HomeMy WebLinkAbout12-18-08 Affordable Housing TF
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Housing y,rust Fund
Johnson County
JOHNSON COUNTY COUNCIL OF GOVERNMENTS
Meeting of the Affordable Housing Task Force
December 18, 20082:00 PM
Location: Council Chamber, Coralville City Hall
1512 1h Street, Coralville, Iowa
MEETING AGENDA
I. Welcome and introductions
II. Opening comments: How did we get here?
Andy Johnson, Housing Trust Fund of Johnson County
III. Meeting overview and groundrules:
Jeff Schott, University of Iowa, Institute of Public Affairs
IV. Discussion of the nine recommendations of the Affordable Housing Market Analysis (The
recommendations are summarized on pages 11-15 of the study and are summarized in the
attachment.) Regarding each of the recommendations:
a. Have events since the 12/2007 report significantly impacted the underlying issues?
b. What additional information/"best practices" (if any) is needed for an informed decision
regarding the recommendation?
c. Is there opportunity/necessity to act regionally?
V. Determination of next steps.
VI. Wrap and summarize any action steps to be taken.
VII. Public comment
VIII. Adjourn
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Re:
December 12,2008
JCCOG Affordable Housing Taskforce
John Yapp, JCCOG Executive Director 7..A 'I ~
Andy Johnson, Johnson County Housing Trust Fund Director
December 18, 2008 Taskforce discussion
Date:
To:
From:
This memo is to provide background information for the discussion at the JCCOG Affordable
Housing Taskforce meeting on December 18, 2008. It is structured around the nine
recommendations made as part of the Metro Area Affordable Housing Market Analysis. Ultimately,
we would like discussion and recommendations from the taskforce on which issues/policies, if any,
would benefit from a regional approach. A summary of this discussion and any recommendations
will be forwarded to the JCCOG Urbanized Area Policy Board, and copied to local government
administrations.
The nine recommendations from the Affordable Housing Market Analysis, with commentary, are
below. The entire Affordable Housing Market Study can be found at www.icgov.org/default/?id=1342.
1. Work to change public perception of higher-density multi-family affordable housing.
The Affordable Housing Market Study indicates that there is a perception that higher density, multi-
family housing proposals consisting of 'affordable' housing are not appropriate for single family
neighborhoods. There is evidence that well-designed, well-located and well-managed affordable or
workforce housing does not decrease surrounding property values or raise as many concerns from
neighbors. In contrast to incorporating multi-family housing in neighborhoods, concentrating lower-
cost housing units separate from other neighborhoods raises other concerns. These concerns
include the concentration of an income level in one elementary school district, and potentially
increased commuting time and distance.
2. Revise public policies to create an environment in which affordable housing opportunities
can be created without obstacles.
Under this recommendation from the Affordable Housing Market Analysis, increasing the amount of
land zoned for multi-family housing is a key component, along with proactively rezoning parcels of
land to multi-family within developing or soon-to-develop neighborhoods. The argument is that
proactively zoning land to multi-family ahead of development gives future adjacent property owners
knowledge of the future multi-family area, and helps to negate the fear-of-change that is prevalent in
many rezoning public hearings.
The existing and future land use maps from the JCCOG Long Range Transportation Plan are
attached. These were compiled by reviewing the adopted land use plans for each community, in
2006, and are intended to be broad-brushed in scale. There are areas which may be planned for
multi-family development, but it is not yet appropriate to rezone the land due to the lack of
infrastructure. The desires of the property owner are also a significant factor.
December 12, 2008
Page 2
3. Consider a mandatory inclusionary housing ordinance to meet the significant unmet need
for affordable housing.
Inclusionary housing is a term for an ordinance which encourages or requires that a housing
development "include" a percentage of "affordable" dwellings.
Mandatorv versus Voluntarv
There are two basic types of inclusionary housing programs: mandatory and voluntary. Voluntary
programs rely on providing density bonuses or reductions in fees to create an incentive for
developers to build affordable units. Mandatory programs also provide density bonuses and other
incentives, but also require that a certain percentage of units in a new development be "affordable,"
typically 10-20%. "Affordability" is defined by the local community. There are many different ways to
set up both mandatory and voluntary programs, however, to be effective the specifics of the program
need to be tailored to local conditions.
A recent article in Zoning Practice, a publication of the American Planning Association, concludes
that "mandatory programs produce more housing, including housing for lower-income populations.
They also provide more predictability for developers and the community, and do not stifle
development activity. As a result more communities are choosing mandatory approaches." In fact,
there are a number of communities that have switched from voluntary to mandatory, because the
voluntary programs were not very effective in creating affordable units and have caused uncertainty
in the market. The report states that, "developers cannot price and value land appropriately and
make informed investment decisions unless they know what the local community will allow them to
build and what is required of them." Private developers often oppose mandatory inclusionary
housing requirements; if this is pursued it is important to have clear criteria, tied to clear incentives.
Defining Affordable
It is also important to define what is meant by "affordable." In some communities, the affordable units
are not subsidized; the density bonuses and fee waivers are used as a means to lower the cost so
that the units can be offered at below-market prices. However, this does not necessarily mean that
the units are affordable to a certain income group. To be affordable to those with low to moderate
incomes or to increase the supply of affordable rental housing, some additional subsidies will likely
be necessary. For example, a program could require that a private developer produce a certain
percentage of below market-rate units with costs offset by density bonuses and other incentives. A
certain percentage of the below market-rate homes could be targeted toward those at 80% to 120%
of area median income, or another pre-determined income level.
4. Identify potential redevelopment areas that may be appropriate for new affordable
housing and neighborhood revitalization.
There are a number of areas which may be appropriate for redevelopment to higher-density housing
or mixed-use development. These potential redevelopment areas are generally located near
downtown Iowa City, and higher volume arterial street corridors where conditions have changed
such that the older land uses, whether they be commercial or residential, are no longer the 'highest
and best' use of the property. Proactively upzoning these areas as a policy is a strategy
municipalities can use to create more land zoned for higher density residential development or
mixed-use development.
One caveat with this approach is that by itself the strategy of upzoning land to allow higher-density
development does not automatically result in affordable or workforce housing - it just allows housing
at a higher density.
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5. Prioritize the preservation of existing affordable housing units.
There are a potential 597 units of privately owned affordable housing units whose HUD Section 8
contracts expire by 2011. These units are in developments partially financed with public funds, and
in return, the developer agrees to keep the units rented to qualifying households if HUD provides
Section 8 rental subsidies. After the contract expires, the units may return to market-rate housing.
We have learned through the Iowa City Housing Authority that a majority of these contracts are
either recently renewed or will be renewed.
Intent to Renew: Number of Expiration
Development Y/N Other Units Date
Systems Renewed for 30
Unlimited Y years. 48 5/31/2007
Autumn Park Y 64 12/31/2009
Pheasant Ridoe y 248 7/31/2010
Coral Village Y 57 7/31/2010
Capitol House Y 81 7/31/2010
Systems Renewed for 30
Unlimited y years. 18 10/31/2011
Ecumenical
Towers Unknown 81 11/30/2011
6. Treat affordable housing developers as a special class of developer.
There are two main options identified in the Affordable Housing Market Study to treat affordable
housing developers as a special class of developer.
Streamlinino the permittino process for proiects involvinq affordable housino.
Streamlining the approval process is difficult due to state code requirements for a minimum amount
of steps in the rezoning and subdivision process, and the need to review building plans for code
compliance the same for every development regardless of ownership. There is an opportunity for
'streamlining' the process by not elongating the approval process more than necessary, but it is
important to maintain a standard process to allow for projects to be reviewed in a public forum.
Participatino in the cost of financino infrastructure improvements such as roads and utilities for
proiects involvino affordable housino.
There are many opportunities for local governments to indirectly subsidize affordable housing
projects by participating in the cost of infrastructure, waiving utility tap-on fees and other
development-related fees for desired projects, owning or donating land dedicated to affordable
housing projects, etc. Off-setting infrastructure or land costs for affordable housing projects (or any
project) must be a budgetary decision balanced against the desirability of the project.
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7. Seek State Housing Enterprise Zone designation.
Cities and counties may use Enterprise Zone designations to spur economic development and
housing construction or rehabilitation.
Cities may designate enterprise zones in areas that meet at least two of the following criteria:
a. The area has a per capita income of $12,648 or less based on the 2000 census.
b. The area has a family poverty rate of 12% or higher based on the 2000 census.
c. 10% or more of the housing units are vacant.
d. The valuations of each class of property in the area is 75% or less of the citywide average for
that classification based upon the most recent valuations for property tax purposes.
e. The area is "blighted" which means that the city determines that the presence of certain factors
in the area (such as a number of deteriorating structures or conditions which endanger life or
property) substantially impair or arrest the sound growth of the city, retard the provision of
housing accommodation, or constitute an economic or social liability and is a menace to the
public health, safety or welfare in its present condition and use. A disaster area may constitute a
"blighted area" (In general, the definition of "blighted" has not been difficult to meet. There is,
however, sometimes political opposition to declaring an area to be blighted).
Certain incentives are available to developers or contractors who build or rehabilitate at least four
single family homes or at least one multi-family building containing three or more units. The housing
must be completed within 2 years of the start of the project and, upon completion, must meet HUD
Housing Quality Standards and local zoning codes. Income restrictions are not a part of the state
requirements, although the participating city may use the program to target a certain market.
The incentives include:
a. A refund of state sales, service or use taxes paid during construction.
b. An investment tax credit of up to a maximum of 10% of the investment directly related to the
housing project. The tax credit is based on the new investment used for the first $140,000 of
value for each home or unit. (Other tax credits, grants and forgivable loans can not be used for
purposes of calculatinQ the investment tax credit.)
Businesses within established enterprise zones may, as an alternative to receiving a new jobs credit,
establish a housing assistance program to provide down payment assistance or rental assistance for
employees in new jobs who buy or rent housing located within the enterprise zone. This program is
funded through a credit from withholding based on the wages paid to the employees participating in
the assistance program. In discussing this with IDED staff, it does not appear that this incentive is
sufficient to encourage the development of such programs.
In order to take advantage of these benefits, a city must establish an Enterprise Zone Commission
which reviews applications from interested businesses. If the Commission determines that a
business qualifies and is eligible to receive the incentives, the application is submitted to the Iowa
Department of Economic Development for consideration and approval.
According to IDED staff, enterprise zones have been used successfully in a number of rural
communities for the development of single family homes, while communities such as Waterloo and
Des Moines have used the program in conjunction with low income housing tax credits for the
development of multi-family units. Developers in Council Bluffs and Fort Dodge have done both
single family and multi-family units. Several communities have rehabilitated old hotels and other
structures located within enterprise zones.
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8. Dedicate specific sources of revenue to finance affordable housing development over the
long term.
Since the 1980's, when federal investment in housing programs was severely reduced, states,
municipalities and regional entities have turned to housing trust funds as an alternative source of
capital to support housing programs. Often, a source of dedicated funding is identified to capitalize
the fund. Examples include document recording fees, development/impact fees and real estate
transfer taxes. Trust funds may be administered by local governmental entities or be established as
nonprofit corporations. The first, and largest, housing trust fund in Iowa is the Polk County Housing
Trust Fund, established in the early 1990's. Polk County contributes as much as $1.5 million to the
fund each year.
In 2003, the Iowa Legislature established the State Housing Trust Fund (SHTF) which is
administered by the Iowa Finance Authority (IFA). Until 2008, the SHTF was dependent on annual
allocations from the legislature. In 2008, lawmakers approved a standing $3 million allocation from
the Rebuild Iowa Infrastructure Fund and, beginning in FY 2010, a gradually increasing percentage
of the real estate transfer tax (to be capped at an additional $3 million).
The Housing Trust Fund of Johnson County (HTFJC) is a private nonprofit that is eligible to receive
funding from the State Housing Trust Fund. In November, for instance, the Iowa Finance Authority
approved a grant of $235,000 to HTFJC. This local trust fund has also received grants from the
Iowa Department of Economic Development, Federal Home Loan Bank of Des Moines, Community
Foundation of Johnson County and United Way of Johnson County. Trust Fund financing has
supported the construction and rehabilitation of affordable rental and transitional housing, as well as
owner-occupied homes. Grant programs have helped with housing assistance to flood victims,
rental assistance to elderly and disabled individuals and help to rural homeowners with household
repairs.
To date, Johnson County, Coralville, North Liberty and Iowa City have invested in the fund. State
law limits the ways in which communities might raise funds for the Trust Fund, but allocations from
the general fund or a defined percentage of certain fees already collected are available options.
9. Create an environment for collaboration and cooperation.
Partnerships
The Affordable Housing Market Study notes that the University of Iowa's Office of University
Partnerships (OUP) may be partnered with to expand opportunities for affordable housing. OUP
offers programs to integrate partnership activities into academic studies and student activities. They
achieve the partnerships through grants, interactive conferences and research. Many of the
programs offered by the OUP focus on minority or tribal colleges/universities or Hispanic serving
institutions.
There are many other types of partnerships occurring, primarily with support from Community
Development Block Grant, HOME funds and local funds. Below are just a few examples of the types
of collaboration which takes place between the public and private sectors:
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Project:
Homes for Our Future
Construction of a single family home that will include "green" and universal design features. The
home will be sold to a family at or below 80% of the area median income.
Partners
Discounted Services and Materials
Iowa City Area Association of Realtors
Iowa City Housing Authority/City
Southgate Development Company
University of Iowa College of Law, Clinical Law Program
Extend the Dream Foundation
Corridor Design
MidwestOne Bank
Hawkeye Title
Bachmeir Carpet One
Lighthouse Builders
Ramsey Creek Cabinets
Slager Appliances
Rally Appraisal Company
Project:
Good Neighbors Strong Neighborhoods
Pilot program in Whispering Meadow Addition designed as an example for neighborhood
associations to assist citizens with yard clean up and weatherization. This project is also intended to
assist with determining need for organized neighborhood activities.
Partners
Discounted services and materials
Grant Wood Neighborhood Association
Iowa City Housing Authority
Iowa City Association of Realtors
Reclaiming Roots
University of Iowa Students
Hy-Vee
Mid-American Energy
Iowa Utilities Board
Habitat for Humanity
Housing Fellowship
Burns and Associates
Saddle brook
Transportation
The Affordable Housing Market Study notes that housing and transportation policies should be
planned together, and this is another area of cooperation. There are a variety of federal programs
designed to help fund public transit routes; however, providing public transit does require significant
local subsidy as well. Consistent and predictable transit routes are important to users, and important
to maintain stability in ridership.
It is certainly appropriate to consider public transit availability when considering requests for multi-
family zoning and/or affordable housing. A map of public transit routes is attached.
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