Title
Middle Housing Infrastructure Policy Discussion
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Discuss Middle Housing infrastructure code amendments.
Report
Issue:
Whether to discuss Middle Housing infrastructure code amendments.
Staff Contact:
Nicole Floyd, Director of Planning, Community Development, 360.753.8087
Zulaika Kim, Engineering Plans Examiner, Community Development, 360.709.2732
Susan Clark, Engineering and Planning Manager, Public Works Water Resources, 360.753.8321
Presenter(s):
Nicole Floyd, Director of Planning
Zulaika Kim, Engineering Plans Examiner
Susan Clark, Engineering and Planning Manager, Water Resources
Background and Analysis:
The City of Olympia recently amended its Municipal Code (Title 18) to comply with Washington State’s Growth Management Act related to middle housing. These amendments expand opportunities for Middle Housing, Accessory Dwelling Units (ADUs), and co-living housing throughout the city. They also further the City’s growth strategy by moving towards a mix of residential types being allowed on all lots.
The changes have now been in effect for several months, which has resulted in the identification of gaps in current code language. City staff across a wide range of divisions have come together to evaluate these gaps and make recommendations on how to best provide necessary infrastructure to ensure our growth targets are achieved.
To promote homeownership opportunities, specific infrastructure must be installed at the point of initial development. Affordability is also a key consideration of requirements that add cost to development. A multi-department workgroup evaluated code policy change approaches and gaps over the last several months. This staff group is now seeking feedback on their recommended approach before drafting amendments.
Central to the topic are the number of individual utility lines (aka connections) required for each property. As the boundary between single unit development and multi-unit development increasingly blur, so do the requirements for connections, fees, and shared improvements.
Staff’s recommended approach is to generally require individual utility connections when feasible as it is far more cost effective than retrofitting later. This approach supports the potential for future “unit lot subdivisions” which retains future home ownership opportunities but requires specific infrastructure to be installed at initial construction. Staff recommends exemptions from individual units having separate connections when developing affordable rental units and in cases where a retrofit of existing development makes individual connections illogical such as stacked housing.
This approach intends to consider the long-term costs and to maximize conversion from rental to ownership options over time. Staff’s recommended approach frontloads cost to the initial development of project in order to retain viable home ownership potential and reduce hidden costs later.
A few key principles staff relied on include:
Affordability
The housing crisis is a major factor in policy surrounding housings supply and development. Ensuring costs are considered and reduced when possible is paramount, especially when considering the city’s affordability goals in the Comprehensive Plan. Staff’s approach proposes carve outs for affordable housing; these exceptions intrinsically limit future conversion to owner occupied units as retrofit after development is cost prohibitive. The amendment approach intends to balance up-front costs with long-term limitations such as limiting properties to rental only in perpetuity.
Achieving Home Ownership
A major goal of the middle housing code amendments was to help increase the housing stock to make room for first time home buyers to enter the market. Infrastructure designed for multi-family use has limitations to future subdivision. Designing infrastructure to serve the individual unit significantly increases the potential for future home ownership.
Avoiding Naming Traps
Naming of units has become far more complicated which has not been fully adapted in the more nuanced corners of the code. For decades infrastructure requirements have been placed in two distinct categories: Single unit (1) and multi-family (3+). Accessory Dwelling Unit’s (ADU) have traditionally been considered a piece of the single unit development type and are given special exemptions from infrastructure due to the perception that they are smaller and less impactful.
These incentives coupled with a lack of specificity for other middle housing types has created some complexity that needs to be resolved in an equitable way. Middle housing (4-8 units) in low density residential zones needs to be added to infrastructure requirement sections of code.
The topic of unit names and utility requirements is quite complicated and nuanced. The multi-department team has spent a considerable amount of time bringing the main issues to the surface. Part of this briefing is to raise awareness of the changed paradigm around long-standing terms and conditions. Staff would also like to receive policy guidance on how best to approach these code amendments.
Topics raised by the multi-division task force include amendments to both the Olympia Municipal Code and Olympia’s Engineering Design and Development Standards (EDDS) related to:
• Where possible - focusing on “units” rather than naming types of units. This allows more subjective evaluation of requirements.
o Cannot fully adopt approach because ADU’s have specific State mandated criteria.
• Adding Middle Housing into utility infrastructure requirements and fee charts.
o Middle Housing (Low Density Zones)
§ 1-3 Units (Principal unit + 2 ADU’S)
§ 4+ Units in low density zones
o Apartments (3+ units in Medium / High Density Zones)
• Establishing requirements for connection to the City’s drinking water and wastewater infrastructure with specific exemptions for affordable housing developments that do not intend to offer home ownership.
• Evaluate charges for drinking water, wastewater and storm and surface water general connection fees.
• Update frontage Improvement triggers to occur at the subdivision rather than pushing costly improvements to the home owner.
• Re-evaluate ADU exemptions from sprinkler system requirements.
Middle Housing is a key component of Olympia’s housing strategy. It supports affordability and expands housing choice for all households across all income levels consistent with the community vision outlined in the Olympia’s Comprehensive Plan and Housing Action Plan. It has the potential to significantly diversify the City’s existing housing stock. Careful consideration of how to ensure adequate infrastructure is available for development while also limiting upfront costs is required.
After receiving input from the LUEC on the proposed policy direction, staff will prepare Olympia Municipal Code and EDDS changes to address policy gaps.
Climate Analysis:
Overall, Middle Housing supports efforts to increase urban density and reduce urban sprawl. By promoting infill residential development, existing transportation and utility systems that are already in place can be used, rather than developing new infrastructure to serve undeveloped areas. In addition, paratransit, retail deliveries, mail, and school buses already serve these areas with transportation services. Most parts of the City of Olympia are served with public transit. More development in these areas will support increased transit use and any increases in service that come with more density and higher ridership.
Equity Analysis:
The cost of infrastructure is typically born by the developer as they often have the most financial gain, however as the cost of housing soars all costs are being evaluated for how they impact housing supply, and specifically the supply of affordable housing. As the City aims to reduce barriers to housing an increasing burden for systemwide upgrades is a critical issue. When infrastructure is not upgraded by the initial developer, the cost is pushed off to the future homeowner, renter or general taxpaying base. Careful consideration should be given to how the City increases housing stock while equitably addressing the infrastructure costs.
Neighborhood/Community Interests (if known):
During the update of the Comprehensive Plan, support was provided for addressing housing affordability.
Financial Impact:
No changes are recommended at this time. Financial impacts would be assessed at the time of any recommended changes to Olympia Municipal Code or program updates.
Options:
1. Discuss Middle Housing infrastructure code amendments.
2. Do not discuss Middle Housing infrastructure code amendments.
3. Take other action.
Attachments:
None