Business & Economy

Burlington taking fresh look at affordable housing rules

Noelle MacKay addresses reporters at a news conference announcing her nomination to lead Burlington's Community Economic Development Office. Photo by Morgan True / VTDigger
Noelle MacKay, the head of Burlington’s Community and Economic Development Office, stands with Mayor Miro Weinberger. File photo by Morgan True/VTDigger
BURLINGTON — A quarter-century after implementing an ordinance designed to ensure socio-economic diversity in housing developments, city officials are assessing its impact and looking at possible updates.

Burlington’s inclusionary zoning ordinance requires any development with five or more housing units to sell or rent a percentage of those units for less than market rates.

The city implemented its inclusionary zoning rules in 1990, making it among the first municipalities in the country to try to promote economic diversity in housing via an ordinance.

The ordinance has changed relatively little since it took effect. City officials recently hired consulting firm czb LLC to assess how well it has served Burlington and what role it can play in supporting the development of more affordable housing.

The consultants’ report, released in January, found that the inclusionary zoning ordinance has achieved the goal of integrating market-rate and affordable housing. The ordinance also promoted mixed-income housing projects in parts of the city with “moderately lower socioeconomic strength,” thereby reducing economic segregation.

In addition to the inclusionary zoning, Burlington has a constellation of city and nonprofit institutions that have combined to develop affordable housing. They include the Housing Trust Fund, the Burlington Housing Authority, Champlain Housing Trust and Cathedral Square.

However, the ordinance and those institutions have not allowed Burlington to keep up with the demand for housing, the report says. The consultants found that the suburbs surrounding Burlington “absorbed a disproportionately high share of development” from 1990 to 2015, with 60 percent of countywide new housing being built in the suburbs versus 15 percent in Burlington.

The report says the inclusionary housing ordinance is far from the only factor that has limited new housing in Burlington. The high cost and scarcity of land in the city, the high cost of construction in the state and the “unpredictability of development review” in Burlington all contributed, the report says.

All of those factors make it difficult for developers to turn a profit on housing in Burlington without some form of public subsidy, such as tax credits or bonuses built into the ordinance.

The report concludes that those bonuses, such as one allowing greater density and another allowing a portion of required parking to be waived, should be granted by right and not based on the discretion of the Development Review Board, which has been inconsistent in granting them.

The report also recommends increasing the threshold number of units triggering the inclusionary zoning to 10 instead of five. That would allow developers to spread the cost of inclusionary units over a greater number of total units, making projects more feasible.

Erhard Mahnke, with the Vermont Affordable Housing Coalition, was among those who helped craft the ordinance. He said he welcomed the consultants’ report and the city’s review of the policy.

Erhard Mahnke
Erhard Mahnke, coordinator of the Vermont Affordable Housing Coalition.
“When we fought for inclusionary zoning, we never saw it as the be-all end-all. It was one of many strategies to increase diversity and affordability,” Mahnke said.

Still, he said he believes the report demonstrates that the ordinance has achieved the goal of creating more socio-economic diversity in housing than would have occurred if the market were left entirely to its own devices.

Mahnke said he was also pleased that the report doesn’t blame the lack of housing production in Burlington on the inclusionary zoning ordinance, as some critics have done, instead acknowledging a range of other factors that have limited production.

“There’s going to be a really good discussion here that’s going to provide some opportunities to grow Burlington’s inclusionary zoning and make it more effective and find other ways to increase affordable housing,” Mahnke said.

The report notes that while the inclusionary units are more affordable than market-rate units — they’re required to rent for amounts affordable by households making 65 percent of median income in the area — the policy isn’t able to stimulate production of housing accessible to low-income residents.

Those are residents making 30 to 50 percent of median income in the area, or households making between $25,000 and $42,000, which account for 25 percent of all renting households in Burlington, according to the report.

“That is typically an income range where you need a subsidy,” Mahnke said.

To help low-income residents find rental housing they can afford, the report recommends a levy or bonding measure that would place more money in the city’s Housing Trust Fund.

Burlington already dedicates a small portion of property taxes to the Housing Trust Fund. But raising additional money for the fund would allow the city to create programs and incentives that would make rental housing attainable for low-income residents, the report says.

City residents must consider that “to get something that is valuable to the community and meets long-term civic goals, the community must be willing to give more and to pay for what it values,” according to the report.

Mahnke said affordable-housing advocates would fully support efforts to raise money locally for low-income housing initiatives, especially with the election of President Donald Trump placing federal support for affordable housing in question.

Noelle MacKay, director of the city’s Community and Economic Development Office, said money from the Housing Trust Fund wouldn’t just go to subsidizing new housing development or helping low-income renters afford a place to live.

The programs could be much broader, helping current homeowners with needed renovations they can’t afford or helping people who have fallen on hard times stay in their current home, MacKay said.

MacKay said the report is a good starting place for such a community dialogue. She presented the report to the City Council’s Community Development and Neighborhood Revitalization committee last week. Officials plan to gather resident feedback and are considering a working group to explore whether to adopt recommendations from the report.

One recommendation that the city is not waiting to act on is more robust monitoring of existing inclusionary units to ensure they’re sold and rented at the rates required by the ordinance — something the report called out as lacking to this point. MacKay said CEDO will be able to do that without additional resources by shifting existing resources within the department.

Eric Farrell, a prominent housing developer in Burlington, is in the approval process for the Cambrian Rise project, which would create more than 700 units of housing in 10 buildings on the former Burlington College campus on North Avenue.

Farrell is partnering with Champlain Housing Trust and Cathedral Square to meet the inclusionary requirements for that project.

He said in an email that he agrees with many of the conclusions and recommendations in the report, saying that “new housing generation is impacted by many forces, including public policy, citizen appetite and reception and market dynamics.”

Given that complexity, Farrell said he believes it will not be easy to create a “sweet spot” using regulations that will accelerate the historical pace of private-sector housing development in Burlington.

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Morgan True

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  • The thrust of this report is to lighten the burden on developers, increase the burden on property tax payers, and ignore the importance of fair wages in addressing the affordable housing problem.

    Expensive consultants should not have been necessary to describe the effects of an ordinance which have played out under the direct supervision of city officials year by year. Furthermore, analysis offered is far more speculative than authoritative.

    No doubt some will seek to leverage the weight of such a report to undermine inclusionary zoning and declare that an improvement.

    The most obvious target is the existing five unit threshold. The report is factually in error in calling this a low threshold. The comparables the report itself provides prove otherwise. Raising the threshold to ten will do nothing to support affordable housing, while enabling multiple developments of up to nine units with no affordable housing component at all.

    • edward letourneau

      The only thing that will make housing more affordable is to lower taxes and fees.

  • Neil Johnson

    Burlington has a constellation of city and nonprofit institutions that have combined to develop affordable housing. They include the Housing Trust Fund, the Burlington Housing Authority, Champlain Housing Trust and Cathedral Square.

    You make it impossible, then you form organizations to go through maze. Rather than making it easy. “unpredictability of development review” IS the permit process!

    Households earning $25,000 per year means somebody in the house isn’t working…..

    • Ibnar A. Stratibus

      Those who make minimum wage in Vermont at $10/hr x 40 hrs/wk X 52 weeks =$20,800/yr.
      The HUD pegged affordable 1BR is $1,200/mo, or $14,400/yr.
      14.4/20.8 = 69% of a person’s income who makes minimum wage is needed to pay for what many of these City and non-profit institutions are calling affordable units.
      A single Mom for example who works and has kids is a Household with one adult who works while raising children who are being children and have a ways to go before working.
      There’s an affordability problem that the current system addresses, while many are left to their own means, and work as they do, still pay way too much for their housing.

      • edward letourneau

        …and 40% or more of the rent they pay goes to taxes and fees the landlord has to pay. — That is the underlying problem that no one wants to talk about or fix.

  • Excellent piece, Morgan – as ever, thank you for the depth of detail & clear explanations.

  • 2 Problems with the new IZ report. 1) Its premise that IZ inhibits building is based on data that does not include the building boom of 2015/16/17. Cambrian Rise, S.D. Ireland, Fletcher Place, new developments on N. Winooski Ave, Bright St., BTC, etc., all are going up under current regulations. 2) enabling more development in lower-income areas raises the median rent in these areas–does not lower it. Since the average rent in lower-income areas is lower than the inclusionary zoning rates in some areas, the introduction of a new building with 15% of units slightly more expensive than the average and 85% of units that are more expensive than the average is not “economic integration”. It is displacement. We are moving wealthier people into poorer neighborhoods and pretending we are doing it for the sake of the poor and underprivileged. This trade off ethics is pricing us out of our city.

  • Instead of bending over backwards to get more development that makes rents higher in the city, instead of lowering the threshold of units that require IZ, instead of lowering the in lieu payment costs, instead of changing the median rate of income eligibility from 65% to 50-80%, we should be working to discourage building that prices out lower income residents, we should be providing tax breaks for property owners to renovate without raising rents, we should be requiring livable wages, and considering rent control and other more visionary options. Business as usual is not working.