CPED STAFF REPORT Prepared for the City Planning Commission CPC Agenda Item #11 June 14, 2021 ZONING CODE TEXT AMENDMENT Initiator: Council Members Gordon, Schroeder, and Goodman Introduction Date: July 17, 2020 Prepared By: Amber Turnquest, Principal City Planner, (612) 352-6047 Jason Wittenberg, Planning Manager, (612) 673-2297 Ward: Citywide Neighborhood: Citywide Intent: Amend zoning ordinance regulations to adopt a regulatory framework to allow for new — and to better regulate existing —single room occupancy (SRO) units to implement policies in Minneapolis 2040. APPLICABLE SECTION(S) OF THE ZONING CODE Title 20, Zoning Code: 1. Chapter 520 Introductory Provisions. 2. Chapter 535 Regulations of General Applicability. 3. Chapter 546 Residence Districts. 4. Chapter 547 Office Residence Districts. 5. Chapter 548 Commercial Districts. 6. Chapter 549 Downtown Districts. 7. Chapter 551 Overlay Districts. The following chapters were also introduced: Chapter 525, 527, 530, 531, 536, 537, 541 and 550. However, staff is not recommending changes to these chapters as part of this amendment and is therefore recommending returning them to the author. BACKGROUND Council Members Gordon, Schroeder, and Goodman introduced an ordinance on July 17, 2020, to amend the City’s regulations to permit the development of single room occupancy (SRO) units. The intent of these amendments are to implement policy guidance in Minneapolis 2040 that calls for the pursuit of innovative housing types and eliminating homelessness. The City Planning Commission Committee of the Whole previously reviewed and provided comments to this zoning code text amendment at the March 25, 2021 meeting. Staff held two stakeholder engagement meetings. The first on September 29, 2020, to review the history and operational requirements and on February 5, 2021, to review the language and provide comment. Department of Community Planning and Economic Development The text amendment is intended to allow residential units that would fill a gap on the affordable housing continuum for people who earn low-wages or work intermittently, creating a regulatory framework to allow for new — and to better regulate existing — rooming houses and single room occupancy units. Rooming-type units are currently allowed only when establishing housing with supportive services (e.g., supportive housing, community residential facilities, assisted living, nursing homes). While SROs are proposed to be classified as a type of congregate living within the zoning code, SRO housing would not include supportive services. Definition. SRO units are distinguished from “dwelling units” by the fact that each living space would not be required to include kitchen or bathroom facilities. The definition of single room occupancy housing is proposed to be introduced in Chapter 520.160: Single Room Occupancy (SRO) Housing - A facility providing housing that is operated by a non-profit organization, government agency, or healthcare agency, as defined in and meeting the requirements of Chapter 244, Housing Maintenance Code. It does not include: 1) Community residential facilities. 2) Board and care homes, nursing homes, assisted living facilities. 3) Supportive housing. New SRO units would generally be limited to parcels where policy and regulation allow four or more dwelling units, beginning with lots 7,500 square feet or larger located in the Interior 2 built form district and more intense districts. The R3 zoning district is proposed as the lowest intensity district where SROs would be allowed. In the R3 district, the use could be established on a lot with at least 7,500 square feet, aligning with the locations where buildings with four or more residential dwelling units are allowed. In the R4 district and above, 5,000 square feet of lot area would be required. Conversions of existing buildings and new construction of SROs would be permitted. SROs would be limited to no more than two occupants per room. Rooming units are not subject to minimum zoning requirements related to minimum floor area (300 for accessory dwelling units, 350 square feet for efficiency units, and 500 square feet for units with one or more bedrooms). The required size of rooms/units within SROs is left to the building code and Housing Maintenance Code to address. SRO units could only be established by non-profit or government agencies with a track record of successfully managing housing. Standalone licenses would ensure renter protections for tenants. FINDINGS What is the reason for the amendment and what public purpose will be served? The reason for the amendment is to permit the development of single room occupancy (SRO) units. The text amendment is intended to allow residential units that would fill a gap on the affordable housing continuum for people who earn low-wages or work intermittently, creating a regulatory framework to allow for new — and to better regulate existing — rooming houses and single room occupancy units. The proposed text amendment is intended to encourage the establishment of SRO units. 2 Department of Community Planning and Economic Development How is the amendment consistent with the purpose of the zoning district(s) or ordinance chapter(s) being amended? New SRO units would generally be limited to parcels where policy and regulation allow four or more dwelling units, beginning with lots 7,500 square feet or larger located in the Interior 2 built form district and more intense districts. Minneapolis 2040 includes the following description of the Interior 2 built form district: “New and remodeled buildings in the Interior 2 district should be small-scale residential. Individual lots are permitted to have up to three dwelling units. Multifamily buildings with more than three units are permitted on larger lots. Limited combining of lots is permitted. Building heights should be 1 to 2.5 stories.” The R3 zoning district is proposed as the lowest intensity district where SROs would be allowed. In the R3 district, the use could be established on a lot with at least 7,500 square feet. In the R4 district and above, 5,000 square feet of lot area would be required. Conversions of existing buildings and new construction of SROs would be permitted. Note that some R3 zoning districts may exist in the Interior 1 built form district. To align with policy, any R3 (or higher) residential zoning will likely be removed from the Interior 1 district when the citywide land use rezoning study is completed. Rezoning from an R1-R2B district to an R3 district is generally not supportable in the Interior 1 built form district or on lots smaller than 7,500 square feet in the Interior 2 built form district. A maximum parking requirement for SRO housing was adopted as part of the recent zoning code amendment affecting off-street parking and travel demand management. Are there consequences in denying this amendment? Denying this amendment would continue to limit housing options and prevent the City from taking steps to align its zoning regulations with the new comprehensive plan. Such a lack of alignment would stifle progress toward important policy goals. What adverse effects may result with the adoption of this amendment? Substantial adverse effects are not anticipated as a result of this amendment. The policies that are informing proposed regulations were adopted following a robust public engagement process. The City is now implementing those policies. Staff acknowledges that there is a stigma associated with SROs which could be contentious in many circumstances because of real or perceived impacts. As proposed, SRO units could only be established by non- profit or government agencies with a track record of successfully managing housing. Standalone licenses would ensure renter protections for tenants. Further, this zoning code text amendment will be accompanied by amendments to the Housing Maintenance Code, with licensing standards intended to avoid or mitigate any adverse effects. Licensing through the Housing Maintenance Code includes a requirement that an applicant demonstrate the ability to operate units effectively and will provide tenants with protections afforded to renters. Tier III rental dwellings would not be eligible for use as SROs. Changes to the Housing Maintenance Code will be considered at a public hearing by the City Council’s Business, Inspections, Housing & Zoning (BIHZ) Committee. How does the amendment relate to other City ordinances? CPED is coordinating with other City departments on additional amendments to other City ordinances to address licensure, health, safety, etc. An amendment to Chapter 244, the Housing Maintenance Code, will occur concurrently with the zoning code text amendment process. The Housing Maintenance Code will be amended to define single room occupancy housing units, redefine the definition for rooming houses, and lists requirements for SROs. What factors are influencing the timing of the proposed amendment? Why? There is a need to permit the development of additional housing types within the City to fill a gap on the affordable housing continuum for people who earn low-wages or work inconsistently. Affordable housing has become more difficult to secure for those working in low-wage occupations. This zoning code amendment is one piece in the City’s overall effort to ensure that people have access to safe and dignified housing. 3 Department of Community Planning and Economic Development How does the amendment compare to practices in other cities? Staff found in a number of the cities surveyed, SROs are used as housing options for low income individuals and senior citizens. Communities such as San Francisco, New York City, and Boston are using SROs to provide additional affordable housing options. How will this amendment implement the comprehensive plan? The amendment will implement the following applicable goals of Minneapolis 2040 (2020): Goal 2. More residents and jobs: In 2040, Minneapolis will have more residents and jobs, and all people will equitably benefit from that growth. Goal 3. Affordable and accessible housing: In 2040, all Minneapolis residents will be able to afford and access quality housing throughout the city.