A continued conversation about inclusionary zoning shed light on the complexities of the county’s affordability issue.
The planning commission voted to warn all but one land development regulation amendment for an Oct. 22 public hearing. The one they tabled, due to new information, was a proposal to build more inclusionary zoning into the regulations.
Inclusionary zoning is a tool used to include affordable units in market rate residential projects. It already exists in the City Center Form Based Code District, which requires that affordable housing be included in developments with 12 or more residential units.
The committee is recommending expanding inclusionary zoning to the Transit Overlay District (areas within a quarter mile of public transportation i.e. Shelburne Road, Williston Road, Kennedy Drive, Dorset Street and part of Technology Park) in order to ensure that development during interim zoning includes an affordable component.
Following an August presentation made to the commission, planning staff, John Simson and Sandy Dooley of the Affordable Housing Committee (chair and vice chair) and regional planning met with Champlain Housing Trust, which has extensive experience and understanding of the affordability climate. This resulted in some changes made to the proposal.
Now, the recommendation for home ownership inclusionary units is to have 10 percent of the units be perpetually affordable at a price point of 70 percent area median income, and eligible buyers can earn up to 100 percent area median income. This differs from the previous recommendation of 15 percent of affordable units, and it widens the gap between the set maximum price point and the eligible households (previously, it proposed that units would be affordable at 100 percent median income and that someone earning 100 percent median income would be eligible to buy).
“The sliver of the market that would be both eligible to buy and able to get a mortgage is miniscule,” explained Paul Conner, director of planning and zoning, based off Champlain Housing Trust’s analysis. By having an “income spread,” the city would essentially “create a portion of the market that would be able to get a loan and not be at the very edge of their loan structure.”
Furthering the possibility of a lawsuit is another incentive for the gap, Conner said. Champlain Housing Trust explained that some areas of the country that do not have this income spread have made it difficult for buyers to meet sellers, resulting in lawsuits against municipalities.
Based on information from Leslie Black-Plumeau, an affordable housing committee member who works for the Vermont Housing Finance Agency, Dooley said an example of 70 percent area median income for a new three-bedroom unit would have to be under $300,000. A new one-bedroom condo would have to be under $160,000.
As far as what’s in it for the developer, the recommended offset is two additional market rate units for every one inclusionary unit. This double the previous recommendation of one market rate for every affordable unit.
“We are allowing triplexes and quadruplexes as single-family; we’re not talking just single-family detached,” said Simson, who admitted that single-family detached homes are a “very tough haul for any developer.”
The ability to have materials in an affordable unit be less than that of a market rate unit, as well as smaller square footage (70 percent of a market rate unit), makes building affordable housing more appealing to the developer.
“We do believe with only 10 percent required and 2:1 as the ratio, there is an opportunity for a developer to make up the loss on the affordable unit,” Simpson said.
A developer’s take
“Could you sell a house in South Burlington that could sell for $299,000?” Commissioner Duncan Macdonald asked Chris Snyder, a developer in the audience at the Sept. 24 meeting.
The answer was simply, “No.”
“You have to ask it in the broader context,” Monica Ostby challenged.
Snyder was frank with his feedback.
“I think there are some real permitting challenges associated with the idea of density bonuses,” he said.
Developers try to maximize the density, but challenges like steep slopes, wetlands, roads, and infrastructure shrink the available land.
“Getting more density isn’t necessarily the fix for this,” he said. “I’m not even sure if we’d even be able to get the 2:1 number of units.”
Snyder provided two alternatives for consideration.
“There are permit fees on every home that is assessed – somewhere between $10,000-12,000 for the City of South Burlington per unit,” he said. “Figure out how to not to assess that on an affordable unit.”
Second, Snyder said, have cities pay for public infrastructure. Having this done through municipal bonds or grants would help drop the price of housing.
“All of those costs have been shifted over to the developer community, rather than saying, ‘This is a public good and this is what we want to see,’” Snyder said. “The best way to decrease the cost of housing is having municipalities participate, like they used to, in the cost of infrastructure improvements,” the developer said.
On the commission end, commissioner Art Klugo also remained unconvinced.
“I do not believe it should be a developer-based solution; it should be a community-based solution,” he said, an opinion he’s expressed in earlier inclusionary zoning discussions. He clarified that he still supports affordable housing, but he does not support the proposed mechanism.
The affordable housing committee will take this feedback and return to the planning commission at its next meeting on Oct. 8.