Planning Commission

AGENDA Meeting Location: Sloat Room—Atrium Building Phone: 541‐682‐5481 99 W. 10th Avenue www.eugene‐or.gov/pc Eugene, OR 97401 The Eugene Planning Commission welcomes your interest in these agenda items. Feel free to come and go as you please at any of the meetings. This meeting location is wheelchair‐accessible. For the hearing impaired, FM assistive‐listening devices are available or an interpreter can be provided with 48 hour notice prior to the meeting. Spanish‐language interpretation will also be provided with 48 hour notice. To arrange for these services, contact the Planning Division at 541‐682‐5675. MONDAY, JANUARY 22, 2018 – REGULAR MEETING (11:30 a.m. to 1:30 p.m.) I. PUBLIC COMMENT The Planning Commission reserves 10 minutes at the beginning of this meeting for public comment. The public may comment on any matter, except for items scheduled for public hearing or public hearing items for which the record has already closed. Generally, the time limit for public comment is three minutes; however, the Planning Commission reserves the option to reduce the time allowed each speaker based on the number of people requesting to speak. II. WORK SESSION: AFFORDABLE HOUSING – CONSTRUCTION EXCISE TAX Staff: Stephanie Jennings, 541‐682‐5529 III. WORK SESSION: LOCAL IMPLEMENTATION OF LEGISLATION RELATED TO SECONDARY DWELLINGS Staff: Alissa Hansen, 541‐682‐5508 IV. ITEMS FROM COMMISSION AND STAFF A. Other Items from Staff B. Other Items from Commission C. Learning: How are we doing? Commissioners: Steven Baker; John Barofsky (Chair); John Jaworski; Elliot Becker; Brianna Nicolello (Vice‐Chair); William Randall; Kristen Taylor  AGENDA ITEM SUMMARY January 22, 2018 To: Eugene Planning Commission From: Stephanie Jennings, Community Development Division Terri Harding, Planning Division Subject: Housing Policy Board Proposal to fund affordable housing through a Construction Excise Tax (CET) ACTION REQUESTED This is an opportunity for the Planning Commission to learn about a proposal from the Housing Policy Board to fund affordable housing projects by implementing a Construction Excise Tax on new development in Eugene. BRIEFING STATEMENT The City Council discussed the Housing Policy Board proposal at a Council work session in December. The Council materials are attached to this memo (Attachments A and B). At the meeting, Stephanie Jennings will present the information that was presented to the Council, and provide an update on the current status of the work. ATTACHMENTS A. December 13, 2017 City Council Memo B. December 4, 2017 Housing Policy Board Letter FOR MORE INFORMATION Stephanie Jennings, Grants Manager, 541-682-5529 or Stephanie.a.Jennings@ci.eugene.or.us 1  ATTACHMENT A EUGENE CITY COUNCIL AGENDA ITEM SUMMARY Work Session: Local Implementation of Legislation Related to Secondary Dwellings Meeting Date: January 17, 2018 Agenda Item Number: B Department: Planning and Development Staff Contact: Alissa Hansen www.eugene‐or.gov Contact Telephone Number: 541‐682‐5508 ISSUE STATEMENT The focus of this work session will be recent legislation related to housing affordability. Specifically, the City Council will be provided with an overview of a new provision in state law related to the allowance of secondary dwellings that will require changes to Eugene’s land use code. BACKGROUND To address housing affordability, the Oregon State Legislature adopted Senate Bill (SB) 1051 during the 2017 legislative session. This bill, which became effective August 15, 2017, had support at the state level from both 1000 Friends of Oregon and the Oregon Home Builders Association. It contains a number of new provisions in state law intended to facilitate housing affordability, including requirements for expediting affordable housing permits, defining “needed housing” as all housing, allowing religious institutions to use their property to develop affordable housing, and requiring cities to allow for accessory dwelling units in single‐family neighborhoods. Pertinent to this work session is the provision in SB 1051 related to accessory dwelling units (known as secondary dwelling units or SDUs in Eugene), which requires: “A city with a population greater than 2,500 or a county with a population greater than 15,000 shall allow in areas zoned for detached single‐family dwellings the development of at least one accessory dwelling unit for each detached single‐family dwelling, subject to reasonable local regulations relating to siting and design.” An accessory dwelling unit as defined by the bill means an interior, attached or detached residential structure that is used in connection with or that is accessory to a single‐family dwelling. The bill further requires that the above provision apply to permit applications for accessory dwelling units submitted for review on or after July 1, 2018. Although the general intent of the new law is evident (cities must allow accessory dwellings), the direction provided within the text is vague. As written, it does not provide clear direction as to which January 17, 2018, Work Session - Item B zones accessory dwelling should be allowed in, nor does it provide any guidance as to what “reasonable regulations relating to siting and design” might be or not be. This lack of clarity is problematic for all cities working to implement the new law by the July 1, 2018, deadline. Eugene has long allowed for secondary dwellings in the R‐1 Low Density Residential zone subject to development standards such as height, setbacks, building size and parking. Secondary dwellings are also allowed in certain special area zones (including Chambers, Chase Node, Downtown Westside, Royal Node, Whitetaker and Walnut Station) subject to development standards. The standards that apply to secondary dwellings in the R‐1 Low Density Residential zone were most recently changed in 2014 as part of the Single Family Code Amendments with the intent of providing greater protections for neighborhood livability. Since the adoption of SB 1051, staff have been monitoring how other jurisdictions are interpreting and considering implementation of the requirement related to accessory/secondary dwellings. We’ve also had informal conversations with several interested parties, including Housing Policy Board and Sustainability Commission members on subcommittees looking at alternative housing types, members of Walkable Eugene Citizen’s Advisory Network, and neighborhood advocates. The City Council has also been hearing from numerous interested parties at public forums and via email and letters. From these communications, we’ve heard a range of perspectives, including:  Cities across the state are struggling with the vague language of the bill.  Housing affordability has been identified by many as a major issue in our community.  Missing middle housing types, including secondary dwellings, have been identified as a potential tool for addressing housing affordability.  There is interest in re‐evaluating our land use code and permit processes to identify and remove barriers to secondary dwellings.  There is concern that any changes to the existing secondary dwelling standards will result in loss of protection of livability to neighborhoods.  Maintaining neighborhood livability while providing for housing affordability is a widely shared value. We’ve also had conversations with the Oregon Department of Land Conservation and Development (DLCD), which is considering proposing legislation at the upcoming legislative session beginning in early February, to provide more clarity about how the new law applies and potentially extending the July 1, 2018, deadline. Based on our analysis, we believe it is prudent for the City to take some action to implement SB 1051 before the legislative deadline. At the same time, we are also aware that our community highly values both housing affordability and neighborhood livability, and that community conversations around these topics are evolving. Next Steps To implement SB 1051 in a way that is both responsible and responsive to diverse interests, staff recommends a phased approach. This approach would allow the land use changes to be completed in two phases, as further described below. At the work session, staff will cover this approach in more detail. Phase 1: The first phase would begin immediately following City Council initiation and consist of limited changes solely aimed at compliance with the bill’s requirement to allow secondary dwellings in areas zoned for detached single family homes by the July 1, 2018, deadline. The existing development standards (height, setback, etc) would remain in effect for all zones. Phase 2: This phase would begin following adoption of Phase 1 and consist of a review and potential update of our existing development standards for secondary dwellings through an inclusive community process. This would allow for the emerging community conversations around housing affordability and neighborhood livability to inform potential changes. Any updates to the City’s land use code require City Council to initiate the process. Council initiation only begins the public process through which the Planning Commission and City Council will consider the merits of the changes, and does not infer support for any proposed changes. The formal adoption process for an amendment to the land use code includes notice to DLCD and interested parties, a public hearing before the Planning Commission which provides a recommendation to City Council, a public hearing before the City Council, and action by the City Council. Staff will return on January 22, 2018, to request City Council initiation. RELATED POLICIES Envision Eugene Pillars The two most pertinent pillars from Envision Eugene are “Provide Housing Affordable to all Income Levels” and “Protect, Repair and Enhance Neighborhood Livability.” Both will be important considerations in this effort. COUNCIL OPTIONS No action is required at this time. The City Manager will provide a recommendation for initiation of land use code changes on January 22, 2018. CITY MANAGER’S RECOMMENDATION No action is required at this time. The City Manager will provide a recommendation for initiation of land use code changes on January 22, 2018. FOR MORE INFORMATION Staff Contact: Alissa Hansen Telephone: 541‐682‐5508 Staff E‐Mail: alissa.h.hansen@ci.eugene.or.us ATTACHMENTS None. January 17, 2018, Work Session - Item B  HOUSING POLICY BOARD The mission of the Housing Policy Board is to increase the availability of decent, affordable housing for low and very low income families and individuals in Lane County. Date: 12/4/2017 To: Eugene City Council From: Intergovernmental Housing Policy Board Subject: The Affordable Housing Trust Fund and How to Fund It Eugene City Council asked the Housing Policy Board to develop a recommendation for the creation of a local dedicated source of funding for affordable housing in its work session on April 12, 2017. Over the past year, members of the Housing Policy Board have gathered research on newly developed local funding sources in other Oregon communities and have worked to develop a recommendation for Council consideration. Over the past three months, the Housing Policy Board has met six times and members have reached out to multiple community stakeholders to inform its recommendation. As a result of these conversations, it is clear there is significant and growing concern about access to affordable housing within Eugene and Lane County. Conversations with local affordable housing providers reveal that a local dedicated source of funding would greatly increase their ability to move forward a wide range of affordable housing developments. In particular, this resource would have much greater flexibility than federal and state resources that are currently available. Background Information Hundreds of local jurisdictions around the country have created housing trust funds to support the development and preservation of affordable housing. These trust funds typically augment federal and state grants with a locally controlled flexible resource. Eugene has previously created such a fund, but has never been able to establish a sustained source of revenue to adequately support it. In 2016, the Oregon legislature created a new way to generate funding that can be used for affordable housing through the adoption of Senate Bill (SB) 1533. As a result of this legislation, local jurisdictions may choose to: 1) adopt a tax on construction permits (called a Construction Excise Tax or “CET”) to generate revenue for affordable housing; and 2) implement inclusionary housing requirements (commonly called inclusionary zoning or “IZ”). This document discusses the first of those, the proceeds of which can go into a housing trust fund. A local jurisdiction may choose to adopt a CET without also adopting IZ. Eugene may adopt a construction excise tax to support affordable housing. The tax may not exceed 1% for residential construction; there is no limit on the rate for commercial or industrial construction. The tax is assessed on the permit valuation of the improvements. The land value is not included. For residential construction, it includes both new construction and improvements to existing structures that add square footage to the living space. 1 If a jurisdiction implements a residential CET but does not implement a mandatory IZ program, the proceeds may be used as follows: • 81% must be allocated to programs and incentives related to affordable housing as defined by the city. • 15% must be transferred to Oregon Housing and Community Services (OHCS) to fund home ownership programs. (OHCS determines how these resources will be used and has communicated that these resources will be made available to the community where they were generated.) • 4% may be retained to cover administrative expenses. If a jurisdiction implements a residential CET and also implements a mandatory IZ program, the proceeds must be used as follows: • 50% of the resources must be reserved for incentives to compensate a developer for IZ developments. • 31% must be allocated to programs and incentives related to affordable housing as defined by the city. • 15% must be transferred to Oregon Housing and Community Services (OHCS) to fund home ownership programs. (OHCS determines how these resources will be used and has communicated that these resources will be made available to the community where they were generated.) • 4% may be retained to cover administrative expenses. If a jurisdiction implements a commercial CET, the proceeds must be used as follows: • 48% must be used to fund programs “related to housing” as defined by the City. • 48% may be used by the city without restriction (including for administration of this program). • 4% may be retained to cover administrative expenses. There are numerous statutory exemptions from the tax including: 1) construction by governmental entities (for example, the school districts and the University of Oregon); 2) affordable housing developments that meet the state’s long-term affordability restrictions; 3) public or private hospitals; 4) religious facilities; 5) private schools; 6) nonprofit long-term care facilities, residential care facilities, and continuing care retirement facilities; and 7) agricultural buildings. The local jurisdiction may add more exemptions, such as Accessory Dwelling Units (ADUs), low income homeownership programs, etc. What Other Jurisdictions Are Doing Portland, Hood River County, Hood River City, Corvallis, Newport, Cannon Beach and Milwaukie have all adopted a CET pursuant to SB 1533. Portland is the only jurisdiction to adopt a mandatory IZ ordinance, though Corvallis has adopted a voluntary IZ ordinance. In addition, Sisters, Astoria, McMinnville, Salem, and Newberg are also considering a CET. The adopted ordinances are quite similar but with a few substantive differences. All have adopted a 1% tax on all construction, except Corvallis which assesses a 1.5% tax on non-residential construction. Several allow for the rate to be set annually by the city council. Hood River County has a special rate 2 for new or replaced manufactured homes, at 75¢ per square foot. Portland has added several exemptions including: ADUs (though the City will review this after two years); improvements valued at $100,000 or less; and owner-occupied homes that qualify for Portland’s low-income single-family property tax exemption. Hood River City and County also add both ADUs and some other minor exemptions. Tillamook exempts any facilities owned and operated by a 501(c)(3) corporation. There are some variations regarding the use of proceeds, targeting different Area Median Income (AMI) levels: • Portland targets affordable housing units at or below 60% of AMI for its non-IZ incentives; under SB 1533, its IZ incentives must serve people at 80% AMI and above. • Corvallis targets affordable rental housing for those below 60% AMI and home ownership for those below 80%. • Hood River County targets affordable housing up to 120% AMI. • Hood River City targets affordable housing below 80% of AMI. • Tillamook directs the residential CET to affordable housing below 80% of AMI, and all of the commercial CET to workforce housing below 200% of AMI. These jurisdictions direct CET revenue into their own housing trust funds to support affordable housing programs. In addition, their ordinances do not provide specific definitions of affordable housing. In Eugene, the Area Median Income for a family of four is $59,000. A reasonable housing budget for this family would be up to $1,475 for rent and utilities (about $1,300 for rent alone). For a household of two, the Area Median Income is $41,300, which translates into a monthly affordable housing budget of $1,032 for rent and utilities (about $900 for rent alone). Table 1 shows information on 100% AMI, 80% AMI, and 60% AMI income levels by household size in our region as defined by HUD HOME and CDBG programs. Table 2 shows gross rents for the corresponding income levels by unit size, which includes utility costs. Table 1: Income Limits by Household Size Income Number of people 1 2 3 4 5 6 60% AMI* $24,780 $28,320 $31,860 $35,400 $38,280 $41,100 80% AMI* $33,050 $37,800 $42,500 $47,200 $51,000 $54,800 100% AMI** $41,300 $47,200 $53,100 $59,000 $63,800 $68,500 * HUD HOME program ** HUD CDBG program Table 2: Gross Rents for Corresponding Income Limits, Which Includes Utilities Rent Limits 0 Bd 1 Bd 2 Bd 3 Bd 4 Bd 5 Bd 60% AMI $620 $708 $797 $885 $957 $1,028 80% AMI $826 $945 $1,062 $1,180 $1,275 $1,370 100% AMI $1,032 $1,180 $1,328 $1,475 $1,595 $1,712 3 Potential Impact CET revenue will fluctuate with real estate cycles. Based on Eugene construction activity over the last two years, a 1% tax on all construction is likely to generate about $3 million per year. If the City decides on a different tax rate, the proceeds are likely to be as follows: Commercial Commercial Commercial Residential Residential @ 0.5% @ 1.0% @ 1.5% @ 0.5% @ 1.0% 974,671 1,949,342 2,924,013 527,889 1,055,778 Because the use of CET proceeds is so flexible (especially without an accompanying mandatory IZ ordinance), it will enable expanding and preserving the supply of affordable housing. This can be done by providing additional gap financing to make housing more affordable. Other possible uses include funding for transitional housing, “housing first” projects, housing related operational support, permanent supportive housing, “missing middle” housing, conestoga huts, tiny housing, shelters, and land banking. Especially important is that these could be accomplished without the sometimes overwhelming, costly, and counter-productive HUD requirements. In addition, the funds could be used for projects when federal funds are prohibited. Housing Policy Board Recommendation The Housing Policy Board recommends that the City adopt a construction excise tax with the following policy elements: Tax rate - The HPB recommends that the rate be set at 1% for all types of construction. Exemptions - Besides the statutorily required exemptions, the HPB recommends exempting affordable housing developments that received an Affordable Housing System Development Charge exemption from the City. Use of funds – The HPB recommends that all CET revenue (including the discretionary 48% from commercial) be used for affordable housing production and implementation costs (collection costs plus 1.0 FTE). The desired outcome of implementing the CET is to see a dramatic increase in affordable housing production. For rental units, the HPB recommends an emphasis for households earning 60% AMI and below. However, the guidelines should be set at 80% AMI and below to allow for greater flexibility. For home ownership units, the HPB recommends an emphasis on households earning 80% AMI and below. However, the guidelines should be set at 100% AMI and below to allow for greater flexibility. HPB anticipates the City would provide deeper subsidies for projects serving lower income residents and shallower subsidies for higher income levels within the above ranges. Process for making funds available - The HPB recommends that the City put the proceeds into Eugene’s Affordable Housing Trust Fund, that staff develop an RFP process (similar to the process for HOME and CDBG funds) with proposed uses reviewed by an advisory committee which would contain some members of the HPB, and that City Council makes final funding decisions. 4  AGENDA ITEM SUMMARY January 22, 2018 To: Eugene Planning Commission From: Alissa Hansen, City of Eugene Planning Division Subject: Local Implementation of Recent Legislation related to Secondary Dwellings ACTION REQUESTED This is an opportunity for the Planning Commission to learn about a new provision in state law related to the allowance of secondary dwellings that will require changes to Eugene’s land use code. BACKGROUND The City Council discussed the topic at a City Council work session on January 17, 2018. The Council will have an opportunity to initiate the code amendment on Monday, January 22 at the 7:30 meeting. Council initiation of the code amendment only begins the process, and does not presuppose the outcome of the proposed amendment. As part of the code amendment process, the Planning Commission will be asked to hold a public hearing and make a recommendation to the City Council. See the Council AIS (Attachment A) for more information on background and process. FOR MORE INFORMATION Alissa Hansen, 541-682-5508 or alissa.h.hansen@ci.eugene.or.us ATTACHMENTS A. Agenda Item Summary for January 17, 2018 City Council Work Session EUGENE CITY COUNCIL AGENDA ITEM SUMMARY Local Options for Affordable Housing Funding Meeting Date: December 13, 2017 Agenda Item Number: B Department: Planning & Development Staff Contact: Stephanie Jennings www.eugene-or.gov Contact Telephone Number: (541)682-5529 ISSUE STATEMENT Council requested a follow-up work session to discuss funding options for affordable housing. This work session follows an exploratory session that occurred on April 12, 2017 and includes a set of recommendations developed by the Housing Policy Board related to a Construction Excise Tax. BACKGROUND Residents of communities throughout Oregon are experiencing challenges related to housing affordability, quality, and stability. Multiple local, state, and national trends have resulted in increased challenges for households who rent their homes. There have been multiple shifts in the supply of housing units as well as the needs of residents. In response to these challenges, the State of Oregon passed a suite of legislative measures in 2016 including SB 1533. Through SB 1533, the State of Oregon enabled local jurisdictions to adopt a construction excise tax to support the development of affordable housing. SB 1533 also enables Oregon jurisdictions to adopt a limited form of inclusionary zoning. Council received an introductory presentation on SB 1533 during a work session on April 12, 2017. At the conclusion of this session, Council voted 6:1 to pursue development of policy options for a construction excise tax, mandatory inclusionary zoning, and voluntary inclusionary zoning. Council asked staff to work with Housing Policy Board and also consult with the Human Rights Commission and other impacted parties regarding policy options and market conditions. Since April, staff have worked with the Housing Policy Board to explore options for a dedicated source of funding for affordable housing through a Construction Excise Tax (CET). Housing Policy Board has developed a set of recommendations for Council consideration. Staff will return to Council at a later date with policy options for voluntary and mandatory inclusionary zoning. The attached HPB recommendation memo provides: 1) a synopsis of local affordable housing trust funds; 2) allowed revenue options and uses under SB 1533; 3) required and options exemptions; 4) a summary of measures passed by other jurisdictions in Oregon; 5) an estimate of potential revenue; and 6) a set of recommendations. These recommendations were unanimously supported by the Housing Policy Board as well as the Human Rights Commission. RELATED CITY POLICIES There are multiple City plans and policies related to affordable housing including the Eugene- Springfield 2015 Consolidated Plan, Envision Eugene, and the Eugene City Code. In addition, multiple task forces over time have recommended the creation of a local housing trust fund with a dedicated source of revenue. Each related plan and policy is briefly summarized below. Eugene-Springfield 2015 Consolidated Plan The Consolidated Plan provides an assessment of local housing, homelessness, and community development needs, identifies priority needs for use of funds received from HUD, and presents strategies to address the priority needs. The Consolidated Plan adopted by Eugene City Council in 2015 identifies low-income renters and homeowners as priority populations and includes five specific strategies for expanding affordable housing options and access for people with limited incomes. At this time, the two primary federal resources received by the City are at risk of significant reduction or elimination. Envision Eugene Community Vision Related pillars of the Envision Eugene Community Vision include the pillars “Provide housing affordable to all income levels” and “Provide ample economic opportunities for all community members.” Housing strategies in the 2012 recommendation include planning for a higher proportion of multi-family housing in the future, expanding housing variety and choice, assessing the applicability of a housing and transportation affordability index, supporting subsidized affordable housing projects, and continuing existing programs that support preservation and rehabilitation of existing housing stock. PROPOSED NEXT STEPS City staff will further explore policy options for structuring a CET, engage with stakeholders, and bring a recommendation back to Council within 90 days. SUGGESTED MOTION No motion applicable. ATTACHMENTS A. Housing Policy Board Memorandum – The Affordable Housing Trust Fund and How to Fund It – 12/4/2017 FOR MORE INFORMATION Staff Contact: Stephanie Jennings Telephone: 541-682-5529 Staff E-Mail: stephanie.a.jennings@ci.eugene.or.us