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Draft Housing Action PlanDraft Housing Action Plan Preview Land Use and Transportation Committee June 7, 2021 By Chaney Skadsen, Associate Planner Draft Housing Action Plan Preview LUTC 6/7/2021 Good evening, Council Members, I’m Chaney Skadsen, Associate Planner and Housing Action Plan project manager for the city. 1 Objective & Presentation Outline Housing Action Plan (HAP) process Federal Way’s housing background Current housing need Designing HAP strategies Implementation Discussion 2 Draft Housing Action Plan Preview LUTC 6/7/2021 The objective of the City of Federal Way’s HAP document is to lay out the housing policy direction for the city towards to goal of increasing residential capacity to meet existing need/shortage and plan for the future. The adoption of the HAP will not result in code changes, instead it sets up a priority schedule for future efforts that will require more community input. 2 Housing Action Plan (HAP) Process Draft Housing Action Plan Preview LUTC 6/7/2021 Over a year into the process: The HNA findings Key Findings Nearly 40% of all households in Federal Way are cost-burdened (over 13,000 households in total) spending more than 30% of their income on housing. 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. Housing production has not kept up with demand. In the last 10 years, 5.3 units for every 10 households formed – lower than Subregion cities The existing housing stock doesn’t align with community profile, by size, type, preference and cost. Stakeholder Engagement On going efforts to ensure that the plan to reflect community needs and concerns Industry specific interviews, Communitywide survey, public Open House events, frequently updated website, E-Newsletter for Interested Parties list, Advisory Group, public meetings etc Housing Policy Code, and Permitting Review Identified opportunities for code specific implementation Toolbox for future code amendments Objectives & Strategies Guiding the processes Based on qualitative and quantitative information from earlier mentioned efforts Implementation Matrix & Priority Schedule The how to guide for using the HAP 3 Federal Way Incorporation Scale of Housing Built by Decade, 1960 - 2020 Incorporation Incorporation 1984 Federal Way Community Plan Zoning Map Draft Housing Action Plan Preview LUTC 6/7/2021 The Federal Way area began developing in the late 1800s as a logging settlement. By the 1920s, Highway 99 was complete linking the community to the economic centers of Seattle and Tacoma. By the mid-1980s South King County was growing rapidly leading to a jump in apartment complex development. Desiring controlled, quality growth and community identity, citizens organized to form what was then Washington's sixth largest city, incorporating in February 1990. A large majority of FW housing units were build prior to incorporation. Throughout the decades, increasingly fine-tuned zoning and land use regulations were adopted and amended. Today there are over a dozen Comprehensive Plan designations and zoning designations. Single Family zones make up nearly 70% of the city zoned area. High density zones that allow a considerable amount of the “missing middle housing” only makes up 1.1% of the city zoned area (RS5.0). MF zones make up a little over 11% 4 Federal Way Housing Stock Draft Housing Action Plan Preview LUTC 6/7/2021 As a result, Federal Way has largely built single-family neighborhoods and high-density apartments - lacking diversity in market rate housing types and choices desired by individuals and families. The lack of housing choice is often referred to as “missing middle” including townhouses, duplexes, triplexes, courtyard apartments, Worth noting that while the land may be zoned for certain types of housing the outcome are not meeting the targets. This includes areas in the downtown and mixed use zone. 5 Cost of Homeownership Median home value (2020): $405,070 Median household income (2018): $66,653 Since 2010, median home value has risen 63%, but median household income has increased just 20% 6 Percent Change in Home Value and City Median Income since 2010 Sources: ACS 1-year Estimates, 2019; Zillow, 2020; BERK, 2020. Draft Housing Action Plan Preview LUTC 6/7/2021 Current situation - Home values and costs increase substantially faster than incomes - Homeownership is increasingly out of reach for many 6 Housing Needs by Affordability Level Total Additional Housing Units Needed by Affordability Level (% of AMI), 2020-2040 Sources: HUD CHAS (based on ACS 5-year Estimates, 2012-2016); BERK, 2020. Distribution of Renter Households by Income Level and Rental Units by Affordability, 2016 Draft Housing Action Plan Preview LUTC 6/7/2021 Cost burdening vs Under renting/down renting The underproduction of housing is contributing to increased competition for available housing resulting in higher prices and 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 (paying more than 30% of their income for housing) and those earning above 100% AMI who are seeking to downsize. Additional housing units are needed for all affordability levels to meet current and future needs. This will require a variety of strategies and housing types, including both market rate and subsidized housing development. The city needs a diversity of new housing types and sizes to meet housing needs Both rental and ownership products catering to a variety of income levels 7 Disparities by Race and Ethnicity 8 Sources: ACS 5-year Estimates, 2014-2018; HUD CHAS (based on ACS 5-year Estimates, 2012-2016); BERK, 2020. Distribution of Households by Income Level and Race, 2016 Homeownership by Race and Ethnicity of Householder Federal Way has a diverse community nearly 48% of the community is non white BIPOC. It’s impact to call out some finding from the HNA that housing needs and risk to displacement are not the for all individuals and families. The HNA found that BIPOC households are more likely than white households to: Be cost-burdened Be renters And Experience an evicted BIPOC households face many barriers to homeownership beyond affordability, including both overt and covert discrimination. The history of racially discriminatory housing policies and practices in the US is extensive, pervasive, and still profoundly impacts access to housing and homeownership in communities of color. A major consequence of this history was the inability of many BIPOC households to gain wealth through homeownership and pass on that wealth through the generations. These findings and the access to homeownership were highly valued in the creation of the HAP objectives 8 Accommodating Population Growth Federal Way will need to add 339 housing units each year. This equates to a 68% increase in the current rate of production. Historic Housing Production in Federal Way Compared to Forecasted Needs, 2010-2040 Sources: ECONorthwest, 2020; OFM, 2020; PSRC, 2017; BERK, 2020. Population 106,500 by 2040. Continued underproduction of housing will increase competition for available housing in already competitive market resulting in even higher prices and fewer housing options for everyone and risk of economic, and cultural displacement. Redevelopment of existing housing can result in physical displacement of these households and communities. 9 Housing Action Plan (HAP) Goal Lay out a comprehensive housing policy direction to guide city investments and efforts to facilitate both market-rate and affordable housing production through identifying strategies and actions the City of Federal Way can implement to support safe and affordable housing opportunities for residents of all income levels. Draft Housing Action Plan Preview LUTC 6/7/2021 Therefore, 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). Part of that money went to participating in a Subregional Framework. 10 HAP Housing Categories Draft Housing Action Plan Preview LUTC 6/7/2021 FW HAP goal is to lay out a comprehensive housing policy direction to guide city investments and efforts to facilitate both market-rate and income restricted housing production, and preserving the vital NOAH stock. 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 and is connected to any of these three categories 11 HAP Objectives & Strategies Promote new housing development that expands housing choices and is inclusive to community needs. Encourage homeownership opportunities and support equitable housing outcomes. 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. Preserve existing affordable housing stock to reduce displacement pressure. Draft Housing Action Plan Preview LUTC 6/7/2021 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. * read objectives * Housing strategies are rarely effective in isolation. When the market is not producing the kinds of new housing that are needed, it is usually due to a combination of different factors. That is why the Federal Way HAP includes 8 different strategies, each associated with several actions the city will need to take to fully implement. These strategies and actions all address different barriers to new development in federal Way. So, to be most effective, the city will need to fully implement several strategies before seeing a real impact on new housing development. 12 #1: Promote a dense, walkable mixed-use City Center Downtown core Transit oriented development #2: Promote mixed use, walkable, neighborhood centers S 272nd Street & S 352nd Street LINK Stations Subarea planning and implementation Community based organizations #1 Chapter 7 of Federal Way’s Comp Plan is a plan for the City Center. With the LINK rail arriving and operating by 2024 TOD supportive housing is needed Short-term: Implement a City Center Subarea Plan Remove regulatory barriers to new market-rate multifamily development Identify and address physical barriers to safety and walkability #2 Promote mixed use, walkable, neighborhood centers Short-term: Support TDM plans to allow reduced parking requirements where appropriate. Long-range planning for mass transit station areas and neighborhood El Centro De La Raza is a mixed-use development with affordable housing, retail, services, and public open space. It is located next to a LINK light rail stop in the Beacon Hill neighborhood of Seattle. 13 #3: Expand “missing middle” development opportunities Community desired housing types Lower cost market-rate “Attached Dwelling Units” RS 5.0 only (1.1% of city zoned area) #4: Encourage ADU production Accessible housing solution Simplify permitting Remove regulatory barriers in Single Family (RS) Zones such as duplexes, triplexes, townhomes, cottage housing, and courtyard apartments. #3 Medium-term: Identify areas within SF zones that can support these types. Update comp plan. Remove regulatory barriers to development. Improve permitting/review process. Pair with updated design standards to ensure compatibility and livability. Clarify whether multifamily impact fees apply to these housing types Townhome Unit-lot subdivision Implementation Actions #4 Short-term: Remove regulatory barriers to ADU production. Promote ADU development with marketing and streamlined permitting. 14 #5: Ensure that incentives for mixed-income housing are effective Implement mutually beneficial fees Use methodology that removes development barriers and provides FWPS adequate funding for facilities #6: Review school impact fees on MF housing Ensuring future affordability Evaluating existing regulatory toolbox of incentives Updates as needed Example: Solera mixed-income project in Renton (Construction begins in 2021) Toolbox not working, “truth testing” incentive #5 Medium/Long-term: 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. Periodically evaluate provisions and implement changes as necessary to promote mixed-income developments. Federal Way currently has both requirements and incentives to encourage the development of mixed-income housing projects where a portion of units are income-restricted and affordable to low income households. Mandatory inclusionary zoning Optional density bonus Multifamily tax exemption #6 Short-term: Clarify school impact fee rates for ADUs, townhomes, duplexes, and triplexes. Clarify whether fees for units in mixed-use buildings vary by unit size. Annually review and adjust, if needed, school impact fees for multifamily housing with consideration for both FWPS’ need for facility funding and the City’s policy goals of encouraging housing production and diversity. 15 #7: Coordinate to support affordable housing development and preservation Naturally Occurring Affordable Housing (NOAH) stock Preservation of affordable housing (SKHHP) Community Based Organizations #8. Tenant protections and pathways to homeownership Ensure safe housing Educational programming Given the council leadership for supporting SKHHP – continued effort Implementation Actions #7 Short-term: Expand access and support mutually beneficial relationships with CBO serving BIPOC communities. Coordinate with SKHHP network to support a capital fund for affordable housing opportunities. Medium/Long-term: Monitor regulated affordable housing properties with expiring covenants. Require notice of intent to sell for properties with rents under a certain affordability threshold. Support manufactured home park preservation and mitigate displacement for residents from closure or redevelopment. Establish relationships with CBO serving BIPOC community. This can lead to collaborations such as in the development of programs that address the unique needs of different cultural communities Coordinate with SKHHP network to support a capital fund for affordable housing opportunities. Monitor regulated affordable housing properties with expiring covenants. Require notice of intent to sell for properties with rents under a certain affordability threshold. Support manufactured home park preservation and mitigate displacement for residents from closure or redevelopment. Partner to provide first time homebuyer educational programs. #8 Short-term: Develop an inspection program and inventory of rental housing units to monitor their condition. Medium-term: Provide additional tenant education and legal assistance. Partner to provide first time homebuyer educational programs. 16 Next Steps 6/16/2021 Planning Commission; Public Hearing & Draft Plan 7/12/2021 LUTC; Draft Plan 7/20/2021 City Council; Adoption 17 Comments/Questions Are these the right 8 strategies? Draft Housing Action Plan Preview LUTC 6/7/2021 From what you have seen are we missing anything? 18 The End, slides following this slide are extra if the topics come up 19 Household Income Levels And Representative Wages 20 20 Housing Context 21 Subregional Displacement is Occurring Comparison of Distributions of Housing Unit Size and Household Size, 2018 Sources: ACS 5-year Estimates, 2014-2018; BERK, 2020. Percentage Change in Home Value Median Income since 2010 Sources: ACS 1-year Estimates, 2019; Zillow, 2020; BERK, 2020. The region is growing. By 2040 the subregion is expected to reach over 630,000 people units. And Federal Way to reach up over 106,500. The majority of the housing stock was built prior to incorporation. A majority (54%) of housing units are single family. About one-third (34%) are in multi-family buildings with 5 or more units Federal Way has a slightly higher percentage of single family homes and lower percentage of multifamily than the county as a whole. Current housing stock does not align well with community household size data Median home value (2020): $405,070 Median household income (2018): $66,653 Since 2010, median home value has risen 63%, but median household income has increased just 20% The imbalance resulting from lagging residential production in a growing regional and slow changing incomes makes finding housing more difficult and displacement is already occurring. Without any measures to increasing housing production that meets the community needs, housing will continue to be competitive making it increasingly difficult for Federal Way’s existing community to afford to remain here, especially for young adults starting out or seniors looking to downsize. Additional housing units are needed for all affordability levels to meet current and future needs. This will require a variety of strategies and housing types, including both market rate and subsidized housing development. The city needs a diversity of new housing types and sizes to meet housing needs Both rental and ownership products catering to a variety of income levels 21 Rental Housing Affordability cont. Median annual wage, top 4 industries (Federal Way) Educational services: $51,543 Health care and social assistance: $45,870 Retail trade: $40,378 Accommodation and food services: $31,935 22 Average Rent and Affordability Level by Rental Unit Size (2020, Q3) Note: Affordability Level adjusted for assumed household size consistent with HUD Income Limits methodology. Sources: CoStar, 2020; HUD, 2020; BERK, 2020. 22