Council eyes curtailing fee-in-lieu for PUDs

In a move to get developers to build on-site affordable housing, City Council members are considering offering fewer choices to those who use planned unit development zoning.

A resolution — sponsored by Council Member Laura Morrison and co-sponsored by Kathie Tovo and Mike Martinez — would eliminate the option of paying a fee-in-lieu toward affordable housing and, instead, require that housing be on-site.

Morrison explained that during the city’s discussion about acquiring the state land at Bull Creek Road, she was struck by an assertion that PUDs had provided no on-site affordable housing to date.

“I think it makes sense, according to that data, that we are just not getting the on-site that we need, and that this would be a prudent way to go forward,” said Morrison. “Obviously, what we have now isn’t working.”

As the resolution points out, since the city established the fee-in-lieu donation approach in 2008, there have been no on-site affordable units built in any PUDs. Though 13 units are proposed for the South Shore PUD, they are not yet occupied, and were established under a more stringent version of the ordinance.

If approved, this would be the second major change to the affordability component of the city’s PUD ordinance in less than a year. Last October, Council approved an ordinance clarifying affordability calculations for PUDs, and that those calculations be based on the “bonus” square footage established through the zoning change. At the time, Tovo and Morrison argued that the calculation should be based on the project’s total square footage.

Morrison pointed out that the South Shore PUD had calculated its affordable housing based on the full project square footage, not the bonus square footage.

Requiring on-site affordable units would further the city’s goal of having geographic distribution of affordable housing, which is hard to establish with the city’s Housing Trust Fund. Affordable housing tends to mean buying affordable land, and city projects are not often built on the same tracts as those that are developed as PUDs.

During the discussion at Tuesday’s work session, Council Member Bill Spelman said he was “very sympathetic to the idea” but suggested it might be useful to get more information from city management before deciding whether a code amendment was warranted.

Morrison said that a lot more conversation would inevitably be had, as the proposed change made its way through the boards and commissions process. She was, however, amenable to an idea from Spelman that the resolution look at other ways of establishing on-site affordability outside of the eradication of the fee-in-lieu.

“It seems to me that there are almost certainly going to be some situations, for some practical reason that none of us have thought of yet, that it’s impractical to do all of it on-site,” said Spelman. “I don’t know what it’s going to look like, but I’m prepared to believe that somebody, somewhere, is going to come up with an explanation for why that will be necessary.”

“It seems to me that we ought to provide a little bit of wiggle room for us to at least consider the option for some in-lieu contributions, so long as we can be sure of getting some on-site affordable housing,” said Spelman.

Spelman added that he had yet to work out exactly how this might be crafted, but said that requiring all affordable housing to be on-site could be “asking for some trouble downstream.”

In September, a Housing/Transit/Jobs Action Team recommended that the in-lieu donation option be removed in order to align with federal guidelines.