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Council updates RHID policy to add capitalization-rate criteria for certain incentives
Summary
The governing body amended the Reinvestment Housing Incentive District (RHID) policy to add cap-rate criteria and updated unit goals; staff said criteria reflect factors used in recent downtown projects to permit higher cap rates when priorities such as downtown redevelopment or workforce housing are met.
The Topeka governing body on July 15 approved amendments to the city's Reinvestment Housing Incentive District (RHID) policy to incorporate capitalization-rate criteria and to update unit targets and tranches.
Deputy City Manager Braxton Copley described two amendments: an update to annual unit targets and a substantive change to add objective capitalization-rate (cap-rate) criteria staff will use when evaluating RHID incentives. Copley explained cap rates as net operating income divided by market value and provided market examples (multifamily ~6.5%, single-family ~7.5%, hotels higher). He said staff had used higher cap rates for the Union Tower project and recommended codifying objective factors that could justify elevated cap rates for developers.
Copley summarized the factors staff would consider in allowing a higher cap rate: prioritizing downtown redevelopment; providing workforce housing (61–120% of area median income); providing affordable housing (<60% AMI); developing historically undeveloped or blighted land; and accepting restrictive covenants on affordability or transfer. He said staff used these considerations in recommending a higher cap rate on a recent project.
Councilmember Neil Dobler moved approval; council supported the change and the motion carried 9-0. Staff said the policy change reflects lessons from Union Tower and aims to provide clearer, objective guidance when RHID incentives are evaluated.
