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HomeMy WebLinkAboutD228-Bonus DensityCITY OF RENTON Community and Economic Development Department #D-228: Bonus Density Staff: Angelea Weihs, Associate Planner Date: July 14, 2023 Applicant or Requestor: City of Renton Staff GENERAL DESCRIPTION The purpose of the proposed code amendments is to revise RMC 4-9-065, Density Bonus Review, in order to: Provide an alternative option for bonus density projects that provide affordable housing in exchange for additional market rate housing in the form of cash payment in-lieu of onsite affordable housing units, Provide additional submittal requirements for bonus density requests to ensure City staff receives adequate information to review and process bonus density applications, and Provide updated standards and criteria for affordable housing projects, particularly management and reporting of affordable housing, to ensure the units remain affordable consistent with code. BACKGROUND The purpose of the density bonus provisions is to offer additional residential density over the maximum allowed in a zone for developments that construct affordable dwelling units, assisted living facilities, or cottage housing. Density bonuses are a particular type of zoning incentive that provides the developer the ability to construct more units in exchange for providing a public benefit (e.g., affordable housing units). Developers can take advantage of the increased density to create more economic value for themselves while cities benefit from the addition of more affordable housing units. Affordable housing is considered to be 80% of the Area Median Income (AMI) for home ownership and 50% AMI for rental housing. To incentivize construction of affordable housing, city code allows bonus density for residential dwellings within the CD, UC, CV, CO, COR, R-14, and RMF Zones at a rate of one market rate unit for each affordable unit provided, up to an established maximum of thirty percent (30%) above the maximum density of the zone. For example, the maximum density in the Residential Multi Family (RMF) zone is 20 dwelling units per acre. If a project included affordable housing it would be allowed to build up to 26 dwelling units per acre, 3 of which would be affordable. MAXIMUM BONUS DENSITY  Subject Zones Maximum Density  CD, UC, CV, CO, COR, R-14, and RMF 30% above maximum density or density allowed via conditional use permit   The affordable units created through bonus density are required to remain affordable for a minimum of 50 years. For the duration of the 50 years that the unit remains affordable, the applicant or property owner must provide an annual report to the city containing information that demonstrates the unit is remaining in compliance with the affordable housing requirements. The following table provides a summary of the current bonus density requirements: AFFORDABLE HOUSING BONUS DENSITY CODE SUMMARY  Affordable Housing Ratio 1 bonus market-rate unit is required per 1 affordable dwelling unit.  Permit Required Administrative site plan review is required if the proposal does not otherwise require a subdivision or conditional use permit.  Minimum Number of Affordable Units Minimum of 2 affordable dwelling units is required. Minimum 10% affordable units required for projects equal or less than 30 units.  Affordability Duration 50 Years  Affordable Unit Conditions Affordable units shall be comparable to market-rate units.  Annual Reporting Applicant/owner shall provide annual report to city for 50 years.   There are three key factors that this proposed amendment is seeking to address: Alterative Option for Affordable Housing Compliance: Current code provides restrictions and guidelines for development of on-site affordable housing for bonus density eligibility. Current code does not specifically prohibit cash payment in lieu of affordable housing as a means of compliance; however, no standards are provided in code. Without guidelines and standards provided in code, if developers have interest in alternative measures for compliance, processing and implementing those measures would be challenging for city staff. In many cases, and particularly for smaller projects, payment in lieu of on-site affordable housing may be more efficient for the developer, as it reduces project complexity and eliminates the need for annual reporting. Payment in lieu of on-site affordable housing would also be beneficial to the city, as it eliminates any concern of on-site violations that conflict with the purpose and intent of the code regarding affordable housing. Therefore, the proposed amendments seek to provide an alternative option for affordable housing compliance in the form of cash payment in-lieu of onsite affordable housing units. The money collected by the City will be directed to the construction of affordable housing within the City. Submittal Requirements: City code currently requires only one submittal requirement for applicants that seek bonus density. This submittal requirement pertains to “Documentation of Affordable Housing Experience and 3rd Party Reporting.” The current submittal requirements do not include any information that will assist City staff in reviewing and processing of bonus density requests, nor does it provide any framework to ensure quality of bonus density request submittals. Therefore, the proposed amendments seek to ensure staff receives adequate information to ensure appropriate review and processing of bonus density applications. Review Criteria and Affordable Housing Monitoring: Current code includes review criteria and standards for affordable housing, including restrictions regarding the minimum number of affordable units, as well as requirements for Annual Reporting. Current code requires a minimum of two affordable dwelling units for projects that request bonus density through development of affordable housing, regardless of project size or total unit number. This two-unit minimum is required in order to ensure the benefits provided by the addition of affordable housing outweigh the burden on the city of monitoring and managing those affordable units. Having multiple affordable units (at least two) in one development helps ensure the burden of management is balanced by the benefit of affordable housing. Unfortunately, this minimum requirement also has the potential to disincentivize participation for smaller developments that would have disproportionately higher costs to add affordable housing. Alternatively, projects that propose cash payment in lieu of on-site development would not place the same burden on the City regarding management, as the affordable housing developed from these funds would either be concentrated in more efficiently managed projects or would be managed by other government or non-profit agencies. Therefore, the proposed amendments seek to eliminate this requirement for projects that proposed cash payment is lieu of on-site development. Current code requires that the project applicant or owner provide annual reporting to the city that demonstrates the affordable units maintain compliance with the affordable housing restrictions for the duration that the units remain affordable (50 years). The purpose of this provision is to ensure the units are monitored and continue to remain affordable over time. Developers and property owners do not typically have the experience or management skills necessary to manage affordable housing or provide the required reports necessary for compliance with code. As a result, the intent of the code is to ensure reports and monitoring is prepared by a qualified third-party, experienced with management of affordable housing. Current code requires that the reports include documentation that a third-party entity has monitored the project; however, code does not specify that the report itself be prepared by a qualified third-party with experience in management of affordable housing, nor does it require that a third-party professional manage the affordable housing for the duration of the 50 years. Furthermore, the current submittal requirements and review criteria do not provide enough guidance to ensure the applicant contracts with the third-party affordable housing manager prior to certificate of occupancy for the development. Therefore, the proposed amendments seek to provide provisions that require that the affordable housing is managed and monitored by a qualified third-party. PROPOSED AMENDMENTS TO CODE Staff proposes the following amendments to City code: Cash Payment in lieu of On-Site Affordable Housing: Staff recommends amending city code to provide an alternative way for developers to satisfy their bonus density affordable housing requirements in the form of cash payment in-lieu of onsite affordable housing units. This option would allow the applicant to substitute the provision of one or more required affordable housing units by making a cash payment to the City of Renton, the Renton Housing Authority, or other government agency approved by the City of Renton, that provides or pays for affordable housing projects within the City of Renton. For example, the City of Renton’s Housing Opportunity Fund (HOF) has established provisions in Ordinance for the City to disburse funds for affordable rental and homeownership projects. This fund was set up by the City specifically to support a range of affordable housing needs in the community, including new construction, acquisition, and rehabilitation. An example of an affordable housing development assisted by the HOF includes Willowcrest Homes, developed in the Sunset Area by the Homestead Community Land Trust, which received a $25,000 HOF grant to support the 12-unit affordable homeownership project. Affordable Housing Bonus Density Submittal Requirements: In order to ensure staff receives adequate information to verify compliance with code, staff recommends updating code to include submittal requirements for projects that request density bonus increases through affordable housing. Submittal requirements may include information such as: Identification of the third-party who will be responsible for monitoring and managing the affordable units, as well as their experience in managing affordable housing, A draft of the city-approved restrictive covenant to ensure the units are maintained as affordable, Identification and quantity of proposed affordable and market rate units, and If a full or partial cash payment in lieu of on-site affordable housing is proposed, calculation of the payment amount based on the number of affordable units proposed and bonus density requested. Review Criteria and Affordable Housing Monitoring: In addition to applying additional submittal requirements for affordable housing bonus density requests, staff also proposes to amend the affordable housing bonus density criteria. The purpose of the bonus density criteria is to establish the minimum number of affordable units, ensure that the units remain affordable for the required minimum duration (50 years), as well as ensure that the proposed affordable units are of equal quality compared to the other units within the development. Staff proposes amendments to the bonus density criteria, including: Eliminating the two-unit minimum requirement for affordable housing for projects that propose cash payment is lieu of on-site development of affordable housing. Requiring monitoring and reports for the on-site affordable housing from a qualified third-party professional with experience in management of affordable housing. STAFF RECOMMENDATION Staff recommends amending RMC 4-9-065, Density Bonus Review, in order to: Provide an alternative option for affordable housing compliance in the form of cash payment in-lieu of onsite affordable housing units, Provide additional submittal requirements for bonus density requests to ensure City staff receives adequate information to review and process bonus density applications, and Provide updated standards and criteria for affordable housing projects to ensure the units remain affordable consistent with code. IMPACT ANALYSIS Effect on rate of growth, development, and conversion of land as envisioned in the Plan Because the goal is to create affordable housing through private development by allowing density above that allowed in each zone, the rate of growth might increase but likely by negligible amounts. Effect on the City’s capacity to provide adequate public facilities There are no significant anticipated effects to the City’s capacity to provide adequate public facilities. Effect on the rate of population and employment growth Units resulting from bonus density will provide additional housing capacity, but will likely have a negligible effect on the rate of population and employment growth. Whether Plan objectives are being met as specified or remain valid and desirable Plan objectives remain valid and desirable. Effect on general land values or housing costs Because the goal is to provide more methods to achieve bonus density through affordable housing, the proposed code amendments will likely result in more affordable housing than would be realized under current bonus density provisions. Whether capital improvements or expenditures are being made or completed as expected Not applicable. There are no anticipated effects on capital improvements or expenditures created by the proposed changes. Consistency with GMA and Countywide Planning Policies The proposed amendments are consistent with GMA, the Plan, and Countywide Policies. Effect on critical areas and natural resource lands There are no anticipated effects on critical areas and natural resource lands.