Inclusionary Zoning Oversight Committee: Top Three Priorities

This morning, the Inclusionary Zoning Oversight Committee had its first meeting. At the meeting, we reviewed recent changes, clarified some things about the ordinance and set our agenda and next meeting dates.

We decided to meet every other week for 2 hours at 8 am on Fridays. The next two dates are August 25th and September 8th. Our agenda items for the next two meetings are as follows:

Aug 25th
- Reviewing policies regarding the buyers terms/obligations under Inclusionary Zoning
- Reviewing a draft Request for Proposals (RFP) for the Housing Needs Study

Sept 8th
- Reviewing the "gap analysis" or Revenue Offsets formula
- Likely continuing discussion on buyers terms/oblicgations

Inclusionary Zoning Oversight Committee: Top Three Priorities

This morning, the Inclusionary Zoning Oversight Committee had its first meeting. At the meeting, we reviewed recent changes, clarified some things about the ordinance and set our agenda and next meeting dates.

We decided to meet every other week for 2 hours at 8 am on Fridays. The next two dates are August 25th and September 8th. Our agenda items for the next two meetings are as follows:

Aug 25th
- Reviewing policies regarding the buyers terms/obligations under Inclusionary Zoning
- Reviewing a draft Request for Proposals (RFP) for the Housing Needs Study

Sept 8th
- Reviewing the "gap analysis" or Revenue Offsets formula
- Likely continuing discussion on buyers terms/oblicgations

City Attoney on Ct. of Appeals Decision

From Attorney May:

The Court of Appeals ruled today (3-0) that Madison's inclusionary zoning ordinance is preempted by the state law that prohibits rent control. This decision only impacts the rental housing portion of the ordinance; the owner-occupied portion remains in effect.

I plan to file a petition for review of this decision with the State Supreme Court. The petition is due in 30 days. This is clearly a decision of statewide impact and a decision of first impression. As you recall, the Circuit Court ruled in the City's favor.

In the interim, we will also look at the decision to see if we can make some minimal changes in the ordinance to meet the ruling of the Court of Appeals. I do not view the ruling as having any impact on existing leases, but new developments could decline to provide rental housing at lower rates until we either change the ordinance or get the decision reversed.

Court of Appeals Decision on IZ

You can find it here.

IZ Oversight Committee Agenda

IZ ADVISORY OVERSIGHT COMMITTEE
Friday, August 11, 2006
8:00 AM
215 Martin Luther King Jr. Blvd. (Madison Municipal Building)
Room 280 (room subject to change, confirmation pending)


CALL TO ORDER

ROLL CALL

WELCOME AND REVIEW OF COMMITTEE CHARGE

ELECTION OF COMMITTEE CHAIR

REVIEW OF ORDINANCE REVISIONS (2006/08-A1 and 2006/08-A2)

REVIEW OF DRAFT POLICIES DOCUMENT (2006/08-B)
Includes 2 alternatives on the calculation of a revenue gap and offsets.
(2006/08-B1 and 2006/08-B2)

DEVELOPMENT OF FUTURE WORK AGENDA
Includes development of a marketing plan and benchmark measures.

ESTABLISHMENT OF NEXT MEETING DATE

ADJOURNMENT

If you need accommodations such as a translator, signing person or materials in an alternate format or wish additional information about any project, please call the CD Office at 267-0740 (866-704-2318.TDD) at least 24 hours prior to the meeting so that
we may make the arrangements for your participation.

Additional information may be obtained from, or written comments may be submitted to the CD Office, Madison Municipal Building, Room 280, 215 Martin Luther King Jr. Blvd., P.O. Box 2985, Madison, WI 53701-2985, e-mail: cdbg@cityofmadison.com; website: www.cityofmadison.com/cdbg.

WSJ (Realtors): Give it a Rest. Or open your eyes and look at the facts.

Inclusionary Zoning will only work if we work on it together. After the vote on Tuesday night, apparently Phil Salkin from the Realtors said that they would stand behind the ordinance now and wanted to make it work. (I'm not sure I believe them, but I'll give them the benefit of the doubt.) And, in email exchanges with another person in the leadership of the Realtors, they told me the same thing.

When we talk about cooperation, I'm not sure what that means, but I do know that it means that they will market the units in good faith and stop trashing the program which will discourage homeowners from buying into the program. Too bad the Wisconsin State Journal can't also at least try to be gracious as well. And that the Realtors didn't send them the same message. I was a little surprised to read the Scott Milfred column (he's the editor of the editorial page) in yesterday's paper. Unfortunately, he's still spouting incorrect information likely given to him by the Realtors.

Let's take a peek at some of the things he's saying . . . .

Point A by Milfred:

I 'm tired of hearing about all the middle-class families -- the teachers, nurses, computer programmers and police officers -- who supposedly can't find affordable homes in Madison.

Have they looked?

The friendly Lake Edge Neighborhood, where I live on Madison's East Side, is filled with smaller, single-family homes. And an ever-changing variety of them are always popping up for sale.

Ok, we know there are clusters of more affordable housing on the east side. How many other neighborhoods have these same opportunities? Additionally, the whole point of Inclusionary Zoning is that we don't have clusters where only one income range of people live, but that those opportunities exist in all neighborhoods. You think they'd build his home in the new subdivisions they're building. I sure wish they would. If we could convince builders to build smaller more reasonable homes in their new neighborhoods then it wouldn't cost the city and the taxpayer so much money to make the developer whole.

Point B by Milfred:

My wife and I bought our two-bedroom bungalow, with wood floors, a remodeled kitchen, detached garage and huge backyard, for $129,000 about one-and-a-half years ago. We love the place and fit just fine here with two small children.

Using the city assessor's Web site, I also can see that my neighbors across the street bought their two-bedroom cottage home for just under $150,000 in December. And the folks a few doors down paid $132,300 for their two-bedroom bungalow and detached garage in September.

All of those prices are well below the majority of "affordable" units the city is trying to force developers to build and then sell using complicated formulas and paperwork.

Ok - IZ prices for two bedrooms homes are:
80% AMI: $156,016 (Makes $58,550 for family of 4)
70% AMI: $136,566 (Makes $51,240 for a family of 4)

Depending upon what the income levels of the people who bought these homes, and their current value, these homes may or may not have been affordable. Milfred's house is now assessed at $139,500 and would likely sell for more than that. It's not affordable to someone at 70% AMI and probably barely affordable to someone at 80% AMI.

Point C by Milfred:

And my neighborhood is hardly the only pocket of affordable homes in Madison. Friends of mine have found great starter homes around Fair Oaks Avenue and Milwaukee Street. Other spot for fixer-uppers include north of East High School and farther north toward Warner Park.

Notice, he mentions homes in a small area of the East side and a few on the Northside. Our city is growing and shouldn't we be providing started home opportunities in all areas of the City. Don't we want people to live near where they work to cut down on traffic congestion and because its better for the environment? Don't we want starter homes in the periphery of the City?

Point D by Milfred/Realtors:

In fact, according to the Realtors Association of South Central Wisconsin, more than 700 homes and condos are for sale for less than $185,000 in the city. A family of four with a household income of 80 percent the Dane County median -- about $58,000 -- could afford any of them.

Wrong. Wrong. Wrong. The data spouted by the Realtors was bunk. Lisa Subeck did a great job of giving us the data and I'm hoping she can find a way to show you the data on this site, but here's a preview.

When she looked, she found 139 single family homes currently available in the income range.
1 - one bedroom
26 -two bedrooms
90 - three bedrooms
22 - four bedrooms

19 or 14% on the Westside
120 or 86% on the Eastside

She also found 183 condos that were currently available if you assume their condo fee is $150. (She had to make this assumption as the information is not available.)
21 - one bedroom
156 -two bedrooms
23 - three bedrooms
2 - four bedrooms

73 or 40% on the Westside
110 or 60% on the Eastside

This leaves a grand total of:
23 - one bedroom
182 -two bedrooms
113 - three bedrooms
24 - four bedrooms

92 or 29% on the Westside
230 or 71% on the Eastside

But that only adds up to 322 units. That's a far cry from the realtors claims of 700. You might wonder why . . . and I can tell you. First, they weren't looking at the bedroom size and instead just used houses under $185,000 regardless of the number of bedrooms.. Second, they didn't consider the condo fee which is part of the housing costs under the ordinance.

Add on the lack of reserve in the condo conversions, which I also hope Lisa Subeck can explain, and there are likely even fewer homes available.

Point E by Milfred:

Here is how easy it was for my family to find an affordable home:

We called a real estate agent. She showed us five homes on a Saturday that fit most of our preferences and price range. My wife and I agreed we could have enjoyed living in three of the five. The next week we made an offer on the best one. A month later, we moved in.

Our home is near the bike path and is four miles from Downtown. That means even the automotively- challenged could live here.

So where is the big problem that City Hall must so desperately try to fix?

The city last week revised its "inclusionary zoning" law to make it easy for developers to stomach and more attractive for home buyers. But the law, called "IZ" for short, is still unnecessary and could actually make market-rate homes more expensive. Many IZ units also require city subsidies to make them work.

Anyone who has bought a home knows it is not just that easy.

Additionally, the changes to the inclusionary zoning ordinance make it so that the builders and developers should have no costs to pass on to the market rate homes. They are being compensated for their lost revenue, so if they are jacking up the prices of the market-rate units, its because that's what they think they can get for them, not because of IZ.

Point F by Milfred:

At a city meeting last week, a social worker who lives on Williamson Street suggested that she and others would have had "no opportunity to buy a house in the city of Madison if not for inclusionary zoning."

Translation: She would have had no opportunity to buy a new condo in a hip neighborhood just blocks from the Capitol if not for the city-subsidized and convoluted IZ law.

But she could have purchased a home in my neighborhood.

Again, Milfred ignores the facts above and does not consider family size and other factors that go into determining affordability.

Point G by Milfred/Realtors:

This debate isn't about poor people trying to find housing. IZ units -- some of which are selling for $217,000 -- are specifically intended to help the middle class.

First, I'm not sure what his definition of "poor" is, but I don't think anyone ever claimed this is about "poor" people. On the rental end, it reaches people at 50% AMI, but that doesn't help the most needy in the community. Check here (click on income level on the left hand side ) for income levels to see for yourself who the program targets.

As for these $217,000 homes, those were only possible for people at 80% AMI buying a 4 bedroom home when the interest rates were great. Not the case any more. Here's the prices IZ homes should be sold at during this quarter.

Point H by Milfred/Realtors:

The IZ law also ignores the many successful and existing housing programs at the local and state levels that help first-time home buyers with down payments, low-interest loans and repairs. My wife and I got a low- interest home loan with $10,000 for repairs from a state program.

This is a last minute talking point brought out by the realtors. They claimed there were 150 programs out there. I'd love to see that list. I know I bought my home with a WHEDA loan, but it only worked for me because I lived in a "target area" and I suspect that many programs have similar restrictions. Many of these programs are for veterans or elderly or disabled folks.

Point I by Milfred:

The real struggle for middle-class, first-time home buyers in Madison is making a choice. They can buy a smaller, older home in the city like I did. Or, for the same money, they can buy a bigger, newer home in a small town beyond the suburbs.

I chose Door No. 1 to avoid the time and cost of commuting and to be near the lakes, nightlife and culture of Madison.

Go ahead and make a different choice if you want. But don't ask city taxpayers for a handout because you can't afford a fancy Downtown condo as your first home.

Wow. So, fight for the 23 one bedroom or 182 two bedrooms that likely need years of work done to them or move out of town. Is that how we want to treat our workers in this City? For a paper that is all about economic development, shouldn't they care that workers have affordable places to live? I guess they want to save the "handouts" for businesses instead.

You think we're going to have to put up with this kind of twisted-facts-sour-grapes kind of bashing of the IZ program for the next two and a half years by the Wisconsin State Journal? (and others?) Cuz if we are, its going to be harder to get people to buy the homes . . . perhaps, that's what they want.

What's next?

Next steps on Inslusionary Zoning . . .

1. Do a Housing Needs Study
2. Form an Oversight Committee
3. Have the City do some marketing of the Inclusionary Zoning program (Alder Cnare has some good ideas and is working on a resolution)

And, of course, we still need to explore other housing programs to assist those who need housing at lower incomes.

Thank you! I'm satisfied!

As I noted last night, there are so many people to thank for helping to create and ordinance that three-quarters of the Common Council could vote for and will help ensure that the 500 units that have been approved will finally be sold. And that the 200 - 300 units per year that we expect will get into the hands of people who need this housing. Here is just the beginning of the list of people to be thanked and my apologies if I miss anyone . . .

• Tom Hirsch and the Housing Committee members, and particularly the Affordability Subcommittee

• Nan Fey and the Plan Commission members

• Jed Sanborn and those who participated in the Mayors workgroup

• City Staff, most notably Hickory Hurie and Barb Constans in the CDBG office and Brad Murphy in the Planning Unit

• Veridian Homes, David Simon and Brian Munson (Vandewalle & Assoc) this time around and Jeff Rosenberg from the last round

• The downtown Neighborhood Associations

• Affordable Housing Advocates, particularly Lisa Subeck and Marsha Rummel
  

• And yes, even the Mayor! Most particularly the mayor, and the faceless key staff on this issue.

• Countless other individuals who contributed through constructive dialog.

The media is reporting this morning that the ordinance left "no one totally satisfied" but I, for one, think all of the above people should be proud of their good work. The silly political games some council members chose to play last night are inconsequential if we have an ordinance that works and in the end, people have housing options not previously available to them. That makes me satisfied.

Thanks again to everyone who helped make this happen!!!

Plan Commission Final Changes

My best summary of the changes from last night's plan commission meeting are as follows:

Provides for the "offsets" to be off by plus or minus 5%. i.e. not 100% offsetting to account for the pragmatic realities of development.

Changes the language regarding a density bonus to ensure that all plans are taken into consideration when this section is used.

Changes the "bump out" period. Units can't bump out until after 180 days after the first market rate unit is sold and there is a model available for walkthrough (virtual would be allowed). After 180 days, the units can only bump out proportional to the number of market rate units sold. If the unit bumps out, the amount of additional income over the price of the IZ unit is split 50/50 with the City of Madison.

Removed the ability of the CDA to purchase units and rent them.

Deals with the effective date of the ordinance.

A mocked up version can be obtained from me by emailing me at brendakonkel@yahoo.com. I'm quite busy with work today, but I'll try to get it to you as soon as I can.

What is 100% off-setting?

So, people walked away from the table because some of us wisely pointed out that "100% offsetting" sounded good, but wasn't very pragmatic. The good Alder Zach Brandon promised to give us an example of what this would look like in real life . . . that never happened . . . I believe the good alder walked away from discussions as well . . .

Regardless, we've come up with a system to provide unlimited "offsets" (previously called incentives) to the developer to make sure they get all the revenue they think that they should. (Yes, I had to swallow hard on that one and I'm hoping I don't live to regret it like the compromises that we are currently correcting like the Zach Brandon Equity Model and the Zach Brandon Point System.)

The problem is . . . now that we have a system that will take a few more tweaks, what does it mean to be 100% cost-offsetting? Does the bottom line always have to equal zero? If the developer is getting $5,124.76 more in "offsets" do they give us a check? What if it is $156,789.43? Or what if it is $1,973,569.93? Does it matter what the size of the project is? Is it different for a project with 12 homes or 1200 homes? It's not any more clear now than it was last April.

More Spin or Outright Lies?

Zach Brandon is working hard to convince readers of his blog that Madison doesn't need Inclusionary Zoning because there is plenty of affordable housing available. Of course, anyone who has tried to rent or buy a home in Madison knows just how hard it is to find affordable housing.

Yesterday, Zach evaluated the average property assessments for various areas of Madison for affordability. He claims:

A look at the City Assessor's 2006 data, shows that the homes in 60 neighborhood areas are assessed below the city wide average of $239,400. More importantly, in all but 16 of them, the average is below the maximum available "affordable" Inclusionary Zoning price of $217,623.

Today, Zach took a look at the assessed value of the homes of 18 of the 20 alderpeople (2 are renters). He concludes:

Turns out 10 of the 18 homeowners on the Common Council live in houses assessed below what the city calls "affordable housing." A majority (56%) of the alders live in houses below the maximum available Inclusionary Zoning price of $217,623.

So, where does the spin come in? Zach uses the magic number of $217,623 as the affordability standard. He pulled this number from the list of available IZ units but fails to state that this is the price of a 4 bedroom home. The maximum IZ price for a 4 bedroom home is affordable to those making $67,900 or 80% of the area median income (AMI) for a family of 6. Presumably, such a family may have 2 or even 3 income earners.

The IZ ordinance defines affordability according to number of bedrooms in the unit, and the maximum sales prices are based upon the various family sizes likely to live in each such home. The real maximum sales prices for smaller Inclusionary Zoning homes (affordable to those making 80% of Area Median Income) are:
1 Bedroom - $130,038 (based on 80% of AMI for an average of 1-2 person families or $)
2 Bedroom - $156,016 (based on 80% of AMI for 3 person families)
3 Bedroom - $180,292 (based on 80% of AMI for an average of 4-5 person families)

Of course, using these real IZ prices blows up Zach's claims that affordable housing is so readily available. Based on these standards, only 6 (33%) of the 18 alders live in housing deemed affordable under Inclusionary Zoning, as opposed to the 10 (over 50%) that Zach claims. And the average property assessments by area really tell us nothing without knowing the specifics of the sizes of the homes in the area and the actual numbers of homes available above or below the affordability levels.

Before believing the claims of Zach Brandon and the real estate industry regarding the availability of affordable housing in Madison, check out the number for yourself. Zach has definitely outdone himself this time as the master of spin and lies.

Preliminary Proposed Plan Commission Changes to IZ

List of 7/6/2006 Preliminary Plan Commission Recommendations to Changing the Inclusionary Zoning Ordinance.

(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.

Selling IZ: Acting in Good Faith?

I keep getting told that its not the developers that are the problem with the marketing, but I got this email from someone. This developer has less than 5 units, and this is the 2nd complaint I have heard from someone who (I think) eventually purchased a unit. It took 21 days for this other person to get their offer accepted, mostly because the developer thought that when their first marketing period was over they could sell the unit for more money and this person wouldn't qualify . . . and now this from a different client of the same developer just this morning . . .

From the beginning it has been hard. We had to have several meetings with the city and the developer to prove that we qualify for the program, we were given a letter written by the developers lawyer stating concern about allowing us to have a (various amenities), our questions have been ignored since May 14th now. I call every week and am told (a person from the development team) will get back to me, but nothing. We feel jerked around, we feel like we are being treated differently because we are IZ like somehow affordable housing is a bad thing. We are due to get financing in August and really don't have all the answers/bottom line $$.

And here I thought we have been repeatedly told, trust us, we want to sell these homes, that's how we make money. Hmmmm . . . I wonder when their marketing period ends . . . .

Inclusionary Zoning: One Week to Go . . . A Look Back

Last October 31st, just before we could get our changes introduced to the Common Council, Jed Sanborn (along with Compton, Thomas and Skidmore, later joined by Brandon and VanRooy) introduced repeal of the City of Madison's Inclusionary Zoning Ordinance. In November, the changes we (Mayor Dave, Konkel, King, Webber, Verveer, Olson, Benford, Gruber) had been working on since May 2005 were finally ready to be introduced. In December, the long awaited report on Inclusionary Zoning was done. In February, we made one change to help developers of the Pres House and reintroduced the rest of the proposed changes. In February the Mayor also started his Mayor's workgroup on Inclusionary Zoning. Meanwhile, the Housing Committee and Plan Commission continued working on various aspects of Inclusionary Zoning. Last Thursday (June 29) the Mayor's workgroup had a very sparcely attended meeting (Jed Sanborn, Golden, Palm, myself and the Mayor) and we approved the final report. (You might be wondering which alders have not yet been mentioned, those would be Bruer, Rosas, Cnare, Knox and Radomski, and while Cnare sits on the Plan Commission, the rest have hardly been heard from.)

There is much going on before the special council meeting on July 11th on Inclusionary Zoning. On Thursday, July 6th, the Plan Commission will have its final meeting and make its final proposals. On Monday, July 10th at noon, the Common Council will be having a special brown bag lunch to discuss Inclusionary Zoning and on July 11th, hopefully, we will vote on something.

Will that something be repeal? Up to this point Councilmembers have been reluctant to vote on repeal because they believed it was a political weapon to be held against supporters of Inclusionary Zoning so that we made "substantial changes". Interesting thing is, those same Councilmembers have failed to really articulate what it is that they are demanding so they won't continue pushing for repeal. The only thing that has been clear is that Councilmembers Brandon, Compton, Sanborn and Palm demanded that the off-sets (incentives) the City is providing be "100% cost-offsetting". Some stopped coming to meetings after those of us who have been working on the ordinance pointed out that as a practical matter, that was impossible. Of course, now that we've worked up a gap-analysis with the help of several in the community. . . I suspect they see the problem with demanding the off-sets be "100%". The only other thing I know they say is that there has to be "substantial changes". I have no idea if this list gets us there, but this is what we have:

1. Change the Equity Model
2. Get rid of the point system and do a "gap analysis" on every project
3. Get rid of the ability to "bump out" of the program after marketing for a period of time.
4. Allow IZ units for single family homes to be in attached housing units.
5. Allow for up to 20% of the project to be "IZ-free"
6. Allow for additional density in some neighborhoods on a case-by-case basis by allowing multi-family housing in previous commercial zones
7. Allow for a project specific off-set to be used.
8. Make the process quicker for the City to purchase the homes.
9. Change how the density bonus is measured.
10. Allow off-site units to be provided in existing housing instead of new housing.
11. Allow non-profits to be out of the program like Section 42 projects if they provide additional affordable housing.
12. Elimination of homeowner notification to the City when they make improvements or refinance.

Will this be "substantial" enough for those councilmembers, who knows?

One last outstanding question . . . where are the lobbying groups at:

Apartment Association - Came to a few meetings, but instead, they're busy appealing their lawsuit against the City.
Madison Area Builders Association - Took their Ball and went home.
REALTORS -Never really were sincere, made ridiculous demands, got their special process and at some point took their ball and went home . . . and then started running radio ads urging repeal.
Smart Growth Madison Inc. - Said they wanted to be part of the dialogue, then disappeared.
Downtown Madison Inc. - Will only show up to private meetings, but tried to be part of the dialogue.
Veridian - Were extremely helpful in technical assistance in helping us discuss the attached housing and "IZ-free" zones.

This next week promises to be interesting . . . will the council be able to get 11 votes for anything? Will the ordinance be repealed? Will the Mayor have to veto it? If we are stuck with our current ordinance, then what? No wonder they didn't want to fix the equity model . . . .

Realtors distort the IZ program . . .

Have you heard these ads on the radio?

When you buy a house through Madison's Inclusionary Zoning Program or IZ as its called, everything’s not included.
Like those of us making less than $50,000 a year, we're not included.
At nearly $200,000 these so called affordable homes are out of reach for me.
Also not included, the 700 homes already for sale in Madison that cost less than most of the IZ homes. IZ only applies to new homes.
And a return on an IZ home investment, that’s also not included because you’ll have to give a chunk of the appreciated value back to the City.
The funny thing about IZ is that the units are not included in most Madison neighborhoods, most IZ units are scattered on the edges of the city and in a few highrise buildings.
What does an IZ home include?
Higher home costs for the rest of us and a photo op with the mayor.
Call the mayor and your alder. Tell them you want an affordable housing program that works. Tell them to repeal IZ and replace it with a downpayment program or a program that helps people fix up existing homes.
Tell them Inclusionary is Delusionary.
Paid for by the Wisconsin Homeowners Alliance

It pained me to listen to hours of am radio talkshow crap, but I finally got a tape of the ad. The most important thing to realize is, who paid for the ads. As Lisa Subeck points out, its a front group for the realtors. Once you understand this, you can see why this is what they are advocating for. But what is much more concerning to me, is how willing they are to mislead the public. Lets dissect the ad.

Like those of us making less than $50,000 a year, we're not included.

Interesting, lets look at the facts. (Click on income limits)
These are the MAXIMUM income limits, most of them under $50,000 per year.
Remember homes are sold to people at 80% or 70% and rented to people at 60% or 50% AMI.

At nearly $200,000 these so called affordable homes are out of reach for me.

Again, lets look at those pesky facts.
Currently, only one type of home, a 4 bedroom at 80% AMI is at that nearly $200,000 range.

And a return on an IZ home investment, that’s also not included because you’ll have to give a chunk of the appreciated value back to the City.

This was one of their best talking points with the Zach Brandon model that was in the ordinance. For months, we have had a better proposal. In fact, we had the fundamentals of it last November. The council could have fixed this in the ordinance, but for political reasons, they refused to do so.

Also not included, the 700 homes already for sale in Madison that cost less than most of the IZ homes. IZ only applies to new homes.

Yes, IZ only applies to new homes. But their analysis of if these homes cost less than IZ homes is flawed. First, they don't include condo fees and many of the homes they count as affordable are condos. The cost of the condo fee is supposed to be calculated into the price of an IZ home. Second, they don't consider the bedroom size of the homes available.

The funny thing about IZ is that the units are not included in most Madison neighborhoods, most IZ units are scattered on the edges of the city and in a few highrise buildings.

There's nothing funny about this, that is how the program is set up. We are trying to make sure that we correct the mistakes made in other neighborhoods and that in all new neighborhoods, we have a broader range of housing options available to people. What's so funny about that? Over the years, as more neighborhoods get more new housing, this will change.

What does an IZ home include?
Higher home costs for the rest of us and a photo op with the mayor.

Giggle. I'll skip over the snarky "photo op" issue and go to the "higher home costs for the rest of us". The current ordinance has a waiver option that allows a developer that has a project that is not financially feasible to build off-site, provide money to the city in lieu of building the housing or reduce the number of units that they need to produce. Therefore, the costs of IZ should not be shoved off on the other homeowners as they would like you to believe. With the changes to the ordinance that are being proposed, we have made quite a bit of progress with the development community and have a proposal to essentially make sure that their profits are not reduced due to IZ.

Call the mayor and your alder. Tell them you want an affordable housing program that works. Tell them to repeal IZ and replace it with a downpayment program or a program that helps people fix up existing homes.

Ooooo, I love this one! As I've said earlier, I'll support these programs in addition to IZ and I'm waiting for a serious proposal to come forward. And . . . as I've described before we do have some of these programs in place, we could simply add more money to them come budget time.

It boils down to the same old misleading crap from the Realtors. I actually contacted two of the members of the board for the group that is running these ads. One of them got back to me and claimed that they were running the ads because "It's simply a way to get the public involved." Well, if you want to get people involved, start with the facts. Oh, and by the way, no one has called me so I'm not sure its an effective way to get people involved.

Inclusionary Zoning Updates

We had an interesting Plan Commission meeting last night and made some progress on Inclusionary Zoning. We essentially made 3 decisions worth noting:

MARKETING (AND MARKETING PLANS AND RECAPTURING INCENTIVES)
We decided to eliminate the marketing period altogether. In other words, the units could no longer "bump out" of the IZ program due to the marketing period expiring. This was done so that we:
a) don't have to dictate what we expect in marketing and monitor marketing plans; and
b) so we don't have to deal with trying to get back the value of the incentives if the units aren't provided.

LANGUAGE APPROVAL ON THE "IZ FREE" ZONES
We approved the following language to allow "IZ Free" Zones in developments:

i. Reservation of up to twenty percent (20%) of the total floor area in multiple unit buildings for market rate units. Floor area reserved for market rate units may include dwelling units on more than one (1) floor. (My notes may have this last sentence a little screwed up since it was amended at the meeting)

j. Reservation of up to twenty percent (20%) of the net residential lot area for single-family homes for market rate units.

ATTACHED HOUSING SUBSTITUTING FOR SINGLE FAMILY HOUSING
k. Up to fifty percent (50%) of required single-family inclusionary dwelling units may be provided in duplex or multifamily buildings with no more than six (6) units. These units shall be dispersed among or immediately adjacent to single-family dwelling units. If these inclusionary dwelling units are provided in buildings containing four (4) to six (6) dwelling units, no more than one half (1/2) of the dwelling units in any building may be inclusionary dwelling units.

OTHER DRAFT LANGUAGE
FYI - There was a draft ordinance handed out with me as a sponsor and I never saw the draft until last night and still haven't read anything more than what we approved above. And the plan commission never even discussed the rest of it. I don't even have an electronic copy and its already outdated, so I'd just ignore it for now . . . and if you see anything in there that alarms you, you might want to check in and see if it was intentional or not. This is wholly a draft from the city attorney's office that was not there for much of the discussion, and that's how things sometimes get twisted.

FINAL NOTE: The mayor's office sent out a ream of paper yesterday - 9 pages of it is the final draft report that we will be discussion at the meeting on Thursday (4:45 Water Utility Building). Haven't read that yet either, printed it out and gave my copy away.

NEXT PLAN COMMISSION MEETING: July 6th 5:00 (or 5:30?)

Who made what "deal"? Who's a Liar?

People have asked what caused me to get mad at Alder Brandon at Tuesday night's Common Council meeting and ask "Are you calling me a liar?" . . . so I thought I would explain . . .

Apparently, several people made some "deal" about not fixing IZ piecemeal. I was never one of those people. In fact, I didn't know that some people explicitly made that deal. I knew people were talking about it and on May 2nd, I even argued why we shouldn't fix the ordinance piecemeal and why we should move forward with fixing the equity model. In summary, there are people who are waiting for the equity model to get fixed to purchase an IZ home. It is the most common call I have gotten from people looking at IZ homes. The equity model is not tied to other portions of the ordinance. We have a solution and there is no harm done by fixing the ordinance and letting people purchase homes. We should have passed the change on Tuesday.

The most absurd/only argument made about not making the changes piecemeal is that people like me wouldn't be motivated to make the IZ changes if we changed only some things. Um . . . some people like me just want an ordinance that works. Removing the Brandon equity model is just one piece of what needed to be changed. Fixing the Brandon incentive model is another, and then there is always that pesky marketing loophole. There is plenty of motivation to keep working on the ordinance. Not everyone is just looking to score political points, for some of us the bottom line is getting an ordinance that works and get people into the few homes that have actually gotten to the point where someone would consider purchasing them.

Anyways, I hope Alder Brandon will apologize for erroneously publicly questioning my integrity, but I won't hold my breath. He'll do whatever he needs to do to score his political point. Meanwhile, thanks to Alder Golden and the Mayor for backing me up and telling the Citty Council that they didn't believe I had made some "deal". I didn't.

Twin Homes and "IZ-free" Zones

Last night during the plan commission meeting we considered the ordinance that would address Twin Homes and "IZ-free" Zones. During the meeting I attempted a re-write of the ordinance based on the discussion at the plan commission and with the understanding that we would eliminate the point system. What follows is the memo I wrote the plan commission and staff last night/this morning.

As I noted last night at the plan commission, during the meeting I attempted a version of what the ordinance might look like based on some of our discussion at the meeting in case I wanted to make a motion to change the language. Here’s what I came up with on the fly:

i. Reservation of up to 20% of the total floor area within an attached-unit development for non-inclusionary dwelling unit designation. Any floor area reserved shall be for contiguous dwelling units and may include dwelling units on more than one floor. (This provision is intended to provide for a 20% “IZ-free” zone for attached housing. It allows the “IZ-free” zone to be on multiple floors.)

j. Reservation of up to 20% of the developable residential area within a development of single-family homes for non-inclusionary dwelling unit designation. (This provision is intended to provide for a 20% “IZ-free” zone for projects than have only detached/single-family housing. At this point, I have not included language about the units having to be contiguous or if all 20% has to be in one area.)

k. In single family detached housing developments, up to 50% of the inclusionary zoning units may be attached housing but no more than x% of the developable residential area may be designated to be a non-inclusionary dwelling unit area. If attached units are provided in buildings with 5 - 8 units, no more than half of the units in any one building may be designated to be inclusionary dwelling units. If the attached units are provided in building with more than 8 units, no more than 25% of the units in any one building may be designated to be inclusionary dwelling units. (This provision is intended to allow that in detached/single-family projects, up to half of the required IZ units can be in attached housing instead of single family homes. I have put language in to limit how large the “IZ-free” zones will be, but need further information to provide a recommendation for the specific percentage. This provision does not indicate how many units the buildings with the IZ units may have, except that it limits larger buildings from being 100% IZ projects.)

Note: Need to change (g)3. as follows:

Notwithstanding incentives provided through 28.04(25)(d)4.k. T the proportion of attached and detached units shall be similar for inclusionary and market rate dwelling units and shall be consistent with the Inclusionary Dwelling Unit Plan. (This provision allows for an exception to the requirement in the ordinance that says that detached and attached housing must be proportional. This exception is only for single family projects that choose to have attached housing under the new language allowing them to provide up to 50% units in attached housing instead of single family homes.)

To address concerns about what the attached units look like, remember that the provision in (g)2. remains and requires that:

The exterior appearance of the inclusionary dwelling units shall be similar in general style to the market rate dwelling units, consistent with the Inclusionary Dwelling Unit Plan.

In other words, the attached housing is going to have to look like single family homes.

A final note, how we will calculate an “IZ-free” zone area needs further discussion.

Inclusionary Zoning Issues

This is part of the memo I recently wrote for the plan commission. Full memo with ordinance with notes on Legistar. (Links not currently working.)

1. Simplification of the Equity Model
Issues: None, plan commission passed ordinance resolving this issue.

2. Marketing
Issues:
a. Should there be a marketing period?
b. If no, how can/should we assist with ensuring eventual sale of IZ units (e.g. IZ homes cannot age out of program (discussed at 6/1 special meeting)
c. If yes, when should the marketing period begin for owner-occupied homebuilders?
d. When should the marketing period begin for a person who sells a lot?
e. Do we agree with the Hirsch language (in Note 2.2) ?

3. City Funded Non-profit Rental Exemption if 15% at 50% AMI or below
Issues:
a. Should for-profits be included?
b. Should dispersion be a requirement for the exemption?

4. City Funded Non-profit Ownership exemption if 15% at 70% AMI or below
Issues:
a. Should for-profits be included?
b. Should dispersion be a requirement for the exemption?

5. City Funded Non-profit Ownership exemption if 75% affordable at 80% AMI or below
Issues:
a. Should for-profits be included?
b. Should dispersion be a requirement for the exemption?

6. Existing Units for Off-Site Waiver Option
Issues:
a. Should existing units (vs. new construction) be included in the Off-Site Waiver Option?
b. Should we have minimal standards for rehab of existing units?

7. City Approval of Buy-Back Provisions
Issues:
a. Who in the City does the approval? Director of Planning and Development or their designee?

8. Removal of point system for incentives
Issues:
On-going discussion so issues vary from day to day – requires more background information for plan commission.

9. System to check if incentives off-set potential revenue
Issues:
On-going discussion so issues vary from day to day – requires more background information for plan commission.

10. Add Incentive: 10% IZ Free Zone
Issues: None? Previously discussed by plan commission, drafted separately and will be discussed during a separate agenda item on June 5th.

11. Add Incentive: Twin Homes
Issues:
a. Should we allow more than just duplex/twin units? Should we allow 4, 6 or 8 unit buildings?
b. What, if any, limitations should be put on how many units can be attached if the market rate units are detached?
c. Do we need to modify “dispersion” language to accommodate these changes?

12. Add Incentive: Change in Use in Neighborhood Plan
Issues:
a. Do we need criteria to determine when this is possible, how much residential, or do we leave it up to staff?
Note: Previous plan commission discussion involved modifying language to ensure that only “some” residential allowed in commercial areas (e.g. become mixed use) vs. changing to 100% residential. How much is “some?” Who decides?
b. If so, does the criteria go in the ordinance or policy?

13. Density Bonus
Issues:
a. How do we determine the base density for periphery neighborhoods?
b. How do we determine the base density for downtown projects?

14. Clarifying City Calculates IZ Sales Price
Issues: None? Simple clarification.

15. Marketing Plan required in the Inclusionary Dwelling United Plan (“IDUP”)
Issues:
a. What are minimum requirements of a marketing plan, if any?
b. If no marketing plan, how ensure eventual sale of IZ units (e.g. IZ homes cannot age out of program - discussed at 6/1 special meeting)
c. What if the marketing plan is not followed?
d. See related issues #1 in “Additional Issues” below

16. Elimination of requirement of City Notification of Improvements
Issues: None?

17. Elimination of requirement of City Notification of Refinancing
Issues: None?

Additional Issues:

1. Hirsch Proposal on Recapture of Incentives’ Value – if an IZ dwelling cannot be sold/rented during the second marketing period, then before the dwelling is made available as a market-rate dwelling, the developer shall pay to the City a cash amount equal to the value of incentives. (Assumes: (1) is a marketing period, (2) dwellings age out of IZ at end of marketing period)

2. How do the incentives provided to the developer of a lot get passed along to the homebuilder if the lot developer is not the homebuilder?

3. Add sections of IZ Policy to Ordinance?

4. Other items brought up by the public or plan commission members?
a. Alder Golden’s memo

If you know of additional issues that should be on this list, please feel free to contact me at brendakonkel@yahoo.com

$197,900 One Bedroom. Not IZ.

No Kidding. I was a little stunned when my boyfriend showed me an ad in the Isthmus for a $197,900 one bedroom condo downtown and the ad says "Income limits apply. Not IZ."

I'm not sure which program allows a $197,900 one bedroom and has income limits . . . but that program sure makes IZ look good. The most IZ would allow the person to pay for a one bedroom this quarter would be $130,038 and that is at 80% AMI and means that there couldn't be any condo fees. If there were condo fees they would need to lower the price so that the total monthly payment wouldn't be higher than what you would pay for a $130,038 home.

$193,900 one bedroom, definitely not IZ.

Brenda's previous Inclusionary Zoning Posts

I've been blogging since last November and have written several posts on Inclusionary Zoning. I thought I'd post them all here, for ease of reference.

May 2006
Fixing IZ - Piecemeal
No Response from Smart Growth Madison
Fixing IZ by Just Saying "No"
(Still Not) Finding IZ

April 2006
Downtown Land of Luxury
MABA takes ball and goes home

March 2006
Inclusionary Alternative Proposal
David Rusk's Lessons on IZ
David Rusk's Missing Lesson
Realtors Act in Bad Faith
Gutting the IZ ordinance
IZ Twists and Spins - Equity Model
IZ - Just Twisted

February 2006
Smart Growth Madison changes their mind
Concerns with Mayor's IZ workgroup

January 2006
Promoting Fear of IZ - Repsonse to Paul Soglin
Real Estate Data - Why Judy Compton's Data is wrong
IZ report is in
Realtors need a special process

December 2005
IZ Equity Model
Incentives
Myths 1 - 5
Myths 6 - 10

The search for IZ begins...
Those who support repealing Madison's Inclusionary Zoning law claim that no one wants to purchase the affordable homes created through this program. After an initial marketing period, during which time a developer is required to make a good faith effort to sell the IZ units, the homes are bumped out of the program and may be sold at market rate. One of the flaws in the original IZ ordinance is that the marketing period often begins and ends long before the IZ homes are actually built.

We decided to see for ourselves why the IZ homes are not selling. The search really began last November with an IZ treasure hunt online. Today, we continued the quest by taking a drive to the sites of many of the IZ homes that reportedly won't sell as part of the program. Finding these homes was harder than we expected and not just because we forgot to take a map. Most of the lots that were supposed to be occupied by IZ houses contained little more than dirt and rocks and construction equipment. It's no wonder that no one has moved into these homes yet. Read on to see for yourself.

Hawk's Meadow...

The lovely homes pictured on the left are located in Hawks Meadow, a Tim McKenzie development on Midtown Road on Madison's west side. It took us quite a while to find the development because we were looking for something more than a sign. After all, these homes have been on the market for more than 8 months, so we thought there might be something more than an empty field here. Actually, we expected to find five 3-bedroom IZ homes located here selling for $193,209, an amount considered affordable for those making 80% of the area median income. We searched high and low throughout the empty field, but all we found was dirt and the sign. There were no IZ homes (or any other homes, for that matter) to be found.

McKenzie supposedly began marketing the units on August 10, 2005. The marketing period ended on April 7, 2006, meaning that these IZ homes have been lost from the program and will be sold at market rate. Of course, a prospective buyer could not see a home, as the homes do not yet exist. Not only did the marketing period begin before construction had even begun, but it ended before construction started, as well.

To include the 5 IZ homes, McKenzie received incentives from the city in the form of a density bonus that allowed the site to contain additional units above and beyond what would otherwise have been approved in the space allotted. Of course, these IZ homes will not be sold at the affordable rate promised, but McKenzie will still reap the benefits of additional profits from the extra units allowed by the density bonus. Perhaps the IZ homes would have been a bit more likely to sell if even one was available for potential buyers to see. After all, who wants to buy a 3-bedroom plot of dirt in a field in the middle of nowhere?

Blackhawk Lofts




It's spring 2006 and these units don't quite look like they are available . . . despite what the sign says . . .

These units by Urban Solutions located at 9320 Old Sauk Rd were marketed last summer starting on July 6, 2005 and then bumped out of the inclusionary zoning program on March 2, 2006. All of the units were 2 bedroom units. The 3 units at 80% were available at $154,4052 and the ones at 70% were available at $136,232.

Hilldale Row

While some IZ units have been built at Hilldale . . .

Others have not . . .


But all of them have been marketed . . . and bumped out of the Inclusionary Zoning program. Despite the fact that in one weekend, 200 people showed up to inquire about inclusionary zoning units after there was an article in the Wisconsin State Journal . . . only one of the not-so-available units have been sold.

Perhaps it is because the Wisconsin Partnership for Housing Development got paid regardless of if the units sold or not.

Perhaps it is because when someone showed interest, they were referred to the City's website and told to read the ordinances . . . and then, if they asked more questions, they were referred to Atty. Ron Tractenberg, a vocal critic of the ordinance.

Well, anyways, we lost some of our most affordable inclusionary zoning units. The units were marketed starting on June 15, 2005 and ended Feb 6 2006. The 3 - 1 bedrooms were available at $110,729 and the 3 - 2 bedrooms were available at $128,814. I take it since the information about these units have disappeared from the Wisconsin Partnership website, the units will not be sold to income eligible families at the IZ price.

Cardinal Glen...
Cardinal Glen, a Veridian Development on the southwest side was not too hard to find, even without a map, as the classic Veridian green signs let us know where it was and that a model was open for our viewing pleasure. We did not have the addresses or lot numbers of the IZ homes in this particular development, so we decided to stop into the office and ask. The realtor told us only two of the units were currently available but neither has been built yet. She pointed out thelocation of the two future homes and said one would be done in August and the other in September.

One of the IZ homes will occupy the lot directly across the street from the office. Currently, the lot (pictured on the left, complete with its one bathroom) contains only a Port-A-Potty. At least potential buyers can rest assured that the unit has a bathroom. The other future IZ home will sit on a lot that is now completely vacant. Despite the fact that other homes in the development have been completed or are in various stages of development, there were no IZ homes to be found in Cardinal Glen.

According to the information provided to the city by Veridian, six 4-bedroom units in Cardinal Glen are currently being marketed for $178,368 to $201,988 for families making 70% to 80% of the area median income. However, we could not find a single one of these houses unless Veridian is now selling a 4 bedroom and 1 bath Port-A-Potty at these prices.

In exchange for building the IZ homes, Veridian received a waiver of $49,680 in park fees. That's a substantial amount of savings to the developer and lost revenue for the city. Veridian claims to have begun marketing the still non-existent IZ homes on February 24, 2006. The marketing period ends on October 22, 2006, and if the units are not sold before then, the city will have kept up its end of the bargain but will not reap the benefits of the promised affordable housing.

The realtor told us that two of the IZ homes would be complete in August and September. Will the other 4 units even be built by October? Or will the homes bump out of the IZ program without ever having truly come available? And is less than 2 months after completion of the first two IZ homes a reasonable time period to market and sell the units before bumping their prices up to market rate?

Southern Ridge...

We were looking for 5 IZ homes when we arrived at Southern Ridge, a Gorman and Company/Wasserberg development located off Midtown Road. We easily found the sign marking the development but finding the IZ homes was not so easy. We expected to see two 3-bedroom and three 4-bedroom IZ homes. We had the addresses and lot numbers, so locating the houses should be easy, but that wasn't the case. We found the lots, but there were no IZ homes to be found.

We drove around the area to five different addresses on three different streets. We even drove up into a construction site along the way (thank goodness for 4-wheel drive) which turned out to be for a different development (we were hopeful that some construction was occurring on the homes), but all we could find were vacant lots with real estate signs stuck in each one.

Marketing on these IZ homes, affordable to those making 80% of the area median income, began in July, 2005. The units were bumped from IZ as of March 25. Nearly two months later, construction has not even begun.

Ironically, the incentive the developer required to build these homes was expedited review of the development. Expedited review for what? Obviously, the developer isn't expediting the construction of the houses.

Pine Hill Farms

These beautiful mud inspired units are provided by Holley Development and located just off of Valley View Rd. These units were marketed since October 14, 2005 and they bump out of the inclusionary zoning program in about a month on June 21, 2006.

These units are all available at 80% AMI. The 3 - three bedrooms are available at $184, 687. The 3 - four bedrooms are available at $208, 385. If you are interested in one of these beautiful homes, you better act quick as they disappear on June 21, 2006. Oh wait, how can they disappear if they don't exist?


This development contains one of our favorite pictures. It's one of the more peculiar IZ units we found.