City of Bellingham Redevelopment Incentive Recommendations at a Glance TARGETED DEVELOPMENT FORMS AND CITY WIDE ECONOMIC INCENTIVES KEY X Currently applicable Y Recommended TBD Further discussion or information needed Not possible given statute or conditions INCENTIVE NOTES AFFORDABLE HOUSING FOR LOW INCOME HOUSEHOLDS Affordable Housing Funding Programs X Additional funding consideration provided for projects along transit corridors, in urban villages, or within CDBG target areas. Density Bonus Y For demonstration projects that provide a 50% mix of affordable and market rate units. Expedited Permitting Y Consider after the completion of LEAN Kaizen events and upgrade of permitting software. Park Impact Fee (PIF) Reduction Y Waive up to 80% for qualified projects Permit Fee Reductions Y Waive administrative fees for qualified projects Pre Approved Plans X Registered Plan program available for all residential projects Reduced Parking Requirements Y City wide for qualified affordable housing projects School Impact Fee (SIF) Reduction X Work with School District to adopt qualifying criteria for standard waiver or reduction. System Development Charge (SDC) Reduction Y Waive for qualified projects Transportation Impact Fee (TIF) Reduction Y Waive for qualified projects
INNOVATIVE HOUSING TYPES (INFILL TOOLKIT, ADU's) Density Bonus Y If BMC 20.28 is updated, evaluate a density bonus provision in appropriate areas, considering the neighborhood character. Expedited Permitting Y Consider after the completion of LEAN Kaizen events and upgrade of permitting software. Infill Toolkit Innovative Housing Forms Y Amend to clean up errors and streamline review process; consider an incentive package if market doesn't respond. Park Impact Fee (PIF) Reduction Y Eliminate for ADU's Permit Fee Reductions Y Eliminate redundant fees for infill toolkit projects Pre Approved Plans Y Evaluate providing for ADU's during review of regulations, and for infill toolkit housing types if BMC 20.28 is amended. Reduced Parking Requirements X In place for infill toolkit projects. School Impact Fee (SIF) Reduction X Work with School District to adopt qualifying criteria for standard waiver or reduction for ADU's and other units that do not generate student demand Transportation Impact Fee (TIF) Reduction Y Waive for ADU's CITY WIDE ECONOMIC DEVELOPMENT B&O Tax Reduction Y Explore raising exemption threshold in line with State incentives Development Agreement X Continue to use as opportunities arise Expedited Permitting X For qualifying green building projects Pre Approved Plans X Registered Plan program available for all residential projects Regional Stormwater Facilities X Dependent on topography and other environmental features Special Valuation Tax Exemption Program X Applies to historic building renovations System Development Charges (SDC) Reduction X Continue credits for historic use, deferred payments Transportation Impact Fee (TIF) Reduction Y Provide online estimate tool; allow credit for highest impact historical use Wetland Mitigation Program Y Consider new policy language, then analyze if program should be run internally or managed by the private sector.
23-Mar-2015 Targeted Development Forms and City-wide Economic Incentives Financial Incentives INCENTIVE SUMMARY SHORT-TERM MID-TERM LONG-TERM Affordable Housing Funding Programs B&O Tax Reduction Park Impact Fee (PIF) Reduction The City receives federal Community Development Block Grant (CDBG), HOME program and Housing Levy funding, which is distributed and allocated through a competitive application process. The goal of the program is to encourage increased affordable residential opportunities for lowto extremely low-income households and stimulate the construction/rehabilitation of multifamily housing. Washington State collects business and occupation ("B&O") tax on businesses, and authorizes cities to collect local B&O taxes. Any city that elects to do so must adopt the mandatory provisions of the so-called "model B&O tax ordinance" developed under state law by a consortium of Washington cities (including Bellingham). Bellingham collects this tax for any individual or entity conducting business within the city limits, with few exceptions. An impact fee is a fee charged by a city or county to developers to pay for the costs of providing public facilities or improve existing ones needed as a result of the new development. PIF funds are used solely for the purpose of acquiring and/or making capital improvements to city parks, as prioritized in the adopted capital facilities plan, and not for maintenance or operations. 1. Waive up to 80% of Park Impact Fees for qualified affordable housing projects. 2. Eliminate the Park Impact Fee for accessory dwelling units. 3. Revise BMC to reflect new State regulations not requiring backfill of waived fees. RECOMMENDATIONS Explore the feasibility of raising the tax exemption threshold above $20,000 in gross sales, or provide other credits to support start-up business, in line with State incentives. During the 2015 Comp Plan update, assess level of service and PIF calculation methodology. Continue to focus affordable housing grant resources into projects that also meet other community objectives, such as locating within an urban village, along transit corridors and within CDBG target areas. Page 1
Permit Fee Reductions When a permit is required, fees are charged to cover the cost of permit processing, plan review, and/or inspections. No overhead cost may be covered by these fees. School Impact Fee (SIF) Reductions Special Valuation Historic Tax Exemption Program The SIF is intended to require new development to pay a proportionate share of the cost of new school facilities needed to serve the growing population. The School District is responsible for setting the school impact fee rate and for using the fees to construct growth related school improvement projects. The Washington State Legislature created the Special Valuation Historic Tax Exemption Program in 1985 to encourage the maintenance, improvement, and preservation of privately owned historic landmarks in Washington State. Special Valuation is the revision of the assessed value of a historic property which subtracts, for up to 10 years, qualified rehabilitation costs that are approved by a local review board. 1. Seek opportunities to reduce the land use fee for Infill Toolkit projects by eliminating redundant fees. 2. Waive administrative fees for qualifying affordable housing projects. 1. Consider working with the School District to adopt a policy outlining qualifying criteria for SIF waiver or reduction. 2. Revise BMC to reflect new State regulations not requiring back-fill of waived fees for affordable housing projects. 3. Work with the Bellingham School District to update and adopt a new six-year capital facilities plan and school impact fee ordinance. Promote the availability of the Special Valuation Program through a new redevelopment incentives website. 1. Amend the program eligibility requirement to include National or Bellingham Register listed properties. 2. Adopt the Department of the Interior's Standards for Rehabilitation as a basis for alteration criteria. 3. Provide training for HPC and staff regarding alterations to historic buildings. Page 2
System Development Charge (SDC) Reduction System Development Charges (SDCs) are upfront charges imposed on new connections to the City sewer, water, and stormwater utilities. SDC waivers or deferred payments may incentivize redevelopment in designated locations within Bellingham. 1. Waive SDC's for qualified affordable housing projects. 2. Revise BMC to reflect new State regulations that do not require backfill of waived fees up to 80%. 3. Continue to offer and promote credit for historic use and for improvements beyond minimum requirements citywide, and codify where necessary. 4. Continue to offer deferred SDC payments for qualifying projects, on a limited timeframe. Transportation Impact Fee (TIF) Reduction TIFs are assessed for vehicle trip generation expected from new development based on the current edition of the Institute of Transportation Engineers (ITE) Trip Generation Manual. Vehicle trips are multiplied by the adopted TIF base rate per trip ($1,869 per trip in 2015). 1. Broadly advertise that TIF estimates are provided with every Transportation Concurrency application and can be obtained quickly through a self-calculation worksheet or by contacting the Public Works Transportation Planner. 2. Waive TIF for qualified affordable housing projects per RCW 82.02.060 (3) and accessory dwelling units. 3. Revise BMC to reflect new State regulations not requiring backfill of waived fees. 1. Improve Permit Center website to allow on-line TIF estimates. 2. Formalize the practice of applying credit for the highest historical use of an existing building. Page 3
Non-Financial Incentives INCENTIVE SUMMARY SHORT-TERM MID-TERM LONG-TERM Density Bonus Provides an opportunity for developers to build more units (or floor area) than underlying zoning allows, in exchange for public benefit such as affordable housing, public space, etc. Finalize amendments to the Affordable Housing Demonstration ordinance to offer a density bonus to projects providing 50% permanently affordable housing to incentivize a mix of affordable and market rate units. RECOMMENDATIONS If regulations for innovative housing forms under BMC 20.28 are updated, evaluate a density bonus provision in certain areas that may be appropriate considering the neighborhood character. Development Agreement A development agreement is a contract between the local jurisdiction and a person who has ownership or control of property within the jurisdiction. The purpose of the agreement is to specify the standards and conditions that will govern development. Continue to enter into development agreements when opportunities arise and make sense for both parties. Expedited Permitting Expedited permitting grants projects which comply with certain criteria priority status for permit review. Under the existing "Bin Bump- Up" program, certain projects (currently green buildings) may be "bumped" to a review category with a faster turnaround time (eg. 7-days versus a standard 28-days). After LEAN Kaizen events and upgrades to permitting software are complete, consider expanding the Bin Bump-Up program to include qualifying innovative housing projects under BMC 20.28 and/or those that provide affordable housing. Page 4
Infill Toolkit - Innovative Housing Forms BMC 20.28 contains guidelines and standards for nine innovative and traditional housing forms, with associated design regulations. The intent of the Infill Toolkit is to create opportunities for more affordable housing and housing not currently available in the market, while promoting high-quality traditional neighborhood design. In coordination with any regulatory updates, showcase the regulations and how they may be used. 1. Amend BMC 20.28 to cleanup errors and streamline the review process. 2. If the market does not respond to Infill Toolkit opportunities after the regulations are revised, consider implementing an incentive package. Pre-Approved Plans Reduced Parking Requirements The City's "registered plan" program creates a library of options for pre-approved housing plans that adhere to City requirements and design patterns. Design assistance may also facilitate faster permit review times, while promoting well-designed projects. Reduce the number of parking spaces required for new or renovated development in targeted pedestrian-oriented areas. Continue to offer the "registered plan" program for residential projects, and promote the availability of this option to the design community through a new redevelopment incentives website. During the review of ADU If BMC 20.28 is amended, regulations, evaluate the consider opportunities to opportunity to develop preapproved plans for these for innovative housing types. develop pre-approved plans housing types to showcase and incentivize quality design. Establish standards to administratively reduce the parking requirement city-wide for qualified affordable housing projects. Regional Stormwater Facilities A regional retention/detention system is a stormwater facility designed and sited to detain stormwater runoff from a number of new developments or areas within a catchment basin or sub-basin, versus those which occur on a specific parcel. These facilities allow a developer to pay a fee in-lieu of providing onsite stormwater management. Sell the remaining capacity of the North Bellingham stormwater facility to developers within the drainage basin. Assess other regional facilities on a case-by-case basis as opportunities are identified. Page 5
Wetland Mitigation Program Creates an option for developers (including Parks and Public Works Departments) to purchase mitigation credits in-lieu of constructing project-specific wetland mitigation. This would mitigate for lost wetland function, while simplifying the review process. As part of the 2015 Comprehensive Plan update, consider adopting goals and policies to support development of the program. After policy language is adopted, conduct an analysis to determine whether to fund additional staff to support the development and administration of the program, or to have it developed and managed by the private sector. Page 6