Title
Affordable Housing Development Fee Reimbursement Pilot Program
Action
Action:
Approve the recommendation from Housing, Safety & Community Committee for an Affordable Housing Development Fee Reimbursement Pilot Program with up to $1,500,000 from the Coronavirus State and Local Fiscal Recovery Fund.
Body
Committee Chair:
Victoria Watlington, Housing, Safety & Community Committee
Staff Resource(s):
Shawn Heath, Housing & Neighborhood Services
Alyson Craig, Planning, Design & Development
Explanation
§ The Affordable Housing Development Fee Reimbursement Pilot Program (pilot program) will provide grants to developers to reimburse eligible land development and infrastructure fees for qualifying development projects that incorporate affordable housing units.
§ The goal of the pilot program is to support the production of affordable housing development throughout the city and incentivize the inclusion of affordable units in market-rate developments.
§ Baseline qualifications for the pilot program include:
- Development may be rental or for-sale new construction, acquisition, or rehabilitation projects.
- 20 percent of the housing units in the development must be affordable to households at 60 percent of the Area Median Income (AMI) or below.
- Development must have a minimum of 25 housing units, of which a minimum of five units must be affordable to households at 60 percent AMI or below.
- Developer must commit to an affordability period of 30 years.
- Development cannot receive other city financial support for affordable housing (e.g., Housing Trust Fund, HOME, CDBG, etc.).
§ The percentage of development fees reimbursed is based on tiered qualifications as follows:
- 50 percent reimbursement of eligible development fees:
Projects that meet baseline qualifications and receive non-city public financial investment (e.g., low-income housing tax credits, NC Housing Finance Agency (NCHFA) housing bond allocations, and NCHFA HOME funds).
- 75 percent reimbursement of eligible development fees:
Projects that meet baseline qualifications and receive no other public financial investment.
- 100 percent reimbursement of eligible development fees:
Projects that meet baseline qualifications, receive no other public financial investment, and prioritize units for voucher/subsidy holders and establish partnerships that promote upward mobility for residents.
§ Fees eligible for reimbursement include standard land development and infrastructure fees including Plan Review Fees, Grading Review and Inspection, Tree Ordinance Review and Inspection, Detention Review and Inspection, Rezoning Fees, Tree Mitigation Fees, Water and Wastewater Service Connection, Water and Wastewater System Development Fees, Waste Permit Fees, and Project Initiation, Review & Inspection Fees.
§ Fees not eligible for reimbursement include fees related to revisions to approved plans, reinspection and resubmittal fees, fees charged by non-city entities (e.g., Mecklenburg County building permit fees), fees associated with appeals and variances, and fees for enhanced or expedited review.
§ In addition to fee reimbursement, qualifying projects will also be eligible for the affordable housing development allowances in the Unified Development Ordinance where applicable, including allowances for heritage tree mitigation and sidewalk cost reimbursement.
§ Staff estimate that three to four projects could participate in the pilot program at the proposed funding level of $1.5 million.
§ The pilot program will be evaluated after one year or at time of full allocation of pilot funding, whichever is earlier.
Background
§ On August 27, 2018, City Council adopted the Housing Charlotte Framework, which recommends leveraging tools to support and incentivize the development of affordable housing.
§ On March 11, 2021, in response to the COVID-19 public health emergency, President Biden signed the American Rescue Plan Act of 2021 (ARPA), which included the Coronavirus State and Local Fiscal Recovery Fund. Charlotte was one of almost 1,000 cities across the nation that received these funds.
Committee Discussion
§ On June 6, 2022, a policy item was referred to the Housing, Safety & Community Committee to assess current development fees, review feedback from the development community, and evaluate options available for the city to implement to lessen the financial burden that development fees place on affordable housing developments.
§ On October 3, 2022 and November 7, 2022 the Committee discussed the various development fees associated with land development, implications and options for affordable housing development, and a draft proposal for a fee reimbursement pilot program.
§ On February 6, 2023, the Committee discussed developer feedback on the proposed pilot program. The Committee voted 4-1 to advance the pilot program to full Council for consideration (In favor: Watlington, Mayfield, Johnson, Molina; Opposed: Bokhari).
§ On February 6, 2023, the Committee briefed Council on the Affordable Housing Development Fee Reimbursement Pilot Program during Council Discussions.
Fiscal Note
Funding: American Rescue Plan Act Funds (ARPA)