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HomeMy WebLinkAboutAgenda - 02-16-2021; 12-4 - Memorandum - Options for Increasing Affordable Housing in Orange County Through the Unified Development Ordinance 1 MEMORANDUM TO: Board of County Commissioners FROM: James Bryan, Staff Attorney DATE: February 4, 2021 SUBJECT: Options for Increasing Affordable Housing in Orange County Through the Unified Development Ordinance ATTACHMENT(S): Affordable Housing Report, Incentives & Opportunities Chart, Framework Chart, Regulatory Process Chart, Survey Summary BACKGROUND: The County Attorney was asked to report to the Board on all available options to incentivize affordable housing in Orange County, focusing on potential changes to the Unified Development Ordinance. This report aims to build upon a similar response from October 2019 by providing a list of actionable items as well as incorporating feedback from the development community. James Bryan, the staff attorney who works most with the Planning Department was tasked with this item. While a list of seventeen actionable incentives and opportunities are included, staff sees four as being the most fruitful although some would be controversial and others would require assistance from the towns. In no particular order these are: First, the initiation of an updated comprehensive plan likely followed by the adoption of a more modern UDO. Second, seek expansion to existing special legislation to allow for an increased density bonus program allowing for payment in lieu of construction or donation of land. Third, initiate discussion with stakeholders in the Joint Planning Agreement ("JPA") and Water Sewer Management Planning Boundary Agreement ("WSMPBA") to allow exceptions for affordable housing. Fourth, revise major subdivisions to be an administratively reviewed process. The Incentives & Opportunities Chart is a compilation of seventeen potential options. The Framework Chart lists traditional regulatory or financial incentive, indicating the statutory limitations and comparison to other jurisdictions. The Regulatory Process Chart demonstrates the review process and the multiple decision points along the way. The Survey Summary describes the feedback from developers. Affordable housing is a ubiquitous issue that could seemingly endlessly benefit from further consideration. Some communities, most recently Apex, utilize outside consultants to provide guidance. The longstanding history of housing here and elsewhere also makes it a worthwhile topic for consideration under the lens of racial equity. While staff did receive feedback from the development community, much of that is anecdotal. At the Board's direction, staff can compile comparison data for abutting jurisdictions and seek more concrete financials. In addition to this report, on October 1, 2019 Michael Harvey, Current Planning Supervisor, provided a memorandum to the Board discussing the Development of Affordable Housing in Orange County, which addressed many of the same items found in this report. Mr. Harvey's report may be viewed here. Should the Board wish to further explore any of these seventeen items the County Attorney's office will work with the Planning Department to bring them forward as expeditiously as possible. 2 Report on Affordable Housing Incentives February 20211 Zoning and land development incentives for affordable housing are necessarily tied to financial costs. These incentives often aim to lower the transactional costs by allowing greater density or flexibility to make the process quicker, more certain or cheaper. Staff from the Orange County Housing & Community development reached out to several developers (both non-profit and for-profit)to have them identify regulatory,financing and other barriers. Developers responded that it was a long, slow and expensive review process. The regulation of development inherently contributes to transactional costs and dampens the market's full potential to provide low cost housing. To incentivize guaranteed affordable housing(i.e. protected by covenants)local governments have some limited options such as fast track permitting. The more powerful incentives,such as density bonuses, require special legislation from the NC General Assembly. In 1991 the County received such special local authority (codified in UDO 6.18) but this incentive has never been utilized by a developer. The general belief is that developers, both for-profit and non-profit, have largely written-off Orange County as too difficult to work in. Aside from land costs, the development process was seen as unwelcoming due to a lengthy process with uncertain results. There are reasons warranting that feeling as the UDO itself is lengthy, dense and confusing. For instance, there are expedited, exempt, minor and major subdivision classifications with major subdivisions being further broken down into five subcategories with three different permitting processes. All of those distinctions have true differences, but perhaps for little purpose as there were 100 subdivisions in the last five years yet only four subdivided into more than five lots. Subdivisions which require approval by the governing board involve a long process with uncertain outcomes. In contrast, all subdivisions in Alamance County are handled administratively. Compounding the problem of an anti-development perception were outdated plans. The Comprehensive Plan was adopted in 2008 using,for example, housing price data from 1970-2000. While a '30 year plan,' the document itself called to be reviewed annually and then an update by 2015. There have been periodic amendments to the plan necessitated by rezonings and text amendments to the UDO, but no review in its entirety. Likewise, there are new demographics and notes from advisory boards, although these are not adopted by the governing board as a formal update to the plan. The amount of attention to the plan and resulting development may have reinforced the perception that the County was not interested in attracting development. A new comprehensive plan would likely be a prelude to a wholesale replacement to the UDO to drastically reduce the over 700 pages and create clear pathways to desired results. In the past two decades there have been considerable shifts in planning regulations allowing much greater legislative tools to replace cumbersome quasi judicial hearings. The General Assembly has provided for 1 This report was drafted by and reflects the opinions of James Bryan,Staff Attorney with recognition of tremendous contributions and assistance from the Housing&Community Development Department(Emila Sutton, Erika Brandt, Maria Dewees)and Planning& Inspections Department(Craig Benedict,Ashley Moncado,and Molly Boyle). 3 Conditional Zoning and Development Agreements—both legislative processes that allow for the placement of conditions and provision of public infrastructure. These powerful tools replace outdated methods of regulation with more straightforward procedures. There have also been the codification of regulatory trends, such as with form based codes. The County has been steadily amending its land use ordinance. It added some of the new tools, but retained the outdated or unused tools. Staff recently updated the table of permitted uses and will be recommending streamlining of the subdivision approval process. However,this piecemeal approach has kept the ordinance large and complex. This is an ordinance which requires a quasi-judicial hearing, five months of processing and more than a thousand dollars of fees to determine whether a taxidermy business is appropriate in the Agricultural Residential zoning district with no guiding standards for the Board of Adjustment other than the statutory minimum (e.g. being in harmony with the area). The availability of land suitable to dense development is also a concern heard from the home builders. There are three existing policies which exist primarily due to concerns about the environment or urban sprawl, but consequentially also reduce the availability of land. The Joint Planning Agreement contains minimum lot sizes within the Rural Buffer, the Water and Sewer Management, Planning and Boundary Agreement limits the availability of public utilities and the Water Supply Watershed Overlay District limits impervious surface on lots. These three policies cover the majority of land in the unincorporated county. None of the policies have allowances to incentivize affordable housing. Staff has compiled a list of available incentives in the Incentives & Opportunities Chart. Several other attachments aim at providing context. The Framework Chart lists each traditional regulatory or financial incentive, indicating the statutory limitations and comparison to other jurisdictions. The Regulatory Process Chart demonstrates the review process and the multiple decision points along the way. The Survey Summary describes the feedback from developers. The most direct incentive would be to expand the current density bonus which would require special legislation. Next, allowing exceptions for affordable housing in the rural buffer would create more opportunities, but would require initiating a discussion with stakeholders in the JPA and WSMPBA. Streamlining the subdivision process to be entirely administratively reviewed would make the process both quicker and more certain. Finally, an update to the comprehensive plan and adoption of a modern UDO would signal to the development community a recognition that affordable housing is a current priority. 4 Incentives and Options Chart Action Item Description 1. Streamline the Reduce the number of options and increase the lot threshold required for greater Subdivision scrutiny. Processes The most comprehensive review occurs at 20 units at which point there are 5 types of major subdivisions. 2. Increase Density Allow a greater density for those projects which contain housing for low-to moderate- Bonus income households.To date, a developer has never pursued this policy. Current policy generally allows for 25% more density where at least 40%of units are affordable. This bonus is not available in the protected watershed. Current bonus is authorized by special legislation, and thus alterations to this bonus would likely require additional special legislation. 3. Government Similar to previous economic development efforts, staff may examine and identify Initiated Rezonings areas well suited for affordable housing and initiate pre-zonings to accommodate that use. 4. Alter Approval Allow for more subdivision processes to occur with administrative review versus board Authority to review which require public hearings. Expedite Subdivision Process Assess the existing development review process, specifically related to residential development, including schedules, review times, and fees to determine if there are any excessive requirements or measures impacting housing affordability. 5. Expedite Review Create a shorter timeframe for staff and board reviews of approvals. Time for Subdivisions and Rezonings 6. Reduce Allow for reduced, refunded, or waived fees or maintenance guarantees. Development Fees 7. Alter Development Alter standards for affordable housing projects. Standards include road construction Standards Specific to requirements; dimensional standards; recreation and open space requirements; flag Affordable Housing lot prohibitions; access to roadways; landscaping; stream buffers; and traffic impact Projects improvements. May require special legislation. 8. Alter Development Alter standards for all residential development. Standards include road construction Standards Applicable requirements; dimensional standards; recreation and open space requirements; flag to All Development lot prohibitions; access to roadways; landscaping; stream buffers; and traffic impact improvements. 9. Utilize Development Use development agreements for particular affordable housing projects. Engage with Agreements individual developers or create a general policy to exchange vested rights in long term projects for several considerations including the provision of affordable housing. 10. Expand Accessory Allow for the expanded use of ADUs.There are limitations due to existing water and Dwelling Units sewer capacity and well/septic requirements. 11. Amend WASMPBA Increase access to public water and sewer service to allow more dense development. to Increase Access to Public Water and Sewer Service 5 Incentives and Options Chart 12. Equity and Inclusion Conduct a review of past, current and future endeavors in light of equity, diversity and Review inclusion principles. A consultant has begun work reviewing current programs. 13. Affordable Housing Seek local legislation from the NC General Assembly to allow an affordable housing Impact Fee impact fee.This would be a fee charged on non-residential or residential (new market rate housing) development which is utilized for various affordable housing programs including construction of affordable housing or rehabilitation of existing affordable housing units. 14. Innovative Evaluate existing standards and new opportunities to support and allow for offsite Wastewater Systems septic facilities for wastewater treatment. By reviewing existing standards and exploring modern advances in offsite septic infrastructure and technology,the Unified Development Ordinance may allow for flexible residential site design and accommodate smaller lot sizes compared to the traditional onsite septic system. 15. Rural Buffer and JPA Modify existing ordinances, plans, policies, and agreements related to development in Modifications the Rural Buffer to accommodate denser development projects which contain substantial affordable housing. 16. Update the 2008 Initiate the overdue update to the 2008 Comprehensive Plan to incorporate updated Comprehensive Plan data information and current County objectives. 17. Unified Complete a thorough review and redrafting of the Orange County Unified Development Development Ordinance.This item would most likely come subsequent to a Ordinance Rewrite recommendation from an update to the Comprehensive Plan. 6 FRAMEWORK CHART Standard Statutory Limit Special Legislation or Special Considerations Orange County Density Bonus Set density restrictions by zoning district or SL 1991-246 Offers affordable housing density bonus by overlay(e.g. watershed) Allows for>25% increase in density if (UDO 6.18); Restricts density in water developer agrees to 1) rent 40%of units to supply watershed through impervious those at<60% median income, 2) rent 20% surface limitations; of units to those at<50% median, 3) sell 2 or more units to<80%, or 4) donate land. Fee Assess user fees for regulatory services Fee reimbursements possible for affordable $1,500+ rezoning Reduction or provided such fees are reasonable. housing under 157-9 and 153A-376(b) Waiver Prohibited from charging different rates to (160D-1311). $3,000+Conditional Zoning similarly situated customers. Major Subdivision $2,500 ($310+concept plan, $1,600 Preliminary, $500 final) Fast-Track Set a maximum time for review or set Earliest approval for major subdivision Permitting separate review procedures. submitted on 1/3/20 would be 5/5/20 with >dozen intermediary deadlines. Relaxed Modifiable standards include setbacks, Greater density can trigger other threshold Restrictions in place by the Rural Buffer Development minimum lot size, parking, etc. requirements such as minimum lot size. A (JPA), impervious surface (Watersheds), and Standards modification of lot size would need to be open space requirements; no allowance for objective or be reviewed with subjective increased density. guidance by a quasi judicial body. Miscellaneous Development Agreements likely could Payment in lieu would likely require special Development include affordable housing provisions. legislation. Payment in lieu (similar to recreation). 7 Summary of the Residential Review Process Currently,the Orange County Unified Development Ordinance contains nine different review processes for residential subdivisions.These vary based on number of lots proposed and designation in the rural or urban areas of the County.The various process are summarized below. SubdivisionsExempt Definition-The combination or recombination of portions of previously subdivided and recorded lots if the total number of lots is not increased and the resultant lots are equal to or exceed the standards of the County, including private road justification standards, as detailed within this Ordinance.The division of land into parcels greater than 10 acres if no street right-of-way dedication is involved.The public acquisition by purchase of strips of land for widening or opening streets. The division of a tract in single ownership of the entire area of which is no greater than two acres into not more than three lots, if no street right-of-way dedication is involved and if the resultant lots are equal to or exceed the standards of the County as shown by its subdivision regulations. Review Process Orange1.Submittal of exempt 2. Staff review and 3. Recordation at subdivision plat decision > of Deeds Review Schedule—One to five days from submittal to recordation. SubdivisionsExpedited Definition—A subdivision shall be classified as "expedited"for divisions of a tract or parcel of land in single ownership meeting all of the following criteria: 1. The tract or parcel to be divided is not exempt under the provisions of the Ordinance, 2. No part of the tract or parcel to be divided has been divided within the past 10 years from the date of application submittal, 3. The entire area of the tract or parcel to be divided is greater than five acres, 4. No more than 3 lots result from the division, 5. All resultant lots comply with the following: a. Lot dimension and size requirements of applicable land use regulations, b. The use of the lot(s) is in conformity with applicable zoning requirements, and c. A permanent means of ingress and egress is recorded for each lot. Review Process Staff 1.Submittal of subdivision3. Recordation at expedited decision Orange plat of Deeds Review Schedule—Five days maximum, as contained in the LIDO. However, in reality,these subdivisions are experiencing a two to four week review period. 8 Definition-A subdivision shall be classified as "minor" if it does not: 1. Create more than: a. Five lots, including the residual acreage,following the Conventional subdivision design model; or b. Twelve lots, including the residual acreage,following the Flexible Development subdivision design model, from any one tract of land in any ten year period; 2. Dedicate or improve any new public street other than widening an existing public street; 3. Extend public water and/or sanitary sewerage systems other than laterals to serve individual lots; and Necessitate the installation of drainage improvements, which would require easements through one or more lots to serve other lots. Traditional Review Process 1. Pre-applicationOrange submittalmeeting and County Conceptof . . Advisory application I CompleteS.Submittal of Final 6. Review by Orange 7. .. . OrangePlat application County staff requirements plat by contained in the D• Planning staff I 9.Recordation at Orange Register of Deed AM Review Schedule—Average three to five month review process from submittal to recordation. 9 . • Definition-A subdivision shall be classified as "minor" if it does not: 1. Create more than: a. Five lots, including the residual acreage,following the Conventional subdivision design model; or b. Twelve lots, including the residual acreage,following the Flexible Development subdivision design model,from any one tract of land in any ten year period; 2. Dedicate or improve any new public street other than widening an existing public street; 3. Extend public water and/or sanitary sewerage systems other than laterals to serve individual lots; and Necessitate the installation of drainage improvements,which would require easements through one or more lots to serve other lots. Flexible Development Review Process Pre-application1. Orange meeting and submittal County staff and 3.Neighborhood Plan by Orange County Developmentof Concept Plan Advisory Information Meeting Planning staff application 5. Initiation of final plat 6.Submittal of Final 7. Review by Orange 8.Complete all application process application . contained in the D• 9.Approval of final plat 10.Recordation at by Orange CountyOrange Planning staff of Deed Review Schedule—Average four to six month review process from submittal to recordation. 1 Major Subdivisions—Standar subdivisionDefinition—Any division of land that is not classified as an Exempt or Minor subdivision. Proposed for a or less. Review Process 1. Pre-application meeting 2. Review by Orange County 3. Neighborhood Review Schedule—Average eight month review process from submittal to BOCC approval. Followed by an average three to six month process leading up to recordation. and submittal of Concept staff and Development Plan application Advisory Committee Information Meeting 6. Review by the Orange 4. Planning Board review 5.Submittal of preliminary County staff and and approval plat application Development Advisory Committee 7. Planning Board review 8. BOCC reivew and 9. Complete all and recommendation approval requirements contained in the UDO 10. Complete site 11. Final review and 12. Recordation at Orange improvements approval by Orange County County Register of Deed Planning staff 11 Definition—Any division of land that is not classified as an Exempt or Minor subdivision. A tract of land in a Rural Designated area on the Growth Management System map that is proposed for a subdivision of 21-40 lots or a tract of land in an Urban Designated area on the Growth Management System map that is proposed for a subdivision of 21-79 lots. Review Process 1. Pre-application — > 2. Review by Orange 3. Neighborhood meeting • submittal County Planning staff Information 1 4. Review by the Orange S. Planning Board review 6. BOCC holds County • • Advisory Committeedecision Complete7. requirements contained improvements approvalby Orange in the D• County 1 Recordation Orange County of Review Schedule—Average seven to ten month process overall. Average four month review process from submittal to BOCC approval of SUP. Followed by an average three to six month process leading up to recordation. 12 . . Definition—Any division of land that is not classified as an Exempt or Minor subdivision. A tract of land in a Rural Designated area on the Growth Management System map that is proposed for a subdivision of 41 or more lots. A tract of land in an Urban Designated area on the Growth Management System map that is proposed for a subdivision of 80 or more lots. Review Process 1. Pre-application 2. Review by Orange 3. Neighborhood meeting and submittal County Planning staff Information Meeting 4. Review by the Orange 5. Planning Board 6. BOCC holds public County Development . hearing and makes Advisory Committee recommendation decision 7. Complete all 8. Complete site 9. Final review and requirements contained improvements approval by Orange in the • County Planning 1 Recordation Orange County Register of Deed Review Schedule—Average seven to ten month process overall. Average four month review process from submittal to BOCC approval of Conditional District. Followed by an average three to six month process leading up to recordation. 13 SURVEY SUMMARY ON AFFORDABLE HOUSING REGULATORY BARRIERS AUGUST 2020 Background In July, the Orange County Department of Housing and Community Development surveyed local real estate developers to identify barriers and possible incentives to affordable housing development. Survey questions asked about development standards, fees, developable land in Orange County and the affordable housing density bonus. Four developers responded — two nonprofit and two for-profit — and identified several regulatory, financing and other market-driven obstacles to affordable housing development in addition to policy solutions and possible incentives that may mitigate these obstacles. Regulatory Barriers Survey respondents identified several regulatory barriers in Orange County that inhibit or complicate affordable housing development. One developer described inconsistency in fees and review processes across jurisdictions as a challenge. Several others cited high impact fees, slow building permitting processes, and long development review timelines as inhibiting factors. One developer also mentioned low-density zoning, watershed restrictions, and the Rural Buffer as land-use limitations on buildable land. Another developer had never considered developing outside of the jurisdictions because they assumed that the broader County is not zoned to allow multifamily building. Possible incentives suggested include reducing or refunding development fees, relaxing building permitting processes, creating an expedited review process for affordable housing projects, and otherwise modifying land-use regulations or creating exceptions for affordable housing developments.