COMMUNITY AMENITY CONTRIBUTIONS POLICY AMENDMENT – AFFORDABLE HOUSING

COMMUNITY AMENITY CONTRIBUTIONS POLICY AMENDMENT – AFFORDABLE HOUSING

RECOMMENDATION:

THAT the June 2, 2021 report from the Senior Planner titled “Community Amenity Contributions Policy Amendment – Affordable Housing” be received for information.

CHIEF ADMINISTRATIVE OFFICER’S COMMENTS: I concur with the recommendation.

DIRECTOR OF DEVELOPMENT SERVICES’ COMMENTS: I concur with the recommendation.

DIRECTOR OF FINANCE’S COMMENTS: I concur with the recommendation.

PURPOSE: To seek direction on how to address affordable housing as a component of the Community Amenity Contribution Policy.

BACKGROUND: At the April 13, 2021 Committee of the Whole meeting, the Committee considered a report regarding the provision of affordable (below-market) housing.

Staff identified an option for consideration is to amend the CAC policy to explicitly collect funds earmarked for housing (either by allocating part of the existing $3500 target funding amount or assessing a new Affordable Housing Amenity contribution). For larger projects it may be advisable to ensure the policy is flexible and does not preclude being able to negotiate for affordable units to be provided (as occurred with 9 Erskine Lane and Christie Point).

DISCUSSION: Council Policy #6400-041 - Community Amenity Contributions (CAC) provides targets for the negotiation of community amenities in residential rezoning applications.

The following issues are discussed in this report:

1. Amending the CAC policy to make specific allocations towards affordable housing
2. Directing funds for affordable housing
3. Negotiating for affordable housing units in large rezoning developments

1. Amending the CAC policy to make specific allocations towards affordable housing

Existing CAC target rates from Section 1.9 of the policy are:

• $5500 per single-family residential unit/lot
• $3500 per unit for other types of residential uses (duplex, triplex, fourplex, townhouse, apartment etc.)

The policy does not allocate a set amount or percentage of CAC funds received towards affordable housing. Staff identifies the following as options to consider:

1. No change – can be allocated case-by-case
2. Allocate 25% of CAC funds collected for affordable housing.
3. Allocate 25% of CAC funds collected for affordable housing and increase the CAC rate by $500 per unit.

Table 1. Community Amenity Contributions towards Affordable Housing

• The percentage target is useful for when a development proponent provides a tangible amenity (e.g., building a public trail) and the target cash contribution rate is consequently reduced.
• This would leave 75% of the rate to be used toward other community amenities. In comparison, City of Victoria allocates 70% of cash amenities received to housing reserve fund, leaving 30% for community amenities.

Options 1 and 2 are both within the range of a sample of other municipalities in the region that have specific CAC rates for affordable housing as shown in Table 2.

Table 2. Other Municipalities

District of North Saanich, District of Oak Bay and Town of Sidney do not allocate specific CAC or Bonus Density amounts towards affordable housing.

Regarding an increase to CAC rates, the impact of additional requests from municipalities on the bottom line for developers is often the difference between a project proceeding or not. Requirements from the Town include frontage and servicing requirements, Community Amenity Contributions, Development Cost Charges, permit fees and more. Hidden costs include carrying costs and risk associated with rezoning and development permit approvals. Not having projects proceed because the economics no longer work is a risk and will have impacts to things like future assessments, building permit fees and more.

The existing target rates in combination with Development Cost Charges placed the Town in the median of municipalities within the region. Increasing the CAC rate would be more progressive, pushing the Town towards the higher end, but at a certain point could make the Town appear to be a less desirable place for investment and community development.

2. Directing funds for affordable housing

The policy does not address how CAC funds for affordable housing would be directed. There are several options that can be considered: a. Allocate to CRD Regional Housing Trust to supplement current annual contribution b. Collect funds to offset DCC waivers c. Collect funds for a project within the Town

Staff supports Option A.

Option A: Allocate to CRD Regional Housing Trust Fund

This is in addition to the Town’s annual contributions.

• Pros:
  • Simple to administer, low overhead costs Town staff
  • Pooling contributions into a regional fund supports affordable housing projects to move forward sooner.
  • The Capital Regional District has staff expertise and capacity to administer the fund.
  • The CRD can leverage pooled contributions with other funding sources to create more ‘bang for the buck’
• Cons:
  • The most recent project is the West Park apartments at 1910 & 1920 West Park Lane. It is uncertain when another a project might be located within Town. However, affordable housing is a regional issue in a region with a relatively compact urban area.
• Note:
  • For larger projects it may be advisable to ensure the policy is flexible and does not preclude being able to negotiate for affordable units to be provided (as occurred with 9 Erskine Lane and Christie Point). Staff have limited capacity to administer. Note private projects have an end date.

Option B: Collect funds to offset DCC waivers

Funds would be collected to offset any potential Development Cost Charge waivers requested for an affordable housing project.

• Pros:
  • supports projects within the Town
  • Preserves integrity of DCC program
• Cons:
  • It could take many years to accumulate sufficient funds to have a significant impact. For example, the DCC waiver of $207,230 for the CRD Housing project at 1910-1920 West Park Lane would have depended on the development of 139-151 single family lots or 208-237 units of market multifamily residential units elsewhere in the Town.
  • There is not certainty of when funds would be requested, and the current building boom would be missed.
  • The creation of new funds should be carefully considered as there are long term overhead costs for staff administration of funds.

Note: date of policy/payment can make a difference in how much money is accruing.

Option C: Collect funds for a project within the Town

• Pros:
  • The amounts would be collected for a local project.
• Cons:
  • Would take a long time to accrue sufficient funds to initiate or support a project within the Town. The Town is approaching build-out in that few large and/or vacant land holdings remain. Land assembly for redevelopment of developed lands takes a long time. The current building boom would be missed.
  • The value of collected funds might not keep pace with inflation.
  • The creation of new restricted or reserve funds should be carefully considered as there are long term overhead costs for staff administration of funds. Having too many funds has created overlapping issues for the Town in the past.
  • There is limited staff capacity to implement or partner in a project.

3. Negotiating for affordable housing units in large rezoning developments

There have been recent Council discussions on the provision of affordable housing units in new developments. The City of Victoria’s 2019 Inclusionary Housing and Community Amenity Policy is the leading policy in the region that sets a target for the provision of inclusionary housing units (housing at a below-market price or rent built/provided by private developers). It acknowledges that “when delivered in small numbers, inclusionary housing units can be challenging and costly to administer, operate and monitor over time.” The City of Victoria policy uses bonus density provisions where additional density is allowed if certain conditions are met. For developments where 60 or more residential units are proposed in higher density locations (downtown, Songhees, James Bay, Cook Street Village, etc.) the general targets are:

• Rental inclusionary units: 20% of the total units or floor space
• Owned inclusionary units: by economic analysis

The viability of development is much lower in the Town, so the target for the provision of affordable units should be more moderate. The Town’s recent experience with rezoning for a larger rental residential project at 9 Erskine Lane for 336 apartment units was for 10% of the units to meet affordable housing criteria for a twenty-year period. A policy statement such as the following could be considered:

Affordable Housing Amenity Where more than 60 additional residential rental units are proposed or possible, target a housing agreement to provide 10% of the units or floor space as affordable units for a twenty-year period as a Tangible Community Amenity Contribution.

A practice for the provision of below market rentals is that third parties (e.g., non-profit societies) would conduct tenant screening to meet affordability criteria at a cost to the landowner, but ongoing staff oversight of each program would still be required.

City of Langford was the first local government in the region to target the provision of below-market owned housing (25-year housing agreement for below market sale pricing), however the development community has demonstrated a consistent preference for cash contributions for housing affordability instead. There are also ongoing staff resources expended on program administration and qualification screening of prospective purchasers with every real estate transaction.

NEXT STEPS:

Decisions on the following options are requested to help staff to prepare a CAC amendment for Council consideration.

1. Amending the CAC policy to make specific allocations towards affordable housing

Options:

1. No change – contributions can be made to affordable housing on an ad hoc basis.
2. Allocate 25% of CAC funds collected for affordable housing.
3. Allocate 25% of CAC funds collected for affordable housing and increase the CAC rate by $500 per unit.
4. Allocate a different percent and/or increase to the CAC rates.

2. Directing funds for affordable housing

Options: a. Allocate to CRD Regional Housing Trust Fund (staff recommendation). b. Collect funds to offset DCC waivers for affordable housing. c. Collect funds for a project within the Town.

3. Negotiating for affordable housing units in large rezoning developments

• Should the threshold to consider the provision of affordable rental units on-site be 60 units (same as City of Victoria) or higher (e.g., 100)?

RECOMMENDATION:

THAT the June 2, 2021 report from the Senior Planner title “Community Amenity Contributions Policy Amendment – Affordable Housing” be received for information.

SUBMITTED BY: Jeff Chow, MCIP, RPP Senior Planner

REVIEWED BY: Lindsay Chase, MCIP, RPP Director of Development Services

ATTACHMENTS

1. Policy #6400-041 - Community Amenity Contributions (4 pages)