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.
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.
