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Housing, Affordable, Work SessionMEM 0 RAND UM June 13, 2002 TO: FROM: SUBJECT: The Honorable Mayor and City Council Members Michael C. Van Milligen, City Manager WORKSESSION - Owner Occupied Affordable Housing Monday June 17, 2002 5:30 p.m. - Carnegie-Stout Public Library At the June 3, 2002 City Council meeting, the City Council agreed to hold a worksession to further discuss the Owner Occupied Affordable Housing Committee report and additional information that has been collected by staff since that report was presented for the City Council Housing and Community Development Director David Harris will be prepared to make a presentation of the material contained in the updated memorandum. The only difference between the May 2, 2002 memorandum from David Harris that the City Council reviewed at their June 3, 2002 meeting and the enclosed June 12, 2002 memorandum from David is the fact that the City council has now approved the 2000 International Residential Code and the Wisconsin Code for Historic Buildings. Michael C. Van Miligen MCVM/ksf Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager David Harris - Housing and Community Development Director CITY OF DUBUQUE, IOWA MEMORANDUM 12 June 02 TO: FROM: Mike Van Miltigen, City Manager David Harris, Housing and Community Development Department RE: City Council Direction for Affordable Housing Committee INTRODUCTION This memorandum provides additional information and requests direction from the City Council on the recommendations presented to the City Council in December 2001 in the report of the Affordable Housing Committee. Based on the discussion at the Council work session, we eliminated recommendations with fiscal implications. In other words, we aren't pursuing TIF (tax increment financing) or a utility surcharge at this time. STATUS REPORT The following report is the status of further action on the recommendations of the Affordable Housing Committee's four Task Forces, and what City Council direction is needed for each of their recommendations. I. Housing Market Task Force A. Task Force Recommendation: The City should consider sponsoring development of an affordable housing subdivision, either acting as developer or assisting a developer. This could include purchase and land-banking of available parcels. Staff Information/Recommendation: The City could consider issuing Requests for Proposals for a development. One of the obstacles to this task force proposal is that the monies set aside for these developments would be committed to one or two projects (e.g., Harvest View Estates and the Callahan project - if approved - and would commit all available Affordable Housing Page 2 funds). This diminishes our capacity, although funds are to be repaid over time through no-interest, five- year loans. Status: Policy direction needed from City Council. Task Force Recommendation: The City could consider application to the DRA for funds to establish a revolving loan fund for down payment assistance to moderate income families. Staff Information/Recommendation: Since the City cannot apply for DRA funds, staff suggests referring this concept to non-profit housing organizations. Status: Policy direction needed from City Council. Co Task Force Recommendation: The City should consider directing "smart growth" at its western and southern boundaries, encouraging residential development in concert with anticipated development at the new office and industrial parks. Staff Information/Recommendation: In this case, Council action may include re-affirmation of the goals and objectives in the Comprehensive Plan that support "smart growth". This would seem to support City assistance for the Callahan Subdivision. Due to its proximity to the new industrial center and City infrastructure, this project represents a "smart growth" development. Status: Policy direction needed from City Council. II. Land Development Task Force A. Limitations. on City Assistance 1. Task Force Recommendation: The City should develop evaluation criteria on which to base decisions to provide financial assistance for development of all types of owner-occupied housing. These criteria should include balancing demand for new development with the benefits of in-fill development and adaptive re-use of existing building stock; availability of City funds; consistency with long-range plans; prevention of urban sprawl; and overall benefit to the city. Affordable Housing Page 3 Staff Information/Recommendation: tn this case, Council action may include re-affirmation of the goals and objectives in the Comprehensive Plan that support "smart growth". Our recommendation is to direct staff to develop evaluation criteria for project ranking, such as: 1) affordable owner-occupied housing, 2) in-fill development, 3) proximity to City infrastructure, etc., and then provide these cdteria to City Council for review and approval. Status: Policy direction needed from City Council. 2. Task Force Recommendation: The City should consider using the General Fund or a new revolving fund to finance capital improvements for housing development. Staff Information/Recommendation: Our recommendation is to not use the General Fund (property taxes), but rather to continue to use the Water and Sewer Enterprise Funds to fund related utilities. We also recommend that the City seek grants and federal and state assistance from tax credits, etc. Status: New revolving loan funds recently were established for water and sewer improvements using Water and Sewer Enterprise Funds. Policy direction needed from City Council regarding use of General Fund monies. 3. Task Force Recommendation: The City should determine acceptable collateral for any City costs related to loans for development of a housing project; including mortgages, promissory notes, personal guarantees or irrevocable letters of credit. Staff Information/Recommendation: Our recommendation is to direct staff to develop criteria for acceptable collateral, and then provide these criteda to the City Council for review and approval. Status: Policy direction needed from City Council. 4. Task Force Recommendation: The City should establish a development agreement that gives the developer specific performance standards and provides remedies for failure to meet those standards. Affordable Housing Page 4 Staff Information/Recommendation: Our recommendation is to direct staff to prepare a standard development agreement, and then provide this agreement to the City Council for review and approval. Status: Policy direction needed from City Council. B. Incentives for Affordable Owner-Occupied Housing 1. Task Force Recommendation: The City should adopt alternative standards for affordable housing developments that allow public streets to be 27 feet wide; right-of-way to be 42 feet; parking on one side of street only, and a 3-foot wide parkway. Staff Information/Recommendation: Our recommendation is to adopt this alternative standard for affordable housing projects. This standard needs to be applied with a case-by-case review because it limits parking, traffic volumes and the variety of street trees that can be planted. Status: This was reviewed and recommended for approval by City staff and the Zoning Advisory Commission for the Callahan Subdivision proposal. City Council adoption of the alternative street standard is needed. 2. Task Force Recommendation: Water main and sanitary sewer connection fees and/or assessments to be waived if parameters for affordable housing (see below) are met. Staff Information/Recommendation: For the Callahan Subdivision proposal, City staff recommended waiver of the sewer interceptor hook-up fee because the City has already incurred the cost of the sewer interceptor with the construction of the industrial park. For this project, City staff also recommended a five-year, no-interest loan for the water hook up fee instead of the waiver of this fee, because the water main extension (unlike the sewer interceptor) would be an expense that the City now must actually incur. The City must be paid back for this expense, to avoid an increase in water rates. Our recommendation is to waive these fees only if the water and sewer mains are in place. If the City must incur the cost of installation of these mains, then we recommend that the developer pay back the cost as lots are sold, with a no- interest, five-year loan. Status: Policy direction needed from City CounCil. Affordable Housing Page 5 3. Task Force Recommendation: The City should participate in all aspects of the development of affordable, owner-occupied housing, including infrastructure, utilities, streets, land acquisition and earthwork, based on availability of City funds. Staff Information/Recommendation: For the Callahan Subdivision proposal, City staff recommended financial assistance as shown on the attached chart based on the Committee report and on the principles discussed above in B. 3. Our recommended participation included assistance with street trees, park development, and waiver of development services application fees. Status: Policy direction needed from City Council. C. Parameters for Affordable Owner-Occupied Housing 1. Task Force Recommendation: The City should limit the sale price of lots in the affordable owner-occupied housing development to $25,000, with adjustments based on the Consumer Price Index (baseline CPI of October 30, 2001). Staff Information/Recommendation: Our recommendation is that this limitation should be part of the project's development agreement. Status: Policy direction needed from City Council. 2. Task Force Recommendation: The City should charge the developer or builder a $10/square foot surcharge for livable space above a 1,250 square foot threshold for any home built in the affordable owner-occupied housing development, and then place the fees collected in a revolving loan fund to finance other affordable housing projects, Staff Information/Recommendation: Our recommendation is that this limitation should be part of the project's development agreement. Status: Policy direction needed from City Council. 3. Task Force Recommendation: To qualify as affordable, the lot frontage should be between 50 and 75 feet. Current minimum lot frontage of 60 feet should be changed to allow platting at 50-foot width Affordable Housing Page 6 Staff Information/Recommendation: The City Council amended the Zoning Ordinance in February by reducing the minimum lot frontage for single family lots from 60 feet to 50 feet. Status: Accomplished. This lot size wes reviewed and recommended for approval by City staff and the Zoning Advisory Commission for the Callahan Subdivision proposal. Future requests can be reviewed and approved through the subdivision platting process. D. Incentives for all Owner-Occupied Housin.q 1. Task Force Recommendation: The City should participate in financing of alt costs for installation of sanitary sewer, storm sewer and water systems, including interceptors, collectors, pump or lift stations, catch basins, pipes and detention basins. The City's financing would be a five-year, no-interest loan. The developer would make prorated repayments as the lots are sold, with a balloon payment for the remaining balance. Staff Information/Recommendation: Considered for Callahan Subdivision proposal, where City staff recommended financial assistance as shown on the attached chart. Status: Policy direction needed from City Council. 2. Task Force Recommendation: The City should participate in financing of extensions of sanitary sewer, storm sewer and water systems. Staff Information/Recommendation: Considered for Callahan Subdivision proposal, where City staff recommended financial assistance as shown on the attached chart. Status: Policy direction needed from City Council. 3. Task Force Recommendation: Engineering Division to hold sedes of meetings with local engineering firms, asphalt paving suppliers and concrete paving suppliers to evaluate and recommend modification of street construction standards, including sub-base requirements, asphalt thickness and "core out' requirements. To be accomplished by March 2002. Affordable Housing Page 7 Staff Information/Recommendation: Our recommendation is to direct the Engineering Division to hold these meetings, and then to report back to the City Manager by October 1, 2002. Status: City Council direction needed, based on October report recommendations. Task Force Recommendation: Engineering Division to survey Iowa cities to evaluate and recommend modification of sanitary sewer specifications, for use of polyvinyl chloride (PVC) pipe instead of ductile iron in residential subdivisions, and to recommend City standards and specifications. To be accomplished by March 2002. Staff Information/Recommendation: Accomplished. Engineering Division has a "pilot project" now underway with White Street reconstruction. Recommended for Callahan Subdivision proposal. Engineering Division has developed the following City standards for PVC sewer pipe in residential subdivisions. The lots must maintain a 300-foot separation from commercial and industrial zones to prevent possible chemical contamination. In addition, the developer must provide for the project engineer to inspect, provide the City with copies of daily inspection reports, and then certify that the PVC pipe is installed to City standards. Our recommendation is for adoption of the alternative sewer standard citywide with evaluation by Engineering Division in two years for the White Street project. Status: City Council adoption of the alternative sewer standard is needed. III, Home Construction Task Force Task Force Recommendation: City Council should direct staff to permit, promote and assist a model project incorporating an economy of scale, simple unit designs and innovative layout; staff would develop zoning regulations and public improvement design standards to promote this type of development, without need for "extra layers" of approvals. Staff Information/Recommendation: Our recommendation is to direct the Building Services Department to investigate examples from other cities, compare with our existing zoning regulations for these types of developments (e.g., R-2A Two-Family Alternative zoning used for the city's older neighborhoods), and then to report back to the City Manager by October 1, 2002. Affordable Housing Page 8 Status: City Council direction needed, based on October report recommendations. Bo Task Force Recommendation: City Council should direct staff to create "idea book" and resource guide for assistance in affordable design techniques and methods. Staff Information/Recommendation: Our recommendation is to direct the Building Services Department to investigate examples where this information is available, and then to report back to the City Manager by October 1, 2002. Status: City Council direction needed, based on October report recommendations. Task Force Recommendation: City Council should direct Electrical and Plumbing Boards to investigate amending licensing requirements to allow for *residential" electricians and plumbers. Staff Information/Recommendation: Electrical Board declined to support this initiative. City staff believes this option is workable, despite the Electdcel Board's position, because we do this now with mechanical licensing/permitting. Status: City Council direction needed for staff and for Electrical and Plumbing Boards to evaluate electrical and plumbing licensing requirements. Task Force Recommendation: City Council should 'encourage" formation of partnership between school systems, NICC, Master Builders Association and Homebuilders Association to encourage students to enter training for construction trades. Staff Information/Recommendation: The City is a member of the Dubuque Area Labor-Management Council, which has a scholarship program to encourage students to enter these trades. Status: City Council direction needed. Task Force Recommendation: City Council should direct staff to investigate adoption of 2000 Intemational Residential Code. Affordable Housing Page 9 Staff Information/Recommendation: Our recommendation is for the City Council to adopt this code. Status: Accomplished; approved by Council IV. Downtown Living Task Force Task Force Recommendation: City Council should direct staff to permit, promote and assist a housing project incorporating various funding sources, model units and a "How-To" Guide. Staff Information/Recommendation: City staff is working with Dubuque Main Street Ltd. to identify a model project. Our recommendation is to direct City staff to work to accomplish this Task Force Recommendation. Status: City Council direction needed. Task Force Recommendation: City Council should direct staff to investigate adoption of Wisconsin Code for Historic Buildings. Staff Information/Recommendation: Our recommendation is for the City Council to adopt this code. Status: Accomplished; approved by Council Task Force Recommendation: City Council should require Dubuque Main Street to maintain map of vacant upper levels for use by potential developers. Staff Information/Recommendation: Dubuque Main Street has agreed to up-date the map every six months; in addition, they will be publishing a "vacancy availability list," for residential buildings, by the end of this calendar year. Status: Accomplished. Affordable Housing Page 10 REQUESTED ACTION The requested action is for the City Council to provide City staff with the necessary direction to move forward with the Affordable Housing Committee recommendations. Assistance in preparation of this memorandum provided by Laura Carstens, Planning Services Department Director. Attachments Laura Carstens, Planning Services Department Rich Russell, Building Services Department Gus Psihoyos, Engineering Division Bob Green, Water Department Dan LoBianco, Main Street Ltd Affordable Housing Committee members MEMORANDUM TO: FROM: SUBJECT: May 31. 2002 The Honorable Mayor and City Council Members Michael C. Van Milligen, City Manager Owner Occupied Affordable Housing Committee OP¥ In December 2001. the Mayor and City Council reviewed a report from the Owner Occupied Affordable Housing Committee. While some issues were resolved at this meeting and through the City budget process, a follow-up report was requested from City staff. While some of the information needed will be collected between now and October 1, 2002, I believe the attached report provides enough additional staff input for a work session to discuss the issues. I have attached the May 20, 2002 staff report, as written by Housing and Community Development Director David Harris, the May 14, 2002 report on the Callahan proposed west side development, and the December 10, 2001 work session material on the Owner Occupied Affordable Housing Committee Report. I respectfully request that a work session be scheduled to discuss the report and the staff input. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager David Harris. Housing and Community Development Director CITY OF DUBUQUE, IOWA MEMORANDUM 20 May 02 TO: Mike Van Milligen, City Manager FROM: David Harris. Housing and Community Development Department RE: City Council Direction for Affordable Housing Committee INTRODUCTION This memorandum provides additional information and requests direction from the City Council on the recommendations presented to the City Council in December 2001 in the report of the Affordable Housing Committee. Based on the discussion at the Council work session we eliminated recommendations with fiscal implications. In other words, we aren't pursuing TIF (tax increment financing) or a utility surcharge at this time. STATUS REPORT The following report is the status of further action on the recommendations of the Affordable Housing Committee's four Task Forces, and what City Council direction is needed for each of their recommendations. I. Housing Market Task Force Task Force Recommendation: The City should consider sponsoring development of an affordable housing subdivision, either acting as developer or assisting a developer. This could include purchase and and-banking of available parcels. Staff Information/Recommendation: The City could consider issuing Requests for Proposals for a development. One of the obstacles to this task force proposal is [hat the monies set aside for these developments woulC be committed to one or two projects (e.g., Harvest View Estates and the Callahan project - if approved - and would commit all available Affordable Housing Page 2 funds). This diminishes our capacity, although funds are to be repaid over time through no-interest, five- year loans. Status: Policy direction needed from City Council. Task Force Recommendation: The City could consider application to the DRA for funds to establish a revolving loan fund for down payment assistance to moderate income families. Staff Information/Recommendation: Since the City cannot apply for DRA funds, staff suggests referring this concept to non-profit housing organizations. Status: Policy direction needed from City Council. Task Force Recommendation: The City should consider directing "smart growth" at its western and southern boundaries, encouraging residential development in concert with anticipated development at the new office and industrial parks. Staff Information/Recommendation: In this case Council action may include re-affirmation of the goals and objectives in the Corn prehensive Plan that support "smart growth". This would seem to support City assistance for the Callahan Subdivision. Due to its proximity to the new industrial center and City infrastructure, this project represents a "smar[ growth" development. Dubuque County and the City of Dubuque have a joint committee to do fringe area planning. Status: Policy direction needed from City Council. II. Land DeveJc pment Task Force A. Limitations on City Assistance 1. Task Force Recommendation: The City should develop evaluation criteria on which to base decisions to provide financial assistance for development of all types of owner-occupied housing. These criteria should include balancing demand for new development with the benefits of in-fill development and adaptive re-use of existing building stock; availability of City funds; consistency with long-range plans; prevention of urban sprawl; and overall benefit to the city. Affordable Housing Page 3 Staff Information/Recommendation: In this case, Council action may include re-affirmation of the goals and objectives in the Comprehensive Plan that support "smart growth". Our recommendation is to direct staff to develop evaluation criteria for project ranking, such as: 1) affordable owner-occupied housing, 2) in-fill development, 3) proximity to City infrastructure, etc., and then provide these criteria to City Council for review and approval. Status: Policy direction needed from City Council. 2. Task Force Recommendation: The City should consider using the General Fund or a new revolving fund to finance capital improvements for housing development. Staff Information/Recommendation: Our recommendation is to not use the General Fund (property taxes), but rather to continue to use the Water and Sewer Enterprise Funds To fund related utilities. We also recommend that the City seek grants and federal and state assistance from tax credits, etc. The following are programs that exist as approved in the City budget: Water Internal Main in New Developments - Revolving Loan Fund ($200,000 over 5 years) and the Sanitary Sewer Internal Main to New Developments - Revolving Lo. an Fund ($798,000 in Fiscal Year 2002 to establish the fund). Status: New revolving loan funds recently were established for water and sewer improvements using Water and Sewer Enterprise Funds. Policy direction needed from City Council regarding use of General Fund monies. 3. Task Force Recommendation: The City should determine acceptable collateral for any City costs related to loans for development of a housing project; including mortgages, promissory notes, personal guarantees or irrevocable letters of credit. Staff Information/Recommendation: Our recommendation is to direct staff To develop criteria for acceptable collaterat, and then provide these criteria to the City Council for review and approval Status: Policy direction needed from City Council. Affordable Housing Page 4 4. Task Force Recommendation: The City should establish a development agreement that gives the developer specific performance standards and provides remedies for failure to meet those standards. Staff Information/Recommendation: Our recommendation is to direct staff to prepare a standard development agreement, and then provide this agreement to the City Council for review and approval. Status: Policy direction needed from City Council. B. Incentives for Affordable Owner-Occupied Housinq 1 Task Force Recommendation: The City should adopt alternative standards for affordable housing developments that allow public streets to be 27 feet wide; right-of-way to be 42 feet; parking on one side of street only, and a 3-foot wide parkway. Staff Information/Recommendation: Our recommendation is to adopt this alternative standard for affordable housing projects. This standard needs to be applied with a case-by-case review because it limits parking, traffic volumes and the variety of street trees that can be planted. Status: This was reviewed and recommended for approval by City staff and the Zoning Advisory Commission for the CaIlahan Subdivision proposal. City Council adoption of the alternative street standard is needed. 2. Task Force Recommendation: Water main and sanitary sewer connection fees and/or assessments to be waived if parameters for affordable housing (see below) are met. Staff Information/Recommendation: For the CaIlahan Subdivision proposal. City staff recommended waiver of the sewer interceptor hook-up fee because the City has already incurred the cost of the sewer interceptor with the construction of the industrial park. For this project, City staff also recommended a five-year, no-interest loan for the water hook up fee instead of the waiver of this fee. because the water main extension (unlike the sewer interceptor) would be an expense that the City now must actually incur. The City must be paid 2ack for this expense, to avoid an increase in water rates. Our recommendation is to waive these fees only if the water and sewer mains are in place. If the City must incur the cost of installation of these mains, then we Affordable Housing Page 5 recommend that the developer pay back the cost as lots are sold, with a no- interest, five-year loan. Status: Policy direction needed from City Council. 3. Task Force Recommendation: The City should participate in all aspects of the development of affordable owner-occupied housing, including infrastructure, utilities, streets, land acquisition and earthwork, based on availability of City funds. Staff Information/Recommendation: For the Callahan Subdivision proposal, City staff recommended financial assistance as shown on the attached chart based on the Committee report and on the principles discussed above in B. 3. Our recommended participation included assistance with street trees, park development, and waiver of development services application fees. Status: Policy direction needed from City Council. C. Parameters for Affordable Owner-Occupied Housing 1. Task Force Recommendation: The City should limit the sale price of lots in the affordable owner-occupied housing development to $25,000, with adjustments based on the Consumer Price Index (baseline CPI of October 30, 2001). Staff Information/Recommendation: Our recommendation is that this limitation should be part of the project's development agreement. Status: Policy direction needed from City Council. 2. Task Force Recommendation: The City should charge the developer or builder a $1 O/square foot surcharge for livable space above a 1,250 square foot threshold for any home built in the affordable owner-occupied housing development, and then place the fees collected in a revolving loan fund to finance other affordable housing projects. Staff Information/Recommendation: Our recommendation is that this limitation should be part of the project's development agreement. Affordable Housing Page 6 Status: Policy direction needed from City Council. 3. Task Force Recommendation: To qualify as affordable, the lot frontage should be between 50 and 75 feet. Current minimum lot frontage of 60 feet should be changed to allow platting at 50-foo~ width Staff Information/Recommendation: The City Council amended the Zoning Ordinance in February by reducing the minim um lot frontage for single family lots from 60 feet to 50 feet. Status: Accomplished. This lot size was reviewed and recommended for approval by City staff and the Zoning Advisory Commission for the Callahan Subdivision proposal. Future requests can be reviewed and approved through the subdivision platting process. D. Incentives for alt Owner-Occupied Housin.q 1. Task Force Recommendation: The City should participate in financing of all costs for installation of sanitary sewer, storm sewer and water systems, including interceptors, collectors, pump or lift stations, catch basins pipes and detention basins. The City's financing would be a five-year, no-interest loan The developer would make prorated repayments as the lots are sold, with a balloon payment for the remaimng balance. Staff Information/Recommendation: Considered for Callahan Subdivision proposal, where City staff recommended financial assistance as shown on the attached chart. Status: Policy direction needed from City Council. 2. Task Force Recommendation: The City should participate in financing of extensions of sanitary sewer, storm sewer and water systems. Staff Information/Recommendation: Considered for Callahan Subdivision proposal, where City staff recommended financiat assistance as shown on the attached chart. Status: Policy direction needed from City Council. Affordable Housing Page 7 3. Task Force Recommendation: Eng~neering Division to hold series of meetings with local engineering firms. asphalt paving suppliers and concrete paving suppliers to evaluate and recommend modification of street construction standards, including sub-base requirements, asphalt thickness and "core out" requirements. To be accomplished by March 2002. Staff Information/Recommendation: Our recommendation is to direct the Engineering Division to hold these meetings, and then to report back to the City Manager by October 1, 2002. Status: City Council direction needed, based on October report recommendations. Task Force Recommendation: Engineering Division to survey Iowa cities to evaluate and recommend modification of sanitary sewer specifications, for use of polyvinyt chloride (PVC) p~pe instead of ductile iron in residential subdivisions, and to recommend City standards and specifications. To be accomplished by March 2002. Staff Information/Recommendation: Accomplished. Engineering Division has a "pilot project" now underway with White Street reconstruction. Recommended for Callahan Subdivision proposal. Engineering Division has developed the following City standards for PVC sewer pipe in residential subdivisions. The lots must maintain a 300-foot separation from commercial and industrial zones to prevent possible chemical contamination. In addition, the developer must provide for the project engineer to inspect, provide the City with copies of daily inspection reports, and then certify that the PVC pipe is installed to City standards. Our recommendation is for adoption of the alternative sewer standard citywide with evaluation by Engineering Division in two years for the White Street project. Status: City Council adoption of the alternative sewer standard is needed. III. Home Construction Task Force A. Task Force Recommendation: City Council should direct staffto permit, promote and assist a model project incorporating an economy of scale, simple unit designs and innovative layout: staff would develop zoning regulations and public improvement design standards to promote this type of development, without need for 'extra layers" of approvals. Affordable Housing Page 8 Staff Information/Recommendation: Our recommendation is to direct the Building Services Department to investigate examples from other cities, compare with our existing zoning regulations for these types of developments (e.g., R-2A Two-Family Alternative zoning used for the city's older neighborhoods), and then to report back to the City Manager by October 1, 2002. Status: City Council direction needed, based on October report recommendations. Task Force Recommendation: City Council should direct staff to create "idea book" and resource guide for assistance in affordable design techniques and methods. Staff Information/Recommendation: Our recommendation is to direct the Building Services Department to investigate examples where this information is available, and then to report back to the City Manager by October 1, 2002. Status: City Council direction needed, based on October report recommendations. Task Force Recommendation: City Council should direct Electrical and Plumbing Boards to investigate amending licensing requirements to allow for "residential" electricians and plumbers. Staff Information/Recommendation: Electrical Board declined to support this initiative. City staff believes this option is workable, despite the Electrical Board's position, because we do this now with mechanical licensing/permitting. Status: City Council direction needed for staff and for Electrical and Plumbing Boards to evaluate electrical and plumbing licensing requirements. Task Force Recommendation: City Council should "encourage" formation of partnership between school systems, NICC. Master Builders Association and Homebuilders Association to encourage students to enter training for construction trades. Staff Information/Recommendation: The City is a member of the Dubuq de Area Labor-Management Council. which has a scholarship program to encourage students to enter these trades. Affordable Housing Page 9 Status: City Council direction needed. Task Force Recommendation: City Council should direct staff to investigate adoption of 2000 International Residential Code. Staff Information/Recommendation: Our recommendation is for the City Council to adopt this code. Status: Scheduled for City Council action on June 3. IV. Downtown Living Task Force Task Force Recommendation: City Council should direct staff to permit, promote and assist a housing project incorporating various funding sources, model units and a "How-To" Guide. Staff Information/Recommendation: City staff is working with Dubuque Main Street Ltd. to identify a model project. Our recommendation is to direct City staff to work to accomplish this Task Force Recommendation. Status: City Council direction needed. Task Force Recommendation: City Council should direct staff to investigate adoption of Wisconsin Code for Historic Buildings. Staff Information/Recommendation: Our recommendation is for the City Council to adopt this code. Status: Scheduled for City Council action on June 3. Task Force Recommendation: City Council should require Dubuque Main Street to maintain map of vacant upper levels for use by potential developers. Staff Information/Recommendation: Dubuque Main Street has agreed to up-date the map every six months; in addition, they will be publishing a ~vacancy availability list," for residential buildings, by the end of this calendar year. Affordable Housing Page 10 Status: Accomplis bed. REQUESTED ACTION The requested action is for the City Council to provide City staff with the necessary direction to move forward with [he Affordable Housing Committee recommendations. Assistance in preparation of this memorandum provided by Laura Carstens, Planning Services Department Director. Attachments CC; Laura Carstens, Planning Services Department Rich Russell, Building Services Depar[ment Gus Psihoyos, Engineering Division Bob Green, Water Department Dan LoBianco. Main Street Ltd Affordable Housing Committee members LLAHAN RE¢ UEST WITH RECOMMENDED ASSISTANCE Item Subdivision City Service Amount of Assistance Assistance Task Force Current Comments No. Section Service Component Assistance Requested Recommended Report Program 1. a. R-2 Lot size 50 x 100'ft N/A Approval Appro. val Approval Yes 1. b. R-2 Street ROW 42 ft ROW N/A Waive std Approval Approval No Alt. Std. 1. c. R-2 Street width 27 ft width N/A Waive std Approval Approval No Alt. Std. 1. d. R-2 Street 4" Asphalt N/A Waive std Do not waive Eng. Div. to No City std is 7" ~aving 14" base study std. asphalt 1. d. R-2 Street 6" concrete N/A Waive std Approve 6 1/4" Eng study No City std is 6 1/4" paving concrete concrete 1. e. R-2 Street One side only N/A Waive std Approval Approval No Alt. Std. parking 1. f. R-2 Sewer PVC pipe N/A Waive std Approval Approval No Alt. Std. 1. g. R-2 Water PVC pipe N/A Waive std Approval Approval No Alt. Std. 2. R-2 & R-4 City Inspection 3% of public Waive Do not waive Not in report No Fees fund 60% Eng. fees ~mprovements (grant) of Eng. salaries 3. R-2 & R-4 Sewer Hook up fee $10,000 R-2 Waive Waive R-2 only Waive only No Existing sewer (Interceptor) $7,500 R-4/CS (grant) Loan R-4/CS Affordable interceptor 4. R-2 & R-4 Water Hook up fee $7,975 R-2 Waive Loan R-2 onfy Waive only Yes New water main $6,215 R-4/CS (grant) Upfront R~4/CS Affordable to be installed 5. Entire Dev. App. fees $2,460 Waive Waiver Not in report Yes project Services 6. R-2 & R-4 Sewer and Assessments None expected Waive None to waive Waive only No Waive of tap Water Affordable fees not rec'd 7. R-2 Sewer Main/Laterals $105,000 Grant Loan Loan Yes Phase I only in subdivision 8. R-2 Sewer Collector $30,000 Grant Loan Loan Yes 9. R-4/CS Sewer Collector $60,000 50% Grant Loan Loan Yes Supports R-2 T0. R~2 Water Int. Mains $100~000 Grant Loan Loan Yes 11. R-2 Water Ext. Main $99,550 Grant Loan Loan Yes 12. R-4/CS Water Int. Mains Grant Do not fund Not in report No Not for housing~ 13. R-2 & R-4 Street Lights Installation Not estimated Trenching Do not fund Not In report No Not budgeted Lights/poles by owner 14. R-2 Park Div. Street trees $27,000 Grant City $21,000 Rec'd Yes City: $150/tree Owner $6,000 to plant & $60/tree 15. Park Park Div. Playground $150,000 Grant City expense Rec'd No Needs a CIP 16. All streets City Eng. Drain tile Not est. City expense Rec'd Yes N/A All streets City Eng. %" concrete Not est. City expense Not in report Yes A streets City Eng. Drain tile Not est. City expense Yes Budget Impact to Assist Affordable Housin.q in the Callahan Subdivision The budget impacts of the staff recommendations for City assistance to facilitate the affordable owner-occupied housing in Callahan Subdivision were as follows. Subdivision City Service Amount of Form of Existing Comments Section Dept. Component Assistance Assistance Program Service R-2 Sewer Interceptor $10,000 Waiver No Hook up fee R-2 Sewer Collector $30,000 Loan Yes R-2 Sewer Main/Lateral $105,000 Loan Yes Phase I only R-4/CS Sewer Interceptor $7,500 Loan Yes Hook up fee R-4/CS Sewer Collector $60,000 Loan Yes Supports R-2 Entire project Water Ext. Main $99,550 City Yes expense R-2 Water' Ext. Main $7,975 Loan Yes Hook up fee R-2 Water Int. Mains $100,000 Loan New Begins July 1 R-2 Park Div. Street trees $21,000 Cost share Yes Park Park Div. Park dev. $150,000 City No Needs a CIP expense Entire project Dev. App. fees $2,460 Waiver Yes Svcs All streets City Eng. %" concrete Not est. City Yes expense All streets City Eng. Drain tile Not est. City Yes expense As shown in the chart above, the amount of recommended City assistance totaled approximately $600.000. The portion of this financial aid in the form of waivers was approximately $12,460. This included $10,000 for the R-2 sewer interceptor fee and $2,460 in development service application fees for the entire project. Cost sharing of $21,000 for street trees and budgeting $150,000 for park development was recommended as well. Staff also recommended that the City spend an estimated $99,550 to extend the existing water main along Seippel Road. In addition, staff recommended that the City pick up the expense of an additional ~ of concrete pavement and drain tile installation for all streets in the subdivision. Staff had recommended City assistance of $310,475 through interest free loans, with $202,500 for sanitary sewer costs and $107,975 for water main costs. Loan payments would have been made as lots are sold, with a balloon payment in 5 years. The amount would have been prorated on the number of lots in each phase of the subdivision. MEMO RANDUM May 14.2002 TO: FROM: SUBJECT: The Honora ~le Mayor and City Council Members Michael C. Van Milligen, City Manager Callahan Subdivision Request for Annexation and Fin ancial Assistance The City has received a request from Joel Callahan for annexation of 40 acres of property on Seippel Road. just north of Dubuque Industrial Center West. Over two phases, he plans to develop a section of the property for 105 single-family owner- occupied housing at a price of $125,000, which is affordable to persons at 95% of median income. Consistent with the ,esults of the City's Affordable Housing Task Force Report and the availability of City funds, Planning Services Manager Laura Carstens is recommending approval of the annexation and certain components of the financial assistance request. The recommendation includes $430,475 in no-interest loans $33,460 in forgivable loans and a commitment to build a neighborhood park valued at approximately $150.000. Following is Mr. Callahan's request and the staff recommendation: 1. City assistance for development of the R-2 affordable single-family lots 50'x 100' tots: Consistent with the Task Force report, staff recommends approval. The City Council recently amended the Zoning Ordinance [o allow these smaller lot dimensions. b. 42' street fight-of-way: Consistent. with the Task Force report, staff recommend s approval, in conjunction with items 1 .c. and 1 .e. c. 27' street pavement width: Con sistent with the Task Force repo~, staff recommends approval, in conjunction with items 1.b. and 1.e. Street paving thickness: Staff recommends approval for the concrete pavement with a ¼" increase to 6¼' concrete and 4" ~ase stone, which is the City standard. As we do with other projects, the City will provide an additiona, N" of concrete to brin9 the pavement to a 7" thickness. Staff is not able to recommend approval of the requested 4" asphalt and 14" stone base, because the City standard is 7" asphalt and 4" base stone. Parking on one side only: Consistent with the Task Force repod staff recommends approval, in conjunction with items 1.b. and 1.c. City Engineering staff will evaluate the best locations for parking to maintain sight distance and avoid hydrants, and then provide a separate ordinance for City Council action. f. PVC SDR26 sanitary sewermalns: PVC sanitary sewer mains are being installed as a City "pilot" project in the reconstruction of White Street. Consistent with the Task Force report, staff recommends approval, except for the R-2 lots that are within 300 feet of the CS lots. City standards require this 300-foot separation for PVC pipe to prevent possible chemical contamination from commercial/industrial sites. In addition, staff recommends that the developer provide for the project engineer to inspect and certify that the PVC pipe is installed to City standards. g. PVC C900 water mains: PVC water mains were installed as a City "pilot" project during the reconstruction of Lincoln Avenue. Consistent with the Task Force report, staff recommends approval except for the R-2 tots that are within 3Q0 feet of the CS lots or in areas that are Known to be the site of a leaking underground storage tank. in accordance with City and State standarc s. Waive all engineering and inspections fees for the R-2 and R-4 sections: This was not presented in the Affordable Housing Task Force report. These fees are based on 3% of the project engineer's estimate for the public improvements (streets, sewers, water, street lights). Approximately 60% of the City Engineering staff salaries are supported by these fees as an offset to the General Fund. Any waiver of fees would have to be made up by the General Fund (i.e., property taxes). Since this item is not in the City's budget, staff is not able to reoommend approval. Waive any and all sanitary sewer hook up fees for the R-2 and R-4 sections: The City charges a sewer interceptor fee when a developer connects to the City's sanitary sewer system. For this project, the interceptor fee is approximately $5001acre. Consistent with the Task Force report, staff recommends waiver o~the sewer interceptor fee for the R-2 area only. This fee is estimated to be $10.000 (21.15 acres of R~2 zoning at approximately $500/acre) for the affordable housing portion of the project. We are recommending this waiver because the City' has already incurred the cost of the sewer interceptor with the construction of the ind ustdal park. Staff recommends that the CS and R*4 portions of th e $500/acre interceptor fee not be waived, and instead be collected by the City. ir installments as lots are sold, with a balloon payment being made in 5 years. This fee is estimated to be $7.500. Waive any and all water hook up fees for the R-2 and R-4 sections: The City charges a water hook up fee based on front footage when the developer connects to the City water system. This fee is $11.00 per lineal foot. This fee covers a 2ortion of the cost to extend the water main to a development. The estimated cost to' extend the existing City water main along Seippel Road is $99,550. Instead of the requested waiver of this fee. staff is suggesting a compromise, beca Jse the water main extension (unlike the sewer interceptor) is an expense that the City now must actually incur. The City must be paid back for [his expense, to avoid an increase in water rates. Our recommendation might be different if the water main was already in place. Consistent with the Task Force report, staff recommends that. for the R-2 lots only, the estimated cost of $7,975 in water hook up fees be paid back as these lots are sold. with a balloon payment at the end of 5 years. This connection charge would be prorated oy the number of lots in each phase of the subdivision. Staff recommends that the estimated front footage fees of.$6 215 fees for the R-4 and CS sections be paid as they normally are, at the start of the project. Waive development service application fees for the R-2 and R~4 sections: Consistent With City practice for annexations, staff recommends waiver of $2;460 in development service application fees for the entire development. This includes the rezoning fee of $1 000 and the preliminary plat fee of $1.460. Waive assessments for any sanitary sewer and water fees for the R-2 and R-4 sections: Staff is not able to recommend waiver of the water tap fee for any lots, because this covers the actual cost of materials. No other sewer and water fees or assessments are anticipated. Furnish and install sanitary sewer in the R-2 section: Consistent with the Task Force report, staff recommends that the City finance this cost in the same manner as it financed the Harvest View development. The developer would make prorated repayments as R-2 lots are sold, with a 5-year balloon payment for the remaining balance. The sewer main cost for Phase I of the R-2 section is estimated to be $105,000. This includes approximately $80.000 for the main sewer line and $25,000 for the lateral lines to the homes. The sewer main cost for Phase I of the P,-2 section is estimated to be $135,000. This includes approximately $100,000 for the main sewer line and $35.000 for the lateral lines. Staff has not recommended that the City commit to funding ~his second phase of the project at this time. Furnish and insta# sanitary sewer extension to the R-2 section: Consistent with the Task Force report, staff recommends that the. sewer extension costs be paid 0ack as R-2 lots are sold. and a balloon payment at the end of 5 years. The collector portion of the sanitary sewer through the R-2 section of the project is estimated to be approximately $30,000. Furnish and install sanitary sewer in the R-4 and CS sections: Although these lots are for multi-family and commercial developments, not for owner-occupied housing, staff recommends approval for interest-free financing for extension of the collectors only. The sawer main and lateral lines would not receive any financial assistance. Two sanitary sewer collectors must be extendeo through the R-4 and CS sections to reach the R-2 zone to the north. This recommendation is consistent with the Affordable Hous;ng Task Force report, because without these extensions, the R-2 area could not be served with City sewer. The ~',ollector portion for the R4 and CS areas is estimated to be $60.000. The City would recoup its cost through prorated repayments as the lots are sold, with all monies 'epaid in 5 years. 10. Fum/sh and install water in the R-2 section: Consistent with the Task Force report, staff recommends that the water installation costs be paid back as R-2 lots are sold with a balloon payment at the end of 5 years. The cost to install the internal water ma~n and service lines to each home in Phase I of the R-2 portion is estimated to De $120,500; however, the City has only $100,000 available for fiscal year 2003. 11. Fumish and install water extension to the R-2 section: The estimated cost to extenc the existing City water main along the property's entire Seippel Road frontage is $99,550. Consistent with the Task Force report, staff recommends that this cos1 ~)e recouped through the prorated payment of the frontage fee [$11.00 per linea foot) as R-2 lots are sold, with a balloon payment at the end of 5 years (see item 4). 12. Furnish and install water to the R-4 and CS sections: Staff is not able to recommend approval because these lots are for mu Itl-family and commercia developments, not for owner-occupied housing. The cost of the water main to serve the R-4 and CS sections must be paid up front. 13. Furnish and instal/street lights in the R-2 and R-4 sections: This was not presented in the Affordable Housing Task Force report. Since this item is not in the City's budget, staff is not able to recommend approval. 14.Plant a tree on each/otin the R-2 section: Consistent with City street tree program and the Task Force.repolt. staff recommends that the City pay half the cost of each tree and the labor cost to plant the trees in the parkway (green space between the curb and the sidewalk). The trees cost $120 each and the labor cost is $150 per tree. To meet City standards, a tree on every lot may not be possible due to the location of utility lines to the homes, driveways, hydrants, etc. If trees were planted for 90%, or 100 of the 112 R-2 lots, for example, the City's cost would be $6,000 for the trees and $15,000 for labor. 15. Purchase and install playground equipment for a 3-acre park: Consistent with the Task Force report, staff recommends budgeting $150,000 for a small pavilion, playground equipment, grading and seeding to create a neighborhood park. The park would be completed within: year after the public street to the oark is installed. provided that the developer makes 1-2 acres of the park land fiat and usable. 16.Furnish and install drain tile: Consistent with current City practice and with the Task Force report, staff recommends approval. [ concur with the recommendation and respectfully request Mayor and Cib' Council approval. MCVM/jh Attachment CC: Mic~qael c. Van Milligen Barry LindahL Corporation Counsel Cindy Steinhauser. Assistant City Manager Laura Carstens, Planning Services Manager CITY OF DUBUQUE, IOWA MEMORANDUM May14,2002 TO: Michael Van Milligen, City Manager FROM: Laura Carstens, Planning Services Manager '~ SUBJECT: City Assistance to Facilitate Development of Callaha~ Subdivision Introduction This memo transmits a request from Joel Callahan, President, Callahan Construction, inc. for City assistance to facilitate development of a new mixed-use subdivision that would include affordable housing. He has asked for financial assistance for the development of his proposed Callahan Subdivision on Seippel Road, in conjunction with rezoning, platting and annexation. This mere 3 provides the staff recommendation in response to his request. Staff has reviewed these recommendations with him Correspondence from the Zoning Advisory Commission and Planning staff regarding the proposed rezon lng and preliminary plat are provided under separate cover. The rezoning request is concurrent with annexation, and is scheduled for a public hearing at the City Council's May 20 meeting. A resolution, staff repot[ and related materials concerning Mr. Callah an's request for voluntary annexation, conc;Jrrent with the rezoning, are provided under separate cover as well. The annexation request also is scheduled for a public headng at the City Council's May 20 meeting. Discussion The City Council has made affordable owner-occupied housing a top priority. In December of 2001. the City Council considered the repot[ of the Affordable Housing Task Force. The purpose of the Task Force was to research and recommend opportunities for development of affordable owner-occupied housing. The target range was households earning 90-100% of median income. Callahan Assistance Request Page 2 He is requesting annexation of his 40-acre parcel concurrent with rezoning to a combination of CS Commercial Service and Wholesale R-4 Multi-Family ResidentiaJ and R-2 Two-Family Residential districts. He is proposing a phased development with installation of five public streets and public water, sanitary sewer and storm sewer systems, as well as creation of a neighborhood park. Mr. Callahan assisted development of the Task Force's recommendations for lana development. Many of these recommendations are reflected in his request for City assistance for his proposed mixed-use development, n his letter. Mr. Callahan indicates that his anticipated price of $125,000 for the single-family homes is affordable to households at 80% of median income. We have calculated that this price is affordable to households at 95% of median ncome, which is within our target range. The Affordable Housing Task Force report recommends that: The City should consider the potentia: of its role in directing "smart growth" at its western and southern boundaries, encouraging residential development ir concert with anticipated business development at the new office and industrial parks. This area "in-fill" residential development could result in housing located adjacent to new employment reducing vehicle trips and commuting time." If this property were to develop in the County as a rural subdivision, the public improvements still would have to be insta led to City standards, which is consistent with how the City has approved other subdivisions in our identified growth areas. Without the benefit of City assistance, however, the density of this development would be much less due to the County's larger Iot i'equirements for septic system drain fields Through a partnership of the City and the developer, this project can provide the opportunity to serve as a "model project" for affordable owner-occupied housing. This project also ~ncorporates the principles of "smart growth~ due to its proximity to the City limits, infrastructure and utiIities, as well as new jobs at the Dubuque Industrial Center West. Recommendation The City should determine its financial involvement on a case-by-case basis, based on the availability of City funds, consistency with the City's long-range plans, and the overall benefit of the development to'the City. All projects should be evaluated on their individual merits, including the prevention of urban sprawl through the use of existing infrastructure and utiIities, such as streets, sewers and water lines. We are recommending City assistance for the R-2 affordable single-family lots because: 1) City funds are available to assist new developments. 2) the request is consistent with the recommendations of the Affordable Housing Task Force, and/or 3) the request is consistent with current City policies, programs or practices. Callahan Assistance Request Page 3 Since the City does not have any policies or programs for facilitating development of new multi-family or commercial properties, we are not able to recommend City assistance for the R-4 multi-family lots or the CS commercial ors. We are able to recommend City assistance to facilitate the affordable single-family development in the R-2 zoning through a combination of waivers (grants) and zero- interest loans with 5-year balloon payments. Repayment of these loans would provide for a revolving loan fund to facilitate other single-family developments in the future. Supporting documentation is provided in the attached memorandums from the Water Department and Engineenng Division. These recommendations follow [he sequence laid out in Mr. Callahan's etter. 1. City assistance for development of the R-2 affordable single-family lots 50'x 100' lots: Consistent with the Task Force report, staff recommends approval. The City Council recently amended the Zoning Ordinance to allow these smaller lot dimensions. b. 42' street right-of-way: Consistent with the Task Force report, staff recommends approval, in conjunction with items 1.c. and 1 .e. c. 27' street pavement width: Consistent with the Task Force report, staff recommends approval, in conjunction with items 1.b. and 1.e. d. Street paving thickness: Staff recommends approval for the concrete pavement with a ¼" increase to 6%" concrete and 4" base stone, which is the City standard. As we do with other projects, the City will provide an additional ~" of concrete to bring the pavement to a 7" thickness. Staff is not able to recommend approval of the requested 4" asphalt and 14" stone base, because the City standard is 7" asphalt and 4" base stone. Parking on one side only: Consistent with the Task Force report, staff recommends approval, in conjunction with items 1.b. and 1.c. City Engineenng staff will evaluate the best locations for parking to maintain sight distance and avoid hydrants, and then provide a separate ordinance for City Council action. PVC SDR26 sanitary sewer mains: PVC sanitary sewer mains are being installed as a City "pilot" project in the reconstruction of White Street. Consistent with the Task Force repot[, staff recommends approval, except for the R-2 lots that are within 300 feet of the CS lots. City standards require this 300-foot separation for PVC pipe to prevent possible chemical contamination from commercial/industrial sites. In addition, staff recommends that the developer provide for the proiect engineer to inspect and certify that the PVC p~pe is installed to City standards Callahan Assistance Request Page 4 ¸4. PVC C900 water mains: PVC water mains were installed as a City "pilot" project during the reconstruction of Lincoln Avenue. Consistent with the Task Force report, staff recommends approval except for the R-2 lots that are within 300 feet of the CS lots or in areas that are known to be the site of an leaking underground storage tank, 'tn accor(:ance with City and State standards. Waive all engineering and inspections fees for the R-2 and R-4 sections: This was not presented in the Affordable Housing Task Force report. These fees are based on 3% of the project engineer's estimate for the public improvements (streets: sewers, water, street lights). Approximately 60% of the City Engineering staff salaries is supported by these fees as an offset to the General Fund. Any waiver of fees would have to be made up by the General Fund (i.e., property taxes). Since this item id not in the City's budget, staff is not able to recommend approval. Waive any and afl sanitary sewer hook up fees for the R-2 and R-4 sections: The City charges a sewer interceptor fee when a developer connects to the City's sanitary sewer system. For this project, the interceptor fee is approximately $500lacre. Consistent with the Task Force report, staff recommends waiver of the sewer interceptor fee for the R-2 area only. This fee is estimated to be $10,000 (21.15 acres of R-2 zoning at approximately $500/acre) for the affordable housing portion of the project. We are recommending this waiver because the City has already incurred the cost of the sewer interceptor with the construction of the industria! park. Staff recommends that the CS and R-4 portions of the $500/acre interceptor fee nol be waived, and instead be collected by the City in installments as lots are sold, with a balloon payment being made in 5 years. This fee is estimated to be $7,500. . Waive any and all water hook up ¢ees for the R-2 and R-4 sec(ions: The City charges a water hook up fee based on front footage when the developer connects the City water system. This fee is $11.00 per lineal foot. This fee covers a portion of the cost to extend the water main to a development. The estimated cost to extend the existing City water main along Seippel. Road is $99,550. Instead of the requested waiver of this fee. staff is suggesting a compromise, because the water main extension (unlike the sewer interceptor) is an expense that the City now must actually incur. The City must be paid back for this exoense, to avoid an increase in water rates. Our recommendation might be different if the water ma~n was already in place. Consistent with the Task Force report, staff recommends that. for the R-2 lots only, the estimated cost of $7,975 in water hook up fees be paid back as these lots are Callahan Assistance Request Page 5 sold. with a balloon payment at the end of 5 years. This connection charge would 2e prorated by the number of lots in each phase of the subdivision. Staff recommends that the estimated front footage fees of $6,215 fees for the R-4 and CS sections be paid as they normally are. at the start of the project Waive development service application fees for the R-2 and R-4 sections: Consistent with City practice for annexations, staff recommends waiver of $2.460 in development service application fees for the entire development. This includ 9s the rezon~ng fee of $1,000 and the preliminary plat fee of $1,460. Waive assessments for any sanita~ sewer and water fees for the R-2 and R-4 sections: Staff is not able to recommend waiver of the water tap fee for any lots. because this covers the actual cost of materia s. No other sewer and water fees or assessments are anticipated. Furnish and install sanitary sewer in the R-2 section: Consistent with the Task Force report, staff recommends that the City finance this cost in the same manner as it financed the Harvest View development. The developer would make prorated repayments as R~2 lots are sold, with a 5-year balloon payment for the remaining balance. The sewer main cost for Phase of the R-2 section is estimated to be $105,000. This includes approximately $80,000 for the main sewer line and $25 O00 for the lateral lines to the homes. The sewer main cost for Phase Il of the R-2 section is estimated to be $135,000. This includes approximately $100,000 for the main sewer line and $35,000 for the lateral lines. Staff has not recommended that the City commit to funding this second phase of the project at this time. Furnish and install sanitary sewer extension to. the R-2 section: Consistent with the Task Force report, staff recommends that the sewer extensior, costs to be paid back as R-2 lots are sold and a balloon payment at the end of 5 years. The collector portion of the sanitary sewer through the R-2 section of the project is estimated to be approximately $30,000 9. Furnish and install sanitary sewer in the R-4 and CS sections: Although these lots are for multi-family and commercial developments, not for owner-occupied housinc. staff recommends approval for interest-free financing for extension of the collectors only. The sewer main and lateral lines would not receive any financial assistance. Two sanitary sewer collectors must be extended through the R-4 and CS sections "each the R-2 zone to the north. This recommendation is consistent with the Affordable Housing Task Force report, because without these extensions, the R-2 Callahan Assistance Request Page 6 area could not be served with City sewer. The collector portion for the R4 and CS areas is estimated to be $60.000. The City would recoup its cost through prorated repayments as the lots are sold. with all monies repaid in 5 years. 10. Furnish and install water in the R-2 section: Consistent with the Task Force reoort. staff recommends that the water installation costs to be paid back as R-2 lots are sold, with a balloon payment at the end of 5 years. The cost to install the internal water main and service lines to each home in Phase I of the R-2 portion is estimated to be $120,500; however, the City has only $100,000 available for fiscal year 2003. 11. Furnish and install water extension to the R-2 section: The estimated cost to extend the existing Cit~water mair~ along the property's entire Seippei Road frontage is $99 550. Consistent with the Task Force report, staff recommends that this cost be recouped through the prorated payment of the frontage fee ($11.00 per lineal foot) as R-2 lots are sold, with a balloon payment at the end of 5 years (see item 4). 12. Furnish and install water to the R-4 and CS sections: Staff is not able to recorr ~nend approval because these lots are for multi-family and commerciaI developments_ not for owner-occupied housing. The cost of the water main to serve the R-4 and CS sections must be paid up front. 13. Furnish and install street lights in the R-2 and R-4 sections: This was not presented in the Affordable Housing Task Force report. Since this item is not in the City's budget, staff is not able to recommend approval. 14. Plant a tree on each lot in the R-2 section: Consistent with City street tree program and the Task Force report, staff recommends that the City pay half the cost of each tree and the labor cost to plant the trees in the parkway (green space between the curb and the sidewalk). The trees cost $120 each and the labor cost is $150 per tree. To meet City standards, a tree on every lot-may not be possible due to the location of utility lines to the homes, driveways, hydrants, etc. If trees were planted for 90%, or 100 of the 112 R-2 lots, for example, the City's cost would be $6,000 for the trees and $15,000 for labor. 15. Purchase and install playground eqbipment for a 3-acre 9ark: Consistent with the Task Force repo¢:, staff recommends budgeting $150,000 for a small pavilion. playground e(:uipment, grading and seeding to create a neighborhood park. The park would be completed within 1 year after the public street to the park is installed. provided that the developer makes 1-2 acres of the park land flat and usable. 16. Fumish and install drain tile: Consistent with current City practice and with the Task Force report, staff recommends approval. Callahan Assistance Request Page 8 Attachments CC Joel Callahan. President, Callahan Construction. Inc. David Harris Housing and Community Development Director Pauline Joyce, Administrative Services Manager ~ill Baum. Economic Development Director Bob Green, Water Department Manager Gil Spence, Leisure Services Manager Mike Koch, Public Works Director Gus Psihoyos, Assistant City Engineer Kyle Kritz., Associate Planner MEM ORANDUM December 7. 2001 TO: FROM: SUBJECT: The Honorable Mayor and City Council Members Michael C. Van Milligen, City Manager WORK SESSION - 12/10/01 Owner-Occupied Affordable Housing Committee Repor~ A work session has been scheduled for Monday, December 10, 2001 at 5:00 p.m. at the ibrary auditorium to discuss the results of the Owner-Occupied Affordable Housing Committee process. There will be no meal served as part of this work session. I think some tremendously creative thought went into the preparation of this [ecommendation. As we look to implement elements of the document that the City Council agrees with, time frame and money will definitely be issues. The committee report is attached. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager David Harris, Housing & Community Development Director CITY OF DUBUQUE, IOWA PUBLIC NOTICE OF MEETING AGENDA Government Body: City Council Time/Place: 5:00 p.m. - Library Auditorium Date: Monday, December 10, 2001 NOTICE IS HEREBY GIVEN that the above identified governmental body will meet at the time, date and place as set forth above. The tentative Agenda for the meeting is as follows: Report from the Owner-Occupied Affordable Housing Committee This notice is given pursuant to Chapter 21, Code of iowa, 2001, and applicable local regulations of the City of Dubuque, Iowa and/or governmental body holding the meeting. /.Jeanne F. Schneider L.~ City Clerk Any Visual or Hearing Impaired Persons Needing Special Assistance or Persons with Special Accessibility Needs Should Contact the City Clerk's Office at (563) 589-4120 or TDD (563) 589-4193 in the Human Rights Department at Least 48 Hours Pdor to the Meeting AFFORDABLE HOUSING TASK FORCE REPORT Committee Members: Larry McDermott Marry McNamer Dick Schiltz Jim Holz Mike Portzen Pat Ready Randy Hefel Ken Buesing Joei Callahan Linda Sangston Dan LoBianco Peter Eck John Gronen Terry Mozena Doris Hingtgen Mary Clark Tom Goric John Walsh Steve Gudenkauf Marry Johnson Rick Dickinson Nancy Zachar-Fett Staff: David Harris Laura Carstens Rich Russell Bill Baum Gus Psihoyos DECEMBER 2001 December 01 Report from the Affordable Housing Committee to the City Council Introduction The Affordable Housing Committee was appointed by the Council in November of 2000. Its purpose was to respond to the Council's indentified top priodty project to research opportunities for development of affordable single-family housing. Four task forces were subsequently convened, as follows: Housing Market Task Force: to examine market factors in Dubuque and make recommendations on policies or programs to meet demand. Development Cost Task Force: to examine costs for developing land in Dubuque and to made recommendations on policies or programs to make costs more competitive. Home Construction Costs Task Force: to examine the costs of home construction in Dubuque and make recommendations on policies er programs that reduce costs. Downtown Living Task Force: to examine the costs of creating owner- occupied housing opportunities for downtown living and make recommendations o~ policies or programs to make this a viable option. AFFORDABLE HOUSING COMMITTEE LAND DEVELOPMENT TASK FORCE Larry McDermott Marty McNamer Dick Schlitz Jim Holz Mike Portzen Pat Ready Randy Hefel Ken Bueslng Joel Callahan Gus Psihoyos/Laura Carstens - Facilitators DOWNTOWN LIVING TASK FORCE Linda Sangston Dan LoBianco Peter Eck John Gronen Terry Mozena Rich Russell - Facilitator MARKET STUDY TASK FORCE Doris Hingtgen Mary Clark Tom Goric John Walsh Jim Holz Bill Baum David Harris - Facilitator HOME CONSTRUCTION TASK FORCE Peter Eck Mike Portzen Steve Gudenkauf Marty Johnson Dick Schiltz Marry McNamer Rich Russell - Facilitator UNASSIGNED MEMBERS Rick Dickinson Nancy Zachar-Fett Executive Summary Operating Principles and Assumptions 1. The mission of the Affordable Housing Committee is to research and recommend ways to produce new single-family housing that is "affordable" to a moderate-income household. 2. A "moderate-income household' is defined as earning $40 780, with two-earners wages at $10/hour, household size 4 persons. This equals 90% of area median income (according to the 2000 income standards published by HUD). This wage represents the "typical" earnings of workers anticipated to be in new jobs at our new office and industrial parks. 3. "Affordable' housing is defined as costing no more than 30% of gross income. This is the homeowner cost for PITI: principal, interest, taxes and homeowner and mor[gage insurance. 4. Typical financing assumed for this scenario includes 7.25% interest rate, 30-year mortgage, 5% downpayment. 5. The new home this [amily is seeking is 1100-1300 square feet in area, with 2-car attached garage, unfinished basement, Current construction costs for a 'modest" new home -without higher-end amenities, architectural features and finishes - are estimated at $90/square foot. Lot cost is $30 000. Sale price for this home is $129 000 for 1100 sc uare-feet and $147 000 for 1300 square feet. 6. A modemte-in~:ome family cannot afford to purchase this home. The "affo'rdability gap," according to household income, as follows: Income Maximum Affordability Gap (percentage of median) affordable home 1100 sq ft home 1300 sq ft home 80 $104 500 $24 500 $42 500 90 118 100 11 000 29 000 100 131 500 N/A 15 500 To re-state: a moderate-income family in Dubuque purchasing a new home under the scenario described above experiences a price "gap' of $11 000 for an 1100 square foot home; and a $29 000 gap for a 1300 square foot home. Housing Market Task Force Recommendations 1 The city should consider sponsoring development of an affordable homes subdivision, either acting as developer or assisting a for-profit or non-profit developer. This could include purchase and land-banking of available parcels, to be developed according to a request-for-proposals process. 2. The objective of such a venture is to produce lower-cost homes, by reducing development and lot costs and/or by removing developer profit margins. 3. An "economy of scale" could be achieved through this approach, by developing enough lots for a builder to reduce home construction costs through mass purchase of materials and mass production of homes. This could be achieved by developing a subdivision of 15-30 lots. 4. Use of tax increment financing for subsidy of develc pment is an available tool to reduce lot costs. The city should consider utilizing this financing source for affordable housing development. State code requires that use of TIF assistance for new home development result in production of a percentage of affordable housing, in an amounl equal to the percentage of Iow income persons in the county population. This housing may be provided either in the development being assisted or at any other location. 5. Other mechanisms exist for the City to assist development of a subdivision for moderately-priced homes. Recently, a developer received approval from the Council for City financing of sanitary sewer extension. This program should be continued by the city and utilized for assistance for affordable housing construction. 6. Use of downpayment assistance funding programs is also necessary to reduce purchase financing costs. The city's existing CDBG- and Federal Home Loan Bank ("PATHS)- funded programs assist lower income (earning less than 80% of area median) households. These should be supplemented by other funding sources in order to help moderate income (80-100%) families purchase newer homes. One funding soume which the city or a non-profit developer could consider is the annual DRA grants competition. An application could be submitted to request that a sum of funds be annually "set aside" for a program of downpayment assistance, to be used as a permanent revolving loan fund for this purpose. 7. The city should consider the potenfiaJ of its role in directing "smart growth" at its westem and southem boundaries, encouraging residential development in concert with anticipated business development at the new office and industrial parks. This area "in- filF residential development could result in housing located adjacent to new employment, reducing vehicle trips and commuting time. Development Costs Task Force Conclusions Rural residential growth is outpacing the construction of new homes in Dubuque. The differences between rural and urban development, in part, are due to: · the quantity of developable land as a result of the rugged local topography · the inventory of land available from willing sellers at a reasonable pdce · proximity to utilities and infrastructure · marketability · arterial access · City standards and specifications for the materials a md installation of public utilities and infrastructure. Recommendations for ALL Owner-Occupied Housing 1. Limitations on City Financial Assistance a. Evaluation Cdteda b. Capital Improvements: Enterprise Funds v. General Fund c. Project Collateral d. Development Agreement 2. Installation of Sanitary Sewer, Storm Sewer and Water Systems. 3. Modification of Street Construction Standards. 4. Modification of Sanitary Sewer Specifications Recommendations for AFFORDABLE Ov,'ner, Occupied Housing 1. Incentives for Affordable Owner-Occupied Housing a. Alternative Standards for Public Streets b. Waiver of Water and Sewer Connection Fees/Assessments c. City Assistance for All Development Costs 2. Parameters for Affordable Owner-Occu pied Housing a. Limit on Sale Price of Lot b. Sumharge for Extra Square Footage c. Minimize Lot Frontage Revenues to Fund Owner-Occupied Residential Development 1. Utility Bill Surcharge 2. Utility Revolving Loan Fund 3. Affordable Housing Revolving Loan Fund 4. Tax Increment Financing Home Construction Costs Task Force Recommendations 1. The City Council should direct staff to permit, promote and assist a model project incorporating an economy of scale, simple, expandable unit designs and an innovative project layout using such principles as Traditional Neighborhood Design ~ND). Staff should develop zoning regulations and public improvement design standards to allow these types of development without extra layers of approvals such as variances and Planned Unit Development rezonings. A direct fiscal impact could be in the form of subsidization of infrastructure costs. 2. The City Council should direct staff to create an "idea book~ and resource guide of affordable design techniques, methods, materials, recommended reading materials and website addresses where additional information may be obtained. 3. The City Council should direct the Electrical and Plumbing Boards to investigate amending the licensing procedures to allow for residential electricians and plumbers. 4. The City Council should encourage the formation of a partnership between the local school systems, the communk'y college, the Master Builders of Iowa and the Dubuque Homebuilder's Association with the purpose of encouraging students to enter training for construction trades and providing that training at the local level. 5. The City Council should direct the Building Services staff to investigate the adoption of the 2000 Intemational Residential Code with appropriate local amendments balancing affordability and safety. Downtown Living Task Force Recommendations 1. Encourage owner-occupied units outside of the four traditional downtown districts. where zoning permits and land or appropriate buildings are available. 2. The City Council should direct staff to permit, promote and assist a housing project incorporating vadous funding sources, model units and a "How To Guide" on how the project was developed. 3. The City Council should direct the Building Services staff to investigate the adoption of a local version of the Wisconsin Code for Historic Buildings. 4. Encourage Dubuque Main Street to maintain an accurate map of the vacant upper tevels for use by potential developers/tenants. Housing ..Marke. t Task Forc=e December 01 Market Study Task Force Report to the Affordable Housing Committee Operating Principles and Assumptions 1.The mission of the Affordable Housing Committee is to research and recommend ways to produce new single-family housing that is "affordable" to a moderate-income household. 2. A "moderate-income household' is defined as earnin_q $40 780, with two-earners wages at $10/hour, household size 4 persons. This equals 90% of area median income (according to the 2000 income standards published by HUD). This wage represents the "typical" earnings of workers anticipated to be in new jobs at our new office and industrial parks. 3. "Affordable" housing is defined as costing no more than 30% of gross income. This is the homeowner cost i~or PITI: principal, interest, taxes and homeowner and mortgage insurance. 4. Typical financing assumed for this scenado includes 7.25% interest rate, 30-year mortgage, 5% downpayment. 5. The new home this family is seeking is 1100-1300 square feet in area, with 2-car attached garage, unfinished basement. Current construction costs for a "modest" new home - without higher-end amenities, architectural features and finishes - are estimated at $90/square foot. Lot cost is $30 000. Sale price for this home is $129 000 for 1100 square-feet and $147 000 for 1300 square feet. Findings 1. A moderate-income family cannot afford to purchase this home. The "affordability gap," according to household income, is as follows: Income Maximum Affordability Gap (percentage of median) affordable home 1100 sq ft home 1300 sq ft home 80 $104 500 $24 500 $42 500 90 118 000 11 000 29 000 100 131 500 N/A 15 500 To re-state: a moderate-income family in Dubuque purchasing a new home under the scenario described above experiences a pdce "gap" of $11 000 for an 1100 square foot home; and a $29 000 gap for a 1300 square foot home. Changes in interest rates alter this "affordability" scenario. For the example noted above, the interest rate used is 7.25%. The Iowa Finance Authority's new FirstHome Program is offedng 30-year, fixed-rate mor[gages at 6.125% to income-qualifying households. For comparison, the same affordability analysis, using the lower IFA rate, results in the following findings: Income Maximum Affo~ability Gap (percentage of median) Affordable home 1100 sq ff home 1300 sq. ff. home 80 $107 000 $22 000 $40 000 90 121 000 8000 26 000 100 135 000 N/A 12 000 To re-state: a moderate-income family, financing at this lower interest rate, experiences a less severe financing gap: $8000 for an 1100 square foot home: $26 000 for a 1300 square foot home.' However, even with this financing, only a family earning 100% of area median income can "afford" to buy a new home, and only the smaller (1100 square foot) version. 2. New homes are not bein.q built in the "affordable" pdce range. In 2000, 40 single- family building permits were issued in the City of Dubuque. Total valuation was $4.6 million, averaging $116 000 per home. Adding lot cost (at an average $30 000) brings the sale price to $146 000, which exceeds the "maximum affordable home" pdce' for households earning 80-100% of area median income - by $22- 48 000. In 1999, 54 City permits were issued, also averaging $116 000 per home (plus lot cost). In Dubuque County in 2000, 120 permits were issued, with total valuation of $16.2 million, averaging $135 000. Adding lot cost (of $30 000), plus average costs of $6000 for well and $4000 for septic, brings the average new County home pdce to $175 000. In 1999, 127 permits were issued. These totals are summarized as follows: Year No. permi~ Value Sale price' Dubuque 1999 54 $116 000 '*$146 000 2000 40 $116 000 $146 000 Dubuque County 1999 127 ...... 2000 120 $135 000 **$175 000 * includes lot cost ** includes lot cost, plus well and septic 3. For sales of existin.q homes, purchase cost is not an obstacle for moderate-income families. At $93 500 - the median home sale pdce in Dubuque County in 2000 - there is no affordability gap. 4. Demand is strong for existing, mid-priced homes, illustrated by the following sales history: Price Range Year Percentage ofallhomes sold $50-100 000 1999 48 2000 48 2001 44 $50-125 000 1999 61 2000 64 2001 63 $125-150 000 1999 [ 9 2000 10 2001 9 >$150 000 1999 I 17 2000 16 2001 17 Price Range Year Average days on market <$150 000 1999 63 2000 66 2001 67 >$150 000 2000 105 2001 140 Recommendations 1. The city should consider sponsonng development of an affordable homes subdivision, either acting as developer or assisting a for-profit or non-profit developer. This could include purchase and land-banking of available parcels, to be developed according to a req uest-for-proposals process. 2. The objective of such a venture is to produce lower-cost homes, by reducing development and lot costs and/or by removing developer profit margins. 3. An "economy of scale" could be achieved through this approach, by developing enough lots for a builder to reduce home construction costs through mass purchase of materials and mass production of homes. This could be achieved by developing a subdivision of 15-30 lots. 4. Use of tax increment financing for subsidy of development is an available tool to reduce lot costs. The city should consider utilizing this financing source for affordable housing development. Examples of successfu] use of TIF for both market and affordable housing follow: In Rockford, a 17 acre subdivision of 60 homes was developed with TIF assistance. These were built (in 1997) for sale at $70 000, with TIF-funded, city- initiated improvements for land acquisition, streets, sewer and water averaging $13 700 per lot. Tax increment revenues generated through this development totaled in excess of $158 000 annually at completion. n McGregor, the city provided TIF assistance for development of all infrastructure ~mprovementa in a 17 lot subdivision. Lots were sold at $15 000. This successful project was built out on schedule. In Farley, the city assists developers by committing 100% of the TIF revenue stream to the developer, for up to 10 years, in order to reimburse the developer's cost of construction of streets within the subdivision. State Code requires that use of TIF assistance for new home development result in production of a percentage of affordable housing in an amount equal to the percentage of Iow income persons in the county population. This housing may be provided either in the development being assisted or at any other location. 5. Other mechanisms exist for the City to assist development of a subdivision for moderately-priced homes. RecentJy, a developer received approval from the Council for City financing of sanitary sewer extension. The City's advance of more than $400 000 will be repaid by the developer at sale of the lots, or within five years, whichever occurs first. These funds wiil be advanced at no interest cost to t~he developer; they will be made available from the enterprise funds available in the current City budget. The 160 home subdivision will not produce affordable housing; prices are projected at $180 000- 250 000. The City should continue the use of this type of assistance for development of new housing and especially encourage its use for new affordable housing. 6. Use of downpayment assistance funding programs is also necessary to reduce purchase financing costs. The city's existing CDBG- and Federal Home Loan Bank ("PATH")- funded programs assist lower income [earning less than 80% of area median) households. These should be supplemented by other funding sources in order to help moderate income (80-100%) families purchase newer homes. One funding source which the city or a non-profit developer could consider is the annual DRA grants competition. An applicatio~ could be submitted to request that a sum of funds be annually "set aside" for a program of downpayment assistance, to be used as a permanent revolving loan fund for this purpose. 7. The city should consider the potential of its role in directing "smart growth" at its western and southern boundaries encouraging residential development in concert with anticipated bus,'ness development at the new office and industrial parks. This area "in- fill" residential development could result in housing located adjacent to new employment, reducing vehicle trips and commuting time. 1300 Squm'e Foot Home HOUSING AFFORDABILITY ANALYSIS INCOME ~ (PERCENTAGE OF MEDIAN) AFFORDABLE HOUSING PAYMENT MAXIMUM PRICE AFFORDABLE HOME Mortgage / Other 80% - $36,250 $677 / 227 $104.500 90% - $40,780 $765 / 253 $118,000 100% - $45,310 $852 / 278 $131,500 SHORT-FALL FOR EXISTING HOME PURCHASE ~ N/A N/A N/A SHORT-FALL FOR NEW HOME PURCHASE $42,500 $29,000 $15,500 ASSUMPTIONS: ~Febrnary 2000 area median household income: $45,310 z An "Affordable Housing Payment" is no more than 30% of gross household income; includes principal and interest payment, plus property taxes and homeowner and mortgage insurance. Assumes financing at 7.25%, 30-year mortgage, 5% downpayment. 32000 median home price, Dubuque County: $93,500 n 1300 square foot, 3-bedroom home; $90/squaro foot construction cost; 2-ear attached garage; unfinished basement; $30,000 lot. Total cost: $147,000. If the new IFA FkstHome program interest rate of 6.125% is used, the numbers change as follows: INCOME AFFORDABLE PAYMENT MAXIMUM PRICE SHORT-FALL FOR NEW HOME PURCHASE Mortgage./Other 80% $644 ! 261 $107,000 $40,000 [}0% $728 / 291 $121,000 $26,000 100% $812 / 321 $135,000 $12,000 1100 Squaro Foot Homo HOUSING AFFORDABILITY ANALYSIS INCOME ~ (PERCENTAGE OF MEDIAN) AFFORDABLE HOUSING PAYMENT MAXIMUM PRICE AFFORDABLE HOME SHORT-FALL FOR EXISTING HOME PURCHASE 3 Mortgago / Other 80% - $36,250 $677 ! 227 $104,500 N/A 90% - $40,780 $765 [ 253 $118,000 N/A 100% - $45,310 $852 ! 278 $131,500 N/A SHORT-FALL FOR NEW HOME PURCHASE $24,500 $11,000 $ N/A ASSUMPTIONS: :February 2000 area median household income: $45,310 2 An "Affordable Housing Payment" is no more than 30% of gross household inoomo~ includes principal and interest payraent, plus property taxes and homeowner and mortgago insuraneo. Assumes financing at 7.25%, 30-year mortgage, 5% downpayment. 32000 median home price, Dubuque County: $93,500 41100 square foot, 3-bodroom home; $90/square foot construction cost; 2-car attached garage; unfinished basement; $30,000 lot, Total cost: $129,000. If the new IFA FirstHome program interest rate of 6 125% is used, the numbers ehm~ge as follows: .INCOME AFFORDABLE PAYMENT MAXIMUM PRICE SHORT-FALL FOR NEW HOME PURCHASE Mortgage / Other 80% $6441 261 $107,000 $22,000 90% $728 / 291 $121,000 $ 8,000 100% $812 / 321 $135,000 N/A De.velopment Cost Ta,sk Force Report to the Affordable Owner-Occupied Housing Committee On Reducing Land Development Costs in the City of Dubuque Land Development Task Force Marry McNamer, McNamer Construction Larry McDermott, McDermott Excavating Mike Portzen. Portzen Construction Dick SchiKz Midwest Reatty Randy Hefel, Hawk Construction Jim Holz. MSA Associates Ken Buesing, Buesing & Associates Joel Ca[lahan Ca[lahan Construction David Harris, Housing & Community Development Gus Psihoyos, City Engineenng Laura Cars[ens, City Planning Kyle Kritz, City Planning ~ecember 6, 2001 REDUCING LAND DEVELOPMENT COSTS IN THE CITY OF DUBUQUE Introduction The City Council established affordable owner-occupied housing as a priority in their annual goal-setting session in 200(3 To address this issue, the City formed a committee of City staff, community stakeholders and citizens at-large to provide recommendations to the City Council on affordable housing. The focus of the Affordable Owner-Occupied Housing Committee was on owner-occupied residential development, not multi-family or rental housing development. To accomplish its purpose the Affordable Owner-Occupied Housing Committee formed several task forces to study aspects of the issue in more depth, and then to report back recommendations to the full committee. The purpose of the Land Development Task Force was to examine the costs for developing land in the city of Dubuque, and then to make recommendatiohs to the Affordable Owner-Occupie'd Housing Committee on policies or programs that make the cost more competitive. Cost Comparisons of Local Development Costs The Land Development Task Force began their examination with a review of local development costs. Task Force members collected and compared development costs from single-family residential subdivisions in the cities of Dubuque, Asbury and Epworth. and the unincorporated areas of Dubuque County. This comparison ~ncluded land purchase cost, earth moving, water/well, sewedseptic, streets, engineering, inspection fees and connection fees. Return on investment also was compared. Table A shows the average composite of development costs for projects in the city of Dubuque (see Appendix A for individual project costs). Table B shows the average composite of development costs for projects outside the City (see Appendix B for indMdual project costs). A comparison of these urban and rural composite costs is shown in Table C. Table D is a cost comparison for City and County homeowners. Survey of Infrastructure Standards and Financial Incentives Next, the Land Development Task Force surveyed the following Iowa cities for infrastructure standards: Asbury, Cedar Falls, Ames~ Council Bluffs, West Des Moines, Burlington. Waterloo. and Coralville. Survey results were compiled in a chart comparing development standards such as depth of concrete and asphalt base and surface for streets, materials for sanitary sewer and water lines, storm water detention requirements, inspection fees, and utility connection fees. The Land Development Task Force then interviewed the same Iowa cities to determine if they provided financial assistance for affordable housing in their communities. Four of the cities - Ames, WateHoo. Sioux City, and West Des Moines - participate in some type of assistance for affordable housing. The assistance varied from waiving connection charges to actually "TIF'-ing the development; that is, using tax increment financing. One community paid for the street infrastructure (see Table E). -1- Conclusions During the early 1990's, the City of Dubuque enjoyed a rate of new residential construction that exceeded the entire inventory of new homes built in the city in the 1980's. Since 1995, however, rural residential growth has outpaced the construction of new homes within the city limits of Dubuque. A recurrenl theme of discussions with local developers has been that development costs in the rural County areas and other cities are ~ower than in the City of Dubuque. The differences between rural and urban development, in part, are due to: · the quantity of developable land as a result of the rugged local topography, · the inventory of land available from willing sellers at a reasonable price, · proximity to utilities and infrastructure. · m~rketabili~, · arterial access, and · City standards and specifications for [he materials and installation of public utilities and infrastructure. The City of Dubuque's higher standards and specs are in place because the City must consider the long-term costs of operations and maintenance. Developers want to have a quality development while maximizing their profit and minimizing their risk. To meet the City Council's goal to facilitate the development of single-family housing that is affordable To moderate income households, the City of Dubuque will need to revise current policies and establish a range of incentives to lower land development costs, The Land Development Task Force believes that City should define parameters and provide financial ~ncentives for affordable developments, as defined by the Market Study Task Force of the Affordable Owner-OEcupied Housing Committee. The target households for the programs recommended oy the Committee earn between 80% and 100% of area median income adjusted for household size (AMI). At about 90% AMi, a dual income household earning $40, 900 annually would be able to afford a 1.100 square foot house pdced at about $129, O00. The Land Development Task Force. believes that to fai:ilitate creation of housing that is affordable to these target households, the City will need to find ways to reduce land development costs so that the lot cost is lowered by at least $5,000. The Task Force has recommended parameters and incentives for affordable owner-occupied housing. The Land Development Task Force also believes that that City should provide financial support to ali owner-occupied residential development to support overall community growth. The Task Force has recommended parameters, financial ncentives and revenue sources that can reduce land development costs for all types of owner-occupied housing in the city of Dubuque. The recommendations are discussed under [he following categories: · Recommended Limitations on Cby FinancialAssistance · Recommendations for AFFORDABLE Owner-Occupied Housing · Recommendations forALL Owner-Occupied Housing · Revenues to Fund Owner-Occupied Residential Development -2- Recommended Limitations on City Financial Assistance The Land Development Task Force recommends that the City provide financial assistance to reduce land development costs in [he city of Dubuque. The Task Force recognizes that the City has limited resources competing for multiple priorities, projects and programs, and therefore must be prudent in the allocation of public monies. The Task Force recommends the following limitations on City financial assistance for owner-occupied residential development. 1) Evaluation Criteria The City of Dubuque should consider financial assistance for the development of ail types of owner-occupied residential housing. Any development to be assisted should be within the city limits of Dubuque, or in the process of annexation. The City's policies and programs reflect the understanding that the City must balance the demand for new development on the community's fringe with the benefits of in-fill development and adaptive reuse of existing building stock in a cost effective manner. The City should determine its financial involvement on a case-by-case basis, based on the availability of City funds, consistency with the City's long-range plans, and the overall benefit of the development to the City. All projects should be evaluated on their individual merits, including the prevention of urban sprawl through the use of existing infrastructure and utilities, such as streets, sewers, and water lines. 2) Capital Improvements: Enterprise Funds v. General Fund The City budgets for capital improvements (repair, construction and reconstruction of sanitary sewer, storm sewer and water systems; streets; bridges; parks; etc.) on a five-year schedule based o~ projected expenditures and revenues. Fees collected for the City's sanitary sewer, storm sewer and water systems are fin te sets of funds for specific uses within each of the respective systems. As Enterprise Funds, revenues for the sanitary sewer, storm sewer and wa[er systems cannot be used to finance projects in the General Fund (which is primarily property taxes). The City should consider using [he General Fund or a new revolving fund to finance projects. 3) Proiect Collateral The City should determine acceptable collateral for any City expenses related to loan(s) for the development of a project. Preferably, the City should require a mortgage, a promissory note, personal guarantees or an irrevocable letter of credit for an amount not to exceed 100% of loan- to-value. The proper~y value should 2e based on the assessed value or on the appraised value after improvements if the assessed value is not a good indicator. 4} Development Aqreement The City should establish a development agreement that gives the developer specific performance standards, and provides remedies for failu re to meet these standards. The development agreement should be based on an approved development plan for the subject property, such as a subdivision peat. site development plan or conceptual plan for a planned unit development ',PUD). -3- Recommendations for AFFORDABLE Owner-Occupied Housing The Land Development Task Force recommends the following incentives and parameters for affordable owner-occupied developments. 1) Incentives for Affordable Owner-Occupied Housinq a) Alternative Standards for Public Streets Public streets in affordable housing developments should be atlowed to have the pavement width reduced to a minimum of 27 feet from back of curb to back of curb, and the right~of- way width reduced to a minimum of 42 feet. This incentive should apply if: (1) the public street is a local street, not a collector or arterial street; (2) parking is restricted to one side only; and (3) a 3 foot wide parkway (the area between the curb and the sidewalk) is provided for planting street trees. b) Waiver of Water and Sewer Connection Fees/Assessments All respective water main and sanitary sewer connection fees and/or assessments against the property should be waived for an affordable housing project that is developed based on the parameters described below. If a house does not meet the definition of affordable and the parameters below, the builder should have to pay back the connection fees and/or assessments waived by the City. The City should not issue a building permit until these fees have been paid. c) City Assistance for AI/ Development Cos[s The City should participate in ali aspects of the development of affordable owner-occupied housing, including infrastructure utilities, streets, land acquisition, and earthwork, based on the availability of City funds. Tax increment financing [TIF) is an identified revenue source that should be available to repay the City's financial assistance for these developments. 2) Parameters for Affordable Owner-Occupied Housinq a) Limit on Sale Price of Lot Lots in the affordable housing development should not sell over $25,300 based on [he October 30, 200! Consumer Price Index ~CPI) rates. These rates will vary with the CPI. To qualify for tax increment financing (T1F) tor affordable housing, the maximum sale price of a lot should be $20,000. b) Surcharge for Extra Square Footage The builder of any house of more than 1.250 square feet in the affordable housing development should pay to the City a $10 surcharge per sq dare foot of livable s pace above the 1,250 square foot threshold. This livable space should not include any improvements to the basement or garage. The surcharge should be collected in a revolving loan fund to finance affordable housing projects. c) Minimize Lot Frontage To qualify as affordable, the lot frontage should be platted between 50 and 75 feet wide. (The current minimum lot frontage of 60 feet in the R-1 Single-Family Residential District should be amended to 50 feet in the Zoning Ordinance to accommodate this parameter without having to request a variance n bulk regulations.) -4- Recommendations for ALL Owner-Occupied Housing · These recommendations are intended to provide incentives for the development of all owner- occupied housing, including affordable housing developments. 1) Installation of Sanitary Sewer, Storm Sewer and Water Systems The City should participate in the financing of all costs [or the installation of sanitary sewer, storm sewer and water systems for each phase of an owner-occupied residential development, based on the availability of City funds. A sanitary sewer system includes interceptors, collectors, and pump (or lift) stations. A storm sewer system includes catch basins, pipes and detention (or retention) basins. The amount advanced by the City for each phase of a development should be allotted equally to the owner-occupied residential lots in each phase. The City's financial assistance should consist ora no-interest loan for up to five years, with repayment on a prorated basis for lots sold within that five-year period. As each lot is sold, the developer would reimburse the City by an amount equal to the total cost incurred by the City divided by the number of owner-occupied residential lots in that phase. A balloon payment for the remaining balance of the loan should be due at the end of this five-year period. The resolution or ordinance approving the residential subdivision or PUD should include this provision. Recording of the resolution or ordinance will show up in the abstract, and serve as a "red flag" at the time of lot sale for payment to be made to the City. As an added reminder for this. payment, the City should not issue a building permit for the lot until this fee has been paid. 2) Extension of Sanitary Sewer, Storm Sewer and Water Systems The City should participate in the financing of extensions of sanitary sewer, storm sewer and water systems to facilitate the development of single-family residential development, in a manner similar to that described above, based on the availability of City funds. The amount advanced by the city for each utility system extension should be allotted equally to the owner-occupied residential lots in each phase. The City's financial assistance should consist of a no-interest loan for up to five years, with repayment on a prorated basis for lots sold within that five-year period. As each lot is sold, the developer would reimburse the City by an amount equal to the total cost incurred by the City divided by the number of owner-occupied residential lots in that phase. A balloon cayment for the remaining balance of the ~oan should be due at the end of this five-year pedod. The City's preference should be to install these utility extensions when development plans have been approved for both the adjacent property, as well as the subject properzy. On a case-by- case basis, the City should consider participating in the extension of utility systems when a development plan has not been approved for the adjacent property. 3) Modification of Street Construction Standards The City Engineering Division will evaluate the feasibility and cost effectiveness of alternative street construction standards to facilitate residential development. -5- tn the next 60 days, the City Engineering Division will hold a series of meetings with local engineering firms, asphalt paving suppliers and concrete pav~ng suppliers to discuss the feasibility and cost effectiveness of modifying the current public street construction standards for residential developments: · to allow for the sub-base to be adjusted based on field conditions; · to adjust the thickness of asphalt based on field conditions; and · to minimize "core out' (the process for removing "soft spots" in the street sub-grade prior to applying the base stone and pavement. The City Engineenng Division will provide a written report by February I 2002 to the Affordable Owner-Occupied Housing Committee as to the feasibility and cost effectiveness of these alternative street construction standards, and what modifications will be recommended to the City standards and specifications. 4) Modification of Sanitaw Sewer Specifications The City Engineering Division will evaluate the feasibility and cost effectiveness of alternative sanitary sewer specifications to allow the use of poiyvinyl chlodde (PVC) pipe, in order to facilitate residential development. In the next 60 days, the City Engineenng Division will survey the cities of Asbury, Cedar Falls, Ames, Council Bluffs, West Des Moines, Burlington, Waterloo, and Coralville as to: · how long they have allowed the use of PVC pipe for sanitary sewer system, · what their experience has been with PVC pipe in these applications, and · what their specifications are for materials and installation of PVC pipe in these applications. The City Engineering Division will provide a wdtten report by February 1, 2002 to the Affordable Owner-Occupied Housin~ Committee as to the feasibility and cost effectiveness of using PVC pipe for sanitary sewer systems in residential developments, and what modifications will be recommended to the City standards and specifications. In the interim period, if an affordable owner-occupied residential development is proposed, the City will pay for the cost differential for materials and installation between PVC pipe and ductile iron pipe. Revenues to Fund Owner-Occupied Residential Development The City has many priorities competing for limited resources. Acknowledging the City's available funding and the restriction of Enterprise Funds for financing only City utilities (sanitary sewer, storm sewer and water), the Land Development Task Force recommends the following initiatives to generate revenues to fund the development of owner-occupied housing. 1) Utilit'¢ Bill Surcharqe The City should place a surcharge on ali utility bills to fund the installation and extension of City utilities to owner-occupied housing. The surcharge would be a percentage based on use, at an -6- approximate average of up to $1.00 per fund (sanitary sewer, storm sewer and water). At this rate, the surcharge would generate up to approximately $3.00 per month per utility bill or household. The surcharge would be waived for all households at or below 80% of area median Income adjusted for household size (AMI). These Iow to moderate income households qualify for subsidized housing programs. Since the programs recommended by the Affordable Owner- Occupied Housing Committee are targeted to households at the 80% to 100% AMI level the Land Development Task Force believes households below 80% AMI should be exempted from the surcharge. 2) Utility Revolvinq Loan Fund The City should use the utility bill surcharge to capitalize a revolving loan fund (RLF) to finance the installation and extension of City utilities to owner-occupied housing. The RLF would oe split equally among the three Enterprise Funds (sanitary sewer, storm sewer and water) for financing of the respective utility systems. Based on the percentage of low to moderate income households in the city of Dubuque, 35% of the RLF would be set aside for affordable single-family developments. The remaining 65% would be available for alt types~of owner-occupied housing projects. There are about 22,000 households in the city of Dubuque. Approximately 65%, or 14,300 of these households, are above 80% of AMI. At an average of $3.00 per household, the surcharge would generate about $42,900 monthly, and about $514,800 annually for the RLF_ 3) Affordable Housinq Revoivinp Loan Fund The City should create in a revolving loan fund for affordable owner-occupied housing projects only. At a minimum the City should olace the $10 per square foot surcharge paid for houses built in an affordable housing development that exceed 1,250 square feet. 4) Tax Increment Financing The City should make tax increment financing (TIF) available to repay the City's financial assistance for all aspects of the development of affordable owner-occupied housing (including infrastructure, utilities, streets, land acquisition, and ear[hwork). TIF is a financial tool that is available to subsidize residential development to reduce lot costs. State law requires that a portion of the TIF .3roceeds equal to the percentage of tow and moderate income households in the county must go to the City for affordable housing. Under State law, for Dubuque, about 35% of the TIF oroceeds from any housing development must be used for the development of affordable housing. Developers receiving TIF assistance would be required to produce this percentage of affordable homes in the residential subdivision being assisted or elsewhere in the community. TIF can be used to pay for: infrastructure and utilities, down payments for home buyers. revolving loan fund. contractor loan pool, and developer rebates. TIF also can be used to -7- purchase lots and build homes through the City's DREAMS program and [hrough Habitat through Humanity. New residential developments typically add children to the public school system. TIF allows the City to capture the Dubuque Community School District's share of the property taxes generated from this new housing. The CiTy could allow the District's portion of the property taxes to flow to the school system for residential TIF projects. The City will need to develop criteria for a TIF program for affordable housing. Criteria also must be developed by City staff and developers through project negotiations, with a development agreement approved by the City Council. -8- Table A: Average Composite of Developments in City of Dubuque ~.and Value Average Purchase Price per Acre' $10,861 Acreage 13.085 Acres needed for Street Development N/A Detention N/A Net Acres for Land Use N/A Average Lot Land Use NIA Number of Buildable Lots 32.4 Average Lot Sale Value $35;800 Total Land Cost $142,119 Total Land Value $1 ,159,920 Development Costs Total Project Per Lot Cost Earth Moving $81,961 $2,530 Sanitary Sewer $94,695 $2,923 Water $82,912' $2,559 Storm Sewer $42,607 $1,315 Street $133,738 $4,128 Lighting and Trenchin9 $12,997 $401 Hook-up Fees $28,367 $876 Engineering $34,379 $1,061 Inspection Fees $15,436 $476 Miscellaneous Expenses $14,785 $456 Subtotal of Development Costs $541,877 $16,725 Total Land and Development Costs $683,996 $21,111 Interest on 65% Financing at 8.5% for 3 years $113,372 $3,499 Total Land, Development and Interest Costs $797,368 $24,610 Total Land Value - Total Cost = Profit $362,552 $11,~ 90 Return on Investment (Profit/Total Land Value) 31% Table B: Average Composite of Developments Outside Dubuque Land Value Average Purchase Price per Acre $7,145 Acreage 31.87 Acres needed for Street Development N/A Detention N/A Net Acres for Land Use N/A Average Lot Land Use N/,~ Number of Buildable Lots 54.00 Average Lot Sale Value $27,967 Total Land Cost $227,687' Total Land Value $1,510,200 Development Costs Total Project Per Lot Cost Ear[h Moving $89,000 $1,648 Sanitary Sewer or Septic System $75,533 $1,399' Water $106,397 $1,970 Storm Sewer $21,961 $407 Street $105,912 $1,961 Lighting and Trenching $6,267 $116 Hook-up Fees $0 $0 Engineering $41,000 $759 Inspection Fees (ave. of costs provided) $1,000 $19 Miscellaneous Expenses (ave. of costs provided) $7,204 $133 Subtotal of Development Costs $454,274 $8,412 Total Land and Development Costs $681,961 $12,629 Interest on 65% Financing at 8.5% for 3 years $113,035 $2,093 Total Land, Development and Interest Costs $794,996 $t4,727 Total Land Value - Total Cost = Profit $715,204 $13,245 Return on investment (Profit / Total Land Value) 47% Table C: Comparison of Composites for Sample Developments Land Value City of Dubuque Outside Dubuque Difference Average Purchase Price per Acre $10,861 $7,145 $3,716 Acreage 13.085 31.87 (19) Acres needed for Street Development N/A N/A Detention N/A N/A Net Acres for Land Use N/A N/A Average Lot Land Use N/A N/A Number of Buildable Lots 32.4 54,00 (22) Average Lot Sale Value $35,800 $27,967 $7,833 Total Land Cost $142,119 $227,687 ($85,569) Total Land Value $t,t59,920 $1,510,200 ($350,280 City of Dubuque Outside Dubuque Difference Development Costs Total Project Total Projectl Difference Per Lot Cost Per Lot Cost Per Lot Earth Moving $81,961 $89,0001 ($7,039) $2,530 $1,648 $882 Sanitary Sewer or Septic System $94,695 $75,533' $19,162 $2,923 $1,399 $1,524 Water $82,912 $106,397 ($23,484) $2,559 $1,970 $589 Storm Sewer $42,607 $21,961 $20,646 $1,315 $407 $908 Street $t33,738 $105,912 $27,826 $4,128 $1,961 $2,166 Lighting and Trenching $12,997 $6,267 $6,729 I $401 $116 $285 Hook-up Fees $28,367 $0 $28,367 $876 $0 $876 Engineering $34,379! $41,000 ($6,621) $1,061 $759 $302 Inspection Fees $15,430 $1,000 $14,430 N/A $31 N/A Miscellaneous Expenses $14,785 $7,204 $7,581 $456 N/A N/A Subtotal of Development Costs $541,87t $454,274 $87,597 $t 6,248 $8,291 $7,957 Total Land and Development Costs $683,990 $68t,961 $2,029 $21,111 $t2,629 $8,482 Interest on 65% Financing at 8,5% for 3 years $113,371 $113,035 $336 $3,499 $2,093 $1,406 Total Land, Development and Interest Costs $797,36t $794,996 $2,365 $24,610 $t4,722 $9,888 Total Land Value - Total Cost = Profit $362,559 $7t5,204 ($352,645) $tt,190 $13,245 ($2,054] Return on Investment (Profit/Total Land Value) 31% 47% -t6% Table D: Cost Comparison for City and County Homeowners Start up Costs Average Pumhase Price per Lot Average Construction Cost Average Water Connection Fee Average Sanitary Sewer Connection Fee Average Cost of Well Installation Average Cost of Septic System Installation Average Cost of Water Service Line Water Softener Total Start u p Cost City of Dubuque $35,800 $120,000 $1,100 $3,500 $0 $0 $2,500 $0 $t62,900 Outside Dubuque $27,967 $120,000 $0 $0 $6,0o0 $5,500 $2,500 $80O $162,767 Difference $7,833 $0 $1,100 $3,500 ($6,000) ($5,5oo) $0 ($800) $133 Annual Costs Water Bill (includes softening & fluoride treatments) Salt for Water Softener Fluoride (anti-cavity treatment) Sanitary Sewer Bill City of Dubuque $180 $0 $0 Outside Dubuque $o $94 $3O $180 $0 Refuse Collection Fee $90 $171 Homeowner Association Fee (snow removal, street repair) Volunteer Fire Department Average Homeowner Insurance $0 $0 $15o $2,317 $30O Property Tax (assessed valuerOf $150,000 and after homestead tax credit) Total Annual Costs $25 $163 $1,701 $2,917 $2,485 Difference $180 ($94) ($30) $180 ($81) ($300) ($25) ($13) $615 $432 Survey of Infrastructure Stan ds and Financial Incentives Tz _E E ~ E,~ s~ E~,~ ~-~-. ~.~ ~:~ ~o~ a,,'~°~- ~o= *'~.~o~"_ ~ ~ ~._ · .~ ~ ="' ' 1" '62'' r ¢ ¢,¢ ~r ~¢''r' ' , ~ · ,,,,' ¢' ......., ¢1' __ ,. ,~g ~ ,Cf,l! 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C'~' ,S~ ]l~ ~ ¢,~ 'r~'l' f ~'~' '4 ~ , ,: ;( ;;~ ,~ y ~;~ ,~, '.l& ¢~, ~ t;; ,L ,," ...................., ¢ ''"¢ ,;~¢ ' '¢5,%' ~'¢ ;¢' R0~ ; ¢¢' "'"' '~ , "',i,, "~ I ur ' '''''~ir''' ' i~¢''' '~ .... ,t 1~¢ ''~¢~4';~; ¢:r' ,r (~ ~4~ ~¢~¢~f ;] ~ ,¢¢ ~ ~$¢u~¢,~ %~f~ ~ ~ ~" ~', ¢;4 ~ ~ '; .~ 1' ~,¢ , ,4 ~ i¢,;' ' r., , ¢ ;~ ~ ~%;'~'i{(; ~ ~]~}~;~',r ~,~¢~]' ~;~'~ 1:~'¢ ~:~ ' '"~¢, ~.~' ~ '.'(~*, f '~ .... , .......... ~ -~,,,~ ," ..., ...; . %'¢-.~,~}~ ¢~,< -.~?, Appendix A Development Exam pies in the City of Dubuque City of Dubuque - Example 1 ~and Value Average Purchase Price per Acre $12,500 Acreage 40 Acres needed for Street Development ~ Detention 3 Net Acres for Land Use 31 Average Lot Land Use 88 x 145 Number of Buildable Lots 110' Average Lot Sale Value $30.000 Total Land Cost $500,000 Total Land Value $3,300,000 Development Costs Total Project Per Lot Cost Earth Moving $285,000 $2,591 $231,500 $2,105 Sanitary Sewer Water $290,000 $2,636 Storm Sewer $148,000 $1,34b Street $418,300 $3,803 Lighting and Trenching $40,500 $368 $62,500 $568 Hook-up Fees $60,000 $545 Engineedng $56,400 $513 Inspection Fees Miscellaneous Expenses N/A Subtotal of Development Costs $1,692,200 . $14,475 Total Land and Development Costs $2,092,200 $19,020 Interest on 65% Financing at 8.5% for 3 years $346,782 $3,153 Total Land, Development and Interest Costs $2,438,982 $22,173 Total Land Value - Total Cost = Profit $861,018 $7,827 Return on Investment (Profit / Total Land Value) 26% City of Dubuque - Example 2 Land Value Average Purchase Price per Acre $10,616 Acreage 7.11 Acres needed for Street Development N/A Detention N/A Net Acres for Land Use N/A Average Lot Land Use N/A Number of Buildable Lots 9 Average Lot Sale Value $37,950 Total Land Cost $75,480 Total Land Value $341,550 Development Costs Total Project Per Lot Cost Eadh Moving $37,873 $4,208 Sanitary Sewer $30,501 $3,389. Water $26,490 $2,943~ Storm Sewer $13,270 $1,474 Street $42,596 $4,733 Lighting and Trenching $4,894 $544 Hook-up Fees $15,000 $1,667 Engineering $18,399 $2,044 Inspection Fees (est. 2.5% of above dev. costs) $3,891 $432 Miscellaneous Expenses $7,935. $882 Subtotal of Development Costs $200,849 $22,317 Total Land and Development Costs $276,328 $30,703 Interest on 65% Financing at 8.$% for 3 years $45,801 $5,089 Total Land, Development and Interest Costs $322,130 $35,792 Total Land Value - Total Cost = Profit $t 9,420 $2,158 Return on Investment (Profit/Total Land Value) 6% City of Dubuque Example 3 Land Value Average Purchase Price per Acre $12,245 Acreage 6.925 Acres needed for Street Development N/A Detention N/A Net Acres for Land Use N/A Average Lot Land Use N/A Number of Buildable Lots 19 Average Lot Sale Value ' ' $30,500 Total Land Cost $84,797 Total Land Value $579,500 Development Costs Total Project Per Lot Cost Ear[h Moving $25,607 $1,348 Sanitary Sewer $103,761 $5,461 Water $48,224 $2,538 Storm Sewer $27,113 $1,427 Street $83,143 ' $4,376 Lighting and Trenching $9,675! $509 Hook-up Fees N/A Engineering $37,464 $1,972 Inspection Fees (est. 2.5% of above dev. costs) $7,438 $391 Miscellaneous Expenses $12,593 $663 Subtotal of Development Costs $355,018 $18,685 Total Land and Development Costs $439,815 $23,148 interest on 65% Financing at 8.5% for 3 years $72,899 $3,837 Total Land, Development and Interest Costs $512,714 $26,985 Total Land Value - Total Cost = Profit $66,786 $3,515 =,eturn on Investment (Profit / Total Land Value) t2% City of Dubuque - Example 4 Land Value Average Purchase Price per Acre $6,500 Acreage 8.71 Acres needed for Street Development N/A Detention N/A Net Acres for Land Use NIA Average Lot Land Use N/A Number of Buildable Lots 19 Average Lot Sale Value $30,250 Total Land Cost $56,621 Total Land Value $574,750 Development Costs Total Project Per Lot Cost Earth Moving $38,8241 $2,043 Sanitary Sewer $77,215' $4,064 Water $31,502 $1,658 Storm Sewer $24,654 $1,298 Street $92,342 $4,860 Lighting and Trenching $7,020 $369 Hook-up Fees N/A Engineering $35,507 $1,869 Inspection Fees (est. 2.5% of above dev. costs) $6,789 $357 Miscellaneous Expenses $10,911 $574 Subtotal of Development Costs $324,764 $17,093 Total Land and Development Costs $381,385 $20,073 Interest on 65% Financing at 8,5% for 3 years $63,215 $3,327 Total Land, Development and Interest Costs $444,599 $23,400 Total Land Value - Total Cost = Profit $130,151 $6,850 Return on Investment (Profit / Total Land Value) 23% City of Dubuque - Example 8 Land Value Average Purchase Price per Acre $12,445 Acreage 2.68 Acres needed for Street Development N/A Detention N/A Net Acres for Land Use N/A Average Lot Land Use N/A Number of Buildable Lots 5 Average Lot Sale Value $50,300 Total Land Cost $33,353 Total Land Value $251,500 Development Costs Total Project Per Lot Cost Earth Moving $22,501 $4,500 Sanitary Sewer $30,498 $6,100 Water $18,346 $3,669 Storm Sewer $0 $0 Street $32,307 $6,481 Lighting and Trenching $2,895 $579 Hook-up Fees $7,600 $1,520 Engineedng $20,524 $4,105 Inspection Fees (est. 2.5% of above dev. costs) $2,664 $533 Miscellaneous Expenses $27,701 $5,540 Subtotal of Development Costs $165,036 $33,007 Total Land and Developrcent Costs $198,389 $39,678 Interest on 65% Financing at 8.5% for 3 years $32,883 $6,577 Total Land, Development and Interest Costs $231,27.2 $46,254 Total Land Value - Total Cost = Profit $20,228 $4,046 Return on Investment (Profit I Total Land Value) 8% Appendix B Development Examples Outside the City of Dubuque City of Asbury - Example Land Value Average Pumhase Price per Acre $10,035 Acreage 19.6 Acres needed for Street Development N/A Detention NIA Net Acres for Land Use N/A Average Lot Land Use N/A Number of Buildable Lots 48 Average Lot Sale Value $31,900 Total Land Cost $196,690 Total Land Value $1,531,200 Development Costs Total Project Per Lot Cost Earth Moving $47,000 $979 Sanitary Sewer $103,608 $2,159~ Water $132,899 $2,76§ Storm Sewer $33,377 $695 Street $137,742 $2,87(~ Lighting and Trenching $18,802 $392 Hook-up Fees N/A Engineedng $51,000 $1,063 Inspection Fees N/A Miscellaneous Expenses $21,613 $450 Subtotal of Development Costs $546,041 $11,376 Total Land and Development Costs $742,731 $15,474 Interest on 65% Financing at 8,5% for 3 years $123,108 $2,565 Total Land, Development and Interest Costs $865,839 $18,038 Total Land Value - Total Cost = Profit $665,361 $13,862 Return on Investment (Profit / Total Land Value) 43% City of Epworth - Example Land Value Average Purchase Price per Acre $6,400 Acreage 36 Acres needed for Street Development 5 Detention 0 Net Acres for Land Use 29 Average Lot Land Use 85 x 135 Number of Buitdable Lots 78 Average Lot Sale Value $22,000 Total Land Cost $230,400 Total Land Value $1,716,000 Development Costs Total Project Per Lot Cos Earth Moving $80,0001 $1,026 Sanitary Sewer $122,990 $1,577 Water $36,291 $465 Storm Sewer $28,506 $365 Street $89,493 $1,147 Lighting and Trenching $0 $0 Hook-up Fees $0 $0 Engineering $45,000 $577 Inspection Fees $3,000 $38 Miscellaneous Expenses N/A Subtotal of Development Costs $4~05,280 $5,196 Total Land and Development Costs $635,680 $8,150 Interest on 65% Financing at 8,5% for 3 years $105,364 $1,351 Total Land, Development and Interest Costs $741,044 $9,501 Total Land Value - Total Cost = Profit $974,956 Return on Investment (Profit / Total Land Value) 57% Dubuque County - Example Land Value Average Pumhase Price per Acre $5,000 Acreage 40 Acres needed for Street Development 4 Detention 0 Net Acres for Land Use 36 Average Lot Land Use 145 x 300 Number of Buildable Lots 36 Average Lot Sale Value $30,000 Total Land Cost $200,000 Total Land Value $1,080,000 Development Costs Total Project Per Lot Costl Earth Moving $140,000 $3,889 Septic System $0 $0 Water $150,000 $4,167 Storm Sewer $4,000 $111 Street $90,500 $2,514 Lighting and Trenching $0 $0 Hook-up Fees $0i $0 Engineering $27,000 $750 Inspection Fees $0 $0 Miscellaneous Expenses NIA Subtotal of Development Costs $411,600 $11,431 Total Land and Development Costs $611,500 $16,986 Interest on 65% Financing at 8,5% for 3 years $101,356 $2,815 Total Land, Development and Interest Costs $712,856 $19,802 Total Land Value - Total Cost = Profit $367,144 $t0,198 Return on Investment (Profit / Total Land Value) 34% Home Construction C'osts Ta s k Fc) rc e AFFORDABLE HOUSING COMMITTEE'S TASK FORCE ON HOME CONSTRUCTION COSTS INTRODUCTION: This report is intended to share the recommendations of the Affordable Housing Committee's Home Constrdction Task Force. BACKGROUND: The City Council set affordable, owner-occupied housin~ as one of their priorities for the Fiscal Year Ending 2002. To that end, the Affordable Housing Committee was appointed by the City Council. The committee involves community stakeholders whose expertise is from a variety of backgrounds. The first meeting of the committee was held on November 30, 2000. The topics for discussion at the first meeting included reviewing the purpose of the committee discussing "affordable" housing and identification of aspects of affordable housing that should be addressed. The committee met again on December 19 2000. The meeting centered on isting barriers to affordable housing and creating four task forces to address the four most prevalent themes developed. One of the themes developed was home construction cost. This task force was formed as a result. Members of the task force are Steve Gudenkauf, Dick Schlitz, Marty McNamer, Marry Johnson, Peter Eck and Mike Portzen. DISCUSSION: A recommended time line was developed for the task forces to follow. A copy of the time line for this task force is attached. This task force met on January 23~d, February 20th, March 21st, April 24 TM, May 22®, June 26th and September 25th. Discussions at the earlier meetings focused on issues seen as barriers to affordable housing and organizing these issues into themes. THEMES AND BARRIERS: The themes developed by the task force included: cost effective design and techniques, land costs, economy of scale and development costs. available labor pool and licensing and code requirements. Each of the themes has associated barriers. The barriers discussed are as follows: A barrier to cost effective designs include a lack of understanding by the customer on what they could or should expect when searching for an affordable home. The smaller, simpler plans may not meet their expectations. This leads to additional carrying costs if the home is on the market for an extended period of time. Land costs are seen as a common theme. The high cost of land is most likely due to a lack of supply. Subdivision regulations that limit the density or style of development were seen as barriers. Customer expectations in the design or style of new homes were seen as a barrier. There appears to be strong demand for ranch-style houses with a two-car garage in front. That demand may not be present for a narrow, two-story home with'the garage ~n the rear of the house. This uncertainty makes it difficult for builders to try a different design, such as building on narrower lots or doing infill projects where there's not room for the typical 70-foot wide ranch-style house. The lack of economy of scate and carrying costs for developers were seen as another common theme. Economy of scale, as used in this report, would provide for a volume discount on materials and labor for a group of 6-10 homes, as opposed to bidding 6-10 homes individually. The guarantee to a bidder that the intended volume would be achieved would allow for a reduced cost. Another economy of scale could be provided if these 6-10 homes were built in the same development or neighborhood. A subcontractor could easily move from job site to job site. The barriers are whether there is enough demand for the volume needed to achieve any economy and the interest costs for financing a project of this scale. The task force agrees that sawngs would be realized in many areas with a larger scale of project. Savings on both labor and materials would be realized if there is a guarantee of volume, Labor pool and licensing ~ssues were combined into the next theme. The task force feels that an increase in available trades people would allow for some savings in labor costs. Barriers to this change include existing license holders may not support this increase in corn petition. Code requirements were found to be a barrier by some members of the committee. Finding a code that balances safety and cost would be a way to address this concern. On the other hand, amending the code to reduce the requirements without specific justification would reduce the City's ISO (Insurance Services Organization) rating and increase the risk of liability. ALTERNATIVES: Providing model units or projects would be a way to alleviate customer concerns about simpler designs or expandable plans. Concepts similar to the Grow Home or Next Home units would be options for simpler designs. Canadian architects developed the Grow Home and Next Home concepts. The Grow Home consists of a 2-story ~ome with a basement. The basement and/or second stow are left unfinished, allowing the owners to "grow" into the home. The Next Home consists of 3-ievet town homes where units could be on 1-3 stories allowing the owners the flexibility of moving into units of various sizes, all somewhat larger than the Grow Home. Hence the term "Next" Home. I have attached an article from the April-May 2001 issue of New Urban News that further explains these concepts. An "idea book" of these and other techniques could be compiled. A website currently being developed by the University of Chicago-based City Design Center will provide a catalog of affordable housing designs. They hope to have the site launched late this year. The address will be http://affordablehousinq.aa.uic.edu. Land cost reductions could be accomplished in many ways. Using smaller lots reduced setbacks, shared open space and creative development designs are all ways to reduce the per unit land costs. Use of attached units would be another way to increase the number of units per acre and reduce the cost of land per unit. The "mixing" of attached and detached units has been effectively done through the use of the "New Urbanism" or "Neo-traditional Planning". The Congress for the New Urbanism web site {www.cnu.or.q) explains: "The New Urbanism seeks to re-integrate the components of modern life-housing, workplace. shopping and recreation-into compact, pedestrian-friendly mixed-use qeighborhoods linked by transit and set in a larger regional open space framework. The New Urbanism is an alternative to urban sprawl, a form of Iow-density development that consists of large, single-use pods-office parks, housing subdivisions, apartment complexes, shopping centers-all of which must be accessed by private automobile." In other words, neighborhoods should be clearly defined, compact and walk-able areas. The economy of scale issue could be addressed through a model project of 6-10 units. The City paying the up-front infrastructure costs and recouping them through a delayed special assessment could encourage larger scale projects and an accompanying economy of scale. The Development Costs Task Force should investigate this option further. Providing a larger pool of trades people could be accom plished through a "split" licensing system where an electrician or plumber could be licensed to work only on residentis projects. The City's current licensing system allows this for the mechanical trade. For example, a trades person would not need to be knowledgeable about transformers and 600-amp services to acq uire a residential electrician's-license. The type of equipment needed for residential projects could also reduce the overhead of this type of contractor. These factors would increase the number of electricians available to work on housing projects, reducing the cost of labor for this component. A partnership between the local Homebuilder's Association the Master Builders of lows (MBI) and the high schools and community college should be formed to encourage students to enter training for the trades. The challenge of balancing the safety and cost issues could be addressed through the adoption of the 2000 International Resid ential Code (IRC). The National Association of Home Builders (NAHB) has endorsed this code because it recognizes affordability as an issue. An example of safety and cost colliding is a proposed amendment to the 2000 International Building Code (IBC) that would require that stairs have a rise and run of 7"maximum and 11" minimum instead of the 1997 Uniform Building Code requirements of 8" maximum rise and minimum 9" run. This change would use up an additional 12 square feet of living space because the length of the stairs would increase by approximately 4 feet. The 2000 IRC provides for a compromise of a 7%" nse and a 10" run. RECOMMENDATIONS: The task force has the following recommendations: 1. The City Council should direct staffto permit, promote an(~ assist a model project incorporating an economy of scale, simple, expandable unit designs and an innovative project layout usin§ such principles as Traditional Neighborhood Design (TND). Staff should develop zoning regulations and public improvement design standards to allow these types of development without extra layers of approvals such as variances and Planned Unit Develc oment rezonings. A direct fiscal impact could be in the form of subsidization of infrastructure costs. 2. The City Council should direct staff to create an "idea book" and resource guide of affordable design techniq ues, methods, materials, recommended reading materials and website addresses where additional information may be obtained. 3. The City Council should direct the Electrical and Plumbing Boards to investigate amending the licensing procedures to allow for residential electricians and plumbers. 4. The City Council should encourage the formation of a partnership between the local school systems, the community college, the Master Builders of Iowa and the Dubuque Homebuilder's Association with the purpose of encouraging students to enter training for construction trades and providing that training at the local level 5. The City Council should direct the Building Services staff to investigate the adoption of the 2000 International Residential Code with appropriate local amendments balancing affordability and safety. We have provided the attached flowchart to assist in explaining this committee's process. The five themes are placed in order of importance from left to right. Home Construction Costs Task Force Review Process 1 Discuss the issue of Home Construction Costs and Affordability of Owner Occupied Units. (Jan.) 2. Determine what information is necessary for making decisions on the issue. (Jan.) 3. Determine if there are other members of the community whose input would be helpful and solicit their membership or feed back. (Jan.) 4. Assign the tasks of gathering the information or conducting research. (Jan.) 5. Review the common themes from the information and the stakeholders. (Feb.) 6. Identify barriers to addressing the issues. (Feb.) 7. Develop alternatives for minimizing or eliminating the barriers. 8. Select the alternatives that best address the issues. 9. Develop a strategy that incorporates the alternatives and make a recommendation for the strategy. 10. Test the strategy with the stakeholders and the Affordable Housing Committee. (Sept.) 11. Prepare and make a final recommendation for consideration by the City Council. (Oct.) The not so expensive house -- - r~anada % Grow Homes and Next Homes have made home ownership affordable through reduced size and modular ,t'gn. The concept may be a good fit for small-lot, traditional neighborhoods. The first Grow Home prototype was built on the cam- pus of McGlll University in Montreal in 1990, and im- mediately attracted widespread attention. Designed by ar- i ckitects Avl Friedman and Witold Rybczvnski of McGill's School of ArchitecPare, the townhouse 'was only 14 feet wide and 36 feet deep. The basement or a second floor would be left m-tfinished for the buyers to complete ac- cording to their needs -- hence the term "grow." This kind of flexibility is even more pronounced in the Next Home, which Friedman and collaborators designed in 1996. The three-story towrthome can be used as a single home, a duplex, or a triplex. Though it is wider than the Grow Home, the house does not rely on Ioadbearing walls, making it easy to modiBd floor plans. The Next Home is a response to the growing number of people working out of their homes, as well as to the shrinking of the traditional family, Friedman says. The Grow Home has found a significant market, espe- ciaily among first-time home buyers who are willing to make a tradeoff on the size of their home. To date, more than 10,000 units have been sold, primarily in Canada, but also in Europe, Latin America, and the US. By US stan- dards, the price is extraordinarily Iow -- according to ~' dman, Grow Homes still have a base price of approxi- n,,~ely $60,000 (US), including the cost of the land. De- spite the low sales price, Grow Homes have been marketed as "prestige towrthouses with an innovative layout" rather than "affordable" homes, a strategy which has proved suc- cessfiaI. Their reduced size and ease of construction are the main reasons for the units' low price. According to Friedman, the simple, rectangular configuration has 20 percent less perimeter than an L-shaped unit of the same size. More- over, builders have been able to reduce labor and material costs using modular building elements, and the design in- cindes as few complexjoints and details as possible. Fried- man maintains that even adding one foot to the width would increase the cost 25 percent. The narrow townhouse would seem ideal for vacant lots in huCill locations, but interestingly, most Grow Home units in Canada have been built in suburban subdivisions. Three, six, or eight units are typically built next to each other. Frontioaded garages are sometimes built below grade in both Grow and Next Homes, but where alleys are avail- able, Parking is typically above ground and ~t the rear of the homes. COST REDUCTION AND CHOICE EXPANSION .~ with the Grow Home, the dimensions of the Next Home are adjusted to fit modular sizes. Not only does this allow builders to use standard materials; but waste is re- duced by sizing the ~ame so that any wood cut off below Grow Homes are commonly built as rowhouses, as in this suburban community outside Montreal. the floor will fit somewhere else in the frame. Careful plan- ning can lead to similar reductions in waste of interior ma- terials such as drywall and floor tiles. Friedman estimates the average Next Home construction cost to be about $35/ sq.ft. Flexibility is the hallmark of the Next Home -- it is de- signed to be easy to subdivide or change before or after it is occupied. Use of the so-called open-web joist helps make adaptability possible. "Open-web is a type of joist that due to its structural design and characteristics permits greater spans, thereby eliminating the need for bearing wails," Friedman says. In addition, the open vertical side of the joist allow conduits and pipes to be pulled through easily. To cut the cost of and to facilitate post-occupancy modi- fications in the floor plan, all water pipes, vents, and wires are located in a single vertical shaft running through the entire building. On each floor these pipes and conduits are directed to a horizontal chaser, which runs along the building's long dimension. As a result, residents will not have to disturb the wails or the ceiling to make changes. Where the Grow Home left floors unfinished, the Next Home gives buyers a range of options for placement of rooms and access between floors. This allows them to buy only what they need or can afford at the moment, and the concept has proved very popular, says Jose Di Bona of Anobid Construction Corp. in Montreal. He has built approximately 80 Next Homes in downtown Montreal and many Grow Homes as well. "People like to be able to personalize the interiors, and it's a very simple pro- cess to customize," Di Bona says. "For us, the major ad- vantage is that we can subdivide the buildings vertically after completion.' Friedman and his coliaborators conceived of these flex- ible homes in tough economic times when affordability was paramount. "The Grow Home gave people a crack at home CONTINUED ON PAGe ~ I All chitdren iR Southern Village can walk to the community's elementary school. the 1970s after recognizing standards ff all the schools U The National Trust recom- mends that ectLng unsuitable land from de- that school districts coopera tions to sham ity suit, the many schools of troversial but schoot W COMMUNITIES Why lohnny Can't tails several successful forts that have ' hood schools llna, residents rallied agains ball fields, ,1 districts be not to defer mainte- vublic be given greater · to review school feasibil- : and that governments present plans for a school 's adaptive reuse if it cannot preserved as a school. New urbanist communities may the physical ducation. In Southern Chapel Hill, North Cato- can reach the local or by bicycle. As a m- needs ordy half as es as other new 'able size. The IS cort- :entral the lACK lng of a school that did not meet the students. Eng'ineers affd the neighborhood volunteered ptete an in-depth study renovation and were able t, the inadequate analysis k board's consultant. numbers prompted to waive paved the way for that for the renova- tion. The ; been expended and to code for several hundred less than it ~ build a new school. ,f the Durham school board board the school's importance to "When you think the school is the only struc- _' that really pulls us together and gives us a sense of ownership over the neighborhood." · · The Northeas has published Growth and the Clean Air Act Smart Growth and the Clean Act. Call the Institute at 5200, or visit their ce at · Planningfo Regional Agenda brings 12 planners, and educa- tors to examine smart by Jonathan Barnett, ~ and a professor of and Regional sity ; edited urban designer Practice of City at the Univer- and specific policy suggestions o such as prnmot- lng with the lack of afford- able welfare reform, and tricts, in book stores, the book , Island Press. Project for Public Spaces has released How to Turn a primer on evaluating transforming public spaces into activity. The handbook fa- vors an approach to planning that begins with the conununi~ the issues, rather than the Canada's Grow Homes FROM PAGE 9 ownership," Di Bona says, "but today we sell to different demographic groups, especially empty nesters. Now the Next Home is seen more as innovative than inexpensive.' Anobid's 1,600 sq. ff. attacked units in Montreal sell for approximately $142,000; units of t,000 square feet be- gm at $84,000. Builders whe wish to build Next Homes must first acquire the rights from McGill University, through Friedman, who will supply plans and architectural guidelines. The full story of the home designs of Friedman end his collaborators will be available in his upcoming The Grow Home Book. to be published by McGili University Press in April. ~ driven, top-down a in neighborhood revitalizations. ating aF tire management and requires the different disciplines," write. Contact (212) 6; www. pps.org. spired by community evident at an ' chitecture and Technological U field, Michigan, such project in troit and search and feas: shops, ~ for anz The to many or r of Ar- Lawrence ~ in South- documented one e Youth Village Ur- ect: Re-Building De- Generations. Seniors development held public work- developed an urban plan ; neighborhood in Detroit. dy's funder, the Northern will use the plans redevelopment. For more 204-2870. · Suburban Nation by Andres Elizabeth Plater-Zyberk, and Jeff Speck will be released in paper- back on April 16. $18. THi~ME:$ Cost effective design & technique Customer understanding and choice Model homes/projects that use simple desi ns I~E:COMME:I Direct staff to facilitate the creation of an "idea boold resource guide" of affordable construction methods and principles. IATIVE:S ~IDATIOFIS Downtown Living Task For .e AFFORDABLE HOUSING COMMITTEE'S TASK FORCE ON DOWNTOWN LIVING INTRODUCTION: This report is intended to share the recommendations of the Affordable Housing Committee's Downtown Living Task Force. BACKGROUND: The City Council set affordable, owner-occupied housing as one of their priorities for the Fiscal Year Ending 2002. To that end, the Affordable HoUsing Committee was appointed by the City Council. The committee involves community stakeholders whose expertise is from a variety of backgrounds. The first meeting of the committee was held on November 30~ 2000. The topics for discussion at the first meeting included reviewing the purpose of the committee, discussing "affordable" housing and identification of aspects of affordable housing that should be addressed The committee met again on December 19, 2000. The meeting centered on listing barriers to affordable housing and creating four task forces to address the four most prevalent themes developed. One of the themes developed was downtown Living. This task force was formed as a result. Members of this task force are Daw LoBianco, Linda Sangston: John Gronen, Terry Mozena and Peter Eck DISCUSSION: A recommended time line was developed for the task forces to follow. A copy of the time line for this task fome is attached. This task force met on January 29~n, February 27th, March 6th, March 27th, April 24th May 22nd, June 26th, July 24th, August 28th and September 25th. Discussions at the earlier meetings focused on issues seen as barriers to downtown living and organizing these issues into themes. THEMES AND BARRIERS: The two themes developed by the task force are rehabbing upper floors and the marketplace. Both of the themes have associated barriers. The barriers ~tiscussed are as follows: The barriers to rehabbing upper floors include the possible loss of control of a portion of the building if the units are truly owner-occu pied the uncertainty of costs associated with rehabilitation projects, the perception that local contractors are not interested in this type of project, current code requirements for existing buildings and that there may be more demand fodand owner interest in rental units. The marketplace is seen as a common theme. Barriers associated with this theme are the uncertainty of demand for downtown units and the restrictions tied to many sources of available funding for these types of projects. ALTERNATIVES: The task force and staff determined that to limit our work to owner- occupied units downtown would essentially eliminate the need for our discussions because there are limited opportunities for a condominium arrangement in existing buildings. Therefore, the taskforce agreed to include rental units in our discussions, as one key component to a successful downtown would be residents, not necessarily owner- occupants. This will alleviate the concern of "loss of ownership or control" expressed by current owners of downtown buildings. In regard to owner-occupied housing units, there are likely only a half dozen existing buildings that have a strong potential for condominium projects within the four traditional downtown districts (Old Main, Cable Car Square, Town Clock Plaza and Upper Main). There is, however, an opportunity for owner-occupied townhouses rowhouses and/or condominiums in other areas of downtown, the Port of Dubuque neighborhood, for example. An alternative discussed at great length by this task force was the idea of a pilot project that would serve at least four purposes. The project would: provide a good indication of the square foot costs associated with rehabilitation projects, help determine the level of contractor interest in these projects by bidding the various components of a sample rehabilitation project, provide "model" dwelling units for prospective residents and other downtown property owners and provide a demonstration of how various funding sources could be packaged for a successful, affordable project. Information and applications for various funding sources are attached to this report. A report summarizing the tools used (including potential funding sources) and the process followed to develop the project would be helpfu for developers of future projects. An alternative discussed that would provide owners and developers flexibility in code requirements would be to adopt a local version of the Historic Building Code used by the State of Wisconsin. The Wisconsin code has a scoring system that allows tradeoffs to be made between non-conformities and positive alterations, such as sprinkler and alarm systems. This code would give the developers the choice of the Uniform Building Code (UBC), Uniform Code for Building Conservation (UCBC) and a local version of the Wisconsin Code for Historic Buildings. Another tool developed by the committee ~n order to facilitate our discussions was a map of downtown units that had vacant upper floors that were suited for conversion to housing. There were 54 buildings noted with vacant upper levels that could be adapted to residential units. The task force recognized that uncertain demand for downtown units make it more difficult for building owners to spend money on rehabilitation projects The task force created a survey of downtown employee interest in downtown living. This survey was not scientific in nature. A copy of that survey and the recorded responses are attached. The committee was disappointed with the small number of responses, but some valuable information regarding the preferences of the respondents can be taken from the data. For those responding "yes" to having an interest in downtown living, the great majority felt that a full kitchen, a laundry in the unit and off-street parking were important amenities. It should be noted that if only 2% of the 7000 downtown workers were interested in living downtown, the units available through the renovation of the 54 buildings would be easily filled. _RECOMMENDATIONS: The task force has the following recommendations: 1. While the great majority of residential units downtown will always be rental. the City should encourage owner-occupied units outside of the four traditional downtown districts, where zoning permits and and or appropriate buildings are available. 2. The City Council should direct staff to permit, promote and assist a housing project incorporating various funding sources, model units and a "How To Guide" on how the project was developed. The use of most of these funding programs will ensure that affordable units are included although they will not be owner-occupied in all likelihood. 3. The City Council should direct the Building Services staff to investigate the adoption of a local version of the Wisconsin Code for Historic Buildings. 4. Require Dubuque Main Street to maintain an accurate map of the vacant upper levels for use by potential developers/tenants. City of Dubuque Housing Office 1805 Central Avenue Dubuque, Iowa 52001 563-589-4239 Fax: 563-589-4239 August2001 THE FOLLOWING IS A CURRENT INVENTORY OF PROGRAMS ADMINISTERED BY THE HOUSING SERVICES DEPARTMENT, WHICH ARE AVAILABLE TO DEVELOPERS INTERESTED IN PROVIDING AFFORDABLE HOUSING IN DUBUQUE: 1. HOME Rental Rehabilitation Program Up to $25,000 per unit may be loaned, for 20-years, for rental unit rehabilitation. Initially, the loan is deferred, at no interest. When payments begin, the interest rate is 3%. Owners have a matching requirement. Low-income tenants are a requirement. Contact Joleen Patterson at the Housing & Community Development Department, 589-4239. 2. Community Development Block Grant Program (CDBG) These funds are also used with rehabilitation projects. Amounts, terms, rates and payment schedules are set according to project needs. The intent use of these funds is to provide the developer sufficient assistance to make the rents "affordable~ to eligible residents. ContactJoleen Pa~erson, atthe Housing Department. 3. Moderate Income Rental Program This program provides 20-year loans for rehab of units which may be occupied by tenants earning up to 80% of ~ rea median income ("moderate income"). No Section 8 tenancy is required. Up to $10,000 per unit may ~)e loaned. There is no initial deferral of payments. Interest rate is 3%. Owners have a matching requirement. Contact Joleen Patterson, at the Housing Department. 4. Tax Abatement Dubuque has an "Urban Revitalization" program, under which real estate taxes, based on assessed value at purchase, are "frozen" for a 10-year period, providing certain property improvements are made. The advantage to the owner is that no additional taxes are levied on the property, for those improvements, for a 10-year period. Contact Aggie Kramer, at the Housing Department, 589-4212. 5, Tax Increment Financing For properties located within Urban Renewal Distdct boundaries, 15-year, 3% loans, up to $300,000 per building, are available. Interest-only payments are made for the first 3 years This loan pool is capitalized through TIFD revenues. Income and rent restrictions do not apply. Contact Para Myhre, at the Economic Development Department, 589-4213. 10. 11. 12. Affordable Housing Program (AHP) This program offers flexible terms, depending on project need, for purchase or rehab, in order to keep rents affordable. It is administered by the Federal Home Loan Bank in Des Moines through local participating lenders. Low-income benefit required. Contact Curt Heidt, at FHLB, 515-281-1175. Low Income Rental Tax Credit Administered by the Iowa Finance Authority, this program offers substantial federat tax benefits to the owner, provided the tenants remain Iow-income for a multi-year period. Contact Tim Waddell. at IFA, 515-242-4990. Historic Rehabilitation Tax Credit For properties located within one of Dubuque's five Historic Districts or designated as land mark properties, approved rehab can result in significant federal tax credits. This program is jointly administered through the City and the State Historic Preservation Office in Des Moines. Contact Pam Myhre, at the Economic Development Department. Iowa Historic Rehab Tax Credit New this year is a State credit program, offering 25% credit for historic rehabs. Administered through the Historic Preservation Office in Des Moines. Contact Judy McClure, at SHPO, 515 281-8637. Housing Assistance Fund (HAF) This program is administered by the Iowa Finance Authority. It offers the owner- developer financial assistance, for any type of project cost. Terms are flexible, depending on project need, while keeping the rents affordable to Iow-income individuals or families. Contact IFA, 515- 242-4990. State of Iowa HOME Program This is administered by the State Department of Development (IDED) in Des Moines. Developers may apply directly to IDED for these funds, which are provided as grants or loans for projects guaranteeing affordable rents. Low-income tenants are a requirement4 Contact Al Collett, at IDED, 515-242-4753. HUD Section 108 Loan Guarantee Program For projects needing "gap~ financing, this Program can access private secondary market funding sources. The City must sponsor this application, as CDBG funds provide the loan guarantee. Below-prime interest rates on long-term loans are available. Contact Para Myhre. at the Economic Development Department. 13. Local Housing Assistance Program Another program offered through the Iowa Dept of Economic Development, providing annual funding competition for municipalities to access for a variety of housing development or rehabilitation programs. The City can prepare an application in behalf of an intended project, for a specific developer. This program has been discontinued. 14. Enterprise Zone Rehabilitation projects located within designated Enterprise Zone boundaries are eligible for an exemption from State sales taxes; and a 10% Iowa income tax credit. Contact Amy Johnson, at IDED, 515 242-4815. 15. Lead Paint Hazard Reduction Program The Housing Department offers a HUD lead paint removal assistance program, with $5,000/unit grants made available for rental properties in downtown neighborhoods income and rent restrictions apply, for 3 years. Contact Kathy Lamb, at the Housing Department, 589-1724. FOR HOME PURCHASE ASSISTANCE: 1. First-Time Homebuyer Program City CDBG-funded program offers $5,000 downpayment loans to Iow-moderate income buyers. Terms are 15-years, 0% interest; payments deferred for lower-income borrowers. Contact Joleen Patterson, at the Housing Department. 2. Affordable Housing Program (AHP) Offered through the Des Moines Federal Home Loan Bank. application is made through local participating lenders, sponsored-by the City. Low-income benefit is emphasized. Has been a useful financing tool for promoting first-time homeownership; funds received as a grant from the FHLB and can be made available to borrowers as grants or loans. Contact the Housing Department or any local member lending institution for more information. In addition, a recent Amedcan Trust publication is attached, delineating the variety of programs most local lenders access to assist buyers for home purchase. While some of the numbers are out of date, this illustrates that there are quite a number of programs available. Contact any local lender for more information on these programs. The Housing Department is available to assist in your application for any of these programs. Contact Joleen Patterson or David Hards, at 589-4239. DH/in USER GUIDE FOR A REHAB LOAN FROM THE HOUSING DEPARTMENT There are many steps in the approval process for obtaining a rehabilitation loan. Several City departments may have review authority. The following is a brief guide to this process. Application Contact the Housing Services Department for an application. Call Kris or Jean. ar 589-4239. You will be asked to come to the Housing Office for an intake or the forms will be mailed to you. Once your application has been completed, an inspection of your property will be scheduled, with the Rehab Inspector. Planning Department Review If your rehab job will include additional units or any other change from the existing use of the property, staff from the Planning Department will review the requirements of the Zoning Ordinance. Housing Department staff will coordinate initial contact with Planning. Rehab Inspection The Rehab Inspector will do a "walk-through" i~spection of your property with you, to determine: - the extent of the rehabilitation you are considering - any additional work required to meet the Housing Department's standards for comprehensive rehabilitation of the dwelling This generally means that any existing Housing Code violations must be corrected as part of the rehab work. In rental units occupied by young children, removal of lead- based paint may be required. All units, whether rental or homeowner, will be scheduled for an inspection by the Housing Department's Lead Paint Inspector to determine if lead-based paint is present. Other work to improve the overall appearance of your property, or to improve energy efficiency, may also be suggested by the inspector. Building Permit in most cases, a permit for building, plumbing, mechanical or electrical work will be required. The Building Department Inspector requires a floor plan drawing in order to determine which permit to issue. After review of the plan. the Building inspector will schedule a visit to your proper[y, if necessary. Housing staff will coordinate initial contact with Building. Usually, your contractor will obtain the necessary permit. If you - as a homeowner- are doing a significant part of the rehab work. then you may need to apply for the permit_ The number at the Building Department is 589-4150. Once the work begins, the Housing and Building Inspectom will coordinate site inspections To review and approve completed work. Fire Marshal If any of the planned work will change exits or fire escapes, or ~n any other way effect fire safety issues for your property, the Fire Marshal may have review approval. Initial contact with the Marshal is handled by the Building Department. The Marshal may also schedule a visit to inspect your property. Community Development Department (CED) Review Because the rehab loan is provided by federal funds CED staff must review your plans to insure compliance with federal standards for rehab of older dwellings. This generally means that significant extedor features of the building cannot be altered, The Housing Department will coordinate initial contact with CED staff, who may also need to schedule a visit to inspect your property. In addition, if your property is located within an histo~'ic preservation district, any changes requiring a permit which you plan for the exterior must be reviewed by the Histodc Preservation Commission. A sketch of the extedor rebab work may have to be prepared for HPC. review. -The Commission meets twice each month; it is staffed by the Neighborhood Development Specialist, at the CED Department. Sidewalks If replacement of the public sidewalk is part of the rehab work, an inspection by Engineering Division staff may need to be scheduled. The sidewalk inspector will require that replacement work be done in accordance with City ordinance. The Housin9 Department will coordinate initial contact with Engineering. The Housing Rehab Inspector will then prepare the following information for the applicant: ~ a rehab work write-u o, listing ali the planned improvements - a cost estimate for the total job - a list of all required permits and approvals At this point, you're ready to begin contacting contractors to obtain bids. During this time, housing staff will be taking care of the income verifications, credit and title search, and prepanng the loan documents. Once all bids are received, you will'meet with Housing's Loan Specialist to finalize the loan package. American Trust & Savings 13ank l~'irst Time Hon]e Buyer ~ and Moderate~ow Income l'r~gr~s J Iowa Finance Authori~ Iowa Finance Ambority 3% Down Payment Communi~ Home 5% Down Payment Individual Home Homebuyer bi'crate Homebuycr Loan