Planning Commission opens public hearing on fee-in-lieu and potential changes to downtown affordable-housing requirement

The East Lansing Planning Commission opened a public hearing on March 25 on ordinance 1559, a proposed amendment to section 50‑94 of the zoning ordinance that would allow developers to pay a fee in lieu of providing required “diverse housing” units downtown and expand where transfer credits can originate.

Mr. Bartley, the city’s planning and zoning official, told the commission the 2016 ordinance currently requires 25% of units in qualifying downtown multifamily projects to be “diverse housing” — defined in the ordinance as units affordable at 80% area median income (AMI), owner‑occupied units, or senior (55+) units. He said projects may transfer one‑to‑one affordable‑unit credits from other downtown projects under existing rules, and council asked staff to study a fee‑in‑lieu (FEL) mechanism and broader transfer areas.

The staff briefing showed two illustrative fee approaches: a higher estimate based on a 50% AMI affordability gap (about $170 per square foot) and a lower estimate tied to 80% AMI (about $87 per square foot). Using those values, staff calculated hypothetical FEL totals for recent projects: the Abbott, the Landmark and the Hub would have produced roughly $5.8M, $7M and $8M respectively under the higher figure (roughly $21M total), and roughly half those totals at the lower rate. Mr. Bartley said community economic development staff and an outside consultant reviewed comparable programs in other college‑town cities and that annual adjustments (CPI or similar) are common.

Commissioners focused on three practical choices: the AMI target to define affordability, whether to charge per square foot or per unit, and which city zones should be eligible as transfer sources. Vice Chair Wagner and others said a per‑square‑foot basis can be simpler because unit sizes vary; staff noted other cities use a range of approaches (per‑unit fees, construction‑cost measures, or market‑gap calculations). Commissioners asked staff to produce supplemental tables showing how fee proceeds would vary if the base diverse‑housing requirement were changed (for example, to 10%), and to run the fee examples at those alternate requirement levels.

On transfer geography, staff proposed initially allowing credits from B2 (business) and EV (East Village) zone districts, and raised the possibility of including RM32 (city‑center multifamily) or RM54 (university‑oriented higher density) after mapping where those zones exist. Mr. Bartley said staff prefers to incentivize downtown affordable housing while offering options that keep projects feasible. Commissioners asked for maps of candidate transfer zones and for examples showing how a one‑to‑one or slightly adjusted transfer ratio (staff floated 1.2:1 as a preliminary idea) would affect project feasibility.

No members of the public spoke during the hearing; the commission closed the public comment period. Mr. Bartley said the commission should expect the item to return with more detailed tables, zoning maps of transfer areas, and scenarios showing alternative diverse‑housing percentages; if advanced, council would hold its own public hearing and could take action this summer.

What’s next: Staff will prepare comparative tables (fee outcomes at alternative AMI levels and at lower percentage requirements), maps of proposed transfer zones, and options for fee administration. The commission will consider those materials at a future meeting before making a recommendation to council.