Planning Commission

AGENDA ITEM SUMMARY November 10, 2008 To: Eugene Planning Commission From: Patricia Thomas, Metro and Community Planning Subject: Opportunity Siting Update and Work Session ACTION REQUESTED: This work session is an opportunity for the Planning Commission to review early Task Team findings and discuss current status and proposed next steps for the Opportunity Siting project. Specific feedback to the Task Team and project team on the following questions is requested: ƒ Are the next steps discussed below and in the presentation appropriate for the next phase of the Opportunity Siting project? ƒ Are there additional considerations that should be included in the next phase of the work plan? BRIEFING STATEMENT: The Opportunity Siting (OS) project was initiated by City Council motion in July of 2005 and a draft work program was adopted by the City Council on July 17, 2006 (Attachment A). Staff was hired for the project in October of 2006 and March of 2007. Following a period of public outreach, including a web-based survey on opportunity siting, engagement with neighborhoods, and interviews with “sounding boards” of community members, a major kickoff event for the OS project and its companion project, Infill Compatibility Standards (ICS), was held in October of 2007. A Planning Commission subcommittee also met regularly to lend guidance to the project. A task team of residents, planning, design, affordable housing and residential development professionals was established for Opportunity Siting and members were approved by the Planning Commission in November of 2007. Project Purpose and Goals The original motion passed by the City Council, on July 20, 2005, to initiate opportunity siting, directed the City Manager to incorporate opportunity siting as a primary strategy for achieving density targets in mixed-use centers. On July 17, 2006, the City Council approved with modifications the Planning Commission’s strategy for opportunity siting, infill standards, and population allocations. The Planning Commission’s strategy included a draft work program with the following stated general purpose for OS: “Find and prepare specific sites for higher density residential development with intention of relieving infill pressure in established neighborhoods.” To build on this direction, the Planning Commission subcommittee also interpreted the intent to include establishing a process for siting dense housing in ways that are compatible with the surrounding neighborhoods. 1 In response, the OS Task Team adopted the following goals and objectives: Goals: Create a planning process to identify and recommend housing sites in the city that can feasibly accommodate high density residential development that is compatible with nearby development and has the support of nearby residents. Develop a program to facilitate development on those sites. Objectives: 1. Further the implementation of the City’s Growth Management Policies, in particular 1, 2, 3, 6, 7, 8, 9, and 10. 2. Contribute to the city’s inventory of housing. 3. Contribute to the variety of housing options available within the city. 4. Demonstrate that dense infill projects can be compatible with their surroundings and garner neighborhood support. 5. Provide an attractive alternative avenue for developers to work with the city to build high density residential projects. 6. Coordinate with infill compatibility standards, mixed use center planning, and other growth management efforts to assure the issues are addressed in a holistic way. To respond to the challenges outlined in the City Council motions, Planning Commission purpose statement and Task Team goal, the Task Team and project team have acted to: 1. Better understand the factors of infill pressure intended to be relieved. 2. Learn what is necessary to gain community support for opportunity siting. 3. Establish a methodology and a working list of criteria to identify sites. 4. Understand what is needed to prepare sites and facilitate development. 5. Define “high density” for opportunity sites. 6. Understand how Opportunity Siting, Infill Compatibility Standards and Mixed Use Centers can be mutually effective. PROJECT UPDATE: Task Team Work: November 2007 through April 2008 The Task Team met every three weeks since it was established in November 2007 and focused on developing broad understanding of the underlying issues and opportunities in multiple-family residential development. To initiate the work, the Task Team adopted a work program and project timeline to guide their research and process. Following development of the work program, the team members shared their expertise and perspectives on the project via a development primer of research and mutual education. The following outlines the highlight activities of the Task Team’s initial project definition, education and research, as reported in an update to the Planning Commission on May 12, 2008. ƒ Establishing Goals and Work Program 2  ƒ Public Outreach Maintaining a current and comprehensive web site: www.eugene-or.gov/oppsiting Sending newsletter updates to 435 person interested parties list. Developing “Ten Tenets of Opportunity Siting,” describing importance of work. Touring Eugene with ICS Task Team ƒ Preliminary Siting Criteria Developing preliminary siting criteria and accompanying map ƒ Design and Development Exploring the role of design as a factor in determining appropriate density for specific sites. ƒ Market Demand Studying economic motivators and constraints on multiple family residential development. Exploring development risks, barriers and possible incentives. See Attachment B for key Task Team Products. “Density and Form Study” and “Development Types” can be found on the OS website by clicking “Presentations and Graphic Resources.” Additional materials are cataloged in monthly folders of the “OS Task Team Materials”. See January folder for real estate surveys. Task Team Work: May through October 2008 Following the research and education phase, the Task Team began to develop processes to collaborate directly with members of the community to identify sites and tease out essential factors to make Opportunity Siting successful. The team worked to: ƒ locate sites directly by identifying several preliminary siting criteria, ƒ locate sites indirectly by identifying a range of factors that would determine the success of development on an opportunity site, ƒ consider who might want to live in the housing, ƒ consider issues of compatibility with existing neighborhoods, and ƒ consider whether the development on a site would be financially viable. The team then formulated this into a guiding concept that for opportunity siting to be successful it must achieve a balance, not unlike a three-legged stool, of three important components – compatibility, market demand, and financial feasibility. The ensuing work done by the task team, resource people, subcommittees, a volunteer neighborhood, market consultant and the project staff team is described below within the three-legged stool framework. Compatibility Financial Feasibility Market Demand 3 Compatibility As conceived by the City Council and reflected in the motions passed, an important focus of the OS program is to protect the health and stability of existing neighborhoods and to relieve infill pressure on neighborhoods. Thus, two of the Task Team’s challenges have been to: • identify those characteristics of a neighborhood that define its “health and stability”, • and to determine where and how to direct development pressure. The Task Team further challenged itself to envision how development pressure can actually be a force for neighborhood enhancement. The Task Team’s working premise is that opportunity site development must be located in such a way as to contribute to neighborhood synergy rather than fragment the neighborhood. ICS Role The Infill Compatibility Standards project shares this challenge and is going forward simultaneously with OS. ICS directly confronts the question of defining compatibility of a broad range of development features within existing neighborhoods and is tasked with proposing mitigation measures to heighten the likelihood of new development being compatible with existing neighborhood character. It is essential for OS to also address issues of existing neighborhood character and compatibility because ICS and OS are on parallel tracks and timelines, rather than OS following completed infill compatibility standards. Studying Compatibility From early in the Task Team’s work, design and compatibility emerged as significant factors in locating dense housing. Based on recurring team member observations that “it’s all about design”, the team devoted a meeting to the topic of, “What’s Design Got to Do With It?” The team furthered their inquiry by studying a range of dense housing types and identifying design and planning characteristics unique to each type. (See Attachment C and website graphics of “Density and Form” and “Development Types.”) Compatibility- Neighborhood Workshop Test Case The team then tackled its goal to, “recommend housing sites in the city that can feasibly accommodate high density residential development that is compatible with nearby development and has the support of nearby residents,” by intensively developing a process to work with and learn from neighborhoods. To further this effort, they sought a neighborhood organization to test the methodology. Jefferson Westside Neighbors (JWN) volunteered to be part of the pilot study and began a productive collaboration with the Task Team and staff to test and refine the process. 4 Evolving from this collaboration was a two-step workshop process to introduce OS to a neighborhood. For the first workshop, JWN’s leadership emphasized that, in the absence of completed infill compatibility standards, OS must start by focusing on defining the JWN neighborhood character that needs to be protected, and must second, identify the negative impacts that denser development can cause. JWN leaders advised that only after these initial steps were accomplished could the neighborhood engage in a productive discussion about opportunity sites. Postcard invitations were mailed to all neighborhood addresses to advertise the workshops. The two step workshop process followed the following format: (See website June and July Task Team materials folders.) Workshop One 1. History, background and context for Opportunity Siting 2. Establish a description of Jefferson and Westside neighborhood character that is important to be protected. 3. Develop a list of possible negative impacts of dense development to guide decisions about appropriate opportunity sites and development types. Workshop Two 1. Training and hands-on exercise in site analysis of a potential opportunity site. 2. Non-binding brainstorm exercise matching development types with potential opportunity sites. Results Numerous hypothetical development sites emerged from the brainstorming exercise matching sites with development types (See Attachment D). The brainstorming activity aligning development types with sites in the neighborhood also provided for a choice of sites to be used for a hypothetical market study and financial viability analysis. The Naval Reserve site near 13th and Chambers (owned by the City of Eugene) was selected as the subject of the hypothetical analysis. Refined Workshop Model The sequence of the workshops as requested by JWN served well to educate the Task Team and staff about the neighborhood organization’s priorities and the important factors in gaining neighborhood support for opportunity sites and implementation strategies. Brainstorming of hypothetical sites also successfully demonstrated the benefits of an intuitive exercise for neighbors to link design, development types and sites as they imagine a possible future neighborhood with denser housing in suitable locations. Following the workshops, the Task Team, staff volunteers and JWN leadership provided debriefing comments and a critique to guide future workshops. Their comments stressed the importance of a more in-depth process with significant pre-planning and inclusion of components that address infill compatibility: “To plan an OS process that effectively engages neighborhood residents, staff and the OS Task Team should understand that most neighborhood residents don’t separate “infill compatibility standards” and “opportunity siting” in the way that OS (and ICS) Task Team members, staff, and Planning 5  Commissioners may. Accordingly, residents’ concerns over infill compatibility standards must be considered by the OS Task Team in planning for successful approaches to achieving OS goals.” The Task Team Workshop Subcommittee used the experience and the debriefing information to develop the Refined Workshop Model to be tested as part of Next Steps below (See Attachment D). Relationship with Mixed-Use Centers The Council’s original motion identified Opportunity Siting as “a primary strategy for achieving density targets in mixed-use centers.” Based on Planning Commission OS Subcommittee input and web survey results, the Task Team stepped back to create a public process to allow the community to identify a broader range of suggested locations for opportunity sites. Neighbors in the test case study wanted to look at a variety of locations for different types of sites including interior sites and edge sites. A next step will be evaluation of sites to determine how locations identified by the community align with mixed use centers. The sites can also be evaluated against other preliminary siting criteria to test both the suitability of sites and the appropriateness of the criteria. Market Demand Task Team Research In winter of 2008, the Task Team studied several factors relevant to market demand including: • Demographic data on local housing demand. • Characteristics of the local multiple family market • Housing affordability trends and levels of unmet housing needs in the Eugene- Springfield area. A key finding the task team learned was that 15-37% of owners (varies by whether mortgage held) and 58% of renters spend more than 30% of their income on housing, indicating a proportionally high housing cost burden (2006 American Community Survey). Team members also developed and conducted informal surveys among local property managers and real estate professionals to get some sense of what types of dwellings were in demand and at what price ranges. Although the number of respondents was limited, the results were revealing. Realtors reported a growing interest in a broader range of housing types from townhouses to condominiums and mixed-use buildings, with a high interest in condominiums in price ranges below $250,000. Property managers and realtors reported a pent-up demand for multiple-family housing in the downtown, southeast and university areas. Consultant Report and Findings This preliminary research was supplemented by a professional analysis in October 2008 of Eugene housing market demand by Johnson-Gardner consultants (See Attachment E). The findings conclude that multiple family rental housing is in great demand in Eugene at all price points. Eugene- Springfield has historically low vacancy rates, and those rates in spring of 2008 were lower than 4% with many unit types at much lower rates. Given the difficulty of financing single family home loans in the current market, the demand for rental apartments is expected to climb. Because Johnson-Gardner was also asked to produce a market analysis for hypothetical development on the Naval Reserve site, the study also outlined the demographic 6 characteristics of the market in the target area of west and southwest parts of Eugene. The types of households seeking rental housing include all age groups, income groups, and household composition. The study targeted the portion of the market earning over $15,000 per year. The expected demographics of the market demand during the next five years in the west and southwest parts of Eugene, as concluded in the report are: “The primary target market for the project is likely to be a mixture of both local and newly in-migrating young graduate student and professional singles and couples as well as pre retirees and retirees desiring a quality apartment unity, located close to employment, the University and services. Proximity to the elementary school will also attract families.” “Middle-income households of working age are the likely primary rental profile at the subject site. Based on the total demand profile, there will be roughly 2785 households earning between $25,000 and $150,000 seeking rental housing per year.” (Includes new and turnover renters.) Financial Feasibility Case Studies The Naval Reserve site was also selected for a case study of financial feasibility for medium and medium-high density development. A subgroup of task team members and staff held a mini-charrette to develop two schematic site plans for the site. The intent was to test the suitability of the site for development at two different densities. Further, the development forms proposed in the two schemes allowed testing of both a less costly medium density building type and a more costly higher density building type. The intent of studying two densities and two development types was to seek generalizations that could inform options for opportunity sites in JWN and similar neighborhoods. The two schematic site plans are shown on pages 7 and 8 of the financial feasibility report (Attachment F). The medium density plan at 20 dwelling units per acre describes a development with several two and three story apartment buildings, which include flats and townhouses. Buildings face the street and an interior drive as well as an internal open space. Parking was proposed to be located in grouped lots and under the townhouses. Based on their research, the consultant assumed construction costs similar to other recent garden-type apartment developments in the community. The higher density site plan, at a density of 50 dwelling units per acre, describes two six-story buildings similar to The Tate constructed along a new north-south street connecting 13th and 14th Avenues. The plan also includes four story stacked townhouses facing 13th and 14th Avenues, shared open space and grouped parking below and adjacent to the buildings. The quality of construction materials necessary to meet building code requirements for the six- story building dictated a higher cost construction and therefore a higher end development. 7 Consultant Report and Findings Johnson-Gardner consultants studied both the market demand, above, and the financial feasibility of the schemes. Their report concluded that the site, located along a bus route, adjacent to a school, play fields, parkland, grocery store, a church and commercial services was well suited for family housing. They also concluded that the area did not provide the range and intensity of amenities, such as restaurants and shops, needed to attract a high-end demographic for the higher cost design. “Households that are seeking an urban experience associated with high- density development will want more amenities in the immediate area than is available at the subject site and many of the neighborhoods in Eugene. Sites close to the downtown core, within walking distance of restaurants, the Hult Center and other amenities have a better chance of attracting households looking for high-density development.” Johnson-Gardner analyzed the feasibility of each development scheme including multiple variables and potential incentives for the 20 dwelling unit per acre scheme. The consultant’s in-depth analysis of land, construction, and other development costs in relation to the expected income return on rents for the property demonstrated a considerable financial gap in all scenarios studied. The high density/high end development scheme was calculated to be the least financially feasible by a significant percentage. The family housing scheme, Scenario E in the report, is the only one that “pencils out.” To achieve this requires density increased to 25 dwelling units per acre, hypothetical city incentives including a subsidy of $650,000 and ten year property tax abatement, along with building permit fee waivers. This “best case” scenario has no financial gap, when 25% equity is provided by the developer. This finding begins to frame the sort of incentives necessary to make existing appropriately zoned sites feasible for development, given current and forecasted market conditions. The likelihood of such incentives being granted to OS developers depends on the success of the implementation process being developed and the City’s willingness to award these incentives at the policy level. The Johnson-Gardner study also provided broad conclusions about rents and wages and the viability of sites located on busy streets at neighborhood edges (See Key Conclusions): “Ultimately, the key variable that prevents either form from being considered viable is that rents in the study area are low.” “The primary reason this site cannot command higher rents, which would improve its financial viability, is its location on a corridor. The site is on 13th Avenue and close to Chambers, heavily trafficked corridors. Large roads are a disamenity for residences and the value of two similar structures, one on a busy road and one a quiet road will be very different.” “One reason this site was selected to be the subject site was because it is an “edge” site. It is in a location that bounds a neighborhood. Existing residents often prefer to consider edge sites to be potential opportunity sites. If an attractive apartment complex locates on an edge site, it creates a buffer for the neighborhood from heavily trafficked roads. However, locating a development on an edge site makes it difficult to command higher rents.” 8 NEXT STEPS To continue moving the OS project forward, the project team and Task Team is planning the following next steps for January-July of 2009 (See Attachment G): Engage development community Although the Task Team has gathered significant information about the development process and about barriers to development, the development community (developers, property owners, design professionals) has not been engaged directly (beyond those members of the task team) in the opportunity siting process. A next step is proposed to meet with developers individually or in focus groups to seek further input regarding: ƒ Methodology for developer to propose an opportunity site; ƒ Risks and barriers to development on different kinds of sites; ƒ Range and effectiveness of potential incentives, economic realities; ƒ The viability of a successful neighborhood planning process as a development incentive; ƒ Response to proposed implementation strategies. Further investigation of neighborhood siting process: Two workshop models are available for further investigation. The first model is the two step workshop process described previously which provides an introductory exploration of opportunity siting in neighborhoods. The second model is a refinement and expansion of the two step workshop into a series of events, outlined in Attachment D, to allow for an in-depth analysis of neighborhood needs and opportunity sites. The Task Team needs to determine where to place its next focus among the following options: ƒ The JWN test of the two step workshop model demonstrated how to effectively present introduction and background materials, identification of neighborhood character and impacts, site analysis and site brainstorming. o The two step workshop model could be conducted in other types of neighborhoods with different characteristics and issues (i.e. suburban, edge). This would allow the Task Team to learn the kinds of things learned from JWN, and to see how the two step model works in other parts of the city. o The two step workshop model can be conducted with two neighborhoods together that share an asset such as a major park or avenue with commercial or cultural amenities. ƒ Through feedback from participants and JWN leadership, a refined workshop model has been developed by the Task Team and is ripe for further testing. The refined workshop model represents an intensive process to work closely with a specific neighborhood. Develop implementation strategies The OS Planning Commission subcommittee, Task Team and staff work groups have begun to brainstorm potential strategies to implement opportunity siting through land use processes, building permit and other processes such as an alternate path. Strategies to be studied will be 9 meant to provide mechanisms to allow sites to come forward through either developer or neighborhood site identification. Each of the potential incentives will also need to be tested for feasibility and aligned with implementation strategies before being formed into recommendations. Hold Planning Commission Work Session During the next phase of the Task Team’s work, occasional meetings will be held with the OS Planning Commission subcommittee for guidance on project direction. Summary recommendations of implementation strategies will be presented to the Planning Commission mid-2009 for a work session and development of recommendations to refer to the City Council. For further details on this project and materials to date, please view the webpage at www.eugene-or.gov/oppsiting FOR MORE INFORMATION For more information, contact: Patricia Thomas, Metro and Community Planning 682-5561 or at: patricia.thomas@ci.eugene.or.us ATTACHMENTS A. City Council, Planning Commission direction B. Task Team Products: Task Team Members 2008 Work Program Timeline Ten Tenets Siting Considerations, draft Siting Criteria Scoring Map, draft C. Study Documents: Density and Form Study page/also see website Development Types page/also see website D. Neighborhood Workshop Documents: Workshop invitation JWN Siting Exercise Map Refined Workshop Model E. Market Analysis F. Financial Viability Analysis G. Timeline Flow chart 10