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Missoula Consolidated Planning Board Minutes July 20, 2010 Page 1 of 18 MISSOULA CONSOLIDATED PLANNING BOARD MINUTES July 20, 2010 – 7:00 p.m. Missoula City Council Chambers, 140 West Pine MEMBERS PRESENT John DiBari Kelley Durbin Tim Ibey Heidi Kendall Jerry O’Connell Jerry Petasek ALTERNATES PRESENT Carol Evans [7:03 pm] Tim Skufca MEMBERS ABSENT Jennifer Clary Jonathan Haber Don MacArthur STAFF PRESENT Mike Barton Jen Gress Laval Means John Newman Sharon E. Reed OTHERS PRESENT Lane Coulston John Hendrickson Brian Kerns Mike Sudik Jason Wiener A. Subsidized Small Lot Option - A city initiated text amendment request to amend Section 20.05.040 Development Options of Title 20 City Zoning Ordinance, to permit subsidized small lot development as an option in multi-dwelling zoned districts. Heidi Kendall: So the first one is the Subsidized Small Lot Option, a city-initiated text amendment request to amend Section 20.05.040 Development Options of Title 20 City Zoning Ordinance, to permit subsidized small lot development as an option in multi-dwelling zoned districts. And we have very little in the way of audience this evening. If a bunch of people come in, then we’ll worry about how to do the public hearing. But this might be fairly short. So Jen Gress is going to do the Staff Report this evening. Jen Gress: Yes. Heidi Kendall: Take it away, Jen. Jen Gress: Good evening. For the record, I am Jen Gress with the Office of Planning and Grants, and like Heidi said, we’re here tonight to ask you to review the proposed text amendment regarding the subsidized development option to Title 20 and recommend it for approval to City Council. This project was initiated by City Council and amending the City Zoning Ordinance to include a residential subsidized development option. The proposed language is considered a text amendment meeting all the necessary review criteria and will be added to Chapter 20.05 Residential Standards…excuse me, Residential Districts, into Section 040 Development Options as subsection C and leave the rest of that section intact. This language is intended to be an additional tool in Title 20 for development of small homes on parcels smaller than 3,000 square feet, encouraging affordable home ownership. As proposed, the tool requires that a development have at least 50 percent of the units meeting 80 percent average median income as determined by either HUD or MBOH and allows detached single-dwelling units to be placed on lots smaller than 3,000 square feet, in multi-family zoned areas with modified building standards including reduced setbacks and a 20 percent density bonus. Solicitations of comments from agencies, community housing organizations, and other interested citizens have suggested that language be…that language would require developments to have prior approval from City Engineering regarding utilities and parking. Staff considered that, but every development, whether subsidized or not, goes through the City Engineering Department, so we didn’t feel that was a necessary conclusion. Concern was expressed regarding the proximity of construction ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 2 of 18 to property lines, but that the standards were possible with careful design. Comments also included skepticism from community housing organizations about how useful the tool will actually be. And the proposal received support from the Missoula Organization of Realtors. In addition, Laval and I met with the MBIA yesterday and discussed some other comments and suggestions that that organization has; and I believe that they are going to be here tonight to give those to you. To summarize, the intent of the amendment is to provide an optional tool to be used in multi-family zones allowing more housing stock for those who meet the lower end of the income spectrum. Heidi Kendall: Thank you, very much. So we have our staff report. Is there any public comment on this proposed amendment? Mr. Hendrickson. John Hendrickson: Good evening, John Hendrickson, MBIA. As Jen said…well, give you a little background. When Bob Jaffe first proposed this or wrote it, I thought automatically that given the circumstances and I was…went to work for MBIA, this would probably be a good opportunity to bring private enterprise into the mix of affordable housing. I think we can all agree that I think funding will be diminishing from the federal government to the entities in town: MHA, HomeWORD, and Bob Oaks’ organization, the Northside Redevelopment. And it’s also a good time: builders are idle, they’re looking for projects to do, and I think it would be a good marriage. But in doing so, in looking at this as you can read the handout before you, 50 percent...I spoke to some of my members, my builders about this… Heidi Kendall: Excuse me, Mr. Hendrickson. John Hendrickson: I’m sorry? Heidi Kendall: Are we talking about the one that’s called pLAND at the top? John Hendrickson: Yes. Heidi Kendall: Okay. Thank you. John Hendrickson: I spoke to some of my builders, Elaine Hawk and I had met with Lori Davidson from Missoula Housing Authority a couple different times. Again, yesterday, with Laval and Jen and to go over some of these…the language and concepts. And we’re just dealing right now with the townhouses, home ownership, the other option that you see before you has to do with multi-dwelling. We are not ready to go forward with this…I’d say informational piece for you, we’ll be working…getting together with probably Andrea Davis, Bob Oaks, Lori Davidson, some other…OPG again, eventually, and hammer out an amendment to this on the multi-dwelling. But anyway, getting back to the sliding scale. Most of the builders…all the builders I spoke to and people in the affordable housing arena didn’t think that 50 percent alone would iron…would pencil out for builders. So we came up with the concept of the sliding scale. We figured maybe that would bring private enterprise in to the mix, giving them an incentive, so that they, say, just for argument’s sake, you know, they build ten houses and they maybe get a 10 percent bonus, one house, if they did three of the units as subsidized housing. It’s pretty self-explanatory and it’s there for your consideration. I think that it’s good for the community. It addresses its needs as MOR and the Cities’ Housing Summit. The Housing Summit did convey that townhouses are a viable…unlike condominiums right now…townhouses are in demand and will be in demand; and I think it offers up more chances for home ownership for Missoula citizens. And I think Laval and Jen could address any concerns that you may have. That’s it. ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 3 of 18 Heidi Kendall: Thank you very much. John Hendrickson: Pretty vanilla and pretty straight-forward. Heidi Kendall: Yep. Thanks for the handout, too. Is there any other testimony on this proposal? All right, seeing none, we will close the public hearing and get down to our questions. Discussion on the Board, does anybody have a question. I can start out with something. I guess I just want to ask Mr. Hendrickson a couple of questions about this and also staff. The difference between Option 1 and Option 2, it looks like the…the density bonus is the same… John Hendrickson: …it is the same… Heidi Kendall: …for either option… John Hendrickson: Option 1, it contains multi-dwelling, rentals. Heidi Kendall: Option 1 contains multi-dwelling, so that is rentals. John Hendrickson: Right. Heidi Kendall: The second one is… John Hendrickson; Option 2 is strictly home ownership, townhouses, attached housing and detached houses. So townhouses. Heidi Kendall: So the difference between Option 2 and the staff recommendation that we have before us is that your Option 2 includes town homes… John Hendrickson: And a sliding scale. Heidi Kendall: …and a sliding scale, of course, and so your Option 2 includes rentals and the staff… John Hendrickson: No. Heidi Kendall: …and the staff recommendation does not. No, I’m sorry. John Hendrickson: Opt…yeah, I was afraid this was going to be confusing. Heidi Kendall: You were afraid I was going to be confused. John Hendrickson: Okay. Option 1 contains rentals, multi-dwelling. What…that’s not being offered, that’s just an informational piece. A month from now or two months from now, after we get all our ducks in a row, we’ll probably be coming forth to planning…to the Planning Board for an amendment to this. Heidi Kendall: I see, so this is…Option 1 is not one that you want us to discuss this evening. John Hendrickson: No. Option 2. Heidi Kendall: Okay. I see. Thank you very much. That’s helpful. John Hendrickson: But I just, like I say, I’m just giving you a heads up. ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 4 of 18 Heidi Kendall: Right. Okay. But Option 2 is on the table? That’s something… John Hendrickson: Option 2 is on the table… Heidi Kendall: …that you would like us to talk about. John Hendrickson: …its home ownership, townhouses, detached housing, with a sliding scale. Heidi Kendall: Okay, wonderful, great. So my second question is for Jen. Can you give us a recommendation about Option 2? What is your…what is the staff recommendation on this? Jen Gress: Staff is okay with most of it. The one thing that we don’t think is necessary is to have the section that says “or a deed-restricted property.” We feel there are other avenues that are being used through the HUD and MBOH that you don’t necessarily have to have that deed restriction in there. Heidi Kendall: Can you explain that a little bit more? Jen Gress: Anyone who is going to go through these processes to determine whether their clients are 80 percent of AMI are going to have to have an agency that verifies that. And, generally, they’re going to go through HUD or HRC or MBOH in order to get those verifications and so each time they’re sold over, they need to…those clients need to qualify to get into those residences. So it doesn’t necessarily mean you have to have a deed restriction, it comes up in title search. Heidi Kendall: And one of the things that I am curious about is that when Mr. Hendrickson talks about this, he talks about the importance of having private enterprise be involved in that. And so I figured that having a deed-restricted property added in there would be something that would make that more possible. Is that a correct assumption or not? Laval. Laval Means: They can do it without needing the extra statement about deed restricted. The deed restricted piece implies there’s an additional…a separate program. And right now, it…and it has been working, actually, for private developers to work through the already-established programs through our community home development organizations for identifying the qualifying property owners. And that’s all they need. So HUD and this MBOH reference isn’t just about for projects that are getting built through the channels, it’s for services also; and they can provide services like helping with identifying qualifying applicants. That’s the kind of thing that creates the link or the relationship to the private developer. So we don’t think you need to add this extra statement about…or deed restriction—it can happen through the services and programs that there are already. Heidi Kendall: Thank you. John. John Hendrickson: We had that in there for extra protection. We just figured, you know, when you go through title search, you know, if that…that would show up and would be protection and a guarantee to the community that it would be restricted, yeah, and sold as low-income housing, you know, so. Heidi Kendall: Okay. All right. Thank you. Tim. Tim Ibey: Yeah, I am just a…well, I think I got the gist of it but basically, the deed restriction was just to say in the title search that this property is, in fact, a low income piece of property and it can’t be sold for… John Hendrickson: It can’t be sold for market rate. Tim Ibey: Right. ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 5 of 18 John Hendrickson: So, it was an added... Tim Ibey: And you’re telling me, Laval, that that’s already something that’s there? Laval Means: When you’re working through already established programs, there’s going to be recording mechanisms, monitoring mechanisms, enforcement mechanisms, there’s terms for how long that is in place. So the…yeah, it’s there. Heidi Kendall: John DiBari. John DiBari: I’d like to ask a little question about the adjusted ratio scale. It says in the text of Option 2 that there would be an exchange for up to 50 percent of the project development and I’m curious…well, first let me say, I assume there’s a connection between that and the chart below, correct? So, in the chart below, the density bonus goes to 20 percent based on that 50 percent, correct? John Hendrickson: No. The density bonuses are 10, 15, and 20 percent. John DiBari: Right, based on the proportion of the development that is as affordable housing. John Hendrickson: Correct. John DiBari: So, the sliding scale, up to 50 percent, is column two, correct? And then the bonus is associated with that? John Hendrickson: No it…right, okay. I see what you’re sa…yes. John DiBari: Okay. I just wanted… John Hendrickson: You know, I say, in my introduction, in talking to builders off the top, and speaking to, like, Lori and such, if you just…if you just had the 50 percent, that would almost eliminate private entities, private builders coming in to the mix, because things would not pencil out. But if…you know, and it might, but if you had a smaller development, subdivision, you know, ten houses for argument’s sake, where five of them had to be, that might not work out. But, one house or two houses might. John DiBari: Okay. Yeah, that was my question… John Hendrickson: Oh, okay. John DiBari: …is, like, rationale for how you’d develop that chart and… John Hendrickson: Just trying to… John DiBari: …and you covered it. John Hendrickson: Okay, just trying to make it out…you know, work it out financially for people. Heidi Kendall: Jerry O’Connell. Jerry O'Connell: Oh yeah, I just want to verify that…so, if you’d have to have at least 50 percent subsidized to get the full 20 percent density bonus. John Hendrickson: Correct. ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 6 of 18 Jerry O'Connell: And you’d have to at least 30 percent to get the 10 percent. John Hendrickson: Correct. Jerry O'Connell: So anything under 30 percent you’re getting no density bonus. John Hendrickson: Correct. Jerry O'Connell: Okay. Heidi Kendall: Jerry Petasek. Jerry Petasek: How are the…the…do we round up? So, if you have 20 percent density bonus, you build three homes, is that .6 percent, so it rounds up and if you build three homes, you can get a fourth bonus home at a 20 percent density bonus? Jen Gress: That hasn’t been something that’s been discussed. I think it’s a possibility. I think it’s something that can be written into it if you all would like to go that way or if you decide it needs to go down. Jerry Petasek: So there is no standard, though, on rounding up on fractions? Jen Gress: If you want to go with basic math, then, yes, you’d round up. Jerry Petasek: Okay. That’s just one of my questions. John Hendrickson: It’s kind of like the IRS, you round up. Jerry Petasek: I would like to round up. For the setbacks, on the chart, are we talking about interior setbacks or the side yard setbacks of exterior properties as well? Did I say that clear enough? Jen Gress: I believe that it’s all the way around. Jerry Petasek: So it would be reduced…side yard setbacks would be reduced to 3 feet regardless of whether or not it was part of the project. Jen Gress: On the exterior of the project, yes. Jerry Petasek: As well, okay. I hadn’t seen this before, the planned subsidized Option 2. John Hendrickson: Well, pLAND, just to let you know pLAND is Elaine Hawk’s land use business…pLAND, Planned… Jerry Petasek: Okay. John Hendrickson: So don’t…it’s…she emailed it from home, she worked, you know… Jerry Petasek: Oh, okay. I see. John Hendrickson: Okay? So it has nothing to do with everything. She happens to be also MBI…my Government Affairs Chairperson, and we work closely together. ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 7 of 18 Jerry Petasek: Okay. Excellent. I like…I like the sliding scale. I think you’re right, it probably makes more sense for the size of the subdivision to have a different…different parameters put upon it for both economic reasons and other…I’m… One of the things I see missing, and the deed-restricted property brought this out is that 30 years ago, in Irvine, California, they instituted…gosh, what do you call it…where you have developers put in a certain number of affordable homes… Laval Means: Inclusionary. Jerry Petasek: Thank you, inclusionary zoning. (I taught myself not to say it in public, I guess). So… Laval Means: You made me do it. Jerry Petasek: Yeah. They instituted inclusionary zoning, and it worked out really well for them. In their inclusionary zoning, there was only one flaw in it and that was the fact that it…all of their affordable homes expired in 30 years. And, of course, at the time, they thought 30 years was a really long time. Well, unfortunately, they just reached their 30-year mark. And so all of the homes that they put into their pool of affordable housing are now slowly going back to market rate. And one of the things that they’re dealing with now, down there, is trying to get up procedures in place that would have all of the housing go into permanent affordability. There are a number of ways to do permanent affordability; and, obviously, deed-restricted property are one of the methods. It’s definitely more hands-off method. You don’t need an organization, necessarily, overlooking a program. And the other that I know of is a community land trust. I’m the coordinator of the only land trust in Missoula; so, obviously, I…I’ve been working for a long time trying to promote permanent affordability. I think there are a number of ways to do it and I’d like to see…I’d like to see that instituted into any of the affordable housing that we do. You know, there are bigger questions and issues that are revolving around the idea of permanent affordability, but we’re even seeing HUD and MBOH lean more towards using permanent affordability methods, too, with their programs, whereas, they usually had methods where it was 10-, 15-, 20-, 30-year affordability periods. They’re definitely leaning now more towards taking taxpayer dollars, putting them to work once, and keeping them in those homes. We call it place-based subsidies versus where you’re subsidizing a home instead of subsidizing a person’s mortgage. So it stays in the community, it doesn’t fly away or float away when those homes are sold or when those rentals dry up 15, 20 years later. So, you know, I want to think about it a little bit; but I’d like to hear if anyone had thoughts about permanent affordability. I know it’s not something that everyone thinks about all the time, but I’d like to see something like that be accompanied with this first draft to see how it flies. Heidi Kendall: Tim. Skufca. I’m not…I’m giving us a chance to think about your question. Jerry Petasek: Okay. Heidi Kendall: And I think we’ll come back to it. Tim. Tim Skufca: Unless we want to carry on, on that train of thought. I guess my contention here is in including detached homes in this whole process. I guess I have a hard time encouraging detached homes in any form and detached homes in connection with affordable housing also doesn’t make sense to me. A detached home indicates that there’s no shared walls, which indicates that there’s going to be more energy costs. The lots are larger, higher property taxes, no shared walls more means more maintenance. So I’d like to propose that we take the detached part out of there, unless someone can convince me that if the subdivision has to be detached, then we might as well get more in that subdivision and…and that’s a wiser direction. But the detached and affordable housing doesn’t make sense to me. It’s to the…everybody. ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 8 of 18 John Hendrickson: Well, first of all… Heidi Kendall: Mister… John Hendrickson: Oh, I’m sorry… Heidi Kendall: No, go ahead. John Hendrickson: The detached…the detached portion of this didn’t come from MBIA, that’s city- initiated; and I can tell you that in a survey put out by HomeWORD in one of their classes, first time home buyers, I believe it was 95 percent of them surveyed, they wanted detached housing, not attached housing, and that’s…you know, and now I’m just going to give you my opinion. I’m pretty sure that was for young starting families just starting out with small children and everything. But the detached…I mean, the attached portion of this, I would say, probably would go more towards the aging population. With people looking to downsize and don’t want, you know, who are, you know, and or that’s what they can afford. So, I mean, it’s…so in the Housing Summit, the detached housing portion came out, but there is a, I believe, a need for affordable detached housing, also. Now, that’s my opinion. The detached portion didn’t come from myself or the group I work with or my organization. That was a vision… Heidi Kendall: Okay, Mr. Barton had his hand up. Laval had her hand up. Who wants to go first? Laval. Laval Means: A little more history on that…introduction of this for a detached housing initially is because we were asked to try to look at the tool we had in place previously, which is a planned neighborhood cluster and what kind of developments were you getting from that and there were a lot of those that were detached, we felt like we lost some of that flexibility. So the notion with this was to try to provide the tools for encouraging that type of…that building type again on smaller lots and it…looking at…you know, what were they asking for back with the old PNCs. Well, it was a reduced lot size, usually, it was a reduced setback and often trying to do it with detached, small lot footprints. So, that’s where that comes from, and I think the notion of extending it to townhouse also really fits the…the bill for what we’re seeing more of right now, too, and also still provides, you know, some home ownership opportunities. So, that made some sense to us. Extending it much more than that, I think we get into a lot more issues with a rental market where we’re not really…we don’t really have a program for, yet; and that, again, is what John was mentioning about needing to look at further before you go into any other building type than this. Heidi Kendall: Thank you. Mike. Is it Interim Acting Director or is it Interim Director, or… Mike Barton: I think I just get Interim. Heidi Kendall: Interim. Mike Barton: I get interim-er and interim-er. Yeah, more history. This really affects a very narrow slice of the market, and it restores a possibility that was available under Title 19. It also does respond to the odd market here where shared wall is…is not the most attractive product, right now, even for the buyers who are targeted through programs like this, so that the lot size and the lot configuration advantage only benefits a detached home. I don’t…it may benefit a town home as well, and if that’s the case, absolutely. Interestingly enough, the discussion about, again, a very narrow application has suggested some much broader topics, which I’ve tried to keep out of this discussion. I think that the question about whether we advantage detached subsidized housing is a legitimate policy question. I also think that a ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 9 of 18 density bonus for subsidized or in other ways affordable housing might be an appropriate topic for discussion, but not on top…you know, not in the context of this amendment, I don’t think. There’s also been discussion of do we need to get up to a 120 percent? Yeah, we probably do. Do we need to consider some other options, like…deed restriction is just one way to guarantee affordability; and typically, in defining affordable housing, the city has gravitated to using the qualifies for subsidy under HUD or MBOH, because that guarantees the 80 percent and it guarantees that it is affordable into the future. Now, again, how long…how far into the future, whether it’s permanently affordable or affordable for 15 or 30 or 35 years—also, a political question. And, you know, and appropriate. But I don’t know that it’s appropriate, for instance, to say, oh, this should be applied to rental housing instead of detached single family. If it shouldn’t be applied to detached single family, get rid of it, don’t send it on. It would…you would be…you know, you would be catching up with your tail as your rounded the block if you tried to apply this to multi family…to multi dwelling units. Heidi Kendall: Thank you. Well, I would like to follow up on some of Jerry Petasek’s questions and one of them…I’m a little bit embarrassed, but I’m not sure I understand…this does not guarantee permanent affordability for whatever units are built under this provision, does it? Jen Gress: Right now, no. Heidi Kendall: But we could recommend that something be added, right? That would say that this should be permanent? Jen Gress: You could amend that… Heidi Kendall: Am I missing… Jen Gress: I think it deserves maybe a larger question… Heidi Kendall: It what? Jen Gress: I think it may deserve a larger discussion. Heidi Kendall: Oh. I see. So, this is like a step in the right direction and… Jen Gress: Right. Heidi Kendall: …and we want to contain it because that’s…when Mike says it’s a political question, that means that it’s a firestorm kind of political question. Jen Gress: Yes. Heidi Kendall: Okay, I got you. I don’t like firestorms, so I’m happy to sort of leave it the way it is. That’s just my own personal opinion. Although I think that’s a really, really important point and it sounds like what’s happening in Irvine is not a very good situation. So, the…and it sounds like, as far as the staff is concerned, the sliding scale is something that is workable and it’s okay. Jen Gress: Yes. Heidi Kendall: And judging from some of the comments that we got from some of the folks in the affordable housing community it sounds like that would make it more acceptable to those folks, that’s how I read it. Jen Gress: I think so. ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 10 of 18 Heidi Kendall: So, at some point, I think it would be great to have an amendment that would maybe put that part of Option 2 into the motion. I mean that’s just how I’m reading this whole thing. And it seems like it should be flexible in terms of whether it’s detached or attached and that it is the way it’s written now, under the staff recommendation. Am I right about that? Or does it have to be Option 2 for that flexibility to be there? Laval Means: I think that the staff recommendation emphasizes detached and this recommendation from the MBIA, Option 2, it adds town homes into the mix... Heidi Kendall: So it makes it more flexible… Laval Means: …and that’s the attached. Heidi Kendall: …and that’s okay with you guys? Laval Means: A couple other mixes…it is, I mean the townhouse already does have…would have, if City approves that revision that they’re going to be looking at. No minimum lot area requirement, so the extra incentive there would be the density bonus for the townhouse. But that’s…that’s okay. I think that it’s what you’re seeing, so it’s a reality, it might be another market tool that could get used. Heidi Kendall: Thanks. John. John DiBari: Maybe, a couple of things here. So, by convention, what is the term that is currently associated with the affordable housing? Is it 15 years? Is it 30 years? What…what is it that would prompt the broader discussion for whether permanence is necessary? Laval Means: I’m hearing from a few folks that we’ve talked to. When we were talking with Lori yesterday, and with some resource people in the office today, that depending on which organization you’re using, It could be 20 years as a minimum, but the City could even up that, I guess, which is what they did with one of their most recent projects, to 35 years. I’ve heard that some are even higher than that, so I think we have some programs that vary. So the notion that everything would expire may not happen in Missoula because we already have programs in place, and they’ve already been rolling along. So, it starts at 20 and then, I think it goes up from there. John DiBari: So we got the second handout delivered to us and I’m curious, is that also from MBIA? It’s the Parameters for Expanding Affordability Tool handout. What’s…who’s the originator of that? Jen Gress: That also goes with the options from MBIA as discussion topics that…things that you want to probably think about when you take up the larger discussion, knowing that there are things that still need to be addressed. John DiBari: Sure. I’m trying to understand the…the congruence between Item 2, which is the discussion about terms in that handout and the recommendation in Option 2 for a deed restriction on the property and what the…the… John Hendrickson: The second handout recommends terms, compliance reporting…excuse me, that has basically to do with Option 1. John DiBari: Okay. John Hendrickson: Just, like I say, Option…maybe I should have given it to you after the meeting, but it was all…all together. This is going to be an amendment. Like I say, it could be a month, six months from now; I’m going to get all the ducks in a row, all the parties... ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 11 of 18 John DiBari: Okay. John Hendrickson: We do want to expand it to multi-dwelling rentals. John DiBari: Okay, so it’s off the table for the time being. John Hendrickson: Correct. John DiBari: So just to add my two cents. I think that however the vote comes out tonight, I would appreciate this broader discussion about how to include terms and what those terms might be and under what conditions and with the consideration of at least some portion of the affordable housing stock being permanent, so… Heidi Kendall: Tim. Tim Ibey: Well, you know, I’m…in thinking on this, if you had a deed-restricted property, if it’s on the deed, that would make it somewhat permanent, doesn’t it? And this is a question for staff, because I’m not… Mike Barton: I would like it if…where…or a deed-restricted property is here in red, if everybody would forget about that for a moment. Deed restriction is simply a method of insuring the term of affordability. And it is one method. And, in fact, it may be questionable depending upon the type of restriction whether the deed restriction is permanent affordability. Most…most of the subsidy for home ownership comes in two different types of packages; and Jerry can, I think, help me with this if I run afoul of the models. But, one has to do with equity recapture. So, a pot of money subsidizes a buyer, usually with a mechanism that’s like a silent second mortgage, is a good example. So, a buyer can afford $130,000, the house is $150,000, he get a silent second for 20. The property is deed restricted, so that some of that silent second is recaptured upon sale. And the idea there is that what’s recaptured is used by another lower moderate income household to purchase another home and that it has appreciated enough to allow that…you know, it to have the same impact that it originally had, it’s $20,000. So, if the house turned into a $300,000 home, the equity doubled and, you know, that 20 should double as well. That’s the idea. Now, Jerry’s program and others operate on a land trust model. And what that does is it takes the land out of the equation. The investment, the subsidy investment is used to buy the land. And a subsidized buyer buys an improvement. And so that…when the property is transferred, the cost of the land is not factored in. Which, you know, as you might expect in this economy and in this community, anyway, it has a very substantial impact on keeping it affordable. Don’t hit the panic button, I have warrants. These methods are sometimes used interchangeably. The way these things are structured are quite complicated and every time we get into this discussion, what we get back to is could we just let HUD and MBOH make the call and if they bless something…I mean, as Jerry points out, these certifying, if you will, organizations are organizations that we’d use as certifying for purposes of ordinance, as he pointed out, are starting to lean to yeah, we don’t want that investment to go away, we want to recapture it. But I wouldn’t get…I mean, I have counseled time and again that you not get into this discussion. Because what you are doing is trying to create the same mechanisms that HUD and MBOH and others have created. However, as I said, the question of…and I didn’t mean to say that it was necessarily a firestorm sort of question. It is a political question and certainly one that is out there for the Planning Board and the City Council to take up, and I wasn’t suggesting that you not necessarily take that one up. I am suggesting, though, that this would not be the appropriate forum for extending a density bonus to ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 12 of 18 subsidized or unsubsidized multi-dwelling units. That seems to me to be a question that bears a broader discussion. Heidi Kendall: Thank you. And thank you for saying that this is complicated, because now I don’t feel so stupid. But I think…I mean, that point makes a lot of sense to me that there are ways of determining how this stuff should be done that have been developed over time, that have stood the test of time, and there are lots and lots of different kinds of circumstances that people can find themselves in, that the land could be in, and the building can… Mike Barton: The City has worked really hard to set up a network that assists people in purchasing homes. And in developing homes that can be purchased by people at or below 80 percent of median. And I think Jerry would agree with me, if there is…if there is a person that could qualify for some financing or can qualify to buy a unit and they’re below 80 percent of median, you know, they fall under this. They will be either HUD or MBOH subsidized. Even if it’s a dollar, we would certify them as, you know, you meet the income criteria. And, again, we have several different organizations set up that do this. I would hate to be rolling around a few years from now, saying, oh are subsidizing (when I wear the grants hat) are you subsidizing yet another organization to administer yet another sort of subsidy or assistance. That’s why I don’t want to get into the discussion of oh, what about deed restrictions, what about land trust, what about the period of affordability? I mean, I would rather not…I would let HUD and MBOH take it and not restrict ourselves any further. Heidi Kendall: Thanks. Other questions? Are we ready for some kind of a motion, perhaps? Do we want to try to take the motion and amend it a little bit with this other new information that we have? Tim Ibey: With Option 2? Heidi Kendall: Yes. Tim Ibey: I would make a move that we amend the motion to include Option 2 without the verbiage, “…or a deed restricted property.” Jerry O'Connell: Second. Heidi Kendall: Okay. We have a motion by Tim Ibey, seconded by Jerry O’Connell. And so this is simply an amendment to the main motion which would come later? Tim Ibey: Yes. Heidi Kendall: Is that right? Okay. And just to be sure that I understand this, you said the language of Option 2 as presented to us, but without the language on deed restricted property? Tim Ibey: Right, the red area that says or a deed restricted property. So it would just read: “Under a subsidy program, the U.S. Department of Housing and Urban Development, HUD, the house…or the Montana Board of Housing, MBOH, for the residents whose income fall below 80 percent of the area median.” Heidi Kendall: Okay. So that’s a motion to amend the motion. Does that work for everybody? Jerry? Jerry O'Connell: I just have a question. Make that the final red part, the “and town homes.” I think I read or heard that that’s okay, it doesn’t…it doesn’t… Heidi Kendall: Yes. Jerry O'Connell: ..so it doesn’t just sort of belt and suspenders, it’s fine. ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 13 of 18 Heidi Kendall: Yeah. Jerry O'Connell: Okay, good. Heidi Kendall: Okay, any other questions, comments on this? All right, let’s vote. I think we’ll try a voice vote first. All in favor of the motion to amend, please say “aye.” [All Board members answered “aye.”] Any opposed? [All Board members were silent.] Heidi Kendall: Okay that amendment to the motion is unanimous, it carries. Now we have the motion. John DiBari: Heidi, Jen. Tim Ibey: I move that the… Heidi Kendall: I’m sorry, hang on. Jen. Jen Gress: I just wanted to make a comment that if you do indeed go through and pass this next motion for the change, that we will, as a matter of process, go through and amend the table so that it also includes those percentages. Heidi Kendall: Yes, excellent point. Jen Gress: …just as a matter of process. Heidi Kendall: …because there will be a little bit of housekeeping that will have to be done to make that work. Jen Gress: Yes. Heidi Kendall: Okay. Tim Ibey: I move that the proposed language for a small lot development option in Title 20, Missoula City Zoning Ordinance, shown in the Attachment A of the Staff Report be recommended to the City Council for approval as amended. Jerry O'Connell: Second. Heidi Kendall: Okay, we have a motion by Tim Ibey and a second by Jerry O’Connell. Any further discussion on this? Jerry. Jerry Petasek: Well, just in general, I guess. You know, I have had this conversation with Mr. Barton before, and it’s a great conversation to have, especially if you want to learn more about it. You know, ultimately maybe this isn’t the right time, on a small ordinance like this where we don’t want to put sweeping, global policy kind of on a very specific item. But I also see…it gets a little frustrating and maybe only for me, because I’m committed to permanent affordable housing that…when is the right time to bring this up? We just redid our planning documents, we just…I don’t know, we just redid subdivision, that probably went to another place for it. It seems like there’s never a right time or place, so I guess what I would say, mostly, about permanently affordable housing (I’m not going to push it onto this ordinance) would be that I think that Mike is absolutely correct that HUD and MBOH are leaning toward permanent affordability; but these are large organizations and it takes time for them to ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 14 of 18 change, and they move slowly, and handfuls of years could go by before it’s ever caught on. And what we see is that the old recapture method. You know, as time goes on, money loses its value, you know, it depreciates. And so when you put $20,000 into a person’s mortgage and they sell their home five years later, it’s not worth $20,000 anymore. The homes have appreciated, especially over the last ten years when we saw the bubble blowing up and up. And so that is why…that’s why deed restrictions and community land trusts came about. It was to do two things: one, it was to keep the tax dollars that we were taking to subsidize these homes in our community, because with a recapture it floats, you put it here, they sell, it moves away to some other maybe neighborhood only; but maybe it moves to some other part of the county, maybe it moves to some other part of the state. You know, if you use…or if you don’t use it and lose it, it moves to some other part of the nation. Community land trusts changed that; they’re place-based subsidies, same thing with deed restrictions. You know, I don’t want to be a rabid advocated of community land trusts, specifically because I’m the coordinator of the only land trust in Missoula and…but I’m a huge advocate of a, getting people into home ownership, because to me, from what I’ve seen of people it’s not…it’s not all about money, even though that’s all…what we always talk about. Getting into home ownership really gives people a completely different mindset to actually do things like join the Planning Board or getting involved in their community and just reaching out into other areas of your life. You stabilize your housing costs and then you start to think about your job and you start to think about your family, your health, and schooling; and so, home ownership is a lot more than that. But, when we are able to create permanently affordable homes in our neighborhoods, we know that it’s not just for one homeowner, it’s for generation after generation of homeowner. So that’s why I want to push it. That’s why I hope that Mike will come back and say, Jerry, it’s time to talk about permanent affordability. But I guess I’ll take his word for it that now isn’t the time. Oh-oh. And let’s vote. Mike Barton: No, let me…I wasn’t…and one of the things I said when I came out, I don’t see this as a firestorm issue; I do think it is a political issue. I don’t know that’s appropriate for staff to say, you know, which way the Planning Board should go on it. So it’s obviously that you all can discuss. It is controversial to a certain extent in that it does eliminate programs that are currently available to us. You know, so it does…it says you can’t do an equity recapture on…you know, because equity recapture is not as much of a means for permanent affordability as it is for building of wealth, frankly, yeah, I mean, so it’s…they are different. I don’t know that…that you want to go…I don’t say it’s appropriate to have the discussion, you know, go ahead and have it. But there aren’t people here who would say wait a minute, equity recapture, if properly managed should, you know, should have the same sort of impact. Is it a home ownership impact? No, not necessarily. Is it a permanent, affordable home? No, it’s a little different. Jerry Petasek: Well, so, the…now you’ve got me wondering because in…I agree, actually, I agree that there’s a lot of value in secret seconds and down payment assistance. But now I’m wondering if we should attach it to this very specific item where it is mainly revolves around construction and isn’t global that, you know, we aren’t going to be using second mortgages with this density bonuses and whatnot, it’s going to be purely subsidized homes. Mike Barton: I think that a lot of the places that were built with clusters, with subsidies, are equity recaptures. So, again, it is certainly a legitimate community discussion. Is that…yeah, I mean, in terms of this, this particular piece of legislation, you know, it’s as good a time as any. But again, I don’t know that…do you want to engage the equity recapture folks, should they show up and… Heidi Kendall: Can I ask a question along these lines? I know that the mayor has identified housing affordability as one of his major issues of interest, if not his most important issue. I don’t want to put words into his mouth or characterize him…especially I don’t want to characterize him incorrectly, but I have gotten the sense, based on the things that he has said and done, that that is a very important ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 15 of 18 issue for him. I mean, is this something that has come up in these conferences, or discussions or something? I mean is this something that we may actually have an opportunity to revisit sometime in the near future? I mean, I completely agree with Jerry that this should be a higher priority, but I do know that there are political realities and you can’t necessarily do it all at once. Mike Barton: This has been a pretty hot topic of debate for at least ten years and within this community and among providers of housing to low and moderate income families. Heidi Kendall: I would not have thought that we would have something that says density bonus on it in front of us so soon. Truthfully, I’m kind of shocked. Mike Barton: Well I’m surprised that Laval got away with saying the words that I thought shouldn’t be spoken again in this Chamber. And I don’t mean inclusionary zoning, that one’s easy. But, so this says oh, you can have that back in multi-family neighborhoods with a tie to affordability. You can certainly take it that…you know, and say and it must be permanent. Let me…you know, to get you further off track here, (and I thought you were almost ready to vote, too) rental housing is typically not permanently affordable by a long shot. We’re…you know, so…go ahead. Heidi Kendall: So you’re saying that as the staff you don’t have any objection to us making a recommendation to City Council that this be…that we say that this should be permanent? Mike Barton: Oh no. No. Heidi Kendall: Well I’m all for it. Let’s do it, let’s at least vote on it. Sorry, that’s just my opinion. John DiBari. John DiBari: This is a question for Mike. So if…I’m trying to figure out whether this broader issue about term would be an issue that would even come back before Planning Board or if it would be an issue that would be handled separately through some other mechanism. Mike Barton: As Jerry says, I don’t know when the time is for the discussion. John DiBari: I guess my question is could this be an issue that City Council addresses through one of its committees independent of coming before Planning Board? Mike Barton: Well… John DiBari: Or is it tied to Planning Board… Mike Barton: No I don’t… John DiBari: …because it’s tied sort of… Mike Barton: …well because it’s tied… in this case, it’s tied to land use; it’s tied to density bonus. It’s not tied to what we do on the Grants side; and as a for instance, on the Grants side, we have not made a call on this particular issue. I mean, and as I think somebody pointed out, we recently cranked up, if you will, expanded the period of affordability on a program that the…that the City is assisting. If you…if you…if you put all of your affordable housing investment, though, into land trust, I’m pretty sure that you…that doesn’t bring the private sector to it. I mean, in terms of…I mean, we would just…we would simply acquire land, then, or somebody would from not-for-profit develop…or from for-profit owners. But I don’t…I mean, one of the things that’s happened here is that this was a tool that was used by not-for-profits to enlist developers to build houses for them that they would then purchase with subsidized mortgages. Those are not permanently affordable models. But those are the way that the private sector gets in, and I suspect it’s one of the ways that the private sector…I mean, the private ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 16 of 18 sector wants to take something away from this, whereas, the non-profit sector does not. So it’s a…you know, do you do have a much larger conversation, here. Heidi Kendall: Okay. We have a motion on the floor. We can vote or we can continue to discuss and further amend, it’s up to you guys. Tim. Tim Skufca: I’m just am going to just throw it out there one more time. Just conceptually and philosophically, if the word “detached house” isn’t stricken from that, I truly can’t encourage any…even if it was anything targeted to any income level, my feeling is that detached housing is an inefficient method for housing stock that it’s…you know, this is…it sounds bizarre, but if it’s…do we want to continue on the sprawl that’s required when you do detached housing. Every subdivision that comes before us that are single family lots, is the wrong direction that a community that wants to preserve farmland should be encouraging. So affordable housing aside, it’s encouraging single family homes. And I’m going to vote no because of that. Heidi Kendall: Thank you. Jerry. Jerry Petasek: I’ll take a shot at this. Tim Skufca: Okay. Jerry Petasek: First, let me share my pain. I have a development that’s called Burns Street Commons, 17 homes, beautiful homes, in what I like to call the upper west side, call now, 829-8414. But I only have seven of the homes sold. A lot of it has to do with the economy and the way that folks view their current situation and their future situations, but a lot of it has to do with the fact that they are detached town homes and condominiums. Now, how much of that… Tim Skufca: Because they’re detached? They’re attached. Jerry Petasek: They’re attached. Tim Skufca: Attached. Jerry Petasek: Attached. Tim Skufca: And you think that’s why they’re not selling? Jerry Petasek: I think that that is large portion of the dismay right now. Tim Skufca: It’s because we’re offering what shouldn’t be offered. We’re creating the…if you don’t put a stop to it, it’s going to keep rejecting the stuff that should be happening. Jerry Petasek: Okay, then, here’s my argument. You were talking about subdivisions and sprawling, huge yards; this is actually one step towards where you want to go. Small lots, putting homes closer together, we can’t…we’re not going to change people’s minds right off the bat and stick them into condominiums. I can vouch for that. But maybe we can get them at least living closer together in that sprawl. Tim Skufca: That’s the…that’s the only argument, but it just doesn’t…it doesn’t make sense that you are giving a piece…you’re…instead of doing cluster, you’re…this lower income family is stuck with higher maintenance, higher energy cost, higher property taxes. It doesn’t…it doesn’t make sense. Jerry Petasek: Yeah, well I tell you that the Homeowner Association dues are no treat, either. It’s a major barrier to getting low and moderate income families into town homes and condominiums, having ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 17 of 18 this fee even split out across the project, because it’s wrapped into your mortgage and it’s seen as debt, revolving debt, so it’s…I mean, I’m with you, I agree with you that we should be building tighter and we shouldn’t be sprawling out into the hinterlands. But at the same time, as a developer, you got to at least, the very least, give people that they’re willing to tolerate. And I think that was why this came about because right now, with the current…with housing prices stabilizing and not rising, you know, eight to ten percent a year, folks aren’t willing to make that sacrifice to get into the town homes and condominiums. It’s…I mean, it’s…I’ve sold three since the first of this year, and since the tax credit has gone away, that phone has…it has dust on it. You know, it’s tough out there… Heidi Kendall: Okay. Jerry Petasek: And like I said, I don’t think it’s all about condominiums, it has a lot to do with what…how people feel about the economy now. Heidi Kendall: I think this is a really important and legitimate topic of discussion, but I’m going to try to move us forward a little bit towards a vote of some kind. John DiBari, did you have something else? John DiBari: It’s actually going back to a point that you had made that you would be interested in…in actually seeing that language of deed restriction put back in there. And I was just curious if anyone had the appetite to go that direction. I just didn’t want to lose it in the discussion. Heidi Kendall: Well I’m…my confusion remains, because I wasn’t thinking that we would put deed restriction back in... John DiBari: Okay. Heidi Kendall: I thought we would just say that homes that are constructed under this provision would be permanently affordable. I mean, I…and maybe that’s the same thing but I’ve been persuaded that deed restriction…that’s a way of doing this that’s already included. So if there’s some other way of doing it, by just saying these…anything constructed under this provision is permanently affordable housing. Jen. Jen Gress: Yeah, we agree with what you’re saying. Heidi Kendall: Okay, so does mean that we would just…I mean, somebody could make a motion that we just add that phrase in there where it’s appropriate? I mean, I…Laval. Laval Means: Are you just talking about the phrase having to do with permanent affordability? Heidi Kendall: Yes. Laval Means: What I thought I was hearing from Mike, and he can tell me if I’m wrong, is that since your already-established programs at this point aren’t set up for the permanent affordability, it may throw those programs out, they’re not applicable. Mike Barton: Yeah, they are, I was just [Inaudible, speaking from the audience] Laval Means: We can extend it? Mike Barton: [Inaudible, speaking from the audience.] Heidi Kendall: You know about speaking into the mic, Mike. Would you say it in the mic or ask Laval to say it for you? ---PAGE BREAK--- Missoula Consolidated Planning Board Minutes July 20, 2010 Page 18 of 18 Laval Means: I‘m not tracking…adding insuring permanent affordability? Mike Barton: I’m sorry. Yeah, I wouldn’t include the deed restricted language. I would say for residents of duh-duh-duh-duh-duh by…and developed under a subsidy program and permanently affordable for residents whose incomes fall below…or affordable in perpetuity. You know, we understand the intent, that’s what would go in. Heidi Kendall: And permanently affordable for…okay, right? Laval Means: Yeah. Heidi Kendall: Okay. So possibly somebody will make a motion to amend the main motion along those lines. Jerry Petasek: I’ll make the motion to amend the main motion to add permanent affordability as one of the requirements for the ordinance. Heidi Kendall: Okay, we have a motion by Jerry Petasek. Tim Ibey: Second. Heidi Kendall: And it’s seconded by Tim Ibey. Discussion? I’ll support it. Further discussion? Anything? Let’s vote on that, let’s try a voice vote. All in favor, please say “aye.” [All Board members answered “aye.”] Any opposed? [All Board members were silent.] Heidi Kendall: All right, now we’re down to the main motion, unless there’s any other change anybody would like to make. And the motion has been made already. Jerry O'Connell: Yes. Tim Ibey: And… Heidi Kendall: And Seconded. Tim Ibey: And I accept that as a friendly amendment. Heidi Kendall: As a friendly amendment. Excellent. Thank you for keeping me on track. All right, so let’s vote. All in favor of the main motion, please say “aye.” [All Board members answered “aye.”] Any opposed? Tim Skufca: Me. Heidi Kendall: One opposed. So that motion carries and we have recommended to City Council that they adopt this change as we have amended it. It’s twenty after eight, does anybody need to take a break or should we just plow ahead? I’m prepared to plow ahead. Okay, yeah, all right, let’s go. So we are going to move along. And thank you very much, Jen and Laval, and Mike, and Mr. Hendrickson for all your testimony and comments and input and work on that.