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Breakthroughs: Successful Local Strategies for Affordable Housing

April 2006
Volume 5, Issue 3
 
          

Florida Task Force Recommends Limited
State Regulation of Impact Fees (part 2)

A PowerPoint slide that reads 2005 Florida Impact Fee Survey.
Earlier this year, the RBC posted an article on the state of Florida’s review of impact fees. Unlike those in many other states, local governments in Florida derive authority to enact impact fees from home rule authority and case law, rather than a state enabling statute. The legislature created the Florida Impact Fee Review Task Force in 2005 and asked its members to examine the administration of impact fees and recommend whether Florida needs to adopt enabling legislation similar to that adopted in other states.

The 15-person task force was composed of public and private sector members. From the beginning, those from the public sector saw little need to enact a state statute, while those from the private sector cited abuses as a need for such enabling state action.

February 2006 Report

The final task force report concludes that impact fees are a revenue option for Florida’s local governments. Ultimately, it says that since Florida has a wide variety of local governments, each with it own needs, a uniform impact fee statute would not serve the state. However, the task force did make a number of recommendations regarding specific issues related to the imposition of impact fees. In only a few issues were members of the task force united in their recommendations to the legislature.

Affordable Housing

The task force discussed exempting affordable housing from impact fees. Some were opposed to the state requiring such an exemption as an intrusion of state authority into local government home rule. The final 6-5 compromise included a request that the legislature consider changing the enabling law to require that local government impact fee ordinances address affordable housing. The task force said that local governments could waive, defer, exempt, or pay impact fees out of another revenue source, or establish a significant affordable housing program.

Administration

Accounting

The task force found no statutory requirements for accounting and reporting of impact fee collections and expenditures. While many communities account for collections, the task force was concerned that local governments may not be accounting for expenditures. The task force voted 7-4 to have statutory direction on the accounting and reporting of the collection and expenditure of impact fees.

Effective Dates

There was also considerable discussion about the amount of time between ordinance adoption and effective date. The task force voted to recommend that the legislature revise the statute to have a time period of not less than 90 days between enactment and the effective date of any impact fee ordinance.

Data Used in Fee Calculations

The task force felt that the state should require local governments to use the most recent and localized data when calculating impact fees and voted to make such a recommendation.

Administrative Charges

The task force also heard claims that some local governments were using too much of the impact fees to cover high administrative costs, which reduce the amount of revenue available for infrastructure. Others said that administrative costs were minimal. The task force ultimately opposed capping administrative charges at three percent by a vote of 3-8. They did, however, recommend that such charges be limited to no more than actual cost.

Additional Revenue Sources for Infrastructure

The task force determined that local governments had limited resources with which to finance public infrastructure, and therefore had to use impact fees. The task force unanimously urged the legislature to consider increasing local bonding capacity, providing alternative funding sources for the public education fund, and fully funding a state housing trust fund. It also voted to recommend allowing local option sales taxes and a document stamp surtax to fund such improvements.

Recommendations Considered But Not Made

The task force considered a number of other concepts they eventually rejected, and one upon which they could not reach a consensus.

Time Limits

The task force heard from some who suggested that local governments be required to spend the impact fee revenue on infrastructure development within a certain amount of time or return the fees. Others were concerned that many rural communities would not have the time to collect sufficient funds to complete infrastructure projects and opposed setting a statutory deadline. The task force decided not to make any recommendations on time limits. A second motion to recommend a seven-year timeframe with exceptions for “extraordinary circumstances” also failed. The task force also voted not to make any recommendation on the timing of payment of impact fees as no one presented this as a problem.

Other

The task force voted not to recommend a model impact fee ordinance, an impact fee cap, the legal burden of proof for fee challenges, methodologies to calculate fees, and a minimum impact fee that would not be challengeable in court.

Credits

There was a tremendous amount of discussion on impact fee credits. Supporters argued that local governments should give builders and buyers credit for other taxes paid to the local government that would be used to finance public improvements. Supporters said that, despite case law requiring credits, some communities were not providing them. Those opposed to granting such credits said that it would open the door to further litigation and weaken local government options. The task force was not able to come to a consensus on impact fee credits, although such credits are in use in other states.

Conclusion

The Florida Impact Fee Task Force examined a number of impact fee-related issues during its short tenure. Ultimately, it recognized that such fees are an important revenue resource, and that while a uniform impact fee statute was not warranted, the state should play a role in guiding elements of the local statutes. For further information on the task force and its report, you can visit the Florida Impact Fee Task Force website.

Ongoing HUD-Sponsored Research

This summer, the U.S. Department of Housing and Urban Development will publish A Guide to Impact Fees and Housing Affordability, which will help in determining fair and equitable impact fees to fund public infrastructure that serves new housing development.

 

Chamber Efforts Support Regulatory Reforms


A photograph of green stucco house.
What do you do when a new physician and your fire chief cannot find affordable housing in your community? The San Luis Obispo Chamber of Commerce answered this question by charging a task force with the responsibility of examining how the regulatory process impacts housing development. Following a 12-month investigation, they came up with a number of recommendations. Stirred into action by the report and other community input, the city enacted a number of regulatory reforms aimed at promoting the development of affordable housing.

Chamber of Commerce Task Force

In 2001, the San Luis Obispo Chamber’s Board of Directors determined that lack of affordable workforce housing was the number one business issue facing the community, and in response, appointed a 15-person task force comprised of realtors, bankers, nonprofits, builders and others to analyze the problems, develop a series of recommendations, and push for reforms. According to the task force’s final report, the San Luis Obispo Chamber “has long recognized that a livable, balanced community depends on widely diverse types of workers - from field workers to police officers, waiters to bank tellers, teachers to nurses, doctors to software technicians - and each has to have somewhere to live.” The Chair of the task force, Carlyn Christianson said, “We wanted to make sure that our local government officials understood that the Chamber considers affordable housing important and would support reducing restrictions to such development.”

The Chamber examined four broad issue categories, including:

  • Funding and costs;
  • Infrastructure challenges;
  • Political issues; and
  • Zoning and land use.

To address the issue of funding, the Chamber supported exploring alternative housing for students at a local university and the concept of an affordable housing trust fund. The Chamber also pushed for the city to hire a dedicated staff person specifically tasked with finding additional funding for housing. The Chamber did not, however, address the issue of infrastructure costs and their impact on housing development, but said the city’s policy of having development “pay its own way” may make some developments infeasible.

The task force addressed ways of overcoming opposition to new development. They suggested that the Chamber initiate education programs, support local leaders who make difficult decisions, and strongly encourage large local universities to actively develop housing for faculty, staff, and students.

The task force made a number of suggested reforms to the city’s zoning and land use regulations. Some of these include:

  • Encouraging increased residential densities in central commercial, office, and retail commercial zones;
  • Making rules for non-conforming structures more flexible;
  • Reducing minimum residential lot sizes;
  • Adopting streamlined processing procedures for housing;
  • Allowing detached second residential units by right;
  • Eliminating the downtown ‘in-lieu’ parking fee for dwellings;
  • Re-establishing the R-O (residential/office) zone;
  • Developing new multifamily housing design guidelines; and
  • Increasing areas zoned for higher density development.

The task force also suggested that the Chamber lobby for more streamlined and coordinated laws governing the construction of market rate rental housing. They also suggested that federal and state agencies move decisionmaking down to officials at the local level.

City Reaction

Christianson, who now serves on the city planning commission, said in a recent interview that the city has undertaken a number of reforms to development regulations as a result of the Chamber’s report and other input. City authorities considered the findings contained in the report during the update of the city’s “General Plan Housing Element.” In addition, the city council enacted several reforms to the development code. Christianson pointed out that the city has adopted an expanded accessory dwelling unit ordinance, and increased the inclusionary housing requirements. She also indicated that the city is considering a revision to its housing cap.

San Luis Obispo limits annual new residential construction to no more than one percent of the total housing stock in the city. For many builders, this results in diseconomies of scale, because they have certain fixed costs that must be spread across all new units. The city is in the process of reviewing the policy to say that the annual one percent limit is revised to be calculated over seven or eight years. In addition, the city expanded the exclusion of low- and very-low-income housing from any cap to include housing for those with moderate incomes.

The city has also adopted an accessory dwelling unit (also known as inlaw apartments or ‘granny flats’) ordinance that places many fewer restrictions on such units. Christianson said that they examined at least 17 restrictions that other communities place on such units, but decided that only one unit could be created on each lot and that one of the units must be owner-occupied.

The city also expanded the affordable housing or 'inclusionary housing' requirement to commercial development. Previously, the requirement was for residential development only. However, according to Christianson, even the Chamber of Commerce recognized that commercial developers have a responsibility to assist in the development of affordable housing, which they are now required to either build or pay an in-lieu fee.

In addition to the reforms identified by Christianson, the city established a no-net-dwelling loss for downtown areas, provided incentives for 'affordable-by-design' developments, and reduced review requirements for smaller housing projects.

The city now allows developments that are 'affordable by design;' i.e. higher density, compact housing that costs less to produce and is more affordable, to have lower inclusionary housing requirements than lower density large home developments. The city also requires that new development replace any housing lost as a result of new construction in the downtown planning area. Replacement housing must be constructed in the downtown area, but not necessarily on the same site as the housing to be removed. The city has also eliminated the need for an Architectural Review Commission review of construction or rehabilitation of housing development with no more than four units if the units are less than a certain size. The city also adopted innovative mixed-use zoning to encourage development of housing along with commercial space.

Conclusion

Leaders of the San Luis Obispo Chamber of Commerce recognize that development regulations have an impact on everyone, especially those least able to pay. They, along with many others, influenced the city to enact reforms that would increase the likelihood that the number of affordable housing units in the city would increase.


Promoting Employee Housing in Resort Destinations

A photograph of a snow resort area.
Cities and counties that serve as popular tourist destinations face a unique set of affordable housing issues in providing options for year-round residents and seasonal employees. The high demand created by visitors and part-time homeowners increases housing prices and makes it harder to accommodate the needs of many seasonal employees (who are typically in low-wage service positions). Regulatory solutions to this problem come in many forms. Three communities are highlighted with different tourism markets (summertime destination, wintertime ski resort, and year-round tropical destination). All tackle affordable housing in different ways. A brief list of other communities confronting affordable employee housing issues is also included.

Nantucket, Massachusetts

The Island of Nantucket faces an affordable housing crisis for local residents and seasonal employees. The island has a massive influx of seasonal employees and visitors from late spring through the end of fall. According to Leslie Woodson, Nantucket Senior Planner, hotels and restaurants have difficulty hiring employees due to a lack of affordable housing. A 1998 report by Jonathan Rose & Associates examined the extent of the problem and determined that a wide range of housing types and prices were needed to adequately address the housing needs on the island. The island’s comprehensive plan develops possible solutions for the future and the island’s code implements a number of creative solutions. For instance, a Nantucket ordinance requires a demolition delay during which houses must be advertised as eligible for a recycling program. The program (in which owners physically move units to scattered sites as a means of creating affordable housing that exhibits the unique architecture of the island) is very effective, in part, due to the ordinance.

Nantucket also allows multifamily housing, contingent upon limiting its use to peak seasonal employee housing. Woodson states that “This section of the bylaw has been successful in producing 103 units since 2000.” Other solutions include the creation of two overlay districts to encourage affordable housing for employees working in the town seasonally or year-round. The first, the Neighborhood Employee Housing Overlay District, encourages small-scale developments with a special permit authority to allow up to 18 people (9 employees + family members) per lot. The second, known as the Dormitory Overlay District, encourages large-scale developments through the use of single-family, duplexes, and dorm style units in small structures. This district permits up to 100 people per acre. Only a limited number of permits have been issued for new developments during the short time these districts have been allowed.

La Plata County, Colorado

La Plata’s supply of affordable housing has dwindled as a result of intense growth over the last 15 years. This condition is further complicated by the fact that wages remain relatively low, due to a wintertime tourism economy that relies on service jobs. The county’s comprehensive plan attempts to address this issue by examining current and recommended solutions. By focusing on broad solutions to affordable housing, the county will be able to provide better access to housing for all residents, including tourism employees.

To develop affordable housing, La Plata has historically used incentive-based strategies, such as density bonuses, development fee waivers, and low-interest loans. Fee waivers are available on the land use permit fees, application fees, and building permit fees. The county is currently working on developing a new land use code that will increase the maximum density bonus from 25 to 50 percent.

The La Plata County Plan also addresses a number of broad action items for the future. The county will evaluate each district plan for public benefits arising out of incentives for affordable housing. The county may also form a panel to review the subdivision and building regulations as a means of lowering the cost of development. The county is currently looking for areas suitable for higher-density residential development, located near central services.

Hawaii County, Hawaii

On February 2, 2005, the Hawaii County Council revised the affordable housing section of the county code. A major part of the new regulations addresses the affordable housing needs of resort, hotel, and industrial employees. Many resort employees in Hawaii live on the east side of the island and commute to the tourism centers of Kona and Kohala on the west. This strategy partly avoids the high cost of housing in the west, but can significantly increase commuting times and costs.

To provide affordable housing for workers in the tourism industry, the county code requires that resorts and hotels with more than 100 employees earn one affordable housing credit for every four full-time equivalent jobs that they create. The resort businesses earn credits by selling completed dwelling units, constructing rental units, selling finished lots, or donating land to the government or a nonprofit for use in affordable housing. The number of credits earned varies by qualifying income and type. Also, the county offers a density bonus to affordable housing projects, which allows for a 10 percent increase in the number of units along with a 10 percent reduction in minimum lot size. The future success of this program bears further monitoring, since it is still fairly new.

Other Cities/Counties

Below is a small list of other cities that have, or are considering, solutions to providing affordable seasonal employee housing.

City/County Solutions Considering Enacted
Density bonus, nonresidential development to provide affordable housing
Check mark.
Conversion of market rate to affordable housing, fee subsidies, land dedication
Check mark.
Nonresidential development to provide affordable housing and downpayment assistance, accessory apartments, waive density requirements, conversion of market rate to affordable housing
Check mark.
Check mark.
Reduced impact fees on small units or employee units
Check mark.
Permit conversion of seasonal units to permanently affordable units, fee waivers, nonresidential development to provide affordable housing
Check mark.
Density bonus, multifamily district, affordable housing district, accessory units, dimensional waivers
Check mark.
Check mark.
Accessory apartments, rental units that are summer affordable and market rate the rest of the year, nonresidential development to provide affordable housing
Check mark.

Conclusion

The communities highlighted here have taken steps to meet the affordable housing needs of those employed in the tourism industry. Through the use of density bonuses or special seasonal employee housing districts, these strategies creatively expand the housing choices available to hardworking tourism employees.