Loading...
HomeMy WebLinkAboutLand Use & Development StrategiesGreenstreet, Ltd. 2022 LEVERAGING HOUSING FOR ECONOMIC WELL-BEING Housing for All: LAND USE & DEVELOPMENT STRATEGIES JANUARY 2022 Housing for All: Leveraging Housing for Economic Well-Being WHAT ARE LAND USE REGULATIONS? In the U.S. nearly 75 percent of all land is zoned for single-family housing – arguably the most expensive form of housing. Hamilton County is no different. National studies have indicated that housing production that has failed to keep pace with population growth costs the U.S. $400 billion (over a 20-year period) in lost gross domestic product (GDP.) Building diverse, attainable housing in high opportunity economies, like Hamilton County, generates positive impacts on the economy and competitiveness of the area. In Hamilton County there are numerous documents, processes, and bodies that regulate how and where development occurs — generally referred to as land use and development regulations. The objective is to ensure development reflects the character and desires of the community. Interviews with local developers, home builders, and planning staff revealed that increasing diversity in housing is difficult given the current political and regulatory environment that dictate what can be built and where. Current land use and development regulations limit opportunities to develop attainable housing through controls on use, lot sizes, and home sizes among other many other factors. Yet, there are several ways to create win-wins for municipalities, builders, and home buyers by bringing together all the parties involved to modify regulations and processes that would ease development of attainable housing in various forms. Nationally, development regulations (at all levels of government) account for 24 percent of the final sales price of new housing. Upgrading a 2,200-square-foot home from standard vinyl siding to cement board adds approximately $4,500 to the cost of development in Central Indiana (2019). Average development costs are roughly $1,000 per lineal foot. Increasing minimum lot widths from 60 to 80 feet may add an additional $20,000 to the cost of development (2019.) The cost of this example 1.0 acre site is $200,000. Land accounts for approximately 25 percent of the final value of the home. The sales price of a home developed on a 1.0 acre site would likely be $1,000,000 for the property (land and improvements.) This would require a household income of $266,667, or 327% AMI. The sales price of a home developed on a 1/2 acre site would likely be $400,000 for the property. This would require a household income of $133,333, or 163% AMI. And the sales price of a home developed on a 1/4 acre site would likely be $200,000 for the property. This would require a household income of $66,667, or 82% AMI. ILLUSTRATIVE EXAMPLE 1 acre $200,000 / lot 1/2 acre 1/2 acre $100,000 / lot 1/4 acre 1/4 acre 1/4 acre 1/4 acre $50,000 / lot The cost of a lot not only impacts the final sales price to the end consumer, but it also dictates what (and how much it will cost) a developer will build on the site. BENEFIT ATTAINABLE HOUSING DEVELOPERS. Residential builders and developers must manage cost, supply and demand, as well as revenue. Local regulations and development standards directly impact what can and cannot be built, affecting both the cost of construction as well as developers’ ability to meet demand. By allowing greater flexibility within local regulations, municipalities can allow attainable housing developers to better meet the needs of their market, reduce the cost of development (and the final sales price), and more quickly and efficiently grow the supply of attainable housing in areas where it is needed most. BENEFIT MUNICIPALITIES. Municipal budgets are highly dependent on property taxes and property tax caps in Indiana created issues for many communities that, in the past, relied heavily on high-cost, low-density luxury housing as their primary revenue source. By increasing a community’s tax revenue per acre – through diversified product types, smaller lot sizes, and higher density – municipal budgets can be maintained and increased. Studies have shown that compact, walkable places generate ten times more tax revenue per acre than traditional, low- density developments. Greenstreet, Ltd. 2022 POTENTIAL 18-MONTH TIMELINE TO BE EFFECTIVE, LAND USE STRATEGIES IN HAMILTON COUNTY NEEDS COOPERATION AND INVESTMENT FROM A NUMBER OF PARTNERS. Municipal partners will... Agree to attainable housing vision statement and participate in community education on its need Agree to benefits of making modifications to local zoning and development regulations Agree to work collaboratively with other municipalities across Hamilton County Agree to explore modifications to zoning and development regulations Agree to support efforts to create model attainable housing district/overlay Development (for-profit and nonprofit) partners will... Agree to attainable housing vision statement Provide time and expertise to inform and evaluate modifications Agree to work in collaboration public-sector partners Partner with MIBOR to assess and promote the importance of regulatory reform on increasing housing production and access to attainable housing types. lead: HCHC Explore additional case studies and best practices of regulatory reform across the country to inform modifications to local codes and regulatory documents. Share with elected officials and planning departments lead: HCHC Evaluate local standards against best practices. lead: HCHC, Planning Staff Discuss preliminary modifications to zoning and development standards. lead: HCHC, Planning Staff Explore technical and political feasibility to make modifications. lead: HCHC, Planning Staff Present recommendations to applicable county and municipal leadership. lead: HCHC, Planning Staff Explore feasibility of implementing county-wide attainable housing district or overlay regulation. lead: HCHC, County Leadership Develop model attainable housing district that could be used across various planning and zoning jurisdictions in the County. lead: HCHC, Planning Staff Housing for All: Leveraging Housing for Economic Well-Being Conversations on how to more effectively use land use and development regulations as well as public-sector incentives presents an opportunity to make moderate, fine tuned adjustments to local zoning, development standards, and public policies without drastically changing the character of what is built. Doing so can increase the speed of diverse housing production. Across the nation, cities and towns are making similar modifications with varying degrees of success. The following list of “best practices” represent early wins for Hamilton County to encourage and support attainable housing development. BY IMPLEMENTING THESE BEST PRACTICES, HAMILTON COUNTY CAN BETTER SUPPORT ATTAINABLE HOUSING. Housing in Hamilton County is becoming less affordable to more people, and demand is growing faster than supply, creating significant pressure on the housing market. Even at higher incomes, finding available housing is difficult given the lack of inventory. Modifications to existing land use and development regulations and processes that govern them could create greater opportunities to develop smaller, more cost-efficient housing at lower price points to the end consumer. ALLOW MODERATE DENSITY. The Village of WestClay is an example of how to create gentle density and efficiently use land. Townhomes are sited on the same block as larger single-family homes and condos and small lots are subtly mixed throughout the development, including multi-family rentals. Home values vary from the low $200s to upwards of $1 million offering a variety of housing types and prices for households of all sizes and life stages without sacrificing quality and design. In areas where land prices are a barrier to building attainable housing, allowing smaller lots sizes can make homes less expensive to develop and ultimately buy. Lot development can account for 20 to 50 percent of the final cost of a home. Reductions in lot sizes ultimately reduces the final cost to the home buyer. Smaller lots can allow buyers and renters to “buy” more house and can be developed in mixed-use, walkable places that are highly desired by a growing portion of the market. It is important to keep in mind that alterations to setbacks, side yard requirements, and lot coverage is likely needed to support development on smaller lots. ALLOW SMALLER LOTS SIZES. The 2.08 acre site in Kirkland, Washington, a suburb of Seattle, was developed into a 16 unit cottage-style development. Part of a 1950s low density suburban neighborhood, the infill development consists of single-family detached homes ranging in size from 700 to 1,500 square feet. The site was originally zoned for 7,200 square foot lots which typically produce 3,00 square foot homes. The development took advantage of a density bonus for small home development – offering 100 percent increase in the number of homes depending on the size. After the development, the city adopted a more innovative code that allowed for “Cottage, Carriage, and Two-Three Unit Homes” and demonstrated the market demand for smaller housing choices. Larger, detached homes typically come with higher price tags and on-going maintenance costs. Townhomes, stacked flats, duplexes, and other multi-unit residential products can offer similar benefits of single-family detached living, but at more attainable prices. These types of housing products can easily fit within the context of single-family neighborhoods without drastically altering the character. Higher density housing types, such as for-rent or for-sale multi-family apartments, also increase attainability and may be attractive to portions of the market not suited for single-family detached living – seniors, empty nesters, young professionals, and service-sector workers. Additionally, the use of Accessory Dwelling Units (ADUs or granny flats, in-law suites, or carriage houses) can offer benefits to a variety of household types and economic backgrounds. ADUs can be housing for recent college graduates, aging parents, or a source of additional income to support higher cost housing. They also offer attainable rental units to low- and moderate-income households without adding considerably to density, parking or traffic issues, or changes to the neighborhood’s existing character. ALLOW A VARIETY OF RESIDENTIAL PRODUCTS. Stapleton just outside Denver, Colorado, is a prime example of how to thoughtfully integrate a variety of housing types and price points within a cohesive, high-quality neighborhood. The 4,700-acre former airport site was developed by a single master developer working with multiple builders to create an inclusive neighborhood development. The inclusion of apartments, townhomes, stacked flats, and single-family detached products, many of which are interspersed in a single block, creates an environment where young professionals, established families, and empty nesters can find a home and continue to live within their community throughout their lives. To ensure affordability, there are income-restrictive units scattered throughout that utilize a quasi-community land trust model to limit the impacts increasing home values. Greenstreet, Ltd. 2022 Attainable housing developers are often working at a disadvantage to market-rate developers – lower returns on investment, less access to capital, and the need to constantly overcome the negative connotations of “affordable” housing. Municipalities and public- sector partners can remove some of these barriers that disproportionately affect attainable housing developers by expediting the approval process and reducing or eliminating fees associated with development. REDUCE FEES OR EXPEDITE APPROVAL PROCESS. Regulatory barriers, cost of living, housing construction costs, and other market pressures caused rapid increases in housing prices in the City of Austin. Facing an affordable housing crisis, the City responded by creating the S.M.A.R.T housing program to incentivize affordable housing development. S.M.A.R.T. housing developments had to be safe, mixed income, reasonably priced and transit oriented. If the development complied with the criteria, the developer would be eligible to receive a waiver of thirty types of development related fees including land development fees (zoning, subdivision, site plan), building permit and inspection fees, and subdivision construction inspections. The program has continued to expand each year. Between 2000 and 2005, 4,900 S.M.A.R.T units were constructed, increasing the share of units affordable to families at or below 60 percent MFI increased by more than 25 percent. There are many factors working against the creation and preservation of attainable housing in Hamilton County – high land costs, high development standards, lack of traditional funding sources, and negative public perception. The public- sector can assist by providing a menu of incentives to help overcome these obstacles. Financial incentives may include TIF investment, tax abatement, infrastructure investment, or other forms of financial participation in the development. Other non-financial incentives that may assist attainable housing developers include density bonuses, reduced parking requirements, and donations of land. Public incentives, whether they are financial or otherwise, can reduce the cost and risk of development making it much more feasible to develop attainable housing given the current market dynamics in Hamilton County. INCENTIVIZE ATTAINABLE HOUSING. Amidst a well-documented affordable housing crisis, Seattle and King County, Washington, enacted an ordinance that requires all surplus public land to first be considered for affordable housing development. Sites that are suitable for affordable housing can be sold below market value, down to as little as $0, as long as the land is used for permanent affordable housing. According to the City of Seattle, land can account for 15 percent of the cost of developing permanently affordable housing. By eliminating those costs, or greatly reducing it, more homes can be developed. To ensure the public has access to the information, the City publishes a map of available surplus and underutilized public properties. CODE REVISIONS CREATE OPPORTUNITIES FOR DEVELOPMENT Memphis, Tennessee The Memphis 3.0 Comprehensive Plan identified various ways code restrictions that prevent the development of walkable, urban communities – often more attainable by design compared to traditional, large-lot subdivisions. Various regulations including street widths, curb radii, lots sizes, land use, and building types regulated by numerous codes including fire code, zoning, and construction code were identified as barriers to incremental development. Coming out of that planning process, Memphis, Tennessee, amended building codes to allow for structures of three to six units to be reviewed under residential building codes versus the standard commercial code. This simple change has the potential to positively impact the financial viability of “missing middle” housing and create greater opportunity to build lower cost housing. Less stringent requirements, such as the need for fire sprinkler systems, more appropriate for large multi-family apartments, can save thousands of dollars per building. Plan review fees and building permits for residential structures are typically less costly compared to similar commercial reviews and permits. Opticos Design, the lead consultant on the project, noted, “gaining compromise between planners, code officials, fire officials, and builders will be important for any community seeking to address missing middle housing in their building codes, as well as for advocates of missing middle housing who may be interested in advancing a similar code change in the ICC [International Code Council] standard codes in a future release.” New incremental infill development is happening in Memphis. One example is Malone Park Commons. Developed by Jones Urban Development, the project features 11 cottage-court style residences as part of phase one. The development moved smoothly through the regulatory process, due in part, to the changes made as a result of the recommendations in the comprehensive plan. The City of Memphis hopes to continue its efforts to encourage infill development via incremental density as a way to increase population and strategically grow its tax base. Housing for All: Leveraging Housing for Economic Well-Being We believe that housing should be attainable for those who desire to call Hamilton County home – during every stage of their lives. We will prioritize diversity in product types and housing prices to uphold the economic well- being of Hamilton County. To ensure housing for all, we will... • work collaboratively with leadership to prioritize diversity in housing product types and prices (prioritizing households earning up to 120% AMI); • encourage and regulate for lower cost housing options near jobs and services; • explore public-private-philanthropic partnerships to expand resources and dollars aimed at removing barriers to attainable housing; and • communicate the importance of attainable housing the County’s economy today and in the future. #HOUSING4ALL VISION: The Hamilton County Housing Collaborative is a group of individuals and organizations committed to improving the inventory of housing in every category along the continuum of housing options. This collective impact initiative is staffed by HAND, Inc. Aspire, Family Promise of Hamilton County, Noblesville Housing Authority, and Westfield Washington Township are the other founding organizations. CREATE STRONG COMMUNITIES WITH #HOUSING4ALL. • Visit www.handincorporated.org to learn more and get digital copies of the 2022 Hamilton County Housing Report. • Be a knowledgeable YIMBY – “Yes in My Backyard” by advocating with your elected officials and following local zoning meetings. Support good projects that provide more workforce housing. Learn more at https://yimbyaction.org/2021/ • Volunteer with a nonprofit working in housing. Contact Kelley Romweber (kelley@handincorporated.org) to explore which nonprofit in Hamilton County would be a good fit for you. • Use your social media presence to advocate for #Housing4All. • Donate funds, land, or expertise for housing initiatives focused on low-income households. Kelley Romweber (kelley@handincorporated.org) can give you the latest information. TAKE ONE ACTION TODAY: