Environmental Groups and Developers Join Forces to Promote Infill in San Francisco

At first blush, this may seem like something of a “man bites dog” story, but there’s more to consider in this real-world account of an environmental advocate who is actively promoting development in the San Francisco Bay area.

To find out more, Breakthroughs spoke with Janet Stone, Livable Communities Director of the San Francisco-based Greenbelt Alliance. A leading land conservation and urban planning nonprofit, the Alliance saw a tremendous need for affordable housing in the Bay Area, and decided to make a name for itself as “The organization that doesn’t just say no to sprawl, but says yes to good infill projects.” To bring this theory into practice, 12 years ago the Greenbelt Alliance launched a program to endorse suitable infill developments within the 9 county-109-jurisdiction San Francisco Bay Area. A dozen years after the program’s inception, here are few of the key lessons learned, along with a brief description of how the program works.

The Review Process

Developers voluntarily submit infill development proposals to the Alliance for review and, hopefully, endorsement. The Alliance has approximately 12 volunteers who are each assigned one or two proposals each year to review. These volunteers include architects, land use attorneys, bankers, and planning interns. Volunteers research each project to see if it meets the following seven criteria:

• Is it located within an urban area and within less than ½ mile of a transit facility?
• Will it help reduce automobile dependency?
• Does it have a minimum density of 20 units per acre?
• Contain at least 20 units?
• Does it employ good design features?
• Is it being developed with community input? …and
• Does it incorporate at least some affordable housing units? (The Alliance has refused to endorse a development simply because it offers only high-end housing.)

If a project is approved, the Alliance provides the developer with a letter of endorsement and sends a copy to the appropriate local government. More importantly, representatives from the Alliance attend local meetings and express support for the proposal. According to Stone, “We will offer active advocacy at local government hearings for endorsed projects”.

Project Endorsements and Infill Advocacy

The Alliance recognizes that reduced impact fees, expedited processing, tax waivers, and other types of incentives are very effective methods by which local governments can promote infill and affordable housing development. To disseminate more information about these practices, the organization published an Infill Guide for people interested in reforming rules and regulations governing infill development. While group members are strong advocates of smart infill, they separate advocacy for these types of general regulatory reforms from individual project endorsements. In some cases, the endorsement of a particular development may include a statement that parking requirements should be waived for a development in a transit corridor. On a few occasions, they have even supported a density bonus to provide additional affordable housing in a development.

Some Tough Obstacles

According to Stone, the greatest barrier developers face with infill development is NIMBYism. Many residents continue to oppose redevelopment because they fear the resulting architecture will not fit into the neighborhood’s character, will create overcrowded conditions, or will result in increased traffic. The Alliance has found that advocacy on its part early in the process is critical to a given project’s success. Unfortunately, only ten percent of developers submit their projects to the Alliance early in the review process. Most send them to the Alliance less than a month before the first local government hearings.

Alliance members have two other concerns relative to the current infill development process. First, they say that developers downsize the scale of a project to obtain local government approval before submitting the proposal to the Alliance. Stone says that they would be willing to endorse and support higher densities if other safeguards are in place, but they are reluctant to encourage developers to increase densities. She also says that Balkanization of the region continues to hurt consistent decision-making. Trying to obtain consensus among 109 jurisdictions in the region on any type of infill development process is next to impossible.

Successful Results

Even in the face of these fairly daunting obstacles, Stone says neighborhoods, developers, and the Alliance have benefited from endorsed projects. Since 1990, the Greenbelt Alliance has reviewed 125 different projects and endorsed 93. These 93 projects account for almost 18,500 housing units in the Bay Area. In addition, the organization also has endorsed 17 plans that propose construction of another 30,000 units. Stone estimates that the local governments have approved over 66 percent of the endorsed projects.

In addition to directly impacting specific developments, the Alliance’s endorsement program has created a new atmosphere in the region. According to Stone, local governments are now asking developers if the Alliance has reviewed a given proposal. In addition, some developers have included affordable housing in their project as a way to secure the Alliance’s endorsement. The program has also spawned sister organizations in four counties in the region and has influenced the creation of similar bodies in San Diego and Washington, DC.

Because the organization does not charge for its services, most people see it as an independent third party that lends credibility to endorsed projects. Funding for this activity comes from the organization’s general revenue, which is derived from member organizations (30 percent), corporate sponsors (30 percent), and foundations (40 percent). Stone reports that the program has proven to be a very popular concept with foundations, as these organizations consider new and innovative ways to positively shape inner city development.

For more information, check the Alliance’s Web site, or email Janet Stone at jstone@greenbelt.org .

Tennessee Expedites Access to Housing for Those with Disabilities

By changing requirements and streamlining the process by which housing is provided for citizens with mental retardation, the State of Tennessee has enabled many individuals to live in smaller group settings within neighborhoods, and has allowed non-profit organizations to focus more on the provision of services and less on the construction of housing.

Beginning in the 1980s, nonprofit organizations began building small group homes for citizens being released from Tennessee’s large mental health facilities. Although these organizations were working on behalf of the Tennessee Department of Mental Health and Mental Retardation (MHMR), they faced numerous state and local regulatory hurtles. During the past few years, however, the state has changed its approach to providing housing for those with mental disabilities. Tennessee has reduced state licensing requirements and encouraged sponsors to abandon the role of housing provider, and in the process, has returned to the role of service provider. These changes have reduced the amount of time necessary to obtain state approval to provide housing, while at the same time virtually eliminated the need to obtain permission from local authorities to provide housing for their clients in a neighborhood setting.

Difficulties… Developing

Pacesetters, Inc. in Cookeville, Tennessee is one of the many organizations that accepted the challenge of housing people being released from large hospital facilities. Steve Singleton, then Executive Director, said that the Board of Directors was determined to provide housing in a neighborhood setting. While Pacesetters rented some existing housing from private landlords, the number of units available was very limited because the state provided owners with little financial incentive to undertake needed improvements. For this reason, Pacesetters and other sponsors of housing for those with mental disabilities, undertook a construction program to provide housing specifically designed for the needs of their clients.

For several years, Pacesetters developed group homes in a number of communities along the Cumberland Plateau in East Tennessee. Each time, however, the organization faced state and local regulatory hurdles to overcome. At the state level, local sponsors had to seek a license to operate each residential facility. To obtain this approval, the sponsor had to submit detailed information concerning emergency egress from the facility and all local fire marshal’s inspections and approvals. The state review process usually took three to four months. Because of special ambulatory conditions of the residents, the state fire marshal also required the entire structure to have a sprinkler system, as well as exit signage and emergency fire exits.

Because these costs often exceeded the financial resources available locally, many sponsors, including Pacesetters, sought to secure financing from the Tennessee Housing Development Agency. Some of the homes were financed through the Section 8 New Construction program, while others were partially financed through the state housing trust fund, know as the HOUSE program. Each time the sponsor wanted to obtain state financing, however, it had to apply for competitive funding. According to Singleton, “The state program was fairly flexible, but the competitive nature of the funding meant that we had to spend considerable time and effort to put together an application that might or might not be funded.”

Locally, the municipal or county governments often created roadblocks to the development of these properties. For example, even though most communities allowed up to eight unrelated individuals to occupy group homes in single-family zoned areas, Singleton indicated that they still required the sponsor to obtain a special permit or some other form of permission to construct this kind of development. The process to secure the special permit almost always required public review and approval. At a minimum, the resulting delays amounted to a few months. At worst, it resulted in additional costs to provide buffers between the new home and surrounding neighborhood. In addition, the city would often require complete fencing of the property, as well as public meetings to explain the nature of the home.

Process Changes

Following a number of court decisions, the Department of Mental Health and Mental Retardation changed the method of licensing group homes in 1995. Today, sponsors no longer need to seek approval for each group living facility, but can operate under a blanket approval that allows sponsors to provide services to any number of homes housing up to 3 people. In addition, clients no longer live in sponsor-owned housing, and can now obtain housing on the private market with the sponsor responsible solely for providing needed services. For those clients with more severe impairments, guardians sign leases on behalf of the residents.

State and Local Procedures Streamlined

The result of these and other changes is a markedly expedited state approval process. Sponsors do not have to submit as many requests to the state for permission, and those requests they do submit require less paperwork. In addition, state fire marshal rules and requirements are eliminated or diminished, and the cost and uncertainty over securing competitive funding from the state is eliminated.

At the local level, sponsors no longer have to seek the approval of local zoning boards or city councils, because individuals are renting private homes or apartments. Singleton indicated that his organization often talks to neighbors and even invites neighbors to meet with the residents, but he sees very little local government interference in the process.

Singleton said that while the courts required the state to reduce the size of the homes, it was the state that made the decision to eliminate the need for individual licenses for each home. “The combination of the state’s licensing decision and the new emphasis on individual owner or renter rights has significantly reduced the costs associated with providing housing for our neighbors with mental retardation.”

Singleton said that he does not pine for the days when his organization owned property and provided services. He reports that now he and his new organization, Omni Visions Inc., can concentrate on being a service provider, rather than be property developer and landlord.

Few Take Advantage of Hawaii Housing Tax Programs

According to the Hawaii Department of Taxation, fewer than 120 taxpayers are taking advantage of the Aloha State’s Individual Homebuyer Account and Individual Development Accounts. Originally enacted in 1982, the Individual Housing Accounts (IHA) program is designed to allow Hawaii taxpayers to exempt from state taxes any contributions to an individual housing account. The individual would then be able to use the funds to assist in the purchase of a first principal residence.

Hawaii also attempts to assist low- and moderate-income homebuyers by providing preferential tax treatment for contributions to an Individual Development Account (IDA). Contributors making a matching contribution to a participant’s Individual Development Account can obtain a state tax credit equal to 50 percent of the matching contribution to an IDA, and holders of these accounts can use the funds to finance the costs associated with a number of activities, including first home-ownership.

PROGRAM BASICS

Individual Homebuyer Account (IHA)

• Hawaii allows individual taxpayers to deduct up to $5,000 from their state gross income for contributions to an IHA.
• Married couples can contribute and deduct up to $10,000.
• Total contributions cannot exceed $25,000 for both individuals and families.
• There are no income or sales price limits on this program.
• Anyone who has not owned a principle residence in the last five years qualifies for the program.
• Taxpayers must keep the funds in the account for at least one year to qualify for the tax exemption.
• Interest paid or accrued is not included in income.
• Funds must be distributed within 120 months of the first contribution.
• Hawaii will charge a 10 percent tax penalty if the taxpayer does not use the funds to buy a first residence.
• The taxpayer is required to remain in the home for a ten-year period.
• Hawaii reduces the potential tax liability on the amount used for the purchase of the home over a ten-year period.
• If the taxpayer sells the house within the ten-year period, the state will assess taxes on the balance plus 10 percent.

Individual Development Accounts (IDA)

• In order to qualify to receive benefits from an individual development account, the holder’s income cannot exceed 80 percent of the area household median income.
• Fiduciary organizations, such as not-for-profits or local governments working with others, are responsible for establishing the program, managing the individual accounts, soliciting matching contributions, and promoting the program.
• Contributors can take a 50 percent tax credit for contributions made to these accounts. (The legislature did not enact a recently proposed amendment to increase the amount of the credit to 75 percent.)
• If contributors cannot use all of the tax credit in the first year, they can carry the credit forward until it is exhausted.
• Individuals, organizations, and businesses can contribute matching funds to a designated individual account holder, or can contribute to a fiduciary organization that in turn distributes the funds to participants.
• The cost of the principal residence cannot exceed 100 percent of the average area purchase price applicable to such residence.
• Eligible housing costs include costs tied to acquiring, constructing, or reconstructing a residence, as well as for settlement, financing, or other closing costs.
• The state provides a grant to each fiduciary organization’s program not to exceed $100,000 to be used to match contributions to such accounts.
• Hawaii disregards the assets of these accounts when they determine if a holder qualifies for other government services.
• All funds contributed to an individual development account, including state and private matches, individual savings, and interest earned, are exempt from state taxation.
• Hawaii limits contributions and tax credits to $1,000,000 during the five-year period between 2000 and 2004.

RESULTS

Among Hawaii’s 574,584 taxpayers, fewer than 120 take advantage of the IHA. According to state records, no one has ever claimed a credit for contributions to the IDA since its inception in 1999. Lowell Kalapa of the Tax Foundation of Hawaii reports that both programs have the potential for providing assistance to low-and moderate-income home purchasers, but they suffer from problems that have made them unattractive or difficult to use.

Kalapa argues that the penalties associated with the IHA make it unattractive to most first-time homebuyers. Most first-timers do not live in their first home for 10 years, and the 10 percent tax penalty discourages most people from using the program. Kalapa contends that the program would be more successful if tied to a federal program designed to provide the same type of benefit. Moreover, Hawaii’s tax rate of approximately eight percent is not high enough to make a tax-exempt program attractive to low- and moderate-income households without a similar benefit at the federal level. According to state officials, there are no plans to revise the program in the near future.

The IDA program, according to Kalapa, suffers from a lack of public awareness. Recently, however, the state has begun promoting the program through faith-based organizations, and some lenders in the state have become interested in participating.

For more information on the IHA and the IDA programs, check out Hawaii’s statutes at
https://www.huduser.gov/rbc/search/rbcdetails.asp?DocId=432