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Council discusses ordinance change to bar sale of affordable-housing credits where developer received public subsidy
Summary
Councilors debated an amendment to the downtown zoning ordinance that would prevent developers who receive a payment-in-lieu-of-taxes (PILOT) or tax-increment financing from selling mandatory 'diverse-housing' credits to other downtown projects; the proposal is intended to close a perceived loophole and will be sent to Planning and Housing Commis
Council discussion focused on a proposed ordinance amendment (listed as proposed ordinance 15-46) to change how developers may transfer credits associated with the downtown "diverse housing" requirement in the zoning ordinance (section cited in the packet as roughly section 59-904).
Council Member Meadows introduced the item, saying the change was prompted by a Bailey Lot workforce-housing proposal and by a developer’s interest in buying credits rather than constructing affordable units in the downtown. Meadows proposed that the amendment bar the sale of credits if the developer received a public subsidy such as a PILOT or tax-increment financing for the project. "I don't think we intended it to begin with ... to be a profit maker for somebody who builds housing, or to avoid the 25% rule," Meadows said.
Council members discussed two related questions: first, whether the amendment should simply prevent sale of credits in cases where a project received public subsidy, and second, whether the credit system should be adjusted to favor particular housing types (for example, owner-occupied units or a weighting formula for single-family vs. multi-unit dwellings). Planning staff attendance and Housing Commission input were recommended before any ordinance drafting.
Several councilors said closing the credit-sale loophole is a discrete change and should proceed through the normal ordinance process; broader changes to incentive structure or credit valuation should be pursued separately through Planning Commission and Housing Commission review. Council members raised implementation questions: whether credits, once sold, are permanent; how compliance is tracked; and whether existing downtown projects are compliant with the 25% requirement.
The council gave direction for staff and the city attorney to prepare language for the ordinance change and to coordinate review with the Planning Commission and Housing Commission. No vote on an ordinance was taken at the meeting.
Ending: The council requested follow-up information on how compliance with the downtown 25% requirement has been monitored historically and asked staff to bring a draft ordinance back for the standard public review process.
