Below Market Rate Housing changes move to second reading
By MEGHAN BRADBURY
mbradbury@breezenewspapers.com
The Sanibel City Council moved an ordinance to second reading last week, which includes substantial changes to the Land Development Code pertaining to Below Market Rate Housing regulations.
The City Council discussed the proposed Ordinance 26-018 in great length and detail, as it addressed the responsibilities of the city and Community Housing and Resources, housing units, financing, qualifications and program administration.
City Attorney John Agnew told the council Tuesday, Nov. 3, that there are changes in some form to almost every section of Chapter 102 and highlighted all the substantial changes.
Councilmember Holly Smith voted against moving the ordinance to first reading earlier in the meeting, as she was not comfortable moving forward with the changes.
The second reading will be held Dec. 1.
Outside counsel Klein Horning LLP reviewed the city’s existing BMRH regulations and proposed amendments to sections 102-102 of the Land Development Code to ensure there is compliance with applicable federal and state fair housing laws. In July, the council identified the third option as a starting point and had a joint workshop with the Planning Commission in August.
Agnew said the Planning Commission met at length and discussed the option and passed Resolution 26-25 by a 6-0 vote.
A section that was completely rewritten was 102-102, qualification and ranking of applicants.
Rental housing opportunities are for very low, low and moderate income for workforce housing.
“It requires all the applicants to meet certain tenant selection criteria as Sanibel related tethers and Sanibel employment related tethers,” Agnew said.
The highest priority is for full-time employment of 35 hours or more. The next priority is for part-time employment of 20 hours or more and are ready, willing and able to seek or accept employment on Sanibel.
“It provides that the applicants for part-time employment are only eligible for consideration,” Agnew said.
Part-time employment would only become eligible to rent if a habitable unit remains vacant for more than 90 days. For those applicants without Sanibel employment, but who are ready, willing and able to seek employment, they are eligible if a habitable unit remains vacant for more than 180 days.
The clock does not start running until the turnover occurs on the unit, as a fair amount of work has to be done before it is habitable for the next person.
“I know as a small business owner one of the hardest things on the island is to find someone to work two days. Part-time in more ways is more difficult to find,” Councilmember Laura DeBruce said about moving the 20 hours a week to 16 hours a week.
Councilmember Richard Johnson said he found the exact opposite to be true, as it is relatively easy to find part-time people.
“The challenge there is a percentage basis. If you begin filling up units, homes, if you will, with part-time employees, the balance of the equation changes and becomes an ongoing financial concern for the organization,” he said.
DeBruce said that was an excellent point.
Johnson said the program is designed for full-time employment.
“The investment we are making and the community is making in affordable workforce housing is we want it to be for full-time workforce,” he said.
Agnew said the section eliminates the preference category for seniors, which existed before.
Agnew added language stating that existing tenants who are fully retired and living in city designated senior housing as of Oct. 31 are exempt from work requirements.
In addition, super priority is given to a household with a minor child. The second priority for full-time is for those who are city employees and perform essential roles that are identified in the city for public health, welfare and safety functions.
Mayor Mike Miller also had proposals for the draft language. Among that full-time priority, he said should go to city employees.
“I thought the community would benefit by a proximity of city employees being closer to place or work. I learned from the director of human resources that of the 150 or so full-time and part-time, only 11% live on the island. I would like to see a higher percentage,” Miller said.
The council supported the proposal.
The addition would be “one or more household members is employed full-time by or has received and accepted a full-time employment offer from the city or another Sanibel governmental body for any role.”
Another section addressed one or more household members with disabilities, and another for a person who is 62 years or older having an employment history on Sanibel. The council did not agree with adding the 62 and older proposal.
Another addition Miller shared was making it clear that affordable housing would be limited to businesses having their principal place of business on Sanibel, but allowing employees who work on Captiva for that Sanibel-based business remain eligible.
“There are enough issues to deal with and return on our investment, which is Sanibel’s investment. It ought to be Sanibel period,” Vice Mayor John Henshaw said.
Agnew said there is also requirement that the housing foundation provides on a monthly basis notice where individuals are in the cue. He said the city manager’s update will also include who is on the list, as he is the final approving authority of who gets into the housing.
Of the sections, 102-56 had a lot of discussion regarding Below Market Rate Housing units acquired by the housing foundation and/or the CLT, and section 102-57 “financing of below market rate housing units and lands and structures acquired by the housing foundation,” which “deletes a provision allowing a mortgage foreclosure to release a unit from the below market rate housing program.”
“I certainly would like the new language taken out and the City of Sanibel retain the current right and ability to approve loans taken out be CHR,” DeBruce said.
The section states that “the City Council must, by resolution, approve the mortgage and loan terms, if the city has an ownership interest in the acquired lands or structures.”
Smith said when reading the documents, it is all on the city.
“I think we are not in a good position to even have this discussion fully. What is our hurry to do this?” she asked. “It is a risk certain. We have to understand it. Reading the documents has scared me more.”
Agnew said the policy is legally defensible with or without the language. He said a government outreach into a nonprofit’s books did not make sense at the time if they did not have invested interest in the property.
“It seems more relevant now,” Agnew said.
DeBruce said maybe they need to have a threshold number.
“If there is a bank or someone that has a mortgage on affordable housing units and suddenly CHR defaults on the loan and now the affordable housing units are no longer owned by CHR — now owned by a financial institution,” she said. “Because of risk the City of Sanibel does have a vested interest in what happens with loans and security grants. If CHR was a standalone independent nonprofit, it would be a different story.”
Agnew said there is language in the existing text, under the current code, that states foreclosure action wipes out the obligation. He said it will continue to run with the land respective of the owner.
She also touched upon 102-35, units that are not owned by the housing foundation.
Agnew said the way the code reads currently is they would only have a required commitment between 10 and 21 years. He said now it’s 10 years with the ceiling of perpetuity.
“They come in and build those for a minimum amount of time and then flip them and that is what developers do. I will not support unless it’s in perpetuity,” Smith said.
Miller said the language of 10 years to perpetuity provides future council flexibility.