Hold a work session to allow the City Council and the public to ask questions, seek clarification, have discussions, and provide direction to staff regarding modifications to the Zoning Code related to the High Occupancy Housing provisions.

On November 17, 2020, the City Council adopted a Zoning Code Amendment (Ordinance No. 2020-28 and Resolution No. 2020-59) that implemented the High Occupancy Housing Specific Plan. At the time of the adoption, the City Council incorporated by motion modifications to the definitions of the High Occupancy Housing Development and Mixed-Use High Occupancy Housing Development land uses.  The modifications to the definitions exempted affordable housing developments that provide 100% of the dwelling units to persons or families with a household income equal to 60 percent of the Area Median Income.  Since the adoption of the above-referenced Zoning Code Amendment, Staff has evaluated the modifications that were made by motion and is requesting direction from the City Council on possible amendments to the Zoning Code to resolve items that have been identified.

I.  City Council Questions:
For your reference, below is a general overview of the questions on which staff is seeking the City Council’s comments and direction.

1. Should the Area Median Income cutoff for a household be changed from 60% to 80% or less, in order to be consistent with the affordable housing incentives in the Zoning Code?
2. Should the Zoning Code be amended to permit an affordable housing development as an allowed High Occupancy Housing Development or Mixed-Use High Occupancy Housing Development land use without the requirement for a Conditional Use Permit and, if so, should some high occupancy housing requirements be modified for affordable housing developments?

II.  Background:
On November 17, 2020, the City Council adopted a Zoning Code Amendment (Ordinance No. 2020-28 and Resolution No. 2020-59) that implemented the High Occupancy Housing Specific Plan.  The amendment incorporated provisions pertaining to definitions, property development standards, parking standards, appendixes, and related provisions for the High Occupancy Housing Development and Mixed-Use High Occupancy Housing Development land uses.  When the amendment was adopted, the City Council incorporated by motion modifications to the definitions of the High Occupancy Housing Development and Mixed-Use High Occupancy Housing Development land uses (Attachment 1).  These modifications excluded affordable housing developments that provide 100% of the dwelling units to persons or families with a household income equal to 60 percent of the Area Median Income from the referenced definitions.  It should be noted that the exemption is for affordable housing developments regardless of the number of units, bedrooms, zoning, or if the units are for sale or rent.  The modification by motion also failed to address affordable housing developments serving households earning less than 60% of the Area Median Income, and by its terms only applies to those developments serving households earning exactly 60%.

In summary, the expressed purpose of the modifications was to exclude the aforementioned affordable housing developments from the requirement of obtaining the approval of a Conditional Use Permit that otherwise would be required for a High Occupancy Housing Development or Mixed-Use High Occupancy Housing Development.  Also, the modifications were intended to minimize the cost and simplify the approval process for these developments.

Note: For the purpose of the analysis below, an affordable housing development that provides 100% of the dwelling units to persons or families with a household income equal to 60 percent of the Area Median Income regardless of the number of units, bedrooms, zoning, or if the units are for sale or rent, is hereafter referred to as the “Affordable Housing Development.”

III.    Assessment:

Upon receipt and review of the modifications by zoning, Staff has identified the following items that should be addressed:

1. The exemption that was incorporated into the High Occupancy Housing Development and Mixed-Use High Occupancy Housing Development definitions is limited to persons or families with a household income equal to 60% of the Area Median Income.  To provide affordable housing, owners of these developments typically allow for a range of incomes equal to and less than a specific maximum amount, rather than a limited, precise income.  Also, the income threshold of 60% is below the income maximum of 80% that is typically used for the affordable housing incentives of the Zoning Code.
2. The U.S. Department of Housing and Urban Development publishes multiple regulations pertaining to the Area Median Income for U.S. cities, areas, and territories.  As adopted, the assumption is that the Area Median Income to be utilized is based upon the amounts established by the U.S. Department of Housing and Urban Development for the City of Flagstaff, although it is not stated.  Since an Area Median Income is not stated, the standard is open to interpretation.
3. The modification by motion did not have its intended impact on Non-Transect Commercial zones.  Since an Affordable Housing Development would not be considered a High Occupancy Housing Development or Mixed-Use High Occupancy Housing Development, the development would be regarded as either a Single-family, Duplex, Mixed-use, or Multiple-Family Development.  In the Non-Transect Commercial zones, the property owner of a Duplex and Multiple-Family Development is required to obtain a Conditional Use Permit approval, and a Mixed-Use Development would be allowed by right. Therefore, the incorporated modifications do not alleviate an Affordable Housing Development from obtaining a Conditional Use Permit.
4. In the Non-Transect Commercial zones, only developments that are considered to be High Occupancy Housing Developments or Mixed-Use High Occupancy Housing Developments are permitted to exceed the allowed density and bedrooms per acre specified in a zone.  Therefore, an Affordable Housing Development that is a Multiple Family or Mixed-Use Development that proposes to exceed the zone’s allowed density and bedrooms per acre would be prohibited.
5. The modifications by motion allow for an Affordable Housing Development that may otherwise be considered a High Occupancy Housing Development or Mixed-Use High Occupancy Housing Development to be developed anywhere in Flagstaff, except as indicated in III.4.  Therefore, these developments would be allowed outside of a pedestrian shed of an activity center, in areas that may not have the desired infrastructure (e.g. street size, multimodal transit opportunities, etc.) to accommodate such a development, and may be incompatible with the surrounding residential developments – these are all issues that the High Occupancy Housing Specific Plan and the associated Zoning Code Text Amendment were intended to address and alleviate.

IV.    Questions and Recommend Approach:

1. Should the Area Median Income cutoff for a household be changed from 60% to 80% or less, in order to be consistent with the affordable housing incentives in the Zoning Code?

2. Should the Zoning Code be amended to permit an affordable housing development as an allowed High Occupancy Housing Development or Mixed-Use High Occupancy Housing Development land use without the requirement for a Conditional Use Permit and, if so, should some high occupancy housing requirements be modified for affordable housing developments?