A report to the City of Bozeman by Werwath Associates AFFORDABLE HOUSING IN BOZEMAN: RECOMMENDATIONS FOR REGULATORY CHANGES AND OTHER ACTIONS 2

 Affordable housing requirements for new construction should be reinstated, with a new set of rules  Regulatory incentives from previous ordinance should be retained and strengthened  Should apply to all affordable construction  Some should apply to affordable rental construction  Some of the strongest incentives depend upon increased City funding for affordable housing  Increased investment can leverage more affordable housing construction and federal funding SUMMARY OF RECOMMENDATIONS 3

 Since November, 2014, the consultant team has evaluated the City’s Workforce Housing Ordinance and other possible regulatory changes  The team collected and analyzed data through:  Review of current regulations, demographic and home sales data, building permits and subdivision data  Public/stakeholder meetings, interviews, surveys  The primary focus of recommendations is ownership housing  Needs and strategies for rental housing are included as well EVALUATION PROCESS 4

Median sale prices before, during and after the recession HOUSING PRICES HAVE REBOUNDED 5

Numbers of Sales of Detached Homes In Two Price Segments THE SUPPLY OF AFFORDABLE HOMES IS ONCE AGAIN DECLINING $250,000 price point is affordable to a median income buyer Only 8 detached units priced under $200,000 sold in

 Renter households with incomes between 65% and 80% of area median income (AMI)  Example of income range:  3 person households: Incomes $42,600 to $64,000/year  Target home prices of $198,000 to $255,000 RECOMMENDED TARGET MARKET FOR AFFORDABLE HOMES 7

 Households with incomes below 65% of AMI  Example of income range:  3 person households: Incomes below $42,600/year  Substantial wave of new construction about to start  Will create more moderate-priced rentals  More student housing will reduce demand pressure  Still, more subsidized rentals are needed  With rents in the range of $500 to $900 a month RECOMMENDED TARGET MARKET FOR AFFORDABLE RENTALS 8

Numbers of Bozeman renters in six income brackets GOALS FOR LOW-MODERATE INCOME TARGET POPULATIONS Create more rental opportunities Sufficient Opportunities For Now 9

AMI BracketHourly Wage – 1 Wage Earner Hourly Wage – 2 Wager Earners Affordable Rent/Sales Price 50% AMI$16.00/hour$8.00/hour$800 rent 70% AMI$22.00/hour$11.00/hour$198,000 sale price 90% AMI$29.00/hour$14.50/hour$255,000 sale price WHO WOULD BENEFIT? Examples of 3-person households in different income brackets $8.00/hour Typically service jobs, just over minimum wage $16.00/hour About average pay for payroll clerk or auto mechanic in SW Montana 1 $22.00/hour About average pay for social worker or mail carrier in SW Montana 1 $29.00/hour Approx. median pay for a police officer in Bozeman (Source: Police Dept.) 1 Source: U.S. Bureau of Labor Statistics, May, 2013 report 10

1.Reinstate ordinance and apply to a broader range of developments -Include subdivisions, annexations and applications for new site plans with 10+ units 2.Give developers a choice of two simplified options: -Provide 10% low-priced homes –priced for 70%-80% AMI buyers OR -Provide 30% moderate-priced homes – for 80%-100% AMI buyers RECOMMENDATIONS 11

3.Simplify requirements for income restrictions -Low-priced homes- continue to have income certification and long-term affordability requirements -Moderate-priced homes would not have income caps 4.Focus on providing finished homes -Eliminate complex requirements for marketing lots 5.Simplify standards for providing homes of different types and sizes -Types and bedroom mix of affordable homes should mirror the rest of the development RECOMMENDATIONS 12

 Strengthen incentives for building low- and moderate-priced homes, vary by housing type  Impact fee deferral  Partial financing for infrastructure  Reduction or waivers of building/subdivision fees  Reduced parkland requirements  Reduced minimum lot sizes  Allowance for simultaneous infrastructure-building work  Study of narrower street options  Expedited review for 100% affordable projects  Streamlined review of smaller subdivision applications  Lower parking requirements RECOMMENDED INCENTIVES 13

8.Make incentives more widely available -To qualified affordable housing construction and very affordable rental projects 9.Increase capitalization of affordable housing fund -Needed to fund long-term deferral of impact fees and partial funding of infrastructure -Could be funded by collecting full mil rate available for affordable housing, using general revenue, or G.O. bond -Pursue outside funding sources like CDBG RECOMMENDATIONS 14

Other actions that the City should consider:  Support new, very affordable rental development  Promote employer-sponsored affordable housing developments  Investigate new ways to encourage preservation of existing mobile home parks  Evaluate options for new rental subdivisions/mobile homes  Reassess restrictions on accessory dwelling units  Encourage private-sector innovation in design and construction of smaller, very livable homes OTHER RECOMMENDED STRATEGIES 15

 If directed by the City Commission, the Planning Division will begin drafting a revised ordinance  The consultants are available to assist  Concerns and ideas of Commissioners will be addressed  City staff and CAHAB will follow up on non-regulatory recommendations at a later date, if directed to do so NEXT STEPS 16

17 QUESTIONS?