Date: January 9, Strategic Housing Committee. IZ Work Group. Legacy Homes Program

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1 City of Whitefish 418 E 2 nd Street PO Box 158 Whitefish, MT Date: January 9, 2019 To: From: Subject: Strategic Housing Committee IZ Work Group Legacy Homes Program At our meeting, we are going to talk about the Legacy Homes Program. We have made considerable progress since our last meeting where we talked indepth about many details. Several decisions were made at the October meeting including: Name: Whitefish Legacy Homes program Quantity: 20% of a project required for a development Applicability: Subdivisions (major, minor), Planned Unit Developments, and Conditional Use Permits for residential developments Target Income Range: 80 to 120% AMI At our January meeting, we would like to talk about: 1. The schedule for adoption of the Legacy Homes program 2. The refinements of the program since October 3. The in lieu fee calculator 4. Zoning for affordability items including incentives, design standards, administrative CUP. The 2017 Strategic Housing Plan called for a series of strategies including: zoning for affordability, flexible development standards in exchange for affordable housing, permitting housing in commercial zonings, and fast-track process for workforce housing (page 23). Use by-right housing above commercial Administrative CUP CUPs New review criteria for multi-family and mixed-use projects that includes: i. Orientation ii. Parking Lot Design iii. Grading/tree retention iv. Open space v. Neighborhood scale 1

2 INTRODUCTION TO THE WHITEFISH LEGACY HOMES PROGRAM SUMMARY SHEET UPDATED Purpose: Facilitate the creation of permanently affordable workforce housing in the City of Whitefish Why: 2016 Whitefish Housing Needs Assessment, adopted by the Whitefish City Council, shows 980 affordable units needed by 2020 (580 rental/400 ownership). The 2017 Strategic Housing Plan, also adopted by the City Council, identified Inclusionary Zoning as one tool to build affordable housing. What is Inclusionary Zoning? A regulation requiring a certain percentage of homes to be deed restricted for long-term affordability. The current draft requires 20% of the total project be deed restricted and targeted toward a certain AMI depending on whether it is a rental or ownership product. What is AMI? AMI is the Area Median Income established by the federal government annually. The AMI for Flathead County for a 2-person household (the D average in Whitefish) is $53,400. This is also referred to as 100% AMI. What is Affordable? Mortgage no more than 33.33% gross monthly income for households making % AMI Rental no more than 30% gross monthly income for households making 60-80% AMI What Types of Development Will be Subject to the WF Legacy Homes Program? Subdivisions (Major & Minor); Planned Unit Development (PUD) involving residential; Conditional Use Permits (CUP) involving multi-family residential Compliance: 1. Provide housing on-site and in-lieu fees (ILFs) for fractional units; 2. ILFs x 1.5; or 3. Other options may be considered. Incentives for Developers/Builders: Reduction in parking, lot sizes, lot width Increase in building height, density, lot coverage A streamlined development approval process for smaller projects and project in the WB-3 For More Information Please Contact the Whitefish Planning Department:

3 WHITEFISH LEGACY HOMES PROGRAM DETAILED OVERVIEW Purpose of Program: To facilitate the creation of permanently affordable workforce housing in the City of Whitefish. 20% = the percent homes deed-restricted for affordability required in a project Applicability Major and minor subdivisions Planned Unit Developments (PUDs) involving residential units Conditional Use Permits (CUPs) involving multi-family residential units Exemptions Subdivision creating only 1 additional lot Accessory apartments Minor waiver of subdivisions Residential units allowed by right D Units that are deed or in other manner restricted for long term occupancy by households that meet some other housing program s eligibility criteria, at the discretion of the City. Pricing Based on needs identified in the 2016 Workforce Housing Needs Assessment, residential ownership units will be targeted for 2-person households earning % AMI, as published annually by the U.S. Department of Housing and Urban Development, and rental units will be affordable to households earning 80% or less AMI. Category 1 Rental Units Serves an income between 60-80% AMI (a range of $820 to $1,094/month for 2-bedroom) with an average income level across all affordable units at 70% AMI ($957/month 2-bedroom). Category 2 Ownership Units Serves an income between % AMI (a range of $185,965 to $278,947 for a 2- bedroom) with an average income level across all affordable units at 100% AMI ($232, bedroom). For More Information Please Contact the Whitefish Planning Department:

4 Characteristics of Deed Restricted Units On-site and interspersed with market rate units Same type of units as rest of development (if a mix, then proportional to rest of development) Owner/renter mix matches rest of development The bedroom mix for the deed restricted units will align with the bedroom mix of the market units provided it is responsive to the needs identified in the Workforce Housing Needs Assessment Phasing of the deed-restricted units will match phasing of the rest of the development The sizes of the deed restricted units may vary in a development, but must meet these requirements: Rental Minimum SF Average SF Studio Bedroom Bedrooms Bedrooms 900 D 1000 Ownership Minimum SF Average SF Studio Bedroom Bedrooms 800 1,000 3 Bedrooms 1,100 1,300 Deed-restricted units will be architecturally compatible with surrounding development; exterior finishes will be compatible and consistent with the materials and finishes used on market rate units. Adequate storage space must be provided. Compliance A Housing Mitigation Plan will be submitted as part of the development permit application; it will detail how the proposed development will meet or exceed the WHP requirements and its contents will become conditions of the development permit approval. The proposal should clearly demonstrate how it meets or exceeds the requirements of the WHP and helps the City achieve its housing goals as established in the Strategic Workforce Housing Plan. Alternatives may be considered on a case-by-case basis. For More Information Please Contact the Whitefish Planning Department:

5 Subdivisions The developer is expected to provide deed restricted workforce housing units on site or pay a fee in lieu of the units area 1.5 times the rate even if the intention is to sell individual vacant. The developer can also offer other options for the council to consider. Fees in Lieu Fees in lieu are allowed for fractions of units when the total number of units required does not equal whole units. For example, an 8-unit subdivision would require 1.6 units. Fees in lieu are allowed by right for the 0.6 unit required. For other than fractional units, fees in lieu of providing Legacy units may be considered at the discretion of the City Council. Fees for units will be assessed at 1.5 times the WLHP rate (the fee would be in lieu of providing 30% affordable units rather than 20%). For example, in a 10- unit subdivision the developer would pay a fee equivalent to three units in lieu of providing two deed-restricted units. Incentives for Meeting and Exceeding the Requirements D As an offset to providing deed-restricted housing as part of a market-rate development, the WHP offers a shopping list of incentives that effectively reduce certain development standards. A project meeting the requirements could make use of the incentives below. Incentive categories include: Reduce parking requirements by 20% Increase building heights by 10% Increase density by 20% Increase percent maximum lot coverage by 10% Reduce minimum lot size by 20% Reduce minimum lot width by 10% Additionally, the Inclusionary Zoning working group is recommending an Administrative Conditional Use Permit for small projects, as recommended in the Strategic Housing Plan. Along with the recommendation for Administrative CUPs, we are proposing more stringent review criteria for multi-family and mixed-use projects. These review criteria would include: building orientation, parking lot design, grading/tree retention, open space and neighborhood scale. For More Information Please Contact the Whitefish Planning Department:

6 Whitefish Legacy Homes Program January 9, 2019 DRAFT Policies and Procedures The Whitefish Legacy Homes Program (Legacy, Legacy Homes, or Legacy Homes Program) is one of many strategies the City of Whitefish will be using to address workforce housing needs. It requires affordable workforce housing to be produced as part of new residential developments as the community grows. The number of Legacy units required is equivalent to 20% of the total number of residential units in a project. Purpose and Need of these Policies and Procedures Whitefish s Need for Housing The Whitefish City-County Growth Policy (2007) identified issues with the availability of affordable housing and lists a goal to ensure an adequate supply and variety of housing product types and densities, at affordable prices, to meet the needs of Whitefish s existing and future workforce. It includes the policy that the City of Whitefish shall always support the development of affordable housing. Recommended actions direct the City, with cooperation and participation of the Whitefish Housing Authority, to investigate mandatory housing programs for workforce housing, as well as review its codes and ordinances for additional opportunities to support and provide for affordable housing. Whitefish s Workforce Housing Needs Assessment (2016) estimated approximately 980 housing units for the workforce are needed by Both ownership and rental housing is needed, with a mix of about 40% ownership (400) and 60% rental (580) units. The Strategic Housing Plan (2017) recommended implementation of mandatory inclusionary zoning with 20% of new residential developments deed restricted for long term affordability for households in the moderate and middle-income ranges. The plan recommends a strong preference for on-site deed restricted housing and indicates fees in lieu of providing deed restricted housing should only be allowed when the development site is not an appropriate location for the affordable workforce housing. Purpose of the Policies and Procedures The purpose of the Legacy Homes Program and these Policies and Procedures is to facilitate the creation of permanently affordable workforce housing in the City of Whitefish. Permanently affordable means the Legacy units are deed restricted for affordability; the deed restriction runs with the land and, therefore, applies to all future owners and renters of the property. Affordable means the mortgage of a Legacy unit is no more than 33.33%, or the rent paid for the Legacy unit is no more than 30%, of a household s gross income. Residential ownership units will be targeted for households earning % of the area median income (AMI) as published annually by the U.S. Department of Housing and Urban Development (HUD); residential rental units will be affordable to households earning 60-80% AMI. Policies and Procedures 1

7 Whitefish Legacy Homes Program January 9, 2019 Guidelines for Developers and Builders Applicability All discretionary applications for residential development including major and minor subdivisions, Planned Unit Developments (PUDs), Conditional Use Permits (CUPs), and Administrative CUPs are subject to the requirements of the Legacy Homes Program. Compliance with the Legacy Homes Program Policies and Procedures is only one of several components of an application for a development permit, as detailed in the City of Whitefish s zoning code and the Growth Policy. Compliance with the Policies and Procedures does not ensure an application for a development permit will be approved by the City. Exemptions Development of residential units that are allowed by right and do not require one of the development permits or approvals listed above are exempt from these Policies and Procedures. Other actions exempt from the Policy and Procedures include subdivision of one lot on which no more than one residential unit will be built; accessory dwelling units, and minor waiver of subdivisions. Additionally, any units deed-restricted or in some other manner restricted for long term occupancy by households that meet a different housing program s eligibility criterion may be exempted from these Policies and Procedures at the discretion of the City. Existing units should not be counted in the total number to which the 20% Legacy Homes rate is applied. For example, in a 100-townhome subdivision where 30 units were permitted and constructed prior to the adoption of the Legacy Homes Program, the 20% Legacy rate would apply only to the permitting and construction of the 70 new units (14 new Legacy units required). Fractional ownership (timeshares) and other short-term rental units are not exempt from the Legacy Homes requirement. Whitefish Legacy Homes Program Requirements When the Legacy Homes Program applies to a residential or mixed-use project, the number of Legacy housing units to be provided is 20% of the total residential units developed. For example, a developer proposing to build 10 single-family homes is required to provide at least two of those units as Legacy Homes; a project proposing 100 townhomes would need to include 20 permanently affordable Legacy townhomes. In-lieu-fees (ILFs) are allowed for fractions of units when the total number of units required does not equal whole units. For example, an 8-unit subdivision would require 1.6 Legacy units. One unit must be provided, but fees in lieu are allowed by right for the remaining 0.6 unit. Deed Restrictions All Legacy housing units are subject to deed restrictions. The requirement for permanent affordability via deed restriction will be placed as a condition on all preliminary plat, PUD and Policies and Procedures 2

8 Whitefish Legacy Homes Program January 9, 2019 CUP approvals. All deed restrictions must comply with these Policies and Procedures and will be in a form provided and approved by the Legacy Homes Coordinator and the Whitefish City Attorney. Housing Affordability Target Income Levels Developers will provide Legacy residential units that are targeted for a range of household sizes and incomes relative to the AMI, which is updated annually by HUD. Since AMI varies by household size, the following assumptions about the number of people in a household are made for Legacy rental and ownership units with different numbers of bedrooms: # People in Household # Bedrooms Rental Units Ownership Units The Legacy rental prices are based on HUD s AMIs (updated annually) and the number of bedrooms using the Montana Board of Housing (MBOH) methodology. If heat, electric, or water utilities are not included in the rental price, the monthly rate will be reduced by 5%, 4%, or 7%, respectively (Appendix X for calculator). Legacy Rental Unit Price Distribution (from MBOH, effective April 1, 2018) AMI 0BR 1BR 2BR 3BR 60% $701 $751 $902 $1,041 70% $817 $876 $1,052 $1,215 80% $934 $1,001 $1,202 $1,388 The developer must provide Legacy rental units that are affordable to households with incomes in the 60-80% AMI range (for a 2-person household, this is an income range of $32,040 to $42,720). The monthly rent for 2-bedroom Legacy units will range from $901 - $1,202 per month. The developer must disperse the Legacy Units throughout that range proportionately such that the average of all 2-bedroom rental Legacy Units must be affordable to households making 70% of AMI (average rent of $1,051/month). For example, a developer building 10 market rate units (2 Legacy units required) may build one unit affordable to households making 60% AMI and one unit affordable to households making 80% AMI, thus achieving the 70% average. A developer building 25 market rate units (5 Legacy units required) may build units affordable to households making 60%, 65%, 70%, 75%, and 80% AMI to spread the units throughout the range and achieve the 70% average. Providing all Legacy units that are affordable to households with an income of 70% AMI is not allowed as this avoids the guideline to spread the units throughout the AMI range proportionately. Policies and Procedures 3

9 Whitefish Legacy Homes Program January 9, 2019 The initial sales price of the Legacy ownership homes will be the lesser of either 80% of the appraised value of the home, or the price calculated in the price distribution table below. Variables that affect the initial target sales price of a Legacy ownership unit include the mortgage interest rate, the amount of the down payment, the term of the mortgage, and the portion of the monthly mortgage payment that goes towards principal and interest. These variables can be adjusted on a project specific basis, or as conditions (such as interest rate) change. A calculator is provided in Appendix X, but for illustrative purposes target price distribution tables are provided below for ownership units. Assumptions include a down payment of 5%, an interest rate of 5%, a 30-year mortgage term, and 80% of total monthly payment goes toward principal and interest. Legacy Ownership Units Initial Sales Price Distribution (if lower than 80% of appraised value) AMI 0BR 1BR 2BR 3BR 80% $162,632 $174,298 $185,965 $197,631 90% $182,961 $196,086 $209,210 $222, % $203,290 $217,873 $232,456 $247, % $223,619 $239,660 $255,702 $271, % $243,948 $261,448 $278,947 $296,447 For ownership units, a developer must provide Legacy Units that are affordable in the % AMI range (or $42,721 to $64,080 annual income for a 2-person household using 2018 AMI data). Based on 2018 AMI data, 2-bedroom Legacy home sales prices would range from $185,965 to $278,947. The developer must disperse the Legacy Units throughout that range proportionately such that the ownership Legacy Units on average are affordable to households making 100% of AMI (the average sales price for 2-bedroom Legacy homes would be $232,456 using 2018 AMI data). For example, a developer building 10 market rate units (2 Legacy Units required) may build one 2-bedroom unit affordable to households making 80% AMI and one 2- bedroom unit affordable to households making 120% AMI, thus achieving the 100% average for 2-bedroom units. Average AMI can only be calculated for Legacy units with the same number of bedrooms since different household sizes (which affect AMI) are assumed by the number of bedrooms in a unit. Using 2-bedroom units again as an example, a developer building 25 market rate units (5 Legacy Units required) may build units affordable to households making 80%, 90%, 100%, 110%, and 120% AMI to spread the units throughout the range and achieve the 100% average. Providing all Legacy Units at the 100% average is not allowed as this avoids the guideline to spread the units throughout the AMI range proportionately. Below is another example of how this can be achieved. Example of Category 2 Units Range of Affordability and Determining the Average Unit 1: Affordable to Household with Income at 120% AMI Unit 2: Affordable to Household with Income at 110% AMI Policies and Procedures 4

10 Whitefish Legacy Homes Program January 9, 2019 Unit 3: Affordable to Household with Income at 90% AMI Unit 4: Affordable to Household with Income at 90% AMI Unit 5: Affordable to Household with Income at 90% AMI Average Affordability = 500% 5 = 100% AMI Characteristics of the Required Legacy Units In general, the type of housing unit (single-family detached or attached, duplex, triplex, townhome, etc.), the proportion of ownership versus rental units, the number of bedrooms offered (not necessarily the square footage) will match the market units offered in a development. If the development provides a mix of unit types, the Legacy units will proportionately match the mix among market units acknowledging that rounding may be required (round down for 0.4 units or less, round up for 0.5 units or more). For example, a development of market rate townhomes must provide townhomes for the Legacy units. Exceptions may be allowed if all market units are single-family detached homes, in which case up to half of the required Legacy units may be attached single family homes (duplexes, triplexes, townhomes). If the project is a subdivision only, the Legacy unit types and numbers of bedrooms provided will be consistent with needs identified in an up to date market study and the performance of previous housing developments (Appendix X). Likewise, the proportion of owner and renter Legacy units in a development will be the same proportion as the market units in that development. If homes are built for individual or fractional ownership, the Legacy homes must be built for sale to, and occupancy by, qualifying households. If the market rate units are rental units, rental units must be provided to comply with the requirements of the Legacy Housing Program. In mixed-use projects, the ownership/rental mix for the required Legacy units should proportionately match the free market units. The mix of the number of bedrooms offered in Legacy units will mirror the mix of bedrooms offered in the market rate units, provided the mix is responsive to the needs and demographics of Whitefish residents as established in an up to date market study and the performance of previous housing developments. The City reserves the right to adjust the mix once some Legacy Homes have been built in the community and the performance of various bedroom mixes established. Three-bedroom units may be allowed to satisfy the Legacy Homes requirement for market units with four or more bedrooms. The sizes of the Legacy units may vary in a development, but no unit may be smaller than the minimum square footage (SF), and the size of all units must at a minimum average the SF, listed below. Rental Minimum SF Minimum Average SF Studio Bedroom Bedrooms Policies and Procedures 5

11 Whitefish Legacy Homes Program January 9, Bedrooms Ownership Minimum SF Minimum Average SF Studio Bedroom Bedrooms 800 1,000 3 Bedrooms 1,100 1,300 When phased construction is planned for a development, the proportion of Legacy units will be constructed in proportion to the market rate units constructed during each phase of development. In a 10-unit development in which five units will be constructed in each of two phases, one Legacy unit must be constructed in each phase. Unit Quality and Design Legacy Homes will meet the requirements of the City of Whitefish land development regulations and building codes. Legacy units will be architecturally compatible with surrounding development. Exterior finishes will be substantially compatible and consistent with the materials and finishes used on the market rate units. Adequate storage space must be provided. Designs that reduce utility costs and enhance the long-term affordability of the Legacy Homes are desired; conversely, amenities that are costly to operate and maintain are discouraged. The design must address livability, maintenance, health, safety, climate, lifestyle, and the needs of the types of households the units are intended to serve. Balconies, decks and private yards similar to the market rate units are encouraged to enhance livability of the Legacy units. Compliance Legacy Homes will be built on site with market rate units and will be distributed throughout the development among the market rate units. Alternatives such as off-site development or ILFs may be considered at the discretion of the City Council but are not guaranteed; however, the proposal presented in the Housing Mitigation Plan should clearly demonstrate how an alternative meets or exceeds the requirements of the Legacy Homes Program and helps the City achieve its housing goals as established in the 2017 Strategic Housing Plan. Purchasing an existing free market unit and deed restricting it is not an allowed method to achieve compliance with the Legacy Homes Program requirements; only new units will be used to satisfy the Legacy Homes Program requirement. If a developer wishes to acquire, buy down and rehabilitate existing units, this may be accomplished through other strategies. Subdivisions The developer is expected to provide Legacy Homes on site even if the intention is to sell individual vacant lots. The developer will be required to provide a financial guarantee equivalent to 150% of the fee in lieu cost for each unit required that will be released upon Policies and Procedures 6

12 Whitefish Legacy Homes Program January 9, 2019 issuance of the certificate of occupancy for the deed restricted unit. Alternatives may be considered as described below. Alternatives that May Be Considered The expectation is that 20% of the housing units produced in a development will be Legacy Homes and the Legacy Homes will be constructed on site and interspersed with the market rate residential units. There may be situations when the Legacy Home units are either not compatible with other uses on the proposed development site or the development site is not appropriate for Legacy Homes due to distance from services or characteristics of the property that would make affordability for workforce housing impractical. In these situations, the City may consider alternative means of compliance with the Legacy Homes Program; however, any alternatives would be approved at the discretion of the City Council and are not guaranteed. High levels of property tax, high homeowner s association dues, a predominance of short-term rental use, or a location far from schools, transit, or shopping are potential characteristics that would support a developer s proposal for alternative means of compliance with Legacy Homes Program requirements. Potential alternatives are discussed below; the developer also may propose, at his or her own risk, an alternative that is not listed below. Off-Site Housing In situations where the provision of the Legacy units off-site is preferable to providing units onsite, an off-site location may be considered (but not guaranteed) at the discretion of the City Council if the developer can demonstrate how the alternative option meets the City s housing goals established in the Strategic Workforce Housing Plan better than the on-site requirement. When Legacy units are provided off-site from market rate units, unit size, quality, design, and construction shall be determined by the Housing Mitigation Plan approved by the City of Whitefish as part of the development approval process. Off-site locations that result in a concentration of Legacy Homes in one area of the City will not be approved. The ratio of Legacy units required relative to market rate units in a project remains 20:80 when the off-site option is used. For example, a development to build 10 housing units will be required to have 2 of those 10 as Legacy Units (20:80 ratio achieved). If the developer is to build 10 on-site market rate units and 2 off-site Legacy Units (12 total), the developer will need to pay an ILF for 0.4 Legacy Units as 12 units built requires 2.4 Legacy Units (20:80 ratio achieved). In Lieu Fees For other than fractional units, fees in lieu of providing Legacy units (ILFs) will be considered (but is not guaranteed) at the discretion of the City Council when the proposed development location and building off-site are both inappropriate for Legacy Homes. Fees for units will be assessed at 1.5 times the Legacy Homes Program rate (the fee would be in lieu of providing 30% affordable units rather than 20%). For example, in a 10-unit subdivision the developer would pay a fee equivalent to three units in lieu of providing two Legacy units. Policies and Procedures 7

13 Whitefish Legacy Homes Program January 9, 2019 Fees will be calculated for rental and ownership categories and will be updated annually upon publication of AMI s for Flathead County by HUD. An administrative charge of 10% will be included to cover the costs associated with the furtherance of affordable housing initiatives. Clustering There may be special circumstances when clustering the Legacy units on the development site will be considered if clustering will enhance a sense of neighborhood, the housing provided would be close to trails, bus stops, or places of employment, or the clustered Legacy Homes will otherwise exceed the requirements of the Legacy Homes Program. If Legacy units are not compatible on the proposed future development site, it is the responsibility of the developer or property owner to propose alternatives acceptable to the City. Housing Mitigation Plan A Housing Mitigation Plan will be submitted as part of the development permit application to demonstrate how the project will comply with the Legacy Homes Program. The approved Housing Mitigation Plan will be recorded as a condition of the development permit or subdivision approval. Any amendment of the Housing Mitigation Plan requires approval of the Legacy Homes Coordinator and will be recorded. The Housing Mitigation Plan will contain the following information, as applicable: Total number of market rate and Legacy units Square footage of total development and each unit Details regarding how the requirements of the Legacy Homes Program will be met, including unit types, sizes, number of bedrooms, target income category, initial sales prices or rental prices The incentives to be used in the project from among those offered below Location of Legacy units within the project by type and size; justification for clustering of Legacy units, if proposed Proposed production schedule of market rate and Legacy units, including issuance of building permits Any proposed alternative methods of compliance with these Policies and Procedures, demonstrating how the alternative meets or exceeds the Legacy Homes Program requirements and helps the City achieve its housing goals as established in the Strategic Workforce Housing Plan Standardized deed restriction provided by the City Any other information deemed relevant by the Legacy Homes Coordinator Incentives for Meeting and Exceeding the Legacy Homes Requirements As a partial offset to the cost of providing Legacy housing as part of a market-rate development that requires a CUP, the Legacy Homes Program offers incentives that effectively reduce certain development standards by-right (below). The developer providing the required 20% Legacy units in a development receives the following incentives: Policies and Procedures 8

14 Whitefish Legacy Homes Program January 9, 2019 Reduce Parking Requirements by 20% Increase Maximum Building Height by 10% Increase Maximum Lot Coverage by 10% Increase Density by 20% In the General Business district (WB-3) downtown, the development standards are such that the incentives listed above do not partially offset the cost of Legacy housing. Instead, projects providing the required 20% Legacy units will be processed through an administrative CUP process rather than the normal CUP process. The streamlined process provides adjacent property owners with notice of the proposed project and an opportunity to submit comments but does not include public hearings at Planning Board or City Council meetings. As with a standard CUP, projects approved through the administrative CUP process must meet Council approved review criteria. The administrative CUP process results in a time savings relative to the standard CUP, which in return reduces carrying costs for the developer. The land developer who is subdividing and providing either 20% Legacy units on-site or a 30% ILF will receive the following incentives: Reduce Lot Size by 20% Increase Density by 20% Reduce Lot Width by 10% Increase Lot Coverage by 10% Should the developer need or want reductions in these standards that go beyond what is offered by-right, or in other development standards, the request would need to be made through the PUD process and would therefore require City Council approval. Policies and Procedures 9

15 January 9, 2019 Whitefish Legacy Homes Program: Administrative Procedures The purpose of these administrative procedures is to 1) establish procedures for the City of Whitefish, staff, boards, or committees, the Legacy Homes Coordinator, and any agent of the City (Whitefish Housing Authority) to implement and administer the requirements of the Whitefish Legacy Homes Program and 2) provide the technical procedures to deliver the affordable housing required by the Whitefish Legacy Homes Program. Chapter X contains all relevant tables, which may be updated on an annual basis. Responsibility for Administration Legacy Homes Coordinator/Whitefish Housing Authority The Legacy Homes Coordinator and the Whitefish Housing Authority (WHA) will be responsible for the following functions regarding administration of the Whitefish Legacy Homes Program (Legacy, Legacy Homes, or Legacy Homes Program): 1. Facilitate flow of information and communication among City staff, WHA, and applicants for development. 2. Set, review, adjust and publish Legacy Home rental rates and housing prices based on available AMI and other variables for Flathead County. 3. Review and approve deed restrictions in coordination with Whitefish City Attorney. 4. Review the individual Housing Mitigation Plans in coordination with City staff to determine if each plan can be recommended for approval by the City Council. If plans are found to be deficient, the Legacy Homes Coordinator and City staff will work with the developer to resolve deficiencies. 5. Track available and in progress Legacy Homes 6. Manage all prior affordable housing agreements and the prior affordable housing program. 7. Act as the primary resource to prospective and active Legacy Home buyers and renters in the Legacy Housing Program by a. Developing and implementing public education and information activities including workshops, newsletters and public presentations. b. Providing technical assistance. c. Screening and qualifying households eligible to purchase or rent Legacy Home units. d. Maintaining lists of pre-qualified households and matching qualified households with available housing units. e. Assisting with marketing of Legacy rental and ownership homes. f. Monitoring compliance of buyers and renters with Legacy Homes eligibility criteria. Administrative Procedures - 1

16 January 9, 2019 g. Providing information to home purchasers and owners regarding allowed appreciation of deed restricted units and determining resale values of Legacy Homes. h. Determining allowable annual increases in rent for Legacy Homes based on Montana Board of Housing (MBOH) Planning and Building Department This City department or its designees will be responsible for the following functions regarding administration of the Legacy Homes Program: 1. Require applicants to prepare a Housing Mitigation Plan concurrently and as part of the development review process. 2. Work with applicants to ensure the Legacy Homes proposed in the Housing Mitigation Plans follows the Legacy Homes Policies and Procedures and help the City meet its goals for affordable workforce housing as outlined in the 2017 Strategic Housing Plan. 3. Recommend to City Council approval or disapproval of Housing Mitigation Plans, including proposals for ILF contributions, clustered units, and off-site housing units. 4. Monitor developer compliance with Legacy Homes Programs regulations through completion of construction, and in the event of noncompliance, requesting that the City Manager direct action by appropriate departments regarding the department s responsibility for administrating the Legacy Homes Program. City Council The City Council will be responsible for approving Housing Mitigation Plans as part of the standard development permitting process. Council is also responsible for adopting any updates to these Policies and Procedures including changes to AMI or affordable rates and evaluating whether the housing goals are being met. Additionally, Council appoints the seven-member Board of Commissioners that governs the WHA. Housing Mitigation Plan Housing Mitigation Plans are required by the City for all residential developments described in Section X of the Legacy Homes Program Policies and Procedures and XX-1, Whitefish Legacy Homes Program regulations. Housing Mitigation Plans will be prepared and submitted by the developer concurrently with the application request for the development permit (subdivision, CUP, PUD, etc.). Once projects are approved by City Council, the details described in the Housing Mitigation Plan become conditions of the development permit approval. Any amendment of the Housing Mitigation Plan requires approval of the Legacy Homes Coordinator and will be recorded. A Housing Mitigation Plan will include all the following, as applicable: Total number of market rate and Legacy units Square footage of total development and each unit Administrative Procedures - 2

17 January 9, 2019 Details regarding how the requirements of the Legacy Homes Program will be met, including unit types, sizes, number of bedrooms, target income category, initial sales prices or rental prices The incentives to be employed by the project (Section XX). Average lot size and square footage of market rate and Legacy units Location of Legacy units within the project by type and size; justification for clustering of Legacy units, if proposed Proposed production schedule of market rate and Legacy units, including issuance of building permits Any proposed alternative methods of compliance with these Policies and Procedures, demonstrating how the alternative meets or exceeds the Legacy Homes Program requirements and helps the City achieve its housing goals as established in the Strategic Workforce Housing Plan Standardized deed restriction provided by the City Provisions granting access to the City, Legacy Homes Coordinator, or WHA to inspect records and development sites and the opportunity to interview Legacy Housing buyers or tenants Any other information deemed relevant by the Legacy Homes Coordinator Pre-Submission Conference Prior to submitting any development request to which the Legacy Homes Program applies, the applicant will schedule a pre-submission conference with Planning and Building Department staff and the Legacy Homes Coordinator regarding the Legacy Homes requirements. Review of Housing Mitigation Plan After submittal, each Housing Mitigation Plan will be reviewed by staff of the Planning and Building Department, in coordination with the Legacy Homes Coordinator. After review, staff will either a) accept the Mitigation Plan if it meets the Legacy Homes Program requirements and make a recommendation to City Council for approval of the Plan or b) not accept the Housing Mitigation Plan if it does not meet the Legacy Homes Program requirements and refer it back to the applicant. In this case, Planning staff will make written comments regarding the plan s deficiencies. If the identified deficiencies are not adequately addressed by the applicant, Planning staff will recommend to City Council the development permit be disapproved. Resubmittal of Housing Mitigation Plans If a Housing Mitigation Plan has been disapproved, an applicant may resubmit a development permit application with a revised plan addressing and correcting the deficiencies identified by staff. Revisions to Housing Mitigation Plans After Approval If the applicant wishes to modify or amend an approved Housing Mitigation Plan due to changes in the development proposal as it proceeds through the development review process Administrative Procedures - 3

18 January 9, 2019 or for other reasons, the developer must submit a new or amended Housing Mitigation Plan for approval by City Council. If the changes are minor and not substantive, Planning staff may approve the modification administratively. Acceptance of Development Proposals Subject to Legacy Homes Program No development proposal subject to the Legacy Homes Program requirements may be heard by City Council unless a Housing Mitigation Plan found to comply with the Legacy Homes Program and accepted by Planning staff has been submitted as part of the development application. Noncompliance with Conditions of Housing Mitigation Plan Failure to comply with the approved Housing Mitigation Plan is a failure to comply with the conditions of the development approval and may result in the revocation of the development approval. Information for Developers of Legacy Homes Required Number of Legacy Homes in a Development If a developer proposes to subdivide residential lots or construct residential housing, then twenty percent (20%) of the gross number of residential lots or housing units in a development will be Legacy Homes. The applicant for a development permit is required to produce the Legacy Homes on-site. The type of units to be constructed will be proposed in the Housing Mitigation Plan and approved by Council. In developments where both Legacy and market rate residential units will be constructed, the balance of ownership versus rental units, the type of units (single family attached, detached, or multi-family), and the number of bedrooms offered per unit will be proportional between the Legacy and market rate units. For example, a proposal to build eight single-family attached townhomes would require 8 x 0.2 = 1.6 Legacy townhomes for ownership. A proposal to build five single-family attached townhomes and eight rental units would be required to provide one Legacy ownership townhome and 1.6 Legacy rental units. Providing Fractions of Ownership or Rental Units When the calculation to determine the number of units required by Legacy Homes Program, as described above, results in a fraction of a home, an in-lieu-fee (ILF) may be paid for the fraction. To calculate the fee, multiply the number of proposed units by 20% and the resulting number is the number of fractional units required. The resulting number is multiplied by the associated rate provided in Appendix X. Appendix X provides ILF schedule and methodology for calculating the fee. If the calculation results in a whole number and a fraction (ie., the 1.6 described above), the whole number resulting from the formula is the number of Legacy units required be constructed and the remaining fraction may be satisfied with the ILF. The fee will be the associated rate from Appendix X multiplied by the remaining fraction. Administrative Procedures - 4

19 January 9, 2019 The ILFs are not and will not be used as an alternate means of compliance, except as outlined in Section XX. The fees will be paid prior to issuance of a building permit or recording of a final subdivision plat. The proceeds of the fee will be credited to the WHA Affordable Housing Fund approved by the City Council. Category 1 Rental Housing Legacy Home Program rental units will be marketed, leased, and occupied according to these criteria: Eligible Renters Income Renters of Legacy Home rental units will have household incomes that do not exceed the defined incomed ranges set forth in Section X, except as otherwise provided for in this Section. WHA will screen rental applicants for income and residency eligibility and maintain a list of eligible renters for IZ units. Priority will be given to households with at least one household member who is employed in the City of Whitefish, then to those with members employed within the zip code area, and finally to those with employment outside the zip code area. Liquid Assets Eligible renters must not have more than 2 times their annual income in liquid assets. Rental Rates The monthly rent of a Legacy Home rental unit being rented pursuant to a Housing Mitigation Plan is provided in Appendix X, Legacy Home Rental Rate Schedule. There will be no side agreement obligating the Legacy tenant to pay the property owner for any add-on features or services. Security deposits may not exceed the sum of two months rent at the Legacy Home rental rate for a unit and in no case can the security deposit be a larger percentage of rent than what is required of market rate units. Establishment of IZ Rental Rates Legacy Home rental rates are based on Area Median Incomes (AMIs) as established by HUD using Montana Board of Housing s (MBOH) methodology; the calculator is provided in Appendix X. Rental housing is affordable when housing expenses (including payment and utilities) are no more than 30% of a households income. Since AMI varies by household size, the following assumptions about the number of people in a household are made for Legacy rental units with different numbers of bedrooms: # Bedrooms # People in Household Administrative Procedures - 5

20 January 9, 2019 The price provided in the table below assumes the landlord pays all utilities. If heat, electric, or water utilities are not included in the rental price, the monthly rate will be reduced by 5%, 4%, or 7%, respectively (Appendix X for calculator). Prices will be updated annually following HUD s updates to AMI numbers. Legacy Rental Unit Price Distribution AMI 0BR 1BR 2BR 3BR 60% $701 $751 $902 $1,041 70% $817 $876 $1,052 $1,215 80% $934 $1,001 $1,202 $1,388 Adjustment of IZ Rental Rates The Legacy Homes Coordinator will review and adjust the rent in each income range and for each unit size based on annual updates to AMI and using the MBOH methodology. The Legacy Homes Coordinator will publish the new rents immediately upon adoption of a Resolution approved by the City Council. Minimum Requirements for Legacy Home Rental Units Legacy Home rental units will be built to conform to local, state and federal laws according to the following guidelines concerning design, equipment, and physical features. Floor size Legacy Home rental units will be constructed according to the minimum and average requirements for bathrooms and square footage of habitable residential space in the table below. The size of each unit type may vary within a development, but no unit will be smaller than the minimum size, and the size of all units by type must meet the average size shown below. Unit Type Minimum Bathrooms Minimum Square Feet Average Square Feet of all units/type in development 0 Bedroom (Studio) Bedroom Bedroom Bedroom Minimum floor areas of habitable residential space include partitions, closets, heated utility rooms, halls and stairways but exclude attics, porches, unfinished basements, garages and unheated storage space. Equipment and hookups Each rental unit will include a new kitchen range and refrigerator; hookups for a clothes washer, dryer, or laundry on site. Administrative Procedures - 6

21 January 9, 2019 Design and location The proposed design and location of the Legacy Home rental units within the development will be reviewed and accepted by Planning staff, in consultation with the Legacy Homes Coordinator, and approved by City Council in order to achieve spatial integration with, dispersion throughout and compatible exterior architectural and landscaping appearance with the market units in the development. Mix of Unit Types The mix of Legacy Home rental units will match the mix of market rate rental units but may be modified by the City to meet the needs identified in the Workforce Housing Needs Assessment, Strategic Housing Plan, or any housing needs identified subsequent to those documents. Marketing to and Certifying Tenants for Legacy Rental Units The WHA will certify tenants who are eligible to rent Legacy Home rental units, will maintain a list of eligible tenants and will notify developers or property managers when units become available. Marketing of the Legacy Units will be the responsibility of the developer or property manager; the WHA may assist with marketing the Legacy Units but will not be responsible for marketing. Reviews, background checks, decision to rent or not rent, execution of rental leases, and the day to day management of the rental units will be the responsibility of the developer/property manager or their associate or successor. The WHA will establish and maintain an equitable process for allocating rights to lease the rental units, including waiting lists where demand exceeds supply. Preference will be given to households with at least one household member employed within the City of Whitefish, then to those with a household member employed with the zip code area, and finally to those with employment outside the zip code area. Vacancies and Changes in Income After Occupancy If a tenant vacates a Legacy Home rental unit, the property owner must rent the unit to a tenant in the same income range as determined through the WHA pre-qualification process. If there are no pre-qualified tenants on the WHA list, the property owner may rent that unit at market rates, however, the next available market rate unit will then be deemed a Legacy Unit. Certification of income after occupancy The income of tenants will be recertified by the WHA upon lease renewal, or no more often than once per year. Should the income of a tenant have increased such that the tenant no longer meets the income level criteria of that particular Legacy Home, the tenant may remain in the unit, but the property manager may increase the rent to match the increased income of the tenant, whether it be at a higher, but still Legacy Home qualifying level, or at a market-rate level. In the market rate situation, the property manager must make the next unit available in the development to new tenants who qualify for the Legacy Homes Program at the same AMI level as the original tenant. Administrative Procedures - 7