Where does it fit? Inclusionary Zoning and the Affordable Housing Puzzle

1. Where does it fit? Inclusionary Zoning and the Affordable Housing Puzzle FLORIDA’S RENAISSANCEANNUAL CONFERENCE 2005FLORIDA CHAPTER OF THE AMERICAN PLANNING ASSOCIATIONSeptember 8, 2005

2. Speakers • Dr. Ned Murray, FIU Metropolitan Center, 305.349.1444 murrayn@fiu.edu • James Carras, 954.415.2022, carras@bellsouth.net • Danny Bivins, Tarragon South, dbivins@tarragonsouth.com, (954) 712-2755

3. Overview • COLLECTING THE PIECES OF THE PUZZLE “The Affordable Housing Needs Assessment” • Ned Murray, Ph.D., AICP • ASSEMBLING THE PUZZLE “Affordable Housing Tools” • Jim Carras, Development Finance Counsel • FROM PUZZLE TO PICTURE “Building Affordable Housing in Your Community” • Danny Bivens, VP, Tarragon South Corporation

4. Collecting the Pieces of the Puzzle – The Planner’s Perspective The Affordable Housing Needs Assessment

5. Affordable Housing Needs Assessment • Primary Elements • Housing Demand Analysis • Housing Supply Analysis • HMDA/CRA Analysis • Development Feasibility Analysis • Supply and Demand Impact Assessment

6. Affordable Housing Needs AssessmentHousing Demand Analysis • Overview of city/county housing and economic development activity • Population and household characteristics and trends • Mobility of the population • Household income by renter and owner households • Economic development and employment growth • Occupation and income analysis of existing and emerging populations • Wage rates and relation to housing affordability • Forecast of housing market demand by type and price.

7. Affordable Housing Needs AssessmentHousing Supply Analysis • Housing inventory by type, age and condition • Existing housing values and rents • Profile of existing residential developments • Assessment of current and projected residential development activity • New and existing housing sales trends • Apartment rent trends • Apartment vacancy rates • Apartment and condominium absorption activity • Workforce housing supply and demand analysis • Market appreciation estimates for owner and renter units

8. Affordable Housing Needs AssessmentHome Mortgage Disclosure Act Analysis • Determine the level of activity of local lenders in affordable housing financing (Analyze Home Mortgage Disclosure Act data) • Help define local lenders role in affordable housing development strategies (Review CRA ratings and HMDA data and convene discussion)

9. Affordable Housing Needs AssessmentDevelopment Feasibility Analysis • Purpose: • To provide a clear understanding of development costs, ROI and gap financing required to produce affordable housing units • Calculate development feasibility based on the following criteria: • Income ranges • Sale price points and rent ranges • Unit sizes and construction types • Densities

10. Affordable Housing Needs AssessmentSupply & Demand Impact Analysis • Purpose: • Determine the correlation and level of impact of current and projected housing supply and demand on future housing accessibility, affordability and economic sustainability. • Analysis includes: • Assessment of the balance between current and projected housing supply and current and future housing demand by geographic sub-area. • Housing affordability gap analysis for homeowner and renter markets by geographic sub-area. • Assessment of current and projected housing supply and demand factors on employment and economic growth.

11. Assembling the Puzzle – The Partnership Perspective Affordable Housing Tools

12. Affordable Housing Tools • Ways to encourage the development of housing that is affordable: • Update local zoning ordinances • Utilize good land use practices • Acquire sources of long-term funding • Develop partnership models

13. Affordable Housing ToolsInclusionary Zoning • What is it? • Inclusionary Zoning involves the development of a percentage of residential units at affordable costs • Is it for your community? • Advantages • Creates ongoing affordable housing stock • Less public subsidies needed • Integrates families of all income levels • Eliminates pockets of high poverty • Prevents sprawl by intensifying densities • Disadvantages • Developers asked to solve a social problem • Costs are passed on to market rate homebuyers

14. Affordable Housing ToolsInclusionary Zoning • Offering Incentives • Density Bonus • Build additional market rate units without acquiring additional land • Fee Waiver • Waive impact or permit fees • Fast Track Permitting • Streamline and expedite permitting process • Design Flexibility • Reduce number of parking spaces • Reduce setbacks, minimum lot size • Direct Subsidies • Award grants or payment per affordable unit built • Publicly fund infrastructure needs • Tax Abatement • Waive property tax

15. Affordable Housing ToolsInclusionary Zoning • Allowing Alternatives • Fee In-Lieu - Developer pays a fee for units not built • Collected into a fund to build affordable units elsewhere • Varying calculation to determine amount (per unit, per square foot, etc) • Some require larger fee than cost to build units • Off-Site Construction - Developer builds units on an alternate site • Some require a greater percentage of affordable units • Land Dedication - Developer donates land for future affordable units • Often developed by profit/non-profit partnership • Best in areas where land is limited • Credit Transfer - Developer credits required units to another project • Similar to off-site construction

16. Affordable Housing ToolsInclusionary Zoning • Striking a Balance • Mandatory vs. Voluntary • Mandatory – Difficulty in gaining public support • Voluntary – Fewer units created • Percentage of affordable units • Too low – Not enough affordable units created • Too high – Income from market rate units will not subsidize development costs • Size of qualifying developments • Too small – projects become unfeasible without alternatives • Too large – may encourage developers to only build below threshold • Targeted income group • Lower – More subsidizes necessary and fewer units created • Higher – Less needy families assisted • Incentives • Too few – Advantages do not outweigh costs of development • Too many – City over-subsidizes projects

17. Affordable Housing ToolsInclusionary Zoning • Striking a Balance (cont) • Alternatives • Advantage – Maximizes number of units developed • Disadvantage – Reduces dispersal and integration of mixed-income families • Length of affordability • Short time – loss of units over time • Long time – may not have most deserving families occupying units • Resale Restrictions • Advantage – Maintain units at affordable prices • Disadvantage – Homebuyer does not build equity in their home

18. Affordable Housing ToolsLand Use • Infill Development • Restoration of existing structures or use of vacant land within urbanized areas • Zero Lot Line (ZLL) • Additional apartments added to current housing • Advantages: • Density lowers land costs • Mixed use reduces infrastructure needs • Reduces sprawl and preserves land

19. Affordable Housing ToolsLand Use • Smart Growth & New Urbanism • Development of mixed use, dense town centers • Urban Growth Boundary • Urban/Rural boundary is created to encourage dense, urban development and land preservation • Advantages: • Density lowers land costs • Mixed use reduces infrastructure needs • Green building design lowers energy costs • Reduces sprawl and preserves land

20. Affordable Housing ToolsLand Use • Community Land Trust • Separates the ownership of the house and the land • Non-Profit organization owns land for future affordable housing development • Offers long term leases to individuals, community groups, and businesses • Advantages: •  Permanent affordable homeownership • Provides access to land, the most valued resources in development

21. Affordable Housing ToolsFunding • Trust Funds • Funds generated through Real Estate Transfer Tax, Stamp Tax, or Bonds • Permanent cash flow • Double Bottom Line Development • Investors driven by community development • Satisfies both financial and social objective • Conventional • HOME, SHIP, CDBG, Low-income Tax Credits • Federal allocations

22. Affordable Housing ToolsPartnerships • Public/Private Partnership • Collaboration of stakeholders from diverse backgrounds within both the public and private sector • Regional • City/County • Public/Private • Advantages: • Information sharing • Division of labor • Utilize others strengths • Improved efficiency and cost effectiveness • Mutually beneficial outcomes

23. Affordable Housing ToolsPartnerships • Public/Private Partnership • Broward Housing Partnership, Inc. www.browardhousingpartnership.org • Successes: • Over 70 organizations involved – private, public and community • Diverse representation of participants • Affordable Housing Summit • Education • Consensus building on solutions • Housing Needs Assessment • Strategic Plan

24. Affordable Housing ToolsLocal Solutions • Initiate public outreach and education programs • Develop public/private partnership among stakeholders • Determine applicable policy solutions • Advocate for policy change • Identify long term funding sources • Increase ability of residents to own homes while ensuring development of rental units • Create new affordable units while preserving existing affordable housing

25. From Puzzle to Picture – The Developer’s Perspective Building Affordable Housing in Your Community

26. Building Affordable Housing • Site Selection • Urban infill • Underutilized parcel • Adjust deal to site • Force Partnerships • Educate "approvers“ • Maintain flexibility • Admit when your wrong (or when "they" are right) • Ethical development • The Real Deal

27. Building Affordable HousingTeacher’s Village

28. Building Affordable HousingTeacher’s Village

29. Building Affordable HousingTeacher’s Village • Purchase of Units | Affordability Preservation • Broward County School Board - Reserves 50 slots for teachers for $20,000 each (total investment: $1 million) • Teacher can buy if he or she: • Agrees to $20,000 forgivable loan • Works at an urban/low income school • Uses loans to buy home from LLTV (TSDC) • Adheres to seed restriction-can only sell to other teacher • Complies by Broward Housing Partnership • Verify purchase and sale • 5% fee per transaction • Must be used for affordable • Housing in Broward County

30. Building Affordable HousingTeacher’s Village • Broward County School Board (BCSB)| Required Contribution • $20,000 needed for each teacher to make a deal work (returns) • BCSB has investment in program (skin in game) • Teachers have five year investment (retention) • Money paid back to BCSB to re-invest in future loans