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Mandatory Requirements

The document summarizes a city council meeting discussing a proposed policy to provide financial incentives for large "transformational development projects". The policy outlined mandatory criteria projects must meet, including creating jobs, using green building techniques, and providing affordable housing. It also listed preferred criteria in areas like dedicating space to non-residential use and meeting green building standards. Council members debated elements like the percentages of affordable and workforce housing required and whether to reduce other thresholds. The incentives proposed in the policy included loans, fee rebates, and a tax increment financing program to waive new property tax revenues for five years. Council decided to further discuss the policy with staff before setting it in stone.

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47 views

Mandatory Requirements

The document summarizes a city council meeting discussing a proposed policy to provide financial incentives for large "transformational development projects". The policy outlined mandatory criteria projects must meet, including creating jobs, using green building techniques, and providing affordable housing. It also listed preferred criteria in areas like dedicating space to non-residential use and meeting green building standards. Council members debated elements like the percentages of affordable and workforce housing required and whether to reduce other thresholds. The incentives proposed in the policy included loans, fee rebates, and a tax increment financing program to waive new property tax revenues for five years. Council decided to further discuss the policy with staff before setting it in stone.

Uploaded by

hozae
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PDF, TXT or read online on Scribd
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ASHEVILLE September 28, 2010 – Asheville City Council tonight indicated

general, preliminary support for a “transformational development projects”


incentive policy. The idea came about at their last meeting when an
unprecedented request for unconventional financial aid from the public coffers
came before council. Council liked the project, a green development known as
Montford Commons, but wanted some way to fairly decide who would get tax
dollars if everybody decided to follow suit. Staff returned with a proposed policy
for providing financial assistance for residential projects. It listed mandatory
criteria, preferred criteria, and available incentives. The policy was to be a
guideline; council would have to review requests on a case-by-case basis.

Mandatory Requirements

To meet mandatory criteria, a developer would have to demonstrate to council that his
project fulfills important public purposes that should include creating jobs, installing
desired public infrastructure, using a substantial level of green building techniques, and if
housing is included providing a percentage of affordable and/or workforce level housing.
Though currently somewhat redundant, the project would then have to comply with
strategic goals set each year by council.

Council members had difficulty with the “but for” criterion. It stated that the developer
must show that his project would not be doable “but for” the requested assistance.
Councilman Cecil Bothwell took issue with using an amorphous standard to demonstrate
proof of poverty. He noted that the Montford developers had recently claimed they
needed ten years of tax credits, but with pressure from council, they reduced their need to
six, and then only five years. Community Development Director Jeff Staudinger replied
the “but for” clause has been a part of HUD language for years. It is intended to be
defined for each project through staff analysis and council interpretation.

Another mandatory criterion was that the project be located in an area designated by
council as a priority redevelopment zone, an area within a quarter mile of a designated
urbanized employment center, or in an area with high annexation potential. Some
members of council thought the enumerated locations were too restrictive.

Projects were also required to have a floor area ratio (the ratio of floor space to parcel
area) of at least 1.0, and parcels were to be of at least one acre. Council preferred
reducing the threshold to a quarter acre. The other mandatory requirements were that the
developer procure private investment in his project totaling at least three times the total
amount requested from taxpayers; and that the requesting party demonstrate he has at
least 20 percent equity participation in the project.

Preferred Elements

In addition to the mandatory requirements, developers would have to satisfy at least four
of six preferred elements. These included dedicating at least 20 percent of floor space
toward non-residential development, providing pedestrian amenities, and meeting
independent certification standards for green building. Councilman Brownie Newman
noted pursuing LEED certification is expensive and causes developers to pinch pennies
elsewhere, yet he was leery of letting developers approve their own greenwashes. He was
OK with staff’s suggestion that city staff serve as an independent review body.

As another preferred element, staff suggested requiring 10 percent of residential units to


be affordable and 40 percent to be workforce housing. According to HUD, affordable
rents constitute at most 30 percent of gross income for a household collecting 80 percent
of area median income; workforce rents constitute at most 30 percent of gross income for
a household collecting 120 percent of area median income. Members of council disagreed
about the percentages and how strict they should be. Bothwell, said he opposed the idea
of council choosing winners and losers and so suggested raising the bar to 30 percent and
60 percent. Gordon Smith suggested reducing the amount of workforce housing required
in the Central Business District to 25 percent.

Mayor Terry Bellamy was concerned about specifying percentages because a recent
project ran into problems trying to get HUD funding because the city required 10 percent
of units to be affordable. (HUD is also in the business of subsidizing market-rate
housing.) The president just availed more money for HUD-backed loans with the signing
of the Small Business Jobs Act. Bellamy felt the city needed to discuss the proposed
policy with prospective partners like HUD to make sure it wouldn’t be cutting off
potential revenue streams.

The two remaining elements were that the project not be a second residence and that 70
percent of the permanent jobs created with economic incentives pay wages competitive in
Buncombe County as long as incentives are being, for all intents and purposes, paid out.

Incentives

Three types of financial aid were proposed, to be made available at council’s discretion.
The first incentive is already in place, and that is that developers of affordable housing
can apply for a revolving loan from the city’s Housing Trust Fund. Council could also
decide to cut developers a 50 percent rebate on fees for zoning, building, driveway, and
grading permits; plan reviews, and connections to the water system.

The other incentive would work like tax increment financing. TIFs allow local
governments to, as an economic development incentive, waive property taxes over and
above pre-existing assessments, for the first five years of a project’s operation. Bill
Russell was concerned that the city was going to apply the TIF concept to residential
development, when TIFs were supposed to have demonstrable economic impact for the
public good. He asked if the incentives would be legally defensible.

City Attorney Bob Oast said the policy would admittedly be advancing the law, but
noted other municipalities were looking into similar applications. Oast felt, in light of
precedents, Asheville could make a strong case for applying TIFs to mixed-use
development.
Council got out of making a decision because Planning Director Judy Daniel was not at
the meeting. Bellamy asked that before a policy be set in stone, staff and council run the
numbers for reality. She called attention to the little vacant building in front of
Walgreen’s on Merrimon Avenue (a.k.a. the Temple to the Goddess of Urban Planning).
It was constructed at no small expense only to satisfy codes, serves no useful purpose,
and satisfies none of council’s strategic goals.

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