Text Amendment – Project ReCode – Proposed Draft Sections 27-300 & 27-800 & 27-1000 - New Neighborhood and Residential Zone Districts: Special Uses--Accessory Dwelling Units, Short Term Rentals and Planned Neighborhood Developments
This is the second in a series of Public Hearings on the Public Review Draft of the City Zoning Regulations in Section 27 of the Billings Montana City Code (BMCC). This second hearing will focus on special uses within the proposed new Neighborhood Residential zone districts. These special uses include Accessory Dwelling Units (ADUs Section 27-1008.G), Short Term Rentals (STRs - Section 27-1005.O) and Planned Neighborhood Developments (PND - Section 27-800).

Planning staff recommends the Zoning Commission conduct the public hearing and receive public comment on the Public Review Draft of the new zoning code. No action is required at this time.

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The current zoning regulations for the City were adopted on May 3, 1972 and unified with the County zoning regulations in December 1997. Since 1972, the City has amended the text of the regulations and added several zoning districts. The city has amended the 1972 zoning code 166 times in the past 48 years since its adoption. Of those 166 amendments, six were major changes. The first occurred in 1977 when the code was updated in its entirety and re-adopted. The second major amendment added the new zoning district for the Medical Corridor in 1986. The next major amendment occurred in 1989 when the entire sign code was replaced with a new code. The combining of the City and County zoning codes took 3 years of editing and drafting and was finally adopted in 1997. In 2004 and 2005, the city adopted the Shiloh Corridor Overlay District to apply higher site design, landscaping and sign standards within this corridor. The sixth major change to the code happened in 2012 with the adoption of the new section for the East Billings Urban Renewal District (EBURD).

In 2017, in anticipation of a comprehensive code update, the City and County agreed to formally separate the zoning codes to aid in the process of the comprehensive update known as Project Re:Code.

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In 2016, the City Council adopted a new Growth Policy that updated a 2008 policy and presented several new community goals. These goals were stated in a set of "guidelines" under the seven major themes of the policy update:
1. Essential Investments (relating public and private expenditures to public values)
2. Place Making (enhance, maintain, preserve, and improve existing public places)
3. Community Fabric (attractive, aesthetically pleasing, uniquely Billings)
4. Strong Neighborhoods (livable, safe, sociable and resilient neighborhoods)
5. Home Base (healthy, safe and diverse housing options)
6. Mobility and Access (transportation choices in places where goods and service are
accessible to all)
7. Prosperity (promoting equal opportunity and economic advancement)

The Growth Policy statement adopted by the City Council is: The City/County Planning Board realized the existing zoning regulations, intended to implement the Billings and Yellowstone County adopted Growth Policies, were no longer effective tools for advancing these goals. The existing code was primarily based on a set of of growth goals adopted before 1970 with some new code sections added to try and achieve smaller area goals. The Planning Board initiated this major code update in June 2017 and appointed an ad hoc Steering Committee to help guide the process of the code update. The City Council and Board of County Commissioners were in complete agreement with the need for a major code update.

The Steering Committee set to work and met monthly from August 2017 until December 2017. In December 2017, the Steering Committee finalized a set of Guiding Principles for the code update and appointed four Working Groups to handle the intensive, hands-on work of updating the code. Those groups included some Steering Committee members as well as interested residents. The four groups consisted of the County Issues Working Group, the Urban Issues Working Group, Sign Code Working Group and Landscaping Code Working Group. The groups met monthly from January 2018 until January of 2020 to review, draft, and accept public comment on the draft code sections. The City and County also agreed to fund the services of a consultant team to help the Steering Committee and Working Groups evaluate the code deficiencies, analyze the character of Billings and County neighborhoods, and help draft a new set of regulations. The consultant team was hired in April 2018 and consists of Elizabeth Garvin, of Community ReCode (CO), Leslie Olberholtzer of Codametrics (IL) and Randy Hafer of High Plains Architects (MT). This team met with each Working Group through the project development and helped the local residents create a code that is uniquely crafted for our local community goals. Best practices were brought to the table from around the Rocky Mountain region as well as similar communities throughout the country. A Code Assessment was presented to the community in October 2018 that helped the Steering Committee and Working Groups create a path forward to building the new code.

The Planning Division requested and was awarded VISTA members to assist with the code analysis in particular as it related to creating new attainable housing choices in Billings. The VISTA members created a Billings Pattern Guide - an on line publication and guide to the core neighborhoods of Billings. The VISTA members analyzed Home Mortgage Data to find out if there were neighborhoods in Billings where home loans might be skewed or denied due to race or ethnicity. Some Billings neighborhoods had much lower mortgage origination rates than others but there was no clear distinction based on the applicants race or ethnicity. The VISTA members completed special research to analyze the existing housing choices in Billings and identify gaps in market demand and housing supply. Their findings indicated a mis-match between the household size (1 & 2 person households >60% of Billings) and the housing choices available (3+ bedroom housing >60% of housing stock). We have a deficit of one and two-bedroom housing stock. A detailed research project was completed about the re-emerging housing choice of an Accessory Dwelling Unit (ADU) in the country. ADUs became very popular throughout the US in the post-WWII building boom and over 900 of these units still exist in Billings although the 1972 zoning code made most of them non-conforming to code. All of this information and public education helped inform the work of the Urban Issues Working Group while they considered new neighborhood zone districts.

This second in a series of public hearings on the Public Review Draft of the new city zoning regulations will focus on the Special Uses (27-1000 and 27-800) included with our new Residential zone districts (Section 27-300). Special Uses in the current code do not include Accessory Dwelling Units (ADUs) or Short Term Rentals (STRs) more commonly know as AirBnB or VRBO. The proposed Planned Neighborhood Development regulation is intended to bring certainty to the annexation and proposed development of land within the city's Limits of Annexation area. The PND would apply to any undeveloped parcel of three acres or more that intends to request access to city services.

Accessory Dwelling Units - Section 27-1008.G
Accessory Dwelling Units (abbreviated as ADU’s) are small dwellings that are built attached to, within, or on the same property as existing residential structures. With concerns surrounding housing affordability circulating in many US cities, municipalities are considering the allowance of ADU’s to encourage non-intrusive and small-scale housing development. It is not considered a full second primary residence due to its small size and sharing of common utilities and space with the primary residence. In Billings, ADUs were a popular and prevalent housing choice right after WWII and up until the early 1960s. Most if not all of these ADUs were "outlawed" by the adoption of the 1972 City Zoning Code. City staff and VISTA members Jacob Cote, Claire Yang and Dave Drennan, researched and analyzed local property data to discover where these ADUs still exist in the community. We found over 900 remaining ADUs in Billings. Every neighborhood had at least a few but they are more common in the mid-century neighborhoods closer to downtown. Jacob Cote authored a briefing white paper on ADUs for consideration by the Steering Committee and Working Groups. "Our housing needs are changing. Industry professionals have begun to notice a gap forming between the housing currently available in our cities and the wants and needs of people looking for a home. The housing inventory in Billings, as in many other Western US cities, provides a lot of choice at the upper end of the market; not so many choices are available at the lower end." (Jacob Cote, ADU White Paper, 2018) 

First and foremost, the proposed code for ADUs is not intended to make all existing ADUs "legal" but it does provide an avenue for those units to become recognized as legal in zoning. This is important for financing and insuring these properties. A re-build letter is a necessary asset in today's real estate market. The proposed regulations are also a way for new builders to allow this option for their clients - either as an addition or as new build. There is increasing demand in the housing market to accommodate multi-generational families. An ADU allows flexibility to accommodate aging parents, adult children just starting out, and provides a possible source of income to allow elders to "age in place". AARP officially endorses ADUs as a housing choice for senior citizens and their families.

The Urban Issues Working Group decided to initiate a Task Group on the issue to define and come to consensus on a draft set of regulations for the city and county. The ADU Task Group met for 6 weeks to discuss and clarify the issues and agreed to a final set of ADU regulations by mid-June 2019. These regulations are embedded in the Use Standards section of the draft code at 27-1008.G. The proposed code limits the size of a detached ADU, requires one additional off-street parking space, has to be registered with the city, the property owner must live in one of the units, and requires the filing of a protective covenant that runs with the land stating the ADU restrictions. ADUs are proposed to be allowed in the N1, N2 zones and as a special review use in the N3 zone district. An accessory unit cannot be a "third" unit on a parcel - it may only be a second unit.

Short Term Rentals - Section 27-1005.O
Air BnB, VRBO and other short term rental platforms have made this home owner small business viable throughout the country. In Billings, our code was written during a time when little tourism was evident in Billings or Yellowstone County. Communities closer to major tourist destinations such as Yellowstone and Glacier National Parks, or the scenic forests of western Montana have always regulated "vacation homes" through their local land use regulations. Billings now draws in more types and varieties of "tourists" than typical gateway communities. Billings has a strong medical services sector, retail draw of at least a 400-mile radius, regional major events (sports and entertainment), and a important financial sector business, oil & gas and agriculture. Short term rentals are available in Billings' neighborhoods although the current zoning code does not legally allow this use of residential homes. Any rental of property for less than 30 days is considered either a "hotel, bed & breakfast, boarding house or lodging house". These uses require special review under current code. Most of the homes offered for short term rental in Billings are not causing issues or impacts in neighborhoods. Most neighbors are unaware the home down the street is a short term rental. This was identified as a gap in our existing code.

The consultant team proposed a set of "starter" regulations for short term rentals in Billings. These are basic regulations meant to prevent some of the issues experienced in larger communities such as the "party house" problems in Las Vegas, corporate buy-outs of popular short term rental neighborhoods, rentals of tents, RVs and non-permanent structures, and similar actions that make a significant impact on neighbors and neighborhoods. The proposed regulations would allow STRs in the Neighborhood Residential districts and in most of the commercial districts as long as the property is registered with the city and provides for a local contact manager or person available 24-hours a day to respond to any complaints such as - noise, parking, disturbances, vandalism and similar problems. There would be a nominal charge for the registration and the STRs would need to ensure the rental met basic life safety for occupancy such as smoke and carbon monoxide detectors.

Planning staff met with a group of STRs owners and the proposed regulations are acceptable to the owners. The proposed regulations - as do all zoning regulations - cannot override or allow a use that is not allowed by a private subdivision covenant or restriction. Property owners will need to know whether their use is allowed by their covenants or restrictions. The city will not enforce those restrictions.

Planned Neighborhood Development - Section 27-800
The existing zoning code for the city and county allows urban level residential and commercial zone districts outside the city limits even though development of the property would have to occur after annexation for the provision of city services. This has resulted in many urban development zoning decision made by the County Commissioners rather than the City Council. Developers are interested in keeping carrying costs of raw land as low as possible by not annexing land before they are just ready to developed. The City Council cannot make zoning decisions for land outside the city limits, so any participation in zoning has to be paired with a concurrent request for annexation. The city and county have agreed there needs to be a better approach to making these critical growth decisions. 

The consultant team proposed a new tool called the Planned Neighborhood Development (PND) that consists of a "kit of zoning and land use parts" to help sketch out a new neighborhood before it is completely annexed to the city limits. A key component of making this work for all parties is the ability to phase the annexation of the new neighborhood over a period of time. This reduces the carrying cost to the land developer, and allows the city to be completely involved in planning for the new neighborhood. The PND "kits" are proposed to range from the Mixed Use-PND where a variety of zone districts is required including commercial, neighborhood services, and residential to the Neighborhood PND where a gentle mixture of zone types is preferred. Each PND would be required to have some open space shown in the master plan and a basic street grid laid out. The PND would be adopted through the City Council but is expected to have a lot of front-loaded staff and neighborhood involvement. Illustrations of how the different PND could be master planned are included with the draft code. Below is the table of the PND types showing the required and optional zone districts for each type.

 

Table 27-800-1. Types of Planned Neighborhood Districts

Required Min. Acres

Zoning Districts

Types of PND

CMU1

CMU2

NMU

NO

NX1

NX2

NX3

N1

N2

N3

RMH

P1

P2

P3

3

Mixed-Use MU PND (City or County)

R

L

P

P

P

P

L

P

P

-

P

R

P

P

Min. % of gross acres

10

5

3 buildings

Max. % of gross acres

30

15

15

8

3

Mixed Residential MR PND (City or County)

-

-

L

P

R

P

P

P

L

-

P

R

P

P

Min. % of gross acres

25

10

Max. % of gross acres

10

20

3

Neighborhood N PND (City or County)

-

-

L

L

L

L

-

R (mix of all 3 districts)

P

R

P

P

Min. % of gross acres

5

20

10

Max. % of gross acres

10

10

20

20

50

R = Required. Refer to specific development type regulations in section 27-802.
P = Allowed or permitted. Refer to specific development type regulations in section 27-802.
L = Allowed but limited per Table 27-800-1 or specific development type regulations in section 27-802.
- = Not allowed or permitted per specific development type regulations in section 27-802.
Table Notes:
All numeric values are percentages of the actual gross parcel area
 

Staff recommends the Zoning Commission conduct the public hearing and take testimony and comment on the Public Review Draft Code.