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HomeMy WebLinkAboutCOM 0072.004 2004-2006 vv or N 4~M`?;....~yy. I'RFD C. fIOLSCHllIi y,~~. Phone: (808) 961-8264 r,.,,„d~~~~.~„n.,~ FAX: (808) 961-8912 w . _ '1j~ O, ~N'~1~' HAWAII COUNTY COUNCIL Counh' of Hun~aii Ha~rnii Cnunm Bullrling ' i ,aupmii Slree! Hilo, H~nraff 96 ?,'0 January 21, 2005 MEMORANDUM TO: Gary S. Safarik, Chairman, and Members of the Hawaii County Council FROM: Fred C. Holschuh, M.D., Council Member SUBJECT: Bi1125, Affordable Housing Policy For your consideration, I request that the Office of Corporation Counsel provide us written guidance with respect to two important legal concerns associated with Bill 25, Draft 2. A summary of these legal concerns is provided below. I recommend that the Council be fully advised on these matters before Bill 25 advances to 2°d reading. In addition to posing legal questions for examination, I wish to touch briefly on a number of issues that I believe should be thoroughly addressed in order to craft a successful county affordable housing ordinance, and program. Legal Concerns 1. "Talrin¢s" and Constitutionality. Bill 25, as presently drafted, contains no provision for affordable housing requirements to be waived or lessened, under any circumstances. Nor does the bill specify a procedure for developers to appeal decisions by the county housing administrator. However, a large body of public policy literature regarding inclusionary zoning/affordable housing statutes recommends that such ordinances contain provisions for developers to request a variance or waiver, as well as an appeals process. Such deliberate provisions can assure that an inclusionary zoning ordinance is not subject to "takings" claims and costly litigation. This concern stems from an oft-cited case, Home Builders Association of Northern California v. City of Napa, 90 California Appellate Court 4th 188 (2001). In Napa, the appellate court found: "Here, Ciry's inchrsionary zoning ardtnance imposes signifcan[ burdens on those who wish to develop their property. However the ordinance also provides sigurficant benef is to those who comply with its terms. Developments that include affordable housing are eligible for expedited processing, fee deferrals, loans or grants, arTd densih~ bonuses. More critically the ordinance permits a developer to appeal for a reduction. adiustment or complete waiver of the ordinance's requirements. Since Comm. No. ~ 2 Ref. To: Press Hrnrar'i Cannn~ 1.c an Fy~ad O/>pornmin~ Prarider and Eny~lorer Ref. UOte ~(1~I _ ~ I City has the ability to waive the requirements imposed by the ordinance, the ordinance cannot and does not, on its face, result in a taking. " [underline added] I am concerned that the court's decision in Napa should be reflected in our county ordinance. In its examination of Napa in "Inclusionary Zoning: Legal Issues" (December, 2002) the California Affordable Housing Law Project of the Public Interest Law Project and the Western Center On Law & Poverty stated: "An inclusionary requirement can be constitutional on its face, but nevertheless applied in an unconstitutional manner Basically, to protect against the unconstitutional application of an otherwise constitutional requirement, inclusionary ordinances should include procedures that provide developers with the opportunity to request alternatives or exemptions from obligations, if the developers can show that the obligations go beyond constitutional limits. Napa, then, teaches that to ensure an inclusionary ordinance can avoid unconstitu- tional implementation, the ordinance should provide standards and procedures for reducing, waiving or mitigating the requirements. Clearly, what was most important to the court was the possibility of complete waiver of the requirements. A carefully drafted inclusionary ordinance can avoid improper application by including the safeguards described previously. To reiterate, an ordinance should provide developers with I) regulatory concessions and incentives such as density bonuses to counter the ordinances financial restrictions, and 2) provide clear standards and a fair process by which a developer can request full or partial relief from the inclusionary requirement. Relief can take the form of a reduction in the requirement, alternatives to the requirement or a waiver of the requirement. " To assure that our housing ordinance is constitutionally defensible, I suggest that Corporation Counsel draft a new section to Chapter 11 outlining provisions for administrative relief, as well as an appeal process. I'm concerned that any Hawaii County Housing Agency appeal process might require council members to act as judge and jury of their own legislative policy. I think Council members should avoid a separation of powers conflict and any personal liability that might result. It's therefore advisable for Corporation Counsel to assist us in this matter. 2. A Requisite "Nexus Study". Much of the literature surrounding inclusionary zoning law stresses the need fora "nexus study" to precede or accompany the adoption of an ordinance. A nexus study is an analysis done to show the connection or "nexus" between the municipality's interest in providing affordable housing for its residents and a proposed inclusionary housing ordinance. It provides data showing how the continued construction of mazket-priced housing creates a need for affordable housing and how the inclusionary housing ordinance will meet that need. Typically, a municipality compiles the study and publishes its findings in an appendix to its affordable housing ordinance or its comprehensive general plan. A nexus study is important for several reasons. First, it provides concrete data to use as justification for the ordinance. It explains why the ordinance is needed in a way that abstract ideas about the value of affordable housing cannot. Second, to uphold the validity of a zoning ordinance, courts have required that governments show a "nexus" between the need the government is trying to address 2 and the ordinance. By completing a nexus study, the county may avoid a legal challenge to its ordinance before disputes arise. Third, if the ordinance is challenged in court, the county can turn to its nexus study as justification for its policy. In Napa, the court acknowledged that the City of Napa had assembled nearly 700 pages of reports and materials that it had relied upon when adopting the ordinance. Much as we can readily agree that affordable housing is a crying need in Hawaii County, it appears that the closest thing to a "nexus study" available to us is the housing element in Bill 163, Draft 4 (pages 119-148 of the General Plan), and its citations of the 1997 housing study done by SMS Research. Is this material sufficiently up-to-date? {Example: Page 122 of the General Plan states that "there are between 585 and 733 sheltered/unsheltered homeless people islandwide" based on a 1999 study of the State Housing and Community Development Corporation of Hawaii; an August 2003 SMS Hawaii Homeless Study reports 1,243 homeless persons in Hawaii County.} To lend authority to the housing section contained in the General Plan, should the Council adopt Bill 163 fiefore adopting Bill 25? It would be prudent to ask for Corporation Counsel guidance about the adequacy of our source findings as they relate to the provisions and requirements outlined in Bill 25. Other Concerns Beyond these legal issues, I'm concerned that Bill 25 is so nan•owly focused on developer exactions that we are skirting the challenge of tackling affordable housing seriously. I agree that one component of an affordable housing "policy" should involve requirements for new developments to provide a percentage of affordable housing units or in-lieu fees. I agree that these requirements should be more rigorous and enforceable. That said, we would be kidding ourselves if we rely entirely on new housing in increments of 5+ units to address all our affordable housing needs and deficits. My concerns include: 1. If "developers are our best hope," as Mayor Kim has stated, why were no representatives of the development community whatsoever invited to participate in our housing committee discussion of Bill 25? Is this any way to launch a new era ofpublic-private partnership? 2. Can we request that the administration present its full housing program and initiatives before adopting "policy" in incremental fashion? 3. What precisely will the county do with in-lieu fees collected? 4. What are our programmatic goals and timelines for (a) new or expanded shelters; (b) transitional housing units; (c) affordable rentals; (d) median-income units for sale? Where do we intend to locate these units? 5. Where does the county see partnership and collaboration with the nonprofit sector - i.e., East Hawaii Coalition for the Homeless, West Hawaii Housing Foundation? Can we do something immediately to assist the completed renovation of the Hilo Hotel? 3 6. Are there other revenue streams (bond issues, real estate conveyance tax, etc.) sought for county housing initiatives? 7. According to Housing Administrator Ed Taira, the County has not undertaken acounty-built housing project since 1991. What staff and level(s) of expertise are required to implement a truly proactive county housing program? 8. What proposals and suggestions have we heard from developers themselves? Can they offer us a "playbook" of design build affordable housing options? 9. If it appears that the 1,000 affordable units contemplated for Waikoloa are expected to cost approximately $300,000 per unit, are we truly providing housing our people can afford? 10. Many young workers, students, and elderly persons do not require costly, detached single- family homes. Unleashing the potential ofowner-financed accessory units may make a significant contribution to our affordable housing inventory. Should we take a fresh look at permitting ohana and "accessory housing units" in our urban core? 11. What elements of a revamped (and long-awaited) county building code can lessen the cost of housing? What expedited permitting can act as an incentive to assist the construction of affordable housing? 12. Can the county facilitate the creation of limited equity housing cooperatives to finance and build affordable projects? Can we invite participation from community banks, credit unions and public employee unions to explore the potential of co-op housing? Last year a study titled Paycheck to Paycheck: Wages and the Cost of Housing in the Counties was released by the Center for Housing Policy and the National Association of Counties (NACo). Its survey of wages and the cost of housing in Honolulu showed: WAGES AND THE COST OP HOUSING IN THE COUNTIES, 2004 NPICAL ANNUAL SALARIES (2004) ¦ $116,400 ^k Income Needed For AcNal Mortgage Payment Income HdMEOWNER$HIP ~4'°;~ ;MARKET ' _ " "-"..2(1(14. $37,560 $37,452 " $34,294 Msdiari"Priced Home Singler arx7l~,NwBtlrruly ~ ~ Annual Income Police Officer Firefighter Elementary Needed School Teacher 4 WAGES AND THE COST OF HOUSING IN THE COUNTIES, 2004 TYPICAL HOURLY WAGE (2004) $17.ao $14.79 ' ~.","_n y $13.41 RENTALAAARKET FAIR. MARKET RENT $9.02 $8.72 ~I 0ltf11 , t' a. 9 ~ A , ,f.,. h ~r Hourly Wage Needed to Afford Retail Janitor Construction 1 BR 26R Salesperson laborer The disparity between income and the cost ofmarket-priced housing is the root cause of our housing dilemma. And there is an inherent flaw in tackling this dilemma by sheer manipulation of the marketplace, for the simple reason that so many of us have a stake in the mazket value of our homes. For those lucky enough to own homes, homeownership represents a major financial asset. No one really wants to see his or her home depreciate For the sake of meeting an affordable housing standard. Attached is an article from USA Today. It describes how the self-interests ofhigh-end mazket, "slow-growth" preservationists hamper land use options for affordable housing. It is on point for our discussion of affordable housing policy in Hawaii County. If we are going to have a true affordable housing program, we are going to have to create a secondary mazket altogether. Developer-built affordable housing can be one element of that market. But we will need a public investment and commitment as well. We need to explore the depth of that public-private commitment in a spirit of collaboration. To date, we have only scratched the surface. We should explore these questions -and many more -seriously. I hope that in our current enthusiasm we will flesh out a complete program, not just a hasty, one-dimensional approach to a critical need of thousands of our citizens. Thank you. FH/rf Attachment 5 Anti-sprawl fervor meets backlash By Haya EI Nasser, USA TODAY August 25, 2002 LEESBURG, Va. -Fox hunts on the lush From California's coastal cities to the suburbs of rolling hills of Northern Virginia once offered a Salt Lake City, Denver, Boston, New York City slice of English country life less than 40 miles and the nation's capital, many people who staff outside Washington, D.C. businesses, schools, public safety agencies, hospitals and other vita] institurions can't afford i • r I ar ~ + ff~ts' f, to live where they work. Experts axe laying part of the blame on the anti- growth fervor sweeping the USA, a trend that has led to building moratoriums and preservation of large chunks of open space. ~ ~ . at„" a f w t t~Y~ai µ ~H i ~~f ~ ~ ~ "There's no question that growth controls I c,:~•:, increase housing prices somewhere between a ~ ~ little and a lot," says William Fulton of the Solimar Research Group, gland-use think tank in Ventura, Calif. Those restrictions are coming under attack in the ~ t ~,~,r[.~~ ~ _ , ,~r,^: West Northeast and parts of the mid-Atlantic muc~."~' '~'c' ' wa.~>~emw ~taewwa~~u w ' ~.fi.~.:, where housing prices have sky-rocketed and the Experts partly lay [he blame of high housing cos[s on re- construction of more affordable apartments, strictions on new construction like this site in Leesburg, Va. condos and townhouses has slowed: Now, onetime horse farms axe crisscrossed by • Loudoun County supervisors face eight lawsuits blacktop lanes winding toward million-dollar challenging their efforts to stop sprawl. Last homes with three-car garages. And most of the month, they were hit with a federal housing hunting is for houses. It's a sport that teachers, discrimination lawsuit filed by Jama Abdi Liban, police officers, service workers and other middle- who works the graveyard shift for FedEx at income people who work in the nation's second- Dulles International Airport. fastest-growing county increasingly can't play. He says he commutes 45 minutes each way to an Fox them, affordable housing is disappearing as apartment in Maryland because he can't find quickly as open space here in Loudoun County affordable housing in Loudoun, where even and other thriving communities across the USA. modest townhouses go for more than $200,000. His drive is "a life-threatening undertaking," the U.S. Conference of Mayors. "They don't want to lawsuit says, because he is "forced to share his do it, and it all falls back on cities." commute with scores of 18-wheelers that use the Beltway (Interstate 495) late at night." The push to control sprawl picked up steam in the 1990s -the same time the nation added The suit claims that Loudoun's zoning violates more population than in any previous decade. the Fair Housing Act by limiting affordable Residents of fast-growing suburbs railed against housing and effectively preventing many overcrowded schools, congested highways and minorities from living there. new subdivisions that spoIled their vistas. They latched onto the "smart growth" movement, an • In Santa Cruz County, Calif., where the effort to protect farmland, air and water quality median home price is $420,000, a grand jury and animal habitats. last month urged the district attorney or citizens to sue county supervisors for doing Local and state governments responded by little to increase the amount of affordable buying large tracts of vacant land and putting housing. 'The grand jury said the supervisors them off limits to development. They enacted delayed housing projects with feasibility zoning restrictions to reduce the number of studies and curbs on development that housing units per acre and charged developers satisfied an anti-growth agenda. The district hefty impact fees to help pay for roads, water and attorney's office says it's not likely to sue. The sewer lines and schools. Santa Cruz area is the second-least-affordable housing market in the USA, the National At the same time, home construction fell to its Association of Home Builders says. lowest level since the 1960s. That helped create the worst housing shortage since the end of • In Massachusetts, where building mora- World War II. toriums are popular, only 27 of the state's 351 cities and towns meet a minimum level for Today, anti-sprawl activists often find themselves affordable housing. In those communities, at on the defensive. But they argue that "smart least 10% of the housing qualifies for growth" doesn't mean stopping growth. government subsidies for low- and moderate- income families. "A married couple making "You plan for open space, and you plan it in a 45 grand a year can't even rent an apartment," a'ay that accommodates higher density," says says Phil Hailer, spokesman for the Massa- David Goldberg of Smart Growth America, a chusetts Department of Housing & Commu- coalition of environmentalists, planners, preser- nity Deelopment. vationists and transportation organizations. "You don't sacrifice your firemen, policemen and Big-city mayors complain that suburban and- schoolteachers." growth efforts put the burden of providing affordable housing on them, although most new "Smart growth" promotes the protection of open jobs are in the suburbs. space by concentrating development close to jobs and services and connecring it with mass transit. "'There is increased resistance in suburbia to housing, especially affordable housing," says The problem, experts say, is that communities Boston Mayor Thomas Menino, president of the adopt only the smart-growth principles they like. "Ask the typical suburbanite if they want to save Incorporating affordable housing in growth open space, and the answer is always `yes,"' says planning is gaining momentum among governors, Robert Lang, director of the Metropolitan mayors and urban planners. Institute at Virginia Tech. "Then ask them, as a trade-off for that open space, are they willing to California, with nine of the 10 least-affordable have dense multifamily housing built nearby, and housing markets in the country, is taking the lead. the answer is almost always `no.' The result is lots Voters in November will be asked to approve of open space preserved and very little affordable $2.1 billion in bonds to pay for up to 27,000 new housing." and refurbished housing units each year fot five years. This includes many moderately priced Fed by job growth at high-tech campuses for apartments. companies such as America Online and WorldCom, Loudoun County's population grew San Jose and San Diego may require developers 97% in the 1990s to 169,599. The most recent to build a certain percentage of affordable Census estimate shows a 13% jump to 190,903 in housing. The state Legislature is considering ways 2001. to reward communities that do so. In the Silicon Valley stronghold of Santa Clara County, where Trying to rein in growth and maintain some rural half the homes cost more than $575,000, the character, county officials want to limit dense school district built arent-subsidized apartment development to the area near Dulles International complex for teachers. The first-of--its-kind Airport and create a 300-square-mile rural program is being watched by school districts in preserve to the west. To do so, they've approved Washington, Alaska and Massachusetts. drastic rezoning -from one house on three acres to one house on 50 acres. The rezoning will Michael Schill, director of the Furman Center for stop the construction of more than 80,000 Real Estate and Urban Policy at New York houses. University, warns that growth controls can have serious repercussions. "The result is that no affordable homes can be built at all in these areas," the lawsuit by the "They may get some short-term gains by closing FedEx worker says. off developments," he says, "but in the long run, it's going to lead to the economic downfall of Complaints also are coming from employers, their communities, and it's going to price out including AOL. They say the county is becoming their children." too expensive for workers. 'I"eachers John Petrosky, 41, and his wife, Vicki, 42, joined Loudoun County schools two years ago because the salaries were good -more than $45,000 fox eight to 10 years' experience. They could have afforded a small house in Loudoun but chose instead to live more than ahalf--hour west in Berryville. There, they found a 2,600- square-foot house on a half-acre for $280,000. The same house in Loudoun? "Another hundred grand on top," Vicki Petrosky says.