City Council - Community and Economic Development Committee

okay we're going to continue our uh January 29th uh committee meetings and resume with uh community and economic development and that is chaired by C council member uh jce cotton thank you council president uh today for this committee I am joined by council members Huffman and stone today we have one agenda item um that's bill number 23991 the subject is the Consolidated annual performance and evaluation report uh housing services and related accomplishments between July 1st 2022 and June 30th 2023 the Federal Department of Housing and Urban Development requires the city to submit a Consolidated annual performance and evaluation report Caper each year detailing the Housing Services and related Community Development projects and programs in which the city has invested the city's Caper includes not only HUD funded activities but also related activities funded by the city's local sources the period reviewed uh is the city's prior HUD program year which runs from July 1st to June 30th and staff will review the report highlights um and I will go ahead and turn it over to Samuel Lutz thank you very much council member uh again my name is samel Lutz I'm the housing and service program manager for the city's Community Development Division and the planning department and I have a presentation for you which I will show um and you should have this in your packet as well so you can follow along so as mentioned in the intro this is a required report by Hud or the federal Housing and Urban

Development Department um and we have this kind of funny HUD year which is July 1 through June 30th refer to it as our program year the reason for that is because the formula allocation grants we get from HUD um are typically announced to us after the federal budget is passed and frequently we need to wait until July in order to kind of know what what that is as we were seeing this year um but we do have all of our different funding sources related to housing and services reflected in this plan um and it is reviewed against the goals that are outlined in our Consolidated plan which I'll talk a little bit more about as well as in our Levy um administrative and financial plan and we'll also talk about all the different funding sources that are a part of this so the city's um Levy administrative and financial plan um lays out specific targets for all of our different programs that the levy can fund now this is a plan that we'd like to come back and revisit with you later this year because we really haven't reassessed the goals uh since our affordable housing sales tax has been at play and you'll see as we go through and look at how we're doing on some of these goals that um it's time to to kind of have another look at that um but that is what we we review against in our Caper when it comes to our local funding sources um and many other funding sources are are of course at play here um and then the Consolidated plan itself that's required by Hud also sets out specific goals and

priorities over the Consolidated plan's five-year period um now you'll probably remember that we spent quite a bit of time talking with Council last winter and spring because we were working on a new Consolidated plan Kate Bartholomew Tara and I um on the team talked a lot about the public participation and a lot of the research and um data analysis that went into that but right now we're talking about the Consolidated plan that was at Play prior to the new one and this Caper is the last report out on that prior 5-year Consolidated plan so Federal funding over time has really not generally not kept pace with inflation the two different um Federal programs that we utilize in our housing and services are the home investment partnership program which is primarily for new development of how housing as well as some Services um rent assistance services and then we also have the Community Development block grant fund which is a bit more flexible but it is not allowed to be used for new Housing Development and we have just a myriad of sources here you can see a number of sources that are reflected um in the action plan for this year that we reported on that are having to do with covid and just um an important note that future Year's budgets will look different those code funds as you know are going away they've been spent and we're just not going to see um you can see the cdbg CV that was a special additional cdbg allocation that we had um in response to H covid we had a special home

arpa allocation um we'll still be spending that down for some time um but primarily the cities are funds that came in the form of the state local fiscal Recovery Act funds that you all chose to allocate significantly to housing and child care and things like that are are really um towards the end of of their spend down period so moving into the accomplishments that show up in this Caper report uh we've had significant um Housing Development come online and this is um um largely due to those arpa funds more than we would typically see in any given program year um looking at the upper right you can see the samish commons development under construction in that photo that is fully completed now um they had completed the first building already when this photo was taken but buildings two and three for seniors and families were completed adding 102 units uh Lydia places heart house project I a photo later on in the slide presentation for that one added 11 units uh for homeless families and then Mercy Housing um completed two projects during this period one was an acquisition of an existing um apartment complex which was at risk of losing its rent restrictions and then they completed a new development uh in the Barkley neighborhood the Trail View Apartments which added 77 units and um all of these have homeless on Entry families living in them um The Ratio or percentage varies by apartment complex but it is a priority of our program as you know to um make sure that at least a portion

of the units are allocated for homeless on Entry so here you can see um the goal as set out in that Levy administrative and financial plan that I mentioned earlier that plan sets out that 10-year Levy goal of 600 units and this is a good depiction of why we want to revisit that plan with you we're just halfway through this uh 10-year Levy period and you can see the number of committed units um so contracts that we have at play in the community with um housing that's going to be constructed or significantly rehabilitated total 675 units already now of those only 536 have been compl completed and occupied um but we are on track to significantly exceed that goal and it is worth probably revisiting that discussion with you the home buyer program uh works with households at are below 80% of the area median income uh who are ready to purchase a home it's a partnership with both the Washington State Housing Finance commission a Statewide agency and locally with kulan Community Land Trust here it supports down payment assistance of up to $40,000 per household which is matched and increased by those agencies that participate with other funding they can bring to the table um and the city also supports new development of home buyer housing um but as you well know that amount of subsidy even doubled with additional matching funds is is often not nearly enough to help a low-income household afford a home in today's market so we do um it's not typical now to see this program succeed with a

new single family um home for sale on the open market for example occasionally we'll see something like that come into the program more often it's a condo um and then what we really see a lot of are the resales of existing homes in the kosan community Land Trust in inventory when one household who has participated in the past sells the subsidy is returned to the city and then we help um a subsequent family get into that kind of Housing and here you can see the goals as set forth in our housing Levy we had a 10-year Target here of 55 homes and in this case we are on track what you would expect here there are much um few fewer of those funding sources that you saw in the py graph earlier in the presentation can support home ownership um this sort of higher income 50 to 80% of area median income it's really only our housing Levy and the uh home investment partnership program that can support this program so moving to community facilities program this is typically just supported with our HUD uh Community Development block Grant funds but arpa played a significant role here because you all supported arpa being used for child care facilities and so we were able to significantly invest there some of which are still under construction in the community so aren't reflected in this Caper but the Lydia Place heart house Child Care Facility was completed during this Caper period And so um that is the picture there of of the Hard House Development which has the child care on the ground

floor that's operated by the YMCA the community facilities program also um supported the expansion of the Family Resource Center that the Bellingham School District runs at shuen middle school and then turning to our services program um rental assistance and supported Supportive Services supports a broad range of things in the case of the the levy it's really only housing related services so you don't see the sort of Human Services basic needs reflected in this graph here but uh again we're um exceeding our goals um that were put out in the levy in a significant way and then if you think of all of the services that the city supports um especially with the covid funds it was um over $3 million that was utilized for that purpose and we'll talk a little bit more about the details here of the different services program so on the housing side um this helps things like project Based Services which are focused on a specific location specific Housing Development um that is designed um to do kind of permanent support of housing or in the case of Garden View tiny home Village um that sort of homeless transitional opportunity for folks um but it also includes services that are provided in a more sort of scattered site basis rapid rehousing programs and the like which partner case management supports and some rental assistance to help families throughout the city um who are referred to and enrolled in those programs um and it also supports a number of initiatives that the city does in

conjunction with watcom County that you're all probably quite familiar with through things like the grace program um we did some significant Investments using arpa funds on Child Care Workforce stabiliz ation and food security um as well as all the various shelter supports that we're doing um so that's really it for the presentation again um HUD is the one that requires this Caper report from us but you can see that those federal funds are kind of the minority of the overall funding picture that we use um for housing and services and happy to answer any questions that you have thank you for that presentation um committee members um any comments or questions other council members Dan uh thanks chair for recognizing me I I don't serve on this committee but I have um questions and opinions um I've got a couple questions um uh Miss L you referred to the cul and CLT um Pro program or or organization and that the scattered site model which was the original model uh for the first 20 years does not work in this uh economy anymore so that means that a person could go previously could go and try to buy a home using a subsidy on the open market uh from kulin that model does not work and so what happened what has happened is kouan is a chto or Community Housing Development organization and they have turned into a developer they've got a development on Telegraph Road and then they have one that's Penn in Birchwood and that's that's the heart of my question here um there's a density need

for that um particular development so that we're able to so that they're able to develop uh in a meaningful way and get the um the price points that they need um it's a a great property I think most of us have been most council members have been out there and have discussed that that project in detail and um I just like to get a sense of where we're at with that and um and to move forward basically thank you and good afternoon Blake lion director of planning and Community Development so I had the opportunity to meet with uh Dean fering a while back and talk about that particular project and also with his design team avt Consulting on some of that they're actually at a really unique time in this process with the state legislation the way it is and so what we've talked about you may recall um this past year in the legislative session there was an adoption of uh House Bill 1337 which was for the Adu piece and then we uh through your direction went forward and advanced much of that work uh already what that enables them to do and and work through because that bill require allows for the condominium isation of those adus and allows them to be up to a th000 square feet that works with kulan Community uh model in which you can take there's six Lots out there so you can have a principal unit and two adus per lot which would then allow them to condo and sell each one of those units consistent with their their overall objective to get to the overall 18 uh that they're that they were

originally Desiring and not need the incentive program that's currently in the code they can do that under the current uh requirements that are within our um our lend development code right now what the opportunity affords themselves and and part of why they're working through the design details is that when we get to the point where we Implement uh House Bill 1110 which is that middle housing form you may recall we can go up to four to six units per lot and so there's an opportunity for them to almost get an increased density above the 18 that they had anticipated and maybe even go as to as many as 36 uh and so that's the process that they're in right now is trying to evaluate okay how do we do this kind of in Phase One get the first 18 and then come back in when we've implemented House Bill 111 and potentially uh do some additional projects so they're working through those design details at the moment haml yeah just to follow so I just want to clarify that we are in a process that's broader than just simply the city's regulations and rules we're talking about a a broader um State Legislative fix that could contribute to to Greater density that is that correct correct so the the portion that the state initiated that we followed through on the adus is in place and and we're working through the design details that kind of phase two that I was referencing the house bill 1110 there's still some work that we need to do at the local level to implement the state regulations and the

timeline for that is six months after this comprehensive plan cycle so we're still a little bit away from that but they can move forward in that in that first phase right now thank youc member Anderson thank you um affordable housing obviously um is important and we as a council and staff um basically did the legislation to protect the mobile homes um so that I mean it's not a guarantee they could still be sold but uh we do um either one I can talk to the two of you separately I was going to send an email but seeing this on the agenda I thought other council members might be interested in getting kind of an update also and I don't expect you to do it now unless you have the information it might be requesting the chair to ask for it to be scheduled but um I know the mobile home park on samish is being sold and I believe there's a a a group working with the residents to try to secure the ability for ownership and recently heard that the Lakeway um over on Lincoln Street which is a a one of our largest and probably most at risk for development and I know a little bit about the one on samish I don't know enough about what's happening on Lakeway and I'd really love to be able to get an update what are we doing how we partnering what do things perhaps look like are there meetings with the residents to try to organize is a city interfacing with that or is it the nonprofit group working with them a little update would be wonderful I think we can provide that right now because it's

just a brief update that we have so Samia yeah so Rock Northwest resident-owned cooperatives Northwest um operates out of the Northwest Co-op Development Center their staff has been very actively involved in both of those mobile home parks um there are I think 20 Parks she said have been listed since July across the state only three of them have been able to move forward with resident acquisition um unfortunately a park like the one on Lakeway is in the neighborhood of 40 million ion dollar and it's um it's just hard to find that kind of capital anywhere in the state through the Housing Finance commission Commerce uh local funds Etc and it's um with the interest rates the way they are it's just it's really challenging and so rock Northwest is working closely with the residents to kind of go through a number of scenarios there I know she's actively reaching out to Housing Authority kulan Community Land Trust a number of agencies and I've been in some of those meetings with them um we're certainly trying to leave no stone unturned but the timeline um combined with the level of capital required um in in a matter of you know a month or so is just um it's it's really really challenging um but we're pleased with samish they've been able to move forward with resident acquisition that's under contract they have not asked for or needed uh assistance from the city in any way but again we we've made ourselves available um and are working closely with rock Northwest to have these

conversations just to follow up do you know as far as the the Lakeway um I assume that it's been advertised for sale do you know if there's potential purchasing um interest in that I you may not know that but I'm just kind of wondering if so how fast is the timeline that it might um turn ownership so I believe the law requires a 70-day notification that started December 12th so that goes through February 20th um when that seller can start to entertain offers counc member liest and then council member Hamil um I know this has to do with the the Capper but to continue on the issue of uh mobile homes there are two open houses I'll be attending at lway this Saturday for residents by residents to go over the current status of their discussions so this is useful to hear what you're saying um at that I would I've sort of been asked to sort of be there to kind of present what the city's rules do or don't do with regard to mobile homes what I want to I want to here's what I want to tell them and I'm going to say it now and you can tell me if I'm right um there are as I see it two forms of protection one has to do with zoning the other has to do with ownership so the ownership the piece that we talked about under the laws we pass in now state law if the current owner wants to sell it then they need to give an opportunity for the current residents to become the new owners has nothing to do with change in use or change in zoning and then separate from that is the zoning the allowed uses

regardless of who owns it it's currently zoned for mobile homes and a few other uses are allowed into the zoning and if that would be changed to a new form of use separative ownership again that would be a rezoning procedure which would need to come through the city and at this point we would have legislative disc ression and we could say no or we could say yes and as I understand it please correct me I'm wrong those are separate and distinct ownership and use are different we're talking about ownership but there's also the use protections if I said that would I be stirring them wrong or right musical chairs sorry um you are correct in that the two are distinct and separate the ownership absolutely is and as you alluded to it would be the type 6 legislative process uh if you're considering rezoning and going through that portion so that would be subject to its own public process I think what i' heard from some of the letters Outreach from the residents is they assumed that if it's sold to a new owner the use could also change in the same act and I think that might be the utility of my attending these events no you're you're correct and that if there were new owners and they would have to come back through the process through that public process that type six which ire Planning Commission and city council to evaluate that portion and I sorry and I believe there's a couple other things to that though CU When it the unless it's a type 6 there's only a couple other uses that

property could be utilized for like church and education and then there's also a period of time that the place would have to be vacated or empty in order to be able to justify a reuse so they would basically not be making a lot of money for a long time in order to be able to qualify for that so there's a and I'm I'm summarizing a little bit but it might be useful to be able to have those exact details too I cannot make that meeting because I'm out of town but I wish I could but we'll talk about the other meeting ccil member H um separate question aside from um mobile home parks which I'm very I'm very concerned about a couple years ago uh this Council Council manically uh passed um a 1110th of 1% sales tax for affordable housing it's referred to in the pi the piie chart is ah sales tax what 21% of the of the funding it was House Bill 1590 that the state legislature passed and enabled councils to um the seven of us to to pass a sales tax that would go towards affordable housing and also Mental Health Services both of which we desperately need um my in my conversation with Finance uh my understanding is that we have $6 million that's allocated from that fund but those dollars are not spent and I just would like to get some clarity on what the intention of that is we a few years ago we were facing a fiscal cliff that we were going to fall off of when it comes to affordable housing and my intent in bringing 1590 to this Council from Olympia was to to try to make sure that the the

housing pipeline continued to be filled with projects no knowing that we're we're leveraging you know up to 10 12 to1 depending on the on the capital part of it um so I just want to make sure that I I just want to have a better understanding and I want the public pardon me to uh have a better understanding of of what that broader fund looks like and where we're at in terms of getting more projects developed in rental subsidies and things like that yeah thank you for bringing that up that's been a huge uh huge help in um all of those different programs related to housing and so significant number of those funds are going into the Laurel Forest project that you can see under construction now um that's being built for seniors on the corner of Laurel and Forest Street um downtown so one challenge with that is there's kind of a 60 40% split that's the expectation there with that funding source that 60% goes towards the capital side the capital development or um can be operations and maintenance for ex for new units that have come online through support from that program um and then the remaining 40 can be used uh for services as well as some Administration so we're trying to make sure that we you know there's there's sort of an endless need for the services funding related to Housing Services and so we certainly have plenty of opportunity to spend those funds um on the services side but we want to make sure that we're keeping in line with that um expectation for that 6040 split so

um like I said the first big project utilizing those funds is is that that Lal enforce and we're looking at some other opportunities coming up um that you'll probably see in this next action plan coming your way soon also want to mention that um we've all seen what cost of construction's done the past few years since the housing ly was passed so without 1590 we would be having a hard time keeping Pace with the production that we're seeing right now arpa helped us a lot as well um but we do have some big projects pipeline projects U Bellis Fair is one of those which should be moving along as well and sorry if I could add something this was in my notes for the presentation which I neglected to say but um our funding sources have really been the thing that's enabled us to continue with our pipeline um with these drastic drastic cost increases the low-income housing tax credit which is the largest source of funding for Capital development has actually gone down there was a 12 and a half% decrease in in that um Statewide and so um our partners have just really really struggled to to find the what they call a capital stack to get these projects to happen so this um this funding source has really made a huge difference there thank you additional questions or comments council member lowest I'll try to make this short it's just it tags on what Samia had just said about um the declining overall allocation to low Inc of housing tax credit this is a a nationwide all Nationwide that's

where the funding usually comes from and when the feds cut back all projects face the same financing problem that one graph uh on Slide Five that shows the the HUD cdgb and home funds going down um if you do the line that was inflation adjusted it would be 2.8 million dollars coming from the federal government if they had just flatlined it and raised it for uh inflation alone but it looks like it's about half that 1.6 million or something so I mean we really are proportionately doing so much better here locally and I don't I don't I would hope that the public would understand that that we're a little Oasis of continued activity whereas in many other jurisdictions things are grinding to Halt things are slowing down things are shrinking I will note um that the that's that's looking at it from 2003 but we started getting cdbg funds from the federal government in the mid 70s so if we really put inflation on those dollars it would be a lot worse than than 2.8 or it would be a lot better if we were getting inflation see no other questions or comments end of committee thank you all