Planning staff recommends the City Council receive and review this first implementation report on the new Zoning Regulations adopted by the City Council on January 25, 2021. As part of the public hearings and development of the code, it was understood there would be a period of adjustment and fine-tuning during the first year of the new code. This first report outlines the code Planning staff is monitoring for possible improvements as well as covers the successes of the new code during the first half of 2021. Staff has been tracking some minor code errors (spelling, cross-references, inconsistencies) as well as some issues that will require further monitoring by staff. These monitoring issues may result in future proposals to amend the code to adjust these new rules.

In January 2021, the City Council repealed the previous 1972 zoning regulations and adopted an entirely new set of zoning districts and code to help implement the adopted 2016 Growth Policy. The drafting and public hearing process, initiated by the City and County and guided by the Planning Board, took 3.5 years. The community effort included the hiring of a consultant team to assist Planning staff and a citizen-led Steering Committee and Working Groups through the drafting process. All topics from the mundane to the controversial were included during these deliberations. The result of this effort is a modern zoning code that was tailored to fit the Billings community and to lead it closer to community growth goals of housing choices, place-making, walk-ability, resiliency and prosperity.

It was acknowledged at the final public hearing Planning staff would continue to review and track issues related to code implementation. Planning staff has compiled a list of errors as well as a list of code issues we are monitoring for possible future amendments to the new code. This is not to imply the new code has serious flaws or is not working as it was intended - very good is not the enemy of perfect. These few errors and issues are minor in comparison to the positive effect the new code has had on residential projects. Several times a week, Planning staff is providing information to homeowners about building additions, new garage space and outdoor living spaces that are now allowed by the new zoning. These incremental investments would have previously required zoning variances or zone changes for these owners to accomplish a small improvement to their property. No full commercial development plan for a mixed use zone district has been submitted as of this 4-month reporting period. There are a number of commercial building projects underway, but these are in other commercial, industrial or planned development zone districts. It is too early to realize the full effect of the new zoning districts and use standards. 

Residential Developments
The City has issued more new construction building permits in the first half of 2021 (325) than in any prior year in the last decade except 2013 (335). The added property value to the city's tax base is over $102 million dollars so far. This new construction will add over 340 new dwelling units - 225 single family homes and 116 new townhomes or apartments. Additions and remodels for residential homes is also keeping pace with 153 remodeling permits issued adding nearly $4 million dollars in value to existing neighborhoods. Residents have been taking advantage of the new rules that expand the area available on their lots for buildings (lot coverage increases), and re-discovered the investment value of in-town lots in Billings' first neighborhoods. Thirty-one percent of residential addition permits were issued to homes built before 1960 from March 2020 through July 2020. In 2021, 53% of all residential addition permits were issued to homes built before 1960 in the same time period. Re-investment in Billings neighborhoods is happening at a brisk pace. Re-investments will help sustain and increase property values in these neighborhoods. Planning staff has continued to work with property owners on checking for zone district errors on the map. Over 62,000 tax parcels needed to be updated and translated to new zoning districts. We have worked closely with these owners and agents to ensure the map is correct.

Some builders have had to re-think some standard floor plans and layouts they have used for years, especially those models that have more than 50% of the street-front facade in garage door openings. Our new residential zones generally limit garage door openings to 50% or less of the front facade. Just as the previous code had limitations on lot area or building height that were intended to create space around buildings, this code provision was intended to create an inviting street-scape that is accommodating to pedestrians and safe for both drivers and walkers. The Planning staff received a letter from the Home Builder's Association (HBA) requesting we look at four specific issues in the new code. These issues are in the attached table, but in general the issues concern maximum building width in the N2 zone (currently set at 80 feet), required landscaping for residential lots and street facade loading of garages for mixed residential zone districts. Planning staff agrees we should monitor some of these issues. We have already clarified the issue of street tree requirements for new residential building permits.

Commercial Developments
The impact of the new mixed use zoning and site design requirements is too early to gauge at this point in time. Few of the 35 new commercial building permits issued have been reviewed with the full code in place. In addition, some of those permits were for non-building structures such as roof structures, concrete work or small adjustments to existing commercial developments. We have successfully assisted a consultant team develop a site plan for two new drive through restaurants, helped two other design consultant teams analyze the best site design for other drive through service businesses and other real estate professionals decipher the new code requirements for their clients. There are some firms that are more challenged than others in understanding the new code requirements and how to apply those to a particular site. Each site also has its own demands, opportunities and obstacles to development. In general, the design professionals appreciate the modernization of the off-street parking requirements, the clearly written landscaping requirements that apply to all new commercial developments, and the ability to request administrative relief to make minor adjustments to accomodate site demands.

Implementation
Planning staff is meeting internally twice a month to review code implementation, increase the core knowledge of each planner and help to resolve complex or complicated development questions. This twice-a-month staff training has also helped develop the attached table of errors and issues that need to be monitored and tracked for possible future amendments to make the code even better than it is right now. Planning staff is also working closely with Engineering and Public Works staff to ensure we are tracking any inconsistencies across city code sections and regulatory jurisdictions. A prime example is the zoning-based assessment rates the Council uses to fund arterial street construction and storm water management. Just recently, the Council approved an amendment to the city code to update the arterial street funding section to incorporate the new zone districts. Later this summer or in early fall, the Council will adopt those zoning-based assessment fees. Planning staff and Public Works staff have been tracking this since before the new code was adopted to ensure there was understanding and cooperation between the departments.

Every day, the new zoning code is implemented in dozens of permit reviews, clarifications to clients and customers, re-build letters to lenders and insurers, and customer questions at the Planning counter. The results of these everyday decisions will become clearer as we proceed through the first year with this new code. 

Planning staff has kept in constant contact with the development community as we implement the new code. This includes design professionals, engineering firms, the Home Builders Association, and the many real estate professionals throughout Billings. Through these daily, weekly and monthly conversations, we have tracked minor errors and cross-reference issues as well as the other items to be cognizant of with the new zoning code. We have compiled this into a table format that is attached to this report and will help us through the next few months of exercising the new code. First and foremost, we have not experienced any major issues with the new zoning code, beyond some site specific design challenges. Implementing new processes does present challenges for applicants and staff as we iron-out issues and concerns. The flow charts created for the Administrative section of the new code (27-1600) do assist with smoothing the review and procedures. We have not had any reports from the development community about any serious or major problems with the code.

The issues Planning staff is tracking fall into three general categories: Inter-code Consistency, Residential Site Design, and Administration. 

Inter-code Consistency
The City Code consists of 28 chapters regulating everything from how Council meetings are run to how developers handle storm water management. Whenever a major section is repealed and updated, some inconsistencies will occur within the other code chapters. Planning staff has identified a few of those consistency issues within the Subdivision regulations (Chapter 23) and the new zoning code. In addition, codes implemented by other departments like Fire have proven some consistency challenges also. Planning staff intends to continue to review other city code sections to see if additional code sections have conflicts. We plan to develop a strategy to handle these conflicts and inconsistencies at the 7-month progress report to the Council this fall.

Residential Site Design
Building activity and permitting has increased in 2021 - just in time to put the new zoning code through its paces and especially the residential sections of the new code. The HBA has requested the city review four specific items related to residential site design and Planning staff is tracking other issues as well for monitoring.

1. Block Face Average - Built-to Zone (N1-2, NX1-3) The site design requirements for these zone districts has both a Build-To Zone - a range measured from the front lot line to where the building can be placed and a Block Face Average to be used whenever an infill project is proposed. This infill project could include a remodel or re-build of a structure. The previous zoning regulations required a minimum setback, but no maximum. Build-To zones are ideal because they provide enough flexibility to fit most types of site design, but enough predictability to make a street or neighborhood feel consistent. The Block Face Average is a tool intended to help infill - rebuilds or remodels - fit within the fine grain of an established street. The Block Face Average requires measuring the building setbacks on the two adjacent lots on either side of the subject parcel to come up with an average setback for the infill project. The Block Face Average overrides the Build-To Zone. In theory this should result in a better fit for the neighborhood. In practice, so far, staff has found the result to be less than ideal. Two main factors are effecting this result: lots with "missing teeth" and utility locations. Planning staff will continue to review this regulation and will present alternatives if needed at the 7-month report to Council. 
2. Ground-Floor Unit Width (NX2-3) The new code for multi-family residential was intended to regulate the two major designs for multi-family developments - stacked units and side-by-side units. The building and siting regulations are intended to improve the livability and sustainability of this housing choice. The code section requires both a maximum building width and a maximum ground-floor unit width. The maximum building width only applies to side-by-side type buildings and the maximum unit width only applies to the stacked unit type building. Planning staff has reviewed many of the stacked unit multi-family developments in Billings and has found the 16-foot maximum ground-floor unit width to be not in character with these existing developments. Most ground-floor units are at least 21 feet in width if not more. An average runs up to 24 feet for newer construction. The mixed residential zone districts were not intended to modify the existing accepted unit width standards in Billings. The Building Siting standards were intended to bring buildings closer to the street, ensure doors (for side-by-side units) and windows face the street frontage and to make the bulk and height of buildings compatible with any adjacent lower density zone districts. Planning staff will present a possible solution to the Council in the 7-month report.
3. Front Load Garages in Mixed Residential (NX1-3) One of the key elements in the zoning code update was to better balance the interface areas between residential uses, pedestrians and vehicle traffic. This all happens between the small area between the front of a building and the street curb. Getting the right balance of elements that gives safety to walkers, bicyclists, driver's and residents is essential. Mixed residential zones typically will have more residents per linear foot of street frontage so giving more safety to walkers and residents is important. One of the ways you minimize conflicts between cars and people on foot is to dedicate space for each one. A side-by-side townhome apartment that dedicates more than half of the linear street frontage to driveway openings, is not a safe place for walking. This development pattern is apparent in many of the multi-family developments built in the last decade. The HBA has requested the city re-evaluate the prohibition on street front loading garages in the Mixed Residential zone districts. Planning staff, the HBA and other stakeholders will continue to monitor and evaluate this item.
4. Maximum Building Width (N2) The N2 zone district has a both a maximum lot width (120 feet) and a maximum building width (80 feet). The N2 zone district building site design requirements are intended to be similar to the style of building and development from the 1950s through the mid 1970s. These districts featured wider lots, ranch-style homes and included two family dwelling with front-load garages. There appears to be a mismatch between the maximum lot width - based on actual Billings lots of this era - and the maximum building width - this is 40 feet less than the maximum lot width. The N1 zone district has both a maximum lot width and a maximum building width but the N1 requirements are a better match of 80 feet (lot) and 65 feet (building). Planning will study this further and report back to Council on a possible solution.
5. Yard Treatment in Neighborhood Districts The code in Section 27-303 has a requirement that all yards have at least 60% of the area in landscaping. We do not have a process to enforce such a code requirement and this is generally not an issue in the city. Some owners have chosen to have more paving or non-landscaped area that likely exceeds this new code limitation. Planning staff believes this requirement is not necessary in Billings, a low rainfall community that relies on a limited source for water supply. Requiring this much landscaping may add to the outdoor water use burden during the summer months. Planning staff will include this item in future proposed amendments to the code.

Administration
There are several issues within the mundane administration of the new code that are not working as intended or require some clarifying language to ensure regularity of application. The first involves Administrative Relief and when a 5-foot variation from a setback or build-to zone can be allowed. Staff believes some clarifying language is needed in this section to ensure staff and designers know when this applies and when a Board of Adjustment variance is needed instead. The second issue involves the mixed use zone district where only a residential use is developed and whether the building and use can be re-established if destroyed or abandoned. The current interpretation of the code for the mixed use zone districts is the residential use - whether single family, two family or multi-family - could not be re-built if destroyed by more than 50% or abandoned for more than 1 year. The third administrative issue is the requirement to submit a zone change upon requesting annexation. Prior to the new code requirement, the city had one "default" zone district. Staff believes with some criteria in place, a zone district for property that has petitioned for annexation to the city could be set without the need for the property owner to submit a zone change. Larger parcels that trigger a Planned Neighborhood Development would not qualify for this exemption from a zone change application. Planning staff will be looking closer at these issues during the next few months and return to Council to discuss possible solutions this fall.

City Council may:

• Give general direction to staff on the issues presented in the work session memo or other items staff may monitor in the near future.

The Planning Division budget will not be effected by providing this Zoning Code update. Ongoing management and monitoring of the zoning code, as well as developing proposed amendments or adjustments that need formal action, will take staff time. However, this work is expected in any regulatory implementation process.