Ned Murray, PHD, AICP

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Where does it fit? Inclusionary Zoning and the
Affordable Housing Puzzle FLORIDAS
RENAISSANCEANNUAL CONFERENCE 2005FLORIDA
CHAPTER OF THE AMERICAN PLANNING
ASSOCIATIONSeptember 8, 2005
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Speakers

• Dr. Ned Murray, FIU Metropolitan Center,
  305.349.1444 murrayn_at_fiu.edu
• James Carras, 954.415.2022, carras_at_bellsouth.net
• Danny Bivins, Tarragon South, dbivins_at_tarragonsout
  h.com, [phone]

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Overview

• COLLECTING THE PIECES OF THE PUZZLE
• The Affordable Housing Needs Assessment
• Ned Murray, Ph.D., AICP
• ASSEMBLING THE PUZZLE
• Affordable Housing Tools
• Jim Carras, Development Finance Counsel
• FROM PUZZLE TO PICTURE
• Building Affordable Housing in Your Community
• Danny Bivens, VP, Tarragon South Corporation

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Collecting the Pieces of the Puzzle The
Planners Perspective

• The Affordable Housing Needs Assessment

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Affordable Housing Needs Assessment

• Primary Elements
• Housing Demand Analysis
• Housing Supply Analysis
• HMDA/CRA Analysis
• Development Feasibility Analysis
• Supply and Demand Impact Assessment

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Affordable Housing Needs Assessment Housing
Demand Analysis

• Overview of city/county housing and economic
  development activity
• Population and household characteristics and
  trends
• Mobility of the population
• Household income by renter and owner households
• Economic development and employment growth
• Occupation and income analysis of existing and
  emerging populations
• Wage rates and relation to housing affordability
• Forecast of housing market demand by type and
  price.

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Affordable Housing Needs Assessment Housing
Supply Analysis

• Housing inventory by type, age and condition
• Existing housing values and rents
• Profile of existing residential developments
• Assessment of current and projected residential
  development activity
• New and existing housing sales trends
• Apartment rent trends
• Apartment vacancy rates
• Apartment and condominium absorption activity
• Workforce housing supply and demand analysis
• Market appreciation estimates for owner and
  renter units

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Affordable Housing Needs Assessment Home
Mortgage Disclosure Act Analysis

• Determine the level of activity of local lenders
  in affordable housing financing
• (Analyze Home Mortgage Disclosure Act data)
• Help define local lenders role in affordable
  housing development strategies
• (Review CRA ratings and HMDA data and convene
  discussion)

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Affordable Housing Needs Assessment Development
Feasibility Analysis

• Purpose
• To provide a clear understanding of development
  costs, ROI and gap financing required to produce
  affordable housing units
• Calculate development feasibility based on the
  following criteria
• Income ranges
• Sale price points and rent ranges
• Unit sizes and construction types
• Densities

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Affordable Housing Needs Assessment Supply
Demand Impact Analysis

• Purpose
• Determine the correlation and level of impact of
  current and projected housing supply and demand
  on future housing accessibility, affordability
  and economic sustainability.
• Analysis includes
• Assessment of the balance between current and
  projected housing supply and current and future
  housing demand by geographic sub-area.
• Housing affordability gap analysis for homeowner
  and renter markets by geographic sub-area.
• Assessment of current and projected housing
  supply and demand factors on employment and
  economic growth.

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Assembling the Puzzle The Partnership
Perspective

• Affordable Housing Tools

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Affordable Housing Tools

• Ways to encourage the development of housing
  that is affordable
• Update local zoning ordinances
• Utilize good land use practices
• Acquire sources of long-term funding
• Develop partnership models

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Affordable Housing ToolsInclusionary Zoning

• What is it?
• Inclusionary Zoning involves the development of a
  percentage of residential units at affordable
  costs
• Is it for your community?
• Advantages
• Creates ongoing affordable housing stock
• Less public subsidies needed
• Integrates families of all income levels
• Eliminates pockets of high poverty
• Prevents sprawl by intensifying densities
• Disadvantages
• Developers asked to solve a social problem
• Costs are passed on to market rate homebuyers

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Affordable Housing ToolsInclusionary Zoning

• Offering Incentives
• Density Bonus
• Build additional market rate units without
  acquiring additional land
• Fee Waiver
• Waive impact or permit fees
• Fast Track Permitting
• Streamline and expedite permitting process
• Design Flexibility
• Reduce number of parking spaces
• Reduce setbacks, minimum lot size
• Direct Subsidies
• Award grants or payment per affordable unit built
• Publicly fund infrastructure needs
• Tax Abatement
• Waive property tax

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Affordable Housing ToolsInclusionary Zoning

• Allowing Alternatives
• Fee In-Lieu - Developer pays a fee for units not
  built
• Collected into a fund to build affordable units
  elsewhere
• Varying calculation to determine amount (per
  unit, per square foot, etc)
• Some require larger fee than cost to build units
• Off-Site Construction - Developer builds units on
  an alternate site
• Some require a greater percentage of affordable
  units
• Land Dedication - Developer donates land for
  future affordable units
• Often developed by profit/non-profit partnership
• Best in areas where land is limited
• Credit Transfer - Developer credits required
  units to another project
• Similar to off-site construction

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Affordable Housing ToolsInclusionary Zoning

• Striking a Balance
• Mandatory vs. Voluntary
• Mandatory Difficulty in gaining public support
• Voluntary Fewer units created
• Percentage of affordable units
• Too low Not enough affordable units created
• Too high Income from market rate units will not
  subsidize development costs
• Size of qualifying developments
• Too small projects become unfeasible without
  alternatives
• Too large may encourage developers to only
  build below threshold
• Targeted income group
• Lower More subsidizes necessary and fewer units
  created
• Higher Less needy families assisted
• Incentives
• Too few Advantages do not outweigh costs of
  development
• Too many City over-subsidizes projects

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Affordable Housing ToolsInclusionary Zoning

• Striking a Balance (cont)
• Alternatives
• Advantage Maximizes number of units developed
• Disadvantage Reduces dispersal and integration
  of mixed-income families
• Length of affordability
• Short time loss of units over time
• Long time may not have most deserving families
  occupying units
• Resale Restrictions
• Advantage Maintain units at affordable prices
• Disadvantage Homebuyer does not build equity in
  their home

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Affordable Housing ToolsLand Use

• Infill Development
• Restoration of existing structures or use of
  vacant land within urbanized areas
• Zero Lot Line (ZLL)
• Additional apartments added to current housing
• Advantages
• Density lowers land costs
• Mixed use reduces infrastructure needs
• Reduces sprawl and preserves land

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Affordable Housing ToolsLand Use

• Smart Growth New Urbanism
• Development of mixed use, dense town centers
• Urban Growth Boundary
• Urban/Rural boundary is created to encourage
  dense, urban development and land preservation
• Advantages
• Density lowers land costs
• Mixed use reduces infrastructure needs
• Green building design lowers energy costs
• Reduces sprawl and preserves land

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Affordable Housing ToolsLand Use

• Community Land Trust
• Separates the ownership of the house and the
  land
• Non-Profit organization owns land for future
  affordable housing development
• Offers long term leases to individuals,
  community groups, and businesses
• Advantages
•  Permanent affordable homeownership
• Provides access to land, the most valued
  resources in development

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Affordable Housing ToolsFunding

• Trust Funds
• Funds generated through Real Estate Transfer
  Tax, Stamp Tax, or Bonds
• Permanent cash flow
• Double Bottom Line Development
• Investors driven by community development
• Satisfies both financial and social objective
• Conventional
• HOME, SHIP, CDBG, Low-income Tax Credits
• Federal allocations

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Affordable Housing ToolsPartnerships

• Public/Private Partnership
• Collaboration of stakeholders from diverse
  backgrounds within both the public and private
  sector
• Regional
• City/County
• Public/Private
• Advantages
• Information sharing
• Division of labor
• Utilize others strengths
• Improved efficiency and cost effectiveness
• Mutually beneficial outcomes

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Affordable Housing ToolsPartnerships

• Public/Private Partnership
• Broward Housing Partnership, Inc.
• www.browardhousingpartnership.org
• Successes
• Over 70 organizations involved private, public
  and community
• Diverse representation of participants
• Affordable Housing Summit
• Education
• Consensus building on solutions
• Housing Needs Assessment
• Strategic Plan

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Affordable Housing ToolsLocal Solutions

• Initiate public outreach and education programs
• Develop public/private partnership among
  stakeholders
• Determine applicable policy solutions
• Advocate for policy change
• Identify long term funding sources
• Increase ability of residents to own homes while
  ensuring development of rental units
• Create new affordable units while preserving
  existing affordable housing

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From Puzzle to Picture The Developers
Perspective

• Building Affordable Housing in Your Community

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Building Affordable Housing

• Site Selection
• Urban infill
• Underutilized parcel
• Adjust deal to site
• Force Partnerships
• Educate "approvers
• Maintain flexibility
• Admit when your wrong (or when "they" are right)
• Ethical development
• The Real Deal

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Building Affordable HousingTeachers Village
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Building Affordable HousingTeachers Village
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Building Affordable HousingTeachers Village

• Purchase of Units Affordability Preservation
• Broward County School Board - Reserves 50 slots
  for teachers for 20,000 each (total investment
  1 million)
• Teacher can buy if he or she
• Agrees to 20,000 forgivable loan
• Works at an urban/low income school
• Uses loans to buy home from LLTV (TSDC)
• Adheres to seed restriction-can only sell to
  other teacher
• Complies by Broward Housing Partnership
• Verify purchase and sale
• 5 fee per transaction
• Must be used for affordable
• Housing in Broward County

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Building Affordable HousingTeachers Village

• Broward County School Board (BCSB)
• Required Contribution
• 20,000 needed for each teacher to make a deal
  work (returns)
• BCSB has investment in program (skin in game)
• Teachers have five year investment (retention)
• Money paid back to BCSB to re-invest in future
  loans