Council hears options to spur housing growth; staff warns legal limits on incentives

Daniel told the council that housing activity in recent years has improved, with staff counting roughly 200 new housing units over the last five years and several larger projects in the pipeline.

He identified specific developments mentioned to council—Chandler Cottages and Bay Road activity, Orchard Commons (about 48 units) and a Thornwell proposal (about 60 apartments and roughly 20 homes)—and asked how the city should support future projects through incentives or infrastructure investment.

“Home builders are here, but we don’t necessarily have a lot of developers in town,” Daniel said, framing the question as whether and how the city should use its resources to attract larger-scale development rather than rely solely on private capital.

Council members and staff discussed past uses of city funds to support development (staff referenced a prior project where the city paid for a pump station) and whether incentives would meet state legal tests. Daniel described a three-part judicial test—referred to in the meeting as the “bird test” from prior litigation—that constrains when public funds may be spent to support private development; he said the city must ensure incentive packages meet relevant legal criteria.

Daniel asked council whether it wants staff to model incentive packages and related budget impacts for the FY2026 process. Council also discussed design standards (overlay or district-based approaches) to address neighborhood concerns about differing construction types and long-term maintenance.

Staff flagged Habitat for Humanity as an occasional partner (staff said the city currently waives permitting fees for Habitat) and recommended inviting Habitat to a future meeting to discuss capacity and opportunities.

Staff will return with options and legal analysis if council asks for a proposal to use fund balance or incentives for housing support.