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Affordable Housing Strategy Prepared for the City of Tempe, Arizona February 2019

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Affordable Housing Strategy Prepared for the City of Tempe, Arizona February 2019 Affordable Housing Strategy Prepared for the City of Tempe, Arizona February 2019 bae urban economics ADOPTED RESOLUTION R2019.82 JULY 31, 2019 CONTENTS LIST OF ABBREVIATIONS .......................................................................................................... 5 EXECUTIVE SUMMARY AND IMPLEMENTATION GUIDE ............................................................. 6 Priority Recommendations .......................................................................................................... 7 Implement Affordable Housing Impact Statement (Strategy E-1) .......................................... 7 Expand Use of “Incentives” such as Fee Waivers, Reimbursements, Abatements, etc. (Strategy B-1) ............................................................................................................................. 8 Dedicate Initial Seed Funding to Affordable Housing Trust Fund (Strategy A-2) ................... 9 I. INTRODUCTION ..................................................................................................................... 10 Purpose of the Affordable Housing Strategy ........................................................................... 10 Methodology .............................................................................................................................. 11 Relationship to Other Planning Efforts .................................................................................... 12 II. HOUSING AND AFFORDABILITY IN TEMPE ........................................................................... 13 Definition of Affordable Housing .............................................................................................. 13 The Need for Affordable Housing in Tempe ............................................................................ 15 Student Population ................................................................................................................. 16 Policies and Programs to Address Affordability ....................................................................... 17 Federal Funding Sources ....................................................................................................... 17 Low-Income Housing Tax Credits ........................................................................................... 17 III. AFFORDABLE HOUSING STRATEGY .................................................................................... 19 A. Increase Resources to Support Production of Affordable Housing ................................... 21 Strategy A1: Annual Affordable Housing Production Goals ................................................. 21 Strategy A2: Annual Funding Allocations to the Affordable Housing Trust Fund ................ 24 B. Incentivize Inclusion of Affordable Units in Private Development ..................................... 28 Strategy B1: Fee Waivers ....................................................................................................... 28 Strategy B2: Inclusionary Housing Policies ........................................................................... 29 Considerations for Tempe: Voluntary Inclusionary Housing Policy ..................................... 31 C. Encourage Development of a Variety of Housing Types ..................................................... 34 Strategy C1: Accessory Dwelling Units .................................................................................. 34 Strategy C2: Micro Units ......................................................................................................... 35 Strategy C3: Tiny Houses ....................................................................................................... 37 Strategy C4: Missing Middle Housing .................................................................................... 39 Strategy C5: Co-Housing ........................................................................................................ 42 Strategy C6: Community Land Trusts .................................................................................... 43 1 D. Improve the Quality and Maintain the Current Inventory of Affordable Housing .............. 44 Strategy D1: Preserve Existing Affordable Housing Stock ................................................... 44 Strategy D2: Marketing for Section 8 Participation .............................................................. 46 Strategy D3: Single Family and Multifamily Housing Improvement Programs ................... 47 E. Be Proactive about Community Concerns, Displacement, and Gentrification .................. 48 Strategy E1: Affordable Housing Impact Statements ........................................................... 49 Strategy E2: Community Inclusion Framework ..................................................................... 50 IV. PERFORMANCE MEASURES ............................................................................................... 51 V. APPENDICES ........................................................................................................................ 52 Appendix A: Affordable Housing Impact Statement Summary Memorandum ...................... 52 Appendix B: Community Meetings and Stakeholder Interviews ............................................. 65 Appendix C: Case Studies ......................................................................................................... 66 Strategy B1: Fee Waivers ....................................................................................................... 66 Strategy C1: Accessory Dwelling Units .................................................................................. 74 Strategy C2: Micro Units ......................................................................................................... 75 Strategy C3: Tiny Houses ....................................................................................................... 78 Strategy C4: Missing Middle Housing .................................................................................... 80 Strategy C5: Co-Housing ........................................................................................................ 81 Strategy C6: Community Land Trusts .................................................................................... 83 Strategy D2: Marketing for Section 8 Participation .............................................................. 85 Strategy E2: Community Inclusion Framework ..................................................................... 87 Appendix C: Pro Forma Analysis ............................................................................................... 89 2 TABLE OF TABLES Table 1: Income Limits, Phoenix-Mesa-Scottsdale MSA, Fiscal Year 2018 ................................ 14 Table 2: Proportion of Cost-Burden Households within Income Groups ..................................... 15 Table 3: Summary of Affordable Housing Strategy Elements ...................................................... 20 Table 4: Projected Housing Demand in Tempe through 2040 by AMI Level .............................. 22 Table 5: New Affordable Housing Units by Funding Scenario ...................................................... 24 Table 6: Typical Preservation Sources of Funds at Different Levels of Rehabilitation............... 45 Table 7: Summary of AHIS Policy Elements .................................................................................. 61 Table 8: Incentive Policy for Affordable Housing Fees Eligibility List ........................................... 67 Table 9: Incentive Policy for Affordable Housing Waiver and Reimbursement Scale ................ 68 Table 10: Summary of Inclusionary Housing Requirements in the City of Detroit ..................... 70 Table 11: Summary of Voluntary Development Incentive Programs in the City of Austin ......... 71 Table 12: Austin Density Bonus Affordable Housing Outcomes (Total Units by Median Family Income Level), August 2016 .......................................................................................................... 73 Table 13: Santa Cruz ADU Development Program Components ................................................. 75 Table 14: Sample Resale Value Calculation, OPAL Community Land Trust ............................... 84 Table 15: King County Community Acceptance Framework ........................................................ 88 3 TABLE OF FIGURES Figure 1: Sample Households at Various AMI Levels ................................................................... 14 Figure 2: Proportion of Tempe Households that are Cost-Burdened (a), 2010 – 2014 Five Year Data ................................................................................................................................................. 16 Figure 3: Inclusionary Housing Programs Across the Continental U.S. ....................................... 31 Figure 4: Types of Accessory Dwelling Units ................................................................................. 34 Figure 5: University House on East Veterans Way, Tempe .......................................................... 36 Figure 6: Tiny Houses ..................................................................................................................... 38 Figure 7: Tempe Micro Estates ...................................................................................................... 39 Figure 8: Missing Middle Housing.................................................................................................
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