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PUDs and affordable housing contributions

Projects in PUD zones under certain conditions may be required to include affordable housing or to make a contribution to the city's affordable housing fund.

Some references:

When a PUD requires affordable housing, they can either provide it on site, or make a payment in lieu, or a combination of the two. This is explained in the zoning code. This staff memo gives an example of how they applied the various formulas to a recent project (The Garnet, somewhat of a saga in its own right).

Supposedly City Council updates the formula used to calculate payments in lieu annually. In practice it's rarer:

In September 2007, City Council Resolution R-07-455 multiplies the number of units by the difference between the 43rd percentile of all residential property sales (excluding vacant land and commercial property) in the city from February, March, and April of the previous fiscal year, and two times the income of a family of four with income equal to 80% of the AMI (Area Median Income). For 2007-2008 they calculate that to be $93,300. The resolution suggests that the amount should be updated every year. But the memo above sticks to the $93,300 value for any calculation prior to August 19, 2019.

August 19, 2019 City Council Resolution R-19-378: uses a similar approach, looking at the gap between housing costs and 80% AMI income, but instead of a per-unit cost, ends up with a per-square-foot cost, at $126 per square foot.

On November 4, 2019 council amended section 5.29.10 of the zoning code to change the rules governing when affordable housing is required. Housing density in the proposed PUD is compared to "the residential density recommendation of the master plan, or the underlying zoning when the master plan does not contain a residential density recommendation". If it's the same or less, nothing it's required. If it's more:

  • Under the old rules, if density is up to 25% more, then 10% of the units must be affordable; if more than 25%, then 15% of the units must be affordable. Under the new rules, the rule is the same if the master plan has a residential density recommendation. If it does not, then the requirement depends on the FAR of the proposed project. (That's the ratio of the floor area to the lot size.) If the FAR of the underlying zoning is exceed by up to 25%, then 10% of the floor area must be affordable housing. If by more than 25%, then 15% of the floor area must be affordable housing.
  • Under the new rules, if a number of units is required, the payment is based on the average size of all dwelling units in the project.
  • The calculation can result in a fraction: previously that would result in plugging a fractional unit into council's formula. Under the new rules, that fraction is converted to a floor area by multiplying by the average floor area of units in the project.

In the case of lowertown, the original site plan approved Dec. 20, 2017 is for 620 units with residential area 637,773 square feet.

Tom Stulberg's number makes the (in my opinion, unlikely) assumption that rejecting the C1A/R rezoning would have resulted in exactly the same project being built as a PUD. So he probably just took that 620 unit number from the original site plan and plugged it into the pre-August-2019 formula, giving 620 units * 15% = 93 units required, at $93,300/unit--sure enough, that gives $8,676,900.

Beside my main doubt, there are a few other complications:

  • The brownfield plan states that 15 units are reserved for renters earning at most 60% AMI. If those count towards the required affordable units (should they?), then the required contribution is reduced to 78 units * $93,300/unit, giving $8,272,400.
  • We're using the calculation that held before August 2019. Whether that's the right one to use may depend on whether you're imagining a scenario where the project used PUD zoning from the start and got approved at roughly the same time, or whether it was rejected and had to restart the process, and how long that might take. I'm not clear how to apply the square-foot-based rules here. I'm not clear what date to use when determining which rules apply--probably the date council approves the hypothetical PUD zoning?
  • The latest site plan (approved May 2020) actually has 626 units.
  • What's the residential density of the underlying zoning? The staff memo treats it as zero for the purposes of The Garnet, but I don't understand why. It might be worth seeing if there's documentation explaining the thinking in the Broadway Village case; the Garnet memo says "An argument could be made that no contribution would have been required, as the underlying zoning was commercial which does not contain any specific residential density. However, in considering such a scenario, staff would look to past projects and use a consistent interpretation. In researching this question, the only example found was the 2003 Broadway Village at Lower Town, which applied the formula in this same way." However, the Broadway Village PUD Zoning request documents say they intended at least 20% of the units to be affordable, which would mean a contribution was not required. I don't know when the city carried out this calculation for Broadway Village.
  • Does the master plan have a residential density recommendation? Chapter 6 of the "land use element" has some vague recommendations (include retail, 2-8 story heights), but no specific density number, so I guess not. So the post-November-2019 rule says we need to know the FAR of the underlying zoning. What's that?