Affordable Housing in City Center

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Thursday May 08, 2014

How can South Burlington offer affordability to current and future residents and keep the vibrant vision of having the City Center economically and socially flourish?

At the April 22 Planning Commission meeting, Commissioner Gretchen Calcagni provided the answer with a formal introduction to the City Center Inclusionary Zoning standards in the Land Development Regulations draft on behalf of the Affordable Housing Subcommittee. 

After thorough research and discussion, the subcommittee decided that inclusionary zoning in the City Center would be the best approach to welcome residents and ease the impact on their  wallets. Inclusionary zoning is an ordinance which requires a percentage of units of a residential development be defined as “affordable” among low and moderate income households. What’s considered affordable?

According to the Affordability Requirements under section 18 of Inclusionary Zoning,  “Housing costs for inclusionary units shall not exceed 30 percent of annual household income, adjusted for household size.”  For rental units, that 30 percent would include costs such as rent, utilities and condominium association fees, and for sale units, that would include mortgage principle and interest, annual property taxes, homeowner’s insurance and association fees.

Within City Center, this ordinance will apply to housing developments with 12 or more units, of which 15 percent of housing units shall be permanently affordable in accordance with a ramped scale of percentage of median income for the region.  

This ramped scale, under section C, Inclusionary Units, is broken down as such: 

 “For covered development, at least five percent of the total dwelling units offered for rent or sale, including units offered for sale in fee simple, shared, condominium or cooperative ownership, shall be affordable to households having incomes no greater than 80% of the area median income (AMI) adjusted for household size. An additional five percent  of  the total dwelling units shall be affordable to households having incomes no greater than 100% of the AMI adjusted for household size. An additional five percent of the total dwelling  units shall be affordable to households having incomes no greater than 120% of the AMI adjusted for household size.”

Under certain circumstances, there are exceptions to the inclusionary zoning requirements, Calcagni continued. Educational institutions with development exclusively for residential use and student occupancy, institutional (group quarters) housing, and replacement of existing dwelling units in a project that produces no additional units are among those exempt.

Commissioner Sophie Quest asked, “What happens if a family’s income changes while occupying an affordable unit?” 

Sandy Dooley, member of the Affordable Housing Subcommittee, responded that if the family were to stay in the affordable range for a rental, rent can be adjusted as necessary without it being market rate. Once they go outside of that range, the unit would be reclassified as market rate and the next market rate would apply. For a sale unit, income will not be re-verified, so it would not have an impact. The next buyer would have to fulfill the Affordable Housing requirements.
This brought forth the topic of perpetuity. The bylaw mentions requiring a deed restriction or restrictive covenants to make it affordable in perpetuity, but is there more to this than meets the eye?

Resident Frank Kochman thinks so, and he pressed that point, specifically; the ordinance needs to mention a housing subsidy covenant.

“We have a specific state statute that allows the covenant to be perpetual,” he said. “Perpetuity doesn’t work for purchased housing subject to a mortgage because banks aren’t going to go along with it. So technically, what has to happen is...establish the details through the housing subsidy covenant and that’s what the ordinance should say.”

As far as aesthetics are concerned, affordable housing units would be required to blend in with market rate units on the exterior, and a difference in interior amenities would distinguish the values of each unit. Kochman pointed out that if an occupant’s annual income goes outside the affordable housing range and reclassifies the unit as market rate, the occupant will be paying market rate for affordable housing amenities. Calcagni said that the matter would likely be more up to the developer.

In terms of administration and compliance, developers will have to submit an application and documentation to the City, and if they meet all of the requirements, the Administrative Officer can sign off on the application.
Calcagni added that if major financial hardships or physical site constraints can be proven, a developer could offer a dedication of equal or greater value  (i.e. donating developable land, working with another entity to build those units off-site within a certain period of time).

Even so, the developer - city partnership, as it relates to inclusionary zoning, should not be entirely burdensome. Commercial Broker/Owner of Geri Reilly and Form Based Code Committee Member Michael Simoneau complimented the Affordable Housing Subcommittee’s efforts and said it is not unreasonable to impose inclusionary zoning on property owners in exchange for infrastructure investments. 

“The City does its share and the property owners are expected to do their share by accepting inclusionary zoning,” he said.

The Planning Commission will review the redline draft of the entire Land Development Regulations again and encourage public input. There will then be a public hearing process before it is presented to the City Council. To view the draft, visit the City website (sburl.com) or visit City Hall to read the hard copy.

SOURCE: Miranda Jonswold, Correspondent