[Please refer to attached documents as well as the official video recording for comprehensive presentation details.]
Mr. Ben Brewer presented the proposed Townhome Exemption Development (TED) ordinance amendments. He provided background information on TEDs, the strategy selection process and the proposed ordinances. He reminded the board of the state criteria for zoning amendments; 1) whether the proposed zoning amendments are consistent with the growth policy, 2) whether the proposed zoning amendment corrects an error or inconsistency in the zoning ordinance, and 3) whether the proposed zoning ordinance amendments are in the best interests of the city as a whole.
Mr. Brewer gave an overview of the background of TED. It was created in 2011 by the state legislature. He provided definitions, parameters, and stated that it must conform with local zoning regulations. Mr. Brewer gave the board a brief primer of terms and understanding on how TEDS are considered board zoning along with TED and subdivision ownership differences. He clarified the terms of 'townhome' vs. 'townhouse' under Title 20.
He presented a map with the locations of TED projects filed since 2011. 59 TEDs were filed in the city since 2011; if/when all of those are built to completion it will have provided 494 dwelling units. Mr. Brewer stated that Missoula's approach to TED is unique in the state of Montana; there are not many other places throughout the state that have used it all, or to the extent that it has been utilized in Missoula, where it has been accepted and encouraged to create home ownership options. It is an alternative to subdivision review, but new challenges have arisen with subsequent issues.
- Between 2011 and 2014 most of the TED projects were small; projects between 2-6 units and were generally all infill projects in locations with existing roads and infrastructure. They were reviewed under the regulations in the zoning; a lot of those projects were reviewed under the multi-dwelling building standards.
- Between the years of 2014 and 2018 the projects got larger and more complex; projects came in as large as 56 units. There was growing concern over neighborhood fit, there were challenges regarding resource constraint issues; how to accommodate roads, private streets, and common areas. During this time there were two different rounds of zoning amendments, one in 2016 where additional building standards were adopted for TED and implementation of the conditional use approval requirement for size; in 2018 they clarified that TED was to be treated as townhouses, not as multi-dwelling buildings.
- The scale and frequency of TEDs continued to increase since 2018. Due to continued challenges the interim ordinance was implemented in May 2019. The interim ordinance is set to end in November 2019.
A leadership group was formed to examine the benefits, challenges, what is working, what is not, and how to meet city goals. A policy/mission statement came out of the those meetings: "The Townhome Exemption Development tool is intended to encourage residential development in the city's core in concert with the City of Missoula's stated policy goals; including the development of compact and walkable neighborhoods, the effective use of existing infrastructure and the building of new affordable housing in a timely manner. The TED tool is not intended to rebuild development for public infrastructure and where there are significant impediments in the community's ability to guide development in an orderly manner or to protect the general health, safety, and welfare of the community." Mr. Brewer compared the number of subdivision projects to the number of TED projects. There have been 7 filed subdivisions since 2011 and 55 TEDs.
Mr. Brewer presented the zoning sections that would be affected by the ordinance amendment:
- 05.040.D: Residential Districts: Townhome Exemption Development Option
- 05.050.B: Residential Districts: Basic Parcel and Building Standards
- 05.060/20.10.050/20.15.060: Residential/Commercial/Industrial Districts: Other Regulations
- 40.180: Use and Building Specific Standards: Townhome Exemption Development (TED)
- 45.060: Accessory Uses and Structures: Accessory Dwelling Units
- 80.020: Nonconformities: Nonconforming Lots
- 100: Terminology
- 110.010: Measurements and Exceptions: Parcel Area
- 110.050.F Measurements and Exceptions (New Section): Setbacks and Separation of Residential Buildings on TED Parcels
He advised the planning board that all proposed text changes could be accessed in Attachment A. Another of the goals is to make the process clearer; to streamline the process. The intent is that it is not used in special zoning districts. TED is permitted only in current Title 20 zoning districts, not in special districts or PUDs. One of the key components is the size cap, and this does not necessarily lead to affordable units, but more units. It will lead to housing being added quickly. TED is limited to residential development that includes either detached home or townhouse building types. TEDs would be limited to 10 dwelling units in single dwelling and some two-dwelling unit districts (RT10 and RT5.4), and 20 dwelling units in R3, RT2.7, and all multi-dwelling and commercial districts. Developments over the new cap on number of dwelling units would be prohibited as a TED. The conditional use process for TEDs of any size would no longer be used. Larger developments would need to go through some form of subdivision process, either minor and then TEDs on those lots, or a single major subdivision. Sites that have significant constraints or hazardous land issues would be prohibited from TED. Development that jeopardizes acquiring public roadways that are crucial to connectivity would be prohibited from TED at the discretion of the Development Services Director in consultation with the City Engineer.
Mr. Brewer stated that they are proposing changing the notification requirements; currently TEDs are required to give notification in some situations, which is tied to conditional use. With these changes there would be no conditional use, so notification would be for informational purposes only. The trigger for that would be anything over 5 dwelling units.
He stated that TEDs over the size cap would be prohibited and they are proposing the removal of the conditional use approval option. Elimination of the conditional use process will help provide predictability and certainty to a development that uses TED and provides the ability to maintain a streamlined process. He clarified that this would not mean that the development would be prohibited, but that the development through the TED option would be prohibited.
Mr. Brewer presented a strategy component addressing constraints and hazards. He stated that there are some situations where constraints should be reviewed through the subdivision process. That would include right of way; there are situations where development should include public right of way rather than establishing private roads with easements. 20.40.180.B is being re-purposed to be a condition not suitable for TED:
- The additional proposed relating to floodplain
- Slopes that are greater than 25%
- Any land that is already included in a filed TED declaration is not suitable for TED, this is from the interim ordinance and has been discussed previously.
- A situation where right of way was needed
On-Site Constraints [slide 36 of Mr. Brewer's presentation] gives the ability to ask for materials that adequately address on-site situations.
The minimum parcel size requirement would be removed for new subdivisions. This would create parity in the subdivision process and the TED exemption. The parcel and building standards table was presented along with information on nonconforming lots and measurement and parcel areas.
Section 20.45.060 states that Accessory Dwelling Units (ADUs) are not permitted on TED Ownership Units (TOUs). 20.100 addressed terminology, TOUs are not lots. Setbacks and separation were addressed in Table 20.05-3. Use and building specific standards were listed in section 20.40.180. Measurements were covered in 20.110.050; which covered setbacks and separation of residential buildings on TED parcels. Section 20.40.180 addressed use and building specific standards for TED.
Mr. Brewer stated that three public comments were received, along with comments and support from the Housing, Fire, and Parks departments. He anticipates Title 12 updates and a continued conversation on subdivision regulations.
PUBLIC COMMENT [8:37 PM]
NICK KAUFMAN, Senior Planner, WGM Group, Missoula, MT. Mr. Kaufman thanked Ms. Means and Mr. Brewer for their hard work. Mr. Kaufman was pleased that TEDs are still available for use in the development process. He felt that the root problem is the time it takes to do a major subdivision. Mr. Kaufman stated that is an issue for the State of Montana, not this Planning Board. He stated that it is important for the Planning Board to understand the context within which this amendment happens. State law says that when parcels are created for sale, they must go through a subdivision process. There are certain exemptions to this, gifts to family members once in a lifetime, creation of condominium units, and in this case, creating parcels through the TED. He stated that a typical subdivision in the City of Missoula, just the preliminary plat process, will typically take 13-15 months. The final plat process for that will take another 3-5 months. Good design takes a lot of lead time. Developments did not occur during the recession years, until after May 2018. The initial first year process takes place under the rules and regulations in place at the time you started. Changes in the middle of the process, like the proposed TED regulations, could mean that all the previous design efforts may all be for naught. This needs to be addressed as it effects a considerable process and there needs to be a safety valve. That safety valve, in the language of land use planning is "a vested right exemption". Mr. Kaufman asked the board to consider if an architect with a building at the 90% planning stage, who had been working through the planning department and building department to get to that point when suddenly the building codes changed; should that architect be able to get a vested right exemption and move forward, as long as there was no danger to the public health, safety and welfare? He feels a vested right exemption should be granted to projects in similar situations. Mr. Kaufman feels that one of the items missing in the proposed TED change is the ability for a vested right for persons and/or organizations involved in that design process. He cited the 2002 Hellgate Meadows project and provided details of the success of that. In order to meet the housing demands for today, and the contemporary design for today, his clients Wade Hoyt and David Edgell looked at this piece of property, tied it up and with the recommendation of Eran Pehan, at Housing and Community Development as well as the leadership of the City of Missoula, hired a company called Opticos Design, Inc. Opticos specializes in housing design for the middle-income population in America today. Several months of design work were completed along with strategizing with the City of Missoula. Their objective was to seek properties zoned Title 19, change the zoning to Title 20, and do a subdivision, meeting all the criteria and follow that up with a TED; all while working with development services to combine the best of two worlds; a subdivision and a TED. Now, near the end of that process, they are faced with changes to the TED. He asked the planning board members to consider adding vested right language to the TED amendments so that those already in the process are not penalized and can continue under the rules and regulations under which they started.
David Edgell, Edgell Building, Inc. asked Mr. Brewer to put his leadership statement on the overhead screen again. Mr. Edgell stated that in 2016 his company developed the Scott Street Village Development, and it followed this exactly. He asked Mr. Brewer why the changes were necessary and what about the Scott Street development does not meet the parameters. Mr. Brewer stated that he is familiar with the larger TEDS and there is a lot to like about the Scott Street Village Development and it has been received well in the community. Mr. Brewer stated that what they are proposing does not come down to one project nor one development; this has been an accumulation of findings and a continuation of being in a reactive place. Mr. Edgell stated that 124 units were constructed, and they were very well accepted by the community and MRA. He stated that projects of that size needed, and they need to be done in a manner that is easy to get done through the city; the process does not need to be more complicated like the subdivision process. He feels that the amendments will make the TED more like subdivision review, which costs $50,000 - $100,000 more to complete and does not make housing more affordable. He asked that the amendment either be stopped or completely reconsidered as he feels most of the items are simply looking for ways to complicate the TED.
Mr. Rice reminded those commenting that the comments are to come to the board, not the staff nor presenters.
Jim Schafer, Straightedge Construction. Mr. Schafer has partnered with other builders on infill TED development projects. He stated that every project he has done has gone through a stringent review process which he felt had met all the requirements as subdivision review such as setbacks and infrastructure. He works on projects that add higher density and affordable housing. Without the TED process he would not be able to get the projects under development. Mr. Schafer referred to the statistic of the number of subdivisions moving forward vs. the number of TED projects. He stated that the subdivision process is so cumbersome and overwhelming that it basically pencils most of the developers out of being able to do it as homes are sold based on market value and that appraisals and bank funding needs to be considered. Additional reviews drive up the costs and the timelines.
Dwight Easton, Public Affairs Director, Missoula Organization of REALTORS (MOR). Mr. Easton stated that MOR has reported for several years that the Missoula housing market has remained tight. His information shows that there is a continuing unmet demand for housing stock. Inventory of homes for sales, which MOR measures as total market absorption rate, has hit an all-time low of 1.96. This means that there is less than two months of total market inventory in the Missoula area. Year to date median sales prices have gone up 5.86% from $290,000 to $307,000. Mr. Easton stated that he felt Missoula could afford to take some upward pressure off the market by incentivizing more housing development, not less. He believes that the proposed amendments would do the opposite. He stated that TED has been an effective tool utilized to lower development costs, increase the speed to market, and improve overall housing stock. Since TED statutes were enacted in 2011, 461 residential housing units, which is 89% of the total housing, were produced by TEDs vs 55 through subdivision. 281 of those units were over the 10-unit rule; that is 54.5% of all the housing stocks. He stated that the proposal to direct developments over ten units through the subdivision process will add unnecessary costs, delays, and in some cases may make the development non-economically viable, thus killing the project. This would result in fewer and higher cost housing. He stated that is was notable that both the MOR Making Missoula Home study and A Place Called Home study done by the City of Missoula recognize TEDs as a tool to encourage more affordable housing development. He stated that there is proof that TEDs can and will provide significant housing stocks quicker and at lower cost than the subdivision process, which he feels is broken. He urged the board to seriously consider pulling this amendment and having Development Services work on the subdivision process prior to addressing the TED. He stated that process is currently working and providing housing and should not be altered so that TEDs over 10 units go to subdivision review. He asked for a "do not recommend" vote from the board.
Jared Kuehn, Vice President, Missoula Building Industry Association board. Mr. Kuehn is a commercial lender at First Security Bank and a native Missoulian. He stated that the Building Industry Association provided a letter and encouraged planning board members to read through those comments. As a commercial lender he sees a lot of these projects in his workplace. A project becomes riskier with the number of compliance items, which is a hinderance to project financing. Most importantly, he stated that it is very difficult to purchase a home in Missoula and one of the cornerstones in the community is home ownership. He understands the need to have rental properties but encourages home ownership and feels that TED is a great tool and the numbers bear that out. He asked the board members to consider any unintended consequences before voting for these additional restrictions.
Wade Hoyt, Hoyt Homes, Inc. agreed with the earlier comments. He has worked with Development Services and feels that Development Services wants to re-write the rules regarding TED. He stated that time is money and costs went up 17% in 2017 and that much again in 2018. The costs for the first six months of 2019 have stayed steady at 9%. Adding time to a project increases the cost to the buyers. He offers different building types with price ranges for most buyers. Each delay increases costs to buyers.
[SHORT MEETING BREAK]
BOARD COMMENTS
Mr. Hoffman stated that the impacts and implications of these changes would be huge, and they deserve careful review.
Mr. Mefford stated that he would like to the see the entire section 20.40.180 repealed as he feels the state has already adopted it in subdivision regulations.
Mr. Caristo asked about the reasoning for updating the TED components before the subdivision regulations, and if this is restricted by state law and, he would like the staff's opinion on the "vested right exemption". Mr. Brewer stated that the reason for addressing TEDs first was that this is where residential development is currently happening. He stated that although they have some flexibility with local subdivision regulations, a lot of that is dictated by the state and needs to be a state level conversation. With regards to the vested right exemption, it is not something that has been discussed here but he appreciated the concern and it can be investigated further. He understands Mr. Kaufman's concerns and the intent is not to make projects fail but to assist in moving projects forward.
Ms. Potts thanked Development Services for their work and the thought process that has gone into this. She shared some of her experience with the legislative process and agreed that it is good to start with the tool that our community has more control over. She reminded that board that the state holds these rights and delegates them to the communities. The TED is a tool that the state has given to communities to use as they see fit to meet their development goals and to fall in line with their growth policies. That is what this should be used for, not just to speed development. She stated that she does understand the reasoning for the creation of more housing units and would be very interested to see the proof that the Missoula Organization of Realtors says they have about how this lowers housing costs. She cited an example of TOU pricing that is not entry level housing. She commended the city planners for using the TED tool and adjusting it as there is a great difference between 10, 20 and 100 units in terms of road connectivity, the number of people using those roads, and public and emergency services accessing those roads. She felt that ultimately it comes down to the state delegation of those rights to cities and communities through the subdivision or the TED process, and the state is creating public oversight mechanisms to do that. She reminded the board that the public, even if they are not in attendance at this meeting, needs to be included in the oversight process.
Mr. Bensen stated he was having a hard time finding a compelling argument for the amendments to the TED. He understood that one of the goals was to reduce costs by streamlining the review process and asked Mr. Brewer to clarify. Mr. Brewer stated that a streamlined review process, versus subdivision review, encourages residential development in the city's core and infill. It uses existing infrastructure and leads to timely development. Mr. Bensen voiced concern over the speeding up of the review process.
Mr. Improta spoke of the history of TED and how many consider it an avenue to affordable housing, but it can also be used for high-end town homes. He would like to see it tied into affordable housing.
Mr. Hoffmann is sympathetic toward the contractors and developers who are trying to produce affordable housing. He feels that they are faced with a capricious and arbitrary subdivision review processes which are risky, time consuming and expensive. Mr. Hoffman has been a Housing Authority board member for 15 years.
Ms. Hassanein asked how City Development Services arrived at the limits of 10 or 20 units. Mr. Brewer stated that they looked at past projects; 85% of the TEDS since 1011 were 10 or less dwelling units, 15% were above 10. Mr. Brewer explained the review process from the filing of a declaration to project completion.
Mr. Rice asked about statistics and missing data from the presentation. The statistics are for 10 or less or 11 or more. He asked how many units were created in the 10-20 category. Mr. Brewer stated that there two or three between 10 and 20 units and of the 9 large TEDs over 10, the majority are 30 or more.
Ms. Hassanein stated that she disagreed with Mr. Hoffmann's statement that subdivision review was arbitrary. She feels that there are specific regulations and review procedures and the development community knows exactly how to do them and have been doing them successfully. Her concern is that the TED may be a work around for not having to go through subdivision review; she also feels that claiming that these projects in the works may not happen is not accurate. Ms. Hassanein asked about the intent statement and affordability; however, she is willing to guess that most of the TEDs are not technically affordable housing, and that more supply does not necessarily bring down prices. She supports the proposed amendments.
Mr. Rice asked how the TED process has been implemented in the Billings, MT community. He stated that it is easier to do in Billings due to the unified code, so the road and emergency standards are all tried together. He appreciates that this version is more well written than other versions; however, it still doesn't get him to where he feels was the intent of the state law. He is concerned about the vested right exemption and would like to see that explored further. Mr. Rice discussed the history of condominium and townhome projects and the financing and requirements associated with those. He stated Title 20 needs much cleanup. He asked if the minimum lot size in the subdivision standards get us truly where we want to be. Currently with a subdivision layout the density is based off the land minus the street right of way and the parks. He stated that the big benefit of TED is that there are more housing units because it doesn't use gross density vs. net density.
Mr. Bensen asked about the benefits of passing the amendment. He feels it is a poor band-aid and possibly dangerous, things get hurried up, regulation suffers, and does it increase low-income housing in the community? Currently he does not support amendments to the TED.
Mr. Brewer stated that that all entities named in the regulation are typically involved in the review for building and zoning compliance permits for TEDs but also for building and development in general. Streamlining is about efficiencies in the process and that the goal is to create parameters for the scale of projects that they feel TED should be able to accommodate.
Mr. Bensen is concerned that the suggested amendments leave a product that is compromised. He feels it changes the regulations and restrictions, the checks and balances, and does not solve nor provide incentives for what the city wants in a broad sense. He asked if it was going to produce low income housing; does it have the regulations in place to maintain safe housing?
Mr. Rice asked the development team about the vested right concern, and more specifically, what parts of this creates roadblocks to success.
Mr. Kaufman stated that there is an administrative side of the regulations, which is City Development Services, and then the client side, those who do development. He stated that it helps to test the regulations in the field with the people who use them to see if they will work. His current project has more than 20 units on a lot, but they are doing a subdivision review process for the infrastructure and the public health, safety and welfare review; then the TED process is used to show exactly what is being built. His concern is about the performance standards. He gave statistics on the affordable housing options at Scott Street Village. With the price of land per acre densities of at least 10 per acre are needed to hit a demand price point.
Ms. Means said that the nature of trying to establish regulations is that projects get caught up and they need to recognize that. Vested rights have been discussed, and it needs to be clarified and what that means. Her department is sensitive to the time and investment that has already gone into projects underway.
Mr. Caristo asked about the Scott Street project and to what extent TED projects are exempt from building public infrastructure. Mr. Brewer answered that for the most part, TED projects meet the city infrastructure standards.
Mr. Hoffman will not be able to make the next meeting. He would like to see an increase over the numbers of 10 and 20. He agrees with the MBIA document, that existing slope requirements adequately address all applicable slope considerations for developments and that there is no need to disallow TEDs on properties with areas of 25% slope. Another of MBIAs comments was that TED projects under 10 units are not required to provide parkland. He agrees with that and feels it is a good thing. ADUs are not permitted on TED units and he wondered why staff would propose that.
Mr. Rice stated the public hearing was still open and the discussion could continue to the next meeting, August 20, 2019.
A MOTION MADE BY MR. BENSEN AND SECONDED BY MR. IMPROTA TO KEEP THE PUBLIC HEARING OPEN AND CONTINUE THE DISCUSSION TO THE NEXT MEETING, SCHEDULED FOR AUGUST 20, 2019. WITH A VOTE OF ALL AYES, THE MOTION CARRIED.