Agenda Packet 12-12-18 Work Session

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43 Background In Eugene low vacancy rates for both rentals and ownership properties reflect strong demand for housing, and trends show production of some housing types has declined over the last several years. This decline is especially true for apartment projects and ADUs. It’s not completely clear what has caused the drop-off, but barriers to housing production cited by developers in Eugene include: • City fees, project delays and uncertainty in the City process caused by appeals, and • High costs for building material, labor, and land. The City can play a role in reducing or removing financial and regulatory barriers to housing, but tradeoffs include City revenues and financial resource constraints since fees imposed on new development provide revenue for Eugene’s utility, transportation, and park networks, and for the fiscal sustainability of city service delivery. It should be noted that Eugene already waives System Development Charges for Affordable housing developments and has a centralized “one-stop-shop” model for all permitting requests. What We Heard: Costs of Development Strategic Economics interviewed developers and City of Eugene staff to understand costs and processes. What we heard: • Under current conditions it is very difficult to make a reasonable return building Missing Middle housing types, which is one reason why very few of them are being built. Some developers are delivering these more innovative housing products under current regulations because they’re personally invested in the end result (ex: building an ADU for a family member) or because their moral interest in delivering the product type outweighs the fact that the project resulted in a limited return or financial loss for them. • Building permits for townhome projects take too long. Townhome permits and subdivision requirements are cumbersome and cause costly delays. • The Planned Unit Development (PUD) process has the potential to significantly delay projects. • The Planned Unit Development (PUD) and appeals processes add delays and cost to multifamily developments with three or more units in many cases. A PUD process is required of projects with 3 or more units in areas zoned “low-density residential” (R-1) in most cases. This process opens the project up to public appeal. Similarly, an adjustment makes a project appealable by the public. • SDCs for ADUs and other Missing Middle housing types are not scaled on building size. Developers noted that SDC and permitting fees, along with EWEB requirements that each unit have separate water meters and sewer hookups, add significant costs to unit types that do not have the same revenue potential as single family. • At least one developer noted a specific project that would not have worked without the Multi-Unit Property Tax Exemption (MUPTE) benefit. Strategy 2: Reduce cost and time burden for development of housing . December 12, 2018, Work Session - Item 2