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LAND DEVELOPMENT CODE REVISION COMMUNITY DEVELOPMENT COMMISSION March 10, 2020 AFFORDABLE HOUSING CREATION Mechanisms to Create/Preserve Income-Restricted Affordable Housing • Subsidies • General Obligation Bonds for Affordable Housing • Federal Funding • Low Income Housing Tax Credits • Private Funding • Publicly Owned Land • Incentives • Fee Waivers • Expedited Review • Voluntary Bonus Programs 2 AFFORDABLE HOUSING BONUS PROGRAM Fundamentals of City-Wide Affordable Housing Bonus Program • Due to state law prohibiting inclusionary zoning and rent control, program must be • voluntary; it relies on incentives It is one of the few tools that does not require financial subsidy from the City or another entity Benefits of City-Wide Affordable Housing Bonus Program • Affordable Housing Bonus Program can create income-restricted affordable housing units that will remain affordable for long periods of time (40 years for rental; 99 for ownership) • Opportunity to tie clearly identified benefits and costs together to the gain of both community and developer 3 AFFORDABLE HOUSING BONUS PROGRAM How Does a Bonus Program Work? Maximum Entitlement with Bonus Base Zoning Entitlement Affordable housing community benefit Market rate bonus units Market rate base units 4 MORE AREAS WITH BONUS POTENTIAL • Existing and expanded areas with affordable housing bonus programs • Current Code: 5,100 acres • LDC Revision: 33,800 acres (six times more area) 5 Helpful AHBP Documents are on LDC Revision Website austintexas.gov/ldc Zoning map and Code text Information about the Affordable Housing Bonus Programs 6 AHBP Affordability Requirements For Rent Units For income-restricted units offered for rent, the monthly rent must be affordable (not exceed 30% of the gross monthly income) of a household earning at or below 60% of the Austin area Median Family Income (MFI). Rental units must remain affordable for 40 years. For Sale Units For income-restricted units offered for sale, the monthly payments must be affordable (not exceed 30% of the gross income) of a household earning at or below 80% of the Austin area Median Family Income (MFI). For sale units must remain affordable for 99 years and are subject to an equity cap. 2019 Austin MSA HUD Income Limits person person person person 1 HH 2 HH 3 HH 4 HH 60% MFI 80% MFI 2019 MFI $39,780 $45,420 $51,120 $56,760 $52,850 $60,400 $67,950 $75,500 $67,150 $76,700 $86,300 $95,900 2019 NHCD Income- Restricted Rents Monthly rent affordable to 60% MFI 2019 NHCD Income- Restricted Sale Prices Max home sales price affordable to 80% MFI bedroom bedroom bedroom $994 $1,135 $1,278 1 1 2 2 bedroom bedroom bedroom $158,550 $181,200 $203,850 3 3 7 General Provisions for Income-Restricted Units Proportionate Bedroom Mix Affordable units must match the bedroom mix of the market-rate units, except that 2 and 3 bedroom units may count as two or three 1 bedroom units at the discretion of the Housing Director. Non-discrimination based on source of income Prospective tenants cannot be denied based solely on their participation in the Housing Choice Voucher Program or in any other housing voucher program that provides rental assistance. Dispersion and Access Affordable units should be dispersed throughout the development to avoid clustering of units, must be accessible by the same routes as the market-rate units, and must have access to all on-site amenities available to market-rate units. Comparable Design Standards Affordable units must be functionally equivalent to the market-rate units in the development. Floating Rental Units Locations of the affordable rental units may move to different parts of the development over time. Affirmative Marketing Each development must have a HUD affirmative marketing plan for the duration of the affordability period. Third-Party Management Developers of projects which result in 3 or less income-restricted units must partner with a city-approved entity. City’s Right to Subsidize (Buy-Down) units Any development that participates in a bonus program gives the City the right to further subsidize units. 8 COUNCIL DIRECTION RELATED TO BONUS PROGRAMS 9 BONUS PROGRAM COUNCIL DIRECTION • Equity Area • VMU • Downtown Density Bonus Program • Other Bonus Program Changes 10 COUNCIL DIRECTION: EQUITY AREA Council Direction: Garza – 1 (Equity Overlay) “BOUNDARIES: The area for the overlay should be delineated by the vulnerability map in the UT Uprooted study. Staff has already proposed this in their report. (a) PRESERVE EXISTING MULTIFAMILY: For current affordable multi-family -Map and zone to current structure and appropriate RM zone - No new height (in the base or bonus) (b) ONSITE AFFORDABILITY: Promote more onsite affordability - Require onsite affordability to be at least 10% of the total and no fee in lieu option.” 11 STAFF RESPONSE: EQUITY AREA New Equity Area Bonus Program created • Covers areas identified by 2018 UT’s Uprooted Study as most vulnerable to displacement through gentrification • Requires on-site affordable units to be at least 10% of the total • No fee in-lieu option • Preserve existing multi-family: Properties with existing multi-family must be granted Council approval and meet stringent requirements to participate in the bonus program 12 COUNCIL DIRECTION: VMU PROGRAM “Keep the affordability requirements of VMU for currently zoned VMU lots. Set the base heights and residential densities for currently zoned VMU lots at the base height and densities of the current VMU lot” “To ensure we maintain zoning on properties currently with -V designation: 1. Carry over existing -V zoning designation on tracts to preserve the existing affordable requirements related to minimum residential units and 10% affordability based on total square footage of the development” Council Direction: Casar AH1 Council Direction: Kitchen - 9 Council Direction: Tovo - 7 “Properties with current Vertical Mixed-Use zoning should access the AHBP with requirements of at least 10% affordable units or more.” Council Direction: Kitchen - 10 “To ensure broader opportunities for affordability: 1. Explore ways for Properties to access AHBP with at least 10% set asides 2. Include VMU in at least every 3-year lookback period/ evaluation cycle to analyze participation and success.” 13 STAFF RESPONSE: VMU PROPERTIES New “-V” designation created • Added a “-V” to the zoning string for properties that currently have a “-V” designation today • Properties will be required to have at least 10% affordable units • MFI requirements will be consistent with citywide Affordable Housing Bonus Program (60% rental, 80% ownership) 14 DOWNTOWN BONUS PROGRAM CHANGES Council Direction “Allow an unlimited CC bonus across Downtown, except do not map this unlimited bonus in the small area of Downtown where there currently is no bonus, on first reading. Council intends to add a bonus with new height and density in this northwest area on second reading, while maintaining a transition in height to areas that are primarily Residential House-Scale within the Downtown area. This transition in heights is to be considered the transition zone for house-scale areas in the Downtown. Staff and stakeholders should explore options for achieving this goal.” 15 DOWNTOWN BONUS PROGRAM CHANGES 1st Reading Draft 2nd Reading Draft 16 OTHER BONUS PROGRAM CHANGES • “-Q” is applied to the zoning string for properties that currently do not have residential Rename “-A” designation to “-Q” entitlements today • Renamed for legibility • Affordable unit set-aside is determined based on percentage of total units (all residential units are considered bonus) 17 Calibration for Affordable Housing Bonus Programs 18 Calibrating City-wide AHBP G E O G R A P H I C S P E C I F I C I T Y • Clustered submarkets into simplified policy geographies based on market dynamics • Refined geographies to reflect “natural” boundaries and Council policy • AHBP requirements set by geography to maximize affordable unit delivery 10 12 Look for a link to the Affordable Housing Bonus Program Guide on the Land Development Code Revision website: http://www.austintexas.gov/department/resources 19 Calibrating City-wide AHBP U N I T R E Q U I R E M E N T S • Approximately 3 to 20 market-rate units can cross-subsidize 1 affordable unit depending on: o Zone-specific entitlements o Housing tenure o Market geography • Affordability requirements were right-sized to maximize bonus uptake and delivery of bonus affordable units Look for a link to the Affordable Housing Bonus Program Guide on the Land Development Code Revision website: http://www.austintexas.gov/department/resources 20 Calibrating City-wide AHBP F E E I N - L I E U O F O N - S I T E A F F O R DA B L E U N I T S AHBP Calibration Principle: • Fees in-lieu of delivering on-site units will be allowed in some cases • Fees-in-lieu are based on the cost of subsidizing affordable units in central Austin*, which will make delivering on- site units more attractive than paying fees in most parts of Austin Per-unit Fees in Lieu of On-site Affordable Units Studio 1-Bed 2-Bed 3-Bed $135,000 $180,000 $335,000 $440,000 This information can be found in the “Affordable Housing Bonus Program Guide” on the Land Development Code Revision website Note (*): NHCD defined “central Austin” as the three downtown-adjacent zip codes (78702, 78703,78704). 21 UPCOMING SCHEDULE Tuesday, March 24 Public Comment Saturday, March 28 Public Comment Tuesday, March 31 LDC Third Reading Wednesday, April 1 LDC Third Reading Thursday, April 2 LDC Third Reading Tuesday, April 7 possible continuation of LDC Third Reading 22 QUESTIONS 23