This is a special review request to demolish three, 4-plex apartments and construct three, 10-unit apartment buildings in a proposed R-60 zone, on Lots 5, 6, 7 & 8, Block 7, Happy Hollow Subdivision, a 1.36 acre parcel of land. The Zoning Commission conducted a public hearing on April 4, 2017, and is forwarding a recommendation of denial.

Special Review applications are reviewed using City Code criteria referenced in the Alternatives Analyzed section of this memo. Special Reviews do not require an ordinance for approval, are not zone changes on property; rather, are tied to specific uses that are allowed in a given zoning district but are subject to a review by the City prior to the use being allowed. Special Reviews, unlike zone changes, may be conditioned to mitigate possible impacts from the use on the subject property or surrounding properties.
 

City Council may:

• Approve the request
• Conditionally approve the request
• Deny the request
• Allow the applicant to withdraw the request
• Delay action on the request for up to 30 days

APPLICATION DATA
OWNER: McDonald Land Holdings, LLC
AGENT: Sanderson Stewart, Bryan Alexander
LEGAL DESCRIPTION: Lots 5-8, Block 7, Happy Hollow Subdivision
ADDRESS: 307-317 Covert Lane and 1739 - 1747 Cody Drive
CURRENT ZONING: R-70, proposed R-60
EXISTING LAND USE: Three 4-unit apartment buildings
PROPOSED USE: Three 10-unit apartment buildings
SIZE OF PARCEL: 1.36 acres

The Planning Division reviewed the application and recommended conditional approval for three 6-unit apartment buildings to the Zoning Commission. The Planning Division did not recommend approval of three 10-unit apartment buildings. The Zoning Commission did not concur with the Planning Division recommendation. Before a recommendation of approval or conditional approval can be made, each special review request must demonstrate conformance with three primary criteria: 1) The application complies with all parts of the Unified Zoning Regulations, 2) The application is consistent with the objectives and purposes of the Unified Zoning Regulations and the 2016 Growth Policy, and 3) the application is compatible with surrounding land uses and is otherwise screened and separated from adjacent land to minimize adverse impacts.

This application conforms to the first criteria in so far that the zoning regulations adopted by the City Council have designated all R-60 zoning districts may have multi-family buildings as long as they go through the special review process for buildings with 3 or more units per building. There are requirements for landscaping and site design with the 3-units per building or larger.

The application meets criteria from the second requirement as it is consistent with some of the objectives of the 2016 Growth Policy:
Essential Investments: Infill development and development near existing City infrastructure may be the most cost effective.
The proposed special review will promote development of a residential parcel in a residential neighborhood and has easy access to City services and infrastructure. This will provide an additional housing choices to residents within the neighborhood and throughout Billings Heights.

Strong Neighborhoods and Essential Investments: Zoning regulations that allow a mixture of housing types provide housing options for all age groups and income levels. Implementation of the Infill Policy is important to encourage development of underutilized properties
The proposed development will provide housing choices for residents of Billings in an established neighborhood and allow for better use of the property. Conditions of approval will be proposed to ensure this development does not impact neighbors with excessive noise, light and other intrusions.

Home Base: A mix of housing types that meet the needs of a diverse population is important.
The proposed special review will support a new housing option in this established neighborhood.

The Zoning Commission found the application does not meet the third criteria. The Zoning Commission determined the proposed number of units either as three 10-unit buildings, or three 6-unit buildings as Planning staff proposed, is not compatible with the neighborhood that is predominantly single family with a few duplexes.  The Zoning Commission determined the number of dwelling units would increase the traffic dramatically in the area and put a burden on open space by not providing active recreation areas on site.  There is a natural park to the west but it has standing water in it for much of the year and would not be safe for smaller children to play in with minimal supervision.  The Zoning Commission found the building mass in the neighborhood would be out of place with the majority of single family and duplex units. The Commission also found that new construction of multi-unit residential development needs to provide some options on the property for open space for residents to have outdoor activities and play space for smaller children, which also would result in buildings that fit better with the surrounding residential buildings.

RECOMMENDATION
The Zoning Commission is forwarding a recommendation of denial.  Should the City Council not concur with the findings of the Zoning Commission, staff would recommend the following conditions:

1. The special review approval is limited to Lots 5, 6, 7 & 8, Block 7, Happy Hollow Subdivision generally located at the northeast corner of the intersection of Covert Lane and Cody Drive.
2. The special review is for the construction of apartment buildings with associated open space and parking for the building residents. No other use is intended or implied.
3. There shall only be three, 6-unit buildings constructed on the subject site with accompanying minimum required parking for the building residents.
4. The developer will meet the minimum required landscaping according to code. In addition, the developer will plant a street tree every 40 feet along both street frontages of Covert Lane and Cody Drive, in the boulevard between the curb and sidewalk. This landscaping will help to reduce the impact of the larger apartment structures along the street frontage and help the new development fit into the neighborhood.  Trees not allowed to be planted are any tree from the genus Populus, Salix or Ulmus.
5. The proposed development shall comply with all other limitations of Section 27-613 of the Unified Zoning Regulations concerning special review uses, and all other City of Billings, regulations and ordinances that apply.
 

If the special review is approved and the property re-develops, value will be added to the City's tax base. City permit fees and assessments for access to public utilities will pay for these services. If the special review is not approved, the property may remain as developed until sometime in the future.

This is a special review request to demolish three 4-unit apartments and construct three 10-unit apartment buildings in a proposed R-60 zone, on Lots 5, 6, 7 & 8, Block 7, Happy Hollow Subdivision. The site is located on the northeast corner of the intersection of Covert Lane and Cody Drive. The existing buildings appear to have been built on the land in 1965, 1966 and 1967 before current zoning was adopted. The special review is required whenever 3 units per building or more are proposed on a single lot in Residential 6000 zoning. There is residential zoning to the north, east and south of the subject property, with public zoning to the west. The overall proposed site plan shows 3, 10-unit residential buildings on the subject properties with parking provided on the back of the properties. It is the applicants intent to relocate lot lines to have a final lot count of 3 lots instead of 4.

The surrounding neighborhoods to the northeast and west are developed. Most of the surrounding property is single family residential development with a few exceptions along Covert Lane. There are 3 duplexes on this block of Covert Lane. There are some duplexes along Lake Elmo in the near neighborhood and one triplex. Farther out in the greater neighborhood, staff did find a 5-plex on Lake Elmo north of the subject property.  There are 4-plexes on Kelby Lane which is west of the Walgreens on Wicks and Main Street. Staff was not able to find any buildings that are the size proposed, 10-units, in the area. Mostly duplexes are scattered throughout the larger neighborhood. This is an older neighborhood with many houses being built in the 1960's so it is an established area of the Billings Heights. The existing apartment buildings are showing their age and are in need of updating or replacement to provide better housing options in the area.

The Zoning Commission conducted a public hearing on April 4, 2017, and received the staff report and recommendation as well as testimony from the applicant's agent, Bryan Alexander from Sanderson Stewart.  He stated that the request for three, 10-unit buildings is the maximum that can be placed on the lot and meet required parking.  They are required to have 42 parking spaces but were able to get 60.  The down side of the increased parking is the loss of green space.  He stated that the proposed density makes commercial sense.  The demolition of the existing buildings will be expensive because of the likelihood of asbestos and lead paint.  Traffic counts are not required until it is determined that a project would generate 500 vehicle trips a day.  This project doesn't meet that threshold but it could be required by a condition if the zoning commission felt the need to add that condition.

Commission members asked if the client was okay with the condition limiting them to three, 6-unit buildings. The Commission also asked if the septic systems are still in the ground behind the existing buildings.  Mr. Alexander stated that the three, 6-units buildings would be harder to 'pencil' out and may require cheaper construction.  He stated they have not investigated yet whether the septic systems are still in the ground, but if construction is proposed they will be determining what needs to be done to mitigate them if they are still in place.

The architect for the proposed buildings, John Atkinson from AT Architects, stood to speak in favor.  He stated they are proposing 30, 2-bedroom apartments instead of a mix of units. There are currently site issues that will have to be mitigated, bringing in fill to raise the site to eliminate the current flooding problem.  He also stated they have increased the parking to 60 to accommodate 2 spaces per unit.  He stated the intent of the new buildings is for higher end buildings with high end finishes.  Also, 18 units would not 'pencil' out with high end finishes, the units would have to use cheaper materials.

Mr. John Jones, attorney for the applicant, stated that a project has to 'pencil' out to make sense, but they also need to listen to the neighborhood.  He stated they will have to see if they could make 18 units 'pencil' out.  Duplexes don't make sense on the site and are too cost prohibitive.  He stated one option would also be to do nothing and leave the site as it is.

Mr. Tom Mutchler, from Rainbow Management Company, stood to speak in favor of the special review.  He stated that they have been managing these buildings for a while and have spent $200,000 on upkeep in the past 5 years.  The buildings need to be removed and replaced with something that is not subject to flooding.  The proposal is for high end apartments with rent in the $900 to $1,000 a month rent for a young professional budget.  Mr. Mutchler stated a good example of what is being proposed is the Trailhead Apartments on Avenue E and 17th Street West.

There were no others wishing to speak in favor and the floor was open to those who wished to speak in opposition. Eleven people from the surrounding neighborhood stood to speak in opposition of the special review.  Their main concerns and opposition to the special review were as follows:

• Density would be too much for the corner lot and way out of character with the neighborhood.
• Traffic in the area is already heavy from new construction to the north and higher density would increase the traffic problem.
• The proposed site plan shows no green space for outdoor activities and there is no developed park in the area, children would be playing in the street.
• There isn't enough off street parking for all the proposed units. Although they show 60 spaces for the proposed density, there would more likely be 90 cars minimum with this proposal.
• The property has been poorly managed now, how will that change with the same management company.
• The proposed number of apartments will devalue the surrounding properties and the proposed density will make the devaluation worse.
• The natural park land in the neighborhood has deer, antelope, wild turkeys, squirrels, geese and ducks, with the new development this will change the habitat area and these animals will go away.
• Current roads are in poor condition, the increased traffic will only make it worse.
• There are no sidewalks in the neighborhood with the zone change and proposed density there will be even more pedestrians in the streets.  There is no school bus stop in the neighborhood now and students have to go to Lake Elmo to be picked up. This will increase the pedestrian/traffic conflicts that already exist.
• There is a high water table in the area and it will be very difficult for new development to be able to retain water on site as they are required.  The land that the apartments are on currently floods whenever there is a heavy rainstorm.
• This will bring so many people into the area and this is a very nice and quiet neighborhood. With all the new people, that will change the entire feel of the area.
• This is a slippery slope to start down, what would stop the next developer from putting something similar on another property in the area?

The public hearing was closed and Commissioner Ulvestad made a motion to recommend Denial.  The motion was seconded by Commissioner Boyett.  The Commission members discussed the proposal and stated that it was too much density for the neighborhood and would cause too dramatic a change in the traffic of the area.  It was also stated this project and the Trailhead Apartments have nothing in common because Trailhead is in an entirely different neighborhood than this area.  The Trailhead apartments are in an area where there is already major street infrastructure and a major commercial area.  Board members also thanked those that came and participated.

The Commission voted 5-0 in favor of denial of the special review.

The Consistency with Adopted Plans and Policies is discussed in the Alternatives Analyzed section above.