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HomeMy WebLinkAboutItem 02 Developing an Affordable Housing Strategy AGENDA ITEM SUMMARY Meeting Date: 4/10/2017 Meeting Type: Work Session Staff Contact/Dept.: Sandy Belson, DPW Staff Phone No: 541-736-7135 Estimated Time: 45 minutes S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Promote and Enhance our Hometown Feel while Focusing on Livability and Environmental Quality ITEM TITLE: DEVELOPING AN AFFORDABLE HOUSING STRATEGY ACTION REQUESTED: Provide direction on further development of Springfield’s Affordable Housing Strategy ISSUE STATEMENT: The City recognizes that there is an affordable housing issue within the community and is working to address this problem. The findings point to a shortage of housing and the expense of housing relative to household incomes. The supply of housing is limited at all levels: emergency shelter, transitional housing, subsidized rental housing, market rate rental housing, space in manufactured home parks, and homes for sale. Rental vacancy rates are very low. It is a seller’s market with a low inventory of homes for sale. Housing costs are increasing faster than incomes. Female-headed households, children, those on fixed incomes, and people with special needs are disproportionately affected. ATTACHMENTS: 1. Council Briefing Memo DISCUSSION/ FINANCIAL IMPACT: The financial impact of implementation will depend on what Council ultimately includes in the affordable housing strategy. Based on decisions of what Council wants to achieve and the financial tools involved, staff can further analyze what resources could be utilized to foster housing choice and affordability in the short and long term, thereby achieving the desired outcomes. By setting priorities, the City can be focused in its efforts to improve housing affordability in the community. M E M O R A N D U M City of Springfield Date: 2/13/2017 To: Gino Grimaldi COUNCIL From: Anette Spickard, DPW Director Sandy Belson, Comprehensive Planning Manager BRIEFING Subject: Developing an Affordable Housing Strategy MEMORANDUM ISSUE: The City recognizes that there is an affordable housing issue within the community and is working to address this problem. The findings point to a shortage of housing and the expense of housing relative to household incomes. The supply of housing is limited at all levels: emergency shelter, transitional housing, subsidized rental housing, market rate rental housing, space in manufactured home parks, and homes for sale. Rental vacancy rates are very low. It is a seller’s market with a low inventory of homes for sale. Housing costs are increasing faster than incomes. Female-headed households, children, those on fixed incomes, and people with special needs are disproportionately affected. COUNCIL GOALS/ MANDATE: Promote and Enhance our Hometown Feel While Focusing on Livability and Environmental Quality BACKGROUND: At its work session on February 13, Council began discussing what it wanted to include in its affordable housing strategy, including thoughts regarding a preliminary draft strategy. In response to a question from Council, staff has provided construction costs for tiny homes. The February Council Briefing Memo included a discussion of developer incentives including property tax exemptions and system development charge (SDC) waivers/discounts. At Council’s request, staff has compared the multi-unit property tax exemption with the vertical housing program and presented more information about potential SDC waivers/discounts for accessory dwelling units. Continuing to move forward with two areas of a potential housing strategy, staff has prepared the next steps for Council’s consideration of: (1) simplifying the regulations in the Springfield Development Code for accessory dwelling units and (2) expanding the overnight parking program. TINY HOME CONSTRUCTION COSTS: This section responds to questions from Council about the construction costs of the types of structures presented under different models of the Tiny Home Pilot Project in the February 13 Council Briefing Memorandum. What follows is a range of “tiny” homes and relative costs, excluding permitting costs and land development costs. The homes on the first page do not include interior plumbing. The homes on the second page include a bathroom and a kitchen. Attachment 1, Page 1 of 16 Consetoga Huts The Conestoga Huts built by Community Supported Shelter currently cost about $2000. Standard huts are 6’ x 13.5’. Huts to accommodate wheelchairs are 7’ x 16’ plus a ramp. Eugene Rest Stop Program Opportunity Village Structures built for Opportunity Village range in size from 8’ x 8’ to 8’ x 10’. Cost of materials is around $1500. Labor, with a lot of volunteer help, has cost about $1500 for a total of $3000 each. Opportunity Village November Work Party https://www.facebook.com/OpportunityVillageEugene/photos Sleeping Pods The sleeping pods have footprints of between 6’ x 8’ and 8’ x 12’. The cost of materials ranged from $1600 to $7000 with an average of $4500. Sleeping pods built by architects & students in Portland https://www.pdxmonthly.com/slideshows/2017/1/26/these-sleeping-pods-provide-safety-and-warmth-for-portland-s- homeless Shelter on Wheels This 8’ x 12’ structure includes electrical wiring per the recreational vehicle code and therefore includes lighting and heat. The trailer cost $2500, materials were $5200, labor $4800, and wiring $1600 for a total of $14,100. Built by Alexander Daniell of Backyard Bungalows for Episcopal Church of the Resurrection Attachment 1, Page 2 of 16 Micro Home This single-wide manufactured home built with HUD approvals has one bedroom, a bathroom, and a kitchen in 373 square feet (32’ x 12’). It costs $19,900 excluding delivery and placement. https://factoryexpo.net/floorplan/micro/ Emerald Village in Eugene Permanent homes meeting building codes that include sleeping areas, a kitchenette and a bathroom planned for Emerald Village range in size from 160 to 288 square feet. The cost for materials for the one designed by Emerald Valley is $15,000. The tiny homes in general are anticipated to cost about $25,000 each. Park Model This top of the line park model of 832 square feet has one bedroom, a bathroom, a kitchen and a loft. It costs $55,000, excluding freight. The Building Codes Division is changing how these are regulated through a rulemaking process. Cavco Park Model http://parkmodels.com/northwest/ Small House/ADU Example A small site built home costs between $125 to $175 per square feet for materials and labor. The difference depends on the quality of materials, and whether or not a loft and built-in features are included. A 384 square foot house like the one shown below may range from $48,000 to $67,000. http://smallhomeoregon.net/wp-content/ uploads/2013/10/SmallHome-1-e13344806018561.jpg COMPARISON OF THE VERTICAL HOUSING DEVELOPMENT PROGRAM AND MULTI-UNIT PROPERTY TAX EXEMPTION: Included below is an analysis of the Vertical Housing Development Program (VHDP) and the Multi Unit Property Exemption (MUPTE) as tools for incentivizing development of multi-unit housing. Both programs attempt to focus development within the Attachment 1, Page 3 of 16 urban core and within close proximity to transit, but differ in their program structure, the type of developments incentivized and the rate of exemption. Outlined on the next page is a comparison of these two programs and how they incentivize development. If the Council has interest in considering these options further staff can bring back more detailed case studies. Since our last Council work session on this topic staff discovered that the City already has language in Chapter 3.5 of the municipal code implementing state statute providing a property tax exemption for low income housing projects that could be used for projects which are near the end of their affordability period. If Council wishes to use this existing code section to allow exemptions for new construction of low-income rental housing, Council would first need to update the municipal code to reflect current statutes. Summary Table Key Components VHDP (Vertical Housing Development Program) MUPTE (Multi-Unit Property Tax Exemption) Zone creation process City applies to Oregon Housing and Community Services (OHCS) City adopts resolution or ordinance Criteria for zone creation Must be Downtown or a mixed use area (Riverbend, Mohawk, Marcola Meadows, or Glenwood). Must be core area of urban center or transit oriented area; or could be entire City for low-income housing projects Development guidelines Managed by OHCS City develops and administers based on minimum criteria set forth by State. City requires public benefits and may set design standards. Building and/or property exempted Only the equalized* floors in the building unless rents are set below market rate - then land is included Entire building including parking and commercial space. If addition or expansion then only the additional value is exempted. Commercial space required Commercial ground floor is required May include commercial space Primarily meant to incent Mixed used commercial-residential (either market rate or low income) Multi-unit housing (either market rate or low income) that may include commercial Applicable taxing districts Includes all taxing districts but all are given the option of opting out Includes all taxing districts only if 51% opt in Jurisdiction responsible for administration Oregon Housing and Community Services (currently) City of Springfield Tax exemption amount 20% per equalized* floor up to 80% Only City tax levy on improvements unless 51% or more other districts opt in, then 100% Term of exemption 10 years 10 years *Equalized floor refers to the quotient that results from the division of total sq ft of a project by the number of actual floors of the project that are at least 500 sq ft Attachment 1, Page 4 of 16 Program Summary: Vertical Housing Development Program The Vertical Housing Development Program (VHDP) is administered by the Oregon Housing and Community Services agency (OHCS). The program encourages mixed-use developments that contain both commercial and residential uses in areas designated by local jurisdictions. The rents for the residential portion may be set at market rates or be set below market for lower income households. Qualifying projects receive a partial property tax exemption up to a maximum of 80% over a 10 year term. Multi-Unit Property Tax Exemption Local jurisdictions are enabled to establish a Multi-Unit Property Tax Exemption (MUPTE) to promote private investment in multi-unit and affordable housing located in core areas, light rail station areas and transit oriented areas. The program shall be established and administered by the local jurisdiction who, within the parameters of applicable legislation, can tailor the program to their needs. The exemption applies only to the tax levy of the originating city or county, but through concurrence of other taxing districts can apply to the ad valorem taxes of all taxing districts. The tax exemption is provided over a 10 year term. Zone creation and project eligibility: Vertical Housing Development Program Cities and counties apply to OHCS to establish a zone (targeted area) where mixed use developments can be built and receive the partial property tax exemption. The zone must meet certain criteria including “contains property for which land use comprehensive plan and implementing ordinances allow ’mixed use’ with residential.” Once the zone is established, the authority to decide what projects are eligible to receive the partial property tax exemption resides solely with OHCS. It should be noted that there is state legislation being considered that would shift some administrative authority to the local jurisdiction. Any private or public developer can apply to the OHCS for project certification and once approved OHCS notifies the county assessor to apply the exemption. The City of Springfield has one Vertical Housing Zone in downtown and one certified project receiving the partial property tax exemption – the Royal Building. Multi-Unit Property Tax Exemption Program Through resolution or ordinance cities and counties may specify an area within which to exempt property taxes on eligible housing projects. The City may designate core areas, light rail station areas and transit oriented corridors, or the entire City for projects that are subject to a low income housing assistance contract with a public agency. Once the area is designated, the local jurisdiction is responsible for accepting applications, evaluating proposals, and either approving or denying the exemption based on locally established standards and criteria set forth in statute. The local standards must include information sufficient to evaluate the conformance of the application with the intent of the program. At the minimum, applicants will include information about the existing site and uses, design elements, rental rates or sales prices, extension of public benefits, minimum number of units and, if applicable, information related to low income housing assistance contracts. It is at the discretion of local jurisdictions to add additional standards/guidelines. Attachment 1, Page 5 of 16 Projects must also include one or more design or public benefit elements such as commercial use of a portion of the structure, open space, parks and recreational facilities, common meeting rooms, child care facilities, or transit/pedestrian amenities. Projects must also be in conformance with local plans and planning regulation. Amount of property tax exemption: Vertical Housing Development Program Certified projects can receive a tax exemption equal to 20% of each “equalized floor” up to 80% maximum (equivalent of 4 floors). Projects are required to have ground floor commercial in an amount determined by the number of public streets that front the property (specific details are found in the Oregon Administrative Rules governing the program). If rents are set at market rates, the owner can only receive the property tax exemption based on the “equalized floors” in the building. However, if the rents are set below market and meet OHCS’s criteria, the land may also receive a partial property tax exemption up to 80%. Before the City can submit its application for the zone designation, certain special taxing districts must be notified and given the opportunity to “opt out” of the program so that their levies are not impacted by the property tax exemption. Multi-Unit Property Tax Exemption Program The tax exemption under this program applies only to the tax levy of the city or county that has adopted the appropriate statutory provisions. However, with resolution of concurrence from governing bodies of at least 51% or more of the total combined rate of taxation on the property, all taxing districts projects will be exempted from all applicable ad valorem taxes for a term of 10 years. The exemption cannot include the land on which the development is built but may include parking constructed as part of the project and the value of commercial property that is a required design element or public benefit component of the housing development. If the development involves the improvement or conversion of an existing structure either to add dwelling units or to convert from a non-housing to a housing use than only the increased value associated with the addition or conversion may be exempted. Conclusion: The two programs share a common intention of attempting to promote the development of transit-served multi-unit housing located in the urban core or mixed use areas. There are sufficient differences between the programs to affect the type and volume of development resulting from their use. MUPTE would seem to have an advantage in that it empowers local jurisdictions with the ability to develop a program that can be adjusted, within statutory constraints, to meet local needs and incent development based on local interests. Under MUPTE, local jurisdictions are required to develop program guidelines and evaluation criteria that focus the type of development and applications that are approved. Approval/denial authority under MUPTE would be held by the local jurisdiction while under VHDP that authority would be held by the State. The two programs may produce developments with different physical characteristic and uses. The VHDP could incent taller structures since the rate of exemption increases as the height of the building increases and VHDP requires a commercial use on the ground floor which cannot be included in the exemption while MUPTE allows but does not require a commercial use. Attachment 1, Page 6 of 16 With MUPTE, the rate of exemption and potentially its ability to incent development relies on other jurisdictions opting in to the program. Thus the city’s ability to partner with other taxing jurisdictions should be taken into account. The ability of each program to incent below market rate development could differ depending on the circumstances surrounding the project. In some cases VHDP could have additional leverage to incent below market rate housing as the value of land is exempted for low income housing projects while MUPTE cannot exempt land value in any case. MUPTE could have an advantage in that the entire City may be designated as the area eligible for exemption for housing that is or becomes subject to a low income housing assistance contract with a public agency. SYSTEM DEVELOPMENT CHARGE WAIVERS FOR ACCESSORY DWELLING UNITS: System development charge (SDC) waivers and discounts (hereafter referred to generally as waivers) are part of a larger strategy to promote infill and stimulate the development of additional, affordable housing units in Springfield. Given the examples of accessory dwelling units (ADUs) already permitted in the City presented in the February Council Briefing Memo, the construction value-to-SDC ratio is typically higher than the ratio for single family dwellings or multifamily apartments. The cost per square foot to build an ADU is typically higher than a standard single family dwelling. Minimizing fixtures and limiting the square footage of a dwelling are some methods to reducing SDC costs, but they are not enough to bring the construction value-to-SDC ratio close to the ratio a single family dwelling. To limit the percentage of development costs for ADUs, SDC waivers or discounts may be an option to bring down a potential cost burden and encourage new units. SDC waivers may appeal to homeowners looking for cost effective ways to build fully permitted ADUs. SDC waivers would promote the development of legally permitted ADUs in the City, and would involve inspections to the benefit of the homeowner, residents, and public safety. Homeowners looking to convert spare rooms to an ADU may also be encouraged by an SDC waiver. Converting to an ADU increases the supply of dwellings. Additionally, adding an ADU increases the property value of the home through a conversion of a spare room to a rentable unit. An SDC waiver in combination with other efforts may stimulate construction of these small and relatively affordable housing options in Springfield. SDC Waiver options for a pilot program: If the City Council chooses an SDC waiver to stimulate ADU development and promote these housing units in Springfield, a targeted waiver effort will be required. As part of a pilot program, the City may decide to determine a dollar amount cap and/or a limited time period for waivers based on the waiver strategy the City Council chooses. Each SDC waiver option below would result in some level of reduced SDC revenue, assuming that the units would have been constructed anyway. It may be that by discounting the SDCs, there will still be more SDC revenue collected overall. All options assume a construction value of $67,000 for a new ADU (see example of a Small House/ADU example on page 3 of this memo) and SDCs of $9,200, a construction value-to-SDC ratio of 14%. The expected SDC revenue for FY 17 is shown below to help gauge the impact of SDC waivers or discounts. Transportation = $795,000 Sanitary sewer = $920.000 Storm drainage = $300,000 Attachment 1, Page 7 of 16 Options for Reducing the SDCs for a Typical ADU No Waivers CITY Discounts or Waivers ALL Jurisdictions Provide Discounts or Waivers Option 1: Option 2: Waive city admin, storm drainage + 20% discount city sewer Option 3: Waive city admin, storm drainage + 20% discount transpo& city sewer Option 4: Waive all city SDCs except transpo Option 5: Waive all city SDCs Option 6: 10% ratio with discount applied to ALL SDCs Option 7: Waive city admin, storm drainage + 20% discount ALL other SDCs Option 8: Waive ALL SDCs Construction value $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 SDCs normally charged $9,200 $9,200 $9,200 $9,200 $9,200 $9,200 $9,200 $9,200 Actual Paid with Discount $9,200 $8057 $7,610 $5,849 $3,462 $6,700 $6,917 $0 # ADUs helped with $100,000 of city subsidy 0 87 63 30 18 63 63 17 Ratio construction value to SDCs paid 14% 12% 11% 9% 5% 10% 10% 0% Revenue loss per ADU City admin - $273 $273 $273 $273 $174 $273 $273 City transportation - - $477 - $2,387 $648 $477 $2,387 City sanitary sewer - $552 $522 $2,760 $2,760 $750 $522 $2,760 City storm - $318 $318 $318 $318 $86 $318 $318 MWMC - - - - - $479 $353 $1,764 Willamalane - - - - - $461 $340 $1,698 Attachment 1, Page 8 of 16 Option 1 This option assumes no waivers or discounts. It serves as a comparison for the other options. Option 2 This option limits impact to the city capital funds by limiting the waiver to the administration and stormwater SDCs and providing a 20% discount on the city’s sanitary sewer SDC. Option 3 This option uses a combination of a waiver of the administrative and stormwater SDCs and a 20% discount of the city’s sanitary sewer and transportation SDCs. Option 4 This option waives all the city’s SDCs except those for transportation given the need for street improvements. This option reduces the SDC cost to just under 10% of the construction value of the ADU. Option 5 This option involves the city waiving all its SDCs. In a typical case, the cost of SDCs would be about 5% of the construction value of the ADU. Option 6 With this option, a homeowner would pay a maximum of 10% of the construction value of the ADU. In the example presented, the construction value of the ADU is $67,000 so the SDCs would be $6,700. If the construction value of the ADU is $40,000, then the SDCs would be $4,000. The City would reduce amount collected for each SDC on a proportional basis. This option would require participation of our regional partners, MWMC and Willamalane. Option 7 This option is similar to Option 3 except MWMC and Willamalane both agree to discount the SDCs by 20%. In a typical case, the SDCs would be about 20% of the construction value of the ADU. Option 8 This option provides a waiver of all SDCs. ENCOURAGING ADUS BY AMENDING THE SPRINGFIELD DEVELOPMENT CODE: One aspect of Council’s emerging affordable housing strategy is the encouragement of accessory dwelling units (ADUs). ADUs: Increase the number and type of affordable housing units without consuming land in the city’s limited inventory of developable land. In particular, they increase the supply of small rental units which is where the rental market is currently the tightest. Increase density in existing neighborhoods, taking advantage of existing infrastructure Create opportunities for intergenerational living, on-site caretakers, and students Diversify the demographics of an existing neighborhood Provide financial benefit to the property owner Trigger economic development at a local scale through local builders/contractors There are several ways in which Council can encourage construction of ADUs. One is by simplifying the regulations in the Springfield Development Code. Another is by discounting the System Development Attachment 1, Page 9 of 16 Charges (SDCs). This portion of the Council Briefing Memo presents potential code amendments based on previous Council comments along with staff commentary. Council members have questioned: 1. Why the city doesn’t allow ADUs in medium density zoning areas such as the area of the Q Street Refinement Plan 2. The need for requiring additional parking on the site if parking is available 3. The need for a minimum ADU size of 300 square feet 4. The need to require that trim on an ADU match the trim of the main house 5. If the city could allow an RV with axels removed as an ADU In addition to those topics, staff has also identified potential amendments that may also help to encourage ADUs. 6. Allow a small house to become the ADU 7. Allow larger ADUs in proportion to the primary dwelling 8. Allow unpaved parking in some cases 9. No longer require that the owner live in one of the dwellings A review of relevant policies sets the stage for discussion of ADUs. Then a series of questions focus the discussion. Based on Council’s direction, staff will prepare a set of code amendments for Council to initiate at a future meeting. Initiating the amendments starts the process to solicit public comments and hold public hearings to find out how Springfield citizens view ADUs. City Policies Relevant to ADUs: The following policies from the Springfield 2030 Comprehensive Plan Residential Land Use and Housing Element set the context and legal framework for any potential development code amendments related to ADUs in general. Policy H.6 - Continue to seek ways to reduce development impediments to more efficient utilization of the residential land supply inside the UGB, especially in the City’s sloped areas (southeast Springfield and Willamette Heights). Policy Analysis This policy supports making code amendments that reduce impediments to the construction of ADUs since ADUs add dwelling units on property that has already been developed. This efficiency in land use and infrastructure has the potential to provide more housing without needing to expand the urban growth boundary (UGB). Policy H.9- Provide a broad range of quality accessible and affordable housing options for very low, low and moderate income residents. Affordable housing is defined as housing for which persons or families pay 30 percent or less of their gross income for housing, including necessary and essential utilities [Oregon Revised Statute 456.055]. Policy Analysis The data analysis completed as part of developing an affordable housing strategy indicated that vacancy rates for rentals are very low and that the waiting lists are longest for the one-bedroom and studio units. Based on the American Community Survey, in 2013, 53% of Springfield renters paid more than 30% of their gross income for housing, including necessary and essential utilities. Accessory dwelling units have the potential to provide additional housing options for these smaller units which by size tend to be more affordable to those with low and moderate incomes. Attachment 1, Page 10 of 16 Policy H.11 - Continue to seek ways to update development standards to introduce a variety of housing options for all income levels in both existing neighborhoods and new residential areas that match the changing demographics and lifestyles of Springfield residents. Policy Analysis ADUs add another rental housing option to those with low to moderate incomes in existing neighborhoods. These ADUs create opportunities for income generation that may be particularly useful for retirees, particularly as Springfield’s population continues to age. They also provide opportunities for seniors to age in place by allowing for on-site caretakers. ADUs allow for intergenerational living, students, and provide an alternative housing option for people wanting to remain in their neighborhood even if their life circumstances change. Policy H.15 - Update residential development standards to enhance the quality and affordability of neighborhood infill development (e.g. partitions, duplex developments, transitional neighborhoods, rehab housing, accessory dwelling units) and multi-family development. Policy Analysis ADUs are a type of infill development. Council will make decisions on code amendments as it balances the need to enhance the quality of the neighborhood while also providing affordability. Questions for Council: Question 1: Should Springfield allow accessory dwelling units in the Medium Density Residential (MDR) zones? A. Continue to limit ADUs to the LDR zones. Preserve the MDR for higher density developments. B. Allow ADUs in the MDR zones. Adding ADUs to existing single-family dwellings increases densities. C. Allow ADUs in the MDR zones on lots of 6250 square feet or less. Two dwellings on a lot of 6250 square feet or less meets the minimum density requirement for the MDR zone. Currently, ADUs are only allowed in low density residential zones with the exclusion of the Washburne Historic District. Council asked about allowing ADUs in MDR zones. According to Section 3.2-205 of the Development Code, the Medium Density Residential District establishes sites for residential development where primarily multifamily dwellings are permitted and the density range is 14 to 28 dwelling units per net acre. Springfield 2030 Comprehensive Plan Residential Land Use and Housing Element Policy H.1 - Based on the findings in the Residential Land and Housing Needs Analysis and to accommodate projected growth between 2010 and 2030, Springfield has designated sufficient buildable residential land (a) for at least 5,920 new dwelling units at an estimated density of at least 7.9 units per net buildable acre; and (b) to accommodate a new dwelling mix of approximately 52 percent detached single family dwellings (including manufactured dwellings on individual lots), seven percent attached single-family dwellings, one percent manufactured dwellings in parks, and 40 percent multifamily dwellings. Eugene-Springfield Metropolitan Area General Plan Policy G.7-Services providers shall coordinate the provision of facilities and services to areas targeted by the cities for higher densities, infill, mixed uses, and nodal development. Attachment 1, Page 11 of 16 Policy Analysis As stated in Policy H.1, the assumption of the Residential Land and Housing Needs Analysis was that 40% of Springfield’s new dwelling units would be multi-family. The Needs Analysis assumed that those would be constructed on land designated Medium Density Residential and High Density Residential. It also assumed that all new single-family homes would be constructed on land designated Low Density Residential, although single-family homes (both detached and attached) are allowed within the MDR zone. The Needs Analysis assumed that 5% of developed lots would develop further or redevelop to include additional dwellings. Between 1999 and 2008, 70% of the new dwellings that were added to already developed lots were added to lots designated MDR.1If there is an existing single family house on a larger lot, it is anticipated that someday that property may redevelop into more dense housing. Allowing the property owner to improve the value of the property by constructing one ADU may delay that ultimate conversion to medium density; thereby increasing pressure on the city’s remaining supply of buildable land. However, allowing ADUs in those situations would provide more dwelling units and somewhat increase density in the short term. Another consideration is that the public facilities and services plan and resulting capital improvement plans are based on the densities allowed by the plan designations. Policy G.7 (among others) requires that service providers coordinate the provision of facilities and services to match the densities allowed by the plan designations. It is important that the densities achieved match the level of investment made in the infrastructure constructed to serve those facilities. Undersizing infrastructure limits the ability of the land to develop to planned densities. Oversizing infrastructure means the public has paid more than necessary to serve the development. Question 2: Should Springfield require on-site parking for the ADU? A. Require one on-site parking space for the ADU. B. Require an on-site parking space only if there is no on-street parking available adjacent to the property. C. Require no on-site parking for the ADU. Currently, the code requires one on-site parking space in addition to the two parking spaces required for the primary dwelling. Council discussed making it easier to fit an ADU on the lot and reducing the cost to construct an ADU by eliminating the parking requirements. Springfield 2035 Transportation System Plan Policy 2.6 Manage the on-street parking system to preserve adequate capacity and turnover for surrounding land uses. Policy Analysis The question becomes, how much on-site parking is enough? Requiring on-site parking for the ADU makes sure there is space on-site to accommodate residents’ cars (based on two cars per standard single-family dwelling and one car for an ADU). Any on-street parking would be available for those households with additional vehicles, for delivery vehicles, and visitors. Not requiring on-site parking for the ADU means that residents and visitors with cars must park on the street if the parking spaces for the primary dwelling are unavailable. 1 Springfield Residential Land and Housing Needs Analysis, April 2011, page 19 Attachment 1, Page 12 of 16 While on-street parking is in theory available to anyone, residents tend to get possessive of on- street parking and become upset if they are unable to find an available parking space near their home. In some cases, people will park illegally, blocking the sidewalk or a fire lane rather than park down the street or on another street. The city could help to prevent this type of problem by requiring on-site parking rather than relying on parking enforcement efforts. However, as we’re making efforts to make our city pedestrian-friendly and bicycle-friendly and with Lane Transit District providing bus service, not every household will necessarily choose to have a car. Requiring a parking space on-site then becomes an unnecessary burden on the property owner. The other factor to consider is that not all streets have on-street parking. Collectors and arterial streets as well as some narrow local streets do not provide on-street parking at all or limit it to one side of the street. In these cases, the provision of parking is shifted almost exclusively to the property owners as the public street is not accommodating the parking. Question 3: Should the Council eliminate the minimum size for an ADU? A. Yes, eliminate the minimum size for an ADU. B. No, keep the minimum size at 300 square feet. With the growing popularity of “tiny homes”, some people may want to construct an ADU smaller than 300 square feet. Question 4: Should ADUs be required to meet any design standards? A. No, eliminate design standards for ADUs. B. Yes, leave the design standards intact. C. Yes, but there should be some changes to the design standards. The following design standards are currently required for ADUs. An accessory dwelling unit shall comply with the following standards, where practicable: A. Exterior finish materials shall be the same or essentially the same in terms of type, size, placement and finish as the primary dwelling. B. Roof pitch shall match the roof pitch of the primary dwelling. C. Trim shall be the same in type, location and finish as the primary dwelling. D. Windows shall match those of the primary dwelling in terms of proportion (height and width ratio) and orientation (vertical vs. horizontal). E. Eaves shall project from the accessory dwelling unit addition the same distance as the eaves on the primary dwelling. Eliminating these design standards would reduce regulation and simplify the approval process. Question 5: Should the city allow structures other than those that are site-built or modular? A. No, only allow site-built or modular buildings as ADUs. Attachment 1, Page 13 of 16 B. Yes, allow small manufactured homes C. Yes, allow any temporary dwelling that arrives on wheels to be sited as an ADU. Staff has concerns with allowing any temporary dwelling as an ADU since the city receives a number of complaints of people living in RVs parked on lots in neighborhoods. Past efforts in Springfield have focused on improving the look and feel of neighborhood areas. While allowing people to live in RVs would help address the affordable housing problem, it may be perceived as having a negative impact on the gains made in the quality of development. The “tiny home” movement has prompted changes to rules at the state level in the Building Codes Division. The Division passed temporary rules in January and is in a permanent rule-making process to redefine recreational vehicles and to determine how best to regulate “tiny homes”. Given these changes to building codes and on-going discussions in the building codes community about “temporary” versus “permanent”, staff recommends waiting to make related changes to the Springfield Development Code until after the permanent rulemaking has been completed. It is possible to allow small manufactured homes as ADUs without getting into questions about “temporary versus permanent”. The Development Code defines as Type 2 Manufactured Home as having less than 1000 square feet and enclosing a minimum floor area of 500 square feet. (A Type 1 Manufactured Home encloses a minimum floor area of 1000 square feet.) The City could reduce the minimum size allowed only for ADUs to allow homes even smaller than 500 square feet. Question 6: Should Springfield allow a small house to become the ADU and then build a second dwelling on the property as the primary dwelling? A. Yes, allow conversion of an existing dwelling as an ADU. B. No, do not allow conversion of an existing dwelling as an ADU. There are a few small houses on relatively large lots in Springfield’s older neighborhoods. This change allows those small houses to become the “ADU” and to construct a larger house on the property to serve as the primary dwelling. Question 7: How big can the accessory dwelling be in comparison with the primary dwelling? A. Keep the proportion to a maximum of 40% of the primary dwelling (excluding garages). B. The accessory dwelling should just be smaller than the primary dwelling (excluding garages). C. The accessory dwelling should be ____% smaller than the primary dwelling. The current code limits the size of the ADU to 40% of the primary dwelling or 750 square feet, whichever is smaller. Given the small size of some houses in the older neighborhoods, limiting the size of the ADU to 40% of the primary dwelling may be unnecessarily restrictive. But if it is built at the same size, it could become like a duplex. Question 8: Is it OK to allow an unpaved (e.g. gravel) parking space if the driveway serving the parking space is at least 18 feet long measured from the property line? A. Yes, parking spaces do not have to be paved if they are at the end of a paved driveway at least 18 feet long B. No, all parking spaces must be paved. The code currently requires one paved, off-street parking space for the ADU, in addition to the spaces required for the primary house. One way that the city could reduce on-site parking costs is by allowing gravel or other types of unpaved parking. If on-site parking is constructed toward the interior of the lot (with a paved driveway at least 18’ long), then the parking space itself would not need to be paved. The Attachment 1, Page 14 of 16 main concern about requiring pavement is so that the cars are not bringing gravel across a sidewalk or onto the street. Gravel becomes a hazard to pedestrian and bicyclists in the public right-of-way. Gravel also causes damage to the street surface, shortening the life of the pavement. Having an 18 foot long paved surface before a gravel parking space greatly reduces the “drag” of gravel into the public right-of- way. Question 9: Should one of the dwelling units be owner-occupied? A. Yes, the property owner shall reside on the property and a deed restriction shall state all future owners shall also reside on the property. B. Yes, at the time of construction of the ADU, the property owner must reside on the property. However, the city will not require that the owner continue to reside on the property so no deed restriction would be required. C. No, the property owner does not need to reside on the property. This code provision addresses potential neighborhood concerns about maintaining home ownership in the neighborhood. This current code provision requiring the owner to live on the property is difficult to enforce after the ADU has been constructed. In cases where both the primary dwelling and the accessory dwelling unit become rentals, if there is a complaint from the neighbor, code enforcement is in the position of requiring both households to move off the property unless the owner returns to live in the property. Or, the owner would have to remove the ADU. OVERNIGHT PARKING PROGRAM: The City allows up to three vehicles to be used as outdoor overnight shelter at an approved site (church parking lot or industrial site) per Chapter 8 of the Municipal Code. At this time, there are six churches participating in this program providing a total of 12 spaces. Three churches (6 spaces) serve families with children who are currently participating in the G Street OASIS program. Partners: St. Vincent de Paul (SVDP) For three years, the City has contracted with SVDP to operate the overnight parking program, including identifying, screening and working with individuals for placement, coordinating trash and port-o-potty services at each site, and addressing site and/or personnel issues. Springfield Shelter Rights Alliance (SSRA) The SSRA would like to see the overnight parking program expand and aims to conduct outreach to churches and industrial property owners to identify additional sites. G Street OASIS OASIS has started to help place participating families in current church sites, and has connected with additional churches that are supportive of hosting families in need. While this would be an expanded role for the OASIS program, OASIS staff view the overnight parking program as a stabilizing resource for their clients. SVDP and OASIS staff plan to work together to address any concerns or issues with sites where families are placed. City role: The City authorizes the overnight parking program, provides base funding and contracts with SVDP to supervise the program, and serves as a resource to SVDP, churches, SSRA and others with questions about the objectives and requirements of the program. Attachment 1, Page 15 of 16 Current costs: The City has allocated $5,000 annually from the general fund to reimburse SVDP for costs to operate the program within the City of Springfield, specifically: background checks urine analysis for drug testing port-o-potty rentals; and garbage pickup costs. The City has not reimbursed SVDP for staff time and SVDP has absorbed any reimbursable costs exceeding the $5000 cap. As shown in the table below, the direct costs are approximately $1,200 per site. With six sites, it is estimated that those costs will exceed what is currently allocated: Estimated Costs for Outdoor Overnight Shelter Program Type of Expenses Annual Cost per Site Annual cost for six (6) sites Background checks, urine analysis, port-o-potty costs, and garbage pickup $1,200 $7,200 Costs to manage the program (including staff time, gas) N/A $2,100 TOTAL costs $9,300 Costs to exceed $5,000 allocation $4,300 Per the current contract, SVDP’s staff time is NOT an eligible category of reimbursement. Staff with SVDP cite this is a reason they are not able to conduct outreach with other church and industrial sites, and are currently limited in how much they can engage with current clients. Given the numbers of homeless people living in Springfield, SVDP staff support the expansion of the car camping program in Springfield, but would like future contracts to include sufficient resources to cover all direct costs and include an allowance for staff time. Fiscal options for car camping program Allocation Impact Maintain $5,000 annual allocation Pays for the hard costs of four (4) sites Does not pay for SVDP staff time to manage the program Partners and churches will need to pick up difference in costs Increase to $10,000 annually Pays for the hard costs of six (6) sites Pays for SVDP staff time to manage the program Partners and churches will need to pick up costs for any additional sites Increase to $20,000 annually Pays for the hard costs of up to fourteen (14) sites Pays for staff time to manage the program Could help purchase Conestoga Huts for clients without vehicles Partners and churches will need to pick up costs for any additional sites or Huts ACTION REQUESTED: Provide direction on the topics presented to assist in further development of Springfield’s Affordable Housing Strategy. Attachment 1, Page 16 of 16 M E M O R A N D U M City of Springfield Date: 2/13/2017 To: Gino Grimaldi COUNCIL From: Anette Spickard, DPW Director Sandy Belson, Comprehensive Planning Manager BRIEFING Subject: Developing an Affordable Housing Strategy MEMORANDUM ISSUE: The City recognizes that there is an affordable housing issue within the community and is working to address this problem. The findings point to a shortage of housing and the expense of housing relative to household incomes. The supply of housing is limited at all levels: emergency shelter, transitional housing, subsidized rental housing, market rate rental housing, space in manufactured home parks, and homes for sale. Rental vacancy rates are very low. It is a seller’s market with a low inventory of homes for sale. Housing costs are increasing faster than incomes. Female-headed households, children, those on fixed incomes, and people with special needs are disproportionately affected. COUNCIL GOALS/ MANDATE: Promote and Enhance our Hometown Feel While Focusing on Livability and Environmental Quality BACKGROUND: At its work session on February 13, Council began discussing what it wanted to include in its affordable housing strategy, including thoughts regarding a preliminary draft strategy. In response to a question from Council, staff has provided construction costs for tiny homes. The February Council Briefing Memo included a discussion of developer incentives including property tax exemptions and system development charge (SDC) waivers/discounts. At Council’s request, staff has compared the multi-unit property tax exemption with the vertical housing program and presented more information about potential SDC waivers/discounts for accessory dwelling units. Continuing to move forward with two areas of a potential housing strategy, staff has prepared the next steps for Council’s consideration of: (1) simplifying the regulations in the Springfield Development Code for accessory dwelling units and (2) expanding the overnight parking program. TINY HOME CONSTRUCTION COSTS: This section responds to questions from Council about the construction costs of the types of structures presented under different models of the Tiny Home Pilot Project in the February 13 Council Briefing Memorandum. What follows is a range of “tiny” homes and relative costs, excluding permitting costs and land development costs. The homes on the first page do not include interior plumbing. The homes on the second page include a bathroom and a kitchen. Attachment 1, Page 1 of 16 Consetoga Huts The Conestoga Huts built by Community Supported Shelter currently cost about $2000. Standard huts are 6’ x 13.5’. Huts to accommodate wheelchairs are 7’ x 16’ plus a ramp. Eugene Rest Stop Program Opportunity Village Structures built for Opportunity Village range in size from 8’ x 8’ to 8’ x 10’. Cost of materials is around $1500. Labor, with a lot of volunteer help, has cost about $1500 for a total of $3000 each. Opportunity Village November Work Party https://www.facebook.com/OpportunityVillageEugene/photos Sleeping Pods The sleeping pods have footprints of between 6’ x 8’ and 8’ x 12’. The cost of materials ranged from $1600 to $7000 with an average of $4500. Sleeping pods built by architects & students in Portland https://www.pdxmonthly.com/slideshows/2017/1/26/these-sleeping-pods-provide-safety-and-warmth-for-portland-s- homeless Shelter on Wheels This 8’ x 12’ structure includes electrical wiring per the recreational vehicle code and therefore includes lighting and heat. The trailer cost $2500, materials were $5200, labor $4800, and wiring $1600 for a total of $14,100. Built by Alexander Daniell of Backyard Bungalows for Episcopal Church of the Resurrection Attachment 1, Page 2 of 16 Micro Home This single-wide manufactured home built with HUD approvals has one bedroom, a bathroom, and a kitchen in 373 square feet (32’ x 12’). It costs $19,900 excluding delivery and placement. https://factoryexpo.net/floorplan/micro/ Emerald Village in Eugene Permanent homes meeting building codes that include sleeping areas, a kitchenette and a bathroom planned for Emerald Village range in size from 160 to 288 square feet. The cost for materials for the one designed by Emerald Valley is $15,000. The tiny homes in general are anticipated to cost about $25,000 each. Park Model This top of the line park model of 832 square feet has one bedroom, a bathroom, a kitchen and a loft. It costs $55,000, excluding freight. The Building Codes Division is changing how these are regulated through a rulemaking process. Cavco Park Model http://parkmodels.com/northwest/ Small House/ADU Example A small site built home costs between $125 to $175 per square feet for materials and labor. The difference depends on the quality of materials, and whether or not a loft and built-in features are included. A 384 square foot house like the one shown below may range from $48,000 to $67,000. http://smallhomeoregon.net/wp-content/ uploads/2013/10/SmallHome-1-e13344806018561.jpg COMPARISON OF THE VERTICAL HOUSING DEVELOPMENT PROGRAM AND MULTI-UNIT PROPERTY TAX EXEMPTION: Included below is an analysis of the Vertical Housing Development Program (VHDP) and the Multi Unit Property Exemption (MUPTE) as tools for incentivizing development of multi-unit housing. Both programs attempt to focus development within the Attachment 1, Page 3 of 16 urban core and within close proximity to transit, but differ in their program structure, the type of developments incentivized and the rate of exemption. Outlined on the next page is a comparison of these two programs and how they incentivize development. If the Council has interest in considering these options further staff can bring back more detailed case studies. Since our last Council work session on this topic staff discovered that the City already has language in Chapter 3.5 of the municipal code implementing state statute providing a property tax exemption for low income housing projects that could be used for projects which are near the end of their affordability period. If Council wishes to use this existing code section to allow exemptions for new construction of low-income rental housing, Council would first need to update the municipal code to reflect current statutes. Summary Table Key Components VHDP (Vertical Housing Development Program) MUPTE (Multi-Unit Property Tax Exemption) Zone creation process City applies to Oregon Housing and Community Services (OHCS) City adopts resolution or ordinance Criteria for zone creation Must be Downtown or a mixed use area (Riverbend, Mohawk, Marcola Meadows, or Glenwood). Must be core area of urban center or transit oriented area; or could be entire City for low-income housing projects Development guidelines Managed by OHCS City develops and administers based on minimum criteria set forth by State. City requires public benefits and may set design standards. Building and/or property exempted Only the equalized* floors in the building unless rents are set below market rate - then land is included Entire building including parking and commercial space. If addition or expansion then only the additional value is exempted. Commercial space required Commercial ground floor is required May include commercial space Primarily meant to incent Mixed used commercial-residential (either market rate or low income) Multi-unit housing (either market rate or low income) that may include commercial Applicable taxing districts Includes all taxing districts but all are given the option of opting out Includes all taxing districts only if 51% opt in Jurisdiction responsible for administration Oregon Housing and Community Services (currently) City of Springfield Tax exemption amount 20% per equalized* floor up to 80% Only City tax levy on improvements unless 51% or more other districts opt in, then 100% Term of exemption 10 years 10 years *Equalized floor refers to the quotient that results from the division of total sq ft of a project by the number of actual floors of the project that are at least 500 sq ft Attachment 1, Page 4 of 16 Program Summary: Vertical Housing Development Program The Vertical Housing Development Program (VHDP) is administered by the Oregon Housing and Community Services agency (OHCS). The program encourages mixed-use developments that contain both commercial and residential uses in areas designated by local jurisdictions. The rents for the residential portion may be set at market rates or be set below market for lower income households. Qualifying projects receive a partial property tax exemption up to a maximum of 80% over a 10 year term. Multi-Unit Property Tax Exemption Local jurisdictions are enabled to establish a Multi-Unit Property Tax Exemption (MUPTE) to promote private investment in multi-unit and affordable housing located in core areas, light rail station areas and transit oriented areas. The program shall be established and administered by the local jurisdiction who, within the parameters of applicable legislation, can tailor the program to their needs. The exemption applies only to the tax levy of the originating city or county, but through concurrence of other taxing districts can apply to the ad valorem taxes of all taxing districts. The tax exemption is provided over a 10 year term. Zone creation and project eligibility: Vertical Housing Development Program Cities and counties apply to OHCS to establish a zone (targeted area) where mixed use developments can be built and receive the partial property tax exemption. The zone must meet certain criteria including “contains property for which land use comprehensive plan and implementing ordinances allow ’mixed use’ with residential.” Once the zone is established, the authority to decide what projects are eligible to receive the partial property tax exemption resides solely with OHCS. It should be noted that there is state legislation being considered that would shift some administrative authority to the local jurisdiction. Any private or public developer can apply to the OHCS for project certification and once approved OHCS notifies the county assessor to apply the exemption. The City of Springfield has one Vertical Housing Zone in downtown and one certified project receiving the partial property tax exemption – the Royal Building. Multi-Unit Property Tax Exemption Program Through resolution or ordinance cities and counties may specify an area within which to exempt property taxes on eligible housing projects. The City may designate core areas, light rail station areas and transit oriented corridors, or the entire City for projects that are subject to a low income housing assistance contract with a public agency. Once the area is designated, the local jurisdiction is responsible for accepting applications, evaluating proposals, and either approving or denying the exemption based on locally established standards and criteria set forth in statute. The local standards must include information sufficient to evaluate the conformance of the application with the intent of the program. At the minimum, applicants will include information about the existing site and uses, design elements, rental rates or sales prices, extension of public benefits, minimum number of units and, if applicable, information related to low income housing assistance contracts. It is at the discretion of local jurisdictions to add additional standards/guidelines. Attachment 1, Page 5 of 16 Projects must also include one or more design or public benefit elements such as commercial use of a portion of the structure, open space, parks and recreational facilities, common meeting rooms, child care facilities, or transit/pedestrian amenities. Projects must also be in conformance with local plans and planning regulation. Amount of property tax exemption: Vertical Housing Development Program Certified projects can receive a tax exemption equal to 20% of each “equalized floor” up to 80% maximum (equivalent of 4 floors). Projects are required to have ground floor commercial in an amount determined by the number of public streets that front the property (specific details are found in the Oregon Administrative Rules governing the program). If rents are set at market rates, the owner can only receive the property tax exemption based on the “equalized floors” in the building. However, if the rents are set below market and meet OHCS’s criteria, the land may also receive a partial property tax exemption up to 80%. Before the City can submit its application for the zone designation, certain special taxing districts must be notified and given the opportunity to “opt out” of the program so that their levies are not impacted by the property tax exemption. Multi-Unit Property Tax Exemption Program The tax exemption under this program applies only to the tax levy of the city or county that has adopted the appropriate statutory provisions. However, with resolution of concurrence from governing bodies of at least 51% or more of the total combined rate of taxation on the property, all taxing districts projects will be exempted from all applicable ad valorem taxes for a term of 10 years. The exemption cannot include the land on which the development is built but may include parking constructed as part of the project and the value of commercial property that is a required design element or public benefit component of the housing development. If the development involves the improvement or conversion of an existing structure either to add dwelling units or to convert from a non-housing to a housing use than only the increased value associated with the addition or conversion may be exempted. Conclusion: The two programs share a common intention of attempting to promote the development of transit-served multi-unit housing located in the urban core or mixed use areas. There are sufficient differences between the programs to affect the type and volume of development resulting from their use. MUPTE would seem to have an advantage in that it empowers local jurisdictions with the ability to develop a program that can be adjusted, within statutory constraints, to meet local needs and incent development based on local interests. Under MUPTE, local jurisdictions are required to develop program guidelines and evaluation criteria that focus the type of development and applications that are approved. Approval/denial authority under MUPTE would be held by the local jurisdiction while under VHDP that authority would be held by the State. The two programs may produce developments with different physical characteristic and uses. The VHDP could incent taller structures since the rate of exemption increases as the height of the building increases and VHDP requires a commercial use on the ground floor which cannot be included in the exemption while MUPTE allows but does not require a commercial use. Attachment 1, Page 6 of 16 With MUPTE, the rate of exemption and potentially its ability to incent development relies on other jurisdictions opting in to the program. Thus the city’s ability to partner with other taxing jurisdictions should be taken into account. The ability of each program to incent below market rate development could differ depending on the circumstances surrounding the project. In some cases VHDP could have additional leverage to incent below market rate housing as the value of land is exempted for low income housing projects while MUPTE cannot exempt land value in any case. MUPTE could have an advantage in that the entire City may be designated as the area eligible for exemption for housing that is or becomes subject to a low income housing assistance contract with a public agency. SYSTEM DEVELOPMENT CHARGE WAIVERS FOR ACCESSORY DWELLING UNITS: System development charge (SDC) waivers and discounts (hereafter referred to generally as waivers) are part of a larger strategy to promote infill and stimulate the development of additional, affordable housing units in Springfield. Given the examples of accessory dwelling units (ADUs) already permitted in the City presented in the February Council Briefing Memo, the construction value-to-SDC ratio is typically higher than the ratio for single family dwellings or multifamily apartments. The cost per square foot to build an ADU is typically higher than a standard single family dwelling. Minimizing fixtures and limiting the square footage of a dwelling are some methods to reducing SDC costs, but they are not enough to bring the construction value-to-SDC ratio close to the ratio a single family dwelling. To limit the percentage of development costs for ADUs, SDC waivers or discounts may be an option to bring down a potential cost burden and encourage new units. SDC waivers may appeal to homeowners looking for cost effective ways to build fully permitted ADUs. SDC waivers would promote the development of legally permitted ADUs in the City, and would involve inspections to the benefit of the homeowner, residents, and public safety. Homeowners looking to convert spare rooms to an ADU may also be encouraged by an SDC waiver. Converting to an ADU increases the supply of dwellings. Additionally, adding an ADU increases the property value of the home through a conversion of a spare room to a rentable unit. An SDC waiver in combination with other efforts may stimulate construction of these small and relatively affordable housing options in Springfield. SDC Waiver options for a pilot program: If the City Council chooses an SDC waiver to stimulate ADU development and promote these housing units in Springfield, a targeted waiver effort will be required. As part of a pilot program, the City may decide to determine a dollar amount cap and/or a limited time period for waivers based on the waiver strategy the City Council chooses. Each SDC waiver option below would result in some level of reduced SDC revenue, assuming that the units would have been constructed anyway. It may be that by discounting the SDCs, there will still be more SDC revenue collected overall. All options assume a construction value of $67,000 for a new ADU (see example of a Small House/ADU example on page 3 of this memo) and SDCs of $9,200, a construction value-to-SDC ratio of 14%. The expected SDC revenue for FY 17 is shown below to help gauge the impact of SDC waivers or discounts. Transportation = $795,000 Sanitary sewer = $920.000 Storm drainage = $300,000 Attachment 1, Page 7 of 16 Options for Reducing the SDCs for a Typical ADU No Waivers CITY Discounts or Waivers ALL Jurisdictions Provide Discounts or Waivers Option 1: Option 2: Waive city admin, storm drainage + 20% discount city sewer Option 3: Waive city admin, storm drainage + 20% discount transpo& city sewer Option 4: Waive all city SDCs except transpo Option 5: Waive all city SDCs Option 6: 10% ratio with discount applied to ALL SDCs Option 7: Waive city admin, storm drainage + 20% discount ALL other SDCs Option 8: Waive ALL SDCs Construction value $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 SDCs normally charged $9,200 $9,200 $9,200 $9,200 $9,200 $9,200 $9,200 $9,200 Actual Paid with Discount $9,200 $8057 $7,610 $5,849 $3,462 $6,700 $6,917 $0 # ADUs helped with $100,000 of city subsidy 0 87 63 30 18 63 63 17 Ratio construction value to SDCs paid 14% 12% 11% 9% 5% 10% 10% 0% Revenue loss per ADU City admin - $273 $273 $273 $273 $174 $273 $273 City transportation - - $477 - $2,387 $648 $477 $2,387 City sanitary sewer - $552 $522 $2,760 $2,760 $750 $522 $2,760 City storm - $318 $318 $318 $318 $86 $318 $318 MWMC - - - - - $479 $353 $1,764 Willamalane - - - - - $461 $340 $1,698 Attachment 1, Page 8 of 16 Option 1 This option assumes no waivers or discounts. It serves as a comparison for the other options. Option 2 This option limits impact to the city capital funds by limiting the waiver to the administration and stormwater SDCs and providing a 20% discount on the city’s sanitary sewer SDC. Option 3 This option uses a combination of a waiver of the administrative and stormwater SDCs and a 20% discount of the city’s sanitary sewer and transportation SDCs. Option 4 This option waives all the city’s SDCs except those for transportation given the need for street improvements. This option reduces the SDC cost to just under 10% of the construction value of the ADU. Option 5 This option involves the city waiving all its SDCs. In a typical case, the cost of SDCs would be about 5% of the construction value of the ADU. Option 6 With this option, a homeowner would pay a maximum of 10% of the construction value of the ADU. In the example presented, the construction value of the ADU is $67,000 so the SDCs would be $6,700. If the construction value of the ADU is $40,000, then the SDCs would be $4,000. The City would reduce amount collected for each SDC on a proportional basis. This option would require participation of our regional partners, MWMC and Willamalane. Option 7 This option is similar to Option 3 except MWMC and Willamalane both agree to discount the SDCs by 20%. In a typical case, the SDCs would be about 20% of the construction value of the ADU. Option 8 This option provides a waiver of all SDCs. ENCOURAGING ADUS BY AMENDING THE SPRINGFIELD DEVELOPMENT CODE: One aspect of Council’s emerging affordable housing strategy is the encouragement of accessory dwelling units (ADUs). ADUs: Increase the number and type of affordable housing units without consuming land in the city’s limited inventory of developable land. In particular, they increase the supply of small rental units which is where the rental market is currently the tightest. Increase density in existing neighborhoods, taking advantage of existing infrastructure Create opportunities for intergenerational living, on-site caretakers, and students Diversify the demographics of an existing neighborhood Provide financial benefit to the property owner Trigger economic development at a local scale through local builders/contractors There are several ways in which Council can encourage construction of ADUs. One is by simplifying the regulations in the Springfield Development Code. Another is by discounting the System Development Attachment 1, Page 9 of 16 Charges (SDCs). This portion of the Council Briefing Memo presents potential code amendments based on previous Council comments along with staff commentary. Council members have questioned: 1. Why the city doesn’t allow ADUs in medium density zoning areas such as the area of the Q Street Refinement Plan 2. The need for requiring additional parking on the site if parking is available 3. The need for a minimum ADU size of 300 square feet 4. The need to require that trim on an ADU match the trim of the main house 5. If the city could allow an RV with axels removed as an ADU In addition to those topics, staff has also identified potential amendments that may also help to encourage ADUs. 6. Allow a small house to become the ADU 7. Allow larger ADUs in proportion to the primary dwelling 8. Allow unpaved parking in some cases 9. No longer require that the owner live in one of the dwellings A review of relevant policies sets the stage for discussion of ADUs. Then a series of questions focus the discussion. Based on Council’s direction, staff will prepare a set of code amendments for Council to initiate at a future meeting. Initiating the amendments starts the process to solicit public comments and hold public hearings to find out how Springfield citizens view ADUs. City Policies Relevant to ADUs: The following policies from the Springfield 2030 Comprehensive Plan Residential Land Use and Housing Element set the context and legal framework for any potential development code amendments related to ADUs in general. Policy H.6 - Continue to seek ways to reduce development impediments to more efficient utilization of the residential land supply inside the UGB, especially in the City’s sloped areas (southeast Springfield and Willamette Heights). Policy Analysis This policy supports making code amendments that reduce impediments to the construction of ADUs since ADUs add dwelling units on property that has already been developed. This efficiency in land use and infrastructure has the potential to provide more housing without needing to expand the urban growth boundary (UGB). Policy H.9- Provide a broad range of quality accessible and affordable housing options for very low, low and moderate income residents. Affordable housing is defined as housing for which persons or families pay 30 percent or less of their gross income for housing, including necessary and essential utilities [Oregon Revised Statute 456.055]. Policy Analysis The data analysis completed as part of developing an affordable housing strategy indicated that vacancy rates for rentals are very low and that the waiting lists are longest for the one-bedroom and studio units. Based on the American Community Survey, in 2013, 53% of Springfield renters paid more than 30% of their gross income for housing, including necessary and essential utilities. Accessory dwelling units have the potential to provide additional housing options for these smaller units which by size tend to be more affordable to those with low and moderate incomes. Attachment 1, Page 10 of 16 Policy H.11 - Continue to seek ways to update development standards to introduce a variety of housing options for all income levels in both existing neighborhoods and new residential areas that match the changing demographics and lifestyles of Springfield residents. Policy Analysis ADUs add another rental housing option to those with low to moderate incomes in existing neighborhoods. These ADUs create opportunities for income generation that may be particularly useful for retirees, particularly as Springfield’s population continues to age. They also provide opportunities for seniors to age in place by allowing for on-site caretakers. ADUs allow for intergenerational living, students, and provide an alternative housing option for people wanting to remain in their neighborhood even if their life circumstances change. Policy H.15 - Update residential development standards to enhance the quality and affordability of neighborhood infill development (e.g. partitions, duplex developments, transitional neighborhoods, rehab housing, accessory dwelling units) and multi-family development. Policy Analysis ADUs are a type of infill development. Council will make decisions on code amendments as it balances the need to enhance the quality of the neighborhood while also providing affordability. Questions for Council: Question 1: Should Springfield allow accessory dwelling units in the Medium Density Residential (MDR) zones? A. Continue to limit ADUs to the LDR zones. Preserve the MDR for higher density developments. B. Allow ADUs in the MDR zones. Adding ADUs to existing single-family dwellings increases densities. C. Allow ADUs in the MDR zones on lots of 6250 square feet or less. Two dwellings on a lot of 6250 square feet or less meets the minimum density requirement for the MDR zone. Currently, ADUs are only allowed in low density residential zones with the exclusion of the Washburne Historic District. Council asked about allowing ADUs in MDR zones. According to Section 3.2-205 of the Development Code, the Medium Density Residential District establishes sites for residential development where primarily multifamily dwellings are permitted and the density range is 14 to 28 dwelling units per net acre. Springfield 2030 Comprehensive Plan Residential Land Use and Housing Element Policy H.1 - Based on the findings in the Residential Land and Housing Needs Analysis and to accommodate projected growth between 2010 and 2030, Springfield has designated sufficient buildable residential land (a) for at least 5,920 new dwelling units at an estimated density of at least 7.9 units per net buildable acre; and (b) to accommodate a new dwelling mix of approximately 52 percent detached single family dwellings (including manufactured dwellings on individual lots), seven percent attached single-family dwellings, one percent manufactured dwellings in parks, and 40 percent multifamily dwellings. Eugene-Springfield Metropolitan Area General Plan Policy G.7-Services providers shall coordinate the provision of facilities and services to areas targeted by the cities for higher densities, infill, mixed uses, and nodal development. Attachment 1, Page 11 of 16 Policy Analysis As stated in Policy H.1, the assumption of the Residential Land and Housing Needs Analysis was that 40% of Springfield’s new dwelling units would be multi-family. The Needs Analysis assumed that those would be constructed on land designated Medium Density Residential and High Density Residential. It also assumed that all new single-family homes would be constructed on land designated Low Density Residential, although single-family homes (both detached and attached) are allowed within the MDR zone. The Needs Analysis assumed that 5% of developed lots would develop further or redevelop to include additional dwellings. Between 1999 and 2008, 70% of the new dwellings that were added to already developed lots were added to lots designated MDR.1If there is an existing single family house on a larger lot, it is anticipated that someday that property may redevelop into more dense housing. Allowing the property owner to improve the value of the property by constructing one ADU may delay that ultimate conversion to medium density; thereby increasing pressure on the city’s remaining supply of buildable land. However, allowing ADUs in those situations would provide more dwelling units and somewhat increase density in the short term. Another consideration is that the public facilities and services plan and resulting capital improvement plans are based on the densities allowed by the plan designations. Policy G.7 (among others) requires that service providers coordinate the provision of facilities and services to match the densities allowed by the plan designations. It is important that the densities achieved match the level of investment made in the infrastructure constructed to serve those facilities. Undersizing infrastructure limits the ability of the land to develop to planned densities. Oversizing infrastructure means the public has paid more than necessary to serve the development. Question 2: Should Springfield require on-site parking for the ADU? A. Require one on-site parking space for the ADU. B. Require an on-site parking space only if there is no on-street parking available adjacent to the property. C. Require no on-site parking for the ADU. Currently, the code requires one on-site parking space in addition to the two parking spaces required for the primary dwelling. Council discussed making it easier to fit an ADU on the lot and reducing the cost to construct an ADU by eliminating the parking requirements. Springfield 2035 Transportation System Plan Policy 2.6 Manage the on-street parking system to preserve adequate capacity and turnover for surrounding land uses. Policy Analysis The question becomes, how much on-site parking is enough? Requiring on-site parking for the ADU makes sure there is space on-site to accommodate residents’ cars (based on two cars per standard single-family dwelling and one car for an ADU). Any on-street parking would be available for those households with additional vehicles, for delivery vehicles, and visitors. Not requiring on-site parking for the ADU means that residents and visitors with cars must park on the street if the parking spaces for the primary dwelling are unavailable. 1 Springfield Residential Land and Housing Needs Analysis, April 2011, page 19 Attachment 1, Page 12 of 16 While on-street parking is in theory available to anyone, residents tend to get possessive of on- street parking and become upset if they are unable to find an available parking space near their home. In some cases, people will park illegally, blocking the sidewalk or a fire lane rather than park down the street or on another street. The city could help to prevent this type of problem by requiring on-site parking rather than relying on parking enforcement efforts. However, as we’re making efforts to make our city pedestrian-friendly and bicycle-friendly and with Lane Transit District providing bus service, not every household will necessarily choose to have a car. Requiring a parking space on-site then becomes an unnecessary burden on the property owner. The other factor to consider is that not all streets have on-street parking. Collectors and arterial streets as well as some narrow local streets do not provide on-street parking at all or limit it to one side of the street. In these cases, the provision of parking is shifted almost exclusively to the property owners as the public street is not accommodating the parking. Question 3: Should the Council eliminate the minimum size for an ADU? A. Yes, eliminate the minimum size for an ADU. B. No, keep the minimum size at 300 square feet. With the growing popularity of “tiny homes”, some people may want to construct an ADU smaller than 300 square feet. Question 4: Should ADUs be required to meet any design standards? A. No, eliminate design standards for ADUs. B. Yes, leave the design standards intact. C. Yes, but there should be some changes to the design standards. The following design standards are currently required for ADUs. An accessory dwelling unit shall comply with the following standards, where practicable: A. Exterior finish materials shall be the same or essentially the same in terms of type, size, placement and finish as the primary dwelling. B. Roof pitch shall match the roof pitch of the primary dwelling. C. Trim shall be the same in type, location and finish as the primary dwelling. D. Windows shall match those of the primary dwelling in terms of proportion (height and width ratio) and orientation (vertical vs. horizontal). E. Eaves shall project from the accessory dwelling unit addition the same distance as the eaves on the primary dwelling. Eliminating these design standards would reduce regulation and simplify the approval process. Question 5: Should the city allow structures other than those that are site-built or modular? A. No, only allow site-built or modular buildings as ADUs. Attachment 1, Page 13 of 16 B. Yes, allow small manufactured homes C. Yes, allow any temporary dwelling that arrives on wheels to be sited as an ADU. Staff has concerns with allowing any temporary dwelling as an ADU since the city receives a number of complaints of people living in RVs parked on lots in neighborhoods. Past efforts in Springfield have focused on improving the look and feel of neighborhood areas. While allowing people to live in RVs would help address the affordable housing problem, it may be perceived as having a negative impact on the gains made in the quality of development. The “tiny home” movement has prompted changes to rules at the state level in the Building Codes Division. The Division passed temporary rules in January and is in a permanent rule-making process to redefine recreational vehicles and to determine how best to regulate “tiny homes”. Given these changes to building codes and on-going discussions in the building codes community about “temporary” versus “permanent”, staff recommends waiting to make related changes to the Springfield Development Code until after the permanent rulemaking has been completed. It is possible to allow small manufactured homes as ADUs without getting into questions about “temporary versus permanent”. The Development Code defines as Type 2 Manufactured Home as having less than 1000 square feet and enclosing a minimum floor area of 500 square feet. (A Type 1 Manufactured Home encloses a minimum floor area of 1000 square feet.) The City could reduce the minimum size allowed only for ADUs to allow homes even smaller than 500 square feet. Question 6: Should Springfield allow a small house to become the ADU and then build a second dwelling on the property as the primary dwelling? A. Yes, allow conversion of an existing dwelling as an ADU. B. No, do not allow conversion of an existing dwelling as an ADU. There are a few small houses on relatively large lots in Springfield’s older neighborhoods. This change allows those small houses to become the “ADU” and to construct a larger house on the property to serve as the primary dwelling. Question 7: How big can the accessory dwelling be in comparison with the primary dwelling? A. Keep the proportion to a maximum of 40% of the primary dwelling (excluding garages). B. The accessory dwelling should just be smaller than the primary dwelling (excluding garages). C. The accessory dwelling should be ____% smaller than the primary dwelling. The current code limits the size of the ADU to 40% of the primary dwelling or 750 square feet, whichever is smaller. Given the small size of some houses in the older neighborhoods, limiting the size of the ADU to 40% of the primary dwelling may be unnecessarily restrictive. But if it is built at the same size, it could become like a duplex. Question 8: Is it OK to allow an unpaved (e.g. gravel) parking space if the driveway serving the parking space is at least 18 feet long measured from the property line? A. Yes, parking spaces do not have to be paved if they are at the end of a paved driveway at least 18 feet long B. No, all parking spaces must be paved. The code currently requires one paved, off-street parking space for the ADU, in addition to the spaces required for the primary house. One way that the city could reduce on-site parking costs is by allowing gravel or other types of unpaved parking. If on-site parking is constructed toward the interior of the lot (with a paved driveway at least 18’ long), then the parking space itself would not need to be paved. The Attachment 1, Page 14 of 16 main concern about requiring pavement is so that the cars are not bringing gravel across a sidewalk or onto the street. Gravel becomes a hazard to pedestrian and bicyclists in the public right-of-way. Gravel also causes damage to the street surface, shortening the life of the pavement. Having an 18 foot long paved surface before a gravel parking space greatly reduces the “drag” of gravel into the public right-of- way. Question 9: Should one of the dwelling units be owner-occupied? A. Yes, the property owner shall reside on the property and a deed restriction shall state all future owners shall also reside on the property. B. Yes, at the time of construction of the ADU, the property owner must reside on the property. However, the city will not require that the owner continue to reside on the property so no deed restriction would be required. C. No, the property owner does not need to reside on the property. This code provision addresses potential neighborhood concerns about maintaining home ownership in the neighborhood. This current code provision requiring the owner to live on the property is difficult to enforce after the ADU has been constructed. In cases where both the primary dwelling and the accessory dwelling unit become rentals, if there is a complaint from the neighbor, code enforcement is in the position of requiring both households to move off the property unless the owner returns to live in the property. Or, the owner would have to remove the ADU. OVERNIGHT PARKING PROGRAM: The City allows up to three vehicles to be used as outdoor overnight shelter at an approved site (church parking lot or industrial site) per Chapter 8 of the Municipal Code. At this time, there are six churches participating in this program providing a total of 12 spaces. Three churches (6 spaces) serve families with children who are currently participating in the G Street OASIS program. Partners: St. Vincent de Paul (SVDP) For three years, the City has contracted with SVDP to operate the overnight parking program, including identifying, screening and working with individuals for placement, coordinating trash and port-o-potty services at each site, and addressing site and/or personnel issues. Springfield Shelter Rights Alliance (SSRA) The SSRA would like to see the overnight parking program expand and aims to conduct outreach to churches and industrial property owners to identify additional sites. G Street OASIS OASIS has started to help place participating families in current church sites, and has connected with additional churches that are supportive of hosting families in need. While this would be an expanded role for the OASIS program, OASIS staff view the overnight parking program as a stabilizing resource for their clients. SVDP and OASIS staff plan to work together to address any concerns or issues with sites where families are placed. City role: The City authorizes the overnight parking program, provides base funding and contracts with SVDP to supervise the program, and serves as a resource to SVDP, churches, SSRA and others with questions about the objectives and requirements of the program. Attachment 1, Page 15 of 16 Current costs: The City has allocated $5,000 annually from the general fund to reimburse SVDP for costs to operate the program within the City of Springfield, specifically: background checks urine analysis for drug testing port-o-potty rentals; and garbage pickup costs. The City has not reimbursed SVDP for staff time and SVDP has absorbed any reimbursable costs exceeding the $5000 cap. As shown in the table below, the direct costs are approximately $1,200 per site. With six sites, it is estimated that those costs will exceed what is currently allocated: Estimated Costs for Outdoor Overnight Shelter Program Type of Expenses Annual Cost per Site Annual cost for six (6) sites Background checks, urine analysis, port-o-potty costs, and garbage pickup $1,200 $7,200 Costs to manage the program (including staff time, gas) N/A $2,100 TOTAL costs $9,300 Costs to exceed $5,000 allocation $4,300 Per the current contract, SVDP’s staff time is NOT an eligible category of reimbursement. Staff with SVDP cite this is a reason they are not able to conduct outreach with other church and industrial sites, and are currently limited in how much they can engage with current clients. Given the numbers of homeless people living in Springfield, SVDP staff support the expansion of the car camping program in Springfield, but would like future contracts to include sufficient resources to cover all direct costs and include an allowance for staff time. Fiscal options for car camping program Allocation Impact Maintain $5,000 annual allocation Pays for the hard costs of four (4) sites Does not pay for SVDP staff time to manage the program Partners and churches will need to pick up difference in costs Increase to $10,000 annually Pays for the hard costs of six (6) sites Pays for SVDP staff time to manage the program Partners and churches will need to pick up costs for any additional sites Increase to $20,000 annually Pays for the hard costs of up to fourteen (14) sites Pays for staff time to manage the program Could help purchase Conestoga Huts for clients without vehicles Partners and churches will need to pick up costs for any additional sites or Huts ACTION REQUESTED: Provide direction on the topics presented to assist in further development of Springfield’s Affordable Housing Strategy. Attachment 1, Page 16 of 16