ZTA-2005-00009 Density Bonus Affordable Housing
Amend Sections 3.1, Definitions; 12.4.3, Low and Moderate Cost Housing; 13.4.3, Low and Moderate Cost Housing; 14.4.3, Low and Moderate Cost Housing; 15.4.3, Low and Moderate Cost Housing; 16.4.3, Low and Moderate Cost Housing; 17.4.3 Low and Moderate Cost Housing and 18.4.3, Low and Moderate Cost Housing of Chapter 18, Zoning, of the Albemarle County Code. This ordinance would amend Section 3.1 to add a definition of "affordable housing" and would amend the density bonus regulations for affordable housing in the VR, R-1, R-2, R-4, R-6, R-10 and R-15 zoning districts by changing the references to such housing from "low and moderate cost housing" to "affordable housing," by reducing the percentage of bonus units required to be affordable from 100% to 50% of the allowed bonus density, by increasing the period during which rental units must remain affordable from 5 to 10 years, and by establishing the minimum requirements for qualifying prospective purchasers and renters and the terms and conditions of the affordable rental period. A copy of the full text of the ordinance is on file in the office of the Clerk of the Board of Supervisors and in the Department of Community Development, County Office Building, 401 McIntire Road, Charlottesville, Virginia. (Wayne Cilimberg)
On June 1, 2005, the Board of Supervisors adopted Resolutions of Intent to amend the County’s Zoning Ordinance to reflect the recommendations of the Albemarle County Housing Committee for implementation of the County’s Affordable Housing Policy, specifically to amend the density bonus regulations to promote production of affordable housing. The Housing Committee’s original recommendation was to allow a 100% increase in density with one-half of the additional units being affordable.
Since that time, the Housing Committee and staff have worked with the Planning Commission to get a recommendation to the Board for adoption. Several work sessions were held with the Commission from August 2005 through October 2006 with a public hearing on August 15, 2006, at which the Commission did not take action. On June 13, 2007, a joint work session was held with the Commission and the Board.
By June 30, 2010, working in partnership with others, increase affordable housing opportunities for those who work and/or live in Albemarle County.
The recommendation to amend the current density bonus provisions found in the Zoning Ordinance was first made by the Housing Committee as a strategy in the County’s Affordable Housing Policy adopted in February 2004. Subsequent to the adoption of this policy, an ad-hoc Affordable Housing Policy Advisory Committee was created to assist the Housing Committee in defining implementation measures for the policy. The ad-hoc committee also recommended changes to the current density bonus provisions specifically to provide an incentive for developers to consider increased density in exchange for providing affordable housing. A number of interest groups were represented on the ad-hoc committee including developers, lenders, and nonprofit housing providers/agencies. The consensus of the group was that the existing density bonus which allowed up to a 30% increase in density but required that all of the units created by the additional density be affordable was not being utilized because it provided no incentive. The group and the Housing Committee recommended allowing up to a 100% density bonus with one-half of the additional units being affordable.
It was clear from the first two work sessions with the Planning Commission that a potential for doubling density administratively was not acceptable. However, the Commission did provide a favorable response to maintaining the 30% density bonus provision with one-half of the additional units being affordable.
Staff identified another weakness in the existing provisions in that it did not restrict who could buy and/or occupy the affordable units based on household income. The sales price and rental rates were restricted but the ordinance would allow anyone to purchase and/or occupy the units at those restricted prices. The proposed revisions to the ordinance will provide for the Office of Housing to approve purchasers of for-sale units created through the density bonus. The revisions also define affordable sales prices and affordable rents on commonly-accepted indices consistent with the definitions proposed as revisions to the Affordable Housing Policy. The definitions have been recommended by the Housing Committee and are currently used for affordable housing proffers.
During the June 13 work session, at least two Board members and one Commission member indicated that revising the density bonus could create an ordinance that will work as opposed to the current density bonus which has been utilized on only a few projects although it was adopted some twenty years ago.
The Housing Committee and staff recommend that the Planning Commission conduct a public hearing and approve the Housing Committee’s recommendations for amending the density bonus provisions in the Zoning Ordinance as attached and recommend approval by the Board with a public hearing set for October 3, 2007.
Mr. Cilimberg said that this particular request was discussed in prior work sessions in the past. There have been a number different proposals for consideration by the Commission and Board that would further the possibility of providing affordable housing in the County. It is the most recent joint meeting of the Commission and Board of Supervisors with the Housing Committee that spelled out some of the particular initiatives that may be forthcoming. This particular request to amend the density bonus provisions of the ordinance actually were discussed with the Commission on several occasions in prior work sessions in the past. It is intended to provide some additional incentives for the use of the bonus provisions that currently exist in the Zoning Ordinance. The amendment language is written in such a way as to address that by continuing to allow the 30 percent increase in density, but not allowing all of that increase to be affordable. Instead it would be allowing ½ of that increase to be affordable to achieve the density bonus. It is hoped to possibly increase the utilization of the by right allowances that currently exist in the ordinance for the development community as they look at the possibility of providing new housing in the County. Mr. White has worked with the Housing Committee on this and some of the other initiatives. Mr. White can add anything that he thinks is important. This is a public hearing tonight for this particular amendment proposal.
Ron White, Director of Housing, said that this proposal is coming forward to address one of the recommendations made when the Affordable Housing Policy was adopted in 2004 by the Housing Committee that was specifically to amend the existing density bonus ordinance to make it more useable. One reason for making the recommendation was to provide an incentive. The current bonus would require that all units created by additional density would have to be affordable. It has only been used in 3 or 4 relatively small projects. They have had several requests to use the current density bonus provision, which includes a nonconforming subdivision of land, Cedar Hill Trailer park and Park View rental housing on South Pantops. The other proposed revision is to bring this part of the zoning ordinance up to where the Affordable Housing Policy is. The current density bonus in the zoning ordinance addresses the sales price and the rental price of houses that are created under the density bonus, but it does not address who those units are being built for or who should occupy those units. That is another important piece of this recommended change. They need to adjust the language so it is consistent with the current Affordable Housing Policy.
Mr. Zobrist said that this only applies to the bonus units and does not have anything to do with the 15 percent they require in the rezoning.
Mr. White replied that this is only in by right development. It would not be in rezoning.
Mr. Cilimberg noted that on a rezoned property that had this proffer associated with it they would have to create the 15 percent affordable housing. This is for zoning that exists where the developer may want to entertain an option to up density to provide affordable housing. It would have to be within the confines of the Comprehensive Plan density called for in that area.
Mr. Zobrist said that it also lowers the threshold of 30 percent of income. The definition of affordable housing to get the bonus is the housing costs do not exceed 30 percent of the gross household income.
Mr. White said that is correct and is consistent with the Affordable Housing Policy. That is consistent with the same language that would be used in looking at a rezoning.
Mr. Zobrist asked where they came up with the number of 80 percent of the median average income.
Mr. White said that the 30 percent is considered to be the housing affordability index for a household. In other words they should not pay more than 30 percent of their income towards housing expenses.
Mr. Zobrist said that this does not look at the unit, but it looks at the person who gets to occupy it.
Mr. White said that it is both.
Ms. Joseph said that was how they figure out the cost of the house. It is 30 percent of their income, but it is 80 percent of the median income.
Mr. Strucko said that they were trying to calculate the sales price of the home to meet the definition of affordable. He asked if this policy applies to by right development anywhere in the county including the rural areas.
Mr. Cilimberg said that the zoning districts that are covered start with VR, Village Residential and then goes through the highest of the zoning categories. Therefore, it applies to non rural area zoning.
Mr. Cannon said that it is by right and available without further action by Commission or Board. Is there a restriction on the ultimate density that could be achieved through the operation of this? Is the ultimate density constrained by the Comprehensive Plan or is it just 30 percent additional where ever this applies without restriction.
Mr. Cilimberg said that it is 30 percent above what the density allows for in the zoning district. The parameters also are not to exceed the application of the density regulations. The other part of the ordinance says they are not to exceed that which is allowed under the Comprehensive Plan for that particular area.
Mr. Cannon said that there is a range so that it would still be within the range of density allowed under the Comprehensive Plan.
Mr. Cilimberg replied yes.
Mr. Cannon said that would be determined by the Comprehensive Plan map and not by the zoning map.
Mr. Cilimberg said that would give them the ceiling basically.
Mr. Strucko asked if they could benefit from this if there was an R-1 designated parcel within the growth area.
Mr. Cilimberg replied yes, that R-1 is the least dense of the zoning districts from VR on through R-15 that can benefit.
Mr. Strucko asked why they could not explicitly state inside the designated growth areas and leave it at that.
Mr. Cilimberg replied that they can attach the zoning provisions to the Comprehensive Plan in that way, but he believed that they would have to do it based on zoning district.
Mr. Kamptner said that there is already land that is in the development areas as R-1, R-2 or R-4 land that is in the designated rural areas under the Comp Plan. But, the zoning regulations have to be triggered by zoning district and not by Comp Plan designations.
Mr. Strucko questioned if they are dealing with the non rural areas. His concern was that they may be encouraging development in the rural areas with the density bonus.
Mr. Cilimberg said that the real effect is mostly as it regards VR zoning because there is VR zoning in old villages that are not rural areas, such as North Garden, Earlysville and Stony Point. They can theoretically exercise the density bonus under this provision. Those would be most of the examples. There is very little other zoning of urban type in the rural areas. Land that is in the development area zoned RA won’t be able to utilize this bonus provision. From staff’s experience those lands are going to come through the rezoning process.
Ms. Joseph asked if there is any reason to keep the VR in there. Is there any reason that they should have bonus density in VR?
Mr. Zobrist suggested that VR be taken out.
Mr. Cilimberg said that he did not think there was any VR in Rivanna Village. All of the other Village designations have been removed. So it would only be new villages that go to VR or VR that might be applied for in the Rivanna Village that would not have the opportunity to utilize the density bonus. It is up to the Commission to decide whether to include VR.
It was the consensus of the Planning Commission to take Section12, VR out.
Mr. Kamptner questioned if there were any Comp Plan or Affordable Housing Committee Policy issues that might be affected if the VR District was removed. He said that he could not recall any.
Mr. White said that he could not think of any. Frankly, when they are talking about affordable housing most of the time they are looking in areas that have existing water and sewer capacity because of the expense of developing raw land. It might not be something that could be used in that area very often because it would not be financially feasible in a VR zone.
Mr. Zobrist asked Mr. White to explain the mathematical formula.
Mr. White said that they take 30 percent of a household income. They are talking about 80 percent of the area median income. They would take 30 percent of $60,000 and that would be what a family could theoretically afford for housing expense. That could be done in a couple of ways. One is how much mortgage that income could buy. The second way is what they are working off of now in some of the proffers that had language that says sales prices will not exceed 65% of the VHDA maximum mortgage limit. They are trying to use an index rather than using a calculation so that it is easier. Right now 80 percent of the area median income could theoretically buy an affordable $191,000 mortgage at today’s rates.
Mr. Strucko pointed out that number changes each year as conditions change.
Mr. White said that if they use the VHDA index that number would change when the VHDA index changes.
Mr. Edgerton agreed that it was confusing. The 30 percent would vary with different communities. He thought that it all comes from HUD standards and works it way down. In certain communities the AMI is going to be considerably different. So 80 percent of it is going to be considerably different. But, the 30 percent is still there. The definition of housing costs for homeowners are principle interest real estate taxes and home owner’s insurance. It is intended to pay utilities. That is where he got excited. He questioned why that is not part of the home owner’s policy. Is there a reason it can’t be?
Mr. White replied that it was the way that the industry looks at it. There is no reason that it could not be with the exception of the difficulty in determining what utility costs would be for an individual in a house that may vary from 1,000 square feet to 2,500 square feet.
Mr. Edgerton asked if they could urge the industry in the right direction. Would they be allowed to put a standard in the ordinance? They have a national standard right now called Energy Star which mandates a 30 percent reduction in energy usage over a standard house. If they put that in there that an affordable house had to be Energy Star would they be allowed to do that?
Mr. Kamptner replied that the short answer was yes. They can define it however they wish to. But, he thought that all of the analysis that the Affordable Housing Committee and Housing staff have up until now was based upon a particular set of defined terms. They are changing the defined term.
Mr. White asked to tell them about how the lending industry has tried to deal with Energy Star rated houses and houses that have low maintenance. They might use a higher percentage than 30 percent. That is being done in the private sector and the mortgage industry. Let’s say that family could afford a $190,000 mortgage, but they have an Energy Star rated house with demonstrated savings. They might be able to get a $200,000 mortgage rather than $191,000 with a recognition that they are going to have savings on their energy side. He did not know if they would want to do something like that in policy or it something that they encourage. Energy Star is likely to be adopted as an industrial standard. They questioned if they should leave it to the private section to do that with some encouragement rather than putting it in a policy. That would be the only question he would have.
Mr. Cannon asked if they really want to make Energy Star the standard. They would want to do that for affordable and non-affordable units, too. He questioned whether this was the right vehicle.
Mr. Edgerton noted that he was trying to figure out how to change the building code a couple of years ago to mandate a certain energy performance in a building. As a Dilland rule state they are not allowed to adopt that.
Mr. Kamptner said that the language in the Building Code is regulated by the state. They could not regulate the manner or the materials used in construction over the State Wide Building Code.
Mr. Cannon suggested that they could have an Energy Star Bonus Policy.
Mr. Edgerton agreed with Mr. White that as things continue as they are all of the building codes and energy codes will probably get here at some point. But, personally he worried about how affordable is affordable housing if you can’t afford to pay the energy bill. Historically, they have built cheap housing instead of truly affordable housing. The decision about the energy performance of a building is a very easy way to save money in the construction cost of a house. That is the deli mina.
Mr. Zobrist suggested that they tie the Energy Star standard to the bonus.
Mr. Edgerton said that if that is legal he would love to see it. That is one thing they could argue for.
Mr. Zobrist said that if it was affordable and Energy Star they should tack both things to a bonus.
Ms. Joseph asked Mr. Kamptner to look at it.
Mr. White said that there are several standards out there now. Energy Star is probably the lower of all of the standards.
Mr. Zobrist said that they have to start somewhere.
Mr. White said that Earth Craft is working on standards, but have not finalized them yet. Then there is the LEED Certification. He thought that Mr. Edgerton was correct that as those things come in, things get certified and they get people out in the field that can do the certification and inspections required, it would likely become a part of the building code at the national level.
Mr. Kamptner said that they are enabled under State law to customize the definition of affordable housing. So to the extent that they can integrate these concepts under the definition of affordable housing they can take a look at that.
Mr. Cannon said that it would be more affordable because it is energy cheaper. They could afford to rent it or the mortgage better.
Mr. Edgerton said the language refers to housing office in that they will pay utilities with the maximum allowances being adopted by the County’s Housing Office. He asked if the Housing Office determines what the acceptable maximum utility bill is.
Mr. White replied that they get their figures from VHDA for this region. They print them out for the entire region. Otherwise, they could do them. But, it is very exhaustive to do so when there are multiple electric companies throughout the county. It makes it even more difficult.
Mr. Kamptner said that in this version they were trying to come up with a policy that somebody might be interested in. In the past 12 years he could recall 2 people use this program. Mr. White recalled a third one. So this has been a very little used program so far.
Mr. Zobrist said that if they made it a little more restricted they might make it even less used.
Mr. Kamptner agreed.
Mr. Cannon said that the down side would be that it would be used less.
Mr. Kamptner said that his suggestion would be if the Commission is satisfied with this as it is written recognizing the desire to move to the next level with Energy Star development with the proposed revision of deleting the change to 12.4.3, let staff proceed with this one and let them further study it. Everybody recognizes that dealing with affordable hosing is going to be an ongoing evolving progress. They are trying to get something on the books that somebody might be interested in.
Mr. Zobrist asked if this was a public hearing. He asked if it should be turned into a work session if they feel they need more time.
Mr. Kamptner suggested that they proceed with the public hearing.
Ms. Joseph opened the public hearing and invited public comment. There being none, the public hearing was closed and the matter placed before the Commission.
Mr. Edgerton said that he could speculate why the existing bonus has never been pursued. He felt that the market has been so strong for market rate units. With the high cost of land it makes it difficult to build affordable houses. Mr. Kamptner’s point is well taken. If the idea of this is to encourage people to build affordable housing adding another restriction to it may be would work against it. His problem was when they would have another chance to do it.
Ms. Joseph said that they could play with the numbers. If they did Energy Star Rated Housing, then they could do more market and less affordable. She did not know if that appeals to anyone. It might get at least some decent houses out there.
Mr. Edgerton said that it would be a 30 percent increase in density if ½ of those units are affordable. They are getting the market rate and they can build that to any standard they want. Mr. White’s other point was that there has been a real push in the last year and ½ on Earth Craft because the home builders decided that was something that would respond to some of the market demand. None of it has been affordable. During the first year they built about 5 or 6 houses, which were all sold before they were finished. The market was there, but they all sold for over a million dollars. They are not even close to affordable. But, there is a segment of the market saying they want an energy efficient house. The biggest problem is that there are not a lot of people available in our area or in the State of Virginia who have this training right now. That would be a bit of a problem. He was optimistic that within a year there will be more people trained locally to do the inspection and the certification in Earth Craft and Energy Star. To put it in perspective one can’t begin the Earth Craft process until you have an Energy Star Rated House. That is a mandatory requirement for Earth Craft. Then they add more on to it. It is coming along. He asked how VHDA calculates what my utility costs would be.
Mr. White said that they are supposed to go out to the utility companies and get average usage. They would not calculate the actual utility costs. They would calculate based on the type of heat and a variety of things in a house. For a total electric house they would go down a list and pull out all of the electric items. If it totals up to $80 a month, then the assumption is that house on average will use $80 a month in utility costs. It comes right off the chart and is an average. There are a lot of variables based on the number of bedrooms. They use the utility costs to help bargain with property owners on the rent.
Ms. Joseph said that Energy Star is a good idea, but do they think it will do more to discourage or encourage this.
Mr. Zobrist suggested that they accept Mr. Kamptner’s recommendation to approve it eliminating the VR and allow staff to work on it some more. This is an evolving situation. They could add a strong recommendation that staff work on methodology for calculating a way to reduce energy costs in the houses that come under affordable housing.
Mr. Edgerton agreed. It may be a little premature, but he was so excited about it.
Mr. Cannon said that it was an excellent discussion. He would be anxious to look for an opportunity more generically, given the restrictions in state law, to try to find an opportunity for a more generic policy to encourage energy efficiency more broadly and not just in affordable housing but other housing as well. May be the market will take care of some of that. May be there are ways they can encourage it.
Ms. Joseph pointed out that this started off at 100 percent. So they have come a long way. She really appreciates the fact that the committee was willing to work with the Commission and come to something that was more palatable at this point in time. The other question they asked in the joint work session is that this only applies to land that is zoned R-1, R-1, etc. and it does not apply to rezonings. That is what people get worried about is that their expectations are a specific density and this may make it go up. She pointed out that one comment she received was that they need to change the bulk and density charts in the ordinance, too. It talks about bonus densities in the charts.
Mr. Cilimberg said that in each section there is a table.
Ms. Joseph questioned if the affordable housing changes should be reflected on the charts.
Mr. Cilimberg said that everything in the ordinance now refers to a 30 percent bonus. So the actual number that someone can get in bonus is not going to change. It just is how much of that would be market versus affordable. He did not think the bulk density changes. Staff will look at Ms. Joseph’s question.
Ms. Joseph said that she liked the change from 5 years to 10 years.
Motion: Mr. Strucko moved, Mr. Craddock seconded, to recommended approval of ZTA-2005-00009, Density Bonus Affordable Housing, removing the amendment to Section 12.4.3, with a strong recommendation to the Board that they would love to see some Energy Star standards for affordable housing, but realize that it may be premature.
The motion passed by a vote of 7:0.
Ms. Joseph stated that ZTA-2005-00009, Density Bonus Affordable Housing will go before the Board of Supervisors on October 3 with a recommendation for approval.
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