Agenda_Item_7_Downtown_Density_Bonus_Program_Recalibration_1 — original pdf

Backup

DOWNTOWN DENSITY BONUS PROGRAM RECALIBRATION DOWNTOWN COMMISSION February 19, 2020 Real Estate Development Fundamentals 2 Real Estate Development Fundamentals Zoning and Affordability Requirements Public Policy Viable Sites Land Development Can Occur Market Feasibility Rents, Prices, and Construction Costs Capital Competitive Returns on Capital 3 Real Estate Development Fundamentals $$$$$ $$$$ $$$ $$ $ 0 Value of Building to Base Entitlements 4 Real Estate Development Fundamentals Bonus Value $$$$$ $$$$ $$$ $$ $ 0 Value of Building to Base Value of Building to Bonus Entitlements Entitlements 5 Real Estate Development Fundamentals Public Affordability Benefit Bonus Value $$$$$ $$$$ $$$ $$ $ 0 Value of Building to Base Value of Building to Bonus Entitlements Entitlements 6 Real Estate Development Fundamentals $$$$$ $$$$ $$$ $$ $ 0 Public Affordability Benefit Bonus Value Development Benefit via Bigger Buildings Value of Building to Base Value of Building to Bonus Entitlements Entitlements Value of Building to Bonus Entitlements Minus Affordability Requirement 7 Real Estate Development Fundamentals $$$$$ $$$$ $$$ $$ $ 0 Poorly calibrated requirements result in no bonus uptake and no public benefits. Base entitlements used Bonus Value Public Affordability Benefit Value of Building to Base Value of Building to Bonus Entitlements Entitlements Value of Building to Bonus Entitlements Minus Affordability Requirement Development Disbenefit of Bonus Building 8 Real Estate Development Fundamentals $$$$$ $$$$ $$$ $$ $ 0 Bonuses do not have value in some submarkets. Base entitlements used. Bonus Value Impact Development Disbenefit of Bonus Building Public Affordability Benefit Value of Building to Base Value of Building to Bonus Entitlements Entitlements Value of Building to Bonus Entitlements Minus Affordability Requirement 9 Density Bonus Calibration • Careful calibration to weigh development benefit and public benefit • Without participation in the bonus, no bonus units – market-rate or affordable – will be constructed • Careful calibration needed to maximize public benefit and achieve policy goals Development Benefit Public Benefit 10 Downtown Density Bonus Program In-Lieu Fee Recalibration 11 DOWNTOWN BONUS PROGRAM CHANGES Council Direction “Allow an unlimited CC bonus across Downtown, except do not map this unlimited bonus in the small area of Downtown where there currently is no bonus, on first reading. Council intends to add a bonus with new height and density in this northwest area on second reading, while maintaining a transition in height to areas that are primarily Residential House-Scale within the Downtown area. This transition in heights is to be considered the transition zone for house-scale areas in the Downtown. Staff and stakeholders should explore options for achieving this goal.” 12 DOWNTOWN BONUS PROGRAM CHANGES 1st Reading Draft 2nd Reading Draft 13 Fee Calibration A N A LY Z E B O N U S VA L U E 1. Gather base, bonus, and max bonus entitlements i. Five+ downtown specifications 2. Consider prototypical buildings for base and bonus entitlements on a variety of parcel sizes 3. Calculate the difference in value between base and bonus prototypes $$$$$ $$$$ $$$ $$ $ 0 Public Benefit Bonus Value Base Entitlements Bonus Entitlements 14 Fee Calibration D E F I N E P O L I C Y G E O G R A P H I E S A N D F E E S 1. Test fees under various policy geographies i. ii. Based on existing bonus policy geography Based on geographies defined in subdistrict plans iii. Based on market sub-geographies iv. Based on bonus entitlement geographies v. Based on base entitlement geographies 2. Define optimal fee specification, balancing fee precision with policy legibility 15 Fee Calibration R E C O M M E N D E D F E E S I N D O W N TO W N Bonus Area Residential In-Lieu Fee per Square Foot* Commercial In- Lieu Fee per Square Foot Applicability Downtown CC Zones Downtown DC Zones $10 $12 Downtown Rainey Subdistrict $5** $12 $18 Fees per square foot of bonus Fees per square foot of bonus $12 for CC Zones $18 for DC Zones Fees per square foot of bonus * Residential fees could be higher if parking maximums in the draft code were adjusted. Currently, condominium sale prices are associated with parking provision at approximately one and a half stalls per unit. ** This district requires that a developer provide some on-site affordable units, even when paying a fee in lieu of providing other required units. 16 QUESTIONS 17