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LEE COUNTY AFFORDABLE HOUSING METHODOLOGY

LEE COUNTY AFFORDABLE HOUSING METHODOLOGY. Policy Memorandum. Clarion Associates Dr. James C. Nicholas Bill Higgins September 22, 2005. AGENDA. Introduction Overview of Policy Memo Questions Next Steps. SUPPORT STUDY. POLICY MEMORANDUM. IMPLEMENTING LEGISLATION.

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LEE COUNTY AFFORDABLE HOUSING METHODOLOGY

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  1. LEE COUNTY AFFORDABLEHOUSING METHODOLOGY Policy Memorandum Clarion Associates Dr. James C. Nicholas Bill Higgins September 22, 2005

  2. AGENDA • Introduction • Overview of Policy Memo • Questions • Next Steps

  3. SUPPORT STUDY POLICY MEMORANDUM IMPLEMENTING LEGISLATION Inventory, Forecast, & Management Structure Legal Assessment, Needs Analysis, & Methodology Formation Ordinances Work Sessions to PresentPolicy Memorandum Work Sessions to PresentSupport Studyand Implementing Legislation WORK PROGRAM

  4. PROJECT SCHEDULE

  5. POLICY MEMORANDUM: AFFORDABLE HOUSING METHODOLOGY • Project Overview and Executive Summary • Affordable Housing Needs and Problem Description • Inventory of Affordable Housing Units in Lee County • Methods for Assessing Impacts of Non-Residential Development on Affordable Housing • Survey of Affordable Housing Programs in Other Communities • Recommended Affordable Housing Methodology and Policy Considerations

  6. Policy Memorandum II: AFFORDABLE HOUSING NEEDS AND PROBLEM DESCRIPTION • Median price of housing has increased dramatically in recent years, both statewide and locally. • Wages have remained fairly constant. • Over the last 2 years, median housing costs have risen to point they are no longer affordable to median income households. • Florida Association of Realtors reports median sales price of existing homes in County for May, 2005 was $273,500 -- 40% higher than median sales price for May, 2004. • Even if median household incomes increased by 5%, this makes cost of median priced home 479% of median household income.

  7. II: AFFORDABLE HOUSING NEEDS AND PROBLEM DESCRIPTION Policy Memorandum Source: Florida Association of Realtors.

  8. Policy Memorandum II: AFFORDABLE HOUSING NEEDS AND PROBLEM DESCRIPTION Source: U.S. Department of Housing and Urban Development and the Florida Association of Realtors.

  9. Policy Memorandum II: AFFORDABLE HOUSING NEEDS AND PROBLEM DESCRIPTION • The fact that wages have remained relatively constant has influenced the housing affordability problem in the county. • Comparing the median sales price of housing to the price that is affordable to a median income household, or a household at 80% of area median income reveals that housing is becoming increasingly unaffordable for the county’s workforce population.

  10. Policy Memorandum II: AFFORDABLE HOUSING NEEDS AND PROBLEM DESCRIPTION Source: U.S. Department of Housing and Urban Development.

  11. Policy Memorandum II: AFFORDABLE HOUSING NEEDS AND PROBLEM DESCRIPTION Source: U.S. Department of Housing and Urban Development and the Florida Association of Realtors.

  12. Policy Memorandum II: AFFORDABLE HOUSING NEEDS AND PROBLEM DESCRIPTION • Breadth of housing affordability problem in 2005 is further demonstrated by considering income and cost data for Lee County from Multiple Listing Service (MLS) data between January 1, 1998 – June 1, 2005. • It shows: • A sharp increase in the sales price of all residential units, especially since 2002, to the point that median income households can no longer afford median priced units; and • A decline in the number of units available for sale at prices that are affordable to a large part of the work force.

  13. Policy Memorandum II: AFFORDABLE HOUSING NEEDS AND PROBLEM DESCRIPTION • In 1998, 86% of houses sold were priced at or below $160,000. • By 2005, that number has dropped to 24%. • By 2004, the median sales price for over 90 percent of the MLS residential units sold (single and multi-family units) were above levels that are considered affordable for median income households.

  14. Policy Memorandum II: AFFORDABLE HOUSING NEEDS AND PROBLEM DESCRIPTION Source: Lee County Multiple Listing Service

  15. Policy Memorandum II: AFFORDABLE HOUSING NEEDS AND PROBLEM DESCRIPTION Source: Lee County Multiple Listing Service

  16. Policy Memorandum III: INVENTORY OF AFFORDABLE HOUSING UNITS IN LEE COUNTY

  17. Policy Memorandum IV: METHODS FOR ASSESSING IMPACTS OF NONRESIDENTIAL DEVELOPMENT ON AFFORDABLE HOUSING • Methods for Assessing Affordable Housing • Impacts in Florida 1)Adequate Housing Rule (9J-2) 2) East Central Florida Regional Planning Council Methodology 3) Fishkind Fiscal Impact Analysis Model (FIAM) • Significant positive step forward in understanding and quantifying need for affordable housing. • Can be improved upon, so: • More specifically focuses on source of the need; • Can be consistently applied; • Does not require significant additional analysis by the applicant or staff; and • Provides foundation for consistent application of mitigation options.

  18. Policy Memorandum IV: METHODS FOR ASSESSING IMPACTS OF NONRESIDENTIAL DEVELOPMENT ON AFFORDABLE HOUSING Method for Assessing Affordable Housing Impacts in Sacramento, CA 1)City/County Affordable Housing Linkage Fee Program • Establishes a close nexus between employees by industry/land use type to affordable housing demand • Can be consistently applied. • Requires little additional analysis by applicant or staff. • Provides foundation for consistent application of mitigation options.

  19. Policy Memorandum IV: METHODS FOR ASSESSING IMPACTS OF NONRESIDENTIAL DEVELOPMENT ON AFFORDABLE HOUSING Sacramento, CA Methodology Calculations Step 1: Estimate of Total New Employees. Step 2: Estimate Employees Who Live Within Jurisdiction. Step 3: Adjustment for Changes in Labor Force. Step 4: Adjustment for Number of Households. Step 5: Breakdown of Household by Occupation. Step 6: Estimate Moderate, Low, and Very Low Income Households. Step 7: Adjustment for Multiple Earner Households.

  20. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES Key West, Florida • Inclusionary Zoning - All new residential development must include affordable units for moderate and low-income families. • Requires 30% of units be affordable (moderate and low-income households). • Mitigation options: • On-site development of units; • Development of units off-site through partnership with other developer; • Payment in-lieu of construction -- $40,000/affordable unit required – if approved by City Commission. • Units must stay affordable for up to 25 years. • Policy encourages development of accessory infill units for workforce and elderly. • 141 affordable units developed, primarily because regulation does not apply to “re-development” – which is basically what is occurring in Key West.

  21. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES Tallahassee, Florida • Adopted to encourage private sector development of affordable housing. • Effective date is October 1, 2005, if City Council not satisfied with private sector development of affordable units. • Requires developers of 50 or more units in specified areas within the city and all DRIs include a percentage of affordable units within the development. • Must have 10% of units affordable for homeownership, or 15% affordable as rental. • Mitigation allowed by: • Building units on-site; • Donating lot to city for every unit required; or • Paying a fee in-lieu of construction ($10,000-$25,000 – based on median sales price of housing in the development). • Policy includes incentives for voluntary compliance prior to effective date: density bonus, expedited review, flexible design standards, transportation concurrency exemption.

  22. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES California Affordable Housing Laws 1)General “Fair Share” Housing Law • Statutory requirement that each local government must plan for its “fair share” of the statewide housing need. 2)Anti-NIMBY Law • Restricts the ability of local governments to deny or reject affordable housing projects. 3)Density Bonus Law • Allows increase in allowable density if it includes a percentage of affordable units (varies from 5 to 35 percent). Reductions in development standards. 4)Redevelopment Law • Requires replacement of affordable units removed through redevelopment, percentage of TIF funds go to improve affordable housing, and percentage of units developed must be affordable to moderate, low and very low incomes.

  23. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES California Affordable Housing Programs 1)Linkage Fee Programs • At least 19 local agencies have adopted linkage fee programs to mitigate the need for affordable housing generated by nonresidential development. • Jurisdictions conduct a nexus/support study to establish the link between new nonresidential development and the need for affordable housing. • Fees are typically set on a square foot basis, ranging form $1 to $10 a square foot, depending upon the type of land use, and the community. • Some programs allow for construction of affordable housing units. • Management of program. • Sacramento’s linkage fee program set precedent for state and has been upheld by U.S. District Court and Ninth Circuit of Appeals

  24. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES California Affordable Housing Programs 2)Inclusionary Housing Programs • Approximately 120 local governments (1 in 5) have adopted programs. • Variation in percentage of housing required, ranging from 4 to 30 percent. Most common inclusionary percentage is 10 percent; a quarter require 20-23 percent. • Most programs offer alternatives to site construction, such as: off-site construction, payment of in-lieu fees, or land dedications. • Include durability requirement. • Incentives often established in conjunction with inclusionary requirements. • Units must be managed. • More than 34,000 units have been produced to date through inclusionary programs in CA.

  25. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES California Affordable Housing Programs 3)Market-Based Responses • Require some form of financial participation by a private sector company • Housing Trust Fund of Santa Clara County – raised more than $30 million from corporations, foundations, local government agencies, and other sources for grants to first time homebuyers and subsidizing development of rental units. • Coastal Housing Partnership of Santa Barbara and Ventura Counties developed by local employers who found it difficult to recruit employees – more than 60 public and private employers have joined to offer employees a housing benefit package including: a downpayment loan program, homebuyers assistance program, mortgage refinancing program, rental housing assistance.

  26. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES California Affordable Housing Programs 4)Maintaining Affordable Housing Properties • Need a process and staff capacity to determine eligibility of homeowners or tenants of affordable units • Need resale restrictions in the case that unit is sold before the affordability period expires – often the agency will have right of first refusal on property. • Equity sharing for affordable units has often been done on a sliding scale – giving more share to longer term tenants and those that make investments in the house. • Transfers, often through inheritance, to non-eligible parties and other “family” transaction will need to be dealt with and policies developed to handle in a consistent manner.

  27. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES Massachusetts Affordable Housing Law 1)Comprehensive Permit Law (40-B) • Simplifies development process, both procedurally and substantively, for proposed affordable housing developments in communities where less than 10% of housing is set-aside for affordable units, or less than 1.5% of land area is for affordable housing. • Requires local governments to establish special review procedure (comprehensive permit process) for affordable housing projects that bypasses normal process (through local ZBA). • If ZBA denies, or conditions placed on approval make project uneconomical, can appeal to state created Appeals Committee. • Appeals Committee can overturn ZBA decision if unreasonable and inconsistent with local needs. • By 2001, 25,000 affordable units in 170 communities approved under the legislation.

  28. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES Connecticut Affordable Housing Law 1)Affordable Housing Land Use Appeals Act • Establishes appeals procedure for affordable housing developers if affordable housing projects are inappropriately denied through local government zoning and land use laws. • Can only use the appeals process in communities where less than 10 % of existing housing is not affordable to moderate income residents, or where local government has not received certification from the state that they have met their fair-share housing goal. • All appeals heard by same court. Burden is shifted to local government to prove: • Decision to deny is based on evidence in record. • Decision was necessary to protect health and safety concerns. • The identified public interest outweighs need for affordable housing. • Affordable housing development cannot be altered to uphold identified public interests.

  29. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES Pitkin County/Aspen, CO AH Programs Five-pronged affordable housing mitigation strategy includes regulatory, voluntary, and production programs for workforce housing. 1)Affordable Housing Mitigation • Requires provision of affordable units for residential and nonresidential developments – based on the number of construction and operation/maintenance employees that serve development. 2)Growth Management Quota System • Requires both residential and nonresidential developers to compete for development rights and must comply with minimum affordable housing standards – those providing additional affordable units receive extra credit in the competition for development rights.

  30. Policy Memorandum V: SURVEY OF AFFORDABLE HOUSING PROGRAMS IN OTHER COMMUNITIES Pitkin County/Aspen, CO AH Programs 3)Affordable Housing Zone Districts • Four affordable housing zone districts encourage mix of land uses for tourists, seasonal residents, permanent residents and workforce housing. 4)Resident Occupied Home Program • Serving local professionals, these units must be sold to local employees, but not subject to as stringent price controls as affordable units to maintain medium level of affordable housing in community. 5)Public Sector Production Program • Funded by real estate transfer tax and 0.45 of a penny sales tax. Allocated to the local housing office for construction of affordable housing.

  31. Policy Memorandum VI: RECOMMENDED AFFORDABLE HOUSING METHODOLOGY AND POLICY CONSIDERATIONS Goals of Methodology • Focus on the source of the need for affordable housing created by nonresidential development, by land use type, to ensure nexus principles followed. • Ensure consistent application. • Require little additional analysis by applicant or staff, except in unusual circumstances. • Provide a foundation for consistent application of mitigation options.

  32. Policy Memorandum VI: RECOMMENDED AFFORDABLE HOUSING METHODOLOGY AND POLICY CONSIDERATIONS Methodology – Focus on Following Land Uses • Retail • Office • Industrial • Tourist/Recreational • Institutional • Governmental

  33. Policy Memorandum VI: RECOMMENDED AFFORDABLE HOUSING METHODOLOGY AND POLICY CONSIDERATIONS Policy Options • Use Methodology in Review of DRIs • Require Use of Methodology in DRIs, and FLUM Amendments, Rezones, and PDs of a Certain Size • Linkage Fee Program • Inclusionary Housing Program • Dedicated local funding for • affordable/workforce housing

  34. Policy Memorandum VI: RECOMMENDED AFFORDABLE HOUSING METHODOLOGY AND POLICY CONSIDERATIONS Methodology - Calculations Step 1: Persons Employed in Lee County, by Industry. Step 2: Income/Wages of Employees, by Industry. Step 3: Employees that Require Housing in Lee County. Step 4: Translate Employee Earnings into Household Earnings, by Industry. Step 5: Calculate Maximum Housing Amount Affordable, by Households, by Industry. Step 6: Assign Employees to Land Uses. Step 7: Determine Number of Employees at Land Use, Per 1,000 SF of Land Use Type. Step 8: Determine Number of Very Low, Low, and Moderate Income Households at Land Use, per 1,000 SF. Step 9: Calculate Cost of Housing Units for Affordable Housing. Step 10: Shortfall per Employee Household. Step 11: Determine Subsidy Amount (accounting for dedicated funding sources).

  35. QUESTIONS

  36. NEXT STEPS October 3: Work Session with County Commissioners November 2005:Work Session on Support Study

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