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Study Session

Minutes
Monday, December 19, 2016

MINUTES FOR THE STUDY SESSION
ASHLAND CITY COUNCIL
Monday December 19, 2016
Siskiyou Room, 51 Winburn Way
                                                                                                                                            
Mayor Stromberg called the meeting to order at 5:33 p.m. in the Siskiyou Room. 
 
Councilor Rosenthal, Morris, and Lemhouse were present.  Councilor Seffinger arrived at 5:45 p.m.  Councilor Marsh and Voisin were absent.
 
1.   Public Input 
Mark DiRienzo/700 Mistletoe Road/Croman Mill was ideal for economic development and would tie in well with the Transit Triangle infill strategy.  He supported improving Ashland Street with multifamily apartments but thought rents in the plan might be higher than what people currently paid for smaller spaces.  In order to have people afford rent, they needed real jobs.  He supported the Transit Triangle Project and wanted it to include the Croman Mill site.  He suggested redeveloping the Croman Mill plan to create economic development first then affordable housing. 
 
Huelz Gutcheon/2253 Highway 99/Noted Portland Mayor Charlie Hales pledged no diesel of any kind by 2025, along with Paris and Athens, Greece during the C-40 Cities Climate Leadership Group event in Mexico City.  He talked about the importance of measuring, provided several examples, and commented the City did not use measuring techniques.  He went on to explain how Ashland had reached its population capacity five years before, was overcrowded, and that had a negative effect on traffic and safety.  A good way to measure traffic safety was eliminating “fossil” cars.
 
2.   Look Ahead review
Interim City Administrator Chief John Karns reviewed items on the Look Ahead.
 
3.   Update on infill strategies for transit triangle project
Planning Director Bill Molnar explained staff had been working with the Planning Commission and Fregonese & Associates, a consulting firm, regarding an infill strategy.  They chose an area that involved a key transit route that included Ashland Street, Siskiyou Boulevard, and linked to Tolman Creek Road the called the Triangle Transit.  The area could accommodate future rental housing, specifically housing for median family incomes. There was a lot of vacant and underdeveloped property there and not much investment had occurred over the past 30 years.  The plan could increase housing, the economy, and transit. It fit with prior council initiatives in terms of the economic development strategy, strategic housing priorities, the Transportation System Plan, and the eventually the Climate Energy Action Plan.
 
John Fregonese, president of Fregonese Associates Urban & Regional Planning explained he had developed a tool to understand why R-3 zoning had not worked in Ashland.  The zone permitted 36 units per acre but no one was able to build.  The Transit Triangle Study focused on a specific area involving Siskiyou Boulevard, Ashland Street, and Tolman Creek Road. The frontages in these areas had opportunities for change that would improve the neighborhoods.
 
Phase 1 of the Transit Triangle Study Conducted in the fall of 2015 completed the following tasks:
  • Market analysis
  • Initial developer interviews
  • Demographic analysis
  • Analysis of current zoning
  • Pro forma testing conducted
  • Detailed site-level analysis conducted at 3 sites across the study area
 
A Population Pyramid slide based on age showed the highest population ranges in Ashland was 20-24 year olds and 55-59 year olds.  The Tapestry Market Segments slide looked at consumer preferences for young professional families, singles, and retirees:
  • Emerald City 30% included an average age of 36 who tended to be well educated, environmentally aware
  • Golden Years 23% had a median age of 51 most likely homeowners, single person households, and married couples with no children
  • College Towns 15%
  • The Great Outdoors 9%
  • Set to Impress 8%
  • Silver & Gold 7%
  • In Style 5%
  • Senior Escapes 3%
 
A lot of housing was single family and larger than the rental market required.  The Housing slide indicated people rented 45% of homes while 55% owned homes.  Over 80% were one and two person households. While 43% of the rental market consisted of one-person households, 73% were one to two people households.  Smaller units would fit well in the community.
 
Ashland’s median income was approximately $45,000 and slightly lower than the state.  A target goal for rent was $875 to $1,250.  The question was whether they could get rental units in a mixed use building on Ashland Street for a $1,000 a month that attracted 1-2 person households in the corresponding demographic. 
Housing programs could help the 60% and 80% median income component.  There were many single-family homes and town houses for rent in Ashland.  They were larger units and not as good a match for one-person households. 
 
One way Council could reduce housing costs was influencing market demand by adding amenities to make an area more attractive.  Another way was influence costs through the zoning standards with the amount it took to build, the amount of construction, developments fees, and adding incentives like tax credits.
 
Envision Tomorrow was a free software program with a prototype builder that had a return on investment (ROI) model, a scenario builder with an extension for ArcGIS and over twenty applications funded by the Housing and Urban Development (HUD) Sustainable Communities Grants.  The prototype builder took zoning, built a building, and tested the financial feasibility.  Mr. Fregonese provided an example using a three story building on Ashland Street.  They based the prototype on current zoning then tried to modify it to make it more feasible using C-1 mixed-use apartment.  They encountered an issue with the maximum units per acre code.  Unit size did not matter.  The other standards allowed a developer to build a floor area ratio (FAR) of almost one.  A mixed-use building should be able to have 40 to 60 units per acre but the City capped it at 30 units resulting in an average of $1,500 for rent.  The cap made the unit size larger and less affordable.  Removing the cap in the prototype increased the units to 44 per acre and reduced rent to $1,200.
The prototype for R-3 was worse.  The cap was 19 units per acre but could be 60 units an acre.  Rent went from $1,750 for a large unit with 55% landscaping to approximately $1,000 per month.  C-1 and E-1 was not as dramatic.  
 
The most feasible application for the area was a mixed use residential that was primarily residential on Ashland Street with the units per acre cap lifted.  Mr. Fregonese suggested a mixed use residential, primarily residential, on Ashland Street and lifting the cap.  Commercial rents were too low to support new construction.   Requiring a high amount of commercial in the ground floor had to be subsidized by the residential which made residential more expensive.  Generally, people would spend more per square foot for a smaller unit.  Their focus is on monthly rent versus size.  The maximum units per acre cap were not in line with FAR.  The cap made units larger and more expensive and countered the desire for residential in that corridor.
 
Possible Solutions examined in Phase 2
  • Focus on mixed use residential in the corridor
  • Adjust the prototype to best meet market conditions
  • Smaller specialized commercial space to achieve $20 per foot rent
  • Encourage smaller apartments to meet rent thresholds and affordability
  • Attempt to develop a prototype that can pay land costs in the area and still be affordable to the median income household
  • Develop visualizations to guide development standards
  • Develop build out scenarios to evaluate impacts and benefits
 
The City could offer incentives like a vertical housing tax credit that would bring monthly rent down to the $950 range that could include the 20%-80% median income with the rest renting around the $1,000 range.  The City would forgo the taxes for 10 years.  He went on to show a slide indicating the areas in the Triangle Transit that could accommodate three story apartments and retail that would result in 876 new units or 500-600 affordable units. 
 
Conclusions
  • Current zoning’s limits on units per acre are a severe limit to affordable housing
  • Market units size would be between 500 square foot studio to 750 square-foot 2 bedrooms, with current market being for smaller units to react to the 80% of renters that are one and two person households
  • That would lead to 40 to 70 units per acre as the most natural result based on the FAR permitted by the zoning standards
  • The unit limits in the zoning code are far below what is otherwise achievable
  • In other words, the zoning creates an unsolvable problem
  • This forces a large, more expensive unit
Caveats and Cautions
  • Different solution should be developed for different zoning districts and situation in the Triangle
  • Strong incentives should be developed to encourage smaller affordable units rather than large units, vacation rentals, or condominiums
  • Incentives should be developed to encourage housing affordable to lower income persons
  • Appropriate design standards should be developed at the same time
  • Implementation of the public improvements adopted in prior plans should be accelerated, they will enhance the attractiveness for investment
 
Vertical income tax breaks would work as an incentive.  There was a tax credit that was just an incentive and another that made the owner guarantee affordability for a specific time.  There were also programs with a preference for local residents but they involved a public subsidy.  Possibly some form of rent control could apply to a certain number of units in response to renters being priced out of Ashland.
 
Mr. Fregonese addressed universal housing for retirees and explained requirements for commercial on the ground floor was expensive and increased rent on the upper floors.  Ground floor units would be viable in a couple of small places and was limited because the City required commercial.
 
Onsite parking would allow one space per unit.  The average unit was 600 to 650 square feet.
 
Planning Commission Chair Melanie Mindlin noted the Council looked at money and the Commission looked at standards and did not consider incentivization.  This was a disconnect that occurred at times.
 
Proposal:  Authorize a process to prepare the following modifications and plans
  1. Develop a Zoning Overlay for the C-1 and E-1 that lift the density cap, and implement other small changes in the zoning changes
  2. Evaluate changes for the R-2 and R-3 zones when property fronts one of the triangle arterials
  3. Develop improved Site Design Standards for this area and for the new zoning standards
  4. Clean up and consolidation of all the previous overlays
  5. Develop recommendations for an accelerated improvement strategy of the existing adopted plans
  6. Develop inclusionary zoning strategy to comply with the new state law
  7. Investigate other incentives and regulations that will encourage affordable units  
 
Council thought it was a good direction, appropriate, and generally supported the plan.  Other comments appreciated looking at state standards in the plan and wanted the permit process reviewed.  Concerns included the complexity of the process, the need to reevaluate what was currently in place and having a larger discussion before moving forward on one tactic.  Interim City Administrator Chief John Karns expressed concerns regarding parking on Ashland Street.  City Attorney Dave Lohman wanted to know the cost of the financial incentives.
 
Mayor Stromberg read a letter John Fields submitted into the record.
 
The Mayor wanted to redefine affordable housing to include people and young families who had lived in Ashland for years that had to move due to affordability.
 
Mr. Molnar explained the group that discussed the plan included mixed use or commercial developers, primarily mixed use, brokers, developers, contractors, and design professionals.  Next steps involved fine-tuning the plan and bringing it back to the group and eventually Council.
 
Council agreed with Mr. Molnar’s plan of action and wanted staff to bring them back options, provide a range, and address what was most important. 
 
Climate & Energy Action Plan ad hoc Committee member Louise Shawkat added it was important to think of the carbon footprint regarding the plan.  Reducing carbon needed to influence everything the City did. 
 
Meeting adjourned at 7:05 p.m.
 
Respectfully submitted,                                                                                                          
Dana Smith
Assistant to the City Recorder 
 
 

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