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03/12/2019 02 Affordable HousingITEM TITLE: SUBMITTED BY: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEM ENT 1 Item No. 2. For Meeting of: March 12, 2019 Affordable Housing Joan Davenport, Community Development Director SUMMARY EXPLANATION: The City of Yakima is exploring the local challenges to encourage housing development. New housing starts have lagged behind demand. We are now experiencing a very low vacancy rates, especially for rental housing. The lack of affordable housing, especially for low to moderate income families, is a growing concern. This session will cover the following topics: 1. Does the City have an adequate supply of vacant land zoned for housing? 2. Are there regulatory barriers that inhibit housing development? What incentives we can bring to the table? 3. Are construction costs and permitting timelines consistent with other communities in Central Washington? 4. To what extent does street frontage improvements and utility costs impact housing costs 5. Are there programs enabled by the State of Washington or Federal government that we should be implementing to encourage affordable housing? 6. Should the City consider a maintenance code to assure existing rental housing is preserved and in safe condition? ITEM BUDGETED: STRATEGIC PRIORITY: Neighborhood and Community Building APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: BOARD/COMMITTEE RECOMMENDATION: 2 ATTACHMENTS: Description Upload Date Type D Affordable Housing Rraort.31ar 36,2019 Cover Memo D Affordable Hofrang Pra:enlatIon_BIN 3512019 Pramentalloo 3 City of Yakima Department of Community Development Affordable Housing White Paper City Council Study Session March 12, 2019 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). Today's vacancy rate for rentals in Yakima is estimates at about 1%. • 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. In 2018, we had 265 new housing units created. • 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 percent of the households were couples with no children. These population demographics may Wage 4 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 Rvevmga 4minry DATA USA: New Housing Units Permitted Since 2010 Type/Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Single -Family 91 66 64 73 78 113 107 90 144 826 Duplex 18 18 30 18 40 24 40 32 70 290 Multi -Family (3+ units) 277 96 72 30 21 3 0 3 51 553 Total New Housing Units: 386 180 166 121 139 140 147 125 265 1669 Population Growth to Housing Starts 2IPage 2010s 2011 2012 2013 2014 2015 2016 2017 2018 New Totals City Population 91,196 91,630 91,930 92,620 93,080 93,220 93,410 93,900 94,190 New Pop 925 434 300 690 460 140 190 490 290 3,919 Avg. new families (2.6 people) 355.8 166.9 115.4 265.4 176.9 53.8 73.1 188.5 111.5 1,507 New Housing 386 180 166 121 139 140 147 125 265 1,669 Starts 2IPage 5 Existing City of Yakima Housing Inventory Housing Type 2417 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% 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 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 tools to address blight, such as those properties identified in the Vacant Housing list? One tool may be an Urban Renewal District which requires designation of Blighted areas. 7. 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? 3IPaie 6 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 inventory Total Acres Vacant Acres AS, Airport Support 815.91 1.0 B-1, Professional Business 382.00 48.0 B-2, Local Business 225.20 20.2 CBD, Central Business District 282.40 20.1 GC, General Commercial 1,349.71 442.4 LCC, Large Convenience Center 195.69 12.4 RD, Regional Development 548.31 232.2 SCC, Small Convenience Center 304.79 44.3 M-1, Light Industrial 1,953.14 851.1 M-2, Heavy Industrial 118.92 17.3 R-1, Single Family Residential 6,813.31 895.8 R-2, Two Family Residential 2,230.29 575.1 R-3, Multi -Family Residential 1,146.23 245.8 SR, Suburban Residential 1,565.26 194.6 Grand Total 17,934.12 3,331 Sq. Miles 28.02 4.84 While it is true we will need housing for all income groups, the most significant need is to encourage the construction of housing that is affordable to low and moderate income family rental housing, which has a very low vacancy rate (less than 2%).The 2015 Vacant Land Study, a background document for the Comprehensive Plan found the City had an adequate supply of vacant land which could accommodate 44,817 new housing units. However, a suitable tract of land for new housing has been identified as one of the main obstacles in getting new projects started. Housing can be built in most zoning districts, but land zoned R-3, Multi -family is limited. The City could benefit from more R-3 zoned land. A new process for minor rezones was adopted with the 2040 Comprehensive Plan which generalized he Future Land Use category for Mixed Residential to include R-2 and R-3 zones. The Yakima Planning Commission could be tasked with identification of specific areas or zoning district uses to encourage housing. To assist the public in finding property for potential development, the City IT staff created a Dashboard for searching and information. This dashboard can be utilized at: https: r±yakimama ps.a rcgis.comfa opsroosdashboardrindex. html#1dOdOf868918e468ab7ae977386bOb991 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: Wale 7 ✓ 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. The City Council recently approved investing HOME funds to the 80 unit Bicycle Apartment project on North 50th Avenue and will be working with the Yakima Housing Authority later this year for approximately 36 housing units at the Armory development. 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. 8 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 most significant challenges is to fund 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 Wage 9 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. 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: 7IPae 10 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 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. Maintaining Housing Stock 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 Wage 11 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 House/Hotel Safety Codes (YMC 11.13) but we have not adopted the optional Minimum Property Standards (MPS). Some community conversation has occurred related to whether the City should promote short term rental housing such as those utilized as "Air Bed and Breakfasts (ABNB) or Vacation Rental Businesses (VRBO). The Yakima Planning Commission will be holding Zoning Text Amendment hearings in 2019 and will consider this topic along with other related short term rental issues. Some communities in Washington State have experienced a negative effect of short term rentals on the available housing market, as the vacation business removes units from the rental market. 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 Action Steps This Study Session was intended to summarize the role of the City in Affordable Housing, and identify action steps to encourage housing starts, especially those that may be below market rates. The City of Yakima has many partners in this community that have broad expertise in housing issues who could assist in providing recommendations or insight to the Council. Action Steps for the City of Yakima: 1. Refer items to the Yakima Planning Commission related to zoning and regulatory innovation for broad community discussion about potential amendments. The City Council reviews all recommendations of the Planning Commission. a. Review options for zoning of additional land for multi -family construction. b. Analyze the Zoning Ordinance (YMC 15) & Subdivision Ordinance (YMC 14) for regulatory strategies to encourage multi -family construction. c. Analyze the R-1 Zoning District to determine if more density should be allowed in the R1 Zone? d. Review techniques used in other cities, especially in the state of Washington to encourage new housing of all types. e. Review the concept of Inclusionary Housing Ordinances that require set -asides for affordable housing or payments into a fund for affordable housing. Seattle and Portland have similar ordinances with mixed results. f. Review short term rental zoning and licensing regulations (ABNB or VRBO). 2. Direct the Healthy Community and Neighborhood Building Committee (NCNB) to review this report and prioritize policy options for the full Council, including: a. Review methods to encourage below market rate construction of multi -family housing. b. Work with Yakima Housing Authority to bring more rent vouchers to Yakima from HUD. Wage 12 c. Explore potential rehabilitation incentives the City could offer existing building owners to develop mixed use projects with commercial/office on ground floors and housing units on upper floors. 3. The full City Council should evaluate some of the crucial policy issues related to encouraging new housing starts. a. The City has adopted the Multi -Family Housing Tax Credit Program, authorized in YMC 11.63.040. The program is limited to CBD zones. Should it be expanded? b. If the council decides to review development standards, such as changes to utility policies or street frontage improvements, a broad community discussion should be convened and include organizations like the City of Yakima Bicycle and Pedestrian Committee. The ability to offer any incentives or discounts from the City Water Division or Sewer Division is ultimately a rate payer and City Council policy decision. c. 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. d. The Council may want to discuss strategies to address vacant and abandoned buildings, like the Community Renewal District. e. CDBG and HOME Entitlement funds from HUD have been spent cautiously and strategically invested. However, there is broad authority to modify program investment. If the City would like to be briefed on these program options, a Study Session may be appropriate. Submitted by Joan Davenport, Director 10IPa;e What Does Affordable 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. 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). Yakima Housing Facts ❖ 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 ❖ 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. 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. There is a current need for 3,300 more affordable housing units in Yakima. ❖ 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 Yakima, or an average of 180 permits per year. To meet our population growth projections, we need about 330 new housing starts every 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 percent of the households were couples with no children. ❖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. Wage Distripution in Yakima County (Central) --Greater Yakima City Puma 25% 20% 15% 5% 0 0 0 4. 0 0 0 v.% Median Family Income in Yakima is $43,089 in 2016 zt S O 0 N. 0 o 0 o try ;1) 03 0 0 MD MI OM • ....... iiii ft= 3' 0 0 0 0 0 0 0 0 0 s o 2 rn.72 9 a- 0 6 6 6 6 6 6 et- 6 o r : 6• 0 s 4, 1 NI t 1 1 el N *2 6 3 ste. VI 4, Average 7,a!ary 0 I' 4 DATA USA Maps New Public Policy Maps from ESRI available free to all communities Maps for Affordable Housing • • USA Census Renter Occupied -lousing ,Sgrrirrt,l'yahti Ahtrijn Housing Demographics in the 2010 Census - Block Group 'Counts • • • .. . : • • 0 Yakima Ur'i(xi Gap Terrace Hc'pbl . What is the "bottom line"? THE CITY OF YAKIMA NEEDS TO ENCOURAGE CONSTRUCTION OF MORE HOUSING STARTS! +Over the last 10 years, we have had an average of 180 housing units permitted each year. In 2018, we had 265 housing starts. +To meet our GMA goal, we need to have 330 housing units started each year. +We need partners to help in this effort and need to be creative. ABOUT HALF OF THE NEW HOUSING UNITS SHOULD BE CONSTRUCTED FOR LOW TO MODERATE INCOME FAMILIES. +We need to encourage multi -family units and rentals of all types. +There is an interest in development of town house type construction. The construction market will not likely be able to build quality units for affordable housing without assistance. Strategies to be Reviewed 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 an Urban Renewal District to address blight issues? 7. 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 zoned for Affordable Housing? Zoning and land use analysis from the Comprehensive Plan 2040 indicates yes. Location, 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-f4. Zoning and Capacity for Growth by District Zoning Suburban Residential Single -Family Residential Two -Family Residential Multifamily Residential Professional Business District Local Business District Historical Business District Small Conenience Center Large Convenience Center Central Business District General Commercial Light Industrial Heavy Industrial Regional Development Airport Support Totals Buildable Excluding Critical Areas (Vacant, Agriculture, Infill, Unde 1 2 3 4 5 6 2.3 7.1 9.2 13.1 2.8 0.3 0.2 3.0 17.5 12.9 236 Source: Yakima County 2015, BERK Consulting 2017 61.9 5.9 35.6 2.1 0.4 1.6 1.2 52.6 28.1 9.0 64.3 263 49.3 19.2 40.2 10.0 10.6 5.7 0.7 57.6 12s.v 318 6.7 5.9 4.2 7.5 1.1 0.1 3.2 15.9 10.1 18.8 8.3 82 14.4 82.4 29.9 29.6 5.2 1.3 12.8 8.5 20.5 123.7 328 66.1 2$4,4 61.3 13.3 3.7 20 1.0 1.7 434 rutilized) 7 Citywide 194.6 895.8 575.1 245.8 18.2 48.0 9.4 20.2 0.3 26.7 1 44.3 2.2 1 12.4 20.1 442.4 581.1 17.3 232.2 1.0 i 1.0 3,331 1,670 ftf R.3 SR Vacant lands were idenzifted zrsin9 the Yakima C: aunty Assessor property records A parcel was determined to be "vacant' if it has a building for irnprovcment, value less than $7,5(?t7 Lands that are owned by the Crty cif Yakima. Yakima County, the Greenway Foundation, Yakima School Distnci cu a Washington State Dep:3rzneni were not considered vacant for the purpose of de velopment. City of Yakima Vacant Land Analysis b Zonin* Districts Property Filters 0 .1s. :. "{Lan..aS.rx*n::r{,.:ec.. ..F:2 Sten..,•.@r_t:a^^�++ $5.5, t',t. e:lAn Property List Sorted 1,992 1,543 ac $140.9M Acres https://yakima. maps.a rcgis.com/apps/opsdashboa rd/index. html#/d0d0f868918e4684b7ae977386b0b991 Question 2: Are there regulatory incentives or barriers to the construction of affordable housing in Yakima? The City has implemented a variety of incentives: ❖"Accessory Dwelling Units" (or ADU's). ❖clustering of housing units around a common amenity in order to promote tiny home villages. ❖housing is permitted in nearly all other zoning districts ❖No Impact Fees. ❖Free Development Service Team project review. ❖Multi -family Tax Exemption program (MFTE) ❖HUD HOME funds assisted in 250 new housing units in the last ten years. Things we can do betterpromotesmaller 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 +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. +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 as 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 could be prioritized for affordable housing projects. Street Frontage Costs and Traffic Impacts 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. On street parking can increase the width of a street and is often desired in a new development, but not required. Traffic calming is allowed on neighborhood streets, but not on busy arterial streets. InfiII 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. 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. ❖ Disposal of Surplus Government Property at a Discount for Affordable Housing. ❖ Allowing for Smaller Residences: sometimes called tiny homes. ❖Exempting Certain Property Intended for Low -Income Housing from Property Taxes: ESSB 5143. ❖ 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. Question 6: How can Yakima encourage housing retention? +Community Development Block Grant (CDBG) senior citizens and disabled persons each year. This program has enabled hundreds of elderly families to "age in place" +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. 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 Action Steps Refer items to the Yakima Planning Commission such as additional R-3 land options and strategies to encourage multi -family construction; Analyze R-1 density limitations; review innovative techniques and ordinances in other cities. +Refer to the Healthy Communities and Neighborhood Committee such as incentives to encourage below market rate construction of MF, how to encourage more rent vouchers, and mixed use building code options. +Full Council should discuss crucial policy issues to encourage new housing starts such as the MFHTC and boundaries, development standards, maintenance of existing housing units vacant or abandoned building strategies and uses of CDBG and HOME funds.