LAND USE REGULATION COMMISSION 7 FEBRUARY 2007

1. AFFORDABLE HOUSING Draft Policy Statement and Proposed Rule Changes LAND USE REGULATION COMMISSION 7 FEBRUARY 2007

2. BACKGROUND • Issue of affordable housing mentioned occasionally in recent years • Monhegan requested rule changes in September 2005 • Affordable housing panel discussion held in August 2006 • Commission directed staff to proceed with drafting rules • Denial of building permit to Monhegan resident in September 2006

3. DRAFT AFFORDABLE HOUSING POLICY STATEMENT • Policy statement provides the basis for proposed rule changes • Draft policy statement defines affordable housing • Describes housing market and income trends in jurisdiction • Discusses several issues related to affordable housing • Presents draft goal and policy statements

4. AFFORDABLE HOUSING DEFINITION • Decent, safe and sanitary living accommodations • Affordable to lower and moderate income households • 33% limit on household income for housing costs

5. Maine Housing Costs • Housing costs, sales and rentals, increasing much faster than incomes in most regions • MaineHousing tracks regional housing costs and median incomes • Trends are particularly problematic in coastal and southern Maine • Uses “affordability index” to evaluate extent of affordability problems across Maine (ratio between how much mortgage loan areas’ median income households can afford divided by areas’ median home price)

6. 2005 Affordability for Median Income Buyers Income Needed to Community or Affordability Median Median Afford Median Housing Market Index Home Price Income Home Price Communities Greenville 0.81 $127,500 $35,948 $44,604 Rangeley 0.46 $251,250 $38,243 $83,826 Counties Aroostook County 1.41 $ 67,000 $32,809 $23,249 Hancock County 0.66 $196,000 $41,869 $63,206 Franklin County 0.84 $127,000 $35,930 $42,752 Hancock County 0.66 $196,000 $41,869 $63,206 Knox County 0.69 $192,875 $44,005 $63,675 Lincoln County 0.64 $209,000 $43,559 $68,281 Oxford County 0.88 $129,900 $38,123 $43,510 Penobscot County 0.88 $132,500 $39,453 $44,988 Piscataquis County 1.02 $ 92,000 $31,652 $30,994 Somerset County 1.14 $ 91,500 $35,153 $30,898 Washington County 0.89 $ 95,000 $29,105 $32,723 Labor Market Areas Dover-Foxcroft LMA 1.06 $ 86,750 $30,982 $29,291 Millinocket LMA 1.81 $ 53,950 $33,440 $18,488 Coastal Islands 0.50 $272,500 $42,716 $85,035 LURC MCDs 0.68 $165,000 $36,554 $53,498 Maine 0.70 $184,000 $43,370 $61,648

7. Median Incomes and Housing Costs2001 – 2005

8. LURC Regulatory Approach • Current CLUP does not mention affordable housing as an issue… • Chapter 10 rules don’t specifically address affordable housing

9. Affordable Housing IssuesDevelopment and Regulation • Demand and Location: Accommodate affordable housing in all areas appropriate for residential development initially – then monitor • Environmental Protection and Land Use Regulation: Examine land use provisions to determine whether standards can be reduced or waived to reduce housing costs while still protecting natural resources

10. Affordable Housing IssuesDevelopment and Regulation • Regulatory Techniques: • Inclusionary zoning – rules integrate affordable housing into overall development in communities • Density bonuses – allow additional units overall in exchange for inclusion of affordable units • Accessory apartments/multi-family dwellings – use incentives to encourage development; limit to affordable housing purposes • Incentives versus mandates – initially, use incentives, then monitor situation

11. Affordable Housing IssuesLong-term Affordability • Specified time frames: • Variable – 10-99 years • Maintaining affordability: • Rentals – easier than sales units…oversight agency sets rental rates within affordable ranges and limits increases • Sales – deed covenants include pricing formulas that may consider inflation, improvements, subsidies • Mechanisms: • Income and affordability limits –set affordable rental rates and sale prices; screen households • Various means – deed covenants, subsidies to bridge gap, right of first refusal for sales

12. Affordable Housing IssuesInitial Commission Approach: • Incentive-based Approach • Allow reduction of minimum lot size and other dimensional requirements, as needed • Long-term Affordability • Consider time frame of affordability • Leave method of ensuring long-term affordability to applicants • Housing Oversight • Require on-going involvement and oversight by acceptable housing entities • May require back-up for the housing entities

13. Draft Affordable Housing Goal Statement Proposed Goal: Facilitate the provision of affordable housing opportunities in appropriate locations to households with a full range of incomes.

14. Draft Affordable Housing Policies Proposed Policies: • Evaluate current dimensional requirements and land use standards for residential structures and subdivisions to remove barriers to the creation of affordable residential lots and construction of affordable dwelling units. • Require that permitted affordable housing is overseen by experienced local or regional housing groups or agencies that can assure it is maintained as affordable housing over the long-term. • Ensure that permitted housing affordable to households with varied incomes is interspersed within residential projects and development subdistricts, as appropriate. • Work with local and regional housing groups, plantation and town officials, and regional planning agencies to identify the need and appropriate locations for affordable housing.

15. PROPOSED RULE CHANGES FOR AFFORDABLE HOUSING ACTIVITIES • 10.02 DEFINITIONS • 10.25 DEVELOPMENT STANDARDS • 10.26 DIMENSIONAL REQUIREMENTS

16. 10.02 DEFINITIONS • Affordable Housing: • Decent, safe and sanitary living accommodations that are affordable to very low, low and moderate income households • Limit of 33% of income spent on housing • Affordable Housing Covenant: • Agreement among owners, and/or tenants, and qualified holders, that permits holders to control purchase price of housing • Primary purpose to provide affordable housing

17. 10.25 DEVELOPMENT STANDARDS U. AFFORDABLE HOUSING • Dimensional Requirements • Reduce minimum lot size to 20,000 square feet • Reduce other dimensional requirements, as needed • Income Restrictions • Require sale or rental to very low, low and moderate income households • Allow waiver of limit on % of income spent on housing in certain markets

18. 10.25 DEVELOPMENT STANDARDS U. AFFORDABLE HOUSING (cont.) 3. Maintenance of Long-term Affordability • Require that provisions run with land & are recorded • Restrict title for sales in perpetuity by deed covenant • Limit annual rent increases • Allow other equivalent mechanisms

19. 10.25 DEVELOPMENT STANDARDS U. AFFORDABLE HOUSING (cont.) 4. Qualified Housing Entities • Require oversight of affordable lots or units by qualified housing entity acceptable to Commission • Require back-up housing entity or covenant holder • Require approval of transfers of rights

20. 10.25 DEVELOPMENT STANDARDS U. AFFORDABLE HOUSING (cont.) 5. Affordable Housing Agreement – Submissions: • Identification of qualified housing entity & back-up • Method for maintaining long-term affordability • Process for screening and selecting tenants or buyers • Purchase option for qualified housing entity • Method to return profits for purpose of housing • Documentation of need for waiver of 33% limit

21. 10.26, G Exceptions to Dimensional Requirements 14. The Commission may reduce dimensional requirements for the purpose of providing affordable housing opportunities, in accordance with Section 10.25, U.

22. STAFF RECOMMENDATION: POST DRAFT AFFORDABLE HOUSING POLICY STATEMENT AND PROPOSED RULE CHANGES TO 30-DAY COMMENT PERIOD