Housing Affordability

113 Pages·2009·1.34 MB·English

by  Karen Flink

Housing Affordability

Report and Recommendations from the
Pierce County Housing Affordability Task Force

Community Services Department
Housing Division

Planning and Land Services
Advance Planning Division March 2009

ACKNOWLEDGEMENTS

Pierce County Executive
Pat McCarthy

Pierce County Council
Shawn Bunney, District 1
Joyce McDonald, District 2
Roger Bush, District 3, Task Force Member
Timothy Farrell, District 4,, Task Force Alternate
Barbara Gelman, District 5
Dick Muri, District 6
Terry Lee, District 7

Cedar River Group (Consultant)
John Howell, Facilitator

Housing Affordability Task Force
Marian Berejikian Friends of Pierce County
Connie Brown Tacoma/Pierce County Affordable Housing
Consortium
Rick Brunaugh Master Builders Association
Sandy Burgess Non-Profit Developer
Jim Dean Mobile Home Owners Association
Maureen Fife Habitat for Humanity
Lyle Fox Master Builders Association
Bill Giddings Citizen Representative
Charlie Gray Pierce County Housing Authority
Tom Hilyard Pierce County Community Services
Denny Hunthausen Non-Profit Developer
Chuck Kleeberg Pierce County Planning and Land Services
John Landis Mobile Home Owners Association
Michael Mirra Tacoma Housing Authority
Helen Myrick Pierce County Planning Commission
John Purbaugh Pierce County Planning Commission
CJ Robinson Untied Way of Pierce County
Jeff Robinson Non-Profit Developer
Catherine Rudolph Association of Realtors
Lessley Shirley Banking Representative
Tiffany Speir Master Builders Association
Brian Stacy Pierce County Public Works and Utilities

Pierce County Housing Programs Division
Gary Aden, Administrative Program Manager
Robyn Lee, Administrative Support

Pierce County Planning and Land Services
Dan Cardwell, Senior Planner
Paula Manning, Administrative Support

Pierce County Economic Development Division
Rob Allen, Economic Development Specialist

Housing Affordability Table of Contents

Table of Contents

Section I Introduction ........................................................1

Section II The Continued Need for Affordable Housing
in Pierce County..............................................................9

Section II.A. The Need for Affordable Housing.........................................................11
Section III Development Incentives................................13

Section III.A Title 18A – Pierce County Development Regulations..........................15
Section III.B Impact of Incentives on Different Development Scenarios..................25
Section III.C Affordable Housing Price Point by Interest Rate..................................35
Section III.D Estimated Direct Fiscal Impact on Pierce County................................37
Section IV Manufactured Housing..................................39

Section IV.A A Study of Manufactured Housing in Pierce County...........................41
Section IV.B Manufactured Housing Policy Recommendations................................99
Appendix A Resolution 2007-139 .................................103

Appendix B Communication from Fire Chiefs regarding
Development Incentives.............................................107

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Housing Affordability Introduction
Section I
Introduction

The following report reflects the work of the Pierce County Housing Affordability Task
Force completed in 2008. The task force was created in 2006 to “…Examine the costs of
housing development and recommend specific measures to address the affordable
housing needs for all economic segments of the population, with particular interest for
low income populations…” At the conclusion of its first year of work, in March 2007,
the task force recommended twenty-two strategies that could help the County increase its
supply of affordable housing. Those recommendations were in the form of suggested
policies and program ideas the County should pursue.

During most of 2007, the task force did not meet, but its recommendations were reviewed
and unanimously adopted by the County Council as amendments to the Housing Element
of the county’s Comprehensive Plan. The amendments took the form of policy
statements that supported the pursuit of all of the strategies recommended by the task
force.

In December 2007 the County Council adopted Resolution 2007-139 (See Appendix A),
re-establishing the task force and requesting development of “…recommendations
regarding implementation plans for the strategies recommended in its March 2007
report…The Task Force work will include review and comment on draft code and
regulatory amendments prepared by County staff, [that] may be required to implement
the housing affordability strategies.”

The membership of the Task Force represents a broad spectrum of interests and
perspectives. That diversity of opinion has proven to be an asset in the Task Force’s
deliberations. In addition, as the recommendations were being crafted, additional
community outreach was conducted to insure that a broad range of perspectives were
considered. For example, there was considerable communication with the county’s fire
districts and the County Fire Marshal regarding the proposed development incentives. At
the most recent meeting in early February, 2009, the Task Force received communication
from the County Fire Marshal that the Fire Chiefs Association and the County Fire
Marshal approve of the proposed regulations. (See Appendix B)

In addition, presentations were made to Land Use Advisory Commissions (LUAC) to
review the work of the Task Force and solicit comments. Additional LUAC
presentations will be made in March, 2009. There were also discussions with
representatives of the Manufactured Homeowners Association regarding the Task Force
policy recommendations on manufactured housing.

In early 2008 the Task Force reviewed the full list of twenty-two strategies to develop a
work plan for the year. Three priorities were initially identified for the task force work in
2008:

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Housing Affordability Introduction
1) Create voluntary development incentives to assist for-profit and non-profit
developers construct additional affordable rental and ownership housing. (The
Comprehensive Plan amendments enacted in 2007 called for “voluntary and
required inclusionary zoning housing methods.” Section 19A.70.070(B)(1)(e).
This provision arises from the Task Force recommendation that the county “create
an initial two-tiered inclusionary zoning program.” The first tier would be
voluntary, based upon incentives. The Task Force work in 2008 has focused on
this effort. The second tier, which must still be designed, would require
developers to include affordable housing units in market rate developments in two
circumstances: “1) when an upzone is approved, and 2) for large master planned
communities.”);

2) Complete a study (suggested in the March 2007 Task Force report) on
manufactured home park communities and their conversion to other uses, and
develop policy recommendations based on the findings of that study; and

3) Complete a study to identify the potential use of county surplus land for
affordable housing purposes.

As the task force work progressed, the focus of the group’s work in 2008 turned out to be
the creation of development incentives and the study of, and then creation of policy
recommendations, regarding manufactured housing. An initial analysis of the potential
use of county surplus land was completed, but because the work related to the other two
issues was so time consuming, development of recommendations on the use of county
surplus land was set aside in 2008.

Voluntary Development Incentives

Four of the twenty-two originally recommended strategies involve the creation of
development incentives to encourage construction of new affordable housing units for
low-income households earning 80 percent or less of county median income. (The
current median income in Pierce County is $52,960.) Task Force recommendations to
implement these strategies are packaged in a proposed regulatory development incentives
chapter. This new chapter incorporates three broad categories of incentives: a) financial
incentives (expedited permitting and fee waivers), b) additional housing units (density
bonuses), and c) regulatory incentives (alternative development standards, including
parking, road, lot area and width, etc.). In addition to specifying the incentives a
developer may utilize, the chapter documents the procedures that will ensure that the
correct number of newly constructed homes or apartments will be affordable to
households earning 80 percent or less of the County’s median area income. (See Section
III.A for the proposed new Chapter.)

Research conducted by staff indicated that numerous jurisdictions around the region, and
throughout the country, have adopted voluntary development incentives to encourage the
creation of affordable housing. However, few voluntary incentive programs have been
found to be effective in creating a substantial number of affordable units. Therefore, an
important principle used by the Task Force was that the proposed Pierce County
incentive program must attempt to create a meaningful economic benefit for profit and
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Housing Affordability Introduction
non-profit developers creating new affordable units. This is particularly important in the
absence of additional local, state, or federal resources to support the creation of new
subsidized housing units. Absent additional housing funds, the economic benefits from
the incentives must be strong enough to encourage private housing developers to
construct affordable units, and enable non-profit developers to stretch their limited
resources so they can construct additional affordable units.

County staff collaborated with the Pierce County Master Builders Association and
various non-profit developers to create an analysis of the potential financial impact
created by each of the proposed incentives on five different development scenarios,
including single-family detached, single-family attached, and multi-family developments.
(See Section III.B) This enabled the Task Force to understand the level of economic
benefit developers could achieve if affordable units were incorporated into their projects.
This analysis also enabled the Task Force to assess whether the economic benefits from
the incentives should apply to all units in a project/development or just the affordable
units. In keeping with the principle that the incentives should provide meaningful
economic benefit, the Task Force is recommending that when calculating the financial
benefit to a housing development with affordable units, that most of the incentives should
apply to all of the units. This will allow a developer to reduce the price of the affordable
units, without having to raise the price of the market-rate units.

The Task Force also explored the potential fiscal impact on the county (See Section
III.D). The recommended package of incentives includes fee waivers and fee
reimbursements for developers. The Task Force is recommending that other county
funds be used to offset the loss of revenues from the waived fees. The Task Force
certainly understands that the current economic climate may make it difficult for the
county to commit considerable resources for this purpose. However, the Task Force is
suggesting that the county offer the incentives on a first-come, first-serve basis, with a
cap created on the amount of financial support the county would provide in any one year.
This would let the county adjust the cap as economic conditions vary. The Task Force is
not recommending what that cap should be.

While Task Force members recognize the constraints of the current economic climate,
they also feel strongly that the level of financial resources required to support the
affordable housing incentives are a bargain when compared to the cost of constructing
subsidized units. A typical fully subsidized housing unit requires a public investment of
more than $200,000 per unit to construct. According to the Task Force analysis of the
proposed incentive package, the public investment to support the single-family affordable
units created by the new program would be approximately $50,000 per unit, and only
approximately $5,300 per multi-family unit.

The Task Force spent considerable time discussing the provisions in the proposed
regulations regarding the re-sale of affordable ownership units created by this program.
The proposal is based on the principle that a future re-sale should allow both the
homeowner and the county to share in either the future increase or decrease in the value
of the property. The Task Force referred to this as the “shared equity approach” (see
Section III.A, Provision F, of the proposed regulations). The county’s interest should be
proportional to the level of its financial support to reduce the price of the home to an
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Housing Affordability Introduction
affordable level at the time of the original sale. The Task Force has attempted to strike
the appropriate balance between public benefit and private gain.

The proposed development incentive regulations also include provisions for annual
reporting to the Council on the progress of the new program, and evaluation of the
program every three years. This is particularly important to determine if the program
should be modified to create more affordable housing. Regular program review is also
important because external factors such as interest rates can have a significant impact on
the affordability of homes. Section III.C provides a graphic representation of the impact
of changing interest rates on affordable sale prices for a family earning 80 percent of the
County’s median income.

It is also important to note that Task Force members believe that simply creating a new
incentive program will not guarantee it will be widely used by private sector developers.
Many private developers do not have experience creating mixed income communities,
and program success will require a marketing effort. The Task Force suggests the county
and the Master Builders Association of Pierce County create an outreach effort to explain
the new incentive program to the private development sector, and encourage developers
to participate.

Manufactured Housing

In March 2007, the Task Force recommended that the County conduct a study of existing
manufactured home communities to “…determine if existing land use regulations or
zoning codes play a role in encouraging conversion of mobile home parks…This analysis
should be completed before other strategies related to manufactured home parks are put
in place.” This past year the Task Force oversaw the development of that study, and
then developed recommendations based on that analysis.

The study explored the history of manufactured housing nationally and regionally,
identified key factors that affect manufactured housing as compared to site built housing,
assessed what is known at the national, state and local level about the demographics of
manufactured housing residents, reported on the inventory of manufactured housing
communities in Pierce County and the different ownership structures, and identified the
rate of closure of manufactured home communities and the risk factors that affect
closures. (See Section IV.A)

Based on the study and considerable discussion about its implications, the Task Force
developed the following statement of principles to guide their development of specific
policy recommendations:

1) Manufactured housing communities are an important component of the overall
affordable housing picture in Pierce County, although not all manufactured
housing is affordable;

2) The portion of the affordable housing portfolio in Pierce County which is
comprised of owner-occupied manufactured housing on rented land is
increasingly at risk due to conversion of these communities to other uses;
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