in King County who reviewed the BAE analysis and findings, the basic approach matches their view of this issue. However, several developers noted that despite an "equilibrium" financial incentive, several real world considerations would influence the choice of using such a voluntary program. These factors include: ■ Political reality regarding community acceptance of affordable housing units ■ Marketing concerns regarding mixed income projects (although there is substantial debate over this issue, warranting further research). This issue was more prevalent as a concern in the case of for-sale products. ■ Ability to achieve increased densities, while facing other on-the-ground constraints such as parcel configuration limiting actual density, community opposition to increased densities, and design/aesthetic considerations Some developers noted that in order to make an affordable housing incentive program practical enough that they would voluntarily consider such an approach, the incentive should reward the developer above and beyond an equal financial return, through such additional mechanisms as faster entitlement processing, reduced parking requirements, reduced impact fees,or other actions that would save money or time. Rental Findings As shown in Appendix B, due to the combination of factors and assumptions, the rental scenarios indicate that incorporation of different mixes of affordable units with a corresponding level of density bonus for market rate units results in different profit outcomes in the different subregions. For rental projects, a mix of five percent affordable units offset by density bonuses of 20 percent or more appear to achieve the best outcomes, due to the baseline profit margins and the interplay between AMI rent levels and added profit from additional market rate units through density bonuses. For a 5-story, wood- frame Seattle rental prototype serving 50 percent AMI households, density bonuses of 20 percent or more appear to be feasible, and a density bonus of 10 to 15 percent may also be feasible for specific projects with slightly lower development costs than those assumed in 12 the analysis. If the proportion of rental units is increased to 10 percent of baseline in the Seattle rental scenario, density bonuses alone do not appear to completely offset the costs for the 50 percent AMI level. At the 80 percent AMI level of affordability, incorporating ten percent of baseline units to serve low-income Seattle households may, however, be feasible with accompanying market rate density bonuses of 20 percent or more. For rental projects in East County, the baseline profit is lower than in the Seattle example, reflecting a different mix of density, land costs, construction costs, and rental rates. A similar pattern in terms of workable affordable housing/market rate density bonuses is indicated by the analysis for East County rental projects, as shown in Appendix B. Incorporating a five percent affordable component appears feasible if offset by at least a 20 percent density bonus for projects serving 50 AMI households, with lower market rate density bonuses approaching feasibility, depending on project-specific factors. Incorporating a five percent affordable component appears feasible with all ranges of density bonus for projects serving 80 percent AMI or above. Increasing the affordable component to 10 percent of baseline unit counts begins to appears workable for AMI levels of 80 percent or above if density bonuses are provided at 20 percent or more. For South County, due to finding that market rate rental projects are barely feasible without any incorporation of affordable units, this approach to creating affordable housing through an incentive program is not workable (as reflected by negative profit numbers in Appendix B-1). However, it is important to note that due to the relationship between market rate rents and the federally-defined affordable income thresholds, households earning above 100 AMI are already served by market rate rents. For-Sale Findings In the case of for-sale projects, the analysis indicates that incorporating a five percent affordable component is also workable in some parts of King County. In Seattle, due to the relatively high baseline profit margin, it is difficult to achieve maintenance of profit margins after incorporation of an affordable component for households below 120 AMI. However, at 120 AMI, incorporating a five percent affordable for-sale component appears feasible, with density bonuses of as low as 10 percent. Increasing the amount of affordable units to 10 percent of baseline total does not appear to work in the Seattle example. For East County Urban Core, the approach of a five percent affordable mix also appears to be workable, even for incomes at 50 percent AMI if density bonuses of 20 percent are provided. Increasing the mix of affordable to 10 percent of the baseline project, however, becomes less workable for lower income households in this prototype, with maintenance of profit margins occurring only for AMI levels of 120 percent and density bonuses of 20 percent or more. As predicted by local developers, the East County townhouse prototype is not clearly workable under this voluntary incentive approach, with rough parity in profitability maintained only at the lowest levels of affordable unit mix and the highest levels of 13 household income(120 percent). In South County, the incorporation of five percent affordable units into the project mix appears workable for all income levels, and may also be workable if the mix is increased to 10 percent, provided density bonuses are allowed in the 20 to 25 percent range. It should be noted that in South County, market rate for-sale prices are generally already affordable to households earning 120 percent AMI. Thus, this approach can work well in for-sale situations, providing additional homeownership opportunities to substantial numbers of households at the same time as increasing overall housing production in partnership with private developers. Summary of Affordable Units&Density Bonuses In summary, these findings indicate that the approach of incorporating affordable units on a voluntary basis in exchange for a density bonus, allowing additional market rate units to offset the cost to developers, is a workable approach in many parts of King County. The approach faces a more difficult economic challenge for very low income household targets in the cases of rental projects in Seattle and East County, due to the relationships between economic factors. In addition, this approach generally works best when the amount of affordable units is kept at a five percent of baseline total,rather than increasing the amount to 10 percent of baseline. It is important to note that the analyses conducted for this study carry a margin of imprecision relative to specific real projects, and the findings should be fine-tuned to match local market conditions and variations by specific project circumstances. Implementation of widespread voluntary programs of this nature, coupled with density bonuses, would allow for some of this variation to be demonstrated by individual developers. In other words, if the analysis indicates a near-feasible project at a certain combination of variables, an actual developer can still opt to use the voluntary program based on his/her own specific project factors which may better accommodate the mix of assumptions in a manner favorable to affordable housing production. Parking Reduction Incentives Reductions in required parking is an option that can also have significant cost reduction impacts to market rate developers, creating incentives for affordable housing production. This option can be used on a stand-alone basis, or in combination with the approach of incorporating affordable units and density bonuses as described above. While this study does not address the capability of local areas to accommodate new housing with fewer numbers of parking spaces than have been traditionally provided or required, it should be noted that the recently completed Seattle Comprehensive Neighborhood Parking Study reports an average off street parking space utilization of 61 percent for urban centers, 42 percent for urban village neighborhoods, and 40 percent for hub urban village neighborhoods. Parking requirements for multi-family projects in 14 Seattle typically range from 1.1 to 1.25 spaces per residential unit 3. However, recent market-rate projects in the downtown core area, however, have been providing 1.5 spaces per unit; for affordable projects the current ratio is 0.5 to 0.75. Comparison of the on-the- ground provisions for parking with the Neighborhood Parking Study suggest that there may be opportunities to reduce these typical amounts of parking. Methodology To test the impact of a parking requirement reduction as an enhancement to scenarios where density bonuses did not, by themselves, create sufficiently feasible projects, this study conducted an example analysis (see Appendix C for pro forma). The analysis was conducted for the East County Rental case with 10 percent of baseline units affordable to 50 percent AMI, a 10 percent market rate density bonus, and a parking ratio of 1.5 spaces per unit. Without any further incentive, this case resulted in a profit (as percent of development costs) of only 4.9 percent, insufficient to create a feasible project and a substantial drop from the baseline profit margin of 9.1 percent. However, when the parking requirement was reduced from 1.5 spaces per unit to 1.0 spaces per unit,the profit margin increased to 8.5 percent, approaching rough parity with the baseline profit margin. Summary of Parking Reductions This finding suggests that various combinations of affordable housing, density bonuses, and parking requirement reductions can work together to create projects with similar profit margins to full market rate "baseline" projects, while also serving very low income households. Key to this finding is the flexibility offered by implementing these combined approaches on a voluntary basis, when they fit the economic parameters of specific projects. 3 In the Pine/Pike overlay district this requirement is reduced to 1.0 and in the Belltown and Denny Triangle neighborhoods there is no minimum parking requirement. 15 Conclusions & Next Steps The analysis conducted for this study shows that incentive programs can contribute to the development of affordable housing within King County jurisdictions, with limited financial investment by public agencies. These programs utilize market forces to maximize opportunities for private sector housing production across a range of income levels. To encourage implementation of voluntary incentive programs throughout King County's local jurisdictions, recommended next steps include: ■ GMPC to direct staff to prepare a motion endorsing incentive recommendations for local consideration. ■ GMPC to make all incentive tools and information developed by the consultants available to local jurisdictions. ■ GMPC to convene a regional forum on affordable housing incentives bringing all interested parties together to review and implement at the local level. ■ Local jurisdictions to fine-tune economic analysis and program incentives to fit local conditions. 16 Appendix A: Voluntary Programs in California 17 C E c 0) 0) TLL c •. _ _ Im N 01 O N � � 0) 12 12 LL C L C 0. a P ~ Q 0) 0) 'E N m Cl m m m f0 m m € O Co Co m (n m C C m >� T M C T T C C >1 >. >. Q; O >. >. >. = >. 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On and Off-Site Costs/Unit(4) $3,000 2)Assumes land costs of$65 per Square Foot Permit&Fees/Unit(5) $5,000 3)Based on RS Means for product type. Other Soft Costs(6) 10.0% 4)Estimates based on review of recent multi-family projects in King County. Property Taxes on Land Improvements(7) 1.25% 5)Estimate based on survey conducted by BAE in August,2000. Cost/Parking Space(8) $20,000 6)Estimates based on recent comparable King County projects. 7)1.25 percent ad valorem tax on hard cost value of improvements Assumes Construction Financing Costs(9) developer will pay an average of 50%of property taxes levied over the marketing Interest Rate 8% period. Period of Initial Loan(months) 12 8)Assumes structured"half down"parking. Costs from recent comparable projects. Initial Construction Loan Fee(points) 2% 9)Construction Financing Costs based on following assumptions: Average Balance 60% Construction+On&Off Site Costs+Parking $6,524,000 Loan to Value Ratio 85% Amount of Loan $5,545,400 Developer Equity $3,632,562 10)Cap.Rate from Thomas Cain Apartment Value Trends:operating expenses from ULI Dollars&Cents of Mulitfamily Housinq.2000. Table B-5: Seattle Rental Housing Scenario with 10% Affordable Units @ 50% AMI and 10% Bonus Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 56 Land $1,415,700 Site Size(acres) 0.5 Unit Construction Cost $5,759,600 Market Rate Units 50 On and Off-Site Cost $184,800 Below Market Rate Units(10%of baseline#) 6 Parking Costs $1,232.000 Market Bonus Units(10%of baseline#) 6 Building Permits&Fees $308,000 Total Units 62 Other Soft Costs $594,440 Product Mix: Property Taxes on Land/Improvements $44,853 2 BR/1 BA Market 56 Finance Costs: 2 BR/1 BA Affordable 6 Interest on Construction Loan $292,797 Unit Size(sq.ft.) 850 Points on Construction Loan $121,999 Parking Ratio 1.00 Total Development Costs $9,954,188 Parking Spaces 62 Total DevelopmentCosts/Unit $161,594 Project Size(Sq.Ft.): Value Stabilized Income(10) Units 52,360 Gross Potential Rent(100%Occupancy) $1,360,128 Common Area 5,236 Vacancy Rate 3.5% Total Residential 57,596 Gross Scheduled Rent $1,312,524 Project Density(DU/AC) 123 Operating Expenses 35% FAR 2.6 Net Operating Income $836,479 Capitalization Rate 7.7% Market Rate Rents: Potential Market Value $10,863,360 2 BR/1 BA(1) $1,950 Developer Profit $909,172 BMR Rent Rates-50%AMI: Profit as Percent of Total Development Costs 9.1% 2 BR/1 BA @ 30%of 50%AMI $740 Per Unit Market Rate Profit(@baseline land value) $29,025 Calculation of Affordable Unit Development Costs Development Cost per Unit $161,594 Development Costs Estimated Value per Affordable Unit $74,961 Land(2) $1,415,700 Net Cost to Developer Per Affordable Unit $86,633 Construction Costs(Sq.Ft.)(3) $100 Total Affordable Unit Costs to Developer $485,144 On and Off-Site Costs/Unit(4) $3,000 Permit&Fees/Unit(5) $5,000 NOTES: Other Soft Costs(6) 10% 1)Reflects current rental rates for recently constructed properties in Seattle's Property Taxes on Land Improvements(7) 1.25% Neighborhood Urban CentersAtillages. Cost/Parking Space(8) $20,000 2)Assumes land costs of$65 per Square Foot 3)Based on RS Means for product type. Construction Financing Costs(9) 4)Estimates based on review of recent multi-family projects in King County. Interest Rate 8.0% 5)Estimate based on survey conducted by BAE in August,2000. Period of Initial Loan(months) 12 6)Estimates based on recent comparable King County projects. Initial Construction Loan Fee(points) 2% 7)1.25 percent ad valorem tax on hard cost value of improvements. Assumes Average Balance 60% developer will pay an average of 50%of property taxes levied over the marketing period. 8)Assumes structured"half down"parking. Costs from recent comparable projects. projects. 9)Construction Financing Costs based on following assumptions: Construction+On&Off Site Costs+Parking $7,176,400 Loan to Value Ratio 85% Amount of Loan $6,099.940 Developer Equity $3,854,248 10)Cap.Rate from Thomas Cain Apartment Value Trends;operating expenses from ULI Dollars&Cents of Mulitfamilv Housing.2000. Table B-6: Baseline East County Rental Housing Scenario Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 60 Land $1,950,000 Site Size(acres) 1.0 Unit Construction Cost $5.610,000 Market Rate Units 60 On and Off-Site Cost $180,000 Below Market Rate Units 0 Parking Costs $900,000 Density Bonus Units(Market Rate) 0 Building Permits&Fees $300,000 Total Units 60 Other Soft Costs $579,000 Property Taxes on Land/Improvements $41,813 Product Mix: Finance Costs: 2 BR/1 BA Market 60 Interest on Construction Loan $272,952 Unit Size 850 Points on Construction Loan $113,730 Parking Ratio 1.50 Total Development Costs $9,947,495 Parking Spaces 90 Total Development CostalUnit $165,792 Project Size(Sq.Ft.): Value Stabilized Income(10) Units 51,000 Gross Potential Rent(100%Occupancy) $1,368,000 Common Area 5,100 Vacancy Rate 3.5% Total Residential 56,100 Gross Scheduled Rent $1,320,120 Project Density(DU/AC) 60 Operating Expenses 35% FAR 1.3 Net Operating Income $841,320 Capitalization Rate 7.8% Market Rate Rents: Potential Market Value $10,855,742 2 BR/1 BA(1) $1,900 BMR Rent Rates-50%AMP Total Developer Profit $908,247 2 BR/1 BA na Profit as Percent of Total Development Costs 9.1% BMR Rent Rates-80%AMI: Profit Per Unit $15,137 2 BR/1 BA na Development Costs NOTES: Land(2) $1,950,000 1)Reflects current rental rates for recently constructed properties in Bellevue&Redmond. Construction Costs(Sq.Ft.)(3) $100 2)Assumes land costs of$32,500 per unit. On and Off-Site Costs/Unit(4) $3,000 3)Based on RS Means for product type. Permit&Fees/Unit(5) $5,000 4)Estimates based on review of recent multi-family projects in King County. Other Soft Costs(6) 10.0% 5)Estimate based on survey conducted by BAE in August,2000. Property Taxes on Land Improvements(7) 1.25% 6)Estimates based on recent comparable King County projects. Cost/Parking Space(8) $10,000 7)1.25 percent ad valorem tax on hard cost value of improvements Assumes developer will pay an average of 50%of property taxes levied over the marketing period. Construction Financing Costs(9) 6)Assumes structured podium parking. Costs from recent comparable projects. Interest Rate 8% 9)Construction Financing Costs based on following assumptions: Period of Initial Loan(months) 12 Construction+On&Off Site Costs+Parking $6.690,000 Initial Construction Lan Fee(points) 2% Loan to Value Ratio 85% Average Balance 60% Amount of Loan $5,686,500 Developer Equity $4,260,995 10)Cap.Rate from Thomas Cain Apartment Value Trends;operating expenses from ULI Dollars&Cents of Mulitfamily Housing,2000. Table B-7: East County Rental Housing Scenario with 10% Affordable Units @ 50% AMI and 10% Bonus Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 60 Land $1,950,000 Site Size(acres) 1.0 Unit Construction Cost $6,171,000 Market Rate Units 54 On and Off-Site Cost $198,000 Affordable Units(10%of baseline#) 6 Parking Costs $990,000 Market Bonus Units(10%of baseline#) 6 Building Permits&Fees $330,000 Total Units 66 Other Soft Costs $636,900 Product Mix: Property Taxes on Land/improvements $45,994 2 BR/1 BA Market 60 Finance Costs: 2 BR/1 BA Affordable 6 Interest on Construction Loan $300,247 Unit Size(sq.ft.) 850 Points on Construction Loan $125,103 Parking Ratio 1.50 Total Development Costs $10,747,244 Parking Spaces 99 Total Development Costs/Unit $162,837 Project Size(Sq.Ft.): Value Stabilized Income(10) Units 56,100 Gross Potential Rent(100%Occupancy) $1,421,280 Common Area 5,610 Vacancy Rate 3.5% Total Residential 61,710 Gross Scheduled Rent $1,371,535 Project Density(DU/AC) 66 Operating Expenses 35% FAR 1.4 Net Operating Income $874,087 Capitalization Rate 7.8% Market Rate Rents: Potential Market Value $11,278,545 2 BR/1 BA(1) $1,900 Developer Profit $531,301 BMR Rent Rates-50%AMI: Profit as Percent of Total Development Costs 4.9% 2 BR/1 BA @ 30%of 50%AMI $740 Per Unit Market Rate Profit(@baseline land value) $21,696 Calculation of Affordable Unit Development Costs Development Cost per Unit $162,837 Development Costs Estimated Value per Affordable Unit $74,477 Land(2) $1,950,000 Net Cost to Developer Per Affordable Unit $88,360 Construction Costs(Sq.Ft.)(3) $100 Total Affordable Unit Costs to Developer $530 158 On and Off-Site Costs/Unit(4) $3,000 Permit&Fees/Unit(5) $5,000 NOTES: Other Soft Costs(6) 10% 1)Reflects current rental rates for recently constructed properties in Bellevue&Redmond. Property Taxes on Land Improvements(7) 1.25% 2)Assumes land costs of$32,500 per unit. Cost/Parking Space(8) $10,000 3)Based on IRS Means for product type 4)Estimates based on review of recent multi-family projects in King County. Construction Financing Costs(9) 5)Estimate based on survey conducted by BAE in August,2000. Interest Rate 8% 8)Estimates based on recent comparable King County projects. Period of Initial Loan(months) 12 7)1.25 percent ad valorem tax on hard cost value of improvements. Assumes developer Initial Construction Lan Fee(points) 2% will pay an average of 50%of property taxes levied over the marketing period. Average Balance 60% 5)Assumes structured podlum parking. Costs from recent comparable projects. 9)Construction Financing Costs based on following assumptions: Construction+On&Off Site Costs+Parking $7,359,000 Loan to Value Ratio 85% Amount of Loan $6,255,150 Developer Equity $4,492,094 10)Cap.Rate from Thomas Cain Apartment Value Trends;operating expenses from ULI Dollars&Cents of Mulitfamily Housing.2000. Table B-8: Baseline South County Rental Housing Scenario Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 25 Land $112,500 Site Size(acres) 1.0 Unit Construction Cost $1,856,250 Market Rate Units 25 On and Off-Site Cost $50,000 Below Market Rate Units 0 Parking Costs $56,250 Density Bonus Units(Market Rate) 0 Building Permits&Fees $125,000 Total Units 25 Other Soft Costs $190,625 Property Taxes on Land/Improvements $12,266 Product Mix: Finance Costs: 2 BR/1 BA Market 25 Interest on Construction Loan $80,070 Unit Size 900 Points on Construction Loan $33,363 Parking Ratio 1.50 Total Development Costs $2,516,323 Parking Spaces 37.5 Total Development Cost&Vnit $100,653 Project Size(Sq.Ft.): Value Stabilized Income(10) Units 22,500 Gross Potential Rent(100%Occupancy) $300,000 Common Area 2,250 Vacancy Rate 3.5% Total Residential 24,750 Gross Scheduled Rent $289,500 Project Density(DU/AC) 25 Operating Expenses 35% FAR 0.6 Net Operating Income $184,500 Capitalization Rate 8.0% Market Rate Rents: Potential Market Value $2,306,250 2 BR/1 BA(1) $1,000 BMR Rent Rates-50%AMI. Total Developer Profit -$210,073 2 BR/1 BA na Profit as Percent of Development Costs -8.3% Profit Per Unit -$8,403 Development Costs NOTES: Land(2) $112,500 1)Reflects current rental rates for recently constructed properties in Federal Way. Construction Costs(Sq.Ft.)(3) $75 2)Assumes land costs of$4,500 per unit or approximately$2.50 per sf. On and Off-Site Costs/Unit(4) $2,000 3)Based on RS Means for product type. Permit&Fees/Unit(5) $5,000 4)Estimates based on review of recent multi-family projects in King County. Other Soft Costs(6) 10.0% 5)Estimate based on survey conducted by BAE in August,2000 Property Taxes on Land Improvements(7) 1.25% 6)Estimates based on recent comparable King County projects. Cost/Parking Space(8) $1,500 7)1.25 percent ad valorem tax on hard cost value of improvements Assumes developer will pay an average of 50%of property taxes levied over the marketing period. Construction Financing Costs(9) 8)Assumes surface parking. Costs from recent comparable projects. Interest Rate 8% 9)Construction Financing Costs based on following assumptions: Period of Initial Loan(months) 12 Construction+On&Off Site Costs+Parking $1,962,500 Initial Construction Lan Fee(points) 2% Loan to Value Ratio 85% Average Balance 60% Amount of Loan $1,668,125 Developer Equity $848,198 10)Cap.Rate from Thomas Cain Apartment Value Trends;operating expenses from ULI Dollars&Cents of Mulitfamilv Housina.2000. Table B-9: Baseline Seattle For-Sale Housing Scenario Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 56 Land $1,415,700 Site Size(acres) 0.5 Unit Construction Cost $6,776,000 Market Rate Units 56 On and Off-Site Cost $280,000 Below Market Rate Units 0 Parking Costs $1,680,000 Market Bonus Units 0 Building Permits&Fees $420,000 Total Units 56 Other Soft Costs $705,600 Property Taxes on Land/Improvements $54,600 Product Mix: Finance Costs: 2 BR/2 BA Market 56 Interest on Construction Loan $356,429 2 BR/2 BA Below Market - Points on Construction Loan $148,512 Unit Size 1,000 Parking Ratio 15 Total Development Costs $11,836,841 Parking Spaces 84 Total Development CostsrUnit $211,372 Revenue From Sale of Units Project Size(Sq.Ft.): Gross Sales Revenue $14,560,000 Units 56,000 Net Sales Revenue(less 5%sales/marketing) $13,832,000 Common Area 5,600 Developer Profit (Net Rev-Dev Costs) $1,995,159 Total Residential 61,600 Profit as Percent of Total Development Costs 16.9% Project Density(DU/AC) 112 Profit Per Unit $35.628 FAR 3 NOTES: Market Rate Prices: 1)Assumes$260 square foot based on recently sold and currently selling projects in 2 BR/2 BA(1) $260,000 Seattle's urban centers/villages,3/2000. BMR Prices(50%Al 2)Assumes land costs of$65 per Square Foot 2 BR/2 BA na 3)Based on RS Means for product type. 4)Estimates based on review of recent multi-family projects in King County. Development Costs 5)Based on survey conducted by BAE in August,2000. Land(2) $1,416,700 6)Estimate based on recent comparable King County projects. Construction Costs(Sq.Ft.)(3) $110 7)1.25 percent ad valorem tax on hard cost value of improvements. Assumes developer On and Off-Site Costs/Unit(4) $5,000 will pay an average of 50%of property taxes levied over the marketing period. Permit&Fees/Unit(5) $7,500 8)Assumes structured"half down"parking. Costs from recent comparable projects. Other Soft Costs(6) 10.0% 9)Construction financing costs based on following assumptions: Property Taxes on Land Improvements(7) 1.25% Construction+On&Off Site Costs+parking $6,736,000 Cost/Pa rkrng Space(8) $20,000 Loan to Value Ratio 85% Amount of Loan $7,425.600 Construction Financing Costs(9) Developer EQuity $4.411.241 Interest Rate 8% Period of Initial Loan(months) 12 Initial Construction Loan Fee(points) 2% Average Balance 60% Table B-10: Seattle For-Sale Housing Scenario With 10% Affordable Units @ 50% AMI & 10% Bonus Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 44 Land $1,415,700 Site Size(acres) 0.5 Unit Construction Cost $5,856,400 Market Rate Units 40 On and Off-Site Cost $242,000 Affordable Units(10%of baseline#) 4 Parking Costs $1,452,000 Market Bonus Units(10%of baseline#) 4 Building Permits&Fees $363,000 l"otal Units 48 Other Soft Costs $609,840 Property Taxes on Land/Improvements $47,190 Product Mix: Finance Costs: 2 BR/2 BA Market 44 Interest on Construction Loan $362,419 2 BR/2 BA Below Market 4 Points on Construction Loan $128,357 Unit Size 1000 Parking Ratio 1.50 Total Development Costs $10,476,906 Parking Spaces 73 Total Development Costs/Unit $216,465 Revenue From Sale of Units Project Size(Sq.Ft.): Sales Revenue $11,750,200 Units 48,400 Net Sales Revenue(less 5%sales/marketing) $11,162,690 Common Area 4,840 Developer Profit (Net Rev-Dev Costs) $685,784 Total Residential 53,240 Profit as Percent of Total Development Costs 6.5% Project Density(DU/AC) 88 Per Unit Market Rate Profit(@baseline land value) $14,169 FAR 2.4 Calculation of Affordable Unit Development Costs Market Rate Prices: Net Development Cost per Affordable Unit $216,465 2 BR/2 BA(1) $260,000 Affordable Unit Sale Price $70,500 BMR Prices(50%AMI): Net Costs Per Affordable Unit -$145,965 2 BR/2 BA $70,500 Total Affordable Unit Costs to Developer -$642,246 NOTES: 1)Assumes$250 square foot based on recently sold and currently selling projects in Development Costs Seattle's urban centers/villages,3/2000. Land(2) $1,415,700 2)Assumes land costs of$65 per Square Foot Construction Costs(Sq.Ft.)(3) $110 3)Based on RS Means for product type. On and Off-Site Costs/Unit(4) $5,000 4)Estimates based on review of recent mufti-family projects in King County. Permit&Fees/Unit(5) $7,500 5)Based on survey conducted by BAE in August,2000. Other Soft Costs(6) 10% 6)Estimate based on recent comparable King County projects. Property Taxes on Land Improvements(7) 1.25% 7)1 25 percent ad valorem tax on hard cost value of improvements. Assumes developer Cost/Parking Space(8) $20,000 will pay an average of 50%of property taxes levied over the marketing period. 8)Assumes structured"half down"parking. Costs from recent comparable projects. Construction Financing Costs(9) 9)Construction Financing Costs based on following assumptions: Interest Rate 8.0% Construction+On&Off Site Costs+Parking $7,550,400 Period of Initial Loan(months) 12 Loan to value Ratio 85% Initial Construction Loan Fee(points) 2% Amount of Loan $6,417,840 Average Balance 60% Developer Eauitv $4.059.066 Table B-11: Baseline East County For-Sale Housing Scenario - Urban Core Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 60 Land $1,950,000 Site Size(acres) 1.0 Unit Construction Cost $7,260,000 Market Rate Units 60 On and Off-Site Cost $300,000 Below Market Rate Units 0 Parking Costs $900,000 Market Bonus Units 0 Building Permits&Fees $450,000 Total Units 60 Other Soft Costs $756,000 Property Taxes on Land/Improvements $52,875 Product Mix: Finance Costs: 2 BR/2 BA Market 60 Interest on Construction Loan $345,168 2 BR/2 BA Below Market 0 Points on Construction Loan $169,200 Unit Size 1,000 Parking Ratio 1.50 Total Development Costs $12,183,243 Parking Spaces 90 Total Development Costs/Unit $203,054 Revenue From Sale of Units Project Size(Sq.Ft.): Sales Revenue $14,400,000 Units 60,000 Net Sales Revenue(less 5%sales/marketing) $13,680,000 Common Area 6,000 Developer Profit (Net Rev-Dev Costs) $1,496,757 Total Residential 66,000 Profit as Percent of Total Development Costs 12.3% Project Density(DU/AC) 60 Profit Per Unit S24.946 FAR 1.5 NOTES: Market Rate Prices: 1)Based on survey of currently selling condominium and townhouse projects in 2 BR/2 BA(1) $240,000 Bellevue and Redmond. BMR Prices (50%AMI): 2)Assumes land costs of$32,500 per baseline unit. 2 BR/2 BA na 3)Based on RS Means construction cost estimates for brick face exterior with concrete block back-up. Assumes interior finishes to condominium specifications. 4)Estimates based on review of recent multi-family projects in King County. 5)Based on survey conducted by BAE in August,2000. Development Costs 6)Estimate based on recent comparable King County projects. Land(2) $1,950,000 7)1.25 percent ad valorem tax on hard cost value of improvements. Assumes developer Construction Costs(Sq.Ft.)(3) $110 will pay an average of 50%of property taxes levied over the marketing period. On and Off-Site Costs/Unit(4) $5,000 8)Assumes slruclured podium parking. Costs from recent comparable projects. Permit&Fees/Unit(5) $7,500 9)Construction financing costs based on following assumptions: Other Soft Costs(6) 10.0% Construction+On&Off Site Costs+Parking $8,460,000 Property Taxes on Land Improvements(7) 1.25% Loan to value Ratio 85% Cost/Parking Space(8) $10,000 Amount of Loan $7,191,000 Developer Equity $4,992.243 Construction Financing Costs(9) Interest Rate 8% Period of Initial Loan(months) 12 Initial Construction Lan Fee(points) 2% Average Balance 60% Table B-12: East County For-Sale Scenario With 10% Affordable Units @ 50% AMI & 10% Bonus Major Assumptions Pro Forma Analysis Characteristics Of Project Development Pro-Forma Base Project Size(Units) 60 Land $1,950,000 Site Size(acres) 1.0 Unit Construction Cost $7,986,000 Market Rate Units 54 On and Off-Site Cost $330,000 Below Market Rate Units(10%of baseline#) 6 Parking Costs $990,000 Market Bonus Units(10%of baseline#) 6 Building Permits&Fees $495,000 Total Units 66 Other Soft Costs $831,600 Property Taxes on Land/improvements $58,163 Product Mix: Finance Costs: 2 BR/2 BA Market 60 Interest on Construction Loan $446,688 2 BR/2 BA Below Market 6 Points on Construction Loan $186,120 Unit Size 1,000 Parking Ratio 1.5 Total Development Costs $13,273,571 Parking Spaces 99 Total Development CostsrUnit $201,115 Revenue From Sale of Units Project Size(Sq.Ft.): Sales Revenue $14,823,000 Units 66,000 Net Sales Revenue(less 5%sales/marketing) $14,081,850 Common Area 6,600 Developer Profit (Net Rev-Dev Costs) $808,280 Total Residential 72,600 Profit as Percent of Total Development Costs 6.1% Project Density(DU/AC) 60 Per Unit Market Rate Profit(@baseline land value) $38,885 FAR 1.7 Calculation of Affordable Unit Development Costs Market Rate Prices: Net Development Cost per Affordable Unit $201,115 2 BR/2 BA(1) $240,000 Sale Price per Affordable Unit $70,500 BMR Prices(50%AMI) Net Costs Per Affordable Unit -$130,615 2 BR/2 BA $70,500 Total Affordable Unit Costs to Developer -$783,688 NOTES: 1)Based on survey of currently selling condominium and townhouse projects in Development Costs Bellevue and Redmond. Land(2) $1,950,000 2)Assumes land costs of$32,500 per Unit. Construction Costs(Sq.Ft.)(3) $110 3)Based on IRS Means per product type. On and Off-Site Costs/Unit(4) $5,000 4)Estimates based on review of recent multi-family projects in King County. Permit&Fees/Unit(5) $7,500 5)Based on survey conducted by BAE in August,2000. Other Soft Costs(6) 10% 6)Estimate based on recent comparable King County projects. Property Taxes on Land Improvements(7) 1.3% 7)1.25 percent ad valorem tax on hard cost value of improvements Assumes developer Cost/Parking Space(8) $10,000 will pay an average of 50%of property taxes levied over the marketing period. 8)Assumes structured podium parking. Costs from recent comparable projects. Construction Financing Costs(9) 9)Construction Financing Costs based on following assumptions: Interest Rate 8% Construction+On&Oft Site Costs+Parking $9,306,000 Period of Initial Loan(months) 12 Loan to value Ratio 85% Initial Construction Lan Fee(points) 2% Amount of Loan $7,910,100 Average Balance 60% 1 Developer Equity $5,363,471 Table B-13: East County For-Sale Housing Scenario Baseline -Townhouse Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 16 Land $720,000 Site Size(acres) 1 Unit Construction Cost $2,129,600 Market Rate Units 16 On and Off-Site Cost $80,000 Below Market Rate Units(10%of baseline#) 0 Parking Costs $320,000 Market Bonus Units(10%of baseline#) 0 Building Permits&Fees $120,000 Total Units 16 Other Soft Costs $220,960 Property Taxes on Land/Improvements $15,810 Product Mix: Finance Costs: 2 BR/2 BA Market 16 Interest on Construction Loan $121,421 2 BR/2 BA Below Market - Points on Construction Loan $50,592 Unit Size 1,100 Parking Ratio 2.0 Total Development Costs $3,778,383 Parking Spaces in garages of units 32 Total Development Costs/Unit $236,149 Revenue From Sate of Units Project Size(Sq.Ft): Sales Revenue $4,400,000 Units 17,600 Net Sales Revenue(less 5%sales/marketing) $4,180,000 Common Area 1,760 Developer Profit (Net Rev-Dev Costs) $401,617 Total Residential 19,360 Profit as Percent of Total Development Costs 10.6% Project Density(DU/AC) 16 Per Unit Market Rate Profit(@baseline land value) $38,851 FAR 0.4 Calculation of Affordable Unit Development Costs Market Rate Prices: Net Development Cost per Affordable Unit $236,149 2 BR/2 BA(1) $275,000 Affordable Unit-Very Low Income na BMR Prices(50%AMI) Estimated Value per Affordable Unit-Low Income $0 2 BR/2 BA na Net Costs Per Affordable Unit $236,149 Total Affordable Unit Costs to Developer $0 Affordable Unit Costs as%of Total Development Costs 0.00% Development Costs Land(2) $720,000 NOTES: Construction Costs(Sq.Ft.)(3) $110 1)Based on estimates from developer forum conducted as part of this study. On and Off-Site Costs/Unit(4) $5,000 2)Assumes land costs of$45,000/unit. Permit&Fees/Unit(5) $7,500 3)Based on RS Means for product type. Other Soft Costs(6) 10% 4)Estimates based on review of recent multi-family projects in King County. Property Taxes on Land Improvements(7) 1.25% 5)Based on survey conducted by BAE in August,2000. Cost/Parking Space(8) $10,000 6)Estimate based on recent comparable King County projects. 7)1.25 percent ad valorem tax on hard cost value of improvements Assumes developer Construction Financing Costs(9) will pay an average of 50%of property taxes levied over the marketing period. Interest Rate 8% 8)Assumes small two car garage in each unit. Period of Initial Loan(months) 12 9)Construction Financing Costs based on following assumptions: Initial Construction Lan Fee(points) 2% Construction+On&Off Site Costs+Parking $2,529,600 Average Balance 60% Loan to Value Ratio 85% Amount of Loan $2,150,160 DeveloDer Eauitv $1.628.223 Table B-14: East County Townhouse Scenario with With 10% Affordable Units @ 50% AMI & 10% Density Bonu Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 16 Land $792,000 Site Size(acres) 1 Unit Construction Cost $2,342,560 Market Rate Units 14 On and Off-Site Cost $88,000 Below Market Rate Units(10%of baseline#) 2 Parking Costs $352,000 Market Bonus Units(10%of baseline#) 2 Building Permits&Fees $132,000 Total Units 18 Other Soft Costs $243,056 Property Taxes on Land/Improvements $17,391 Product Mix: Finance Costs: 2 BR/2 BA Market 16 Interest on Construction Loan $133,563 2 BR/2 BA Below Market 2 Points on Construction Loan $55,651 Unit Size 1,100 Parking Ratio 2 Total Development Costs $4,156,221 Parking Spaces in garages of units 35 Total Development Costs/Unit $236,149 Revenue From Sale of Units Project Size(Sq.Ft.): Sales Revenue $4,512,800 Units 19,360 Net Sales Revenue(less 5%sales/marketing) $4,287,160 Common Area 1,936 Developer Profit (Net Rev-Dev Costs) $130,939 Total Residential 21,296 Profit as Percent of Total Development Costs 3.2% Project Density(DU/AC) 16 Per Unit Market Rate Profit(@baseline land value) $38,851 FAR 0.5 Calculation of Affordable Unit Development Costs Market Rate Prices: Net Development Cost per Affordable Unit $236,149 2 BR/2 BA(1) $275,000 Sale Price for Affordable Unit $70,500 BMR Prices(50%AMI) Net Costs Per Affordable Unit -$165,649 2 BR/2 BA $70,500 ITotal Affordable Unit Costs to Developer -$265,038 NOTES: 1)Based on estimates from developer forum conducted as part of this study. Development Costs 2)Assumes land costs of$45,000/unit. Land(2) $792,000 3)Based on IRS Means for product type. Construction Costs(Sq.Ft.)(3) $110 4)Estimates based on review of recent multi-family projects in King County. On and Off-Site Costs/Unit(4) $5,000 5)Based on survey conducted by BAE in August,2000. Permit&Fees/Unit(5) $7,500 6)Estimate based on recent comparable King County projects Other Soft Costs(6) 10% 7)1.25 percent ad valorem tax on hard cost value of improvements. Assumes developer Property Taxes on Land Improvements(7) 1.25% will pay an average of 50%of property taxes levied over the marketing period. Cost/Parking Space(8) $10,000 8)Assumes small two car garage in each unit. 9)Construction Financing Costs based on following assumptions: Construction Financing Costs(9) Construction+On&Off Site Costs+Parking $2.782,560 Interest Rate 8% Loan to Value Ratio 85% Period of Initial Loan(months) 12 Amount of Loan $2,365,176 Initial Construction Lan Fee(points) 2% Developer Equity $1,791,045 Average Balance 60% Table B-15: Baseline South County For-Sale Housing Scenario Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 12 Land $114,000 Site Size(acres) 1 Unit Construction Cost $1,122,000 Market Rate Units 12 On and Off-Site Cost $60,000 Below Market Rate Units 0 Parking Costs $27,000 Market Bonus Units 0 Building Permits&Fees $90,000 Total Units 12 Other Soft Costs $118,200 Property Taxes on Land/Improvements $7,556 Product Mix: Finance Costs: 2 BR/2 BA Market 12.00 Interest on Construction Loan $49,327 2 BR/2 BA Below Market - Points on Construction Loan $24,180 Unit Size 1,000 Parking Ratio 1.50 Total Development Costs $1,612,263 Parking Spaces 18 Total Development Costs/Unit $134,355 Revenue From Sale of Units Project Size(Sq.Ft.): Sales Revenue $1,860,000 Units 12,000 Net Sales Revenue(less 5%sales/marketing) $1,767,000 Common Area 1,200 Developer Profit (Net Rev-Dev Costs) $154,737 Total Residential 13,200 Profit as Percent of Total Development Costs 9.6% Project Density(DU/AC) 12.00 Profit Per Unit $12,895 FAR 0.30 NOTES: Market Rate Prices: 1)Based on survey of currently selling condominium and townhouse projects in 2 BR/2 BA(1) $155,000 Renton&Federal Way. BMR Prices(50%AMI): 2)Assumes land costs of$9.500 per unit or about$2.60 per sf. 2 BR/2 BA na 3)Based on RS Means construction cost estimates for attached townhouse style units.. 4)Estimates based on review of recent multi-family projects in King County. 5)Based on survey conducted by BAE in August,2000. Development Costs 8)Estimate based on recent comparable King County projects. Land(2) $114,000 7)1.25 percent ad valorem tax on hard cost value of improvements. Assumes developer Construction Costs(Sq.Ft.)(3) $85 will pay an average of 50%of property taxes levied over the marketing period. On and Off-Site Costs/Unit(4) $5,000 8)Assumes surface parking.. Costs from recent comparable projects. Permit&Fees/Unit(5) $7,500 9)Construction financing costs based on following assumptions: Other Soft Costs(6) 10.0% Construction+On&Off Site Costs+Parking $1,209,000 Property Taxes on Land Improvements(7) 1.25% Loan to Value Ratio 85% Cost/Parking Space(8) $1,500 Amount of Loan $1,027,650 Developer Equitv $584,613 Construction Financing Costs(9) Interest Rate 8% Period of Initial Loan(months) 12 Initial Construction Lan Fee(points) 2% Average Balance 60% Table B-16: South County For-Sale Scenario With 10% Affordable Units @ 50% AN & 10% Density Bonus Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 12 Land $114,000 Site Size(acres) 1 Unit Construction Cost $1,234,200 Market Rate Units 11 On and Off-Site Cost $66,000 Below Market Rate Units(10%of baseline#) 1 Parking Costs $29,700 Market Bonus Units(10%of baseline#) 1 Building Permits&Fees $99,000 Total Units 13 Other Soft Costs $130,020 Property Taxes on Land/Improvements $8,312 Product Mix: Finance Costs: 2 BR/2 BA Market 12 Interest on Construction Loan $63,835 2 BR/2 BA Below Market 1 Points on Construction Loan $26,598 Unit Size 1,000 Parking Ratio 1.50 Total Development Costs $1,771,665 Parking Spaces 20 Total Development Costs/Unit $134,217 Revenue From Sale of Units Project Size(Sq.Ft.): Sales Revenue $1,944,600 Units 13,200 Net Sales Revenue(less 5%sales/marketing) $1,847,370 Common Area 1,320 Developer Profit (Net Rev-Dev Costs) $75,705 Total Residential 14,520 Profit as Percent of Total Development Costs 4.3% Project Density(DU/AC) 12 Per Unit Market Rate Profit(@baseline land value) $20,783 FAR 0.3 Calculation of Affordable Unit Development Costs Market Rate Prices: Net Development Cost per Affordable Unit $134.217 2 BR/2 BA(1) $155,000 Estimated Value per Affordable Unit $70,500 BMR Prices(50%AMI): Net Costs Per Affordable Unit -$63,717 2 BR/2 BA $70,600 Total Affordable Unit Costs to Developer -$76,460 NOTES: 1)Based on survey of currently selling condominium and townhouse projects in Renton&Federal Way.. Development Costs 2)Assumes land costs of$9,500 per Unit. Land(2) $114,000 3)Based on RS Means construction cost estimates for attached townhouse style Construction Costs(Sq.Ft.)(3) $85 units.. On and Off-Site Costs/Unit(4) $5,000 4)Estimates based on review of recent multi-family projects in King County. Permit&Fees/Unit(5) $7,500 5)Based on survey conducted by BAE in August,2000. Other Soft Costs(6) 10% 6)Estimate based on recent comparable King County projects. Property Taxes on Land Improvements(7) 1.25% 7)1.25 percent ad valorem tax on hard cost value of improvements. Assumes CosUParking Space(8) $1,500 developer will pay an average of 50%of property taxes levied over the marketing period. 8)Assumes surface parking. Costs from recent comparable projects. Construction Financin Costs(9) 9)Construction Financing Costs based on following assumptions: Interest Rate 8% Construction+On&Off Site Costs+Parking $1,329,900 Period of Initial Loan(months) 12 Loan to Value Ratio 85% Initial Construction Lan Fee(points) 2.0% Amount of Loan $1,130,415 Average Balance 60% 1 Developer Equity $641,250 Appendix C: Pro Forma with Parking Reductions 37 Table C-1: East County Rental Housing Scenario with 10%Affordable Units @ 50%AM 1, 10%Bonus&Parking Reduction Major Assumptions Pro Forma Analysis Characteristics of Project Development Pro-Forma Base Project Size(Units) 60 Land $1,950,000 Site Size(acres) 1 Unit Construction Cost $6,171,000 Market Rate Units 54 On and Off-Site Cost $198,000 Affordable Units(10%of baseline#) 6 Parking Costs $660,000 Market Bonus Units(10%of baseline#) 6 Building Permits&Fees $330,000 Total Units 66 Other Soft Costs $636,900 Product Mix: Property Taxes on Land/Improvements $43,931 2 BR/1 BA Market 60 Finance Costs: 2 BR/1 BA Affordable 6 Interest on Construction Loan $286,783 Unit Size(sq.ft.) 850 Points on Construction Loan $119,493 Parking Ratio 1.00 Total Development Costs $10,396.107 Parking Spaces 66 Total Development Costs/Unit $157,517 Project Size(Sq.Ft.): Value Stabilized Income(10) Units 56,100 Gross Potential Rent(100%Occupancy) $1,421,280 Common Area 5,610 Vacancy Rate 3.5% Total Residential 61,710 Gross Schdeulded Rent $1,371,535 Project Density(DU/AC) 66 Operating Expenses 35% FAR 1.4 Net Operating Income $874,087 Capitalization Rate 7.8% Market Rate Rents: Potential Market Value $11,278,545 2 BR/1 BA(1) $1,900 Developer Profit $882,437 BMR Rent Rates-Very Low Income: Profit as Percent of Total Development Costs 6.5% 2 BR/1 BA @ 30%of 50%AMI $740 Per Unit Market Rate Profit(@baseline land value) $27,016 BMR Rent Rates-Low Income: 2 BR/1 BA na Calculation of Affordable Unit Development Costs Development Cost per Unit $157,517 Development Costs Estimated Value per Affordable Unit-Very Low Income $74,477 Land(2) $1,950,000 Estimated Value per Affordable Unit-Low Income na Construction Costs(Sq.Ft.)(3) $100 Net Cost to Developer Per Affordable Unit $83,039 On and Off-Site Costs/Unit(4) $3,000 Total Affordable Unit Costs to Developer $498,236 Permit&Fees/Unit(5) $5,000 Affordable Unit Costs as Percent of Total Development Costs 4.79% Other Soft Costs(6) 10% Property Taxes on Land Improvements(7) 1.25% NOTES: Cost/Parking Space(8) $10,000 1)Reflects current rental rates for recently constructed properties in Bellevue&Redmond. 2)Assumes land costs of$32,500 per unit. Construction Financing Costs(9) 3)Based on IRS Means per product type. Interest Rate 8% 4)Estimates based on review of recent multi-family projects in King County. Period of Initial Loan(months) 12 5)Estimate based on survey conducted by BAE in August,2000. Initial Construction Lan Fee(points) 2% 6)Estimates based on recent comparable King County projects. Average Balance 60% 7)1.25 percent ad valorem tax on hard cost value of improvements. Assumes developer will pay an average of 50%of property taxes levied over the marketing period. 8)Assumes structured podium parking. Costs from recent comparable projects. 9)Construction Financing Costs based on following assumptions: Construction+On&Off Site Costs+Parking $7,029,000 Loan to Value Ratio 85% Amount of Loan $5,974,650 Developer Equity $4,421,457 10)Cap.Rate from Thomas Cain Apartment Value Trends;operating expenses from ULI Dollars&Cents of Mulitfamily Housina.2000. Metropolitan • is WWI Stats A 4i_ I I Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 This annual report summarizes local tools Highlights and incentives that promote new affordable housing in the Twin Cities area.This information was gathered Twin Cities area municipalities use a variety of fiscal tools to assist or facilitate the through a survey that was sent to every development or preservation of affordable or life-cycle housing: municipality in the seven-county Twin Cities area. The response rate for this . 70 municipalities, or 48 percent of survey respondents, used tax-increment survey was 81 percent(147 out of 182 financing (TI F) for affordable or life-cycle housing. communities responded). 61 municipalities, or 41 percent of survey respondents, used federal Community In accordance with the 1995 Livable • Development Block Grant(CDBG)funds for affordable or life-cycle housing. Communities Act(Minnesota Statutes, • 38 municipalities, or 26 percent of survey respondents, collaborated and section 473.254,subdivision 10),the participated with a community land trust or other non-profit organizations to Metropolitan Council is responsible for preserve long-term housing affordability. producing an annual report that includes Many Twin Cities municipalities conduct housing preservation or housing maintenance information on government,non-profit programs to maintain or improve their existing housing stock: and marketplace efforts in producing . 44 percent of municipalities returning a survey had a rental housing maintenance affordable and life-cycle housing. p p g y g code and enforcement program/initiative in 2007 or 2008. The goal of the Livable Communities Act • 38 percent of municipalities returning a survey had an owner-occupied housing (LCA)is to stimulate housing and maintenance code and enforcement program/initiative in 2007 or 2008. economic development in the seven- 53 municipalities reported reducing, adjusting, eliminating, waivingor flexibly metropolitan area.The LCA authorizes the Metropolitan Council to implementing a local official control, development, or building requirement in order to levy funds to create affordable housing, reduce development costs for affordable or life-cycle housing. The most common promote redevelopment through the adjustments to local controls reported in this year's survey were: clean-up of polluted sites,and develop • Setback reductions, used by 31 municipalities, or 21 percent of survey neighborhoods that are pedestrian and respondents; transit-friendly.Metro-area municipalities • Reduced lot sizes and widths, used by 22 municipalities, or 15 percent of survey participate in the Livable Communities respondents; Act program voluntarily.The a Parking variances, used by 21 municipalities, or 14 percent of survey respondents; requirements for eligibility to receive LCA and funding are:(1)that communities choose to participate in the program,(2)that they • Mixed-use developments, used by 21 municipalities, or 14 percent of survey negotiate affordable and life-cycle respondents. housing goals with the Metropolitan Other tools municipalities used to promote affordable family or senior housing included: Council,and(3)that they agree to invest local funds in implementing their local 029 municipalities, or 20 percent of survey respondents, reported approving the housing goals. development, reuse of, or municipal reinvestment in existing housing in 2007 or 2008 for future use as affordable family housing or senior housing. • 18 municipalities, or 12 percent of survey respondents, reported acquiring land in 2007 or 2008 to be held for the future development of new affordable family housing or senior housing. For questions on this report,contact: The following pages list how survey respondents report using fiscal tools and Joel Nyhus incentives to promote and preserve affordable and life-cycle housing in their ioel.nyhusC�metc.state.mn.us communities. ommunities. Publication No.74-10-006 METROPOLITAN COUNCIL ■ RESEARCH ■ 390 ROBERT STREET NORTH, ST. PAUL, MN 55101-1805 ■ WWW.METROCOUNCIL.ORG MetroStats Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion #6: Please identify local fiscal tools or initiatives that are available from the city to assist/facilitate the development or preservation of affordable or life-cycle housing. The identification of state and/or federal dollars is only applicable if the community could have used the dollars for activities other than affordable housing development or preservation. m U a) g a CL a E a 0 t Q >+ L rA !+ N C C C C 3 3 c 30 0' U a`) Z a �' a) m ° o m ° m V m CU M 3 o as c 'c Y > ca a� m o E E c m a'i ° c 0 � N 3 0 `m (7 0 '0 0 0 0 -00 0 c > > 0 W 0 E ° x o 3 3 Y E L E m ca E c Y > 3 0 0 c c c 0 (D 0 0 o m c cc — 0 c c o m m M cu t m m o 0 a) 0 0 0 Q Q Q m U U U U U W LL 2 2 J J J Z OO� U U U U 2 2 J 2 Z Z > Collaboration for long-term affordability' Community Development ®®®® Block Grant (CDBG) Credit enhancements General obligation bonds Housing ® X revenue bonds Land write-down ®®® ®® or sale Livable Communities ® ® ®® grants Local fee waivers or reductions Local property tax levy Local tax abatementent Tax Increment ®®®®®® ® ® ® Z im Financing (TIF) Taxable revenue bonds Other 'Collaboration and participation with a community land trust or other non-profit organization to preserve long-term affordability. 2 MLIROPULIIAN UOUNCIL 0 RESEARCH ■ 390 HUBERT STREET NORTH ST PAUL. MN 55101-1805 1 WV'NVMETROCOUNCIL.ORG Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion #6: Please identify local fiscal tools or initiatives that are available from the city to assist/facilitate the development or preservation of affordable or life-cycle housing. The identification of state and/or federal dollars is only applicable if the community could have used the dollars for activities other than affordable housing development or preservation. a_ L Q (A L 0. r�-� a a ,a 3 : 9 c (Ln 0 � t N N N c c t 3 m c c c c c o 3 2 o o c o cYi 3 3 ~ a� o o H a H I— co U o o m v �, 0 0 0 -FUa) c c o> _ F- L L }; c c a a c U a (n Y L CL C > c0 -0 -� L d Y y a a E •cL E E C a� Y -o c c 3 •� c u�i E E N 0 0 0 m ea a co m E co m (a > ca m 0 m c cu m o o a� a� m m o ° o L � a < M 0 W WWC� = x = CU _ � _, M zz � W OfU » � � = mmcU Collaboration for long-term ® ❑X affordability' Community Development® ®®Block Grant X X ® M M ® ONE (CDBG) Credit enhancements General obligation bonds Housing ® ®® revenue bonds Land write-down X or sale X ®® ® Livable Communities grants Localfee waivers or® ( ® X reductions Local property ® M E E tax levy Local tax abatement® X Tax Increment® ® ® ONE ® ® ON M Financing (TIF) Taxable revenue bonds Other 'Collaboration and participation with a community land trust or other non-profit organization to preserve long-term affordability. 3 MLTHOPOLITAN CUUNCIL 0 HE3EARCH 1 390 HOBEHT SHEET NORTH. ST PAUL, MN 55 10 1-1805 1 WVVIlINILTHOUOUNGIL r_�RG MetroStats Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion#6: Please identify local fiscal tools or initiatives that are available from the city to assist/facilitate the development or preservation of affordable or life-cycle housing. The identification of state and/or federal dollars is only applicable if the community could have used the dollars for activities other than affordable housing development or preservation. r U (0 N U N Y m N C > C to Y (0 C C ` N -0 O Q N J C C (n CU a) t � N C a. c M a c 3 w c C9 d o ca m o 0 0 c � a y '� U > N N C U N N Q a) N a Q -U U C_ _C C C C 3 coE L 0) C Q J o Z' m a) a x o o v o m m a� a� o o U) >, o o a .r UUo0LUUjW 2 22222222Mz00a W W W W W W Collaboration for long-term ® ®® ® ®® ®®®®® affordability' Community Development Block Grant®® ®® ON ® ®®®®®® ®®®® ®® (CDBG) Credit enhancements General obligation bonds Housing b ®® revenue bonds Land write-down X ®® or sale Livable Communities ® ® ® ® grants Local fee waivers or M ® ®® reductions Local property tax levy Local tax � abatement Tax Increment Financing (TIF)F)0N M ® MON ® ® ®®® ®®®® Taxable revenue bonds Other 'Collaboration and participation with a community land trust or other non-profit organization to preserve long-term affordability. 4 MLTHUPOLITAN COUNiCIL ■ RLSEARCH 0 390 ROBERT STREET NORTH, ST. PAUL, MN 55101- 1805 0 WWW NIL FHOCOUNCILORG MetroStats Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion #6: Please identify local fiscal tools or initiatives that are available from the city to assist/facilitate the development or preservation of affordable or life-cycle housing. The identification of state and/or federal dollars is only applicable if the community could have used the dollars for activities other than affordable housing development or preservation. n_ a a a s a t •c L -c a ran c N +U) Y 3 C 0 p Y N co 0 O m 3 c � rn � H 3 F' ~ c6 c c 3 ~ aD p(U c @C c 3 C O ~N YU O > = _ O N O M ca Co3 + �pO a c U Z (n ID YN 0 W c mN Um m a) � >, O E 0) E N 7 � � A - O Cc O �M 0 0 O J [L �) � ° z `M <',L0 _jJ2MzzW %) ) W mM0C aiinNC Collaboration for long-term ® ® ®®® affordability' Community Development Block Grant ®!1Z ®®®® X (CDBG) Credit enhancements General obligation bonds Housing ®® revenue bonds Land write-down ® X or sale Livable Communities M ®®®® ® N grants Local fee waivers or reductions Local property tax levy Local tax abatement Tax Increment(TIF) Financing TIF) ®® ®®®®® ® ®®®® M N Taxable revenue bonds Other M ® i N 'Collaboration and participation with a community land trust or other non-profit organization to preserve long-term affordability. 5 h4ETRUPULIT/1N CGUNGI'_ 5 HESLAHCfI 0 390 HU3ERT STREET tJCUH'H, Sf. F'AUl_, MN 5510I.1805 0 EIHCJ�'rJUNr�IL_(�I�f, MetroStats Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion #6: Please identify local fiscal tools or initiatives that are available from the city to assist/facilitate the development or preservation of affordable or life-cycle housing. The identification of state and/or federal dollars is only applicable if the community could have used the dollars for activities other than affordable housing development or preservation. a a c r_ CL ° 3 3 0 t Lu, w w H 0 c (D 0 0 rn o c m c 0 0 0 0 s _ co N 'Y a+ Y > O C N aJ c ° ° C `m a� as °? J •� Y 0, t c a 0 rn N U 0 W N m 0 Q70 c cc Z N .+ 0 O C ? N N N Y Y N CL �C�pp —�i 41 O L Q N N O N O 7 (p fD (d (a a) M M C +: U +. O — 0 (Z U) Q m CO 0 0 LL (9 0 2 J J J M Z 0 0 d W CO Collaboration for long-term® ® ®®® affordability' Community Development Block Grant® I� ®® ® ®® (CDBG) Credit enhancements General obligation bonds Housing revenue bonds Land write-down or sale Livable Communities grants Local fee waivers or reductions Local property M tax levy -- Local tax abatement Tax Increment ® ® ® ® ® ®®®® Financing (TIF) Taxable revenue bonds Other 'Collaboration and participation with a community land trust or other non-profit organization to preserve long-term affordability. 6 ME I'HOPOLFTAN COUNCIL ■ RLSLARGI I 0 390 ROBERT STRLLT NUM H ST PAUL. MN 55101-1605 9 WWW-NAL THOCOUNCIL.UHG ctroStats Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion#7: Please identify examples during 2007 and 2008 in which the municipality reduced, adjusted, elminated, waived, or in some fashion was flexible in the implementation of a local official control, development, or building requirement; OR for which it is the municipality's policy and practice to reduce, adjust or eliminate such requirement, when requested to do so, to reduce development costs for the development of affordable or life-cycle housing. ° a a 12 rn = o 3 o aa) o � m C Y ~ C > V ~ y y C m Z a n - W m ° ° o m ° a co ° 3 m c �° ° m P_ 3 ° m _� c °c c o m m m m m m Q Q Q m U U U U U W LL 2 2 J J Z OG� U U U U 2 2 J Z 00 0 00 co Year developed o 0 0 0 0 0 0 N N N CD N N N N Allow alternate construction methods Cluster development Density bonus system Density transfers Floor area ratio waiver Inclusionary housing requirement Increased building height flexibility Mixed-use development Parking variances Private street allowances Reduced lot sizes and widths Setback reductions ®®® Service availability charge (SAC) credits Soil corrction variance Special or conditional use ®® permits Street width reduction variance Other 7 METROPOLITAN COUNCIL 0 RESEARCH 0 390 ROBERT STREET NORTH. ST PAUL, MN 55101•1805 0 WWVJ METROCOUNCIL ORG Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion#7: Please identify examples during 2007 and 2008 in which the municipality reduced, adjusted, elminated, waived, or in some fashion was flexible in the implementation of a local official control, development, or building requirement; OR for which it is the municipality's policy and practice to reduce, adjust or eliminate such requirement, when requested to do so, to reduce development costs for the development of affordable or life-cycle housing. m U N Q E g t a t a a Q L a Q a y L t W L (n � C � 3 :E !EC C N L � c o = ~ c c o 3 = 3 o m >o F- c o ° 0 o o 0) � > = o v m m 3 U m H F- m c = co 2 N m m A? a a o .: o C9 - o 0 O N c c O to > CL) N m > O .. rn N +� •• c N cA 16 m m �°c a E u m .a E E c"n 0 Y c c 3 c c umi z° > � � � o ¢ m' ciwww' c9 = i = EJJ2 ZZ W WOfcoo > "01" co00 co co CC) 00 Year developed 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N Allow alternate construction methods Cluster development Density bonus system Density transfers Floor area ratio waiver Inclusionary housing requirement Increased building height flexibility Mixed-use development Parking variances Private street allowances Reduced lot sizes and widths Setback reductions Service availability charge (SAC) credits Soil corrction variance Special or conditional use permits Street width reduction variance Other 8 METROPOLITAN COUNCIL ■ RESEARCH ■ 390 ROBERT STREET NORTH ST. PAUL. MN 55101-1805 ■ WWW.METR000UNCIL ORG MetroStats Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion#7: Please identify examples during 2007 and 2008 in which the municipality reduced, adjusted, elminated, waived, or in some fashion was flexible in the implementation of a local official control, development, or building requirement; OR for which it is the municipality's policy and practice to reduce, adjust or eliminate such requirement, when requested to do so, to reduce development costs for the development of affordable or life-cycle housing. a a c t s c c CU O c - T o Y FO- H m m U c m M C A? _ > cvc , , aO m wC Co Ccoa c a o .h My o a) o C c3 oYY �a ° Ua m m o 0 m c O N N N N N NY Y E O O O Q a N C_ C C C C CU a) N N o m� -a -O X O O "6 p m M N O > x mmm000aoLULuLu 9C9 = S _J2 � � � � � Year developed o 0 0 0 0 0 0 0 0 N N N N N N N N N Allow alternate construction methods Cluster development Density bonus system ® ® ®® Density transfers Floor area ratio waiver Inclusionary housing requirement Increased building height flexibility Mixed-use development ®® Parking variances Private street allowances Reduced lot sizes and widths Setback reductions Service availability charge (SAC) credits Soil corrction variance Special or conditional use permits Street width reduction variance Other 9 METROPOLITAN COUNCIL 0 RESEARCH 1 390 ROBERT STREET NORTH ST PAUL, MN 55101.1805 0 WWW METRUCOUNCIL ORG M Clol"()Stats : Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion#7: Please identify examples during 2007 and 2008 in which the municipality reduced, adjusted, elminated, waived, or in some fashion was flexible in the implementation of a local official control, development, or building requirement; OR for which it is the municipality's policy and practice to reduce, adjust or eliminate such requirement, when requested to do so, to reduce development costs for the development of affordable or life-cycle housing. c 42 c LCD U iu a1 0 r v N a 0 w ca c �, — = Y 0 c 0 rn �: N 2 N75 O N O N C N a) N N c c u) E � 0 c Q � >, 0 E m � E '0 a) a � 3 � w a 0 -co c O 0 c 2z0Oa � wofcou) 05 �: W Qii (93 � 22zzW0) cco > Year developed 0 0 0i:Z 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N Allow alternate construction methods Cluster development® X Density bonus system Density transfers Floor area ratio waiver Inclusionary housing requirement Increased building height flexibility Mixed-use development ® ®®® Parking variances ® ®® ®®® Private street allowances® Reduced lot sizes and widths ® ®® ®® Setback reductions® ® ® ®® ® ®®® Service availability charge (SAC) credits Soil corrction variance Special or conditional use permits Street width reduction variance Other 10 METROPOLITAN COUNCIL 0 RESEARCH 0 390 ROEIERT STREET NORTH. ST. PAUL, MN 55101-1805 1 WWW.METR000UNCIL ORG MctroSt ts r Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion#7: Please identify examples during 2007 and 2008 in which the municipality reduced, adjusted, elminated, waived, or in some fashion was flexible in the implementation of a local official control, development, or building requirement; OR for which it is the municipality's policy and practice to reduce, adjust or eliminate such requirement, when requested to do so, to reduce development costs for the development of affordable or life-cycle housing. L N a N a y w C d L 3 3 n 3 3 Q t w n 3 3 3 'o N 45 y 3 3 W O N 3 0 ~ a) C Y O O {- Y O m m V O CCN ~ C 2 O N N a J C ` C a) Y J O N N .+ V a aD m � Z c w 0) 0 0) r o o rn m U > > v N O N Y N (0 0 0 0 'C (6 �: L Q l>f N M O N O fn m m U U W 2 _ J Z d W fn W co Q 00 m U LL C9 U' 2 Year developed o 0 0 0 0 0 N N N N N N Allow alternate construction methods Cluster development Density bonus system Density transfers Floor area ratio waiver Inclusionary housing requirement Increased building height flexibility Mixed-use development Parking variances Private street allowances Reduced lot sizes and widths Setback reductions Service availability charge (SAC) credits Soil corrction variance Special or conditional use -_ permits Street width reduction variance Other 11 METROPOLITAN COUNCIL ■ RESEARCH ■ 390 ROBERT STREET NORTH ST PAUL, MN 55101.1805 0 WWVV METROCOUNCIL ORG Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion#7: Please identify examples during 2007 and 2008 in which the municipality reduced, adjusted, elminated, waived, or in some fashion was flexible in the implementation of a local official control, development, or building requirement; OR for which it is the municipality's policy and practice to reduce, adjust or eliminate such requirement, when requested to do so, to reduce development costs for the development of affordable or life-cycle housing. a L T L V 0 � l0 O U) N COd Y W N N p O 00 N (n N J C Y Al Y Y Y N d 3 N O C _ JJJ2zOOa (n (n (n � � � co c Year developed o 0 0 0 0 0 N N N N N N Allow alternate construction methods Cluster development �1 Density bonus system Density transfers Floor area ratio waiver Inclusionary housing requirement Increased building height flexibility Mixed-use development Parking variances Private street allowances Reduced lot sizes and widths Setback reductions Service availability charge (SAC) credits Soil corrction variance Special or conditional use permits Street width reduction variance Other 12 ME 1 ROPOLITAN COUNCIL 0 RESEARCH ■ 390 ROBERT STREET NORTH S1 PAUL. MN 55101.1805 a WWW METROCOUNCIL.ORG MetroStats ' Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion #8: Please list up to five housing preservation/maintenance activities your community has used in 2007 or 2008 that maintain or improve its existing housing stock. For example, a housing maintenance code and enforcement program, or a home rehabilitation program. County-administered programs are applicable. a a a � r c 3 >, ' ai = a 5 0 o m c o a � H m 0 a� c 0 a r a) c o H > H c E `m E a� T m o m o a o C` a m m m 0 3 a`) Y > m a) a) a� E E c m o f a J 0 C7 co y L �c n o o C� o �° o c c ` > > o v - E o .X o 3 3 Y E Z E m m E c Y >. 3 c c c - a) 0 0 o m •c m = � c c o m m m m � s Co m m m m Q Q Q oo U U U U U W LL = = J J J Z O 1r U U U U 2 2 J M Z Housing o ®®® ® ®®® ® ®® maintenance code and enforcement o ®®® M M ® ®® N Owner Housing g X X® ® ® ®®® rehabilitation `V loan or grant program o ®®® ® ® ®®® X N OD Housing o ®®®®®® ®®® ® X ®® maintenance code and n enforcement o ®®®® ix ®®® X N N Rental Housing o ®®® rehabilitation `4 loan or grant I- program o ®®® N CD C) NZ ® ® z Local tool N sharing center or program o 0 ®X ® M N Acquisition/ o ®® ® ® X rehabilitation N resale initiative or o program N co 0 0 N Other C 0 N 13 METROPOLITAN COUNCIL ■ RESEARCH 1 390 ROSERT STREET NORTH. ST, PAUL, MN 55101-1805 1 WWW.ME 1 ROCOUNCIL.ORG MefroSt ts I Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion #8: Please list up to five housing preservation/maintenance activities your community has used in 2007 or 2008 that maintain or improve its existing housing stock. For example, a housing maintenance code and enforcement program, or a home rehabilitation program. County-administered programs are applicable. co U N a N a L a a O> N a a 'a 0 3 > >. Y c c 12 0 = 3 0 m H e 0 0 3 3 a� 0 0 0 0 0 m _ > o o V m — W ~ ~ o o rn a) a� M cB .0 `m a s 0 uj •o 0 '� 0 c u>i a? m Co c a a .S '> co °a a ~ m 00 v° m s — o coo m m a " m m E � m m coo > e >. (D Q a3i c m m o 'o a� z > � IS Q OO U W W W (7 2 2 2 C J J z z W' 0= 0_ (A > Housing 0 ® ®® maintenance code and enforcement o ® ®® N Owner co Housing o ®® ®® �® ®® rehabilitation `V loan or grant r program g ®® X ®® M ®® ® ®® N Housing 0 ®®® X ®® ® X ® ® ®® maintenance `" code and r— enforcement o ®®® X ®® X N Rental Housing o ® ®® rehabilitation loan or grant _ program 0 ®® N 00 Local tool N ®® sharing center or program 0 ®® 0 N Acquisition/ o rehabilitation N resa le initiative or 0 program N co 0 ® ®® N Other N 14 M E I ROPOLITAN COUNCIL 0 RESEARCH 0 390 ROBERT STREET NORTH, ST PAUL, MN 55101•1605 0 WWW.METR000UNCIL.ORG MetroStats Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion #8: Please list up to five housing preservation/maintenance activities your community has used in 2007 or 2008 that maintain or improve its existing housing stock. For example, a housing maintenance code and enforcement program, or a home rehabilitation program. County-administered programs are applicable. _a _a L L �+ �+ C C C N O O 7 C ? U Y m C N I- H N U O N N C .� O C > C J C N N C C d C .. U a O ` f0 -o ° N O .� J -se C CL a c L d y C c c S N o N N 'U C O 0 0 Y Y N M O d 0 00 t Z N o ' M 'o O X O N N D -0 O M N a) N C C C 2 m M m 0 0 0 0 0 W W W U' C7 U� 2 J 2 Housing o ® ®®®® maintenance `14 code and enforcement I,- ® ®®®® N Owner Housing g rehabilitation loan or grant program o X MMM X ®® ® ®® N Housing g ®®®® ®® maintenance "' code and enforcement o ®®® ® ®® N Rental Housing o X z ® ® X rehabilitation loan or grant program o IX ® X N 00 N C) L� ®® ® ® M ®® Local tool N sharing center or program o 0 ® ®® X ® X N Acquisition/ o rehabilitation N resa le initiative or o program N 00 o ® ® ® ®® N Other o ® ®® ® ® M N 15 METROPOLITAN COUNCIL 2 RESEARCH 1 390 ROBERT STREET NORTH. ST PAUL, MN 55101.1805 5 WWW METROCOUNCIL ORG MetroStats Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion#8: Please list up to five housing preservation/maintenance activities your community has used in 2007 or 2008 that maintain or improve its existing housing stock. For example, a housing maintenance code and enforcement program, or a home rehabilitation program. County-administered programs are applicable. C w c 0 r �c >, ° M iu a) cu c a. L) N �, m m m o j L a 3 2 O Cc C a- X C m cc N C a) w � C 3 oco E m rn •c Q >, o Ea) E a te 3 C o a 2 2 z 00 a a of a W cn U) W Q LL 0 z z WO co c/n > Housing 0 ®®® ®®® ®® ®®®® ®® ®® maintenance code and enforcement o ®®® ®®® ®® ®®® ®® ®® N Owner 00 Housing o MMMM® ®®® ® ®®® ®®® rehabilitation loan or grant program 0 ®®®®®®® ®®® ®®®® ®®®®®®®® N Housing 0 M ®®® ®®® MMM ®®®®®®®® maintenance code and enforcement 0 ®® ®®® ® ®® ®® N Rental Housing o M ® ® ®® ®®® rehabilitation loan or grant _ program o ® ® ®®® ®®M N 00 o ®®®® ® ® ®®® ®®® Local tool N sharing center or program o 0 M m m ® ® ®® ®®® N Acquisition/ o ® ® ® ® ® ®® ®® rehabilitation N resale initiative or o ® ® X program N 00 0 N Other 0 0 N 16 ME ROPOLI VAN COUNCIL 0 RESEARCH 0 390 ROBERT STREET NORTH ST. PAUL, MN 55101•1805 2 WWW METROCOUNCIL ORG Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion #8: Please list up to five housing preservation/maintenance activities your community has used in 2007 or 2008 that maintain or improve its existing housing stock. For example, a housing maintenance code and enforcement program, or a home rehabilitation program. County-administered programs are applicable. a o_- a s a 9- a L L L L L 0 a 0 o Q w c n o w a) c 3CL c 3 a) ° 3 3 0 L c � 0 3 0 0 m` c c 3 0 F- 0 (� c 0 c 0 F- F- 3 a) ~ c 3 > c m o a� L 3 0 0 0 aD 0 0 0 0 a) a) O f0 >, CU 3 F- ~ a) Y a) N ~ Y O M co ELJ C = a) J C J f', a) Y a7 'p O a) Y N : — M J Y C N C CD d 0 a) E C >, O L L 0 a3 Y a) (0 O O a) .9 m _; L a of a) M O N 0 N N m cn mm ()) Uw = -, � Jzacncncncn ¢ mm00LL (D (Dx Housing o maintenance code and enforcement o X N Owner Housing o ®® mom ®® ®® rehabilitation loan or grant r program o ®® ®®® ®® ®® N 00 Housing o N X maintenance code and enforcement o ®® N Rental Housing o XX rehabilitation loan or grant program 00 XM X M N 00 O Local tool N sharing center or program o 0 N Acquisition/ o rehabilitation 0 resale initiative or o program 0 00 N Other c 0 0 17 METRUPOLITnN C rOUNUIL 0 RES3LAR0H 0 390 RUBLHT STREET NOR?H ST PAUL, MN 55101-1805 1 WN'AIN�IETHOUOUNUIL OP6 Tools and Incentives to Promote Affordable Housing in the Twin Cities February 2010 Criterion#8: Please list up to five housing preservation/maintenance activities your community has used in 2007 or 2008 that maintain or improve its existing housing stock. For example, a housing maintenance code and enforcement program, or a home rehabilitation program. County-administered programs are applicable. a o c in v� Y m O U) v 2 rn ca a o Y o Y w ° o CQD) a. - aacn my r Ev JJ 2 CU J z 0 0 MWcoonU) Housing o ® ®® maintenance code and _ enforcement oo N Owner Housing o ® ®® rehabilitation loan or grant program o ®® N Housing o ® ®® maintenance `*4 code and r-- enforcement o ®® N Rental Housing o ® ®® rehabilitation N loan or grant n program o N O O Local tool N sharing center or program o O N Acquisition/ o rehabilitation N resale initiative or o program N w 0 N Other C 0 0 N 18 METROPOLITAN COUNCIL 0 RESEARCH ■ 390 ROeERT STREET NORTH, ST. PAUL, MN 55101-1805 6 WWW.METR000UNCIL.ORG i etroStats Local Tools and Incentives to Promote Affordable Housing February 2010 Criterion#10 In 2007 or 2008, did your community In 2007 or 2008, did your community approve acquire land to be held for the development the development, reuse of, or municipal of new affordable family housing or any reinvestment in existing housing for future use senior housing (exclusively 55+) but for as affordable family housing or senior housing which no housing units have been where the development has not yet been constructed or started? undertaken or completed for reasons beyond the municipality's control? Yes Yes 2007 2008 2007 2008 Anoka County Andover Anoka Blaine Centerville [] Circle Pines Columbia Heights ] Columbus Coon Rapids East Bethel Fridley ® 0 Ham Lake Hilltop Lexington Lino Lakes Linwood Township Nowthen Oak Grove Ramsey Carver County Camden Township Chanhassen Chaska Hamburg Hancock Township Laketown Township Mayer New Germany Norwood Young America Victoria Waconia Waconia Township Watertown Dakota County Apple Valley Burnsville Castle Rock Township Eagan Empire Township Eureka Township 19 METROPOLITAN COUNCIL ■ RESEARCH ■ 390 ROBERT STREET NORTH, ST PAUL, MN 55101-1805 ■ WWW_METROCOUNCIL.ORG Local Tools and Incentives to Promote Affordable Housing February 2010 Criterion#10 In 2007 or 2008, did your community In 2007 or 2008, did your community approve acquire land to be held for the development the development, reuse of, or municipal of new affordable family housing or any reinvestment in existing housing for future use senior housing (exclusively 55+) but for as affordable family housing or senior housing which no housing units have been where the development has not yet been constructed or started? undertaken or completed for reasons beyond the municipality's control? Yes Yes 2007 2008 2007 2008 Eureka Township Greenvale Township Hampton Hampton Township Hastings Inver Grove Heights Lakeville Lilydale Mendota Mendota Heights New Trier Nininger Township Randolph Randolph Township Rosemount South St. Paul Vermillion Vermillion Township Waterford Township West St. Paul Hennepin County Bloomington Brooklyn Center Brooklyn Park Champlin Corcoran Crystal Dayton Deephaven Eden Prairie Edina Excelsior Golden Valley Greenfield Greenwood Hopkins Independence Loretto Maple Grove Maple Plain Medicine Lake 20 MUROPOLIIAN COUNCIL. ■ RESEAHCH ■ 390 RUBLRr SIRLLI NUR1H. t3f PAUL, MN 55101-1805 ■ YdWi AIETROCOUNCIL.ORG MetroStats Local Tools and Incentives to Promote Affordable Housing February 2010 Criterion#10 In 2007 or 2008, did your community In 2007 or 2008, did your community approve acquire land to be held for the development the development, reuse of, or municipal of new affordable family housing or any reinvestment in existing housing for future use senior housing (exclusively 55+) but for as affordable family housing or senior housing which no housing units have been where the development has not yet been constructed or started? undertaken or completed for reasons beyond the municipality's control? Yes Yes 2007 2008 2007 2008 Medina Minneapolis Minnetonka Minnetonka Beach Minnetrista Mound ® v, New Hope Orono Osseo Plymouth Richfield Robbinsdale Rogers Spring Park St. Anthony St. Louis Park Wayzata 0 Woodland Ramsey County Arden Hills Falcon Heights Gem Lake Lauderdale Little Canada Maplewood Mounds View New Brighton North St. Paul Roseville St. Paul Shoreview Vadnais Heights White Bear Lake 0 White Bear Township Scott County Belle Plaine Township Blakeley Township Cedar Lake Township Credit River Township Elko New Market 21 METROPOLITAN COUNCIL ■ RESEARCH ■ 390 ROBERT STREET NORTH, ST. PAUL, MN 55101-1805 0 VM V.METROCOUNCIL.ORG Local Tools and Incentives to Promote Affordable Housing February 2010 Criterion#10 In 2007 or 2008, did your community In 2007 or 2008, did your community approve acquire land to be held for the development the development, reuse of, or municipal of new affordable family housing or any reinvestment in existing housing for future use senior housing (exclusively 55+) but for as affordable family housing or senior housing which no housing units have been where the development has not yet been constructed or started? undertaken or completed for reasons beyond the municipality's control? Yes Yes 2007 2008 2007 2008 Helena Township Jackson Township Jordan 0 Louisville Township New Market Township Prior Lake Savage Shakopee Spring Lake Township St. Lawrence Township Washington County Afton Bayport Baytown Township Cottage Grove Denmark Township Forest Lake 0 Grant Grey Cloud Township Hugo Lake Elmo Lakeland Lakeland Shores Mahtomedi Newport Oak Park Heights Oakdale Pine Springs St. Paul Park Scandia Stillwater West Lakeland Township Willernie Woodbury 22 METROPOLITAN COUNCIL ■ RESEARCH ■ 390 ROBERT STREET NORTH, ST, PAUL, MN 551 01-1 805 ■ WWW.METROCOUNCIL.ORG city of sAn Luis oaispo JunE Zoos zonlnG RCGuldtions Chapter 17.90: Affordable Housinq Incentives Sections: 17.90.010 Purpose. 17.90.020 Definitions. 17.90.030 Standard incentives for housing projects. 17.90.040 Standard incentives for conversion of apartments to condominium projects. 17.90.050 Alternative or additional incentives. 17.90.060 Relationship to other city procedures. 17.90.070 Agreements for affordable housing. 17.90.080 Fees. 17.90.090 Affordability standards. 17.90.100 Occupant screening. 17.90.010 Purpose. The purpose and intent of this chapter is to encourage housing projects which incorporate units affordable to very-low, lower, and moderate income households, and qualifying seniors, and which conform to city development policies and standards, by providing density bonuses, or other equivalent incentives, as required by California Government Code Section 65915, et seq. (Ord. 1282 § 2, 1995; Ord. 1035 § 1 (part), 1985) 17.90.020 Definitions. For the purposes of this chapter, the following words and phrases shall have the meaning set forth below: A. "Density" means residential density as defined in Section 17.16.010 of this code. B. "Density bonus" means a density increase of at least twenty-five percent over the maximum density otherwise allowable under the zoning regulations. C. "Director" means the community development director or his or her authorized representative. D. "Lower income households" shall have the meaning set forth in California Health and Safety Code, Section 50079.5; provided the income of such persons and families shall not exceed eighty percent of the median income within the county. E. "Very-low income households" shall have the meaning set forth in California Health and Safety Code, Section 50105. F. "Moderate income households" shall include those persons and families whose incomes exceed eighty percent but are less than or equal to one hundred twenty percent of the median income within the county. pac,E 177 city of San Luis OBISpO zoninc, aecjulations June Zoos G. "Affordable" shall mean residential rent costs or sales prices which conform to the standards issued by the director and updated periodically to reflect state and/or federal housing cost indices. (Ord. 1282 §2, 1995; Ord. 1035 § 1 (part), 1985) 17.90.030 Standard incentives for housing projects. A. This section shall apply only to housing projects consisting of five or more dwelling units. B. When a developer agrees to construct at least twenty percent of the units otherwise allowable under the zoning regulations for persons or families of lower or moderate income, the director shall grant the developer, upon the developer's request, a density bonus equivalent to an increase in density of at least twenty-five percent over the density otherwise allowed by the zoning regulations; and the developer shall be eligible to receive at least one of the development incentives described in Section 17.90.050. C. When a developer agrees to construct at least ten percent of the units otherwise allowable under the zoning regulations for very-low income households, the director shall grant the developer, upon the developer's request, a density bonus equivalent to an increase in density of at least twenty-five percent over the density otherwise allowed by the zoning regulations; and the developer shall be eligible for at least one of the development incentives described in Section 17.90.050. D. When a developer agrees to construct at least fifty percent of the total dwelling units in a residential project for qualifying senior residents, as defined in Section 51.3 of the Civil Code, the director shall grant the developer, upon the developer's request, a density bonus equivalent to an increase in density of at least twenty-five percent over the density otherwise allowed by the zoning regulations; and the developer shall be eligible to receive at least one of the incentives described in Section 17.90.050. E. If a developer agrees to construct housing for two or more of the categories listed in Section 17.90.030.(B), (C), and (D) above, the developer shall be entitled to a density bonus of at least twenty-five percent and shall be eligible to receive at least one of the development incentives described in Section 17.90.050. The city may, upon the developer's request, negotiate additional incentives in exchange for the increased provision for affordable housing. F. The developer may submit a preliminary proposal for the development of affordable housing prior to the submittal of any formal requests for general plan amendments, zoning amendments or subdivision map approvals. The city council shall, within ninety days of receiving a written preliminary proposal, notify the housing developer in writing of the procedures under which the city will comply with this chapter. G. Any request for a density bonus or other incentives shall be in writing, and shall include the following information, as well as any additional information required by the director: 1. The name of the developer; 2. The location of the proposed project; 3. The density allowed under the zoning regulations, as well as the proposed density; pace 178 city of san lulls oBispo junE 2008 zonlnc, nequLations 4. The number and type (bedroom count) of dwellings and identification of those dwellings which are to be affordable to each household income category; 5. Whether the dwellings will be offered for sale or for rent; 6. The proposed sales price, financing terms, rental rates or other factors which will make the dwellings affordable to very-low, lower and moderate income households. (Ord. 1282 §2, 1995; Ord. 1035 § 1 (part), 1985) 17.90.040 Standard incentives for conversion of apartments to condominium projects. A. When an applicant for approval to convert apartments to condominium units agrees to provide at least thirty-three percent of the units of the proposed condominium project to households of lower or moderate income, or fifteen percent of the units of the proposed condominium project to very-low income households, and agrees to pay for the reasonable, necessary administrative costs incurred by the city pursuant to this section, the director shall grant a density bonus equivalent to an increase in the units of twenty-five percent over the number of apartments, to be provided within the existing structure or structures proposed for conversion; provided, the director may place such reasonable conditions on the granting of the density bonus as he or she finds appropriate including, but not limited to, conditions which assure continued affordability of units to the targeted income groups or qualifying seniors. B. Nothing in this section shall be construed to require the city to approve a proposal to convert apartments to condominiums. C. An applicant shall not be eligible for a density bonus under this section if the apartments proposed for conversion constitute a housing development for which a density bonus or other incentives were provided under Sections 17.90.030 or 17.90.050. D. The city shall grant the developer's request for development incentive(s) unless the city council makes written findings of fact that the additional incentive(s) are not required to achieve affordable housing objectives as defined in Section 50062.5 of the Health and Safety Code, or to ensure that rents for the targeted dwelling units will be set and maintained in conformance with city affordable housing standards. (Ord. 1282 § 2, 1995; Ord. 1035 § 1 (part), 1985) 17.90.050 Alternative or additional incentives. A. When a developer agrees to construct housing for households of very-low, lower or moderate income households, or for qualifying senior households, and desires an incentive other than a density bonus as provided in Section 17.90.030 of this chapter, or when an applicant for approval to convert apartments to a condominium project agrees to provide housing for households of very low, lower, or moderate income, or for qualifying senior households, and desires an incentive other than a density bonus as provided in Section 17.90.040, the developer or the applicant shall submit a proposal for consideration by the council. B. If the proposal is submitted by a developer of a housing project, the proposal shall include information set forth in Section 17.90.030 (G), as well as a description of the requested incentive, an estimate of the incentive's financial value in comparison with the financial of the density bonus allowed in Section 17.90.030, as well as the basis pagE 179 city of san lulls oalspo zonrnc Recutations June 2008 for the comparison estimate. Alternative incentive proposals may include but are not limited to one or more of the following: 1. Density bonus in excess of that provided in Section 17.90.030; 2. Waiver of application and processing fees; 3. Waiver of utility connection or park land in-lieu fees or park land dedication requirement; 4. City funded installation of off-site improvements which may be required for the project, such as streets or utility lines; 5. Write-down of land costs; 6. Direct subsidy of construction costs or construction financing costs; 7. Approval of exceptions to subdivision or zoning property development standards, but only to the extent that such exceptions would be authorized by relevant provisions of this code; provided, that any proposal for an incentive which requires a direct financial contribution from the city shall also include provisions for assuring continued availability of designated units at affordable rents or sales prices for a period of not less than thirty years, or as otherwise required by state law. 8. Provide other incentives of equivalent financial value to a density bonus based upon the land cost per dwelling unit. C. If the proposal is submitted by an applicant for approval to convert apartments to a condominium project, the proposal shall include those relevant items set forth in Section 17.90.030 (G), plus the requested incentive, an estimate if the incentive's financial value in comparison with the financial value of the density bonus as set forth in Section 17.90.040, and the basis for the comparison estimate. Nothing in this section shall be construed to require the city to provide cash transfer payments or other monetary compensation. The city may reduce or waive requirements which the city might otherwise apply as conditions of conversion approval. D. Nothing in this section shall be construed to require the council to approve any alternate incentive. The developer or applicant has the standard incentive of a density bonus under Sections 17.90.030 and 17.90.040 if the council fails to approve an alternative incentive. E. The council action on any alternative incentive proposal shall be by resolution. Any such resolution shall include findings relating to the information required in subpart B or C of this section. F. The council shall respond to a proposal within ninety days after submittal of a complete proposal. The city clerk shall notify the developer or the applicant of the council's response. Should the council fail to approve a proposal for alternative incentives within ninety days after submittal of a complete proposal, the proposal shall be deemed denied, and the city clerk shall so advise the developer or applicant in writing. (Ord. 1282 §2, 1995; Ord. 1035 § 1 (part), 1985) pace tso city Of sAn Luis OBISPO Julie 2008 zoni c, 12eGuldtions 17.90.060 Relationship to other city procedures. A. Projects incorporating affordable housing and receiving density bonuses, incentives, or alternative incentives as provided in this chapter shall receive high priority processing, to the extent allowed by law. Operation of Sections 17.90.030 or 17.90.040, or approval of alternative incentives as provided in Section 17.90.050 shall not be construed as a waiver of standard development review procedures or an exemption of the project from city development standards other than those explicitly listed in the approving resolution. Should a project fail to receive any required city approval, the density bonus or alternative incentive granted under this chapter shall be null and void. B. Applications of Sections 17.90.030 and 17.90.040 to projects shall be ministerial acts for purposes of environmental review. Environmental documents need not be filed solely for recordation of agreements concerning the density bonus and provision of affordable housing. Normal environmental review procedures shall apply to the project applications. C. If the council approves an alternative incentive as provided in Section 17.90.050, such approval shall be subject to and conditioned upon an environmental determination being made for the project in the usual manner. The community development department shall outline for the council any probable, significant environmental effects which would result from the proposed incentive. (Ord. 1282 §2, 1995; Ord. 1035 § 1 (part), 1985) 17.90.070 Agreements for affordable housing. Prior to the issuance of construction permits for any project incorporating a density bonus or other incentive as provided in this chapter, the city and the project owner(s) shall enter into an agreement in a form acceptable to the city attorney, to be recorded in the office of the county recorder. The agreement shall specify mechanisms or procedures to assure the continued affordability and availability of the specified number of dwelling units to very- low, lower, and moderate income households and/or qualifying seniors. The agreement shall also set forth those items required by Section 17.90.030 (G) of this chapter or any alternative incentives granted pursuant to Section 17.90.050 of this chapter. The agreement shall run with the land and shall be binding upon all heirs, successors or assigns of the project or property owner, and shall ensure affordability for a period of not less than thirty years, or as otherwise required by state law. (Ord. 1282 §2, 1995; Ord. 1035 § 1 (part), 1985) 17.90.080 Fees. A. No fee in addition to normal project application fees shall be charged for a request for a density bonus pursuant to the provisions of Sections 17.90.030 or 17.90.040, except for reasonable, necessary administrative costs incurred by the city pursuant to Section 17.90.040. B. A fee not to exceed the amount charge for "preapplication concept review" may be charged for proposals submitted pursuant to the provisions of Section 17.90.050. (Ord. 1282 § 2, 1995; Ord. 1035 § 1 (part), 1985) pace 181 City of san Luis OBISPO zoninc, neclutdtions junE Zoos 17.90.090 Affordability standards. A. The community development department shall publish and revise as needed a schedule of rental rates and sales prices for dwellings which will be affordable to households with incomes as provided in this chapter. The schedule shall substantially conform with the affordability standards as established by state or federal law. B. The maximum rental rates and sales prices as revised, generally on an annual basis, shall remain in effect for projects receiving density bonuses or additional incentives under this chapter as provided in the affordable housing agreement, but in no case less than the minimum term required by state law. (Ord. 1282 §2, 1995; Ord. 1035 § 1 (part), 1985) 17.90.100 Occupant screening. A. The affordable dwellings developed pursuant to this chapter shall be available to qualified occupants without regard to race, religion, national origin, sex, occupation or other affiliation. Occupants may be screened on the basis of age only to qualify those occupants seeking housing designed for the elderly. B. The city housing authority shall screen prospective occupants so that dwellings developed pursuant to this chapter shall be occupied by households with the appropriate qualifying incomes or ages. Owners of projects shall enter into agreements with the housing authority for such screening services. C. Preference in occupant screening shall be given to those employed within or residing within the city or the immediately surrounding area, to the extent that this provision does not conflict with state or federally funded housing assistance programs which may apply to a particular project, or other applicable law. This section is to insure that those households having the greatest difficulty obtaining housing at market rates within the city shall be able to occupy affordable housing made available pursuant to this chapter. (Ord. 1282 § 2, 1995; Ord. 1035 § 1 (part), 1985). pdqE 182 Development incentives: City of Fort Collins Page 1 of 2 Search i home>departments>social sustainability>development incentives Select Language Development Incentives for Affordable Housing Programs Competitive Process In order to encourage the building of affordable housing units,Fort Collins offers a variety of development incentives that are intended to reduce the costs to developers.In order to receive affordable housing development incentives,a project Development Incentives must meet certain criteria as defined in the Land Use Code: Homebuyer Assistance -A housing development is considered affordable if at least 10%of the total dwelling units are affordable to rent or awn HUD Recovery Act of 2009 by households earning 80%or less of Area Median Income(AMI). -A unit is considered affordable to rent if a household earning 80%or less of AMI pays no more than 30%of their gross Human Services monthly income towards rent,including utilities. -A unit is considered affordable to own if a household earning 80%or less of AMI pays no more than 38%of their gross Land Bank monthly income towards their mortgage,including principal,interest,and insurance. More Developer Resources For complete definitions,see Section 5.1.2 of the Fort Collins Land Use Code, colocode.com/ftcollinsllanduse/article5.htrg. Projects HUD Income Limits Mobile Home Redevelopment Services Each year HUD determines Area Median Income(AMI)for the Fort Collins/Loveland Metropolitan Statistic Area(MSA), broken down by household size and percentage of AMI. Our Team Fort Collins-Loveland MSA Family Median Income,2012 Advisory Groups Source:City of Fort Collins,based on info from U,S.Housing and Urban Development Awards Number of About Us/Contact Us People/Household Median(100%) 80%AMI 60%AMI 50%AMI 30%AMI 1 $54,400 $43,550 $32,640 $27,200 $16,350 Resources ................. ......... .. ._ 2 $62,200 $49,750 $37,320 $31,100 $18,650 .........................................................................„ .................................-.._.... Applications 3 $70,000 $55,950 $42,000 $34,550 $21,000 ....................................._............_,.-...__ . ................................._ _ . Document Download 4 $77,700 $62,150 $46,620 $35,000 $23,300 .......................................................I.....,I.........., ...I.........,..,.. .. . . ...., _....,....._,,._....... FAQ 5 $84,000 $67,150 $50,400 $38,850 $25,200 ......................................................................................................................_.....-....., ., _ _-..-........._.......... Funding 6 $90,200 $72,100 $54,120 $42,000 $27,050 .......................................I..........................................-_......---.......................-....,,, Funding History 7 $96,400 $77,100 $57,840 $48,200 $28,900 ...................................................I......,......... __ _ .... __ Sample Projects 8 $102,600 $82,050 $61,560 $51,300 $30,800 Looking for Housing or Help? IMPACT FEE DELAY Posters Impact fees are typically paid at the time that building permits are issued.This incentive allows the developer to delay the payment of those impact fees until a certificate of occupancy is issued,or December 1 of that year,whichever happens first.See Section 7,5-26 of the Fort Collins Municipal Code&Charter for full detail. DEVELOPMENT REVIEW FEE WAIVER All projects are required to pay fees related to the review of their project.This incentive waives those fees based upon the percentage of affordable units being offered in a project.For example,if a developer plans to make 40%of the dwelling units affordable,40%of that project's development review fees ADMINISTRATIVE CONSTRUCTION FEE WAIVER Certain construction fees are exempt for affordable housing projects including construction inspection fees,development construction permit fees,right-of-way construction license fees,and street cut fees.The formula for this fee waiver is the same as the Development Review Fee Waiver;fees are waived based upon the percentage of affordable units being offered in a project.Contact Engineering for more information,970-221-6605. PRIORITY PROCESSING Affordable housing projects are eligible to receive an expedited development review and permitting process. DENSITY BONUS Affordable housing projects proposed in the Low Density Mixed-Use Housing(LMN)zone are eligible to increase the maximum allowed density from 8 to 12 dwelling units per acre.See Section of the Land Use Code for full detail. http://www.fcgov.com/socialsustainability/developmentincentives.php 12/6/2012