Incentive Zoning - Dallas...Jun 07, 2018 · Presentation Overview • Prior Meetings/Approach • Housing Policy • Incentive Zoning • Background • New Proposal and Details

Incentive Zoning

Pam Thompson, Senior Planner, Sustainable Development and Construction

Zoning Ordinance Advisory CommitteeJune 7, 2018

Presentation Overview

• Prior Meetings/Approach• Housing Policy• Incentive Zoning

• Background • New Proposal and Details• Examples

• Next steps

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Prior Meetings – Incentive Zoning • Previously known as voluntary inclusionary zoning• HUD rules require the City to affirmatively further fair

housing • Engage in activities that promote equal access to housing• Incentive zoning is one tool of many to achieve that end

• August 1, 2016 - Housing Committee directed staff to begin the code amendment process for incentive zoning

• ZOAC met 6 times in 2017• 2017-2018 - Housing Department crafted a

Comprehensive Housing Policy, which Council approved on May 9, 2018

• June 2018 – ZOAC to begin again to review incentive zoning3

Approach• Discuss updates related to the City’s market value

analysis and comprehensive housing policy• Assessment of Fair Housing research is under way

• Review of background elements, housing market, and recommended zoning and policy elements

• Discuss and finalize proposed design elements• Discuss implementation recommendations, including

recommended changes to Section 51A-4.900• To be crafted in close coordination with Housing and Fair

Housing• Final review of recommended zoning and policy

elements and ZOAC recommendation to CPC4

City Policies/Goals• HUD rules require the City to affirmatively further fair

housing • Actively encourage housing at a wide variety of price points

throughout the city; work to desegregate housing • forwardDallas!: encourage more housing near jobs

within the city; encourage a wide range of housing options

• Neighborhood Plus Goal 6.2: Expand affordable housing options and encourage its distribution throughout the city and region

• HUD Voluntary Compliance Agreement: encourage the development of affordable housing throughout the City.

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Housing Policy

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Housing Policy Overview• The problem:

• Housing shortage of approximately 20,000 housing units. • Six out of ten families are housing-cost burdened.

• Analysis and development of the policy: • Guided by a Market Value Analysis (MVA) completed by the

Reinvestment Fund in early 2018. • MVA - data-driven tool to analyze the local real estate market at a

census block level. • Built on local administrative data and validated by local experts.

• The broad goals: • Create and maintain housing throughout Dallas• Promote greater fair housing choices• Overcome patterns of segregation and concentrations of poverty

through incentives and requirements.7

Housing Policy Income/Production Goals• Create 3,733 homeownership units (55% market rate, 45% low/mod-

income)• Create 2,933 rental units (40% market rate, 60% low/mod-income). • Focus on serving families at 30% to 120% Area Median Income (AMI).

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Housing Policy Three-Year Production Goals

Percentage of HUD Area Median Income

Dallas Metro

Homeownership Rental

Production Goals

%Production

Goals%

Market Rate120% 933

55%587

40%100% 1,120 587

Extremely Low, Very Low, and Low

Income

80% 1,307

45%

733

60%60% 37 44050% n/a 29330% n/a 293

Total 3,733 2,933

Housing Policy Reinvestment Strategy Areas• Redevelopment Areas – Four areas

• Catalytic project scheduled to occur within the next 12 months• Includes new housing including affordable units for sale or rent to a mix of

income bands.• Projected success of project supported through a third-party, independent

market analysis.• Stabilization Areas – Eight areas

• Weaker real estate markets (G,H,I) surrounded by stronger markets (A-E)• Current residents at high risk of displacement. • Strategies include creation/use of neighborhood empowerment zones (NEZ),

promotion of use of incentive zoning, ADUs and strategic land banking.• Emerging Market Areas – 3 areas

• In need of intensive environmental enhancements, master planning and formalized neighborhood organizations to be prepared for real estate investment.

• Strategies include code lien foreclosure, neighborhood beautification projects, strategic use of land banking and infrastructure improvements.

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Housing Policy – Programs• Home Improvement and Preservation Program (HIPP):

• Finances home improvements and addresses health, safety, accessibility, and structural/deferred maintenance deficiencies.

• Serves homeowners up to o120% AMI with 0-3% loans and varying payment plans• Dallas Homebuyer Assistance Program (DHAP):

• Offers 0% interest loans, payable upon resale, to homebuyers between 40%-120% AMI.

• Loan may be used for principle reduction, down payment, and/or closing costs.• Rental Rehabilitation and Reconstruction Program:

• Offers a 3% loan to landlords of single-family or small multi-family properties (1-4 units) to bring the structure into compliance with local codes.

• During the period of affordability, rental units leased to households at or below 80% AMI.

• New Construction and Substantial Rehabilitation Program: • Offers a 0%-3% loan to persons developing or substantially rehabilitating

homebuyer or rental units, where such assistance is necessary. • During the period of affordability, units must be sold or rented to households at or

below 80% AMI. 10

Housing Policy – Incentive Zoning• The Housing Policy directs the creation of a

voluntary inclusionary (incentive) zoning code amendment.

• Incentivize rental units using by-right development bonuses

• Create mixed income housing in multi-family and mixed-use districts

• Available throughout the city in MF-1(A), MF-2(A), MU-1 and MU-2 districts

• Adopt design principles to encourage walkability, reduce the need for parking, and require open space.

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Incentive Zoning

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Background – Incentive Zoning• Incentive zoning refers to a type of zoning that

encourages developments to provide • Housing at a wide variety of income levels• Market-rate housing in historically under-invested areas of

the city• Community benefits, such as improved design, green

space, connections to transit• Incentives include an increased building envelope

(such as height or lot coverage), decreased parking, or other accommodations.

• In exchange, developers reserve a certain percentage of units for qualifying families.

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Background – Incentive Zoning

• Incentive zoning can, with appropriate controls• Provide an additional tool to create mixed-income

housing throughout the city, potentially without additional financial subsidies from the city

• Reduce sprawl by encouraging additional pedestrian-oriented and multi-modal development in targeted areas

• Encourage development on under-utilized tracts of land

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Background – Housing Economics• The city has a housing shortage• Supply of housing has not kept pace with the

population growth in the DFW metro area• Wages have not kept pace with rising housing costs• National Association of Realtors estimates the

nationwide supply of for-sale and rental units combined is 3 million units short of current demand.

• Across all income groups 45% of Dallas renters are cost burdened: they spend more than 30% of their income on rent and utilities

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Background – Rent Burden

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Renter Households - City of DallasPercentage of Income Used for Rent + Utilities

Income: Total < 20% 20-29% >30%Less than $20,000: 64,389 1,359 3,361 59,669$20,000 to $34,999: 61,135 2,338 10,675 48,122$35,000 to $49,999: 49,465 7,953 26,032 15,480$50,000 to $74,999: 48,688 20,290 22,221 6,177$75,000 or more: 51,995 40,464 10,078 1,453Zero or negative: 9,070 - - -No cash rent 5,766 - - -

total 290,508 72,404 72,367 130,901Source: 2015 American Community Survey table B25106

- More than 20,000households in Dallas earn $35,000 - $75,000 and still pay more than 30% of their income in rent.- Incentive zoning can help to serve these families, potentially without needing financial support from the City.

Background – Rent Burden

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Renter Households - City of DallasPercentage of Income Used for Rent + Utilities

Income: Total < 20% 20-29% >30%Less than $20,000: 64,389 1,359 3,361 59,669$20,000 to $34,999: 61,135 2,338 10,675 48,122$35,000 to $49,999: 49,465 7,953 26,032 15,480$50,000 to $74,999: 48,688 20,290 22,221 6,177$75,000 or more: 51,995 40,464 10,078 1,453Zero or negative: 9,070 - - -No cash rent 5,766 - - -

total 290,508 72,404 72,367 130,901Source: 2015 American Community Survey table B25106

- More than 20,000households in Dallas earn $35,000 - $75,000 and still pay more than 30% of their income in rent.- Voluntary inclusionary zoning can help to serve these families, potentially without needing financial support from the City.

- More than 100,000households in Dallas earn less than $35,000 and pay more than 30% of their income in rent.-Housing funds and other strategies can help to serve these families.

Background – Rent Burden• This rent burden comes from a variety of sources,

including issues with the underlying housing market, such as

• Disinvestment in areas with lower market returns• In strong markets, displacement of families due to loss of

“naturally” occurring affordable housing combined with development that does not keep pace with population growth

• Naturally occurring affordable housing is housing that is affordable because of age and quality of the housing unit

• Housing development that fails to keep pace with population growth, leading to a lack of affordability for families at all income levels.

• Problem increasingly more severe for lower income families 18

Background – Rent Burden & Filtering • Two ways to help families that are cost-burdened

• Encourage new development and reserve some of those new units directly for families under a designated income cap.

• Create additional housing units overall.• Filtering allows families with the means to move

to new units, leaving a vacancy for others to utilize.

• Filtering is less efficient in areas with short supply• One analogy – musical chairs where people with

enough money can bid for their preferred chair19

Background – Potential Incentives• The city’s low-density multifamily and mixed-use districts are not

being utilized like they were in the 1970s and 1980s. • This proposal allows for an alternate path for these underutilized

areas• Utilize the existing zoning without the incentive• Apply for a zoning change, or• Use the incentive as a by-right third option.

• The incentive• Allows for increased height and removes minimum lot-size constraints in

MF-1(A) and MF-2(A) districts • Allows for additional density and floor area ratio in MU-1 and MU-2

districts. • Requires less parking, particularly for larger units and for units near

transit.• In exchange, developers would reserve units for families under a

certain income.20

Background – Potential Incentives• Previously, the proposal differentiated the provision of

reserved units based on whether the property is in a:• High opportunity area• Racially and ethnically concentrated area of poverty (R/ECAP)• Other area

• Under the adopted housing policy, the provision of reserved units would be different based on the strength of the nearby residential real estate market.

• Continue to recommend additional design standards in line with urban design objectives and complete streets and to complement reduced parking.

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Background – Potential Incentives

• Incentives under this program are voluntary. If a developer does not want to take advantage of the incentive, he or she can

• Utilize the existing zoning without the incentive• Apply for a zoning change

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Background – Keys to Success

• Additional development and reserved units should • Be disbursed throughout the city• Encourage mixed-income neighborhoods• Deconcentrate poverty• Vary by the strength of the adjacent residential market

• Support existing policies, such as forwardDallas!and the City’s Comprehensive Housing Policy

• Must be financially viable for the developer: Benefits of development bonuses should off-set the costs of providing the affordable units 23

Background – Keys to Success• Encourage new residential development at all price

points, benefitting all current and new residents of Dallas

• Increase denominator to increase numerator• Requiring too high of a set-aside ratio can discourage

development• More units in more areas offers more options in terms

of location and product type.Percentage Total Reserved

10% 1,000 10020% 200 40

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Incentive Zoning Details

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Incentive Zoning Elements - Overview

• Incomes• Rents• Locations• Detailed charts• Examples

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Incomes – Unchanged from Previous• 2017 incomes in terms of percentage of Dallas

area median family income (AMFI): • 60% of AMFI for a couple is $35,232• 100% of AMFI for a family of four is $73,400

2017 Incomes: 60-100% AMFIHousehold

Size 60% 80% 100%

1 $30,828 $41,100 $51,3802 $35,232 $47,000 $58,7203 $39,636 $52,850 $66,0604 $44,040 $58,700 $73,400

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Rents – Unchanged from Previous • In this proposal, rents are capped at 30% of the

applicable percentage of AMFI. • Rents for families making 60% of AMFI range from

$639 for an efficiency apartment to $1,025 for a four-bedroom apartment.

• Rents for families making 80% of AMFI range from $896 to $1,450.

• These rates are generally lower than what is available in the market for a comparable apartment.

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Location – Previous Recommendation• High opportunity areas:

• Dallas Census tracts with a poverty rate of less than 20%• In the attendance zone of an elementary school that has a

state accountability rating of “Met Standard” from the Texas Education Agency

• Racially and ethnically concentrated areas of poverty (R/ECAP)

• Non-white population of 50 percent or more.• Poverty rate that exceeds 40% or is three or more times the

average tract poverty rate for the metropolitan area, whichever threshold is lower

• Non-R/ECAP29

Location – Previous Recommendation

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Green: high opportunityGray: R/ECAP

Location – Previous Recommendation

31Green: high opportunityGray: R/ECAP

Location – New Recommendation• Market category A, B, or C

• Housing units - median ~$390,500 and up• Higher than average rates of new construction and rehabilitation• Lower than average rates of subsidized units, code violations,

vacancy, and foreclosure filings• Market category D, E, or F

• Housing units - median between $117,600 to $267,100• Average rates of new construction, rehabilitation, and subsidized

units• Slightly lower rates of code violations and vacancy, but slightly higher

rates of foreclosure• Market category G, H, or I

• Housing units - median between $41,500 and $91,300• Lower than average rates of new construction and rehabilitation• Higher than average rates of subsidized units, code violations,

vacancy, and foreclosure filings 32

Location – New Recommendation

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Location – New Recommendation

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Incentives – Previous Recommendation

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MF-1(A) and MF-2(A) Districts

Current High opportunity area TOD Non-R/ECAP R/ECAP

5% at 60%

5% at 60% & 5% at

80%

5% at 60% & 5% at 80% &

5%<100% 5% at 80%10% at

80%

10% at 80% & 5% at 100%

5% at 80%

10% at 80%

10% at 80% & 5% at 100%

none required

Setbacks 10-15' no changesMax unit density per acre none 85 105 130 95 120 150 80 95 120 95

Floor area ratio none no changes

Height 36' 51' 66' 78' 66' 85' 95' 51' 66' 85' 66'

Max stories no max no changesLot coverage (residential) 60% 80% 80% 80% 80% 85% 85% 80% 80% 85% 80%

Min lot size unit varies remove requirements

Res. Proximity Sloperequired no changes

Parking requirements

1 per bdrm.*

1 1/4 space per unit. An additional 1/4 space per dwelling unit must be provided for guest parking if the required parking is restricted to resident parking only. No additional parking is required for accessory uses that are limited principally to residents. For TOD: 1 space per unit.


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MU-1 District

Current High opportunity area TOD Non-R/ECAP R/ECAP

5% at 60%

5% at 60% & 5% at

80%

5% at 60% & 5% at 80% &

5%<100% 5% at 80%10% at

80%

10% at 80% & 5% at 100%

5% at 80%

10% at 80%

10% at 80% & 5% at 100%

none required

Setbacks 0-20' no changes

Max unit density 15-25

current + 65 =80 to 90

current + 80 = 95 to 105

current + 105 = 120 to 130

current + 80 = 95 to 105

current + 105 = 120 to 130

current + 135 = 150-160

current + 65 =80 to 90

current + 80 = 95 to 105

current + 105 = 120 to 130

current + 80 = 95 to 105

FAR (total dev with res) 1-1.1 Remove FAR requirementHeight 80-120 no changeStories 7-9 no changeLot coverage 80% no changemin lot size/bdrm n/a no changeRes. Proximity Sloperequired no changes


1 per bedrm.*

Residential uses: 1 ¼ space per unit. An additional one-quarter space per dwelling unit must be provided for guest parking if the required parking is restricted to resident parking only. No additional parking is required for accessory uses that are limited principally to residents. All other uses parked per code. For TOD: 1 space per unit.


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MU-2 DistrictCurrent High opportunity area TOD Non-R/ECAP R/ECAP

5% at 60%

5% at 60% & 5% at

80%

5% at 60% & 5% at 80% &

5%<100% 5% at 80%10% at

80%

10% at 80% & 5% at 100%

5% at 80%

10% at 80%

10% at 80% & 5% at 100%

none required


Max Unit density 50-100

current + 40 = 90-

140

current + 60 = 110-

160

current + 80 = 130-

180

current + 40 = 90-

140

current + 60 = 110-

160

current + 80 = 130-

180

current + 35 = 85-

135

current + 55 = 105-

155

current + 75 = 125-

175

current + 50 = 100-

150

FAR 2.0-2.25 Remove FAR requirement

Height 135-180 no change

Stories 10-14 no change

Lot coverage 80% no change

min lot size/bdrm n/a no change

Res. Proximity Sloperequired no changes


1 per bdrm.*

Residential uses: 1 1/4 space per unit. An additional one-quarter space per dwelling unit must be provided for guest parking if the required parking is restricted to resident parking only. No additional parking is required for accessory uses that are limited principally to residents. All other uses parked per code. For TOD: 1 space per unit.

Incentives – New Recommendation

• Locations – update from high opportunity, etc. to the MVA categories

• High opportunity incentives become available in categories A, B, and C

• R/ECAP incentives become available in G, H, and I• Non-R/ECAP incentives become available in D, E, and

F• TOD becomes a “bonus” in above geographies

• Details to be discussed

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MF-1(A) and MF-2(A) DistrictsCurrent Category A, B, C Category D, E, F Cat. G, H, I

5% at 60%5% at 60% &

5% at 80%

5% at 60% & 5% at 80% &

5%<100% 5% at 80% 10% at 80%

10% at 80% & 5% at 100% none required


Max unit density per acre none 85 105 130 80 95 120 95Floor area ratio none no changesHeight 36' 51' 66' 78' 51' 66' 85' 66'Max stories no max no changes

Lot coverage (residential) 60% 80% 80% 80% 80% 80% 85% 80%Min lot size unit varies remove requirementsRes. Proximity Slope required no changes

Parking requirements 1 per bdrm.

1 1/4 space per unit. An additional 1/4 space per dwelling unit must be provided for guest parking if the required parking is restricted to resident parking only. No additional parking is required for accessory uses that are limited principally to residents.

Transit Oriented Development To be determined.


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MU-1 DistrictCurrent Category A, B, C Category D, E, F Cat. G, H, I

5% at 60%5% at 60% &

5% at 80%

5% at 60% & 5% at 80% &

5%<100% 5% at 80% 10% at 80%



Max unit density 15-25

current + 65=

80 to 90

current + 80=

95 to 105current + 105=

120 to 130

current + 65=

80 to 90

current + 80=

95 to 105

current + 105=

120 to 130current + 80=

95 to 105FAR (total dev) 1-1.1 Remove FAR requirementHeight 80-120 no changeStories 7-9 no changeLot coverage 80% no changemin lot size/bdrm n/a no changeRes. Proximity Slope required no changes

Parking requirements 1 per bdrm.*

Residential uses: one and one-quarter space per unit. An additional one-quarter space per dwelling unit must be provided for guest parking if the required parking is restricted to resident parking only. No additional parking is required for accessory uses that are limited principally to residents. All other uses parked per code.



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MU-2 DistrictCurrent Category A, B, C Category D, E, F Cat. G, H, I

5% at 60%5% at 60% &

5% at 80%

5% at 60% & 5% at 80% &

5%<100% 5% at 80% 10% at 80%



Max Unit density 50-100current + 40

= 90-140current + 60 = 110-160

current + 80 = 130-180

current + 35 = 85-135

current + 55 = 105-155

current + 75 = 125-

175current + 50 =

100-150FAR 2.0-2.25 Remove FAR requirementHeight 135-180 no changeStories 10-14 no changeLot coverage 80% no changemin lot size/bdrm n/a no change

Res. Proximity Slope required no changes

Parking requirements 1 per bdrm.*

Residential uses: one and one-quarter space per unit. An additional one-quarter space per dwelling unit must be provided for guest parking if the required parking is restricted to resident parking only. No additional parking is required for accessory uses that are limited principally to residents. All other uses parked per code.


Incentives – New Recommendation• Proposed amendment takes into consideration

return on cost scenarios for various markets. • Incentive zoning should provide additional

building volume in proportion with the reserved units.

• Ratio of building volume to reserved units will vary with the strength of the residential market.

• This is one tool of many in the Comprehensive Housing Policy

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Will it be enough? And will it work?• Applied to more than 11,000 acres across the city,

and at set-asides of 5% to 15%, this code amendment could produce thousands of needed units over time.

• Example: 50 units per acre times 11,000 acres is 550,000 new units. 5% of 550,000 is 27,500.

• => This recommendation has the capacity to address both the current housing deficit and the current rent burden of families under 60-80% of area median income.

• => Stakeholder response has been positive. • Supply is currently partially constrained by the need for zoning

changes for development proposals.• These focus districts are generally well-located, near transit and

good transportation.43

Example – Market Type ~I

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• 14 acres• Zoned MF-1(A)• R/ECAP area• Market Category I• Northern portion of

the city.• Currently: 18 units

per acre, 243 units total

• No pedestrian access, no room for children to play, etc.

• Redevelopment potential: 1,120 to 1,820 units

Example – Market Type ~F

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• 8 acres• Zoned MU-1

(before a recent successful re-zone request)

• Non-R/ECAP area• Market type F• Northern portion of

the city• Currently: 27 units

per acre, 206 total• Redevelopment

potential if still MU-1: 607-910 new units, with 30-137 reserved.

Example – Market Type ~E

Example – Market Type ~E• Current

• Four aging apartment properties on a total of 34 acres• 934 existing “naturally affordable” units in these properties• Built between 1968 and 1980

• Potential scenario• One property undergoes renovation and remains attainable,

preserving 328 units for middle incomes• Redevelop the remaining 23 acres at 120 units an acre, removing

606 aging apartments• Reserve 10% at 80% AMI and 5% at 100%

• Scenario Result• Result: 2,815 units, of which 422 are reserved for 15 years• Net: 2,209 additional units created, with a cascade effect allowing far

more families to have housing better suited to their needs.

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Examples of mixed-income communities

• Mixed-income communities in Dallas

Image: Billingsley Company Sylvan Thirty – 75 units/acre

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Examples of mixed-income communities

• Mixed-income communities in Dallas

Image: Lang PartnersZang Triangle – 91 units per acre

Oaks Trinity – 55 units per acre

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Four Story Wrap

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• 4 acres• 311 total units• 70 units/acre• 4 stories• Garage parking• Setbacks similar to

MF-1(A) and MF-2(A)

Five Story Podium• 2 acres• 164 total units• 105 units/acre• 5 stories• underground

parking• Setbacks similar to

MF-1(A) and MF-2(A)

• Mixed income

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Six Story Podium• 2.6 acres• 340 total units• 120-130 units/acre*• 6 stories (5 over

podium)• Garage parking• Lot coverage 80-

85%*• Setbacks similar to

MF-1(A) and MF-2(A)

• 15% set aside is 51 units

• *almost works under current proposal 52

Appendix

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Appendix – Alternate Use of Setback

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Example of how a 15’ front yard setback might be used to provide amenity space as regulations allow.

Appendix – Prior Actions• November 5, 2014 – Voluntary compliance agreement (VCA)

signed with the U.S. Department of Housing and Urban Development (HUD) to encourage the development of housing at a wide variety of price points and create greater economic opportunity in areas of concentrated poverty.

• October 7, 2015 – Council adopted Neighborhood Plus – a neighborhood revitalization plan.

• Goal 6.2: Expand affordable housing options and encourage its distribution throughout the city and region

• December 2015 – Staff began research of a voluntary inclusionary zoning (VIZ) program to help meet the requirements of the agreement with HUD and Goal 6.2 in Neighborhood Plus.

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Appendix – Prior Actions• October 2016 through March 2017 – staff met with:

• Housing, City Attorney’s Office, Code, Building Inspection• Habitat for Humanity• Inclusive Communities Project• Members of the development community

• Housing Committee was briefed on VIZ on May 16, 2016; August 1, 2016; and May 15, 2017.

• ZOAC was briefed June 2017 – September 2017• Council briefed on a market value analysis on January 17, 2018• Council and its Economic Development and Housing

Committee were briefed on a Comprehensive Housing Policy March-April 2018

• Council approved the Comprehensive Housing Policy on May 9, 2018 56

Incentive Zoning

Pam Thompson Senior Planner Sustainable Development and [email protected]

Zoning Ordinance Advisory CommitteeJune 7, 2018

http://dallascityhall.com/departments/sustainabledevelopment/planning/Pages/Code-Amendments.aspx

Incentive Zoning - Dallas...Jun 07, 2018 · Presentation Overview • Prior Meetings/Approach • Housing Policy • Incentive Zoning • Background • New Proposal and Details

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