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HomeMy WebLinkAboutItem 11- Land Acquisition for Affordable HousingAGENDA ITEM SUMMARY SPRINGFIELD CITY COUNCIL Meeting Date: Meeting Type: Staff Contact/Dept.: Staff Phone No: Estimated Time: Council Goals: 6/20/2023 Regular Meeting Katie Carroll / DPW Erin Fifield / DPW 541.726.3660 10 Minutes Promote and Enhance our Hometown Feel while Focusing on Livability and Environmental Quality ITEM TITLE: LAND ACQUISITION FOR AFFORDABLE HOUSING ACTION Approve a request to Lane County to transfer two Lane County tax foreclosed REQUESTED: properties, tax lot # 1703274105200 and tax lot # 1702333400800, to the City for purposes of low-income housing development. Authorize the City Manager to negotiate and execute all documents needed to formalize the request and to take ownership of the properties. ISSUE City Council has directed staff to identify land suitable for low-income housing STATEMENT: development and use federal funds to acquire or help developers acquire land. Lane County has two tax -foreclosed properties available in Springfield that could be developed for low-income housing. ORS 271.330(2) permits counties to transfer county -owned property without consideration (payment for the property) to municipal corporations for the purpose of providing low-income housing. To initiate a request to transfer, the City must submit a plan to the Lane County Board of County Commissioners for using the properties for low-income housing. ATTACHMENTS: 1: Draft Letter to Lane County Board of Commissioners with: • Springfield's Proposal for Two Tax -Foreclosed Properties and • Springfield Housing Strategy DISCUSSION/ As part of the City's Housing Strategy, first developed in 2017, Council has FINANCIAL directed staff to acquire land for low-income housing. Lane County has two IMPACT: residentially zoned tax -foreclosed properties in Springfield which the City could take ownership of for purposes of low-income housing development. The City has conducted due diligence on the properties and determined the lots are suitable for this purpose. The transfer process for County -owned foreclosed property is laid out in Lane Manual 21.010.025(D). The City must request transfer of the properties from the Board of County Commissioners and present a plan for making the properties available for low-income housing development. If the Board approves the proposal, there is a $400 administrative fee to process the transfer request, in addition to any recording fees. The City would not own these lots long-term, but would make them available to developers for development as low-income housing as outlined in the attached draft transfer plan. SPRINGFIELD 7t OREGON DATE Lane County Board of County Commissioners c/o Kellie Hancock, Property Management Officer RE: Transfer of Lane County Tax Foreclosed Properties in Springfield Dear Commissioners, I am submitting this proposal on behalf of the Springfield City Council. The City proposes that Lane County transfer two residential properties of approximately .17 and .25 acres to the City for purposes of development as low-income housing as allowed under ORS 271.330(2) and the Lane Manual 21.010.025. The tax lots requested for transfer are 1703274105200 and 1702333400800. The City is working to address the community's housing needs by supporting several efforts to increase the supply and affordability of housing across the housing continuum. The City's Housing Strategy, originally developed by Council in 2017, includes the efforts the City is focusing on to help meet housing needs. Land acquisition for the development of low-income housing is one effort the City has undertaken as part of its Housing Strategy. Transfer of these properties fits within the City's existing housing work and expertise and will help the City and County meet the housing needs of vulnerable populations in the community. If the County approves this request, the City is committed to making sure the properties are available for efficient and prompt development. The City appreciates the Board of County Commissioner's consideration of this request and looks forward to partnering with the County on this and future housing -related efforts. Sincerely, Mayor Sean VanGordon Encl: Springfield's Proposal for Two Tax -Foreclosed Properties Springfield Housing Strategy SPRINGFIELD'S PROPOSAL FOR TWO TAX -FORECLOSED PROPERTIES CITY OF SPRINGFIELD EXPERTISE The City of Springfield is working to address the community's housing needs by supporting several efforts to increase the supply and affordability of housing across the housing continuum. In 2016 the City conducted a comprehensive analysis to evaluate housing challenges in Springfield, and to identify efforts the City could undertake to address the community's needs. Using this information, the Council created the City's HousingSgy, which includes the efforts the City is focusing on to help meet housing needs. Land acquisition for the development of low-income housing is one of the efforts the City has undertaken as part of its Housing Strategy. The City is actively searching for land to acquire or help developers acquire in Springfield for development as low-income housing. Transfer of these Lane County tax foreclosed properties will help the City meet this goal. The City is a Department of Housing and Urban Development (HUD) entitlement community, receiving annual allocations of both Community Development Block Grant (CDBG) and HOME funding for community development, including affordable housing. As such, the City has expertise in working with developers of affordable housing, including by awarding funding for low-income housing development through competitive request for proposal (RFP) processes and monitoring projects for conformance with affordability requirements. If the County transfers these properties for low-income housing purposes, the City does not plan to own the properties long-term. The City would award the properties to developers through competitive RFP processes. Additionally, the City has other incentive programs and funding sources that could be paired with each property to help ensure their successful development as low-income housing. DUE DILIGENCE CONDUCTED The City has been working to identify land to acquire for affordable housing for several years. Previous efforts focused on lots that can accommodate multi -unit apartments with at least 40 units to make projects competitive for State funding. However, with the adoption of Springfield's updated Development Code in 2022, which incorporates State middle housing requirements, the City has also begun to consider acquiring land for small-scale infill projects. Given the size of the tax -foreclosed lots, the City determined it should conduct additional due diligence to determine their feasibility for development as low-income housing before requesting transfer from the County. The City worked with University of Oregon architecture students who envisioned multi -unit middle housing developments that would be feasible on each lot and used this information to interview 14 local service providers, non-profit developers, and small private developers about their interest and ability to develop the lots for this purpose. The City's proposal for each lot is based on the information collected during its due diligence, along with existing City resources that can be paired with each lot. 2 PROPOSAL 1577 Laura Street (tax lot # 1703274105200) Kenzie Ri`* I The Laura Street property is an R-1 zoned lot of 0.17 acres with an existing single-family home onsite that would need to be razed. The lot could accommodate four units. The City requests transfer of this property for development as low-income rental housing. The City has federal HOME Investment Partnership Program — American Rescue Act (HOME -ARP) funds of $745,728 for development and $200,000 for supportive services to serve people experiencing homelessness, people at -risk of homelessness, and people who are fleeing/attempting to flee domestic violence, including priority special needs populations as identified in the Eugene -Springfield's 2020 Consolidated Plan. The City would award this property to a developer as part of the HOME -ARP RFP process through the Eugene - Springfield HOME Consortium along with HOME -ARP funds for development and supportive services. The City's due diligence suggests that the available HOME -ARP development funds will likely be sufficient to cover most, if not all development costs for a project of this scale. HOME -ARP funds require a 15 -year affordability period; however, the City would require 20 years in alignment with the requirements of ORS 271.330(1). In order to pair HOME -ARP funds with this property, the City would need to complete a federal Environmental Review prior to taking transfer of the property. The City has a Low -Income Rental Housing Property Tax Exemption (LIRHPTE) program which a developer could apply for to help offset ongoing operational costs of a project by exempting property taxes for up to twenty successive years. To qualify for the LIRHPTE, a developer must create at least four new units of rental housing reserved for households with incomes at or below 60% of the area median income (AMI). 367S52 d Street (tax lot # 1702333400800) wv. ■ e� syu,ysew � . ou3.0 Pati Crariis�+anch — � k The S 52nd Street property is an R-1 zoned vacant lot of 0.25 acres. The lot could accommodate four to five housing units, such as townhomes or a cottage cluster. The City requests transfer of this property for development as low-income home ownership housing. Home ownership is a priority of the Council, and while the City does not have development funds available for home ownership housing to award with this property, there are other City housing incentives that could be used to make the project pencil. To reduce upfront development costs, the City has a program to waive City system development charges (SDCs) for affordable home ownership housing which is sold affordably to low-income buyers at or below 80% AMI for a period of five years. The City also has the Springfield Home Ownership Program (SHOP) which provides no -interest loans of up to $25,000 for first-time low-income homebuyers earning at or below 80% AMI. These funds can be used to help reduce the subsidy a buyer needs to make a home affordable by helping with down payment and other purchase costs, such as closing fees and buying down interest rates. Multiple developers interviewed by the City said that the award of the land and City incentives would likely be enough to make a project pencil for low-income homeownership. The City would create a competitive RFP process to accept proposals for development of low- income homeownership units on the property, or a similar open and competitive selection process. The proposals would be required meet an affordability period of at least 20 years to match the requirements of ORS 271.330(1). Transfer Conditions The City Attorney's Office has identified concerns about the original foreclosure proceedings that would prevent underwriting of title insurance for the county lots, specifically the method of service of the prior owners and lienholders.. This situation poses a barrier to awarding these properties for development as low-income housing. If the County transfers the properties to the City, the City will need to file a proactive lawsuit in Lane County to quiet title in favor of the City. If the City is unsuccessful in this effort, it would return the properties to Lane County. The City requests that the County transfer the properties with a deed restriction requiring affordability, rather than a reversionary clause. The City proposes that the deed restriction 4 provide that the property owner compensate Lane County if the 20 -year affordability requirement of either property is not met. After the transfers takes place, if the City is successful in quieting title to the properties in favor of the City, the City will make the properties available through competitive RFPs or similar process, as discussed above. The City will make its best effort to make these properties available to developers and ensure timely development. If the City is unsuccessful in finding a qualified developer through an RFP or similar process within a reasonable time, it will return the property to Lane County. If a qualified developer is awarded the property but does not make progress on the development within a reasonable time, the property owner will be required to compensate Lane County. Summary of Proposal Property Proposed Use Proposed Terms Springfield Resources 1577 Laura Street . 4 units • 20- year affordability requirement • HOME -ARP funds- • Low -Income with repayment to County if unmet development and Rental Housing • Return to County if unsuccessful in operation quieting title • Low Income Rental • Return to County if unsuccessful in Housing Property finding a qualified developer Tax Exemption through the RFP process • Property owner compensates the County if not making progress on the development or using the property for another purpose 367 S 52nd Street • 4-5 units 0 20- year affordability requirement • SDC waiver for • Low -Income with repayment to County if unmet affordable home Home 9 Return to County if unsuccessful in ownership Ownership quieting title 9 Springfield Home Housing • Return to County if unsuccessful in Ownership Program finding a qualified developer buyer assistance through the RFP process • Property owner compensates the County if not making progress on the development or using the property for another purpose In 2016, the Springfield City Council directed staff to evaluate housing needs and to build on strategies to both increase the supply of housing and the accessibility of housing across the housing continuum. The result is the Springfield Housing Strategy, which includes the actions the City is taking to address the community's housing needs. We want Springfield to be a welcoming community for all people in every phase of life, whether it's just starting out with a new family or downsizing to a smaller home. Allow for temporary sheltering options. Overnight Parking Program Allow religious and social institutions and industrial sites to host up to 3 vehicles/campers/trailers. Provide $37,000/yr in City general funds to support non -profits running the parking program. STATUS: ONGOING RVs as Temporary Housing Temporarily allow RVs to be occupied on private property to address regional shortage of affordable temporary housing options. STATUS: ONGOING Shelter Sites Assist with siting emergency shelter as needed. Work with Mainstream Housing Inc to continue operation of a temporary emergency pallet shelter site. Award one-time federal ARPA funds toward acquisition of a house to shelter unhoused women in Springfield. STATUS: IN PROGRESS =qan Warming Center Continue looking for a long-term solution to ensure a cold weather emergency shelter is available in Springfield. Use State general funds to help meet this need. STATUS: IN PROGRESS Incentivize and fund development of income - restricted housing. Income -Restricted Affordable Housing Development Award federal HOME funds and other one-time funds toward new Affordable Housing projects. Help develop a new Manufacturered Dwelling Park with $3 million in State general funds. STATUS: ONGOING Land Acauisitior Identify land suitable for Affordable Housing development and use federal funds to acquire or help developers acquire land. STATUS: IN PROGRESS Development Fee Waiver for Non-profit Affordable Housing Providers Waive development fees for affordable homeownership and Rental Housing developed by non -profits. STATUS: ONGOING Low -Income Rental Housing Property Tax Exemption Allow property taxes to be exempted for 20 years for income -qualified Rental Housing. STATUS: ONGOING SDC Waiver for Homeownership Implement temporary program to waive System Development Charges (SDCs) for housing that is sold affordably to low-income homebuyers. STATUS: IN PROGRESS RenAssistance Assist agencies supporting low-income renters in Springfield. Rent Assistance for Low-income Households Award one-time Community Development Block Grant (CDBG) coronavirus relief funds to the County to distribute to local non-profit agencies to provide emergency household assistance. STATUS: IN PROGRESS Springfield Euaene Tenants Association !SETA) Award one-time CDBG coronavirus relief funds to SETA to support their tenant hotline to assist, educate, and empower renters on housing rights issues. STATUS: IN PROGRESS ership Assistance Provide assistance to prospective and current low-income homeowners. Home Repair Program Provide up to $10,000 over 5 years in financial assistance with CDBG funds (as a grant) to help very low-income homeowners with home repairs that address health, safety, or accessibility needs. STATUS: ONGOING Springfield Home Ownership Program Provide up to $25,000 in financial assistance with CDBG funds (as an interest-free loan) to help first-time low-income homebuyers purchase a home. STATUS: ONGOING �Rousllna Diversity & Production Increase the supply and diversity of housing at all levels. Springfield Development Code Update Updated Development Code to support efficient, timely, clear development review. Implement State middle housing laws (House Bill 2001) to allow more diverse housing types in residential zones. STATUS: COMPLETED SDC Waiver for ADUs Waive System Development Charges (SDCs) for Accessory Dwelling Units (ADUs) through June 2027. STATUS: ONGOING Housing Diversity Tax Exemption Consider multi-year waiver of property taxes for multiple unit housing to incentivize development in some areas of Springfield. STATUS: IN PROGRESS The status for each action listed above indicates how far along the City is in implementing that action. What is housing affordability? Housing is considered affordable if a household spends less than 30% of its income on housing -related costs, including utilities.' Housing affordability is a term applicable to households at a range of incomes. How is that different from Affordable Housing? Affordable Housing is housing priced so that a household at or below the median income pays no more than 30% of its total gross income on housing and utilities.10 �prleld'shousing market ousmg mix & deve opmen Springfield's population will grow by almost 300 people per year, through 2040. The population within the urban growth boundary was 70,337 in 2020 and is estimated to be 76,042 by 2040.' Housing is hard to find in Springfield's housing Springfield, due to a very low inventory is aging. vacancy rate.2 SPRINGFIELD �% � Vacancy Rate • inventory is decreasing.' paid in Springfield in 20202 EUGENE dd % VacancyRatA of housing in Springfield OREGONo 0 is more than Vacancy Rate • 20 yrs. old .2 Springfield needs to build about 296 dwelling units per year to keep up with population growth from 2010 to 2030.1 The average sale price of Springfield homes has increased.' 2022 Q2 average home sale: $443,000 > difference of $72,000 2021 Q2 average home sale: $371,000 2020 Q2 average home sale: $315,000 > difference of $56,000 2020 Fair Market Rent in Springfield:' 1 Bedroom $893 2 Bedroom $1,176 Springfield's housing mixt 5 6.5 % Detached single unit 16.2% Multi -family (5+ units) 14% Attached single unit or duplex 7.6% Mobile home 5.3% 3-4 units 0.4% Boat, RV, van, etc. The City has issued building permits for over 1,000 new dwellings in the last 5 years .4 300 250 Single -Family 200 150 Multifamily 100 _ Manufactured 50 _ Duplex 0 ADU 2017 2018 2019 2020 2021 2022 Springfield UNEMPLOYMENT Rate 8 9% 2 Springfield POVERTY Rate 18.301° 2 At some point Springfield Poverty Rate for RENTERS 23'x° 2 in 2022. Springfield UNHOUSED residents 1,055 people' Tenant -based vouchers IN SPRINGFIELD 932 households Wait list for HOUSING CHOICE VOUCHERS 3,699 households Lane County's home sales Gross monthly rent Median income' Springfield households inventory is decreasing.' paid in Springfield in 20202 I 53.8% 12 10 are homeownersz are rentersz 8 6 4 SU $1M $2=0 $30M $4 fsww $60M $7M Spfld.median 25% 46% 2 Oregon median of homeowners of renters are are cost burdened' cost burdened' 0 o o o 8 �^ 8 Y ^ = Iryoti�otiti0�ti Spfld. renters Households are cost burdened if they �o1ryo1�oltio1�o1�o1h ID o�ryo�A 'b Spfld. homeowners pay 30% or more of income on housing. SOURCES:' PSU Population Research Center, a US Census ACS 5 -year (2020),' 2011 Residential Land & Housing Needs Analysis,' City ofSpringfield (2022), 5 RMLS,' HUD, ' Lane County Homeless by Name List (Oct. 2022), 1 CHAS (2015-2019), 1 Homes for Good (Sept. 2022), 10 Eugene -Springfield Metro Plan