HomeMy WebLinkAbout2016-0418 Study Session PACKET
CITY OF
ASHLAND
CITY COUNCIL STUDY SESSION
AGENDA
Monday, April 18; 2016
Siskiyou Room, 51 Winburn Way
5: 30 p.m. Study Session
1. Public Input (15 minutes maximum)
2. Look Ahead review
3. Affordable Housing Trust Fund potential funding source discussion
4. Mayor's discussion of public art selection process
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this
meeting, please contact the City Administrator's office at (541) 488-6002 (TTY phone number 1-800-735-
2900). Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to
ensure accessibility to the meeting (28 CFR 35.102-35.104 ADA Title 1).
COUNCIL MEETINGS ARE BROADCAST LIVE ON CHANNEL 9. STARTING APRIL 15, 2014,
CHARTER CABLE WILL BROADCAST MEETINGS ON CHANNEL 180 OR 181.
VISIT THE CITY OF ASHLAND'S WEB SITE AT WWW.ASI-ILAND.OR.US
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CITY OF
-ASHLAND
Council Communication
April 18, 2016, Study Session
Affordable Housing Trust Fund Potential Funding Source Discussion
FROM:
Linda Reid, Housing Program Specialist, Planning Department, reidl(a,,ashland.onus
SUMMARY
In July of 2015 the Housing and Hurnan Services Commission approached the City Council to ask the
Council to authorize the Commission to research and develop a list of potential options for providing a
dedicated funding source for the City's Affordable Housing Trust Fund. The Council requested that
the H&I-ISC develop a plan that included needs, uses, priorities, cost amounts, and potential revenue
sources for the Fund. The H&HSC and staff are looking to the Council for direction regarding further
evaluation of specific funding sources and articulation of an annual revenue target needed to ensure the
viability of the Affordable I Iousing Trust Fund for future development of needed housing types.
BACKGROUND AND POLICY IMPLICATIONS:
In 2003 the City Council approved the Affordable Housing Action Plan which identified the
establishment of an Affordable Housing Trust Fund as a key strategy for supporting the development
of affordable housing. Starting in 2006 the City undertook a planning and citizen input process for
establishing a Housing Trust Fund. In September of 2008 the City Council adopted an ordinance
establishing an Affordable Housing Trust Fund and a resolution that provided a limited amount of
funding to the AHTF from 1985 CDBG home rehabilitation loan repayments. In 2012 the City
dedicated $125,000 from the sale of the Chitwood property to the AHTF. Currently the AHTF has a
balance of $166,350 with no further revenue source beyond the remaining $65,000 in outstanding
rehabilitation loan repayments identified to continue to provide funding.
• Ordinance 2966 was approved by the Council on October 7, 2008. The ordinance established
the Affordable Housing Trust Fund and defined the general purpose of the AHTF as:
A. The purpose of the City of Ashland 's Affordable Housing Trust Fund is to support the
creation or preset°vation of housing that is affordable to people with incomes that do not exceed
120% of the Area Median Income, as defined by the Department of Housing and Urban
Development fof° the Medford-Ashland Metropolitan Service Area.
B. AHTF finds mill support activities that create, preserve or acquire housing within the
Ashland Urban Grotit,th Boundary. AHTF finds may also be used for permanent or
transitional housing, for homeless, fainilies and individuals, and, for the modernization,
rehabilitation and repair of public housing.
Page 1 of 3
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CITY OF
-AS LAN
C. The AHTF is not intended to be the sole sour°ce of funding fog- czftbrdable housing and any
activity or proiecl eligible for support from the AHTF is expected to develop additional sources
of funds.
• The Council also adopted Resolution 2008-34 which established the policies and procedures for
how AHTF funds would be used and awarded, and Resolution 2008-33 which dedicated the
repayments fi•om a 1985 Housing Rehabilitation program funded with Community
Development Block Gant Funds to the support of the AHTF.
The AHTF was created to address several barriers to the development of affordable rental and
ownership housing in Ashland. Barriers such as; the high cost of housing, the disparity between
housing costs and the incomes of Ashland residents, and to offer a more flexible funding source to
developers to allow them to be more responsive to development opportunities, and to serve a larger
population than traditional affordable housing funding sources such as Tax Credit financing, CDBG or
HOME funding. The AHTF is available to a variety of applicants from for profit entities, and private
employers to Community Action Agencies. The uses of the AHTF are broad and include activities not
otherwise eligible for funding under traditional affordable housing financing mechanisms including;
predevelopment costs such as engineering and architectural costs, environmental clearance costs,
bridge loans, land banking, and such direct benefit activities as down payment assistance, emergency
housing vouchers and homeowner education. In all AHTF awards the City Council acts as the final
award making body.
The H&HSC has been evaluating the AHTF over the last year and presented its analysis in the attached
memo of July 20, 2015. More recently the Commission has put together a brief overview of identified
community needs and priorities, potential uses for Affordable Housing Trust Funds, including several
potential revenue sources, and revenue estimates for the Council's review. Potential revenue sources
include: a I % construction excise tax; capping an existing revenue stream and dedicating the excess to
the AHTF; increasing the transient occupancy tax by 0.5% and dedicating the non-restricted portion of
the increase to the AHTF; using food and beverage tax revenue; and using all or a portion of the City's
unlevied permanent tax rate for the AHTF.
COUNCIL GOALS SUPPORTED:
5. Seek opportunities to enable all citizens to meet basic needs.
5.2 Support and promote, through policy, programs that make the City affordable to live in.
5.2a Pursue affordable housing opportunities, especially workforce housing. Identify specific
incentives for developers to build more affordable housing.
FISCAL IMPLICATIONS:
This item is informational. Any future Council action to dedicate resources to the AHTF would have
to be achieved through the biennial budget process.
STAFF RECOMMENDATION AND REQUESTED ACTION:
Staff has no recommendations as this item involves new policy and budgetary issues.
SUGGESTED MOTION:
This item is for information only, however the Council may wish to give direction to staff or the
H&HSC to further develop certain revenue options.
Page 2 of 3
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CITY OF
ASHLAND
ATTACHMENTS:
Affordable Housing Trust Fund Memo dated April 18, 2016
Housing and Human Services Commission Memo dated July 20, 2015
ADDITIONAL LINKS:
City Council Stu& Session Minutes dated July' 20. 2015
Ordinance No. 2966 (Establishment of an Affordable Housing Trust Fund)
Resolution 2008-34 A Resolution Establishing Policies and Procedures for Administration of the
Affordable Housing Trust Fund
Resolution 2008-33 A Resolution Dedication Loan Repayments from the Ashland Rehabilitation
Program Deferred Payment Loans to the Affordable Housing Trust Fund
Page 3 of 3
!VALAR
C I T Y OF
ASHLAND
Memo
DATE: 4/12/2016
TO: City Council
FROM: Housing and Human Services Commission and City Staff
RE: Affordable Housing Trust Fund Revenue Source
Statement of Need
"Having quality, stable housing is directly linked i,o children's ability to do ia,ell in school.
National Housing Trust Fund: Center for Community Change.
There is a dramatic need for low-income rental and market rate rental housing in Ashland. There have
been relatively few multi-family housing units developed in recent years while the need for rental
housing has increased, especially for those with the lowest incomes. Due to the lack of available rental
housing units even those households that receive a Housing Choice Voucher are unable to secure
housing as there is no availability of units that rent for an amount that can be covered by the voucher.
• Between 2000 and 2010 median mortgage costs for homeowners in Ashland went up by 53%.
Rental costs for Ashland residents increased by 47% in that same period. While median
household income increased by 22.9%.
• There are currently 138 households in Ashland that hold section 8 vouchers and 268 households
are on the waitlist. There are 160 households on the waitlist for a one bedroom unit at
Snowberry brook.
• The 2015-2019 CDBG Consolidated Plan estimates that the City needs 800-1000 additional
below market rate rental housing units added to the housing stock are needed to relieve
populations experiencing housing cost burden.
• Permit data for the City of Ashland tracked over an eleven year period shows that on average
seven multi-family units are added to the City's housing stock per year.
1
Prioritized Activities
• During the development of the 2015-2019 Consolidated plan the H&HSC identified the retention
and expansion of affordable housing opportunities for those with the lowest incomes as the main
priority articulated by agencies and citizens through the consultation process.
• The City Council has established a goal, 2020 Strategic plan goal 5.2, to support and promote
through policy, programs that make the City affordable to live in.
Outcome Statement
The 2012 Dousing Needs Analysis states that to meet identified needs the City would need to add, at a
minimum, 30 new affordable rental units a year. Using Access' Affordable housing development, Hyde
Park, which was built in 2011, as an example of a recently construction affordable housing project. The
cost for Access to develop I lyde Park was $229 per square foot. Each unit at Hyde Park is
approximately 1000 square feet. Extrapolating these same development numbers to a 30 unit project,
would result in a total project cost of $6,870,000. For the Hyde Park development the City contributed
CDBG funds toward the land costs and waived Community Development and Engineering fees
providing a 15% subsidy toward the $229 per square foot development costs.
Looking to the AHTF to supplement other funding sources, it is approximated that AHTF funds would
provide 1/10"' of the project cost (leverage number taken from the National Housing "Trust fund based on
the use of trust fund money in projects in other communities) which equates to providing $687,000 in
funding per year to meet the need. This amount is exclusive of CDBG fiends or SDC deferrals. Over the
last five years the City has provided approximately $130,000 in fee waivers annually in support of
affordable housing projects.
Hypothetical Projects
The Housing and Human Services Commission discussed the potential use of the AHTF assistance with
various affordable housing providers, including, Access, the Housing Authority, and I Jabitat of
Humanity. When asked what they would most likely utilize HTF fund for affordable housing providers
identified: acquisition and construction activities, land banking, and predevelopment costs.
Purchase & Rehab of Existing multi-family project
Staff compiled a list of existing multifamily properties that were either presently available on the
Ashland housing market or were sold in the recent past. Five properties were shown with an average
cost of $90,000 per unit or $94 per square foot. These estimates do not take into account any potential
rehabilitation costs.
2
New Construction
The average cost of construction for the Ashland area is $11 3 per square foot (conservatively). This is
construction cost only, and does not include the price of land, permits, development fees or required site
improvements like parking or landscaping. Multi-family zoned land with development potential vary
greatly in price and the availability of multifamily zoned vacant or developable land in Ashland is
extremely limited. Most multi-farnily zoned land is outside of the City limits yet within the UGB, and
would need to be annexed to be developed at urban densities. Annexation and site developments would
add additional costs and time to any project. Based on a review of multi-family zoned property recently
available on the Ashland real-estate market land costs average $70,000 per unit or $70 per square foot
for raw land. An estimate based on information obtained from recently completed projects for site
improvements, landscaping, permits and fees put new construction/redevelopment project costs
somewhere around $208 a square foot. A much greater cost than an acquisition/rehabilitation project
depending on the rehabilitation costs.
Promotion of Accessory Residential Unit Development
Another potential tool that the City could explore is a public private partnership for the development of
Accessory Residential Units (ARU) on single family lots. This program could utilize private
developers/contractors who offer a set of small unit ARU plans that have been reviewed by the City and
that can be adapted to various spaces; this could help streamline the development process. The
Affordable Housing Trust Fund could potentially offer zero percent interest loans to help offset the cost
of the development of ARU's. Such AHTF assisted ARU's could be deed restricted to rent to low-
income households for a specific period of time. In certain circumstances the City could also provide a
partial or complete waiver for system development charges. Such a program could promote the
development of additional small rental units upon properties currently containing single family homes.
The creation n of ARU's is a cost effective strategy to address rental housing needs as the costs of land
and public infrastructure are largely factored out of the equation.
Potential Funding Sources
• Up to 1% Construction Excise Tax on all construction approved by the State through newly
enacted SB 1533 can be directed toward the development of affordable housing.
o In looking at a three year average of permit activity within the City (2013-2015), a
construction excise tax is estimated to generate approximately $93,000 a year in funding
to the HTF.
o SB 1533 allows cities to direct up to 35% of the funds generated on new square footage
added to residential development on affordable housing, and 50% of funds generated on
new square footage of commercial development.
o SB 1533 allows cities to allocate 4% of fees collected to administration, which would be
approximately $10,000 in funds.
o SB 1533 requires that cities allocate 50% of funds collected on residential, and $75,000
in funds that can be directed to developer incentives such as fee waivers and SDC
deferrals.
o This tax is estimated to add an additional cost of approximately $2000 to a typical single
family home's building permit cost or roughly $1 per square foot of new construction.
• Cap growth of existing revenue stream: Capping an existing revenue so that any amount over a
certain level can be dedicated to a program. Dedicate the "overage" to the AHTF on the funding
sources identified below.
• Direct a small portion out of several funds toward the HTF:
o TOT-a small portion of the Transient Occupancy Tax could be directed toward the
support of the HTF.
■ The Transient Occupancy Tax of 9% is used to support general funds operations,
economic, cultural and sustainability grants, promote tourism, tourism-related
facilities, economic development and other appropriate purposes consistent with
the limitations in state law for such funds.
■ In FY 2015 $2,460,000 in revenue was generated from the TOT.
■ A '/2 percent increase would generate approximately $ I OOK a year.
o Food and Beverage tax revenue: A voter approved tax established in 1990 on all
prepared food sold in Ashland, 1% reserved for parks, and 4% is dedicated to wastewater
treatment. Generates approximately $2,400,000 annually.
o Small increase in property tax rate;
■ The maximum the City is permitted to levy is approximately $4.29 per $1,000 of
assessed valuation. Currently the budget levies $4.20 per $1,000. The City could
increase the property tax rate by a fraction of a percent and dedicated that
additional funding to the HTF.
■ It is estimated that the revenue generated from levying the maximum rate would
be $210K.
■ A one cent increase is expected to generate $25,000 in new revenue annually.
4
o Small increase in the Community Development Fee
■ Currently the Community Development fee is calculated 1.1% of a structure's
valuation. This fee has traditionally been used to offset the costs of staff time for
processing applications.
■ Over a three year period between 2012 and 2015 the Community Development
Fees generated an average annual revenue $307,385.
■ An increase of. 15% in the community development fee could generate
approximately $42,000 in new revenue annually.
• Marijuana tax-To be decided by voters in November 2016.
o The City could commit to putting the first $50,000 a year from the tax toward the AHTF
potentially in combination with other revenue sources.
• Tax on E-Cigarettes
A dedicated funding source would need to generate enough revenue to make the Affordable Housing
Trust Fund appealing to public and private developers, providing enough of an incentive to attract
further leveraged funds. The City has identified the need for 30 additional affordable housing units
to be created each year to meet demand. It is estimated that the development of 30 units would cost
over 6 million dollars annually. The Affordable Housing Trust fund was not designed to provide a
majority of the funding for any project, and a 1/10 leverage is an accepted norm based on National
Housing Trust Fund data. At that rate it is anticipated that the Affordable Housing Trust fund would
need to provide over $600,000 in funding to meet the identified housing needs in the Ashland
Community. However, over the past 10 years the City has developed approximately 75 total
housing units annually. The City's Housing Program has a goal of providing 10% of newly
developed units as affordable each year. The City could reasonably hope to see some of that
affordable development assisted through the Affordable Housing Trust fund with additional
affordable units expected to be provided through other mechanisms. The development of 5-7
affordable units per year would not adequately meet the City's need for affordable housing, but
would be incremental progress toward the goal of providing housing that is affordable to Ashland's
population.
"Having an aff rdable home in a vibrant community means greater- access to jobs and pathways to
economic success. " National Housing Trust Fund, Center for Community Change
5
6
CITY OF
ASHLAND
Housing Human Services
and
Comm-ission Memo
TITLE: Council Study Session on the HTF
DEPT: Community Development
DATE: July 20, 2015
SUBMITTED BY: Linda Reid, Housing Program Specialist
Housing and Human Services Commission Housing Trust Fund Subcommittee
Regina Ayars, Heidi Parker, Rich Rohde, Connie Saldana
Purpose
Ask the council at the May 18, 2015 study session to authorize the Housing and Humans
Services (H&HS) commission to develop a plan for creating a sustainable funding stream for
the existing Housing Trust Fund (HTF).
Background
2003 Approval of the Affordable Housing Action Plan which identifies the HTF as "a key
strategy" for the city to undertake to support the development of affordable housing
2006 Interviews with regional affordable housing providers for input on funding gaps that HTF
could address
2007 Public survey of Ashland citizen for input on the development of the HTF
2008 June, HC finalizes recommendations and submits them to the council for approval
2008 September, council signs ordinance 2966 creating HTF and resolution funding it with
rehabilitation loan repayments of approx. 99k
2012 Proceeds, $125,000, from the sale of the Chitwood property added to the HTF.
2015 Current balance in the HTF is $166,350 with no sustainable revenue stream
What are the Financial Benefits?
Housing trust funds are unique in that they benefit from a dedicated source of ongoing
revenue. That revenue is committed to producing and preserving housing affordable to lower
income households. The key is having a public source of revenue that is committed through
legislation or ordinance. Housing trust funds are extremely flexible and thus can be used to
support innovative ways of addressing many types of housing needs. They exist in small towns
of about 1000 people as well as in the largest states in the country.
On average, each dollar spent by a housing trust fund leverages seven dollars in additional
funding for housing, such as loans from banks. These funds are usually administered by
government entities, such as a city housing department, which award funds through a
competitive application process.
LI
I
Examples of Ongoing Sources of Funding for Housing Trust Funds
Lodging or Hotel Tax [Ashland's Transient Occupancy Tax]: Hotel or Lodging Tax
generates significant income for local jurisdictions and can be dedicated to affordable housing.
Recent changes to the Short Term Rental ordinance will generate additional revenue that can
be dedicate to the HTF. An increase in short term rentals are known to reduce the availability
of long term rental housing and increase rental rates.
Restaurant Tax [Ashland's Meal Tax]: As a luxury or tourist tax on dining out, a Restaurant
Tax charges diners a small tax on the total bill. The tax can be limited to large restaurants
grossing a certain level of sales and with a liquor license.
In Lieu Fees and Fractional Payments for Inclusionary Zoning (Ashland's Annexation
Ordinance): Some Inclusionary Zoning ordinances allow developers to opt out of constructing
affordable housing units by paying an In-Lieu Fee equal to the value of the required affordable
housing units. Some ordinances require Fractional Payments for the value of un-built portions
of required housing units. While these fees generate modest revenue, Inclusionary Zoning
policies are most successful when they create affordable housing development, not revenue.
Ashland's inclusionary Zoning requirement for newly annexed lands was grandfathered in
when the Legislature voted to ban the strategy several biennia ago. Currently, legislation is
pending to permit the use of inclusionary zoning to create affordable housing in all
communities.
Linkage Fees and Systems Development Charges [Ashland's SDCs]: Systems
Development Charges are imposed by local governments on new development (commercial
and residential) for the cost of providing new public services and infrastructure such as
sidewalks, schools, parks and affordable housing. Linkage Fees are a type of development
impact fee charged specifically for the cost of affordable housing, often based on jobs and
housing nexus studies. This is the most common revenue source dedicated to affordable
housing and services.
Business Registration Fee (Ashland's Business License): An annual Business
Registration Fee can be charged for the permission to do business within a particular
jurisdiction. The fees can range according to the size and type of business. While all
organizations must register, organizations with income tax exemption do not pay the fee.
Recent addition of property owners with more than 2 rental units will generate some additional
revenue that could be dedicated to the HTF.
City Housing Trust Funds are effective:
There are 73 city housing trust funds in twenty-seven states, bolstered by another 148
jurisdictions participating in Massachusetts' Community Preservation Act, and 250
communities certified in New Jersey by the Council on Affordable Housing-a total of 471 city
housing trust funds. Two good examples
Examples
The Affordable Housing Fund in Bend, Oregon was established to develop affordable
housing for families at or below 80% AMI. The fee of 1/5 of 1 percent of the building permit
valuation for all building permits raises the funding. Established in 2006, and extended in
!AWA
2011, the housing program has preserved or created 371 affordable homes and
apartments. To date, the housing program has loaned more than $5.8 million to affordable
housing developments. This funding leveraged an additional $39.6 million in federal, state and
private funds-a ratio of nearly 1:7.
Tucson Housing Trust Fund Citizens Advisory Committee (THTFCAC) was created by
ordinance November 14, 2006 to identify sources of funds and allocate them in support of
affordable housing. From 2006 until 2011 the fund allocated $546,344: 70% to home-
ownership and down payment assistance, 25% to rental and rental rehabilitation projects, and
5% for housing repair projects.
CLOSING COMMENTS
As was clear from the number of applicants and monetary size of the recent requests for
CDBG funds, the Ashland Community will not be able to realize its goals of developing "decent
and affordable housing, transitional housing and shelters for low and moderate-income
persons, as well as provide services for the homeless" with CDBG funds alone. There simply
isn't enough money to go around.
Establishing a dedicated funding source for the existing Housing Trust Fund is vital if we are
to meet the housing goals that have been re-stated with each Strategic Plan since 2003. That
is why the Housing & Human Services Commission is asking the City Council to take the
following steps:
1. Identify and authorize a sustainable funding source for the existing Housing
Trust Fund.
2. Authorize the Housing & Human Services Commission to set up parameters for
utilization of the HTF monies, with the Council having final approval.
In memory of two, now deceased, Housing Commissioners; Steve Hauck and Aaron Benjamin,
who actively advocated for the Housing Trust Fund, we respectfully request the Council's
immediate attention to this very important issue.
IWALAS-11