LAND USE REGULATION COMMISSION

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AFFORDABLE HOUSING Draft Policy Statement and
Proposed Rule Changes
LAND USE REGULATION COMMISSION 7 FEBRUARY 2007
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BACKGROUND

• Issue of affordable housing mentioned
  occasionally in recent years
• Monhegan requested rule changes in September
  2005
• Affordable housing panel discussion held in
  August 2006
• Commission directed staff to proceed with
  drafting rules
• Denial of building permit to Monhegan resident
  in September 2006

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DRAFT AFFORDABLE HOUSING POLICY STATEMENT

• Policy statement provides the basis for proposed
  rule changes
• Draft policy statement defines affordable
  housing
• Describes housing market and income trends in
  jurisdiction
• Discusses several issues related to affordable
  housing
• Presents draft goal and policy statements

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AFFORDABLE HOUSING DEFINITION

• Decent, safe and sanitary living accommodations
• Affordable to lower and moderate income
  households
• 33 limit on household income for housing costs

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Maine Housing Costs

• Housing costs, sales and rentals, increasing much
  faster than incomes in most regions
• MaineHousing tracks regional housing costs and
  median incomes
• Trends are particularly problematic in coastal
  and southern Maine
• Uses affordability index to evaluate extent of
  affordability problems across Maine (ratio
  between how much mortgage loan areas median
  income households can afford divided by areas
  median home price)

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2005 Affordability for Median Income Buyers

• 
  
  Income Needed to
• Community or Affordability Median Median
  Afford Median
• Housing Market Index Home Price Income
  Home Price
• Communities
• Greenville 0.81 127,500 35,948
  44,604
• Rangeley 0.46 251,250 38,243
  83,826
• Counties
• Aroostook County 1.41 67,000 32,809
  23,249
• Hancock County 0.66 196,000 41,869
  63,206
• Franklin County 0.84 127,000 35,930
  42,752
• Hancock County 0.66 196,000 41,869
  63,206
• Knox County 0.69 192,875 44,005
  63,675
• Lincoln County 0.64 209,000 43,559
  68,281
• Oxford County 0.88 129,900 38,123
  43,510
• Penobscot County 0.88 132,500 39,453
  44,988
• Piscataquis County 1.02
  92,000 31,652 30,994
• Somerset County 1.14 91,500 35,153
  30,898
• Washington County 0.89
  95,000 29,105 32,723
• Labor Market Areas

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Median Incomes and Housing Costs2001 2005

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LURC Regulatory Approach

• Current CLUP does not mention affordable housing
  as an issue
• Chapter 10 rules dont specifically address
  affordable housing

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Affordable Housing IssuesDevelopment and
Regulation

• Demand and Location Accommodate affordable
  housing in all areas appropriate for residential
  development initially then monitor
• Environmental Protection and Land Use Regulation
  Examine land use provisions to determine
  whether standards can be reduced or waived to
  reduce housing costs while still protecting
  natural resources

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Affordable Housing IssuesDevelopment and
Regulation

• Regulatory Techniques
• Inclusionary zoning rules integrate affordable
  housing into overall development in communities
• Density bonuses allow additional units overall
  in exchange for inclusion of affordable units
• Accessory apartments/multi-family dwellings use
  incentives to encourage development limit to
  affordable housing purposes
• Incentives versus mandates initially, use
  incentives, then monitor situation

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Affordable Housing IssuesLong-term
Affordability

• Specified time frames
• Variable 10-99 years
• Maintaining affordability
• Rentals easier than sales unitsoversight
  agency sets rental rates within affordable ranges
  and limits increases
• Sales deed covenants include pricing formulas
  that may consider inflation, improvements,
  subsidies
• Mechanisms
• Income and affordability limits set affordable
  rental rates and sale prices screen households
• Various means deed covenants, subsidies to
  bridge gap, right of first refusal for sales

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Affordable Housing IssuesInitial Commission
Approach

• Incentive-based Approach
• Allow reduction of minimum lot size and other
  dimensional requirements, as needed
• Long-term Affordability
• Consider time frame of affordability
• Leave method of ensuring long-term affordability
  to applicants
• Housing Oversight
• Require on-going involvement and oversight by
  acceptable housing entities
• May require back-up for the housing entities

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Draft Affordable Housing Goal Statement

• Proposed Goal
• Facilitate the provision of affordable housing
  opportunities in appropriate locations to
  households with a full range of incomes.

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Draft Affordable Housing Policies

• Proposed Policies
• Evaluate current dimensional requirements and
  land use standards for residential structures and
  subdivisions to remove barriers to the creation
  of affordable residential lots and construction
  of affordable dwelling units.
• Require that permitted affordable housing is
  overseen by experienced local or regional housing
  groups or agencies that can assure it is
  maintained as affordable housing over the
  long-term.
• Ensure that permitted housing affordable to
  households with varied incomes is interspersed
  within residential projects and development
  subdistricts, as appropriate.
• Work with local and regional housing groups,
  plantation and town officials, and regional
  planning agencies to identify the need and
  appropriate locations for affordable housing.

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PROPOSED RULE CHANGES FOR AFFORDABLE HOUSING
ACTIVITIES

• 10.02 DEFINITIONS
• 10.25 DEVELOPMENT STANDARDS
• 10.26 DIMENSIONAL REQUIREMENTS

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10.02 DEFINITIONS

• Affordable Housing
• Decent, safe and sanitary living accommodations
  that are affordable to very low, low and moderate
  income households
• Limit of 33 of income spent on housing
• Affordable Housing Covenant
• Agreement among owners, and/or tenants, and
  qualified holders, that permits holders to
  control purchase price of housing
• Primary purpose to provide affordable housing

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10.25 DEVELOPMENT STANDARDS U.
AFFORDABLE HOUSING

• Dimensional Requirements
• Reduce minimum lot size to 20,000 square feet
• Reduce other dimensional requirements, as needed
• Income Restrictions
• Require sale or rental to very low, low and
  moderate income households
• Allow waiver of limit on of income spent on
  housing in certain markets

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10.25 DEVELOPMENT STANDARDS U.
AFFORDABLE HOUSING (cont.)

• 3. Maintenance of Long-term Affordability
• Require that provisions run with land are
  recorded
• Restrict title for sales in perpetuity by deed
  covenant
• Limit annual rent increases
• Allow other equivalent mechanisms

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10.25 DEVELOPMENT STANDARDS U.
AFFORDABLE HOUSING (cont.)

• 4. Qualified Housing Entities
• Require oversight of affordable lots or units by
  qualified housing entity acceptable to Commission
• Require back-up housing entity or covenant holder
• Require approval of transfers of rights

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10.25 DEVELOPMENT STANDARDS U.
AFFORDABLE HOUSING (cont.)

• 5. Affordable Housing Agreement Submissions
• Identification of qualified housing entity
  back-up
• Method for maintaining long-term affordability
• Process for screening and selecting tenants or
  buyers
• Purchase option for qualified housing entity
• Method to return profits for purpose of housing
• Documentation of need for waiver of 33 limit

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10.26, G Exceptions to Dimensional Requirements

• 14. The Commission may reduce dimensional
  requirements for the purpose of providing
  affordable housing opportunities, in accordance
  with Section 10.25, U.

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STAFF RECOMMENDATION
POST DRAFT AFFORDABLE HOUSING POLICY
STATEMENT AND PROPOSED RULE CHANGES TO
30-DAY COMMENT PERIOD