Saturday, May 21, 2022

Workforce mixed-use housing district finally revealed by Wilmington

The new option would allow a developer to include workforce housing units within a development or pay a fee in lieu of units in exchange for increased building height and lot coverage, prioritized development plan review, and elimination of city development fees.

The state's top lobbyist for the home-building industry went to Raleigh to appeal a state decision requiring building frame inspections before further construction. (Port City Daily photo / File)
A new zoning district could incentivize developers into including more affordable options for residential units in Wilmington (Port City Daily photo / File)

WILMINGTON — How can a city convince developers to include affordable housing units in new projects around the region? That is the question leaders, residents, and community stakeholders have been asking for several years — now without much progress.

Some cities might require a certain percentage of housing build meet affordability standards but in Wilmington local government has stayed away from requiring affordable housing.

That could be changing.

In 2019 the City of Wilmington submitted a report to the state (as part of a requirement) addressing how the city was addressing workforce/affordable housing. One of the items on that report included the addition of a new zoning district, the ‘workforce housing mixed-use District (WHMU)’.

But the report to the state provided little detail into what this district would actually look like, mainly, because it did not exist as a fully fleshed-out part of the city’s code.

Now, the city is kicking off 2020 with a Planning Commission meeting on Jan. 6 that will offer a first look at the newly proposed district through a proposed amendment to the city’s land development code.

“The proposed amendment would create ‘workforce housing mixed use’ (WHMU) as a use permitted by prescribed conditions in the O&I-1, CB, and RB districts to encourage the provision of workforce housing units by the private sector within mixed-income neighborhoods. This use would be an optional use, available only to property owners who apply for this designation, either as an opt-in by right development on land already zoned appropriately or as a part of a conditional rezoning request,” according to city documents.

The hope of the district is to incentivize developers into including workforce housing or paying a fee that will go into a workforce housing fund in exchange for looser building restrictions.

“A developer may opt to include workforce housing units within a development or pay a fee in lieu of units in exchange for increased building height and lot coverage, prioritized development plan review, and elimination of city development fees,” according to the staff report.

What does it look like?

There was little more than an idea to go on when the new district was first suggested, but now the city has a comprehensive plan ready for approval, starting with a stated purpose.

“Purpose: Urban areas have traditionally included mixed-use developments that provide housing for persons of all income levels, along with complementary nonresidential uses. In Wilmington, these mixed-use developments have contributed to economic success, unique built environment, job creation, and diversity. Mixed-use centers bring together medium- to high-density residential and nonresidential uses within a walkable, bicycle-friendly, and/or transit-accessible development framework. Uses can be mixed vertically (within buildings) and horizontally (among buildings). The diversity of uses and activities in mixed-use centers make them vibrant destinations. A mixed-use center should provide a full-service environment and diverse uses, including housing at a variety of price points, offices, retail, service, entertainment, civic, and open space, for residents, employees, and visitors,” according to the amendment.

The district is 100% voluntary, but even if a developer wants to rezone into the WHMU district there are requirements. First of all, only properties currently zoned O&I-1, CB, and RB may apply for the district.

Every WHMU rezoning must meet certain criteria, aside from being located in the previously mentioned zoning districts. Each development proposal must contain a mixture of uses, include sidewalks or connectivity, and consist of multifamily housing for the residential aspect. The number of ‘workforce housing’ units must be greater than one and equal 10% of the total number of available units.

So if a 100-unit apartment complex is proposed, at least 10 of the units must be set aside for workforce housing. One of the appealing features of this district for developers is the fact that multifamily residential units would have no density requirements.

“Multifamily units shall be permitted with no density limit, except within the Watershed Resource Protection areas. Residential density may exceed 2.5 units per acre in the Watershed Resource Protection areas if the development does not exceed a maximum of 25% impervious surface area or is exceptionally designed,” according to the amendment.

The zoning district would also require at least 5% of the site acreage be dedicated to ‘open space’ or ‘community facilities’ including sidewalks, sitting areas, multiuse paths, etc.

Developers are also required to treat all of their residential units the same.

“Workforce housing units shall be fully integrated into a development and shall be architecturally indistinguishable from market-rate units,” according to the proposed amendment.

Fee in-lieu

If developers want the benefits provided by the WHMU district but have no desire to (or are unable to) include affordable units, they are able to pay a fee instead.

According to the proposed plan, “In lieu of providing workforce housing units on-site, a developer may choose to contribute a fee to the city’s dedicated housing fund. Given the example of a mixed-use development with 250 residential units (therefore 25 workforce units required), the fee in lieu shall be calculated as follows:

  • The fee shall be a sum equal to the percentage of the project dedicated to residential use in terms of gross building square footage multiplied by 10% of the fair market value of the land at the time of the issuance of the first certificate of occupancy.
  • The fair market value shall be demonstrated by a licensed appraiser, commissioned by the developer, and may be subject to verification by another licensed appraiser commissioned by the city. For example, if total building square footage of a development is 5% nonresidential and 95% residential, and the fair market value of the land is
  • determined to be $5,000,000, the fee would be calculated as follows:
  • 95% x $5,000,000 = $4,750,000
  • $4,750,000 x 10% = $475,000 total fee in lieu
  • In this example, the developer may choose to pay $475,000 instead of providing the 25 required work force units on-site.”

Affordability defined

Affordability Criteria. The following terms shall be employed to determine affordability price points for workforce housing units.

  • Workforce housing unit: A housing unit requiring a mortgage payment or rental payment, as applicable, in accordance with the household income and affordability criteria defined below.
  • Area median income (AMI): AMI is the midpoint of a region’s income distribution – half of the families in a region earn more than the median and half earn less than the median. For housing policy, income thresholds set relative to the area median income identify households eligible to live in income-restricted housing units and the affordability of housing units to low-income households. AMI shall be determined annually by the U.S. Department of Housing and Urban Development and shall be adjusted for family size
  • Qualified household: Households where occupants have, in the aggregate, a household income less than or equal to 120% percent of the AMI, adjusted for family size, for owner-occupied units, and a household income less than or equal to 80% of the AMI, adjusted for family size, for rental units.
  • Initial maximum allowable sales price: An amount equal to three times 120% of the AMI, adjusted for family size.
  • Affordable rent: Affordable rent is the high HOME rents as published annually by the United States Department of Housing and Urban Development, or its successor, for the city of Wilmington, and adjusted for the number of bedrooms.
  • Household income: Income as defined and used by the U.S.Census long form.

Supporting Documents by Michael Praats on Scribd

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