75B - PH - HOUSING OPPORTUNITY ORD

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Zoning Ordinance Amendment 2015 -03 July 20, 2015 Page 2 On October 27, 2014, the City Council adopted the Adaptive Reuse Ordinance (ARO) to allow the reuse of vacant and/or obsolete buildings within specific areas of the City. One of the provisions of the ARO, Section 41 -1652 (d)(1), requires all adaptive reuse projects to comply with the HOO. Emit Analysis A review of the contents of the HOO has revealed that certain components of the ordinance prevent staff from consistent implementation of the ordinance. In reviewing the existing ordinance, staff has identified a few areas that warrant a revision to the existing Housing Opportunities Ordinance. Issues to Consider. In examining the existing ordinance, staff has identified the following items as points of confusion that may be impediments to new housing production and production of new affordable housing units in the city: ■ Constraints on Adaptive Reuse of Historic Structures and Retrofitting of Existing Buildings - This particular issue revolves around the cost of adaptive reuse of historic buildings (which has the public benefit of preserving historic resources by making them economically productive) or retrofitting of existing building stock for a new use, typically switching the use from commercial to residential, thereby minimizing the carbon footprint of the reuse of the building and eliminating the need to turn such buildings into landfill. In both categories, the inclusionary housing requirement adds a cost to the developer on the already high cost of restoration and retrofitting of the existing buildings, which can be costly due to extensive fire and building safety upgrades necessary. ■ Already Built or Entitled (but not Built) Projects - The existing HOO does not fully consider the economics of inclusionary housing requirements on entitled or built projects. The current version of the HOO retroactively applies to projects that were entitled under different sets of circumstances and conceived under very specific economic assumptions when they were entitled, The retroactive application of inclusionary housing requirements drastically changes the economics of the projects from the assumptions that supported the originally approved projects. An existing project that was entitled or built under a set of economic assumptions may become economically unviable once the inclusionary requirement has been added to its costs. ■ Viable Alternatives for On -site Production of Inclusionary Affordable Housing Units — The current ordinance does not really allow off site production of affordable units as a means to meet the inclusionary affordable housing standard. Instead, in practice, it allows the developer to negotiate lower in -lieu fees for up to 100% of the inclusionary requirement. This particular item works as an impediment to the intent of the Housing Opportunities Ordinance in two ways: 1) It removes the consistency and predictability that can assure applicants of the actual cost of their development when formulating their application, and 2) By allowing up to 100% of the inclusionary requirement to be fulfilled through a negotiated in -lieu fee, it lessens or eliminates the opportunity to produce affordable housing units at no cost to the public in conjunction with production of new market rate housing. 75B -6