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2021-05-05 Planning Commission PacketCommissioners City Staff Lawson Bronson, Chair Tim O’Neil, Vice-Chair Keith Niven, Planning Manager Wayne Carlson Hope Elder E. Tina Piety, Administrative Assistant Diana Noble-Gulliford Tom Medhurst 253-835-2601 Dale Couture Eric Olsen, Alternate www.cityoffederalway.com Jae So, Alternate Anna Patrick, Alternate K:\PLN Planning Commission\2021\Agenda\Agenda 05-05-21.docx City of Federal Way PLANNING COMMISSION May 5, 2021, 6:30 p.m. City Hall, Zoom Meeting AGENDA 1. CALL TO ORDER 2. ROLL CALL 3. APPROVAL OF MINUTES a. Planning Commission Meeting of April 21, 2021 4. PUBLIC COMMENT 5. COMMISSION BUSINESS a. Discussion – Housing Action Plan; Strategies Implementation 6. STAFF BUSINESS a. Manager’s Report 7. NEXT MEETING a. May 19, 2021, 6:30 p.m. 8. ADJOURNMENT Notice: Pursuant to Governor Inslee’s Proclamation 20-28, all in-person meetings are prohibited until further notice. The Mayor and City Council encourage you use one of the following ways to participate in the meeting: • Join here https://cityoffederalway.zoom.us/j/92039948345?pwd=b3RBOGdQeUw5ZEFQSi8rblhlZ0hRQT09 • Call in and listen to the live meeting (888) 788-0099 or 253-215-8782 • Public Comment may be submitted via email here, or sign up to provide live comments here • Zoom meeting code 920 3994 8345 and passcode 431768 Planning Commission Minutes Page 1 April 21, 2021 CITY OF FEDERAL WAY PLANNING COMMISSION April 21, 2021 City Hall 6:30 p.m. Zoom MEETING MINUTES Commissioners present: Tim O’Neil, Wayne Carlson, Diana Noble-Gulliford, Tom Medhurst, Dale Couture, Hope Elder, Jae So, and Anna Patrick. Commissioners absent: Lawson Bronson and Eric Olsen (both excused). City Staff present: CD Director Brian Davis, Planning Manager Keith Niven, Associate Planner Chaney Skadsen, City Attorney Eric Rhoades, and Administrative Assistant II Tina Piety. CALL TO ORDER Vice-Chair O’Neil called the meeting to order at 6:30 P.M. MINUTES Commissioners Carlson, Patrick, and Noble-Gulliford requested changes/updates to the minutes presented with the packet to more fully represent their comments. The April 3, 2021, minutes were approved as presented. PUBLIC COMMENT None COMMISSION BUSINESS Discussion, Housing Action Plan (HAP): Updates to the Strategies and Public Open House Findings – Senior Planner Skadsen delivered the staff presentation. This is for information only. Two events were held on Zoom for an explanation of the project and citizen input. Staff utilized some fun engagement tools, one of which was the creation of a Word Cloud of what people love about Federal Way. Popular words include diversity, parks, friendly people, community events, and location. Citizen input included: When asked if going to move in the next five years: • A traditional single-family residence is desired. • Small cottage housing and duplex/triplex options were favored. Concerns with condos and apartments: • Families and individuals that have pets. • Units are dark and do not have enough windows. • Lack privacy. Planning Commission Minutes Page 2 April 21, 2021 ADUs should be easier to develop: • Federal Way’s code is more complicated than nearby cities. • ADUs are important and provide a housing option for those with disabilities. Some single-family minimum lot sizes are too big: • Smaller lots, cottage-type housing, and townhomes are limited with current zoning. The following items will be added to the proposed HAP strategies: 1. Partner to provide homeownership educational programs. 2. Consider pet-friendly amenities in apartment/condos. 3. Promote elements for community and economic development near transit. 4. Seattle ADUniverseexample: https://aduniverse-seattlecitygis.hub.arcgis.com/. 5. Reformulate Strategy #2 to state: Update area-specific development regulations and design standards to be responsive to changing conditions and support walkable neighborhood centers through updated and new subarea planning. In response to Commissioner Noble-Gulliford’s question at the last meeting regarding financing, Planner Skadsen stated that FHA, VA, and conventional loans are available for purchasing attached housing. In addition, construction mortgages, aka self-build loans and conventional loans are available for constructing attached housing. Commissioner Noble-Gulliford stated that Federal Way has been discussing mixed-use for a long time. She noted the Uptown Apts are mixed-use, but there is a lack of parking for employees and customers of the stores. The city needs to address parking. The city can’t assume people will be taking the bus. She commented that mixed-use has been waived for the Sound Transit station Transit Oriented Design (TOD) projects. Why did the city bargain away this tool? Director Davis stated Community Development will work with Public Works on the parking concerns. In regards to the mixed-use question, it has been raised before and he will resend an email that discusses the Council’s approved agreement and what the city gained by this approval. Commissioner Noble-Gulliford asked what was the demographics of the open houses’ attendees. Planner Skadsen responded there were eight attendees on Thursday and four on Saturday. The attendees were of diverse ages, races, and living situations. Also, there were realtors, aspiring homeowners, and community leaders. The city did a lot of outreach, but this is all that showed. A discussion was held as to why do people buy attached housing. If two units, the owner could live in one and rent the other out, or maybe have family live there. Planner Skasden stated that if there are five or more units it must be a commercial venture and there are various loans available. The sale price may be a factor since attached housing is estimated to be less than detached single-family. However, recently the median sale prices have risen greatly (exceeding 400,000). In addition, there are fewer newer attached dwelling developments. Commissioner Noble-Gulliford asked why aren’t more condominiums being built? Also, how are they financed? Planner Skadsen commented that there are two types of condos, those where the owner also owns the lot and the other where the lot is owned in common and managed by a Homeowners Association and financing is handled by the county. Vice-Chair O’Neil stated that in the last 10-15 years builders have been often sued by HOAs because of building issues and that has driven many out of the market. Many are now building apartments because they can sell them to a property management company and thereby have no further liability. Vice-Chair O’Neil said that usually, the biggest cost is insurance. Lifestyle Planning Commission Minutes Page 3 April 21, 2021 condos like the ones in Burien that are walkable have been successful. Commissioner Noble-Gulliford said that ideally, Federal Way should have condos in the city center for walkability, but she sees almost all are rentals. How do we encourage condo development in the city center?. Planner Skadsen replied she will ask the city’s consultants how we can encourage condo development. Commissioner Patrick expressed her concerns about multi-family housing impacts. She shared a document that outlines her concerns (attached). In her document, she states “Low-income communities on the east side are getting squeezed out of their community by developers who buy up apartments when the LIHTC duration requirements expire and convert them to market rate as the demand for upper income bracket rentals grow. It appears that this leads to fully tax-exempt housing in south King County while reserving the east King County housing for the upper most tax bracket allowed with less tax breaks and more tax revenue.” Housing that doesn’t bring in property tax is a big burden on our city. “DevCo’s housing in Federal Way reflects complete year over year tax exemptions while bringing in massive tax revenue for the same housing in Issaquah where they rent at higher income brackets. This is reflected in our school funding and funding for public safety and services.” Planning Manager Niven commented there are many layers to increasing homeownership. Supply-side economics is one factor. Currently, there is more demand than supply, which is pushing up prices. We need to have housing at all price points. Many of those who are income-restricted are being pushed out to where they have a long commute and there is less available mass transit. Commissioner Noble-Gulliford inquired if the city would issue a permit for a four-plex in a single-family neighborhood where the HOA has a rule of no more than one residence per lot. Planner Skadsen replied that the city is not bound to HOA rules and would approve the project if it meets the city’s code requirements. Meeting the HOA rules is a civil matter between the HOA and the builder. Commissioner Noble-Gulliford asked how many homes rent out a single room? Planner Skadsen replied the city does not keep this statistic but expects they would need a business license and the number could be determined from that. Manager Niven commented that if it is a short-term rental they must have a business license, but if to a family member, no business license is required. The city is developing a rental inspection program that would capture the number. Director Davis clarified that we are proposing that if they rent just one unit, they would not fall within the program but if more than one rental, they would be required to be inspected by our program. Commissioner Patrick asked if in-home care or group home would be considered an indirect rental that would be included in the city’s rental inspection program? Director Davis stated that other regulatory agencies may inspect group homes, and if they do so, we wouldn't include them in our program. Vice-Chair O’Neil inquired if I want to sell my home in which I currently rent out my basement and it is a nonconforming use, can I tell the buyer they will be able to rent the basement? Will inspectors be looking for violations? Director Davis replied as long as the nonconforming use meets the city’s provisions and is legally established it can continue. The city is not trying to burden owner-occupied rentals. The city will not be looking for violations and it would only be considered one if a complaint is made. Vice-Chair O’Neil commented that at our last meeting, Mr. Pace suggested the city use a 50-year planning horizon rather than the current 20-year. Why don’t we do this? Director Davis replied that the city can do a 50-year horizon; however, it is tied to the comprehensive plan and we would have to plan out for 50 years for future needs and infrastructure, and the more time that passes the less the accuracy. Going beyond 20 years is major guesswork. Vice-Chair O’Neil asked if the city could allow overlay zoning for specialty housing. Director Davis commented the city currently uses overlay zoning with some areas that have additional conditions and restrictions such as the CP-1 and this can be continued. Planning Commission Minutes Page 4 April 21, 2021 STAFF BUSINESS Manager’s Report – Director Davis reported that the growth targets will be presented to the council soon; staff will keep the Commission informed of its progress. Manager Niven will be taking over the staff lead and this report; Director Davis’ involvement will be phased out. NEXT MEETING May 5, 2021, 6:30 p.m., Zoom Meeting ADJOURN The meeting adjourned at 8:00 P.M. K:\Planning Commission\2016\Meeting Summary 04-21-21.doc As we create our long-term plan, I propose we take a close look at actual housing numbers and policies in south King County compared to communities such as east King County. We will need to ask important questions that will allow us to see the full picture. Under the premise of maintaining affordability for the workforce in their community such as for teachers and health care workers, east King County is providing exceptional tax breaks for land grabs while reserving construction to residents at the 120% AMI bracket shifting affordable housing burden to cities like Federal Way. Low-income communities on the east side are getting squeezed out of their community by developers who buy up apartments when the LIHTC duration requirements expire and convert them to market rate as the demand for upper income bracket rentals grow. In Federal Way and upper SKC communities, developers appear to be buying up these same apartments, utilizing the LIHTC tax credits in some apartments and recycling the tax exemptions. In communities with less opportunities and more crime and less tax revenue, it may be difficult to attract the upper income brackets unless they add opportunities and vitality to their community while addressing the crime and blight which requires the needed tax revenue. It appears that this leads to fully tax-exempt housing in south King County while reserving the east King County housing for the upper most tax bracket allowed with less tax breaks and more tax revenue. DevCo’s housing in Federal Way reflects complete year over year tax exemptions while bringing in massive tax revenue for the same housing in Issaquah where they rent at higher income brackets. This is reflected in our school funding and funding for public safety and services. LIHTC DevCo Federal Way LIHTC DevCo Issaquah The increase in the school impact fee shows a halt in LIHTC units in Federal Way in 2019. Housing Action Plan: Implementation Matrix Page 1 of 4 COMMUNITY DEVELOPMENT DEPARTMENT 33325 8th Avenue South Federal Way, WA 98003-6325 253-835-7000 www.cityoffederalway.com Jim Ferrell, Mayor MEMORANDUM DATE: May 5, 2021 TO: Federal Way Planning Commission FROM: Brian Davis, Director Keith Niven, Planning Manager Chaney Skadsen, Associate Planner SUBJECT: Housing Action Plan: Implementation Matrix MEETING OBJECTIVE Review the Implementation Matrix and Priority Schedule developed for the enactment of Federal Way’s Housing Action Plan (HAP) housing objectives and strategies. BACKGROUND In 2019, the City of Federal Way received a $100,000 grant from the Washington State Department of Commerce to prepare a Housing Action Plan (HAP). The goal of a HAP, as stated in RCW 36.70A.040, is “to encourage construction of additional affordable and market-rate housing in a greater variety of housing types and at prices that are accessible to a greater variety of incomes, including strategies aimed at the for- profit single-family home market.” HAP EXPECTATION The objective of the City of Federal Way’s HAP document is to lay out the comprehensive housing policy direction from which regulatory changes can be implemented. This plan intends that regulatory changes occurring after adoption be towards the goal of expanding housing choices, encourage homeownership opportunities, plan for increased quality of life as the city grows, and keep people in their homes. HOUSING CONTEXT AND NEED • Federal Way needs to add about 6,800 new units before 2040 to accommodate population growth and account for past underproduction. This equates to an average production of 339 additional units each year, a 68 percent increase over recent housing production trends. • The rate of new housing production in Federal Way is not keeping pace with demand or comprehensive plan growth targets. One reason is the lack of multifamily housing construction since Housing Action Plan: Implementation Matrix Page 2 of 4 mid-2017 following a moratorium on multifamily housing permits and an increased impact fee to support the Federal Way School District. • Federal Way’s housing stock lacks a variety of housing options. Types such as duplexes, triplexes, and small-scale multifamily developments like townhomes, courtyard apartments, and stacked condominiums make up a small portion of the available housing. • The underproduction of housing is contributing to increased competition for available housing resulting in fewer housing options for everyone. The lack of housing choice is making it difficult for individuals and families across both ends of the income spectrum to find housing that meets their needs. This is particularly true for households earning below 50% of area median income (AMI) who are cost-burdened and those earning above 100% AMI who are down renting. • Nearly 40% of all households in Federal Way are cost-burdened (over 13,000 households in total). The cost burden is most common among both owner and renter households with incomes below 50% AMI and disproportionately impact Black, indigenous, and persons of color (BIPOC) households. • Future Sound Transit Link light rail stations planned for in and around Federal Way provide an excellent opportunity for the city to encourage new higher-density housing production for an amenity-rich neighborhood where residents will have access to jobs, transit, services, and community gathering and recreation. HOUSING OBJECTIVES AND STRATEGIES The housing objectives and strategies were developed using data collected from the Subregional Housing Framework, Housing Needs Assessment for Federal Way, Code and Policy Review, and input received from Councilmembers, Planning Commissioners, Advisory Group, Visual Preference Survey, and the public. The selected strategies went through an iterative review process with internal city departments and Planning Division staff resulting in identified opportunities for coordinated and collaborative implementation. As a result, four housing objectives were established: 1. Promote new housing development that expands housing choices and is inclusive to community needs. 2. Encourage homeownership opportunities and support equitable housing outcomes. 3. Plan for continued growth and ensure that the built environment promotes community development and increases the quality of life for Federal Way’s existing and future residents. 4. Preserve existing affordable housing stock to prevent displacement pressure. There are broad housing needs in Federal Way spanning the spectrums of income, accessibility, housing size, and typology. The city needs a diversity of new housing types, including both rental and ownership options that align with the community’s composition. A single housing strategy cannot effectively address the current shortfalls in housing and fulfill the housing objectives for meeting future demand. Alternatively, the HAP Housing Action Plan: Implementation Matrix Page 3 of 4 proposes a series of strategies designed to work together to shape opportunities for the development of market-rate and affordable housing and the preservation of housing that serves the existing community. Exhibit 1: HAP Objectives, Strategies, and Housing Category Objective Strategy Market Rate Regulated Affordable Preservation Promote new housing development that expands housing choices and is inclusive to community needs. #1 Promote a dense, walkable, mixed-use City Center as a complete neighborhood. x x #2 Promote mixed use, walkable, subareas and neighborhood centers. x x #3 Increase diversity in housing choice through expanding missing middle development opportunities. x #4 Encourage Accessory Dwelling Unit production. x #5 Ensure that financial and regulatory incentives for mixed-income housing are effective. x x #6 Review school impact fees on multifamily housing. x x Encourage homeownership opportunities and support equitable housing outcomes. #1 Promote a dense, walkable, mixed-use City Center as a complete neighborhood. x x #2 Promote mixed use, walkable, subareas and neighborhood centers. x x #3 Increase diversity in housing choice through expanding missing middle development opportunities. x #4 Encourage Accessory Dwelling Unit production. x #6 Review school impact fees on multifamily housing. x x Plan for continued growth and ensure that the built environment promotes community development and increases the quality of life for Federal Way’s existing and future residents. #1 Promote a dense, walkable, mixed-use City Center as a complete neighborhood. x x #2 Promote mixed use, walkable, subareas and neighborhood centers. x x #3 Increase diversity in housing choice through expanding missing middle development opportunities. x #6 Review school impact fees on multifamily housing. x x #7 Coordinate affordable housing development and preservation with community groups and the South King Housing and Homelessness Partnership (SKHHP). x x Preserve existing affordable housing stock to prevent displacement pressure. #7 Coordinate affordable housing development and preservation with community groups and the South King Housing and Homelessness Partnership (SKHHP). x x #8 Protect tenants through the development of a rental housing inspection program. x x Housing Action Plan: Implementation Matrix Page 4 of 4 More information and background on the strategies are detailed in the Housing Objectives and Strategies document. The Implementation Matrix and Priority Schedule outlines the priority, level of effort and time duration, responsible departments and partners, and measures of success. Each of these actions will be implemented over time and will involve contributions from stakeholders such as other city departments, City Council, Land Use and Transportation Committee, Planning Commission, residents, community-based organizations (CBOs), developers (both market-rate and affordable), and others. ATTACHMENTS A. Housing Objectives and Strategies B. Implementation Matrix and Priority Schedule NEXT MEETING • June 2, 2021, Planning Commission: Public Hearing – Draft Housing Action Plan City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 1 Housing Objectives and Strategies This document presents a set of proposed objectives for addressing housing needs in Federal Way to increase residential building capacity and promote the development of market rate housing with provisions for income restricted affordable housing and preservation of naturally occurring affordable housing. These objectives and strategies were informed by the Housing Needs Assessment (HNA), Housing Policy, Code, and Permitting Review, the Visual Preference Survey, and additional engagement with the Advisory Committee, City Council, Planning Commission, stakeholders and the community. Housing Action Plan Objectives 1. Promote new housing development that expands housing choices and is inclusive to community needs. 2. Encourage homeownership opportunities and support equitable housing outcomes 3. Plan for continued growth and ensure that the built environment promotes community development and increases the quality of life for Federal Way’s existing and future residents. 4. Preserve existing affordable housing stock to prevent displacement pressure. There are 9 strategies with implementing actions that help to realize the identified Objectives #1 Promote a dense, walkable, mixed-use City Center as a complete neighborhood. #2 Promote mixed use, walkable, subareas and neighborhood centers. #3 Increase diversity in housing choice through expanding missing middle development opportunities. #4 Encourage Accessory Dwelling Unit production. #5 Ensure that financial and regulatory incentives for mixed-income housing are effective. #6 Review school impact fees on multifamily housing. #7 Coordinate affordable housing development and preservation with community groups and the South King Housing and Homelessness Partnership (SKHHP). #8 Protect tenants through the development of a rental housing inspection program. City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 2 HOUSING ACTION PLAN STRATEGIES The Exhibit 1 matrix (below) connects the 9 selected strategies to the 4 plan objectives. It also links to a detailed strategy description containing ideas about how each strategy can be best implemented in the City of Federal Way. Exhibit 1 Proposed Housing Strategies for Consideration and Related Housing Objectives Visualize which category of housing development the strategy is designed to directly support. The categories are market rate, income restricted affordable housing, and those that apply to both. Strategy Promote Housing Options Encourage Homeownership Plan for Quality Growth Preserve Affordable Housing #1 Promote a dense, walkable, mixed-use City Center as a complete neighborhood.    #2 Promote mixed use, walkable, subareas and neighborhood centers.    #3 Increase diversity in housing choice through expanding missing middle development opportunities.    #4 Encourage Accessory Dwelling Unit production.  #5 Ensure that financial and regulatory incentives for mixed- income housing are effective.  #6 Review school impact fees on multifamily housing.    #7 Coordinate affordable housing development and preservation with community groups and the South King Housing and Homelessness Partnership (SKHHP).   #8 Protect tenants through the development of a rental housing inspection program.  City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 3 #1  Promote a dense, walkable, mixed-use City Center as a complete neighborhood.  What? The Puget Sound Regional Council (PSRC) designated Federal Way’s City Center Core (CC-C) zone as a Regional Growth Center. A key element of Regional Growth Centers is to promote dense, walkable, mixed-used areas. To date, there has been limited residential development located in the Federal Way’s Regional Growth Center (CC-C) zone. In 2024, the Sound Transit LINK station is planned to open and serve Federal Way north bound commuters. Future connections are planned for the Tacoma Dome Link Extension Station. To support the addition of high capacity transit access, higher density residential development and safe and pleasant connections to resources and amenities will fulfill the key elements to the Regional Growth Center area (Downtown neighborhood). Why? Impacts from greenhouse gas emissions from single-occupancy vehicle trips; growing interest in mixed-use neighborhoods; and, desire for active, healthy ways of getting around are trends in the Puget Sound region pointing to regional support for transit-oriented development (TOD). Currently adopted plans and development regulations for the City Center zones also point to a less auto-focused downtown. Higher densities—i.e., increased number of homes and businesses/organizations/institutions—combined with safe and pleasant connections and gathering spaces near transit achieves the following:  Livable, vibrant, people-friendly places that serve the full spectrum of Federal Way’s residents and businesses.  Increased access to opportunity—the ability to easily reach jobs, education, healthcare, and services— through improved transit access and proximity of uses.  A critical mass of transit riders to support the transit investment. PSRC calls for high capacity transit-served areas to have residential and commercial densities exceeding 15 to 20 homes per acre and/or 50 jobs per acre, and in a Regional Growth Center, densities of at least 45 people (resident/employee) per acre (VISION 2040, pg 81). Transit-oriented development leverages existing assets like local businesses, cultural anchors, and parks and adds to their vibrancy (and doesn’t displace them). Complementary development supports existing businesses and enlivens public spaces. City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 4 How?  Revisit the City Center-Core (CC-C) and City Center-Frame (CC-F) zone building height, streetscape, and usable open space provisions to remove regulatory barriers to market-rate multi-family development.  Consider providing for minimum density standards to ensure supportive planned-for densities are achieved.  Evaluate city owned assets and future capital improvements in and around the City Center area appropriate for public and private partnerships.  Evaluate whether changes to Comprehensive Plan classifications within a ½ mile and ¼ mile of transit to allow higher density zoning are necessary.  Review the city’s existing Local infrastructure Financing Tool “LIFT Tax” program to support City Center development.  Explore specific opportunities, challenges, and strategies to encourage transit-oriented development in a comprehensive downtown plan update. Consider a phasing plan that demonstrates how the station area can intensify over time and offers flexibility to meet changing community needs.  In station area planning efforts, incorporate Crime Prevention Through Environmental Design principles and funding mechanisms that promote safe and pleasant paths for people walking, biking, and rolling to transit and other amenities. Related Strategies:  #2 Promote mixed use, walkable, subareas and neighborhood centers.  #5 Ensure that financial and regulatory incentives for mixed-income housing are effective.  #6 Review school impact fees on multifamily housing. Related Objectives: #1 Promote Options, #2 Encourage Homeownership, and #3 Plan for Quality Growth Case Studies  Lynnwood is also designated a Core City and Regional Growth Center by PSRC. Lynnwood is planning for coming light rail, developing the City Center Subarea Plan (2005), Streetscape Plan (2014), Lynnwood Transit Center Multimodal Accessibility Plan (2016), City Center Subarea Implementation Strategies Report (2017), City Center Parks Master Plan (2018), City Center Design Guidelines (2019), and others. These planning efforts set the vision for the area and development and design standards, and has attracted hundreds of new units just prior to light rail arrival in 2024.  Kent’s “Meet Me on Meeker” initiative is an effort to update the main corridor to the historic downtown, City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 5 complement new development, and better connect residents with businesses through updated streetscape design and construction standards. Pairing one side of the road with wide sidewalks, a landscaped buffer/amenity zone and on-street parking, the other featuring a multi-modal promenade that extends from community trails to the downtown.  Many Puget Sound cities require minimum densities around transit, including Mountlake Terrace, Bothell, Bellevue, and Redmond. Mountlake Terrace Town Center uses a minimum height – four stories – rather than a minimum density, paired with a prohibition on surface parking near the future light rail station. City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 6 #2  Promote mixed use, walkable, subareas and neighborhood centers. What? Similar to the desired amenity-rich City Center, Federal Way has additional opportunities to achieve dense, walkable, mixed-use areas in other locations including around future mass transit locations and smaller scale neighborhood centers. This includes potentially revisiting existing sub-area plans as well as planning opportunities associated with the new transit stations being planned as part of ST3 outside of the City Center. A north and south station location will drive opportunities for new housing development that should be incorporated into future planning activities for the City Why? Higher density housing near amenities like grocery stores, commercial, retail, transit, parks, schools, services, and existing and future transit lines support healthy walkable communities. This would include identifying housing opportunities city-wide that increases housing options within a 15- minute walk zone from such amenities. To be more responsive to meeting the community’s housing needs, the City of Federal Way should identify opportunities to enhance and promote neighborhood centers and subarea plans to encourage local community economic development for accessible, vibrant and livable neighborhoods The best design standards offer a strategic mix of predictability and flexibility. This includes integrating clear minimum standards for site and building design so that the community knows what to expect as development occurs. Options for flexibility provide the applicant ways to have some adjustment while still meeting the intent of the standards. These strategies encourage development of market rate townhome and condominium development to increase entry level homeownership opportunities at a lower-cost but at higher densities than single-family detached residential. Shared wall homes are also more energy efficient than free-standing houses and are less costly to build. Federal Way’s rules for townhouses and condominiums are complex and restrictive, which makes new construction slower and more expensive than in other cities. El Centro de La Raza Plaza Grand Opening El Centro de La Raza Plaza City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 7 How?  Support additional long-range planning around mass transit, including the planned S 272nd St Station, S 352nd Street Station, and neighborhood centers.  Consider alternative code provisions such as form-based code provisions particularly for multifamily and neighborhood business zones where strict density limits are present.  Encourage mixed-use areas to include elements that foster local economic development through partnerships with Community based Organizations (CBOs).  Consider amending the ground floor commercial requirement in mixed-use zones to promote flexibility.  Couple flexible provisions with design standards to emphasize stoops and other similar active/pedestrian- friendly ground level frontages for residential uses.  Revise and simplify dwelling unit definitions and types outlined in FWRC 19.05.040.  Collaborate with Public Works Department to identify areas for phased parking standards near the development of future mass transit.  Continue support of Transportation Demand Management (TDM) plans to allow reduced parking requirements where appropriate. Consider self-reporting as part of TDM plan for monitoring, evaluation and enforcement. Related Strategies:  #3 Increase diversity in housing choice through expanding missing middle development opportunities.  #5 Ensure that financial and regulatory incentives for mixed-income housing are effective.  #6 Review school impact fees on multifamily housing Related Objectives: #1 Promote Housing Options, and #2 Encourage Homeownership Case Studies Parking minimums vary widely from city to city. Many jurisdictions have worked towards reducing or eliminating parking minimums in recent years.  Wenatchee’s 2019 housing code update includes design guidelines to ensure pedestrian-friendly design in higher density and mixed-use zones. Specific pedestrian-oriented streets in the historic downtown require non-residential use and have more stringent design guidance.  Anacortes’ code includes standards for live-work units, which accommodate ground-floor residential use with the flexibility to convert to commercial use when market conditions permit. City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 8 #3  Increase diversity in housing choice through expanding missing middle development opportunities.  What? Strategically expand opportunities for market rate development of missing middle housing types such as duplexes, triplexes, townhomes, cottage housing, and courtyard apartments in the Residential Single Family (RS) Zone. Currently single-family zones make up nearly 70% of the city zoned area, while only 1.1% of the city zoned area, RS5.0, allows limited missing middle options. Why? In Federal Way and many suburban communities, the only housing choices are single-family homes on large lots or medium-to-large multifamily buildings. Such limited options do not reflect the wide range of preferences and needs of differing family sizes, household incomes, and cultural groups. One potential solution is to encourage a larger variety of housing types, often referred to as the “missing middle” as they are typically not allowed by many zoning codes. These housing types are also some of the most affordable forms of housing in terms of construction-cost-per-square-foot. In general, these types are lower costs than detached single-family homes and offer a greater range of design and locational choices than larger apartment buildings can offer. When properly designed, missing middle housing options can have a compatible appearance within an established neighborhood. Related Strategies:  #2 Promote mixed use, walkable, subareas and neighborhood centers.  #5 Ensure that financial and regulatory incentives for mixed-income housing are effective.  #6 Review school impact fees on multifamily housing. Related Objectives: #1 Promote Options, #2 Encourage Homeownership, and #3 Plan for Quality Growth How?  Consider removal of barriers for market-rate missing middle housing types in single-family zones.  Analyze areas that can support redevelopment and where additional housing capacity can occur and City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 9 would be supported by the neighborhoods. Integrate proposed changes into Comprehensive Plan update and FWRC.  Encourage missing middle typology of 4 units or more such as, courtyard apartments and townhomes and more on lots in amenity-rich areas proximate to schools, parks, transit stops, or commercial uses.  Allow duplexes and triplexes on corner lots and to be reviewed under the same process as single- family homes, rather than requiring a separate land use approval, which adds time and cost to development.  Consider lower impact fees for missing middle housing typology.  Revise minimum lot size for townhouse developments from the current standard of 5,000 sf per unit to improve the financial feasibility of this type of development and opportunity for infill.  Revise lot coverage permitted for higher density single family residential uses.  Consider revisions to the front and side yard setbacks particularly when paired design features.  Expand cottage housing and compact single-family housing options to more single-family zones and consider allowing attached units.  Reevaluate cottage housing and compact single-family housing lot criteria. Consider reduction to required minimum lot and development size.  Revise the City’s Comprehensive Plan (related to Traffic and Street Sections), Non-Motorized Plan, and Park PROs plan. Review ADA Transition Plan for required revisions.  Pair all regulatory strategies to encourage new types of housing development with updated design standards to ensure compatibility and livability.  Add design standards for façade modulation, covered entries, pitched roofs, and integration of design details. These should also include strict standards on garage/driveway width and design. Case Studies  The City of Kirkland recently passed a missing middle housing reform which removed regulations such as, minimum lot sizes, proximity limitations, floor area ratios, and cottage housing developments.  In 2019, the City of Wenatchee revised its zoning code to allow duplexes, triplexes, cottage housing, and townhouses in almost all low-density residential zones.  An Oregon law passed in 2019 requires all cities above 25,000 to allow duplexes, triplexes, fourplexes, and cottage clusters to be built on all land that allows detached houses. City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 10 #4  Encourage Accessory Dwelling Unit production.  What? Encourage the construction of market rate and accessible housing options by removing code barriers for accessory dwelling units (ADUs). ADUs are small dwelling units that share a parcel with an existing or concurrently-built house (the primary dwelling unit). Detached ADUs, like a backyard cottage or garage apartment, aren’t connected to a house, but are placed in the yard. Attached ADUs are contained within the house structure or are built onto the existing house, but have separate living facilities (bathroom and kitchen), like a basement apartment. Why? All cities in Washington above 20,000 population are required to allow ADU construction, but in many cities few ADUs have been built because restrictions like owner-occupancy and parking requirements can make adding an ADU difficult to finance or accommodate on a site. For ADUs to play a role in reducing housing scarcity and contributing to the diversity of housing options, restrictions that severely limit ADU construction should be reconsidered. Owner-occupancy provisions require that the homeowner live in either the primary dwelling unit or ADU. Federal Way requires owner-occupancy, however, these provisions make it more difficult to finance construction of an ADU, add to the permitting process, and are generally considered to be unenforceable In Federal Way the ADU size cannot exceed 40% of the primary residence and fall between the range of 300- 800 square feet. These regulations can have unintended consequences and create barriers to ADU construction. Simplifying the ADU size limits and removing the minimum lot size requirements assist in reducing barriers. Related Strategies:  Promote mixed use, walkable, subareas and neighborhood centers.  #6 Review school impact fees on multifamily housing. Related Objectives: #1 Promote Options How? Consider removal of barriers for ADU construction  Evaluate best practices implemented by cities successful in attaining more ADUs and recommend code revisions 11 Promote ADU development:  Eliminate stand-alone land use application process and conduct zoning review as part of the building permit.  Establish ADU program to advertise to the community  Invest in planning staff resources to simplify ADU permitting for the community by providing preapproved ADU plans at low cost.  Consider including plans that are designed for those living with a disability and mobility needs and that serve populations aging in place. Case Studies  In 2017 Vancouver, WA removed ADU owner-occupancy and parking requirements and allowed larger ADUs to be up to 50% of the size of the primary house.  In 2018 Olympia removed owner-occupancy requirements, eliminated parking requirements, and increased allowed heights for ADUs to 24 feet.  In 2019 Burien removed its owner-occupancy requirement, parking requirements (near transit stops), and allowed two ADUs on a lot if one is a detached ADU and the other is attached.  In 2020 Kenmore modified its owner occupancy provision so that it only applies in the first six- months after construction and removed minimum lot sizes.  In 2019 Seattle removed barriers and promoted the construction of ADUs in single family zones by launching ADUniverse, an online central resource the includes a step-by-step guide and pre- approved DADU plans. City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 12 #5  Ensure that financial and regulatory incentives for mixed-income housing are effective.  What? While increased production of market-rate housing is an essential part of this Housing Action Plan, the housing market in Federal Way provides very few options that are income-restricted affordable units to very low-income individuals and families. There are a variety of tools that the city can pursue to increase the number of units that are income restricted. The City has a variety of policy and code provisions in place to ensure affordable housing development is built such as: • Mandatory inclusionary zoning per FWRC 19.110.010(2) require that developments with 25 units or more provide 5% of total of rental units be affordable for households with incomes at 50% AMI. • Optional density bonus per 19.110.010 (3)(a) allows one bonus market rate unit for each affordable unit included in the project; up to 10 percent above the maximum density of the underlying zoning district. • Multi-family dwelling unit limited property tax exemption (also known as MFTE) program is eligible in the CC-C and CC-F residential target areas per FWRC 3.30 serving at or below 80-115% AMI. However, the implementation of these tools has not been regularly evaluated or monitored for efficacy. Why? The City should periodically review the measures it has in place to determine which are effective and which may need additional work to ensure that multifamily housing development integrate mixed income units effectively and support meeting community housing needs. Related Strategies:  #1 Promote a dense, walkable, mixed-use City Center as a complete neighborhood.  #2 Promote mixed use, walkable, subareas and neighborhood centers.  #6 Review school impact fees on multifamily housing. Related Objectives: #1 Promote Options, #2 Encourage Homeownership, and #3 Plan for Quality Growth How? • Conduct a study to evaluate the financial incentives and impacts of the existing mixed-income provisions on multi-family development. • Monitor the income restricted units created by these provisions. • Periodically evaluate provisions and implement changes as necessary to promote mixed-income developments. City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 13 #6  Review school impact fees on multifamily housing.  What? School impact fees are collected from new housing units to partially fund capital facilities necessary to accommodate the resulting student growth from new development within the school district. Currently, children and youth make up a larger portion of the population in Federal Way than in King County as a whole: 27% of Federal Way residents are aged 19 or under, compared with 22% of King County residents. Furthermore, student generation rates for multifamily housing in Federal Way are 2.7 times higher than the King County composite rate 1. As a result, Federal Way’s school impact fees for multifamily housing are high compared to other cities in the region and should be reviewed jointly by the City and Federal Way Public Schools (FWPS). Why? No new multifamily housing projects subject to school impact fees have occurred since the fees drastically increased in 2017 from approximately $8,000 per new unit to $20,000 per new unit. The annually-approved fees have stayed in the $16,000-$20,000 range since that time. While the methodology for the increase was based in state statute, county code, and upon co-adoption by the City, stakeholder input indicated that local developers do not consider Federal Way to be a viable location for new multifamily development due to its higher school impact fees. Despite an adjustment in December 2020 by the City and FWPS in which the aggregate impact fee was lowered, no new multifamily development permits subject to the fees have been submitted since then. Related Strategies:  #1 Promote a dense, walkable, mixed-use City Center as a complete neighborhood.  #2 Promote mixed use, walkable, subareas and neighborhood centers.  #4 Encourage Accessory Dwelling Unit production.  #5 Ensure that financial and regulatory incentives for mixed-income housing are effective. Related Objectives: #1 Promote Options and #2 Encourage Homeownership, #3 Plan for Quality Growth How? • Annually review and adjust, if needed, school impact fees for multifamily housing with consideration for both FWPS’ need for funding of future facilities and the City’s policy goals of encouraging housing production and diversity. • Partner with FWPS to identify and support additional revenue sources for local school funding. • Clarify school impact fee rates for ADUs, townhomes, duplexes, and triplexes. 1 FWPS 2021 Capital Facilities Plan City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 14 #7 Coordinate affordable housing development and preservation with nonprofit developers, community groups, and the South King Housing and Homelessness Partnership (SKHHP).  What? Preventing displacement through promoting and preserving adequate affordable housing supply requires creative solutions and regional collaboration that cannot be solved within the city limits of one jurisdiction alone. There are many opportunities to work with community entities that are interested in meeting the housing needs in Federal Way. This work can look like, but is not limited to coordinating with organizations that provide rental assistance, affordable housing developers, religious institutions, and anti-racism and racial equity advocates and CBOs. Why? The Housing Needs Assessment found that nearly 40% of all households in Federal Way are cost- burdened (over 13,000 in total), meaning they are spending more than 30% of their income on housing related costs. there is a large gap between the regulated units available and household and individuals that are cost-burdened. Housing insecurity and vulnerability to displacement does not treat all groups equally. On average, over 2% of renter households in Federal Way experienced an eviction filing each year between 2004 and 2017. This rate is nearly double for Black households, echoing similar inequitable patterns in other South King County communities 2. Currently, Federal Way has 7 manufactured home parks with approximately 1,018 homes. Manufactured Home Parks (MHPs) provide naturally occurring affordable housing (NOAH) and homeownership opportunities in Federal Way to low- income households including many senior households. Related Strategies:  #3 Increase diversity in housing choice through expanding missing middle development opportunities.  #5 Ensure that financial and regulatory incentives for mixed-income housing are effective.  #9 Protect tenants through the development of a rental housing inspection program. Related Objectives: #1 Promote Options and #4 Preserve Affordable Housing How? City effort in collaboration with these community entities will be essential to getting closer to meeting housing needs in Federal Way. Success will require a combination of actions, such as:  Coordinate with South King Housing and Homeless Partnership (SKHHP) network to support a capital fund for affordable housing opportunities.  Support Manufactured Home Park (MHP) preservation and displacement mitigation from closure 2 University of Washington. 2017. “The Evictions Study Map.” Center for Studies in Demography and Ecology. https://tesseract.csde.washington.edu:8080/shiny/evictionmaps/ City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 15 or redevelopment. Efforts to support residents and landlords of MHPs in the city can include establishing relationships with existing MHPs, creating a city webpage with resources and key materials, identifying opportunities for reducing hardship on residents and promoting alternative ownership models when appropriate.  Monitor expiring regulated affordable housing properties.  Require notice of intent to sell for properties with rents under certain amounts, including for Mobile Home Parks that lease land to tenants at affordable rates.  Partner to provide first time homebuyer educational programs.  Work with non-profit and religious institution interested in developing property for affordable housing construction.  Coordinate with the Diversity Equity and Inclusion manager to establish mutually-beneficial relationships with CBOs serving the BIPOC (Black Indigenous People of Color) community that is disproportionately vulnerable to displacement and historically excluded 3. 3 City of Federal Way Housing Needs Assessment City of Federal Way Housing Action Plan | Housing Objectives and Strategies DRAFT April 28, 2021 16 #8  Protect tenants through the development of a rental housing inspection program.  What? Throughout South King County, the largest share of housing that is accessible to middle and low- income households is in the unregulated affordable housing stock. The Federal Way housing stock contains naturally occurring affordable housing (NOAH) that is affordable by nature of its age, location, condition, or amenities. In 2019 Federal Way residents passed the “Stable Homes Initiative” which created new protections for renters. Specifically, it limits the reasons for which a landlord can evict a tenant, requires a 120-day notice period when the landlord is removing the property from market, and requiring landlords to give tenants the option to renew a lease with at least 60 days’ notice prior to lease expiration. The city also provides limited financial support for legal assistance and credit counseling for preventing evictions. Why? Monitoring and maintaining existing unregulated and regulated affordable housing units can often be cheaper than constructing new units (although both are needed). This strategy calls for the city to expand tenant protections to ensure housing safety and collect data on the rental properties in the city. Related Strategies: #7 Coordinate affordable housing development and preservation with nonprofit developers, community groups, and the South King Housing and Homelessness Partnership (SKHHP). Related Objectives: #4 Preserve Affordable Housing How? Develop an inspection program and inventory of rental housing units in Federal Way to monitor their condition. Additional actions could include pairing this strategy with expanded access to tenant education and legal assistance. DRAFT March 2021 1 Implementation Matrix and Priority Schedule Strategies and actions proposed in this Housing Action Plan must be implemented by the City to have an impact on housing development. The implementation work will require significant staff time and resources as well as coordination with potential partners. This chapter provides a framework for prioritizing implementation strategies and actions as well as developing a workplan to schedule staff efforts and resource allocations over the next several years. The HAP as a whole is intended to be reviewed in conjunction with the Comprehensive Plan periodic review every eight years. Exhibit 1 lists each of the strategies and associated actions. It also includes additional information to inform implementation planning. 1. Priority Each strategy and subsequent action will require different levels of partnership, staff time, and potential funding to be fully implemented. Each of the actions includes a priority of short-term (ST) for about 1-2 years, medium-term (MT) for between 2-5 years, and long-term (LT) for 5 or more years. 2. Level of Effort & Duration refers to the anticipated amount of dedicated staff time or added positions, as well as costs for technical studies and the number of years it will likely take to implement the actions if staff and resources are available. Low-effort action can be implemented without the allocation of additional resources. Medium-effort actions will require additional staff-time resources and possibly consultant support to implement. High-effort actions will likely requires significant additional staff-time, funding resources, and possibly consultant support to implement. 3. Department/Partners lists the city department(s) responsible for implementation as well as other collaborators for the action to be a success. 4. Measures of Success includes both short-term milestones for implementation (such as adopting a code amendment) as well as longer-term performance metrics the city can monitor over time to evaluate whether an action is successful in achieving its intended outcome. It is important to note that measuring success can be complicated by the complexity of the issues; however, the most relevant metrics of success are included. Exhibit 1. Implementation Framework Strategy/Action Priorty Level of Effort & Duration Department/ Partners Measures of Success Strategy 1. Promote a dense, walkable, mixed-use City Center. Modify City Center-Core (CC-C) and City Center-Frame (CC-F) zone to ensure developments standards that are supportive of Transit Oriented Development (TOD). ST Medium 1-2 Planning Public Works Code amendments adopted Increased density of new development Create a City Center Subarea Plan ST Medium 1-2 Planning Plan adoption Identify physical barriers, solutions, and funding mechanisms to promote safe and ST Medium Planning Plan adoption City of Federal Way Housing Action Plan| Implementation Matrix and Priority Schedule DRAFT April 28, 2021 2 Strategy/Action Priorty Level of Effort & Duration Department/ Partners Measures of Success pleasant paths for people walking, biking, and rolling to transit and other amenities. 1-2 Evaluate city owned assets and future capital improvements in and around the City Center area appropriate for public and private partnerships. MT/LT Medium 1-2 Planning Public Works Number of public/private partnerships established Review and refine the city’s existing Local infrastructure Financing Tool “LIFT Tax” program for opportunities to support City Center development. MT Medium 1-2 Planning Finance Public Works Revenue from LIFT Tax New development in City Center Strategy 2. Promote mixed use, walkable, subareas and neighborhood centers. Continue support of Transportation Demand Management (TDM) plans to allow reduced parking requirements where appropriate. ST Low 1-2 Planning Public Works Inventory of TDM plan created Support additional long-range planning around mass transit, including the planned S 272nd St Station and S 352nd Street and neighborhood centers. ST/MT Medium 1-2 Planning Subarea planning, interjuridiction collaboration Consider alternative code provisions to remove barriers to development MT Medium 1-2 Planning Code amendments adopted Collaborate with Public Works department to identify areas for phased parking standards near the development of future mass transit. MT/LT Low 2-3 Planning Public Works Establish an interdepartmental work group Strategy 3. Increase diversity in housing choice through expanding “missing middle” development opportunities Identify and remove barriers to the development of “missing middle” housing types, in single-family zones. These include townhomes, multiplex, cottages, and compact single-family housing. MT Medium 2-3 Planning Finance Code amendments expanding “missing middle” adopted Pair all regulatory strategies to encourage new types of housing development with updated design standards to ensure compatibility and livability. MT Medium 2-3 Planning Units of “missing middle” housing types built Strategy 4. Encourage accessory dwelling unit (ADU) production Remove regulatory barriers to ADU production. ST Medium Planning Updated development regulations City of Federal Way Housing Action Plan| Implementation Matrix and Priority Schedule DRAFT April 28, 2021 3 Strategy/Action Priorty Level of Effort & Duration Department/ Partners Measures of Success 1-2 Finance Monitor ADU applications and review timeline Promote ADU development with marketing and streamlined permitting. ST Medium 2-3 Planning Establish ADU promotion campaign on City website Strategy 5. Ensure that financial and regulatory incentives for mixed-income housing are effective. Conduct a study to evaluate the financial incentives and impacts of the existing mixed-income provisions on multi-family development. MT Medium 1-2 Planning Number of projects that utilize the MFTE program. Monitor the income restricted units MT Low Planning Communirty Services Inventory of income restricted units created. Periodically evaluate provisions and implement changes as necessary to promote mixed-income developments. MT/LT Medium 1-2 Planning Number of income- restricted units in projects that utilize the MFTE program Strategy 6. Review school impact fees on multifamily housing Annually review and adjust, if needed, school impact fees for multifamily housing with consideration for both FWPS’ need for funding of future facilities and the City’s policy goals of encouraging housing production and diversity ST Low 1-2 Planning Finance Number of new multifamily housing projects Clarify school impact fee rates for ADUs, townhomes, duplexes, and triplexes. ST Low 1-2 Planning FWPS Code amendment Partner with FWPS to identify and support additional revenue sources for local school funding. MT Low 1-2 Planning FWPS New revenue sources identified Strategy 7. Coordinate affordable housing development and preservation with nonprofit developers, community groups, and the South King Housing and Homelessness Partnership (SKHHP) Coordinate with the Diversity Equity and Inclusion manager to establish mutually- beneficial relationships with Community Based Organization (CBO) serving BIPOC ST Low 1-2 Human Resources Community Services Increased in the number of mutually beneficial partnerships with CBOs. City of Federal Way Housing Action Plan| Implementation Matrix and Priority Schedule DRAFT April 28, 2021 4 Strategy/Action Priorty Level of Effort & Duration Department/ Partners Measures of Success (Black Indigenous People of Color) community that is disproportionately vulnerable displacement and historically excluded. Coordinate with South King Housing and Homeless Partnership (SKHHP) network to support a capital fund for affordable housing opportunities. ST High 1-2 Planning Community Services Finance City investment in capital fund Creation of database of NOAH at risk Monitor regulated affordable housing properties with expiring covenants. MT Medium 1-2 Planning Community Services Creation of database Require notice of intent to sell for properties with rents under a certain affordability threshold. MT Medium 2-3 Planning Adopt notice of intent to sell ordinance Successful purchase or management of NOAH for preservation when for sale Support Manufactured Home Park (MHP) preservation and mitigate displacement for residents from closure or redevelopment. MT/LT Medium 2-3 Community Services Planning Relationship building with residents and landowners. Webpage added the city website. Partner to provide first time homebuyer educational programs. MT Medium 1-2 Community Services Educaitonal program offered and accessible to community Strategy 8. Protect tenants through the development of a rental housing inspection program Develop an inspection program and inventory of rental housing units to monitor their condition. ST High 1-2 Community Services Planning Building Rental inspection program adopted Inventory of rental units inspected Provide additional tenant education and legal assistance. MT High 2-3 Community Services Building Number of tenants receiving education or assistance