May 5, 2017
Victor City Council and Mayor Potter
32 Elm Street
Victor, Idaho 83455
Re: Discussion of possible waivers and/or city fee reductions for workforce housing
Dear Mayor & Council:
Workforce housing is a growing community issue. Housing costs continue to rise, yet household income in Teton Valley appears to remain stagnant. The need for more workforce housing is clear, but housing is difficult to produce. Public, private, and nonprofit housing developers are challenged to make projects “pencil” because construction, land, sitework, and other costs are high. This is common in mountain towns like Victor. As the gap between inventory and affordability grows, our community will need public and nonprofit housing developers to fill in.
For the last 3 months, Valley Advocates has been studying several housing proformas, and we have have found that producing housing units below $250k is virtually impossible in Teton Valley without financial relief. As a solution, we propose the city consider offering financial relief in the form of fee waivers and/or reductions for restricted affordable housing development.
The public policy foundation is strong for workforce housing and fee relief.
- The Victor City Comprehensive Plan puts for the policy of “[encouraging] development of varied housing types appropriate to meet a wide spectrum of housing needs for the city,” and to “encourage affordable housing for the community.”
- The Teton County Comprehensive Plan, which was formulated in close collaboration with Driggs, Tetonia, and Victor, recommends our community “evaluate the need for workforce housing program in Teton County.”
- The 2014 Western Greater Yellowstone Housing Needs Assessment recommended the creation of a valley-wide housing program, and the following: “Enact Fee Waivers or Reduction for Affordable Housing units. Sewer and water hookup fees in Driggs and Victor represent a combined cost of nearly $10,000, which significantly affects the cost to develop workforce housing. The elimination and/or reduction of these fees could be an effective incentive for private, non-profit and public sector developers to produce workforce housing. A deed restriction or other title instrument could be used to ensure long-term affordability in exchange for waived/reduced fees.”
Victor’s many years of thoughtful community planning efforts clearly establish a justification for fee waiver and/or reductions for restricted workforce housing.
Other communities have undertaken similar measures.
In 2015, Driggs waived their $2500 impact fee for restricted workforce housing units. The City of Ketchum recently waived $137,000 in building permit fees for a performing arts complex with significant workforce housing contributions. The Town of Jackson routinely waives development permit fees for projects initiated by the Teton County Housing Authority, the Jackson Hole Community Housing Trust, and private developers seeking to build workforce housing. We believe the City of Victor should follow suit.
A total accounting of Victor fees.
There are several city fees that can knock a housing proforma off-kilter. The $3500 water hookup fee and $2125 sewer connection fee are by far the most burdensome, however we understand these fees are deposited into an enterprise fund legally ineligible for waiver. Preliminary discussions with city officials have indicated the city intends to move to an impact fee model (similar to Driggs), which we support because it appears to allow for waivers and reductions. The $4800 subdivision fee for subdivision plats of 5 or more lots is also substantial, which we understand has increased nearly tenfold in several years. Finally, we estimate building permit valuation fees to be $1500-$2000 per unit. These combined fees represent significant costs for any workforce housing development, where margins are razor-thin at best.
In order to make workforce housing development possible, please consider the following two ordinance options for workforce housing development fee waivers/reductions:
- An across-the-board waiver or reduction. This could be enacted for subdivision and building permit fees for all development proposals containing housing with a deed-restriction or other title mechanism to ensure perpetual affordability. This could be enacted on a permanent basis or enacted with a sunset clause.
- A case-by-case consideration of proposals seeking fee waivers/reductions. Here, the council could establish an application process for projects seeking fee waivers for workforce housing development or other projects that provide an extraordinary charitable, civic, educational, or similar benefit to the community. Council could approve or deny fee waiver/reductions at their discretion.
We hope this discussion is helpful for the council, and can be parlayed into an overall infill development strategy for Victor. As always, we are grateful to the city for its consideration and would like to offer any assistance in pursuing this and other community matters going forward.
Thank you for your time and service to the community,
Shawn W. Hill