County of Loudoun. Department of Planning and Zoning MEMORANDUM

Transcription

1 County of Loudoun Department of Planning and Zoning MEMORANDUM DATE: TO: FROM: Loudoun County Planning Commission Kate McConnell, AICP, Project Manager, Zoning Administration Ricky Barker, AICP, Director, Planning and Zoning Mark Stultz, AICP, Zoning Administrator, Planning and Zoning Chris Mohn, AICP, Deputy Zoning Administrator, Planning and Zoning SUBJECT: ZOAM , Affordable Dwelling Unit Program Supplemental to the Planning Commission July 26, 2016 Public Hearing Staff Report PURPOSE The purpose of this supplemental memo is to provide the Planning Commission with the following additional information regarding the subject Zoning Ordinance Amendment (ZOAM) that was not available in time for inclusion in the Public Hearing Staff Report: 1) additional background related to the Resolution of Intent to Amend (ROIA); 2) agency referral comments regarding the draft text included in Attachment 2 of the Public Hearing Staff Report; 3) a summary of the outstanding issues identified to date; and 4) an updated staff analysis of the Zoning Ordinance Criteria for Approval of text amendments. The purpose of ZOAM is to amend regulations of the Revised 1993 Loudoun County Zoning Ordinance (the Zoning Ordinance ) applicable to the Loudoun County Affordable Dwelling Unit (ADU) program that may conflict with the affordable housing funding assistance requirements of the Virginia Housing Development Authority (VHDA), the U.S. Department of Housing and Urban Development (HUD) and other state and federal housing programs. The overall objective of ZOAM is to increase opportunities for providing affordable housing to assist with addressing this issue in the County. STAFF RECOMMENDATION Staff recommends the Planning Commission forward ZOAM to a work session for further discussion and to address outstanding issues. The referral agencies identified several issues with the proposed text amendment as they relate to consistency with the County s Housing Policies and the Purpose of Article 7 of the Zoning Ordinance. The outstanding issues are summarized below.

2 Page 2 SUGGESTED MOTIONS 1. I move that the Planning Commission forward ZOAM , Affordable Dwelling Unit Program, to a work session for further discussion. OR 2. I move that the Planning Commission forward ZOAM , Affordable Dwelling Unit Program, to the Board of Supervisors with a recommendation of approval. OR 3. I move an alternate motion. BACKGROUND The ROIA adopted by the Board of Supervisors on June 23, 2016 was in response to a request from affordable housing developers in the County to eliminate conflicts between the requirements of the County s Zoning and Codified Ordinances and State or Federal programs as they relate to the provision of affordable housing. The ROIA initiated amendments to the Zoning and Codified Ordinances that would assist in facilitating the process for providers of affordable housing to obtain funding from VHDA, HUD, or other State and Federal programs. The effect of this ZOAM would also facilitate the ability of affordable housing providers to use affordable housing created with funding assistance from VHDA, HUD, or other State and Federal programs to meet the County s ADU Program requirements. Attachment 1 of the Supplemental Memo provides the Board s Action Item related to the ROIA. The Low Income Housing Tax Credit (LIHTC) and HUD 221(d)(4), are the two most frequently identified affordable housing funding assistance programs that have limited use in the County because of conflicts with the County s ADU Program requirements in the Zoning Ordinance and Codified Ordinance. The LIHTC program provides financing for the construction of affordable multifamily rental housing. It is a competitive program, with VHDA serving as the state agency awarding LIHTCs for qualified affordable housing projects. The HUD 221(d)(4) program provides financing for construction or rehabilitation of rental or cooperative multifamily projects. A HUD 221(d)(4) project does not have income requirements for residents. The inconsistencies that HUD 221(d)(4) programs have with the County s ADU Program requirements will be addressed with revisions to the Codified Ordinance. The following conflicts between the LIHTC and HUD 221(d)(4) programs and the County s ADU Program requirements have been identified:

3 Page 3 Qualifying Household AMI A LIHTC project requires a minimum of 20% of the units be affordable for households earning 50% Annual Median Income (AMI) or that a minimum of 40% of the units be affordable for households earning 60% AMI, whereas the County s ADU Program only allows units to be rented to households with incomes between 30 and 50 percent AMI. Therefore, a LIHTC project that provided a minimum of 40% of the units affordable to households earning 60% AMI would not meet the requirements of Article 7 unless they had the required number of ADUs at 50% AMI. Interspersion Requirement State and Federal rental housing finance programs, such as LIHTC, generally provide financing for affordable rental units to be provided in a multifamily rental building subject to the program. Article 7 requires affordable units to be interspersed throughout a development in proportion to the unit types in the development, e.g. 12.5% of single family attached or detached units and 6.25% of multifamily units must be affordable. This results in a combination of for sale single family units and rental multifamily units in a development that has a mix of unit types. If a LIHTC project (100% rental units clustered in multi-family buildings) were used to provide affordable units in a development with a required mix of unit types it would not meet the requirements of Article 7, as it would not provide a range of unit types and they would not be interspersed throughout a development. Covenant Release Currently, Chapter 1450 of the Codified Ordinance requires a Right to Cure notification and a foreclosure date notification within a specific timeframe for foreclosures or deed-in-lieu of foreclosure. The required notifications conflict with the requirements for State and Federal rental housing finance programs, such as LIHTC and HUD 221(d)(4). Revisions to the Codified Ordinance to remove this covenant requirement upon foreclosure would also increase the opportunities to use State and Federal affordable housing funding programs. Codified Ordinance revisions are considered by the Board of Supervisors and will not be reviewed by the Planning Commission. When considering the draft ordinance revisions, it is also important to understand the status of the County s ADU Program. The Department of Family Services (DFS) reported that the County s ADU Program has a high demand for both for sale and rental units. At the end of May 2016, the County had 358 households on a waiting list for for sale ADUs; between June 13 and July 8, DFS received 117 applications for the for sale program, and last week received 27 application packages. The main objective of the for sale program is to provide affordable housing to first time homebuyers in Loudoun County. Currently, 100 households are on the rental ADU waiting list. The County s rental ADU Program has 320 available units, but has not had a significant number of new units added to the program in the recent past. The program has a very low vacancy rate. It has served approximately 1,700 households since Rental ADU units are permitted to float in a multifamily building, meaning that as long as the same number of

4 Page 4 units of the same size, floorplan and number of bedrooms are available for rental ADUs, the multifamily building is in compliance with the rental ADU Program. Staff also notes that George Mason University Center for Regional Analysis is currently preparing a Housing Needs Assessment (HNA) for the County with completion anticipated by December The assessment s findings will clarify, and may identify additional, affordable housing needs in the County. AGENCY REFERRALS Since the Planning Commission received the Staff Report, Staff received referral comments on the draft text proposed for ZOAM that is included as Attachment 2 to the Staff Report. The draft text amendment was sent for review and comment to the Department of Planning and Zoning Community Planning Division (Community Planning), the Department of Family Services (DFS), the Affordable Dwelling Unit Advisory Board (ADUAB), the Zoning Ordinance Action Group (ZOAG), and the County Attorney s Office. The group met on July 11, 2016 to discuss the draft text and identify issues with the proposed language. Community Planning and ADUAB provided written comments that are included as Attachment 2 to the Supplemental Memo. In addition, Staff summarized the referral meeting comments from DFS and ZOAG and included them in Attachment 2. The County Attorney s Office will continue to provide guidance for future versions of the draft text, as well as feedback as to whether the proposed revision to interspersion requirements comply with Federal Fair Housing Laws. ISSUES FOR CONSIDERATION Staff has consolidated the referral comments into the issues summarized below. Staff recommends the Planning Commission forward ZOAM to a work session for further discussion of these issues and other comments and issues that may be received during the public hearing. In preparation for the Planning Commission work session, Staff will provide recommendations to address each issue, along with revised draft text to reflect the Staff recommendations, for the Planning Commission s consideration. 1. Lack of an Income Requirement: Community Planning, DFS, ZOAG, and ADUAB noted the lack of an income requirement for certain projects using Federal, State, or local programs, which is needed to ensure that housing opportunities are created for moderate income households consistent with the Purpose of Article 7 and the County s Housing Policies. 2. Entity Designated to Review and Approve Federal, State, or Local Programs: DFS, ADUAB, and ZOAG recommended that the entity that should review and approve substitute Federal, State, or local programs should be ADUAB rather than the Director of family Services.

5 Page 5 3. Lack of an Interspersion Requirement for Affordable Units: Community Planning, DFS, ZOAG, and ADUAB identified a concern with the loss of the unit interspersion requirement of Article 7 (Section 7-104(C)) for residential projects complying with Federal, State, or local affordable housing programs. Consolidation of affordable units is possible considering the financing structure, unit type, and building management requirements for Federal, State or local affordable housing programs. The Article 7 affordable unit interspersion requirement is consistent with the County s Housing Policies and may ensure compliance with Federal Fair Housing Laws. Staff will consult with the County Attorney s Office and/or the Department of Family Services to determine whether the proposed revisions to the interspersion requirements comply with Federal Fair Housing Laws. 4. Potential Loss of Affordable For Sale Units and a Mix of Unit Types: Community Planning, DFS, ZOAG, and ADUAB identified a concern that the proposed amendment could result in the loss of affordable for sale units, which are an important component of the County s ADU Program. This would occur in developments with a mix of unit types, e.g. single family detached and/or attached and multifamily. It could also incentivize revisions to approved single family developments, particularly in the R-8 ADU Zoning District, to include a multifamily component to the development with the purpose of providing all required affordable units in this multifamily component. It is important to note that one of the purposes of the ADU requirements is to promote the development of a full range of housing choices and requiring the construction and continued existence of dwelling units which are affordable for purchase and for rent. 5. Lack of an Architectural Compatibility Requirement Community Planning noted that the amendment, as currently proposed, would remove the architectural compatibility requirement for affordable housing projects complying with Federal, State, or local affordable housing programs. This has the potential to exacerbate the interspersion issue by creating physical disparities between the affordable units and market rate units and enabling the affordable units to be clearly distinguishable from the market-rate counterparts. This may create negative perceptions of affordable housing, negatively affect a community s residential market due to negative connotations of the program, or sacrifice program participant privacy. 6. Loss of Cash Contribution Associated With SFD Modifications DFS questioned whether the amendment, as currently proposed, would create a situation wherein the modification provision for affordable single family detached units that allows for cash in lieu of the required SFD ADUs would not apply to affordable housing projects complying with Federal, State, or local affordable housing programs, thereby diminishing the County s Housing Trust fund (Section 7-108(A)(3)).

6 Page 6 In addition to the issues summarized above, which were identified through the agency referral process, staff has also received comments on the proposed amendment from an affordable housing provider. For the Planning Commission work session, Staff will provide a summary of all comments and issues received by the public, including the comments received during the public hearing, and will provide a Staff response and recommendation for the Planning Commission s consideration. ZONING ORDINANCE CRITERIA FOR CONSIDERATION Section (D), Text Amendments, of the Revised 1993 Loudoun County Zoning Ordinance states for an amendment of the text of this Ordinance, the Planning Commission shall consider the following matters: Standard Whether the proposed text amendment is consistent with the Comprehensive Plan. Analysis Standard Analysis The County s policies support the Board s resolution to eliminate conflicts between the County s ADU program and affordable housing funding assistance requirements of VHDA, HUD and other State and Federal housing programs. However, as drafted, the proposed text amendment is not fully in conformance with the policies of the Revised General Plan (Plan). Staff has made recommendations that would address issues of inconsistency between the draft text amendment and the County s Housing Policies of the Plan. Whether the proposed text amendment is consistent with the intent and purpose of this Ordinance. The intent of the Zoning Ordinance is defined under Section 1-102, and states: This Ordinance is enacted in order to promote the health, safety and welfare of the residents of Loudoun County and to implement the Loudoun County Comprehensive Plan. Section 1-102(N) specifically states it is designed to Provide for and promote affordable housing for the County residents to meet the intent of the Ordinance. The purpose of Article 7 is to promote the development of a full range of housing choices to persons of moderate income (Section 7-101). The proposed amendments would achieve this basic purpose. However, as drafted the amendments are not wholly consistent with the purpose of Article 7 as the proposed substitution of Federal, State and local programs for the County s ADU Program would permit income levels outside the purpose of the Ordinance and could cause the loss of affordable unit interspersion and variety of affordable unit type. Staff has made recommendations that would address issues of inconsistency between the draft text amendment and the purpose of Article 7.

7 ATTACHMENTS 1. Board of Supervisors Action Item, dated June 23, Referrals a. ADUAB b. Community Planning c. Department of Family Services d. ZOAG ZOAM , Affordable Dwelling Unit Program Page 7