HomeMy WebLinkAbout01/25/2022 04. Discussion about adopting an affordable housing incentive program 1
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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 4.
For Meeting of: January 25, 2022
ITEM TITLE: Discussion about adopting an affordable housing incentive program
SUBMITTED BY: Matthew"Selby" Selby, Interim Assistant City Manager
SUMMARY EXPLANATION:
Attached you will find a summary of a proposed affordable housing incentive program that is a
requirement of the Connecting Housing to Infrastructure Program grants the City applied for to
support the development of 100 units of affordable housing in Yakima.
ITEM BUDGETED:
STRATEGIC PRIORITY:
APPROVED FOR SUBMITTAL BY THE CITY MANAGER
RECOMMENDATION:
ATTACHMENTS:
Description Upload Date Type
Memo re:fee wailer program for affordable housingID 1/18/2022 Cover Memo
projects
D letter of intent for CHIPs grant 1/18/2022 Cover Memo
D ORD. No. 2019-020 1/21/2022 Cover Memo
D Draft ordinance for affordable housing incentive program 1/19/2022 Cover Memo
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MEMORANDUM
To: Bob Harrison, City Manager
From: Matthew "Selby", Interim Assistant City Manager
Date: January 20, 2021
RE: Fee waiver program for affordable housing projects
On January 7, the City applied for three Connecting Housing to Infrastructure Program grants
through the Department of Commerce to assist in the development of three 100% affordable
housing projects by the Yakima Housing Authority, Catholic Charities and Rod's House.
If received, these grant funds would pay for construction and system development costs for
water, sewer and stormwater. System development costs include the fees typically charged for
connecting housing to the City's water and sewer systems.
A requirement of the CHIPs grant program is that the City adopt a fee waiver program to
support affordable housing.
We request that the City Council discuss the adoption of a waiver program for water and
sewers connections fees for affordable housing projects at its January 25 study session.
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!., OFFICE OF THE CITY MANAGER
•7 s 129 North Second Street
City Hall,Yakima Washington 98901
Phone(509)575-6040
.. ..1 1.41
January 7,2022
Lisa J. Brown, Ph,D.
Director
Washington State Department of Commerce
1011 Plum St SE
Olympia,WA 98501
Dear Lisa,
I am writing to express the City of Yakima's intent to adopt a fee waiver program that will
incentivize affordable housing development. The program will waive system development fees
charged at the time of development that allows connection to City utilities including water, sewer, or
stormwater systems. Our intent for this program goes beyond waiving system development charges
required by the Connecting Housing to Infrastructure Program (CHIP): Water, Sewer, and
StormwaterforAffordable Housing grant application.
In 2019,the City of Yakima adopted legislation to implement Substitute House Bill 1406. The
legislation allows the city to collect and retain a portion of the existing sales tax to be used for the
provision of affordable housing opportunities within the City. We plan to use the funds collected to
create additional funding sources for affordable housing. The fee waiver program will alleviate
system development charges, and benefit low-income households by increasing affordable housing
opportunities throughout the city. In the interim, the City of Yakima is submitting three CHIP grant
applications on behalf of the Yakima Housing Authority, Catholic Charities Housing Services, and
Rod's House. These grant funds will cover utility improvements and system development costs for
their current housing projects.
Our city is facing a severe housing shortage. Vacancy rates for both apartments and single-family
homes for sale are extremely low—below 1%. With vacancy rates so low, people looking for new
homes have fewer options,thereby increasing competition for the limited supply of units available.
This has continued to drive up both rents and housing prices. Additionally, local housing prices are
rising faster than local incomes. The median home value in Yakima has risen by 33%between 2012
to 2019, while average rents increased by 26%. Over the same period, the median family income has
only increased by 19%. The proposed fee waiver program will help local agencies continue providing
new high-quality, affordable housing for low-income households.
The fee waiver program will be presented to the Yakima City Council on January 25th during a
scheduled study session.
Since I
Robert Harrison
Yakima City Manager
Yakima
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ORDINANCE NO. 2019-020
AN ORDINANCE imposing the maximum capacity available from the City's annual taxable
retail sales and use tax, as provided for in Substitute House Bill 1406
effective July 28, 2019, to be used for the provision of affordable housing
opportunities within the City.
WHEREAS, the residents of the City of Yakima are subject to a retail sales and use tax of
8.2%for retail goods and services purchased within the City; and
WHEREAS, the City of Yakima does not impose any of the "qualifying local taxes"
identified in Section 1(1)(e) of Substitute House Bill 1406; and
WHEREAS, Substitute House Bill 1406 provides the opportunity to a city to legislatively
authorize, fix and impose a sales and use tax in the maximum amount of up to 0.0146% of the
taxable retail sales occurring in the City; the maximum amount available to the City is determined
by a number of factors that include whether the City levies a "qualifying local tax"; and
WHEREAS,the tax imposed under Substitute House Bill 1406 must be deducted from the
amount of tax otherwise required to be collected or paid to the Department of Revenue, as
authorized under RCW 82.08 and RCW 82.12, and retained by the City; and
WHEREAS, the tax revenue that the City is authorized to retain under the operation of
Substitute House Bill 1406 may only be used for acquiring, rehabilitating or constructing affordable
housing, including new units of affordable housing within existing structures or facilities providing
supportive housing services, or for providing rental assistance to tenants; and
WHEREAS, the housing and services provided pursuant to the use of the taxes retained
under the operation of Substitute House Bill 1406 may only be provided to persons with incomes
at or below 60% of the median income of the City; and
WHEREAS, the Yakima City Council is keenly aware of the need in the community for
opportunities to provide affordable housing assistance to the residents of the City who are
experiencing low income, as well as the fact that there is a shortage of good quality affordable
housing within the community; and
WHEREAS, the City Council finds that it is in the best interests of the City to take
advantage of this opportunity to retain the maximum amount of the sales and use tax revenue
collected within the City to enhance the affordable housing opportunities to low income residents
of the City; Now, Therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
Section 1. Section 3.78.065 entitled "Imposition of sales and use tax for affordable
and supportive housing" is added as a new Section to the Yakima Municipal Code and reads as
follows:
3.78.065 Imposition of sales and use tax for affordable and supportive housing.
A. There is imposed a sales and use tax, as the case may be, as authorized by Chapter 338,
Laws of 2019, which shall be codified in chapter 82.14 RCW, upon every taxable event, as
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defined in chapter 82.14 RCW, occurring within the City of Yakima. The tax shall be imposed
upon and collected from those persons from whom the state sales tax or use tax is collected
pursuant to chapter 82.08 and 82.12 RCW.
B. The rate of the tax imposed by this Section 3.78.065 shall be the maximum rate authorized
under Chapter 338, Laws of 2019, which shall be 0.0073 percent, except that in the event the
City of Yakima levies a "qualifying local tax" as defined by and before the deadline imposed
by Chapter 338, Laws of 2019, the rate shall be 0.0146 percent.
C. The tax imposed under this Section 3.78.065 shall be deducted from the amount of tax
otherwise required to be collected or paid to the Department of Revenue under chapter 82.08
or 82.12 RCW. Under subsection 1(3) of Chapter 338, Laws of 2019, the Department of
Revenue will perform the collection of such taxes on behalf of The City of Yakima at no cost
to the City.
D. Under subsections 1(4) and 1(5) of Chapter 338, Laws of 2019, the Department of
Revenue will calculate the maximum amount of tax distributions for The City of Yakima based
on the taxable retail sales in the City in state fiscal year 2019, and the tax imposed under this
Section 3.78.065 will cease to be distributed to the City of Yakima for the remainder of any
state fiscal year in which the amount of tax exceeds the maximum amount of tax distributions
for the City as properly calculated by the Department of Revenue. Distributions to The City of
Yakima that have ceased during a state fiscal year shall resume at the beginning of the next
state fiscal year.
Section 2. Section 3.78.067 entitled "Purposes of tax" is added as a new Section to
the Yakima Municipal Code and reads as follows:
3.78.067 Purposes of tax.
A. The City may use the funds collected by the tax imposed under section 3.78.065
or bonds issued under subsection 1(9)of Chapter 338, Laws of 2019 only for the following
purposes and in accordance with Chapter 338, Laws of 2019:
1. Acquiring, rehabilitating, or constructing affordable housing, which may include
new units of affordable housing within an existing structure or facilities providing
supportive housing services under RCW 71.24.385; or
2. Funding the operations and maintenance costs of new units of affordable or
supportive housing; or
3. Providing rental assistance to tenants, unless and until the population of the city of
Yakima should exceed 100,000, upon which event the funds collected shall only be
used in accordance with 3.78.067(A)(1) and (2).
B. The housing and services provided under this Section 3.78.067 may only be
provided to persons whose income is at or below 60 percent of the median income of the
City.
C. In determining the use of funds under this Section 3.78.067,the City must consider
the income of the individuals and families to be served, the leveraging of the resources
made available under Section 3.78.065, and the housing needs within the City.
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D. The City of Yakima must report annually to the Washington State Department of
Commerce, in accordance with the Department's rules, on the collection and use of the
revenue from the tax imposed under Section 3.78.065.
E. Under subsection 1(12)of Chapter 338, Laws of 2019, the tax imposed by the City
under Section 3.78.065,will expire 20 years after the date on which the tax is first imposed.
The Finance Director shall provide notice to the City Council and the City Manager of the
expiration date of the tax each year beginning three years before the expiration date, and
shall also promptly notify the City Council and City Manager of any changes to the
expiration date.
Section 3. Section 3.78.080 of the Yakima Municipal Code is hereby amended to read
as follows:
3.78.080 Administration and collection of tax.
The administration and collection of the tax imposed by Sections 3.78.060 through
3.78.100 of this chapter shall be in accordance with the provisions of RCW 82.14.050 and
Chapter 338, Laws of 2019.
Section 4. The Finance Director is authorized to provide any necessary notice to the
Department of Revenue to effectuate the tax enacted by this ordinance and to execute, for and
on behalf of The City of Yakima, any necessary agreement with the Department of Revenue for
the collection and administration of the tax enacted by this ordinance.
Section 5. Any notice given or agreement executed by the Finance Director as
authorized by Section 4 of this ordinance prior to the effective date of this ordinance is ratified and
confirmed.
Section 6. Severability. If any section, subsection, paragraph, sentence or clause of
this ordinance is declared invalid or unconstitutional for any reason, such decision shall not affect
the validity or constitutionality of the remaining portions of the ordinance.
Section 7. Sections 1 through 3 of this ordinance shall take effect on November 1,
2019.
Section 8. This ordinance shall be in full force and effect 30 days after its passage,
approval, and publication as provided by law and by the City Charter.
PASSED BY THE CITY COUNCIL this 3ro day of September, 2019.
ATTEST: * athy C ffey,
•
•
S n a Claar Tee '
Publication Date: September 6, 2019 • ••,
Effective Date: October 6, 2019
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ORDINANCE NO. 2022-
AN ORDINANCE adding Section 7.92: Affordable Housing Incentive Program for multi-family
low-income housing.
WHEREAS, the City provides wastewater and water services to the residents of the City;
and
WHEREAS, connection fees for those services are based on the actual costs of
connection of dwelling units to the water and wastewater services; and
WHEREAS, the City Council passed Ordinance No. 2019-020 which adopted the tax
retention provisions of House Bill 1406, codified as RCW 82.14.540, allowing the City to retain a
portion of its sales tax to be used to support affordable housing; and
WHEREAS, the City adopted its Housing Action Plan on June 15, 2021, wherein one of
the adopted strategies to increase affordable housing opportunities within the City is to evaluate
and address the costs of connecting affordable units to public water and sewer; and
WHEREAS, the City adopted its 2040 Comprehensive Plan in 2017 wherein the analysis
indicates that the City needs a minimum of 300 housing unit starts each year during the Plan
period to provide housing for Yakima's growing population; and
WHEREAS, housing statistics for the City of Yakima found in the Housing Action Plan
show that nearly 50% of the residents renting housing pay over 30% of their income to housing,
and 36% of all households pay over 30% of their income for housing, showing that there is a need
for affordable housing in the City; and
WHEREAS, monies retained due to adoption of the parameters of HB 1406 and RCW
82.14.540 may be used for constructing affordable housing, which includes connecting to city
water and wastewater services; and
WHEREAS, the incentive program adopted herein will provide those affordable housing
developers the opportunity to apply for a grant to pay for water and/or wastewater connections,
the funding for which will come from the 1406 money, to be paid from the 1406 money to the City
for the costs of connections; and
WHEREAS, the funds will help affordable housing developers reduce costs of their
projects, which hopefully will increase the number of units that can be developed, as well as
ensure that the City receives payment into its water and wastewater accounts for the actual costs
of connecting the affordable units to the City's utility services; and
WHEREAS, the City Council of the City of Yakima hereby finds and determines that it is
in the best interests of the City of Yakima and its residents to add Section 7.92: Affordable Housing
Incentive Program, to the Yakima Municipal Code, and such addition will promote the general
health, safety and welfare; now, therefore
BE IT ORDAINED BY THE CITY OF YAKIMA:
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Section 1. Chapter 7.92: Affordable Housing Incentive Plan is hereby added to the
Yakima Municipal Code to read as follows:
Chapter 7.92
AFFORDABLE HOUSING INCENTIVE PROGRAM
Sections:
7.92.010 Purpose of chapter
7.92.020 Applicability
7.92.030 Affordable housing requirement
7.92.040 Incentive program for water and/or wastewater connection charges
7.92.050 General requirements
7.92.060 Additional requirements for mixed-income developments
7.92.070 Report to Council
7.92.010 Purpose. There is a demonstrated need in the City for housing which is
affordable to persons of low and moderate income. This chapter provides an incentive program
for developers in exchange for the public benefit of providing multi-family affordable housing
units within the City.
7.92.020 Applicability. The incentives listed herein for low-income households may be
utilized for multi-family housing projects with a minimum of 10 units, including cottage and/or
manufactured housing communities, in applicable zoning districts. The housing project must
include a minimum threshold of affordable units allocated for low-income households and other
criteria as specified in this chapter. Development proposals must meet all other standards for
development outlined in the Yakima Municipal Code, state and federal laws.
7.92.030 Affordable housing requirement.
(a) Minimum requirement. All applicants creating ten (10) or more new dwelling units
shall provide at least 50% of the units as affordable housing units and comply with the
provisions of this chapter as established herein if the applicant wishes to take advantage of the
incentive program outlined in this chapter.
(b) Rounding. The number of affordable housing units required is determined by
rounding up to the next whole number of units.
7.92.040 Incentive program for water and/or wastewater connection charges.
(a) There is created an incentive program for applicants meeting the affordable housing
requirement in section 7.92.030 wherein applicants may apply for a grant from the incentive
program fund to pay for some or all of the connection fees for water and/or wastewater utilities.
(b) Applicants may apply for a grant for the entire water and/or wastewater connection
fees if the development is 100% affordable housing, as defined herein.
(c) If the development is less than 100% affordable, the applicant may apply for a grant
for a percentage of the water and/or wastewater connection fees which is the same or less than
the percentage of units in the development that are affordable, as defined herein. For example,
if 50% of the units are affordable, then the applicant may apply for a grant to pay for up to 50%
of the water and/or wastewater connection fees.
(d) The incentive program is funded in part by sales and use tax retained pursuant to
Yakima Municipal Code section 3.78.065. The City Council may place additional funds into the
incentive program when it deems appropriate. There is no guarantee that there will be funds
available in any given year for the incentive program and applicants are not entitled to
participate in the incentive program.
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(e) The incentive program is available on a first-come, first-serve basis. There will be
no opportunity to put a project on a "wait list" or otherwise try to save funds for certain projects.
7.92.050 General requirements.
(a) Affordable Housing. For purposes of this chapter, "affordable housing" or"low
income housing" means housing wherein the households earn 50% or less than the Yakima
County median household income, adjusted for family size. Further, the monthly rent for an
affordable unit may not exceed 30% of the income limit for the affordable housing unit.
(b) Duration of Affordability. Applicants taking advantage of the incentive program must
ensure that the affordable housing units remain affordable for fifty (50) years.
(c) Lien and Covenant to be Recorded. To ensure affordability is maintained, the
property owner shall sign a recorded lien and covenant running with the land, binding all the
assigns, heirs and successors that the units will meet the affordability requirements for the fifty-
year period. The recorded lien and covenant must provide that if the property is converted to a
use other than for affordable housing as defined in this Chapter within the required affordability
duration, the property owner must pay the applicable water and/or wastewater connection fees
in effect at the time of the conversion. The recorded lien and covenant may also include other
requirements associated with the project, including, but not limited to, reporting requirements
regarding affordable units and/or other methods to ensure the units remain affordable and allow
for enforcement of the covenant by the City. The affordable housing units shall be rented, sold,
or resold to income-qualified households or a non-profit housing provider through the end of the
required affordability duration.
(d) Monitoring Continued Affordability. The City of Yakima Community Development
Department shall be the responsible party to monitor the continued affordability of the affordable
housing units. The Department, with the City Manager's consent, may contract this work out to
a third party.
(e) Annual Report. The applicant shall submit an annual report on or before November
30'h of each year to the Community Development Director which outlines the number of
affordable units (itemized by type of unit) and the rent that will be charged for each type of unit
in the upcoming calendar year.
7.92.060 Additional requirements for mixed-income developments. The following
requirements apply to mixed-income developments, in addition to the requirements outlined in
other sections of this chapter.
(a) Construction of Affordable Housing Units. For mixed-income developments
constructed in phases exceeding 12 months, a proportional amount of affordable housing units
must be completed at or prior to the completion of related market rate housing units.
(b) Location/Appearance of Affordable Housing Units. When affordable housing units
constructed under the provisions of this Chapter are intermixed with market rate housing, the
general exterior design and appearance of the affordable housing units shall be compatible with
the market rate housing units within the project.
(c) The affordable housing units shall consist of a range of number of bedrooms that are
comparable to units in the overall development.
(d) Size of the Units. The size of the affordable housing units should be the same as
the units in the overall development. If the size of the affordable housing units is smaller than
the other units with the same number of bedrooms in the development, the housing units must
be approved by the Community Development Director or their designee. In no case shall the
affordable housing units be more than 10 percent smaller than the comparable dwelling units in
the development, based on number of bedrooms.
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7.92.070 Report to City Council. An annual report shall be forwarded to the Yakima
City Council as part of the budgeting process that provides details on all the projects that utilized
the provisions of this chapter. The report should include, but is not limited to, the total number
of housing units constructed, an itemization of type of unit (by bedroom number) and the
number of those units which are affordable.
Section 2. SeverabilityNalidity. If any section, subsection, paragraph, sentence,
clause or phrase of this ordinance is declared invalid or unconstitutional for any reason, such
decision shall not affect the validity of the remaining portions of this ordinance.
Section 3. Effective Date. This ordinance shall be in full force and effect 30 days after
its passage, approval, and publication as provided by law and by the City Charter.
PASSED BY THE CITY COUNCIL, signed and approved this day of
, 2022.
Janice Deccio, Mayor
ATTEST:
Sonya Clear Tee, City Clerk
Publication Date:
Effective Date: