City staff outline standardized housing-incentive package and process reforms to speed development

City staff presented a package of policy and process ideas Tuesday intended to reduce developer uncertainty and lower project costs for housing development.

Assistant/Deputy city staff framed the proposals as a response to repeated concerns raised by builders and developers that high construction costs, regulatory uncertainty and long plan-review times push projects to nearby communities with more favorable financing or incentives.

Key elements of the staff proposal: - Standardized incentives (proposed): staff proposed a tiered, standardized package that would be available for a limited window (staff suggested two years for projects that get in the queue). Elements include: if a project is located in both a Tax Increment Financing (TIF) district and the state enterprise zone, provide up to 75% of the TIF increment for TIF-eligible costs; waive 50%–100% of city plan and permit fees depending on council direction; waive sales tax on construction materials through enterprise-zone mechanisms; offer a share (up to 50%) of food-and-beverage or local sales tax to developments that include ground-floor retail/restaurant as part of an affordable-housing project; and provide a density bonus for projects that include affordable or low/moderate-income units. - Fee-reduction examples: staff presented the Lincoln Lofts development as a worked example. Using the project’s two phases (110 units total, roughly $11–$22 million combined construction value depending on phase), staff showed the city-level fee reductions could range from roughly $189,543 (general-fund fee waivers in one scenario) to an estimated total city incentive of about $388,000 when enterprise fund waivers are included, depending on the chosen discount level and what partner agencies contribute. Staff noted that a local partner (identified in the presentation as “BinWord”) is already offering a short-term 50% reduction in certain local fees for the next two years as a separate incentive. - Process and certainty reforms: staff described work currently underway with consultants, including a zoning-code review by Opticos (to identify where “missing middle” housing can be enabled) and a plan-review/process improvement engagement with Iverson Consulting Group. The city also proposed considering a self-certification program for licensed architects and engineers to accelerate plan review (cities such as Glenview and Phoenix were cited as precedents). - Enterprise-zone sales-tax abatement: staff confirmed the state has approved use of the enterprise-zone mechanism to exempt construction-material purchases from sales tax for qualifying residential projects in the zone, an action staff said could save a sizable amount on large projects.

Council reaction and next steps: Council members expressed interest in a standardized program and fairness/consistency concerns. Several members asked for more detailed fiscal analysis showing how a 50% or 100% fee waiver over a two-year pilot would affect city finances; others asked for protections to avoid unintended competitive harm to existing local businesses. Staff asked whether the council would support a time-limited standardized incentive and asked for guidance on fee-waiver percentage (50% or 100%). Several council members signaled interest in seeing the proposal in writing with pre-read financial impact information before formal approval.

Staff requested direction on whether to prepare an ordinance or formal proposal for council consideration and committed to provide requested fiscal impact analyses and example incentive agreements from neighboring communities.