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Affordable Housing Development Incentive Programs January 10, 2023, City Council Workshop Presentation Overview 2 • Background information & current conditions • Benefits of affordable developments • Current state of developments in progress • Proposed Fee Waiver Program • Proposed Gap Funding Pilot Program Workforce & Income Conditions 3 Data Point Glendale Maricopa County United States Civilian Labor Force 64.2% 64.8% 63.1% Median Household Income 1 $60,499 $72,944 $69,027 Persons in Poverty 2 17.3% 11.3% 11.6% Disabled Persons Under 65 10.4% 7.9% 8.7% Source: https://www.census.gov/quickfacts 1 Approximately 20% lower than Maricopa County 2 Poverty statistics may not be comparable to other geographic levels due to methodology differences that may exist between different data sources. Impacts of Poverty 4 • 1 out of 6 Glendale residents live in poverty 1 • Child poverty costs more than $1 trillion per year in lost economic productivity, increased health and crime costs, and increased costs resulting from child homelessness and maltreatment 2 • Unstable housing among families will cost the U.S. $111 billion in avoidable health and education costs (2017-2027) 3 1 Rounded, based on U.S. Census data 17.3% poverty rate and 249,630 population 2 Source: https://www.pgpf.org/blog/2022/10/what-are-the-economic-costs-of-child-poverty 3 Source: http://childrenshealthwatch.org/wp-content/uploads/CHW-Stable-Homes-2-pager-web.pdf Housing Availability & Homelessness 5 • 22% increase in unsheltered homelessness in Maricopa County (2020-2022) 1 • 270,000 housing units needed statewide (ADOH) 2 • 143,998 units needed for 30% AMI households 3 • 68% increase in apartment rent since 2017 4 1 Source: www.azmag.gov 2 Source: https://housing.az.gov/sites/default/files/ADOH_FY2022_Annual_Report.pdf 3 Source: https://nlihc.org/housing-needs-by-state/arizona 4 Source: https://azmag.gov/Programs/Maps-and-Data/Land-Use-and-Real-Estate/Housing-Data-Explorer What is the measure of affordability? 6 • Housing that a household can obtain for 30% or less of their income Income Level Annual Income Affordable Rent Rent Rate Needed County Area Median Income (AMI) $72,944 $21,833 $1,824 Glendale AMI $60,499 $18,150 $1,512 Low Income (80% AMI) $48,399 $14,520 $1,210 Very Low Income (50% AMI) $30,250 $9,075 $756 Available Rents 7 Source: https://azmag.gov/Programs/Maps-and-Data/Land-Use-and-Real-Estate/Housing-Data-Explorer Benefits of Affordable Developments 8 • Occupancy remains steady • Job creation (construction and management) • Generates one-time and on-going tax revenue • Long-term ownership contributes to community stability • Residents have more disposable income for essential items (food, healthcare, education, etc.) 9 Development in Progress • 605 units by Dominium – 67 Flats & Juniper Square – Families & Seniors – 60% Area Median Income – Summer 2025 & Winter 2025 • 368 units by Gorman – Centerline on Glendale Phase I & II – 120 units for 30% Area Median Income – 248 units for 60% Area Median Income – Winter 2024 • 148 units by Mercy Housing – Seniors, veterans, people exiting homelessness – 30, 50, and 60% Area Median Income – Winter 2024 • 105 units by TWG – Unity at West Glendale Apartments – 60% Area Median Income – Winter 2025 • 80 units by Cesar Chavez Foundation – 60% Area Median Income – Summer 2023 Development Funding 10 • LIHTC awards have been made • Developer Fees deferred to assist with financing • Foundation, agency, or other grant opportunities have been applied • All projects are experiencing funding gaps ranging from $2.1 to $6.5 million Adverse Financial Conditions 11 • Labor shortages • Supply chain issues • Increased cost of materials • Increased interest rates • Off-site improvements • Design requirements Need for Incentives 12 • Tax credit projects are increasingly competitive • Inverse relationship between housing affordability and homelessness • Promote quality development for affordable units • Address needs of low-income residents and vulnerable populations • Use one-time funding sources to create sustainability • Stimulate infill and adaptive reuse Community Development Fee Waiver Program 13 • Fees are usually about 1% of construction costs • Authorized by current ordinance • Leveraged as City contribution & improves competitive position • Potential to leverage other grant funding • Council Consensus Direction Needed: – Update ordinance to add fee waiver for development with 30-year affordability – Approved by City Manager administratively – City Council provided a copy of notice when approved Affordable Development Gap Funding Pilot Program 14 • 3-year pilot • Initial funding, one-time revolving fund $1.75 M • Future contribution from one-time construction sales tax as units are operationalized ($2,400) • Limit grants to ADOH Tax Credit developments • Creates a sustainable fund to promote housing development for Glendale residents • Council Consensus Direction Needed: – Is there interest in developing a pilot program?