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12/11/2018 09 2018 Affordable Housing Report
to\'4\lyy tbxk ik 1 (1).-471415""-•141 PP g 1 d PPi ittYlltYlt.\ta. BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEM ENT Item No. 9. For Meeting of: December 11, 2018 ITEM TITLE: 2018 Affordable Housing Report SUBMITTED BY: Joan Davenport, Director Community Development SUMMARY EXPLANATION: At the September 11, 2018 City Council meeting, a presentation on the issues related to Affordable Housing in Yakima was requested. There are many organizations in Yakima that have expertise on this topic and a community forum is suggested for a future time. This Affordable Housing report addresses several related topics: 1 . Locational issues of zoning and neighborhoods 2. Regulatory Incentives or Barriers 3. Cost of Development and Permitting 4. Frontage Improvements and Utilities 5. Dedicated Revenues and Other State Incentive Programs 6. Housing Maintenance Codes ITEM BUDGETED: NA STRATEGIC PRIORITY: Neighborhood and Community Building ir APPROVED FOR SUBMITTAL: lir City Manager STAFF RECOMMENDATION: Review report and provide direction BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date Type 2 D Affordable Housing Report, 71113 12/1/2018 Backup Material D Presentation ficconent-Affordable Howarth 12/7/2018 Presentation L) Wenatchee Housing Cost Coin dancon Report, 2018 11/2612018 Backup Material 3 City of Yakima Department of Community Development Affordable Housing White Paper City Council Meeting of December 11, 2018 Submitted by Joan Davenport, Director Summary Like most communities in Washington State, and indeed throughout the nation, the City of Yakima does not have an adequate supply of affordable housing to meet the needs of our community. Housing is defined as "affordable" if the costs do not exceed 30 percent of a family income. Families who spend more than 30 percent of their income are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. Families that spend 50 percent of their annual income on housing are considered severely cost burdened. Statewide, over 51% of renters are cost-burdened and nearly 234,000 households are severely cost-burdened today. A family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States (2015 Washington State Housing Needs Assessment). In order to reduce the cost burden to families, there is a gap (need) of 3,300 housing units affordable to those earning lower incomes in the City, according to the 2015 Washington State Housing Needs Assessment. This is the estimated measure of families (10% of families) that are currently struggling to cover housing related costs in our community. Yakima Housing Facts The City of Yakima currently has approximately 35,980 housing units for 94,190 persons. Average persons per housing unit is 2.66 persons. In 2014, 54 % of all housing units were owner-occupied and 46% rentals. Vacancy rates for existing housing units is very tight. Less than 2% of the rental units are vacant at any particular time. Single family homes on individual lots are the dominant housing type in Yakima. Findings • Vacancy Rates, especially for rentals, is very low. Available rentals in Yakima have been reported to drop from 7.8% to 1.7% vacancy rate between 2014 and 2016 (Runstad Center for Real Estate Research). • Home Ownership remains out of reach for many. Approximately 44% of our City families cannot afford to purchase home at the area Median Home price. Median single family home values (June 2016) in Yakima was $156,500 (compared to $275,600 in Wenatchee, $183,300 in Spokane and $216,300 in Tri-Cities). To afford the purchase of a median value home in Yakima, a family would need to make at least $38,500 annually ($3,200 monthly). • Many households are cost burdened. In the City of Yakima, 32% of renters are cost burdened and 49% of home owners are cost burdened (2012 study). • New construction of multi-family units has not kept up with demand. Between 2009 and September 2018 a total of 916 new single family homes were permitted for construction. In that same time period, only 281 housing units in duplex structures were built and 596 units of multifamily type buildings (more than 3 units per structure). Over this ten year period, a total of 1,793 housing units were issued building permits in the City of Yakima, or an average of 180 permits per year. • Smaller Household size. Over half the Yakima households are one or two people with no children. In 2015, 29 percent of Yakima's 33,074 households were single persons and 24 Wage 4 percent of the households were couples with no children. These population demographics may be indicators of a market demand for smaller homes, with smaller lots in a walkable setting. Townhouse type development and other moderate density to higher density settings may be responsive to this market. • Housing choices for low to moderate income families in Yakima is severely limited. The Median Family Income in the City of Yakima is $43,089 (2016 ACS data) which is 27% lower than the Washington State Median Family Income. An estimated 22.5% of our residents live below the Federal Poverty level. The illustration below shows the distribution of household income by employees in the Yakima Urban Area. Yakima is shown in the orange color bar, the Nation as a whole is shown in gray. Median family income is noted by the black bar. Wage Distribution in Yakima County(Central)--Greater Yakima City puma 25% 20% 15% ..x 10% ......... 5 5% 0% Waft " c> O 4 i0 4 O K±t .t`t K+* (71 vt 4.74 .tn Av�rag�Salaey DATA USA. New Residential Units Permitted Since 2009 2018 Type/Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD Total Single-Family 119 91 66 64 73 78 113 107 90 115 916 Duplex 15 18 18 30 18 40 24 40 32 46 281 Multi-Family (3+ units) 65 277 96 72 30 21 3 0 3 29 596 Total New Housing Units: 199 386 180 166 121 139 140 147 125 190 1,793 Total BLD Permits Issued 130 116 84 85 88 101 128 127 107 146 1,112 Existing City of Yakima Housing Inventory Housing Type 2017 Percent SF 22,303 61.98% Duplex 3,078 8.55% 3-4 units 2,383 6.62% 5+units 6,216 17.27% Mobile Homes in parks 2,003 5.57% Total housing units 35,983 100.00% Wage 5 Strategies for the City of Yakima There are a number of issues the City of Yakima may want to consider in order to promote the construction of affordable housing. This report will summarize the following six issues: 1. Does the City have adequate supply of land zoned for housing, including alternatives to single family homes?What zoning districts encourage rental housing development? 2. Are there local regulatory barriers that inhibit affordable housing development?Are there regulatory incentives we can offer to encourage housing construction? 3. Are construction costs & permitting timelines in the Yakima Area consistent with other communities? Can they be improved? 4. Frontage Improvements and Utility Costs associated with new or infill development. 5. What programs has the State of Washington enabled that the city might want to take advantage of and what steps are necessary to implement the programs? 6. Should the city of Yakima consider a maintenance Code to assure that existing rental housing is preserved as well as descent and safe?What are the disadvantages to this approach? Supply of Land Zoned for Housing Based on population projections and guidelines issued by the Growth Management Act, the Yakima Comprehensive Plan 2040 identified the need to provide for 17,167 additional persons in the Yakima Urban Area by 2040 and 8,556 new jobs. The 17,167 new residents would need 6,602 new housing units over the 20+ year time or approximately 330 new housing starts every year. As stated in the Housing Facts section of this report, there is a significant need for more affordable housing. To the extent possible, a goal of the City of Yakima should be to promote approximately half of the new housing starts (3,300 housing units) as affordable to our moderate and lower income residents. The target of 330 new housing starts every year is significantly higher than the 180 average housing starts we have experienced in the last 10 years. CITY OF YAKIMA—2015 While it is true we will need housing for inventory Total Acres Vacant Acres all income groups, the most significant AS, Airport Support 815.91 1.0 need is to encourage the construction of B-1, Professional Business 382.00 48.0 housing that is affordable to low and B-2, Local Business 225.20 20.2 moderate income family rental housing, which has a very low vacancy rate (less CBD,Central Business District 282.40 20.1 than 2%).The 2015 Vacant Land Study, GC, General Commercial 1,349.71 442.4 a background document for the LCC, Large Convenience Center 195.69 12.4 Comprehensive Plan found the City had RD, Regional Development 548.31 232.2 an adequate supply of vacant land SCC, Small Convenience Center 304.79 44.3 which could accommodate 44,817 new M-1, Light Industrial 1,953.14 851.1 housing units. However, a suitable M-2, Heavy Industrial 118.92 17.3 tract of land for new housing has been identified as one of the main obstacles R-1, Single Family Residential 6,813.31 895.8 in getting new projects started. Housing R-2, Two Family Residential 2,230.29 575.1 can be built in most zoning districts, but R-3, Multi-Family Residential 1,146.23 245.8 land zoned R-3, Multi-family is limited. SR, Suburban Residential 1,565.26 194.6 The City could benefit from more R-3 Grand Total 17,934.12 3,331 zoned land. A new process for minor Sq. Miles 28.02 4.84 rezones was adopted with the 2040 Comprehensive Plan which generalized the Future Land Use category for Mixed Residential to include R-2 and R-3 zones. 3IPage 6 II. Regulatory Barriers or Incentives for Affordable Housing The City needs to encourage construction of all housing types but particularly affordable housing. Some steps to implement this goal have been taken while other options should be reviewed for future action. Already Implemented: ✓ The City Council modified the zoning code in 2018 to streamline construction of "Accessory Dwelling Units" (or ADU's). These are housing units which are built on lots that already have a house or other structure. ✓ The City amended the zoning code in 2017 to allow clustering of housing units around a common amenity in order to promote tiny home villages. ✓ With the exception of the Industrial zoning districts, new construction of housing is permitted in nearly all other zoning districts and locations. The process for multi-family construction requires notice to neighborhood residents within 300 feet in all districts except R-3 and projects with more than 20 units require review under State Environmental Policy Act (SEPA) in most situations. Neighborhood concerns ("Not in my Backyard — NIMBY") continues to be a challenge for some affordable housing projects. ✓ The City of Yakima has not imposed any Impact Fees (as allowed under RCW 82.02) on any construction projects. ✓ The City of Yakima offers a free Development Service Team project review. A follow up review is available for $100. If a developer takes advantage of these programs, the actual project review can be shortened because they have a better understanding of the Codes and requirements. ✓ Multi-family Tax Exemption program (MFTE). This tax exemption provides an incentive to construct multi-family housing in a targeted area of Yakima. This area has been defined as the Central Business district and several properties have been constructed using the exemption including the Lofts, the One Chestnut and the Nordstrom/Mills building. The program provides an exemption of property tax increases for up to 12 years based upon qualified improvements of the project and is governed by YMC 11.63.040. Should this area be expanded? ✓ The City of Yakima is an Entitlement Community for the HUD HOME program. Funds received under this program must be utilized to create new housing units. HOME funds have been used by the City of Yakima to support many partnerships and resulted in the construction of over 250 new housing units in the last ten years. Partners include Habitat for Humanity, Yakima Housing Authority, Next Step Housing, Catholic Charities and others. Future Options: o The City of Yakima could review smaller lot sizes as a tool to encourage more diversity and density of new homes. o The Central Washington State Homebuilders indicated the preference of many clients for more townhouse type homes. The Zoning Code could be reviewed specifically for techniques to encourage this type of development in Yakima, especially located on individual lots. o The City of Yakima could analyze the Municipal Code to determine if there are other options to encourage infill of vacant land and buildings with residential uses that have been successful in other communities. o Many of the existing buildings in the Central Business District were constructed with boarding house, hotels or other residential uses on the upper floors. These buildings often do not have fire suppression sprinkler systems or elevators. The City could examine code options related to these public safety measures to encourage redevelopment of these buildings with new residential units. Wage 7 o The State legislature adopted amendments to RCW 19.27.060(2) which allows for local government to reduce the minimum dimensions of habitable spaces in single family housing units in an effort to promote smaller homes. o Promote accessory dwelling units in a wider range throughout the City. o Examine "Inclusionary" zoning that requires a percent of new units to be below market rate. III. Construction Costs and Permitting in the City of Yakima The City of Yakima was invited to participate in a 2017 survey of five markets in Eastern Washington to study housing costs. The five markets included Wenatchee/East Wenatchee, Yakima, Spokane, Ellensburg and Tri-Cities/Benton County. The 8-page report was issued in March 2018 and indicates that construction of single family housing in the City of Yakima is competitive with the other four markets. In some measures, Yakima is one of the two least expensive markets for development costs. Areas where Yakima was most competitive was Median Value per square foot, total Sales Prices, total Cost of Framing materials and total permitting fees. One area in which the Yakima market was high was the Land Cost. One area where Yakima fell in the middle of the group was the length of time for development approvals. If the length of review time is perceived as excessive, this can be viewed as a potential disincentive for development. Some options to reduce processing time include: 1. The zoning code could be examined for land use types where the review level is changed to make more affordable housing type "permitted" Class 1 review projects, rather than requiring a class 2 or Class 3 review. Under Washington State Environmental Policy Act (SEPA), review is necessary for any project that has more than 20 housing units. One option the City might consider is to make any SEPA exempt housing project a permitted land use. 2. In some Washington State communities, there is an option to pay an additional fee for expedited reviews. In other communities certain types of land uses are given an expedited review if the use is something the community wants to encourage. 3. As noted earlier in this paper some recent affordable housing developments in Yakima have experienced active neighborhood opposition, which has added up to a year to the review process. The NIMBY problem is a natural reaction to a project that might introduce diversity or increased housing density into an area. The City could review options to reduce the NIMBY effect, including community education and engagement. One solution may involve multiple smaller projects spread broadly in the City, rather than a project of 30 or more housing units. This could reduce the NIMBY opposition and streamline development of small scale projects. There are some grant opportunities for assistance in financing the construction of housing for low to moderate income families. One of the challenges remains operational costs for these developments. IV. Frontage Improvements and Necessary Public Utility Costs The cost of providing public utilities to new development has been noted as a concern for new projects in Yakima. Public water and sewer are enterprise funds, primarily operating on the rates paid by existing customers. Therefore, an adequate reserve fund for public financing of area wide improvements or line extensions does not exist in either of these programs. Some grant funds have been used in the past to assist in the extension of utilities into some areas. This funding is significantly constrained. Yakima Municipal Code Title 12 directs many of the policy issues related to these elements. To reduce frontage and utility costs, locations that already are served by public utilities and complete streets should be prioritized for affordable housing projects. 5IPage 8 Public water and fire flow— Public water is available from either the City of Yakima or Nob Hill Water systems, depending on location. No new wells in City Limits for drinking water are permitted, although there are still neighborhoods where public water is not currently available. The City recently extended public water to a mobile home park on Fruitvale Boulevard due to a failed water system. Public sewer—One of the most expensive items for new development is the common need to extend a public sewer line to the site. Currently, the City has approximately 20% of the neighborhoods and areas where no public sewer is available. The Yakima Health District does not recommend allowing any new septic systems inside the City of Yakima if public sewer can be made available. The City of Yakima does not have a robust Capital fund to finance the extensions of public sewer to all the regions of the City where no sewer lines exist or the capacity of the lines are not adequate. Developers cite the "to and through" policy requirement as adding expense burdens to projects, yet this remains one of the principle methods of equitably extending sewer lines to adjacent properties. Late comer agreements for sewer reimbursement are not popular, because the payback time is uncertain. In some of our older neighborhoods, the cost of sewer connections is a financial burden to families in existing homes that have old or failing septic systems. An alternative financing tool is the Local Improvement District (LID). In some neighborhoods, property owners may not be able to afford to participate in the LID or even afford the connection charges. Street frontage improvements - Construction of new streets, or improvement to existing streets to support a new development is a basic element of a project. There are many factors that impact the nature of the street improvement necessary to support a new development. The City has adopted the policy of "complete streets" that considers all users, including walking, biking and transit. This is most important in walk to school neighborhoods and safe routes locations. On street parking is often desired in a new development, but not required. Traffic calming is allowed on neighborhood streets, but not on busy arterial streets. The City policy is for sidewalks on both sides of the street. Infill lots may be exempt from some of the requirements to upgrade streets. Requirements for street frontage improvements must have a "nexus" to support the need for physical improvements. A traffic study is required for large projects to determine if"off-site" street improvements are necessary. The authority for the traffic study is most often the State Environmental Policy Act (SEPA). V. Washington State Legislative Affordable Housing Optional Programs Several programs have been enacted by the State to encourage affordable housing. • Affordable Housing Fund Sales and Use Tax increase. The State of Washington enacted an optional sales and use tax increase of one-tenth of 1 percent for Counties and Cities in 2015 (RCW 82.14.530) to be used exclusively for affordable housing projects and mental health programs. The cities of Ellensburg and Olympia have adopted programs to impose this sales tax increase. The city of Ellensburg anticipates it will raise approximately $450,000 to $500,000 per year from this program. The City of Olympia anticipates close to $2 million a year in revenue. The program requires a ballot measure for adoption. Both Ellensburg and Olympia conducted community workshops and studies to get support to pass these ballot measures. If the city council is interested in this program, a study session on implementation steps should be scheduled. • Disposal of Surplus Government Property at a Discount for Affordable Housing: Effective June 7, 2018, RCW 39.33.015(8)(a) enables state agencies and local governments to dispose of its surplus property at no or low cost to developers to construct affordable housing. There are requirements as to the affordability period and other restrictions as to the use of the property associated with the disposal. Municipalities must typically receive fair market value for surplus properties. Allowing Wage 9 the sale of surplus property at a discounted rate will open up more land for development of affordable housing. This program could streamline transactions of idle city owned land to housing agencies and developers who will build qualified affordable housing units. • Allowing for Smaller Residences: In HB 1085, the legislature amended the state building code and related planning statutes to allow local governments to reduce the minimum dimensions of habitable spaces in single-family residential units below the standards set forth in the state building code. This bill is intended to enable the development of smaller, more affordable homes, sometimes called tiny homes. RCW 19.27.060(2) now reads, in relevant part: The legislative body of a county or city... may adopt amendments [to its local regulations implementing the state building code] that eliminate any minimum gross floor area requirement for single-family detached dwellings or that provide a minimum gross floor area requirement below the minimum performance standards and objectives contained in the state building code. The City of Yakima has not adopted an amendment to the building code that allows this reduction in gross floor area requirements. • Exempting Certain Property Intended for Low-Income Housing from Property Taxes: ESSB 5143 exempts real property owned by a nonprofit entity from state and local property taxes when that land is being used for developing or redeveloping low-income residential housing. In particular, this law extends the exemption to community land trusts where the land remains in the ownership of the nonprofit but is leased to low-income households. There is no community land trust in Yakima. • Increased Funding Available for Affordable Housing and Homelessness: The legislature made permanent the $40 recording fee surcharge intended to raise funds for homelessness and affordable housing. It also increased the surcharge amount to $62. A portion of the surcharge is provided to counties to put toward their homeless housing program and a portion goes to the state to be deposited in the Home Security Fund Account. The funds must be used for specific purposes, and data collection requirements and metrics are incorporated to determine whether the funds are addressing the homelessness problem. The City of Yakima is considering a request to Yakima County that would reserve this increase in the filing fee for the capital project financing and operations of a permanent low-barrier homeless housing project and /or homeless shelter. VI. Minimum Housing Maintenance Code Preservation of the existing housing stock in the City of Yakima is critical to meeting the demand for affordable housing. The condition of housing (both rental and home ownership) is essential to quality life in the community. The City of Yakima, as an Entitlement Community, expends approximately 60% of the Community Development Block Grant (CDBG) resources in the repairs for safety and health items in the homes of senior citizens and disabled persons each year. This program has enabled hundreds of elderly families to "age in place", delay entry into an assisted living situation, or simply experience safety repairs that otherwise were not affordable. The City Council has strongly supported this program but it is limited by available funding. Much of the City of Yakima housing stock is old, with over 50% of the housing units constructed more than 40 years ago. There is a strong correlation between housing age and housing condition. The percentage of housing units that lack either a kitchen or plumbing varies by Census Tract between zero and 11.26 percent, with the high rate of no plumbing is found east of 16'h Avenue. Other condition issues have not been recently documented. The City of Yakima has adopted Municipal; Codes for Chronic Nuisance properties (YMC 11.45), Dangerous Buildings (YMC 11.46) and Apartment 7IPage 10 House/Hotel Safety Codes (YMC 11.13) but we have not adopted the optional Minimum Property Standards (MPS). The City of Yakima does not have a rental registry program, like Seattle does that requires inspection of rental units on a routine basis. At this time, the City cannot demand an inspection of a rental unit, which impairs the ability to write citations for unsanitary or potentially dangerous conditions. While there are many positive reasons to support a Minimum Maintenance Code or program, one significant negative affect would be the potential to displace low income persons from housing without any other housing resources to provide shelter. The City does not maintain a vacant residential building program at this time. The City Council has started a discussion of the goals and intended outcomes that may result from a vacant building program. If the City of Yakima adopts and enforces minimum maintenance standards, some housing units will be upgraded especially with public safety improvements. However, some housing units will likely be abandoned and some tenants may be displaced. City Council Options The Yakima City Council requested an overview report on the topic of"affordable housing". Staff has provided this briefing on the nature of this issue in our community. In order to begin to address the urgent housing needs in our community, the City of Yakima should focus on new ways to encourage construction of new housing units, and seek innovative methods to encourage housing which may be below market rates. The City of Yakima has many partners in this community that have broad expertise on these issues and may provide recommendations or more insight to the Council. 1. The City Council may choose to have a study session on the complex issues covered in this briefing paper. Community partners could be invited to attend and discuss their recommendations, concerns and future plans. 2. The Council may direct the Healthy Community and Neighborhood Building Committee (NCNB) to review this report and prioritize action steps for the full Council. 3. Some of the programs noted in this report require review by the Yakima Planning Commission for amendments to the Zoning Ordinance. 4. Any change to utility policies and street improvements should involve a broad community review, including the City of Yakima Bicycle and Pedestrian Committee. 5. Consideration of the adoption of the minimum maintenance code and a rental registry could involve review by a variety of stakeholders, including but not limited to, tenant rights organizations, health industry professionals and landlord organizations. Wage m ..... w,:: . x = _ .. a4.::::.iv:w+:.. ,vr'.:.:i;.;....„,rii. 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' w .... .. .. .................... .:4:..w...wJ.w...........w..... ......mm'xx.... ..... .mw. .......................................................... :.......... ..:..,,,,........wmw.mv........................ ..... w .. ..xix'v:ix. .. . . ......mmx.vm.. ..... . x. y: '::::.. ...... .mmmxmm:. mu§iiii:........::::i : iii: : 'f" .. w.a.::.w"N ... 0 alciepeiogy What Does Afforcable Housing Mean ? Housing is defined as "affordable" if the costs do not exceed 30 percent of a family income. Families who spend more than 30 percent of their income are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. toe Families that spend 50 percent of their annual income on housing are considered severely cost burdened. IC* Statewide, over 51% of renters are cost-burdened and nearly 234,000 households are severely cost-burdened today. A family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States (2015 Washington State Housing Needs Assessment). Yakima Housing Facts CC Vacancy Rates, especially for rentals, is very low. Available rentals in Yakima save been reported to drop from 7.8% to 1.7% vacancy rate between 2014 and 2016 C. Home Ownership remains out of reach for many. Approximately 44% of our City families cannot afford to purchase home at tie area Median Home price. To afford the purciase of a median value iome in Yakima, a family would need to ma <e at least $38,500 annually ($3,200 monthly). C Many households are cost burdened. In the City of Yakima, 32% of renters are cost burdened and 49% of iome owners are cost burdened. There is a current need for 3,300 more affordable housing units in Ya <ima. CCC New construction, especially of multi-family units has not kept up with demand. Between 2009 and September 2018 a total of 1,793 housing units were issued building permits in the City of Ya <ima, or an average of 180 permits per year. To meet our population growth projections, we need about 330 new sousing starts every year. CCC Smaller Household size. Over ialf the Yakima iouseholds are one or two people witi no csildren. In 2015, 29 percent of Ya<ima`s 33,074 houseiolds were single persons and 24 percent of the iouseiolds were couples with no csildren. es Housing choices for low to moderate income families in Yakima is severely limited. The Median Family Income in the City of Ya<ima is $43,089 (2016 ACS data) which is 27% lower than tie Wasiington State Median Family Income. 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C:40ver the last 10 years, we have had an 4:4We need to encourage multi-family units and average of 180 housing units permitted each rentals of all types. year. C:CThere is an interest in development of town C:CTo meet our GMA goal, we need to have 330 house type construction. housing units started each year. 4:' The construction market will not likely be 4:4We need partners to help in this effort and able to build quality units for affordable need to be creative. housing without assistance. Strategies to be Reviewec Does the City have adequate supply of land zoned for housing, including alternatives to single family homes? What zoning districts encourage rental housing development? Are there local regulatory barriers that inhibit affordable housing development? Are there regulatory incentives we can offer to encourage housing construction? Are construction costs & permitting timelines in the Yakima Area consistent with other communities? Can they be improved? 4. Frontage Improvements and Utility Costs associated with new or infill development. What programs has the State of Washington enabled that the city might want to take advantage of and what steps are necessary to implement the programs? 6, Should the city of Yakima consider a maintenance Code to assure that existing rental housing is preserved as well as descent and safe? What are the disadvantages to this approach? Question 1 : Do we have enough land zonec for Affordable Housing ? Zoning and land use analysis from the Comprehensive Plan 2040 indicates yes. Availability and market price of land might be a different story. The Growth Management Act (GMA) population projections for the City of Yakima indicate a need for approximately 6,600 new housing units by 2040. Half of those units should be available to low or moderate income families. Exhibit 3-1 4* Zoning and Capacity for Growth by District Buildable Excluding Critical Areas (Vacant, Agriculture, Infill, Underutilized) Zoning 1 2 3 4 5 6 7 : Citywide Suburban Residential 2.3 61.9 49.3 - 14.4 66.1 0.6 • 194.6 ............................................. Single-Family Residential 7.1 5.9 19.2 6.7 82.4 2844 •....•E;w iki 895.8 Two-Family Residential 9.2 35.6 40.2 5.9 29.9 61.3 5_ E _ 575.1 Multifamily Residential 13.1 2.1 10.0 4.2 29.6 13.3 173.5 • 245.8 Professional Business District 2,8 10.6 7.5 5,2 3.7 18.2 48.0 Local Business District 0.3 0.4 5.7 1.1 1.3 2.0 9.4 • 20.2 Historical Business District 0.2 - - 0.1 _ _ - 0.3 Small Conenience Center _ 1.6 - 3.2 12.8 - 26.7 • 44.3 Large Convenience Center - - 0.7 - 8,5 1,0 2.2 12.4 Central Business District 3.0 1.2 - 15.9 _ ss - 20.1 .............................................. General Commercial 17.5 52.6 5711 113.1 205. 442.4 Light Industrial 12.9 28.1 ####: 18.8 ####sssssssssssssss . :::::::.:.: 2:##:#s 1.7 i i 581.1 Heavy Industrial - 9.0 - 8.3 - - - 17.3 Regional Development 64.3 • 232.2 Airport Support - - - - - - 1.0 1.0 Totals 236 263 318 82 328 434 1,670 3,331 Source: Yakima County 2015, BERK Consulting 2017 Vacant Land, City of Yakima by Zoning & Council Districts ors or+mons r,at n:x4a roan,an.„, •:......-" «" - `' : ... n As..5i:.ms 5u ars ...a' -, r....._.y ; }_.,' • /." =s,.,,j „. I. ...t 1- ":;. r 1 City Zoning W ,r— ItkFrY.tkkl:i>M1J+OGilxkrt '- y f ' 4 , y • ... 1 AS R 2.ki4t3l&u4rtl455 2T5 ik r +...t ,y •' „a_.,, 5 •• w'y, t.,..._ 1....... .F cao,eenlra itusur-.>oltn.._t u�I��,``}} I. s�' r � _,> � �`+{ a� &S O..Gan4sa?Cxxr:uxrcyl ` a �M1"„ '.i. 4,ry' r __" ... 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E'i .'1. �L .r ' ' j ..} -_.,ram r. r..... `i ..`�_. r rr .M i.T..A'J'f ; . :r r ........ ; .... n s,= t 5 , Vacant lands were identified using the Yakima County Assessor property records,A parcel was determined to be"vacant'if it has Trot Yakima a building (or improvement)value less than$?,gOtl Lands that are owned by the City of Yakima, Yakima County, the Greenway NORTH Foundation, Yakima School District or a Washington State Department were not considered vacant for the purpose of Analysis inch=3,fltt4 feet development. b �'L yI C y of Ya nna Paannkng Division.December 2011 • str �.0 is Question 2 : Are there regulatory incentives or barriers to the construction of affordable housing in Yakima ? The City nas implemented a variety of incentives: 4:^Zoning Code Amendments to streamline construction of "Accessory Dwelling Units" (or ADU's). These are housing units which are built on lots that already have a house or other structure. 4:^Zoning Code Amendments to allow clustering of housing units around a common amenity in order to promote tiny home villages. 4:*New construction of housing is permitted in nearly all other zoning districts and locations. 4:*The City of Yakima has not imposed any Impact Fees (as allowed under RCW 82.02) on any construction projects. C*The City of Yakima offers a free Development Service Team project review. A follow up review is available for $100. If a developer ta<es advantage of these programs, the actual project review can be shortened because they have a better understanding of the Codes and requirements. On-line payments and filing permitted. 4:*Multi-family Tax Exemption program (MFTE) provides an exemption of property tax increases for up to 12 years based upon qualified improvements of the project and is governed by YMC 11.63.040. Currently applies in the CBD. Should this area be expanded? 4:*The City of Yakima is an Entitlement Community for the HUD HOME program used to support many partnerships and resulted in the construction of over 250 new housing units in tie last ten years. Partners include Habitat for Humanity, Yakima Housing Authority, Next Step Housing, Catholic Charities and others. Things we can do better — promote smaller lots and smaller units in walkable neighborhoods . ........................................................................................................................................................................................ .... ..................... . ..................-:::................................................................................................................................. .::... .... Other incentives to consider that may encourage affordable housing construction Encourage infill of vacant land and buildings with residential uses that have been successful in other communities. ICI* Many of the existing buildings in the Central Business District were constructed with boarding house, hotels or other residential uses on the upper floors. These buildings often do not have fire suppression sprinkler systems or elevators. The City could examine code options related to these public safety measures to encourage redevelopment of these buildings with new residential units. tC,The State legislature adopted amendments to RCW 19.27.060(2) which allows for local government to reduce the minimum dimensions of habitable spaces in single family housing units in an effort to promote smaller homes. + Promote accessory dwelling units in a wider range throughout the City. <' Examine "Inclusionary" zoning that requires a percent of new units to be below market rate. Question 3 : Is Yakima competitive in construction costs and permitting ? A 2018 report on housing construction costs in five markets in Eastern Washington (Wenatchee/East Wenatchee, Yakima, Spokane, Ellensburg and Tri-Cities/Benton County). indicates that construction of single family housing in the City of Yakima is competitive with the other four markets. Yakima is one of the two least expensive markets for development costs in { Median Value per square foot, Total Sales Prices, Total Cost of Framing materials and Total permitting fees. One area in which the Yakima market was high was the Land Cost. Permitting time is average for Eastern Washington - Can it be streamlined more ? Allow more housing construction to be permitted Class 1 Uses which do not require neighborhood review. Under Washington State Environmental Policy Act (SEPA), review is necessary for any project that has more than 20 housing units. One option the City might consider is to make any SEPA exempt housing project a permitted land use. Consider an option to pay an additional fee for expedited reviews. In other communities certain types of land uses are given an expedited review if the use is something the community wants to encourage. Can we reduce some of the NIMBY delays without hurting existing neighborhoods? Appeals can add up to a year to the review process. The City could review options to reduce the NIMBY effect, including community education and engagement. One solution may involve multiple smaller projects spread broadly in the City, rather than a project of 30 or more housing units. Question 4 : Do street improvements and utility costs deter affordable housing projects ? Public water and fire flow — Public water is available from either the City of Yakima or Nob Hill Water systems, depending on location. No new wells in City Limits for drinking water are permitted, although there are still neighborhoods where public water is not currently available. The City recently extended public water to a mobile home park on Fruitvale Boulevard due to a failed water system. Public sewer — One of the most expensive items for new development is the common need to extend a public sewer line to the site. Currently, the City has approximately 20% of the neighborhoods and areas where no public sewer is available. The Yakima Health District does not recommend allowing any new septic systems inside the City of Yakima if public sewer can be made available. The City of Yakima does not have a robust Capital fund to finance the extensions of public sewer to all the regions of the City where no sewer lines exist or the capacity of the lines are not adequate. To reduce frontage and utility costs, locations that already are served by public utilities and complete streets should be prioritized for affordable housing projects. Street Frontage costs and Traffic Impacts C. The City has adopted the policy of "complete streets" that considers all users, including walking, biking and transit. This is most important in walk to school neighborhoods and safe route locations. The City policy is for sidewalks on both sides of the street. 4C4 On street parking can increase the width of a street and is often desired in a new development, but not required. C. Traffic calming is allowed on neighborhood streets, but not on busy arterial streets. Infill lots could be exempted from some of the requirements to upgrade streets. .• Requirements for street frontage improvements must have a "nexus" to support the need for physical improvements. IC* A traffic study is required for large projects to determine if "off-site" street improvements are necessary. The authority for the traffic study is most often the State Environmental Policy Act (SEPA). Question 5 : Are there other State Programs the City could adopt to encourage Affordable Housing ? Affordable Housing Fund Sales and Use Tax increase. The State of Washington enacted an optional sales and use tax increase of one-tenth of 1 percent for Counties and Cities in 2015 (RCW 82.14.530) to be used exclusively for affordable housing projects and mental health programs. The cities of Ellensburg and Olympia have adopted programs to impose this sales tax increase. The city of Ellensburg anticipates it will raise approximately $450,000 to $500,000 annually. City of Olympia anticipates close to $2 million a year in revenue. The program requires a ballot measure for adoption. Disposal of Surplus Government Property at a Discount for Affordable Housing: New in June of 2018, local governments may dispose of its surplus property at no or low cost to developers to construct affordable housing. There are requirements as to the affordability period and other restrictions as to the use of the property associated with the disposal. This program could streamline transactions of idle city owned land to housing agencies and developers who will build qualified affordable housing units. Allowing for Smaller Residences: The legislature amended the state building code and related planning statutes to allow local governments to reduce the minimum dimensions of habitable spaces in single-family residential units below the standards set forth in the state building code. This bill is intended to enable the development of smaller, more affordable homes, sometimes called tiny homes. The City of Yakima has not adopted an amendment to the building code that allows this reduction in gross floor area requirements. Exempting Certain Property Intended for Low-Income Housing from Property Taxes: ESSE.t 5143 exempts real property owned by a nonprofit entity from state and local property taxes when that land is being used for developing or redeye °ping ow-income residential housing. In particular, this law extends the exemption to cranirnimi.tv ionri trusts where the land remains in the ownership of the nonprofit but is leased to low-income households. There is no community land trust in Yakima. Increased Funding Available for Affordable Housing and Homelessness: The legislature made permanent the $40 recording fee surcharge intended to raise funds for homelessness and affordable housing. It also increased the surcharge amount to $62. A portion of the surcharge is provided to counties to put toward their homeless housing program and a portion goes to the state to be deposited in the Home Security Fund Account. The funds must be used or specific purposes, and data collection requirements and metrics are incorporated to determine whether the funds are addressing the homelessness problem. The City of Yakima is considering a request to Yakima County that would reserve this increase in the filing fee for the capital project financing and operations of a permanent low-barrier homeless housing project and /or homeless shelter. Question 6 : Should Yakima consider a Minimum Maintenance Coce ? Preservation of the existing housing stock in the City of Yakima is critical to meeting the demand for affordable housing. The City of Yakima, as an Entitlement Community, expends approximately 60% of the Community Development Block Grant (CDBG) resources in the repairs for safety and health items in the homes of senior citizens and disabled persons each year. This program has enabled hundreds of elderly families to "age in place", delay entry into an assisted livins situation, or simply experience safety repairs that otherwise were not affordable. The City Council has strongly supported this program but it is limited by available funding. Much of the City of Yakima housing stock is old, with over 50% of the housing units constructed more than 40 years ago. There is a strong correlation between housing age and housing condition. The percentage of housing units that lack either a kitchen or plumbing varies by Census Tract between zero and 11.26 percent, with the high rate of no plumbing is found east of 16th Avenue. Other condition issues have not been recently documented. The City of Yakima has adopted Municipal; Codes for Chronic Nuisance properties (YMC 11.45), Dangerous Buildings (YMC 11.46) and Apartment House/Hotel Safety Codes (YMC 11.13) but we have not adopted the optional Minimum Property Standards (MPS). The City of Yakima does not have a rental registry program, like Seattle does that requires inspection of rental units on a routine basis. At this time, the City cannot demand an inspection of a rental unit, which impairs the ability to write citations for unsanitary or potentially dangerous conditions. While there are many positive reasons to support a Minimum Maintenance Code or program, one significant negative affect would be the potential to displace low income persons from housing without any other housing resources to provide shelter. The City does not maintain a vacant residential building program at this time. The City Council has started a discussion of the goals and intended outcomes that may result from a vacant building program. If the City of Yakima adopts and enforces minimum maintenance standards, some housing units will be upgraded especially with public safety improvements. However, some housing units will likely be abandoned and some tenants may be displaced. City Council Options CThe City Council may choose to have a study session on the complex issues covered in this briefing paper. Community partners could be invited to attend and discuss their recommendations, concerns and future plans. The Council may direct the Healthy Community and Neighborhood Building Committee (HCNB) to review this report and prioritize action steps for the full Council. Some of the programs noted in this report require review by the Yakima Planning Commission for amendments to the Zoning Ordinance. +Any change to utility policies and street improvements should involve a broad community review, including the City of Yakima Bicycle and Pedestrian Committee. Consideration of the adoption of the minimum maintenance code and a rental registry could involve review by a variety of stakeholders, including but not limited to, tenant rights organizations, health industry professionals and landlord organizations. 34 ^ . �� Valley �� �� �� ���� , ~�K�� Future � ^ ��°�U�.�^ �� �u������� "���u������ "�ro���� ~ �m � SINGLE FAMILY HOUSING WHITE PAPER March 2018 Authors: Housing Values -- Brian Vincent, Pacific Appraisals; PermnitDmta--Stmve King, City mfWenatchee Background The City of Wenatchee and its partners commissioned a housing study in 2016 to collect data related to the cost and availability of housing in the Wenatchee Urbanized area, which includes Wenatchee, East Wenatchee, Flooh Island, K8o|ogm and Monitor. The Housing Needs and Market Demand study can be viewed on the cityvvmbmita via following web address: tch eewa.gov/gove mrmem t/m ayo r-s-office/tey This 2D10 study reached several findings based on the data available. One conclusion confirmed was that housing prices are quite a bit higher in the Wenatchee Urban area compared to other Eastern Washington cities. The following table was provided in the 2016 study: Metro Area Single Family ttorn Third of Median Value per Residences Home Values S.F. Exhibit 36.Comparison of Median Home Values as of June 2016 As demonstrated in the study, Wenatchee's income levels are comparable or even less than Spokane and Tri-Cities. This is critical in the bottom 1/3 median values for housing affordability. Questions have surfaced asking if why the cost of housing in Wenatchee is higher than many other similar markets in the area. This paper is designed to compare and contrast housing costs in an effort to quantify and explain cost differences, while also bringing to light barriers and opportunities. In this paper, single family housing information has been collected from five markets, including Wenatchee/East Wenatchee, Yakima, Ellensburg, Benton County and Spokane. Information sources are from various county assessors, aerial mapping, local multiple listing services and, in limited oasen, naa| estate appraisers. 8aovnh criteria is defined as follows: 0 Data search occurred between October 2O17ho February 2018` 35 • Homes built between 2016 and 2017, sold new in 2017 • Home sizes researched ranged from approximately 2,000 sf and 2,500 sf • Spokane search required slightly larger homes due to lack of data. Data Total sales price is defined as the price of a home, land, and amenities. In the Wenatchee Market, listings were also used and prices obtained from the NCWAR Multiple Listing Service. Underlying land value was established using multiple criteria, including A) Last recorded land sale,; B) Neighboring lot sales; C) Realtor/Appraiser opinions; D) Percentage of land value versus total sale price. Information has not been confirmed with market participants and has been relied upon using assessor/multiple listing service records as reported. The Residual Sale Price (RSP) is defined as the Total Sale Price (TSP) minus the underlying land value. Sample Sizes: Wenatchee 46 Yakima 13 Benton County 16 Ellensburg 18 Spokane 18 Results A number of charts will be presented showing metrics found in the five market areas and how they compare and contrast, beginning with Total Sale Price. Total Sale Price ($/sf) $245 82 r� 7 G 51� 52 C .....:.....: 111 10 z p S too n igt, 5.5t3 Loon 40 :y;✓c f z1tJE°Y.gt, i'II(�tt 36 Information on sales has been collected ant the previous chart indicates Total Sale Price ($/sf) of building area. The Total Sales Price on average (orange) is highest in Wenatchee at$185 per sq. ft. The low end of the range is Spokane noted at$118 per sq. ft. The difference between Wenatchee and the other towns ranges from $21 to $67 p/sq. ft. Land One of the larger components in a home sale is the land, which, if more expensive, could drive up the total sale price. The next chart shows both land prices and the ratio between land and Total Sale Price. Average Land Value and Ratio 20% SRo t)im 18'h, 5.' {tsar 4% •-ice- °:.:: .....:,..... ,:.,....... WOO(; 10% $bO,C)ttC: 3% tIOL E�)%. ........................................................................................................................._..................................._......._....................................._........................................................... 54U,U0C'. iyenatchec Yakuna Benton County Ellensburg 5pokrine LV to TSP Avg. Land Price The Wenatchee Market does have the highest land value noted at$77,500. Yakima and Benton County have the next highest land prices at$64,000 and $66,500 respectively. Ellensburg and Spokane have lower land prices. The ratio of land price to TSP price is relatively consistent in all three markets ranging from 16%to 19%. The following chart shows the Residual Home Value which does not include land value. RESIDUAL HOME VALUE ($/SF) I...$2104. $ 9...•......116. , $156 .4143. ..$15U.:.141 Y.t:-$/3?;<i.:$t25;74 00�`— ..$T i. 103 `' 7,....j.. Y yt;a a•Tt. J �ti, 37 As can be seen, even with land extracted, Wenatchee on average has the highest unit value noted at$150 p/sf. This is $16 to $20 p/sf higher than Benton County and Yakima. Quality In an effort to determine if the difference in value is associated with quality, below are photos of homes in each market which reflect the average price. WENATCHEE/EAST WENATCHEE FEE"T. . .•• r . . . . .• ....... 4 0.. -• ;EH"..HEERssiftie:34:::::::02:::.„,::::::;•.,;•••••••, • YAKIMA • • ••••?.••••••••••••••••••••••••••••••,........:::•••••-•••••'-' 1.4.1.04. •• ...• ,-•• ••••• ?..;;;:t-i.• • ••- •• • • . . . .... ,". • ...., -- — BENTON COUNTY • , -• • . . „HE •• •.: • .• .15.°X*'***4 •'• . ' •• .T.••••'....• ''."‘"7 •I . * ***•1.3*§F"*".*T2 ...... •• ........ :!;;;;;",;••:.;,7",•"/AVEilif, • """"f•Zi , . 38 ELLENSBURG ..w:. r. .................::.w w::.w w v w:::.w.w::::::.w::::::::::::::::::....::::........:......................................... w.. .... wa.....x a....xm........w...r ..ww .. ;.. :..wwwx..: ..: "* x„xa»";Ma,,,iaw.a ta***-,..,;'i:: .,nxxtw "#r.. ..•—•a. ................. ..F.v t... .. r x: :'k.,;.>-:.......:.. x. , .x.F. v • ....,:xm;.. .. .u..v.;.::' :..:: •.aa.:...a,+tow.: ::::: '::::: ::wv+' ::s,. nHH�::;tt. :w::, SPOKANE • • ..........................:..................... a . }� Fi 1.i;:.*44,'tYi:�v':iiii':::"iiiiry .ed..::::v:,vv;::.v. .si::uA.s., . .. ... yw::a :xvx r . :JnN."'>.JA'%;m:bY+M i:xki�,��il,... House style, construction type, roofing, fenestration, and siding appear similar. There are a few differences in bump outs and other architectural features. Interior quality was not compared. Framing Package Pricing In an effort to compare framing package pricing, we submitted the same materials list to 4 lumber yards and the results are shown as follows: Wenatchee/East Wenatchee: $37,329 Ellensburg: $33,500 Benton County: $32,869 Yakima: $26,710 Spokane: NA on « ~ Plumbing Costs for rough-in plumbing are unknown at this time a 2.250 sq. ft. 3-bedroom, 2-bathroom average quality home. The Housing Solutions Group would ask that contractors in the community weigh in on these costs. Electrical Costs for rough-in electrical are unknown at this time a2.25Osq. ft. 3-bedroom, 2-bathroom average quality home. The Housing Solutions Group would ask that contractors in the community weigh in on these costs. Title and Escrow Fees Title and escrow fees for a $3OO.U0U purchase price have been collected from the five communities. On average the Wenatchee Market is above all other markets. However, these costs do not appear tmbeo significant driver. _Title and Es��o�� Cost ��� ����"������n����� _ � - Community Low� | High Average 0iff.VVen. �Wenatchee $ 1,500^~$ 2/400 _$��1'ySO ^ Yakima $ 1,657._$ 1'940 | $ 1,799 $ 152 Benton County $ _-1598 $ ~~2,224 $ 1,911 $ 39 . Ellensburg $ _1,505 $ Spokane $ � - _ '� � ���$ 1,92I Labor The authors of this white paper were not able to obtain Information on labor costs for new home construction. It is recognized that labor is as much a cost as materials or permit fees. Permit Fees � A portion of the development cost is permit fees.A survey of the comparison cities was � performed in4m quadar2O17. Information was collected for all fees for a new single family ' home including utility connection charges for a single family home ranging from 1,800 to 2,300 square feet. In general the following table i||ustnobau that fees range between $3.400 in Kennewick to $13,982 in Douglas County with an average of all entities at$10,024. The table provides a summary of total fees for a 2,000-square-foot house with a 420-square-foot garage. A detailed table is included in the appendix showing the breakdown of fees for each agency for varying house sizes. 40 Total Jurisdiction Permitting Douglas County $ 13,670 East Wenatchee $ 13,275 Ellensburg $ 12,472 Richland $ 11,201 Chelan County $ 10,039 Spokane $ 9,699 West Richland $ 9,264 Yakima $ 9,147 Wenatchee $ 7,981 Kennewick $ 3,490 Average $ 10,024 Single Family Home Permit and Connection Fee Cost Comparison 14,00C S OW. 58,i10W $ti,0700 000 a et \\% (^ $3 ,Z*� c' • Development Requirements Permit fees are not the only way that government agencies impact the cost of constructing new housing units. The prior section of this white paper only addresses the direct cost of permitting in terms of fees. The purpose of this white paper is to determine if there are any noticeable differences between the Wenatchee Valley and the comparison cities. In general, agency requirements impact the cost of developing new units in two areas 1)the land development or creation of a building ready lot; and 2)the actual construction of a housing unit. 41 The land development requirements were not studied in depth inthis white paper aoit was outside the scope of work. Based on common knowledge of working with other agencies, generally all urban onaos require installation of similar noodvvaya, oidmvvo|hs, vvabmr, amvver, and stormwater facilities. All of these elements are standard urban services that make a neighborhood livable. However, there are some distinguishing factors in Wenatchee that provide extra challenge to complying with these requirements. These factors may include topography, requirements to extend utilities to access property(known as offsite improvements), critical areas due to slope and xvat|ands, and construction specific construction requirements. For example, developing stormwater controls in areas with clay soils is far more difficult compared to areas with sandy soils. This directly impacts the area required for ntmnnvvetmrponds. Nevertheless, given the prices of lots in the Wenatchee area, it may be safe to assume that � these requirements are not substantially different from the comparison cities. More work may be necessary to compare development standards if a more detailed analysis is determined to be valuable. The second area of government requirements impacting cost is the application of building codes. The Wenatchee Valley and all of the comparison cities are required to implement the International Building Code. This requirement is mandated by the State of Washington. Building officials work together across the state to help understand how the code is implemented. Thus building code requinannents, vvhi|m they do impact cost, do not likely impact costs disparities between agencies especially for single family homes. This can be verified by builders and associations that work across multiple jurisdictions to see if homes are required to be built differently between jurisdictions. Volume of Building Like anything that involves production, the volume of units built may have an impact on the differences in the cost of homes. In areas where there are large tracks of land available to large scale deve|opera, production can be higher leading to greater efficiency in construction. While no direct conclusions are nnode, it is interesting to note that the total number ofpermits issued in Chelan and Douglas counties (including cities)was 574 in 2016, according to US Census data. This added slightly less than 1.1%to the existing housing stock of 53,000 units in the two- county region. In comparison, Spokane County (including cities) issued permits for 3,596 units in 2016. This added 1.7% to their housing stock of nearly 210,500 units. This difference is significant ina period ofa housing supply shortage. According to local builders, spec building does not generally occur in the Wenatchee Valley anymore. While not confirmed, it is suspected that spec building occurs in the comparable cities. These concepts are provided only to provide discussion as potential reasoning adding to why the cost ofconstruction is larger in Wenatchee.