Preliminary Proposed Plan Commission Changes to IZ
(Note: It is entirely possible that I missed something as the Plan Commission meeting ended about 7.5 hours ago and I haven't had much sleep and my notes were relatively messy, even for me!)
1. Change the current equity model. Owner earns equity based on the amount they pay toward the home. The City earns equity based on the amount it subsidizes after 5% is set-aside for the homeowner to be compensated for potential improvements made to the ordinance. This provision is retroactive to already approved projects.
2. If the developer gets a waiver
a. They can provide the off-site units in existing buildings instead of new units as long as the units are comparable in quality
b. Units provided have to be within a 1 mile radius of the new project currently and we added that they could also be within the same elementary school district area as long as the units are in the City of Madison.
3. If the City has budgeted money for inclusionary zoning homes, staff can make the determination to purchase the homes without a City Council action, allowing the City to decide to exercise the option to purchase within 30 days making the process to sell a home quicker for the seller.
4. Remove the current point system for incentives and go to a system that calculates potential revenues of the developer. Those revenues must then be offset by a list of things the developer requests from the City. The developer requests the level of offsets they believe are necessary to close the gap in revenues and this is reviewed by the City staff and ultimately the Common Council.
5. The previous list of incentives has been expanded and converted to a list of offsets and the list has been modified as follows:
a. Unlimited density bonus. The current ordinance limits this to a density bonus to 30 or 60% depending upon the type of development.
b. Unlimited reduction in minimum parking requirements. The current ordinance limits this to 25%
c. Cash subsidies are the offset that must be chosen last. The current ordinance only allows cash subsidies if you have a project that either
i. Provides units that are even more affordable than the minimum ordinance requirements
ii. Provides the units in a building that is s4 stories or more and has 75% of its parking underground
iii. Provides the units in a “small” development of 49 units or less.
d. Allows up to 20% of the project to be “IZ-free”. This is to allow units such as expensive lots with better amenities or penthouse floors or lakeview units to not have to include IZ units.
e. Allows single family developments to provide up to 75% of the units in attached housing provided that they are in buildings that are 8 units or less and if the buildings have 5 – 8 units on half of the units in a building may be IZ. Dupleses, 3 and 4 unit buildings may be all IZ units.
f. Eliminated the following from the list
i. Provision of street trees
ii. Assistance from the City in obtaining other funding
g. Reduced street widths
h. Allowing projects on the periphery to build housing in previously commercial planned areas on a case-by-case basis.
i. Other items, as requested by the developer.
6. Change in the way we calculate density bonus
a. In the downtown area the staff will consider the current zoning, neighborhood plans and existing development patterns in determining the base to calculate any density bonus
b. On the periphery where they are developing currently agriculture lands, for areas planned to be low density, the density bonus is calculated from the 75% point in the range of density. (i.e. if the area is planned to have 1 – 8 units, 75% would be 6)
7. If a developer is selling lots only and has received the offsets from the City, they cannot sell the lots for more than 25% of the value of an IZ home that should go on that lot.
8. Marketing Period – The plan commission had eliminated the ability for the developer to have units “bump out” of the IZ program for the following reasons:
a. There were too many loopholes and projects were being “marketed” and “bumping out” of the program before roads were even in some areas.
b. We wanted to avoid dictating marketing plans and the requisite tracking and auditing of the progress of those plans.
c. If we provide offsets to provide units and the units are not provided to the City, then we need to find a way to recapture the value of the offsets we provided.
Currently, this is an outstanding issue for the Plan Commission to consider
9. We need to determine an effective date for the ordinance and under which ordinance the projects that have already submitted an application should fall.
Final recommendations will be made on Monday evening after we have had a chance to do a final review of the ordinance language and see written proposals on the marketing issue.