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Transmittal - 11/29/2022ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director CITY COUNCIL TRANSMITTAL ________________________ Rachel Otto, Chief of Staff Date Received: 11-29-2022 Date Sent to Council: 11-29-2022 ______________________________________________________________________________ TO: Salt Lake City Council DATE: November 28, 2022 Dan Dugan, Chair FROM: Blake Thomas, Director, Department of Community and Neighborhoods __________________________ SUBJECT: Update on the Thriving in Place efforts to mitigate involuntary displacement. STAFF CONTACT: Blake Thomas, Director, Community and Neighborhoods, 801-718-7949, blake.thomas@slcgov.com Angela Price, Policy Director, Community and Neighborhoods, 385-315-9024, angela.price@slcgov.com Susan Lundmark, Transportation Planner, Transportation Division, 801-535-6112, susan.lundmark@slcgov.com DOCUMENT TYPE: Written briefing RECOMMENDATION: No action needed BUDGET IMPACT: None BACKGROUND/DISCUSSION: The Administration, in conjunction with Baird and Driskell, will be providing a briefing to the City Council on Thriving in Place (TIP), Salt Lake City’s Gentrification and Anti-displacement Plan. TIP has entered the final stage of developing recommendations to mitigate involuntary displacement and the Administration is seeking feedback from the City Council on the proposed policy framework. This briefing follows a series of presentations to the City Council through the lifespan of the plan’s community engagement and policy development process to ensure compliance with City Council Resolution 14 of 2020. In April, CAN presented on housing efforts generally and the Housing Loss Mitigation Ordinance specifically during two separate Council meetings. In July, the TIP project team presented to Council to offer a progress update on the findings from Phase I of th e project. In rachel otto (Nov 29, 2022 07:43 MST) ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director October, the TIP project team met with a variety of stakeholders to discuss the pro ject’s progress and solicit additional feedback. TIP will be transformative by establishing Salt Lake City’s first comprehensive anti- displacement framework. After extensive community outreach, TIP has a heavy focus on protecting tenants by providing programmatic resources including legal services, increasing affordable housing stock, and replacing the City’s Housing Loss Mitigation Ordinance. Current policies do not provide the City with an opportunity to maximize public benefit on land use decisions; TIP is proposing an incentive-based approach to upzoning, which includes the development of affordable housing units. To address intergenerational poverty, TIP proposes investment in a community ownership model and maximizing City-owned parcels through the expansion of the City’s Community Land Trust program. The policy framework is bold and recommends new programs and expansion of existing services. This will require financial investment, staffing increases, accountability, and political capital to execute what has been proposed. The policies outlined in TIP reverberate through all City departments and, as such, it has been imperative that representatives from each department have been involved in the development of the framework. There is no silver bullet to solving gentrification, displacement, social inequity, and the housing crisis, which is why the framework is a multifaceted approach. There are many areas where state preemption exists, and the framework must work within the legal parameters. This will be frustrating for residents as the biggest driver of displacement is increasing rents, and there is not a legal option for rent control. Salt Lake City is undoubtedly a leader in the state on creating a more equitable city and combating displacement; however, there is more that can be built upon to strengthen current efforts. These are complex and systemic social issues that will require collaboration, partnerships, and accountability. Housing SLC In conjunction with TIP, the Administration (through the Department of Community and Neighborhoods) is developing a new five-year housing plan to replace Growing SLC, which is set to expire at the end of this year. The new housing plan, which is being called Housing SLC, has incorporated the data and feedback gathered through the TIP process to inform further engagement efforts, policies for inclusion, and recommendations for implementation. Housing SLC and TIP have worked in tandem to develop policy recommendations to address all facets of the City’s current housing affordability crisis. It is anticipated that TIP will be included, in full, as an appendix to Housing SLC, while the policy recommendations will be specifically addressed in the body of the plan and will be included in the implementation portion of the Housing SLC. The inclusion of TIP into Housing SLC allows the recommendations and strategies in TIP to be included in the City’s General Plan, as Housing SLC will fulfill the Moderate-Income Housing portion of the General Plan requirements outlined in HB 462. Inclusion in the General Plan allows the City to allocate funding toward pursuing the strategies outlined in TIP and Housing SLC and sets a policy framework to guide all City housing efforts over the next five years. A full ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director draft of Housing SLC will be ready for public comment and Council review by the end of December 2022. OVERVIEW OF THE DRAFT ANTI-DISPLACEMENT STRATEGY The TIP team has developed a framework for Salt Lake City’s Anti-Displacement Strategy that outlines 21 proposed priority actions to help counter displacement pressures, mitigate the impacts of displacement, and build a more resilient community over time where lower income residents and tenants can stay in place and thrive. The actions are organized under six interrelated goals, with many of the actions helping to advance more than one goal as well as the strategy’s overall “guiding principles” (see below). The areas of focus have been shaped by extensive analysis of displacement data and trends as well as community input, as summarized in the Phase 1 Report and presented to City Council on July 12, 2022. The strategy is also grounded in the regulatory limits of State preemption as well as resource constraints and capacity, as expressed in the short but important list of “caveats” (also listed below). In its final form, the strategy will outline anti-displacement program priorities and budget needs, with a strong focus on near-term priorities to implement in the coming two years. Guiding Principles The TIP policy framework is guided by five principles that speak to the core values of the Anti- Displacement Strategy, all of which were informed by the project’s extensive community engagement: ●Prioritize tenant protections. Work to strengthen tenant rights and make tenant assistance a top priority, especially for those most at risk. ●Partner with the most impacted. Work with those facing high displacement risks to coordinate comprehensive action beyond housing to keep communities in place and help them thrive. ●Increase housing everywhere. Create more housing overall, and more affordable housing specifically, while minimizing displacement and countering historic patterns of segregation. ●Focus on affordability. Create and preserve diverse rental housing and ownership options for lower and moderate-income households and families in all parts of the city, especially options that are affordable in perpetuity. ●Build an eco-system for action. Work with regional and state partners, the private and nonprofit sectors, and affected communities to coordinate action and advance shared priorities. Caveats There are some important caveats to keep in mind as we craft the action plan, including State preemption that limits what the City can do, as well as the challenge of finite resources and things beyond our control. These include: ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director ●There are no magic fixes; success will be incremental. It will require hard, ongoing work and difficult decisions. ●We will build on what we are already doing; this is a next step. Sequencing and coordination of actions will be key. ●State preemption limits the range of potential action. We will work with the State legislature to make changes where possible. ●We have finite resources and capacity, and there are many things Salt Lake City does not control. ●It’s not just what we do, but how we do it. We must work together, build trust, ensure transparency, and have honest conversations. Goals The framework defines six core goals: three goals focused on desired outcomes, and three focused on supporting actions to achieve the outcomes. Importantly, most actions support more than one goal, and many are interrelated or will need to be implemented in sequence. The six goals are: 1.PROTECT tenants from displacement, especially the most vulnerable 2.PRESERVE the affordable housing we have 3.PRODUCE more housing, especially affordable housing 4.EXPAND FUNDING for tenant support and affordable housing 5.PARTNER + COLLABORATE for maximum impact 6.ADVOCATE for tenants at the state level. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director Anti-Displacement Framework at-a-glance To help provide a high-level overview of the Anti-Displacement Strategy’s full range of proposed policies and actions, the TIP team has developed an “at-a-glance” one page summary, which has been updated iteratively over the past weeks as we hear feedback from the community and our internal and external partners. The latest version of the at-a-glance summary is attached with this memo as Appendix 1. Near-Term Action Priorities The Draft Anti-Displacement Strategy outlines 21 proposed actions. While they are all important, effective implementation of the strategy requires prioritization: we cannot do 21 actions, in full, all at once. Some of the proposed actions build on areas of work already underway, with modifications to specific aspects of the work or requiring a significant up -scaling to meet the level of need. Others represent new areas of work or investment or recommend a change in not just what the City does, but also how we do it. Eleven (11) of the proposed actions are flagged for near-term action as called out in the at-a-glance summary and shown in the table below. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director For this briefing, the Thriving in Place team is seeking Council feedback on a subset of the 11 proposed near-term priorities. In particular, staff is looking for Council feedback on the proposed set of strategies that would replace Ordinance 18.97, Mitigation of Residential Housing Loss (aka: Housing Loss Mitigation Ordinance or “HLM”). The full set of actions and complete Anti-Displacement Strategy document will be presented to the Planning Commission and Council in early 2023 along with the Housing SLC plan for full review and consideration. PROTECT TENANTS 1a Replace the Housing Loss Mitigation Ordinance 1b Create a one-stop shop tenant resource 1c Improve and expand tenant resources, access to legal services + landlord training and incentives PRESERVE + PRODUCE AFFORDABILITY 2a Factor displacement impacts in master plans, rezonings + development agreements 2d Partner with impacted communities to coordinate action and investment 3a Capture value from zoning decisions to create affordability 3d Prioritize and invest in community ownership + housing integrated with support services EXPAND FUNDING / PARTNER + COLLABORATE 4a Develop new and increased funding sources 4c Expand and invest in Community Land Trust models 5a Be bold, accountable + transparent 5c Create an SLC Anti-Displacement Coalition Deep Dive on Proposed Action 1a - Replace the Housing Loss Mitigation Ordinance Why Is a Different Approach Needed? A key catalyst for the TIP work was Council and community concern about the ineffectiveness of the City’s HLM Ordinance (18.97). On April 12, 2022, the Administration briefed the City Council on HLM and outlined the challenges with the current ordinance (Appendix 2), including the fact that the fee rarely applies and does nothing to address the loss of affordability. In addition to those outlined issues, the City Attorney’s office has communicated concerns that the existing fee structure may not hold up under scrutiny. Since the ordinance was enacte d in 1995, there have been substantive state statute changes limiting fees and inclusionary zoning. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director Additionally, there is case law that raises questions about the legality of collecting a fee for the loss of a housing unit. Community input in Phase 1 of TIP also underscored concern that new development is driving displacement, sometimes through direct demolition of existing units but often indirectly through rising land values and rents in areas undergoing redevelopment. Scale of the Problem Since January 2021, the City’s Building Services Division received 130 applications, each representing a site, to demolish a total of 297 units. However, we don’t know how many were considered affordable or if they resulted in actual loss of units (the application identifies units but does not specify affordability nor do all applications lead to actual development and/or demolition of the units). Of the 130 applications submitted, about 80% identified a single unit on the site, and only eight identified eight or more units on the site, including one with 61 units (however that project did not ultimately proceed with demolition of the units). If the full 297 units had been demolished (which we know is not the case), that would have represented only 0.4% of the city’s housing stock. While that scale of impact is relatively small, the impact on tenants living in units to be demolished is profound, and therefore providing a meaningful response to that impact is important. However, it is also important to keep in mind that rising rents are by far the largest driver of displacement in Salt Lake City, and largely due to a shortage of housing overall, and affordable housing specifically. “Fixing” the HLM ordinance will address only a small fraction of the City’s displacement challenges and does not effectively protect or create more affordable units. It is imperative that work continues to expand the city’s affordable housing supply even as we work to mitigate the loss of existing housing due to new development and address the impact on affected tenants. Proposed Response: Overview There are two main displacement concerns associated with the demolition of housing units due to redevelopment: 1. The potential loss of the unit, especially if it’s an affordable unit (whether through deed restriction or because it is an older unit and “naturally affordable” due to a below- market rent); and 2. The displacement impact on renter households that were living in demolished units. With regard to the potential loss of a unit the proposed strategy to replace the HLM ordinance would: ● Document existing units and their affordability on proposed redevelopment sites; and ● Offer incentives for the preservation or replacemen t of those units at similar levels of affordability. Because they cannot be required to act on these incentives under state law, the use of the incentives would be voluntary. With regard to the displacement impact on renter households due to demolition of units on redevelopment sites, the proposed strategy would: ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director ● Provide relocation assistance to affected households to help them find new housing (whether interim or longer term) to meet their needs. ● Give displaced renter households priority in returning to the site or neighborhood when new affordable housing units are available. These may be units created on-site as a result of the incentives program, or in the neighborhood, created through other means. To support these strategies, the proposed set of actions also recommends methods for improved data tracking through changes to the City’s business licensing for rental units (via the voluntary Landlord Tenant Initiative). The proposed changes to policies and practices that would replace the existing HLM ordinance are illustrated below and explained in more detail in the text that follows. Proposed Response, Part 1: Mitigating the Loss of Units There are two parts of the proposed strategy to address the potential loss of affordable housing units when a property is being redeveloped. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director ● Document the presence and affordability of housing units on proposed redevelopment sites, as well as any impacted tenants. Under current practice, the HLM ordinance and its provisions are triggered in response to a demolition permit, a conditional use for a surface parking lot, or a zoning map amendment for a residential zoning district to a zoning district that permits non-residential uses. The trigger does not address the loss of affordable housing, but rather the net loss of a unit due to one of those conditions. Under the proposed practice, the presence of housing units on a site and their affordability would need to be documented along with tenant contact information when applicable (see discussion below). Documentation of affordability could be in the form of copies of signed lease agreements for residential units on the site over the past five years, accompanied by information on the unit’s size (approximate square footage and number of bedrooms) and occupancy. If a deed restriction (affordable housing agreement) was in place on any affected unit, that information would also be required. Affordability would be determined based on the deed restriction or on recent rent levels in relation to unit size. ● Incentivize the preservation or replacement of existing housing units at similar levels of affordability. State code section 10-9a-535 states that a municipality may only require the development of a certain number of moderate-income housing units as a condition of approval of a land use application if there are incentives offered or if a voluntary agreement between the two parties is in place. It is this preemption that makes it challenging to enforce the existing HLM ordinance even if changes to the existing triggers and fee calculations are made. The City can only require the preservation or replacement of an existing housing unit, including the payment of a fee to mitigate the loss of such a unit, through an incentive-based approach or if a voluntary agreement is enacted. For redevelopment proposals consistent with the established zoning and underlying master plan, the developer could proceed with demolition and redevelopment without any mitigation requirements even if residential units are being lost. However, the City could offer an incentive in the form of increased development intensity in return for mitigat ing the loss of the affected units. Incentives would be defined through a code change that would define community benefits when an applicant is proposing a modification to an adopted plan. For developers opting into the incentive, the resultant development agreement would define the agreed-upon form of unit mitigation: preservation, replacement (on- or off-site), or fee payment (set at a level commensurate with the cost of replacing the unit on-site). For redevelopment proposals seeking to demolish an affordable unit and requesting an increase in intensity or change of use beyond what is allowed under existing zoning and the underlying master plan, the City can request a housing loss mitigation plan that addresses how the unit will be preserved or replaced. The proposed framework would give an applicant the option to preserve or replace the affordable unit by: o Maintaining existing units at affordable rents; ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director o Building new affordable units on the site; or o Paying into a housing fund to create new affordable units elsewhere (linked to a requirement that the funds be used by the City or its partners to support housing affordability within an established period of time). Details regarding the levels of incentive offered and parameters for how the mitigation requirements would be agreed to, documented, and enforced will need to be developed. Proposed Response, Part 2: Assisting Displaced Tenants The second part of the proposed strategy is focused on helping the tenants who are impacted by the demolition of affordable housing units due to property redevelopment. It consists of two key components: ● Document the presence of impacted tenants on proposed redevelopment sites and provide relocation assistance to those living in affordable units lost due to property redevelopment. While the incidence of direct displacement of tenants due to property redevelopment is small, the impact on those tenants can be significant. While rental assistance programs are in place and proposed to be expanded as part of the TIP strategy (actions 1c and 4a), current policies and programs to provide relocation assistance are limited to redevelopment projects that involve federal funding or in situations where tenants are displaced due to a building closure enacted by the City (SLC Code Section 18.99). The draft proposal for supporting tenants displaced by redevelopment includes: ● Identifying impacted tenants as part of the demolition permitting process and/or development entitlement process. This will require collecting tenant information as well as notification of tenants by the City and/or its community partners. Proactive tenant outreach and education should also be prioritized in areas facing redevelopment pressure, recognizing that in many situations tenants might be displaced prior to a demolition application or entitlement process. ● Revising Code Section 18.99.040 - Tenant Relocation Fee to include tenants displaced due to redevelopment/demolition of private development as well as City-led housing closures, update the fee, and link to potential incentives-based developer contribution. In cases where no incentive-based fee payment is made, the assistance would need to be provided from City funds. Based on activity of the past two years, and assuming assistance of approximately $4,000 per qualifying household, the potential budget impact is likely in the range of $150,000 to $250,000 per year. A funding source will need to be identified, which could be partially offset by voluntary developer contributions in response to opt-in incentives; and ● Providing relocation assistance, as well as ongoing rental assistance, when needed, working with and through designated partners. ● Provide the opportunity to return to the site or neighborhood when new affordable housing units become available. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director When new affordable housing units are created, they are made available to income-qualified households to provide secure, long-term affordable housing that can help them remain in the neighborhood. Under Fair Housing Laws, these units must be made available without discrimination. Salt Lake City has a strong commitment to ensuring compliance with Fair Housing Laws in the city. To help ensure that new affordable units help mitigate displacement impacts on existing residents, many cities have adopted “community preference policies” that provide priority for income-qualified households that have been displaced from a property or neighborhood due to redevelopment, rising rents, or other factors. These policies do not restrict new affordable units to only these households; rather, they give first priority (through a preference point system) to displaced households. Another aspect of the proposed approach for replacing the HLM ordinance with something more effective is to adopt a Community Preference Policy in Salt Lake City. The details of recommendations for best ways to frame the local policy, put it into practice, and manage it over time will be included in the final report. Related Efforts to Support Action 1a The proposed Anti-Displacement Strategy includes other actions which will help reinforce the changes to policy and practice outlined above that would replace the existing HLM ordinance. These are listed below and described in more detail in the subsequent section of this memo: ● Action 1c: Improve and Expand Tenant Resources, Access to Legal Services, and Landlord Training and Incentives. Part of this effort would improve data tracking by collecting rent data as part of the rental business license application and equip landlords through the Landlord Tenant Initiative to be partners in mitigating displacement. This will require additional staffing in the Business License Division to enact the tenant portion of the Landlord Tenant Initiative and to increase the scope of the division’s work. ● Action 2a: Factor Displacement Impacts in Master Plans, Rezonings, and Development Agreements. This action works to implement mitigation of units lost through redevelopment, as described above, but applies more broadly to proactively consider displacement impacts during master planning processes and establish displacement factors for consideration in evaluating zoning amendments. This effort would include defining mitigation and anti- displacement measures that can be incorporated in master plans, zoning amendments, and development agreements to address both the direct and indirect displacement of residents through redevelopment. ● Action 3a: Incentivize Creation and Preservation of Affordable Housing. This action is currently being developed by the City through the Affordable Housing Incentives program. While different from the specific application of incentives to mitigate units lost due to property redevelopment (action 1a), its mechanisms are similar, and consideration will need to be given to how the two policies work in relation to each other. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director ● Action 3d: Prioritize and Invest in Community Ownership and Housing Integrated with Support Services. Like Action 2b, this expands upon an existing area of action by the City and its partners and provides a highly suitable near-term opportunity for applying affordable housing funds collected as the result of mitigation plans and related fee payments. ● Action 4a: Develop New and Increased Funding Sources. This action calls for an increase in funding for both development of new affordable housing and expansion of tenant support, including expanded rental assistance, to help alleviate near-term displacement pressures and the provision of relocation assistance under Action 1a. These policy and programmatic recommendations will require funding resources , code amendments and prioritization of said amendments, staffing increases in Business Licensing and other departments, collaboration across City departments, political capital at the legislature to remove state preemption, and partnerships with the development community and residents. The policy changes will need to be phased and layered upon one another to be impactful for the residents who are being involuntarily displaced. Overview of Other Near-term Priority Actions While the focus of this briefing is on outlining the proposed strategies to replace the HLM ordinance, there are also ten other near-term priority actions included in the Draft Anti- Displacement Strategy that staff would like to highlight. They are briefly described below. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director PROTECT TENANTS 1b Create a one-stop shop resource to help prevent evictions and provide easy access to services. This action will be led by the Housing Stability team, requiring additional staffing resources, to: ● Create a single web portal and hotline where tenants can access all services to help them respond to potential eviction (legal services, rental assistance, etc.). ● Incorporate easy access to other tenant resources that can help people live more affordably (reduced transit fares, utility bill assistance, etc.). ● Partner with community organizations and others to improve awareness of and access to resources and services. This action is focused on how tenant-focused resources and services are accessed, responding to community feedback that sometimes those most in need are unaware of resources that are available, and that it can be time-consuming and frustrating to navigate the array of resource providers and service agencies. While this action does not in itself expand the pool of resources available (that is covered in Action 1c), it helps to leverage all of the resources available (not just from the City, but from partners, too) to ens ure maximum benefit for those most in need, especially low-income tenants who are at-risk of eviction and displacement. 1c Improve and expand tenant resources, access to legal services, and landlord training and incentives to help keep tenants in their housing when faced with rising rents and other financial hardships that can lead to displacement. ● Increase funding for tenant services (see 4a). Work to head-off the impact of losing $2 million/month in current rental funding support from ARPA. ● Work with partners to innovate on how legal services are delivered , so that services can be provided in a more timely and lower-cost manner. ● Provide tenants with support for lease application fees, by providing funds to cover the fees and/or by establishing a master lease application that can be used as a standard for multiple applications. ● Improve the Good Landlord program so that managers know about available tenant resources/services and best practices. ● Incentivize landlords to minimize rent increases through the Landlord Tenant Initiative (Good Landlord Program) or other means. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director This action will also be led by the Housing Stability and Business License teams in close coordination with partners and will require an expansion in funding. The level of proposed budget increase is being developed for consideration with adoption of the stra tegy in 2023 and the upcoming budget process. See also action 4a. PRESERVE + PRODUCE AFFORDABILITY 2a Factor displacement impacts in master plans, rezonings, and development agreements to help ensure that development-related decisions are considering and responding to potential displacement impacts and putting in place appropriate mitigation measur es. This action will be led by the Planning team. Context ● Master plans establish long-term vision and framework for site-specific decision making. They should prioritize affordable housing development and preservation, as well as retention of existing communities even as planning for growth and change. While many master plans were developed years ago, before displacement was an issue, an approach is needed to en able the application of mitigation strategies in development decision making without having to wait for master plan updates . As identified in the displacement analysis, areas of particular concern include most of the Westside, as well as Ballpark, Central City, and the Liberty Wells area. ● Voluntary development agreements create opportunities to preserve and create affordable housing and/or take other anti- displacement actions (such as preserving or creating affordable commercial space or needed community service facilities like daycare or health clinics). Due to state preemption, the City cannot require affordable housing contributions. This limitation shapes the proposed approach to replacing the HLM Ordinance (outlined previously in this memo). In short, developers must opt- in to an incentives-based program that provides additional development capacity (or in some cases, potentially, a financial contribution or other form of incentive from the city) in return for preserving or creating affordable housing or committing to other displacement mitigation actions. See also the discussion under 3a. Mechanisms ● Integrate displacement factors and mitigation measures as a formal part of master plans, master plan and zoning amendments, and, when possible, development review (through use of incentives). ● Define and monitor displacement indicators (see action 5a) and adjust land use plans and policies when possible (especially in high-risk areas) to help counter displacement pressures. Action Steps ● Formalize displacement analysis and mitigation in master plan processes. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director ● Add language to “purpose and intent” section of code for zoning amendments (21A.02.030). ● Add list of displacement factors and potential mitigation measures to be considered in zoning amendments and development agreements (TBD as part of Housing SLC plan). Example Displacement Factors ● Population/Household Vulnerability as measured by proportion of renter households, cost-burdened households, people of color, low-income households, etc. ● Affordable Housing Vulnerability as measured by expiring deed restrictions, pre-WWII housing, rent rates below city average, etc. ● Demand Drivers: new/planned transit or parks, increased private investment, desirable schools, etc. Example Mitigation Measures ● Create or preserve deed-restricted affordable housing in return for increased development capacity, City/partner investment, or other incentives. ● Provide relocation assistance and rental assistance or other tenant-focused services (e.g., mediation/legal services). ● Invest in job training programs, cultural institutions, affordable commercial space, etc. Considerations / Challenges ● Allocating the necessary resources to develop workable strategies, update plans/policies and oversee implementation. ● Establishing clear and objective evaluation criteria (factors), achievable mitigation measures, and clear processes that lead to outcomes that counter displacement impacts. ● Ensuring consistency in how evaluation criteria are interpreted and applied by staff, developers, and decision-makers. ● Enforcing implementation of policies and agreements in both the near- and long-term. 2d Partner with impacted communities to coordinate action and investment, creating a cross-departmental team to coordinate investments and work in partnership with community organizations and representatives to counter displacement, focusing on Westside communities and in the Ballpark, Central City, and Liberty Wells areas. This action will be led by Community and Neighborhoods in partnership with the Mayor’s Office and partner departments. ● Recognize that displacement impacts are particularly hard felt in lower income areas and focus attention and resources in those areas. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director ● Define area-specific anti-displacement priorities in partnership with the community and in neighborhoods experiencing high displacement risk. ● Form a City team to coordinate investment (housing, transit, parks, services, food access, etc.) in these areas and identify funding priorities. ● Meet regularly with community organizations and representatives to communicate priority actions, identify emerging needs, define opportunities for collaboration, monitor progress, and build trust over time. ● Invest in community-defined priorities that may fall outside of traditional funding streams and/or require a shift from systems- defined priorities, including non-housing priorities to help support the goal of keeping communities in place and helping them thrive. 3a Incentivize the creation and preservation of affordable housing in areas throughout the city. CAN is the lead for this action. ● Allow developers to opt-in for increases in development capacity and in return commit to creating affordable housing units. ● The City is working on an Affordable Housing Incentives policy that is based on this concept. Specifics of how the policy will be structured and implemented are currently being developed. This will offer capacity increases on qualifying residential properties in return for creating affordable units. ● Create flexibility whenever possible to maximize community benefit: on-site units, off-site units, land donation, and/or in-lieu fees (set at a level commensurate with the cost of creating a new unit and linked to an implementation strategy and schedule). ● Distribute new affordable housing throughout the city to avoid an over-concentration in any single area. ● Long-term: Establish linkage fees to ensure contributions toward affordable housing from all new development, creating options for non-residential development (commercial, institutional, etc.) to contribute toward affordable housing, recognizing that many types of development create more affordable housing needs. This will require changes to state law. 3d Prioritize and invest in community ownership and housing integrated with support services, utilizing publicly owned land and partnering with nonprofits and mission-driven developers to build long-term social equity. Community and Neighborhoods is the lead for this action in partnership with the RDA. ● Focus on creating housing that will be affordable in perpetuity and managed as a long-term community asset. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director ● Partner with mission-driven nonprofits, faith-based groups, and others to create high quality housing in multiple forms, including developments that create ownership and other wealth -building opportunities for lower income residents. ● Create affordable housing with integrated support services, including childcare, health services, counseling, etc. ● Grow the Community Land Trust model (see 4c). ● Contribute public lands to achieve community goals (affordable housing and other desired amenities) (see 2d, 3c and 4c). EXPAND FUNDING / PARTNER + COLLABORATE 4a Develop new and increased funding sources to better meet the level of need related to both tenant support and affordable housing development and preservation. Community and Neighborhoods is the lead for this action in collaboration with Finance and the Mayor’s Office. ● Identify and evaluate options and potential revenue generation. This may include reallocation of existing funds to support higher priority anti-displacement investments as well as new revenue generation. ● Ensure funding from multiple sources that can position the City to advance affordable housing, even during economic downturns. ● Continue to compete for state and federal funding and look for opportunities to advance multiple community priorities simultaneously (e.g., seeking energy efficiency funds for affordable housing, thereby helping to provide healthier, more comfortable, and lower cost living for affordable housing residents). ● Partner with community organizations to leverage different funding sources, including philanthropic and private sources. Also partner with them to distribute resources and services to those in need to help overcome trust issues and combine resources for greatest impact. 4c Expand and invest in Community Land Trust models to support long-term affordable housing, community ownership, and social equity goals. Community and Neighborhoods is the lead for this action in collaboration with the RDA. ● Grow the portfolio of CLT properties and expand investment in land that can help achieve affordable housing goals and shared equity housing. ● Partner with community organizations to define priority uses for CLT assets and manage them over time. ● Provide support for cultural institutions and affordable commercial space in mixed-use buildings. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director 5a Be bold, accountable, and transparent in establishing goals and monitoring impact, while remaining nimble in response to changing conditions and new challenges. Community and Neighborhoods will be the lead for this action. ● Establish goals by housing type, income, and area, coordinating between Housing SLC and Thriving in Place. ● Align goals and priorities with partners to achieve goals and leverage resources. ● Establish easy-to-implement data collection systems on key metrics to better know what is happening in as real-time as possible and help quantify the impact of anti-displacement strategies and investments. ● Measure progress over time and provide regular reports to the community and City Council. 5c Create an SLC Anti-Displacement Coalition to bring together key partners from across agencies and sectors for regular meetings to align on priorities, coordinate action, and monitor implementation of the Anti-Displacement Strategy (this is the group that will “own” the strategy). Community and Neighborhoods will be the lead for this action in partnership with the Mayor’s Office. Def ine the group’s membership and formally convene it by invitation of the Mayor in partnership with the City Council. ● Clarify the Coalition’s authority and ability to follow through on actions (give it teeth). ● Define shared priorities for near-term action and clarify roles and responsibilities as well as implementation timelines and clear objectives for measuring outcomes. ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director Next Steps and Timeline December City Council TIP briefing on 12/13/22. January A draft of Housing SLC, including the TIP policy recommendations, ready for public comment in early January 2023. This will commence the 45-day public comment period. Housing SLC and TIP will be presented to the Planning Commission for a briefing on January 25. February Housing SLC and TIP will be presented at a Planning Commission meeting for public hearing on February 22. March Once a recommendation is received from the Planning Commission, Housing SLC and TIP will be presented again to the Council and Council will set a date for a public hearing. Attachments Appendix 1 - Draft Anti-Displacement Framework Appendix 2 - Transmittal to City Council on “Update on the Status of the Thriving in Place plan and the Housing Loss Mitigation (18.97) ordinance”, April 12, 2022 ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director Appendix 1 Draft Anti-Displacement Framework THRIVING IN PLACE / SALT LAKE CITY’S ANTI-DISPLACEMENT STRATEGY REVISED DRAFT / NOV 25, 2022 DRAFT Anti-Displacement Framework at-a-glance From the Phase 1 Report: Displacement in Salt Lake City is significant and getting worse. There are no “more affordable” neighborhoods in Salt Lake City where families can move once displaced. Salt Lake City is growing and there aren’t enough affordable units for low-income families. Plus a shortage of units overall is creating more competition for lower cost units Almost half of Salt Lake City households are rent burdened. More than half of all families with children live in displacement risk neighborhoods. Latinx and Black households have median incomes that are lower than what is required to afford rent in the city. Displacement affects more than half of White households in Salt Lake City and disproportionately affects households of color. Many areas experiencing high displacement risk were redlined in the past and are still highly segregated today. Community members are very concerned about displacement and its impacts. They want more affordable housing and support for those being impacted. GUIDING PRINCIPLES: prioritize tenant protections / partner with those most impacted / increase housing everywhere / focus on affordability / build an eco-system for action 1 PROTECT tenants from displacement, especially the most vulnerable 1a Replace the Housing Loss Mitigation Ordinance 1b Create a one-stop shop resource to help prevent evictions and provide easy access to services 1c Improve and expand tenant resources, access to legal services, + landlord training and incentives 1d Help tenants become owners 1e Promote more affordable living, better jobs, and fair wages Caveats: there are no magic fixes (it will be hard work) / we will build on what we are already doing / state pre-emption creates limits on what we can do / we have finite resources + things we don’t control / we must work together 2 PRESERVE the affordable housing we have 2a Factor displacement impacts in master plans, rezonings + development agreements 2b Expand investment in acquisition + rehabilitation of existing affordable housing 2c Address short-term rental impacts on rental housing 2d Partner with impacted communities to coordinate action + investment to preserve affordability and counter displacement 3 PRODUCE more housing, especially affordable housing 3a Incentivize creation and preservation of affordable housing 3b Make affordable housing easier and less expensive through streamlined review 3c Create more housing choices 3d Prioritize and invest in community ownership + housing integrated with support services 4 EXPAND FUNDING for tenant support + affordable housing 4a Develop new and increased funding sources to better meet the level of need 4b Coordinate + leverage affordable housing investments 4c Expand and invest in Community Land Trust models 5 PARTNER + COLLABORATE 5a Be bold, accountable + transparent – set aspirational goals + metrics; report on progress 5b Continue community leadership , partnership + engagement 5c Create an SLC Anti-Displacement Coalition 5d Strengthen regional coordination 6 ADVOCATE for tenants at the state level 6a Work to strengthen tenant rights and resources at the state level Near-Term Action Priorities Protect Tenants 1a Replace the Housing Loss Mitigation Ordinance Focus on affordable housing; incentivize unit preservation or replacement; provide relocation assistance; support tenant return; improve rent data tracking 1b Create a one-stop shop resource Partner to create a web portal and hotline for tenants to access anti- displacement and “affordable living” resources 1c Improve and expand tenant resources, access to legal services + landlord training and incentives Strengthen and increase rental assistance + other resources; improve access to legal services; provide lease application support; improve the Good Landlord program to include tenant supports Preserve + Produce Affordability 2a Factor displacement impacts in master plans, rezonings + development agreements Establish code criteria for assessing displacement impacts and mitigation measures and when/how they apply 2d Partner with impacted communities to coordinate action and investment Create cross-dept. team to coordinate investments and work in partnership with community, focusing on Westside communities and in the Ballpark / Central City / Liberty Wells area 3a Incentivize creation and preservation of affordable housing Capture value from increases to development capacity to create/ preserve affordable housing; provide flexibility for max benefit; work toward enabling linkage fees 3d Prioritize and invest in community ownership + housing integrated with support services Focus on long-term affordability and social equity Expand Funding + Partner 4a Develop new and increased funding sources Identify and establish multiple funding mechanisms to expand resources for affordable housing and tenant assistance 4c Expand and invest in Community Land Trust models Identify public lands for affordable housing; partner/invest to create long- term community-owned affordable housing 5a Be bold, accountable + transparent Establish clear, quantified goals; ensure alignment with partners; define, track and report on key metrics 5c Create an SLC Anti-Displacement Coalition Convene regularly with key partners, including reps from impacted communities, to agree on / coordinate action and monitor progress SIX INTERRELATED GOALS 3 OUTCOME GOALS: Protect – Preserve – Produce 3 SUPPORTING GOALS: Expand Funding – Partner + Collaborate – Advocate ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director Appendix 2 Transmittal to City Council on “Update on the Status of the Thriving in Place plan and the Housing Loss Mitigation (18.97) ordinance”, April 12, 2022 ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director SALT LAKE CITY CORPORATION 451 SOUTH STATE STREET, ROOM 404 WWW.SLC.GOV P.O. BOX 145486, SALT LAKE CITY, UTAH 84114-5486 TEL 801.535.6230 FAX 801.535.6005 CITY COUNCIL TRANSMITTAL ________________________ Date Received: _________________ Lisa Shaffer, Chief Administrative Officer Date sent to Council: _________________ ______________________________________________________________________________ TO: Salt Lake City Council DATE: March 28, 2022 Dan Dugan, Chair FROM: Blake Thomas, Director, Department of Community & Neighborhoods __________________________ SUBJECT: Update on the status of the Thriving in Place plan and the Housing Loss Mitigation (18.97) ordinance. STAFF CONTACT: Blake Thomas, Director, Community and Neighborhoods, 385-270 -4638 , blake.thomas@slcgov.com Angela Price, Policy Director, Community and Neighborhoods, 385-315 -9024 , angela.price@slcgov.com Susan Lundmark, Project Manager, Transportation Division, 801-535 -6112, susan.lundmark@slcgov.com DOCUMENT TYPE: Information item RECOMMENDATION: No action needed BUDGET IMPACT: None BACKGROUND/DISCUSSION: In December 2020, the Department of Community and Neighborhoods (CAN) presented The Future of Housing: A Collective Vision for an Equitable Salt Lake City to the City Council. The intent of that presentation was to discuss various housing policy topics identified as goals in Growing SLC: A Five Year Housing Plan. These included the vision for an equitable and holistic city, data analysis, a summary of comprehensive solutions and policies including the Gentrification Mitigation Plan and the Housing Loss Mitigation (HLM) ordinance, among other equitable housing concepts, and identification of next steps for moving forward various housing policies. Since the policy briefing in 2020, the Administration has selected Baird and Driskell to oversee the Gentrification Assessment and Displacement Mitigation Plan or Thriving in Place (TIP). In addition to a robust, community-driven planning process, data analysis and mapping, and policy recommendations to mitigate displacement, the Baird Team will also guide policy changes to the City’s Mitigation of Residential Housing Loss ordinance (18.97). This summary will provide the City Council with an update on: • An overview of Thriving in Place including information on the engagement activities that are currently underway and next steps; • 2022 legislative requirements that are applicable to housing loss mitigation; and • A detailed analysis of the Mitigation of Residential Housing Loss ordinance (18.97), including the history of the ordinance, a summary of the current ordinance, adopted ordinance constraints, technical discrepancies, policy considerations, next steps, a legal analysis of common questions, and an HLM project summary. The TIP Plan and HLM ordinance both address the goal of “increasing housing opportunities for cost burdened households” in Growing SLC: A Five Year Housing Plan and meet several objectives outlined in the plan. The Administration welcomes the opportunity to work with the City Council to present the data and engagement efforts that are happening in the TIP Plan and seek guidance on policy directives to mitigate involuntary displacement and create a more equitable Salt Lake City. The TIP Plan will inform the update to Growing SLC, which will be underway shortly. Both plans will be brought before the City Council throughout the process and will be presented for adoption when completed. Thriving In Place In June 2020, the City Council allocated FY21 funding for a Gentrification Assessment and Displacement Mitigation Plan to understand the breadth and depth of involuntary displacement and formulate policies and programs to mitigate any such displacement that might occur. After a Request for Proposals (RFP) process was initiated and completed, a consultant team was retained in September 2021, which consists of the following researchers and thought leaders in the fields of gentrification and displacement: • Baird & Driskell Community Planning (led by David Driskell); • Urban Displacement Project, University of California Berkeley (UDP; led by Dr. Tim Thomas); and • University of Utah Department of City and Metropolitan Planning (CMP; led by Dr. Ivis Garcia and Dr. Alessandro Rigolon). Together with the consultant team, City staff (together, the Team) are guiding the Plan, now called Thriving in Place, using the following overarching actions: • To understand gentrification pressures in Salt Lake City; • To document patterns of involuntary displacement, including those related to housing costs, eviction, and demolition; and • To find policy solutions to help people choose to stay, live, and thrive in Salt Lake City even as the city grows and changes. This briefing will provide an overview of TIP and what the Team has learned from early community engagement. It is the intent of the Administration and the Consultant team to come back to the City Council in a future meeting with an in-depth analysis of the Listening and Learning phase and to seek guidance before the Crafting Collaborative Solutions phase. • Phase 1: Listening and Learning – Focuses on defining and understanding the problem and includes extensive community engagement and data collection. o Quantitative data collection and analysis is led by UDP. o Qualitative data collection through numerous community engagement activities. o Information gathered in this phase provides context on experiences of displacement, community asset mapping, and neighborhood challenges to ensure policies are aligned to mitigate displacement pressures specific to Salt Lake City neighborhood needs. • Phase 2: Crafting Collaborative Solutions – Develops a Displacement Mitigation Plan that includes actionable policy recommendations. o Recommendations will include a shared framework that can guide action across sectors, including the City, other governmental agencies, and community-based organizations and partners. o Recommendations will be informed by Phase 1 engagement and a review of existing policies, programs, and practices. A second round of input from community and stakeholders will inform priorities for action and recommendations for policy changes. Phase One - Community Engagement From the outset, there has been an effort to have a community-led process that includes extensive and equitable community engagement. The Team is listening to residents and partners through a variety of engagement methods, including online and in-person. The Team reviews engagement efforts and statistics weekly to ensure equitable representation and recalibrates outreach tactics if needed. TIP is currently in the Listening and Learning phase. Details of engagement efforts are outlined below: • City Steering Committee – This committee consists of City staff and includes representatives f rom various departments to ensure collaboration and impactful policy development. • Community Working Group – This 22 -member advisory group was formed to guide the community engagement process and ensure inclusion, provide input and feedback on the process design, outreach materials, and draft strategies as they emerge, and serve as liaisons to groups and organizations in which they are involved. The group has met twice so far, with notes from the meetings posted here. • Project Launch Interviews – These confidential one-on-one interviews with 15 key community representatives helped shape the Team’s engagement strategy and refinement of the Plan’s goals. Interviews were completed in late Fall 2021 and are summarized here . • Public Website and Online Survey – The Thriving in Place website, available in English and Spanish, was launched in February 2022 to provide educational information for residents and to serve as an online engagement tool. To date , the website has seen 3,100 visits from 2,600 unique visitors, 46% of which have been via mobile device. An online survey (English and Spanish) was launched in conjunction with the project website and to-date has been completed by over 1,000 individuals. • Intercept (in-person) Surveys – Two CMP classes are conducting in-person “intercept” surveys at various locations throughout the city , with an emphasis on Westside neighborhoods. The demographics of these survey respondents tend to be younger, more diverse, and more likely to be renters than the population that has responded to the online survey. To date, over 300 interview surveys have been completed. We anticipate over 700 in-person intercept surveys will be conducted. • Community Liaisons – The project team has hired six community liaisons with experience and connections in communities of color, non-English speakers, and lower income neighborhoods to help ensure equitable engagement and input. The liaisons are conducting in -person engagement with small groups in culturally appropriate formats, touching on the same themes and questions as the survey but in a more formal way. While the methodology will not engage as many residents, the value of the input will be significant. • Youth Workshops – The CMP classes have hosted numerous engagement activities for youth to discuss change in their neighborhoods and their perspectives and ideas related to gentrification and displacement. • Community Events - The project team has been participating in a variety of community events (e.g., Neighborhood House Family Fun, tabling with Ventanilla de Salud, and Sunday Mass at Our Lady of Guadalupe Church, among others). They will also be hosting a mural-painting event at Three Creeks Confluence Park on April 16th. • Other engagement efforts by the Team to help ensure people are aware of the project and opportunities for engagement include: o CMP students discussing TIP at Westside Community Council meetings in February and March 2022; o Introducing and discussing TIP at board meeting for University Neighborhood Partners in March 2022; o Presenting at Salt Lake City Human Rights Commission (HRC) and Salt Lake Community Network (SLCN) meetings; o CMP students distributing hundreds of flyers, door hangers, and sidewalk stencils; and o Sending out City Council citywide mailer for housing related efforts to all residential addresses in Salt Lake City during the first week of April 2022. Phase Two - Mapping and Data Analysis Data gathered from the project’s community engagement efforts will be complemented with in- depth analysis of the city’s neighborhoods through a mapping and analysis led by UDP. UDP is developing a map using advanced statistical analysis to identify where the highest rates and risk of displacement are currently occurring in Salt Lake City by analyzing hundreds of variables. These variables include housing markets, property types, population demographics, changes over time, administrative data, and many other variables (see UDP’s Housing Precarity Risk Model as an example of this type of modeling). UDP then maps the model’s output values to identify areas that need the most support and protection. The final map will show four distinct characteristics: areas with low displacement risk, elevated risk, high risk, and extreme risk. Timeline and Next Steps The project is in the final stages of Phase One, Listening and Learning. In May 2022, the Team will summarize the community input received and connect it with the results of UDP’s mapping and data analysis. Phase Two , Crafting Collaborative Solutions, includes the Team working with the Community Working Group and members of the City Steering Committee to share results and identify key take-aways, as well as identify areas for policy recommendations. Phase Two , Craftin g Collaborative Solutions, will run from May through August 2022. A few key dates are outlined below: • April 16 - Mural painting at Three Creeks Confluence Park. • April 18 - Conclusion of Phase One engagement activities. • April 26 - Student presentations (from the two CMP classes) on outreach efforts at Glendale Community Learning Center. • May - Summary of Phase One findings and UDP’s displacement analysis presented to the Team. • May/June - Presentation to Planning Commission on TIP. • May/June - Small group work sessions to distill Phase One findings and agree on direction for Phase Two (we expect to return to City Council in mid to late June to share results). • June/July - Phase Two begins with preliminary policy options and near-term recommendations. • July/August - Evaluation of policy options and refinement of recommendations. • July/August - Presentation to Planning Commission on TIP. • August/September - Planning Commission and City Council process for TIP. Housing Loss Mitigation History In 1994, the City Council commissioned an independent economic evaluation to analyze the impact and loss of affordable housing and potential mitigation measures. The impetus of the study was a substantial shortage of affordable housing in the Central City, University, and Capitol Hill neighborhoods. The driving forces behind the shortage were the demolition of housing stock for commercial and institutional purposes or assemblage of land by speculators. Since inception, the policy has been centered around a land-use transition from residential to commercial or a petition to expand parking. A Housing Mitigation Plan and Statement is required before final approval of a parking conditional-use is granted or a zoning change is approved that would allow commercial use on properties that currently have residential dwelling units (1995 ordinance does not contemplate land use changes but rather demolition of units). The initial plan required an analysis of adverse impacts, dwelling units that will be demolished, fair market value for demolished units, square feet of land to be rezoned, and a mitigation plan that addresses the loss of residential zoned land, residential units, or residential character. To mitigate the identified loss, developers can replace the housing within two years of the entitlement application approval, pay a fee that is the difference between the fair market value and the replacement cost, or pay a flat fee of $3,000 per dwelling unit to be demolished. Adopted Ordinance The c urrent ordinance, Chapter 18.97 Mitigation of Residential Housing Loss, was adopted in 2012, and states: “The purpose of the chapter is to mitigate the loss of affordable housing stock due to new development with due consideration for vested or protected property rights.” The ordinance requires a Housing Mitigation Plan for: • Any application for a demolition permit that will result in a loss of one or more residential units in a residential zone; • A request for a conditional use permit to expand parking in a residential or mixed -use zone; and • Any petition for a zoning change that would permit a non-residential use of land that includes residential dwelling units within its boundaries. A Housing Mitigation Plan and Housing Impact Statement shall be submitted unless the applicant meets certain provisions such as a non-conforming use, a master plan calling for non- residential use, or proposed demolition because of health and safety issues. The Housing Impact Statement must identify adverse impacts on the residential character of the neighborhood, the address of units targeted for demolition, fair market value and state of repair of units targeted for demolition, square footage of land that will be impacted, and a mitigation plan to address the loss of residential zoned land, units, or residential character. Permitted mitigation measures include replacing the lost housing units or paying a fee to the Housing Trust Fund that equals the difference between the fair market value of the housing units to be eliminated or demolished and the replacement cost of building new units of similar square footage. Adopted Ordinance Constraints • Affordability - The adopted ordinance does not include an assessment of the loss of affordable housing in the Housing Impact Statement nor does it require replacement of affordable units. • Purpose - The purpose statement of the Chapter is to mitigate the loss of affordable housing, but the policy does not analyze or mitigate demolition of affordable units. • Trigger - The ordinance is triggered by a demolition permit, a parking conditional use permit, or a zoning amendment from residential to commercial. The trigger does not address the loss of affordable housing. The Housing Impact Statement is required during the e ntitlement process which is challenging because a parcel may be rezoned and not see development or the fee for many years. • Formula - The formula takes the current fair market value of the building (excluding land value) from the Salt Lake County Assessor and subtracts the International Code Council (ICC) square foot replacement costs of the building. The structure of this formula typically yields a negative number and, therefore, the City is not receiving funding to mitigate the loss of residential units. • Process – Currently, an application is submitted to Building Services, then passed to the Planning Division, which creates the report, and is then reviewed and approved by the Director of Community and Neighborhoods. There is no clear ownership over the process as it touches multiple divisions at different stages in the project timeline. 2022 Legislative Requirements There are two new statutory requirements that are applicable to the establishment of a Housing Loss Mitigation f und and the City’s ability to require moderate-income housing units in a land use decision. Those bills are: • HB 462 Utah Housing Affordability Amendments - authorizes the City to establish a Housing Loss Mitigation fund to preserve existing, subsidized, and new moderate-income housing (lines 708-710). • HB 303 Local Land Use Amendments - states that a city may only require moderate income housing units as a condition of approval of a land use application if: o The developer and the city enter into a written agreement (does not specify development agreement); or o The city provides incentives that are agreed to by the developer (lines 828-838). Additionally, HB 303 prohibits a city from approving or denying a land use application based on a developer’s decision to incorporate moderate-income housing units in their development. HB 462 and HB 303 define moderate income housing as 80% AMI or below. These two policies are compatible with the adopted Housing Loss Mitigation ordinance as well as the proposed Affordable Housing Zoning Incentives, RMF-30, Shared Housing, Parking Reduction, and Accessory Dwelling Unit ordinances. Technical Discrepancies • Section 18.64.050 Residential Demolition Provisions does not align with 18.97 Mitigation of Residential Housing Loss. The City Attorney’s Office has done a legal analysis and drafted amendments to clean up technical discrepancies between 18.64.050 and 18.97. • The purpose statement to mitigate the loss of affordable housing in 18.97 does not align with the policy or the mitigation plan as there is no data collected on affordability of units nor is there a requirement to replace the demolished housing with affordable units. • Housing Loss Mitigation touches multiple chapters in the code rather than being contained within a demolition or development section. HLM could be contained within a development code, but this would require substantial amendments to various chapters within the Municipal Code. • If a payment is collected, ordinance 18.97 directs that payment to the Housing Trust Fund. The Housing Trust Fund is being moved from Community and Neighborhoods to the Redevelopment Agency (RDA) and is being changed to the Housing Development Loan Program. • 18.97.040 requires a report to the Housing Advisory and Appeals Board (HAAB) but does not give the HAAB authorizing power to deny the report, mitigation plan, or petition. • The current formula does not yield a positive number and needs to be amended to mitigate the loss of residential units. A fee justification study and an amendment to the consolidated fee schedule to include the HLM will be required. Policy Considerations • Is the policy objective to mitigate the loss of all housing or just affordable housing? If the objective is targeted at affordable housing, the ordinance will need to be amended so the policy is reflective of that objective. • Does the fee constitute an impact, linkage, or flat fee? A fee justification study will need to be conducted to amend the mitigation formula to yield a positive number. • When should the plan be required and the fee collected? Is it beneficial to have the plan during the entitlement process for upzoning legislative decisions? HLM is a demolition - focused ordinance, should this be the policy objective? • What are the policy objectives of the fee? Should the fee be paid to the Housing Development Loan Program, held in the RDA, or another funding source that can be used for the mitigation of displacement? • Should the amended ordinance require affordable units for an upzone? • What constitutes naturally occurring affordable housing? Currently the City does not track affordable housing units unless the units have been subsidized by city, county, state, or federal funds. Is it the intention of the City Council to start tracking affordable units through the entitlement process or business license rental application? • The current ordinance is focused on the loss of housing and does not contemplate the loss of local businesses for the development of housing. Is this a policy objective that should be considered in the amendment to the ordinance? Next Steps The Administration understands the frustration of the public to amend the Housing Loss Mitigation ordinance to preserve and develop affordable housing. The following actions are recommended: • The City Council, working in conjunction with the Administration, can assist in the development of the policy objectives of the new HLM ordinance. • The City Attorney’s Office has conducted a thorough review of the code and has drafted proposed amendments to clean up the technical issues. This does not address the policy considerations outlined above; rather, it cleans up technical inconsistencies. If preferred by the Council, the technical changes to HLM could be transmitted while the TIP study is being completed. The Administration recommends waiting to make any policy changes due to the robust engagement process happening within the TIP Plan. • The Zions Public Finance study that was conducted in Summer 2021 did not produce a specific enough outcome for the City to rely on. The Administration is going to go to bid in Spring 2022 for a consultant to conduct a fee justification study. This study will be running concurrently with TIP. • The TIP study that is currently underway is analyzing displacement metrics and will develop mitigation measures in addition to policy changes to the current HLM ordinance. These policies will need to be adopted by the City Council after they go through the engagement process. • Once the policy considerations are determined, the City Attorney’s Office will draft amendments to the relevant ordinances. Housing Loss Mitigation Legal Analysis of Common Questions • Can the City institute a rent control policy? o Utah Code Section 57-20-1 prohibits the City from enacting an ordinance or resolution that would control rents or fees on private residential property unless it has the express approval of the Legislature. Lease agreements are a contractual matter between private parties and the City does not have jurisdiction to halt an eviction. • Should the City issue a moratorium on development? o A temporary land use regulation, or “moratorium”, can be imposed by the City Council to prohibit a development activity if the Council finds a compelling, countervailing public interest to do so. This is a policy decision that the Council would have to make. However, the temporary regulation cannot exceed six months. The purpose of a temporary land use regulation is to halt (or, in some cases, allow) a development activity immediately for a temporary period while more permanent regulations are developed, presented to the public and the planning commission, and transmitted to the Council for action. Prohibiting development activity while waiting for a study to be produced could possibly be justified by the Council, but it seems unlikely that land use regulations could be ready for adoption within the six -month moratorium period, especially when the findings of the TIP study are not yet known. • Why is the City not requiring the development of affordable units in all new housing projects? o Utah Code Section 10-9a-535 as outlined in HB 303 states that a city may not require moderate income housing units in the approval of a project unless the developer agrees to the incentives. This provision does permit cities to adopt incentive-based policies for the inclusion of moderate-income housing in a new development, though this cannot be a requirement. • Does the current h ousing loss mitigation ordinance protect affordable housing? o The current housing loss mitigation ordinance (18.97.010) states that the “purpose of this chapter is to mitigate the loss of affordable housing stock due to new development with due consideration for vested or protected property rights.” The conditions upon which an applicant would need to comply with the HLM ordinance outlined in 18.97.020 and develop a mitigation plan are when a residential unit (does not state affordable unit) is demolished to expand vehicle parking in a residential zone or when a land use transitions from residential. This ordinance does not prohibit the demolition of affordable housing units but simply protects against the loss of a residential unit. Additionally, it does not prohibit a developer from increasing the number of units on a parcel, nor does it consider the affordability of the existing or new units. These are policy considerations for the amendments to the new ordinance. Housing Loss Mitigation Best Practices There are few analogous ordinances in other municipalities. Most ordinances and fees in other cities are Housing Mitigation Fees, meaning that they are applied to new developments that do not include a minimum percentage of affordable units. The most similar policy to Salt Lake City’s housing loss mitigation ordinance (18.97) is a demolition permit surcharge, which is a current pilot project in Chicago, Illinois. This surcharge, along with other fees from around the country, are outlined below. Chicago, IL Demolition Permit Surcharge • A temporary surcharge (March 29, 2021 - April 1, 2022) in a pilot area. o Applied in addition to other demolition fees, surcharges, and taxes imposed by City, State, or other political subdivisions. o Ordinance requires a written report no later than 150 days prior to expiration identifying:  The amount of revenue generated through the surcharge;  Its observed effect on development activity in the applicable pilot area; and  Any other information that the committee reviewing the surcharge’s impact may require. • A flat fee of $15,000 for the demolition of detached houses, townhouses, or two-flats. • A flat fee of $5,000 per dwelling unit for the demolition of multi-unit residential buildings. • Exemptions: o If replacement development designates 50% of units as affordable at 60% AMI or lower; or o Demolition is determined to be necessary to remedy conditions imminently dangerous to life, health, or property. • Funds from this surcharge are deposited into an Affordable Housing Opportunity Fund. Somerville, MA Project Mitigation Contribution or Linkage Fee Program for Affordable Housing • Requires that linkage fees be collected on any project that: o Requires zoning relief; and o Contains a single-use or combination of uses exceeding a square-foot threshold (30,000 sq ft) set by the Board of Alderman (City Council). • Project mitigation contributions are made to the Somerville Affordable Housing Trust Fund for the purpose of the creation of affordable rental and homeownership units. • The rate per square foot was $10.75 for FY 2021-2022. • The Project Mitigation Contribution is adjusted on March 1 of each year based on the change in the Consumer Price Index for All Urban Consumers over the previous calendar year. Berkeley, CA Affordable Housing Mitigation Fee • Similar to an inclusionary zoning policy. • The Affordable Housing Mitigation Fee per unit of market-rate rental housing is $39,746. o The fee is offset if affordable units are included in the project and is waived if at least 20% of units in a project are affordable.  50% of affordable units must be affordable at 30% AMI with the remaining affordable units affordable at 50% AMI. Avon, CO Employee Housing Mitigation Linkage Fee • The purpose is to create housing for workers generated by new development. • Applies to new multi-family residential (3+ units), commercial, accommodation units, industrial, and other non-residential development within the Town. • A formula is used to calculate the fee. The fee is based on the number of workers required per square foot of new space. Aspen, CO Affordable Housing Impact Fee • A 2012 study suggested calculating the fee for their program by taking the difference between the market price of housing and the price that is affordable to households at targeted income. Seattle, WA Affordable Housing Incentive Program (Chapter 23.58C) • Ordinance applies to development in Seattle that requests extra floor area and includes dwelling units in the following cases: o new construction; o addition to existing structure that increases number of units; o alterations within an existing structure that increases total number of units; and o change of use that increases the total number of units. • In return for extra floor area, ordinance provides a performance option (directly supplying affordable housing units as allowed by code) or a payment option. Performance option must satisfy median income requirements listed in the ordinance. • Payment option includes a fee per square foot (SF) of new construction (units). Fee amount varies by zoning code of the construction. Fee amounts are listed in tables in the ordinance and range from $5.50/SF to $20.75/SF in the downtown zones and from $7.00/SF to $32.75/SF in certain zones outside of downtown. • Payments are deposited into an account managed by the Seattle Director of Housing to support the development of affordable housing. PUBLIC PROCESS: Briefing EXHIBITS: Exhibit 1 – Zions Public Finance Study One South Main Street, 18th Floor, Salt Lake City UT 84133-1904 Telephone: 801.844.7373 Fax: 801.844.4484 23 September 2021 Angela Price Policy and Project Manager Department of Community and Neighborhoods Salt Lake City Corporation Re: Housing Loss Mitigation Analysis Zions Public Finance (ZPFI) examined a sample of 207 properties in and around Salt Lake City and compared the market value determined by the Salt Lake County Assessor to asking prices as currently listed on various real estate services. Results indicate that list prices on for-sale properties are significantly higher than assessed values on the Assessor’s tax rolls. The computed difference seems higher than most would expect. Traditionally, assessors tend to value homes at somewhere between 90 and 110 percent of market value and prefer the lower end of this range. In the graph below, that would be in the first column representing only a small percentage of homes, where the listed value is 11 percent higher than market value. However, market values overall are currently a lot higher than expected. 0 5 10 15 20 25 30 35 40 Nu m b e r o f H o m e s Amount Above Assessed Market Value Homes Above Assessed Market Value 2 Zions Public Finance, Inc. | September 2021 Housing Loss Mitigation Analysis | Salt Lake City, Utah Recent migration to Salt Lake County, among other factors, has contr ibuted to a substantial housing shortage, prompting many owners to try to sell for significantly more than prices seen a few years ago. Due to the lack of housing inventory, buyers were more willing to buy at high prices. Additionally, many of the listed homes that ZPFI studied had been on the market for some time. This is evidence that the sellers priced their homes much higher than what the actual market value would be. The assessor’s database is based off the 2020 tax year, where officials likely calculated market value during the year 2019. In 2020, realtors at slrealtors.com report that home prices increased by 11.8 percent. In 2021, Deseret News reported an increase of 17 percent. Together, this represents a potential increase of 30.8 percent since the 2020 tax roll was calculated. As a comparison, if the tax rolls were thirty percent higher, many of the houses sampled fall in the range expected. ZPFI has calculated that the average house on the market is listed $268,701 higher than its assessed value. This translates to a 70.8 percent markup on assessed values. The increase in selling price varies by house price – for homes listed at less than $250,000, listings are at a 58 percent premium. For houses above $1 million, the premium increases to 103 percent above assessed value. Between $250,000 and $1 million, there is a gradual increase from 58 to 103 percent. The following three graphs show the distribution of homes listed at between $250,000 and $500,000, between $500,000 and $1,000,000, and those homes listed above $1 million. 0 5 10 15 20 25 Nu m b e r o f H o m e s Amount Above Assessed Market Value Homes Above Assessed Market Value Listed Between $250,000 and $500,000 3 Zions Public Finance, Inc. | September 2021 Housing Loss Mitigation Analysis | Salt Lake City, Utah 0 2 4 6 8 10 12 14 Nu m b e r o f H o m e s Amount Above Assessed Market Value Homes Above Assessed Market Value Listed Between $500,000 and $1,000,000 0 0.5 1 1.5 2 2.5 3 3.5 Nu m b e r o f H o m e s Amount Above Assessed Market Value Homes Above Assessed Market Value Listed Above $1,000,000 4 Zions Public Finance, Inc. | September 2021 Housing Loss Mitigation Analysis | Salt Lake City, Utah Other noteworthy findings include that the difference is much smaller for condos, which are on average 47 percent more expensive compared to the 75 percent increase in price for non-condos (including townhomes and single-family homes). Additionally, larger homes are priced 74 percent higher than the assessor’s database while smaller homes (less than 1500 square feet) are priced 63 per cent higher. Despite the difference, larger homes are listed at $120 higher per square foot compared to the database while the increase is $140 for smaller homes.