Title
Resolution to Set Revised Fee in Lieu of Affordable Housing Formula and Adopt 2019 Annual Fee in Lieu Rate
Memorandum
In the City of Ann Arbor's Unified Development Code, there is a provision within the Planned Unit Development Zoning District to require Affordable Housing for Lower Income Households or a payment of an Affordable Housing Contribution in lieu of constructing affordable units consistent with the formula adopted by annual resolution of City Council as part of the Planned Unit Development zoning district. For example, in Chapter 55 Unified Development Code Article V: Administrative Bodies and Procedures, Section 5.29.10 Planned Unit Development (PUD) Zoning District, F. Standards for PUD Zoning District Review (5) (b) notes the following (staff emphasis):
Affordable Housing for Lower Income Households shall be provided by the Development of units on-site, or payment of an affordable housing contribution in lieu of units consistent with the formula adopted by annual resolution of City Council, or by a combination of affordable housing Development and contributions.
The previous calculation of the affordable housing contribution has been amended by resolution twice, in 2004 and 2006, and is due for an update. OCED and City staff looked into best practices for calculating the fee-in-lieu of affordable units and has found two main strategies for calculating the amount.
1) One strategy is calculating the actual cost of constructing a unit. The means of determining this amount is often through a nexus study usually done annually by affordable housing consultants. It is often used in states that enable local units to require additional affordable units or fee in lieu of units for new commercial/office and related development, noting that most commercial and office will require lower-wage employees as part of the developments. Michigan state law does not enable this sort of nexus requirement. Since we aren't allowed to require affordable units...
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