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HomeMy WebLinkAboutCOM 0200.002 2006-2008 ptv or ~.`y Harry Kim r Christopher J. Yuen Mayor Director Brad Kurokawa, ASLA LEED®AP ~IIixttYg of ~tt~xtlxtt DepuryDirecror PLANNING DEPARTMENT lOl Paoahi Street, Suite 3 Hilo, Hawaii 96720-3043 (808) 961-8288 FAX (808) 961-8742 r... v March 8, 2007 ~ ` ' ..J R* Honorable Pete Hoffmann Chair and Presiding Officer o and Members of the County Council COUNTY COUNCIL 333 Kilauea Avenue, Second Floor Hilo, HI 96720 Deaz Chair Hoffmann and Members of the County Council: SUBJECT: Bill 156 (2004-2006) -Affordable Housing Requirements for Industrial Park Developments The council is considering Bill 156 (2004-2006 Term). This bill would change the affordable housing requirements for industrial projects. Currently, affordable housing is only imposed on industrial projects when an individual industrial enterprise generates more than 100 jobs. Most "industrial" development on the island is really "light industrial", consisting of such things as warehouses, caz repair facilities, lumberyards, contractor's baseyazds, and the like. Individual enterprises rarely if ever hire more than 100 people, although the total employment in an azea like the Kaloko industrial pazk may be much more than that. Bill 156 would impose affordable housing requirements on industrial pazks that employ more than 100 persons in the aggregate. When this came up earlier, I promised Councilmember Hoffmann, the sponsor of the bill, that I would work on another draft of this, and I apologize for my delay in doing so. This is not simple, though, because the law has to clearly state how the number of jobs to be generated will be estimated and assessed. When a typical project comes in for rezoning to industrial, the actual mix of uses is typically not clear. Industrial zoning, whether MG, ML, or MCX, allows a very wide range of uses. Some may create many jobs, others may not. After the project has been rezoned, the overall developer will Comm. No. Z~' Z Ref. To•~resrs~.S T Ref, Uate ^MAR 0 0 `tftii7 Hawaii County is an Equal Opportunity Provider and Employer. Honorable Pete Hoffmann Chair and Presiding Officer and Members of the County Council COUNTY COUNCIL Page 2 March 8, 2007 typically do a subdivision to create the individual lots for sale, bearing the cost of roads, water, and other infrastructure, then sell the individual lots. Then the lot owners will apply for plan approval for their buildings. Because plan approval is tied to a particular use, it is easier to estimate job generation at that time, but the various owners will come in one by one, and obviously, it wouldn't be fair or practical for the County to waive affordable housing in a particular industrial subdivision for the first 99 employees, then start to assess affordable housing on every business that came in afterwards. The option is to have the original developer of the industrial subdivision take care of the affordable housing at the time of subdivision. Apart from the difficulty of estimating the number of employees, the developer cannot do this by creating affordable housing onsite, because residential uses are not allowed in ML, MG, or MCX zones. It can also be a very high requirement for a developer who is just building infrastructure and not the final buildings on the site, as discussed below. So if the council wants to do something like this, the ordinance must have: (1) an initial assessment at the time of rezoning whether the project, as a whole, will generate more than 100 jobs, to determine if there will be a future affordable housing requirement; and (2) a fair way of assessing the affordable housing requirement when the businesses actually start to occupy the project. The attached proposed amendments to Chap. 11 would do the following: First, at the time of any new zoning to ML, MG, or MCX, the future potential job generation would be estimated at ten employees per acre. This is basically consistent with an economic study done for TSA in their recent LUC application and rezoning for Increment 4 of the Kaloko industrial park. This means that a rezoning of ten or more acres of ML, MG, or MCX would trigger a future affordable housing requirement when the project is developed. Second, the actual affordable housing requirement, within any such project, would be determined at the time of plan approval. To avoid having to deal with businesses on a case-by-case basis, the number of employees would be assessed based on ten employees per acre, or one employee per 1000 square feet of gross floor area, whichever is greater. (A one-acre light industrial lot developed with awarehouse-type building will typically have 10,000-20,000 square feet in gross floor area, after allowance for setbacks and parking.) The Zoning Code requires one parking space for 400 square feet of gross floor Honorable Pete Hoffmann Chair and Presiding Officer and Members of the County Council COUNTY COUNCIL Page 3 Mazch 8, 2007 area for most industrial uses, which covers employee and customer parking, and one space for 1000 square feet for warehouses with no retail traffic, so the assessment of one employee per 1000 square feet of gross floor area will be on the low side for most uses. There is a provision that the housing administrator, after consultation with the planning director, could reduce the number of employees based on the actual use of the site, provided that the requirement would have to be re-assessed if the use changed. This would accommodate businesses that have low employee requirements. Now, this affordable housing assessment would apply to all businesses within the rezoned area, even if the individual business did not employ 100 persons. Third, the developer of the industrial subdivision is given the option of taking care of the affordable housing requirement, and avoid passing this on to the future lot owners, by satisfying the requirement at final subdivision approval. In this case, the number of credits the developer must earn will be based on ten employees per acre, and reduced by 50% to account for the fact that the developer is taking Gaze of the requirement in advance of the actual needs, and also because, as explained in the next paragraph, not all of the businesses within the project will have to provide affordable housing. The council should note that not all businesses within an ML, MG, or MCX zone will have an affordable housing requirement. There is some overlap in the uses that can be done in commercial zones with these industrial zones. As in the current law, this draft would exempt the uses that can also be done in CG zones and "home improvement centers" from the affordable housing requirement. There is an additional change that I would suggest if the council broadens the affordable housing requirement on industrial enterprises. It is much more difficult for an industrial project to provide affordable housing than a residential or resort project because they cannot provide the housing onsite within the project. Residential uses are not allowed in ML, MG, or MCX zones. The individual business that ultimately has to fulfill the requirement maybe something like a tractor repair shop or a beer distributorship. Unlike a residential or resort developer, they are not in the business of building units that people can live in. As a practical matter, the only way for the business to satisfy the requirement may be by paying the in-lieu fee. As currently formulated, the in-lieu fee can be very high for districts where the median house price is high. Based on the 2006 median home price, the in-lieu fee in North Kona, Honorable Pete Hoffmann Chair and Presiding Officer and Members of the County Council COUNTY COUNCIL Page 4 March 8, 2007 per employee, would be roughly $19,000. This means that the person getting plan approval fora 10,000 square foot warehouse on a one-acre lot, who we would assume to generate ten employees and provide 2.5 affordable housing credits, would have an in-lieu fee of $190,000 to satisfy the affordable housing requirement. This is a tremendous financial burden for a project like this. In South Hilo, the in-lieu fee would be roughly $6000 per employee, or $60,000 for aone-acre lot. In Puna, on the other hand, the in-lieu fee would be zero or close to zero because the median sales price for homes is not that different than the "120% of median" affordable price. While the in-lieu fee for non- industrial projects can be high too, those have other options. The proposed amendment I have drafted reduces the in-lieu fee requirement for an industrial project from being based on 25%, to 10%, of the difference between the median sales price of homes in a district and the 120% of median figure. This would reduce the fee to about $7600 per employee in North Kona, and $2400 per employee in South Hilo. There is also a slight wording change to sec. 11-6(c) to change the term "dwelling unit" to "housing credit", because the technically the applicant has to earn a "housing credit" rather than provide a dwelling unit. The specific amendments to implement the above are as follows: Amend section 11-4(d) to read as follows: "(d) Requirements for industrial uses. The industrial uses that must fulfill affordable housing requirements are any uses allowed as ofright in an ML or MG district, except for home improvement centers, and any uses that are also allowed as of right in a CG district. [Individual enterprises generating more than] Rezonings to ML MG or MCX with a potential to generate more than one hundred employees on a full-time equivalent basis must earn one affordable housing credit for every four full-time equivalent jobs created. At the time of rezoning the votential iob veneration shall be assumed to be ten full-time equivalent lobs ver acre to determine whether subsequent develoyment within the rezoned area must satisfy an affordable housing reauirement. At the time of elan ayyroval pursuant to sec 11-9(b~ the affordable housing requirement shall be based uvon ten full time equivalent iobs ver acre or one per 1 000 square feet of gross floor area whichever is greater yrovided that the administrator after consultation wtth the Manning director can reduce the number of iobs based on yroof that the actual number of iobs created will be lower and provided that in that case the affordable housing requirement shall be reassessed if the use is changed. The applicant may also satisfv the Honorable Pete Hoffmann Chair and Presiding Officer and Members of the County Council COUNTY COUNCIL Page 5 March 8, 2007 affordable housing requirement at the time of final subdivision approval for the rezoned area provided that in that case the applicant shall be required to earn one affordable housin>; credit for every eieht full-time equivalent fobs created based on ten full-rime equivalent jobs per acre. " Amend section 11-6(c) to read as follows: "(c) The in-lieu fee for each required affordable [dwelling unit] housin>; credit for resort[,]and hotel[,and industrial] uses shall be twenty five percent of. the median sales price for asingle-family home in the tax map zone containing the project, in the previous calendar year, minus the affordable price for households earning one hundred twenty- percent ofthe median." Add a new subsection 11-6(e) to read as follows: "(e) The in lieu fee for each required affordable housing credit for industrial uses shall be ten percent of• the median sales price for a sinele-family home in the tax map zone containingthe proiect in the~revious calendar year minus the affordable pace for households earni ~ one hundred twenty-percent of the median " Sincer~, l ~ CHRISTOPHER J. Planning Director CJY:pak Wpwin60/Chris 07/Hoffmann -Bill 156 -Affordable Hsg. Req. for Industrial Park Developments cc: Mayor Harry Kim Office of Housing and Community Development Corporation Counsel