The Cost of Living in South Burlington: Affordable Housing Committee, Planning Commission Contemplate Citywide Inclusionary Zoning Proposal

Home » City » The Cost of Living in South Burlington: Affordable Housing Committee, Planning Commission Contemplate Citywide Inclusionary Zoning Proposal

Thursday September 27, 2018

South Burlington is often revered as a coveted place to work, play, learn and live, but at what cost? What about the people who can’t afford to live here?

The city’s affordable housing committee has been working on an inclusionary zoning proposal that could help even out the playing field.

Inclusionary zoning links production of affordable housing to the production of market-rate housing. Inclusionary zoning already exists in the City Center Form Based Code District, where regulations require that affordable and moderate housing be included in developments with 12 or more dwelling units.

The “affordable” goal is to have households spend no more than 30 percent of their income on housing.
In late August, the affordable housing committee laid out a proposal for applying the standard in all city zones where residential development is permitted. Though the planning commission did not reach consensus on inclusionary zoning citywide, commissioners encouraged the committee to revise its draft for inclusionary zoning to include in the city’s land development regulations.

What is affordable?

“When we look at the demographics, there’s quite a large population of people in the middle range who are still housing-disadvantaged,” said John Simson, chair of the affordable housing committee, at a joint meeting Aug. 28.

Though South Burlington is middle-range, the general issue of affordability spreads county, state and nationwide.

According to the National Low-Income Housing Coalition 2018 Out of Reach: The High Cost of Living report, Vermont has the 13th-highest housing wage of $22.40 per hour. In Vermont, the fair market value for a two-bedroom apartment is $1,165. With minimum wage at $10.50, a person would need to work 85 work hours per week, or 2.1 full-time jobs, to afford a two-bedroom rental home at fair market value, and 68 hours, or 1.7 full-time jobs, for a one-bedroom rental.

The Burlington/South Burlington Metropolitan Statistical Area (Chittenden, Franklin and Grand Isle counties) is listed as the most expensive area with a housing wage of $27.73. This assumes pay for 40 hours a week, 52 weeks per year, for a two-bedroom rental without paying more than 30 percent of income on housing.

Regionally, Champlain Housing Trust, Housing Vermont and the Chittenden County Regional Planning Commission launched the Building Homes Together campaign, which aims to build 3,500 homes by 2021 for people of all incomes, including 700 affordable homes.

But what is “affordable,” and how is it calculated? That varies.

Michelle Black-Plumeau, a committee member who is policy and planning manager for the Vermont Housing Finance Agency, shared the target area income median levels for both rental and home ownership, as recommended by the South Burlington Affordable Housing Committee.

For developments with 12 or more units, the recommended provisions would require 10 percent of those units be affordable to renters at 80 percent of area median income and 5 percent of units be available to renters making 100 percent of area median income.

For home ownership, at least five of the total dwelling units would be made affordable for households making no more than the area median income. An additional 10 percent of total dwelling units would be made affordable for households making no more than 120 percent of area median income.

Black-Plumeau used a one-bedroom rental for a one-person household as an example:

“Ten percent of units in this rental project must be affordable to families making $52,080 (that’s 80 percent of the area median in a one-person household), and that they have rents no more than $1,395,” she explained. “Five percent of the units in the project would need to be affordable at the 100 percent of the area median level. For a one-person household, they need to have an income of no more than $55,100. Then the rent of the unit would need to be no higher than $1,743.”

In an example of home ownership, she used a three-bedroom, four-person household. Five percent of units would be at 100 percent of median income, and each household must make no more than $93,000. The purchase price must be no more than $319,000. Ten percent of units would be at 120 percent of median income, and each household must make no more than $111,600. The purchase price must be no more than $383,000.

Affordable homes must be similar in design, energy efficiency and at least 70 percent of the size of market-rate units. There are comparable provisions for subdivision of 12 or more lots.

“There’s a perception that developers might lose money on these affordable units,” Simson said. “We have to introduce an incentive or at least offset the financial burden.’”

The committee proposed rewarding developers with an additional market-rate unit for each additional inclusionary unit. That would increase housing density by about one-sixth beyond what’s normally allowed, said Sandy Dooley, a longtime committee member who’s on the board of directors for the Champlain Housing Trust.

In instances where inclusionary zoning is feasible, the proposal offers alternatives, such as a contribution to the city’s Housing Trust Fund of $60,000 per unit for one or more inclusionary units, off-site construction or a dedication to the city having an equal or greater value than the per-unit contribution to the Housing Trust Fund.
For planned unit developments, the committee recommended including more multi-family and multi-unit buildings, even in lower densities.

In the Southeast Quadrant, the city could consider giving developers the option to buy three transfer development rights to offset the cost of an inclusionary unit. Each of those rights is estimated between $10,000 and $15,000, but that depends on the market, said Paul Conner, the city’s director of planning and zoning.

“Right now in the Southeast Quadrant, there’s up to a 50 percent bonus of units available when affordability is added on an optional basis,” commission member Monica Ostby said. “Much of what we are seeing that some may want to call sprawl or high-density is because of how our land development regulations are currently written. I don’t think it’s understood by the broader community.”

Stuart Mowat, a resident in the Southeast Quadrant, requested upfront plans from developers.

“I think that it’s important to have the developer tell the development review board or planning department, before they build any houses, where the affordable housing is going to be, because they’ll stick them all on one block,” Mowat said.

Dooley confirmed that will be addressed in the new provisions.

$383,000 as affordable

“How did we get to a point where $383,000 and $120,000 is affordable housing?” Commissioner Art Klugo asked. “Where is the obligation that people have to understand that, unfortunately, sometimes life is hard work and you pick places that you may not want to be right away, but you know you have a goal in mind and a place you want to end up, and that place happens to be South Burlington?

“I’m really struggling with $383,000 as affordable.”

“Talk to developers,” said Tom Bailey, an affordable housing committee member. “It’s expensive to build now.”

Klugo said developers may take advantage of loopholes, just as some do to avoid Act 250 permitting.

“We are saying 12 or more units,” he said. “We can’t let 11-unit developments slip away and not be able to generate the revenue needed.”

“I’m as in favor of affordable housing as the next person, but we’ve had so many opportunities recently to learn that ‘affordable’ isn’t what I think of as affordable or 90 percent of this community thinks of as affordable,” said resident Sarah Dopp.

“This gentleman who built those Kirby cottages … we all kind of loved them and they represent to the people of South Burlington what we want, and yet we’re told repeatedly that it’s not possible,” she said.

Commission member Ted Riehle wondered about administration and income verification.

For permits, that would still fall under the city’s purview, Simson said. Finding a tenant/buyer and evaluating the affordable housing logistics could be contracted out to Champlain Housing Trust.

For income verification, potential homeowners would be required to meet the household eligibility limits only when they move in, but when a unit is up for resale, the city could buy it and transfer to the Champlain Housing Trust.

According to Affordable Housing Committee member Todd Rawlings, some municipalities will evict tenants if they make more than the threshold income. Burlington does not do that, he said. Rawlings is the housing program manager for Burlington’s Community Economic Development Office.

Dooley said there is often turnover for people who eventually make more and end up buying or renting a market-rate unit.

“What stops me from buying an affordable house, upgrading it, living there for a year because my income level meets the requirements, and then selling it and making a profit?” asked resident Wes Daum.

Keeping the units affordable in perpetuity would prevent such a scenario, Black-Plumeau said. He would not benefit from full market appreciation, and when a title company does a search, there would be notice of an affordability covenant.

“The intent is not necessarily to create affordable housing,” Rawlings said. “That’s sort of the byproduct of what we are doing. The intent is to create inclusive neighborhoods where they’re economically diverse because we want to make sure there is a place that makes room for all kinds of people. That’s really what we’re talking about.”

Commission follows up

Meeting Sept. 11, commission members assessed the overall structure, implementation, incentive structure and buy-out provisions outlined in the draft regulations.
A majority agreed with the concept of inclusionary zoning, but not citywide; most were open to applying it only to certain areas of the city.

“The commission is interested in having you move forward,” Planning Commission Vice Chair Bernie Gagnon confirmed. “There are obviously a lot of details that need to be worked out.”

Housing types and size, cost of land, cost of building and impact on neighborhoods in areas like the Southeast Quadrant, whether an in-lieu payment is appropriate, what fees could generate money, and housing density were just some of the moving pieces being considered.

“I don’t want to throw the baby out with the bathwater,” Klugo said. “This is only one component trying to solve the problem, and I don’t understand what the comprehensive affordable housing plan is and how inclusionary zoning fits into that. I’m a conditional ‘maybe.’ ”

“I certainly support the concept, but I am a little concerned with the regulating part of it,” admitted commission member Duncan Macdonald. “Is there another way we can do it that would allow us to get what we want? It looks like you (committee) looked pretty thoroughly and it’s not out there.”

“We need to clarify to the committee what we want. What is that, because I think we all might say something different,” Ostby said.

“There’s been a lot of talk about inclusionary housing plans that have failed, but you must have come across some that have succeeded?” commission member Michael Mittag asked.

Staff will follow up to get the answer.

“We’re willing to adjust the geographic location of what we’re doing and bring it back to you and look at other incentives we can apply,” Simson said. “I think long-term I’d love to have a joint committee, and perhaps involve some other people, to really look seriously at permit fees, some kind of development fees on new commercial, residential or both, and go to the voters and to the Legislature. We do need a reliable, sustainable source of money to take the next step to make things happen.”

The affordable housing committee meets at least once a month. For the most updated times, dates and locations, visit southburlingtonvt.gov/calendar.php. The planning commission meets on the second and fourth Tuesday of every month at 7 p.m. at City Hall.

 

SOURCE: Miranda Jonswold, Correspondent