ARTICLE
Community Benefits Program for Santa Cruz’s Mixed Use Corridors Dyett & Bhatia, Draft for City Staff review, July 11, 2016 The proposed zoning for the Mixed Use Corridors includes a community benefit program based on the principle that in exchange for a development bonus that increases the value of property, the City and the community at large should receive benefits that are commensurate in value. In their most basic form, community benefits programs are a means by which new development is authorized to exceed a baseline floor area ratio, building height, or density limit in exchange for incorporating project features that exceed the basic requirements imposed to implement General Plan policies. Community benefit programs must conform to both statutory and case law, but also, for a defined benefits approach to work, the City must be able to entitle projects that will provide sufficient additional value to generate the types of benefits the community wants. This means that there must be additional traffic-carrying capacity on local streets and infrastructure capacity to accommodate additional development as well as market demand for the additional private sector costs such a program will incur. What Are Community Benefits Programs? Traditional approaches to land use regulation have long required development to meet minimum standards enacted to protect public welfare and to help achieve the community’s shared vision of a quality environment. The State has also authorized the use of incentive zoning to obtain certain benefits including affordable housing and child care. While some cities require an individual hearing before granting any incentive, another practice is to agree on the bonus conditions ahead of time and then grant the bonus without discretionary review. Investors need the predictability of knowing that if they offer an amenity that meets the city’s standards, they can budget on the additional height or space and avoid running the risk of having that reduced or denied in a discretionary hearing. This added certainty makes incentive programs work more effectively than if every detail has to be negotiated. The legal basis for community benefits programs is derived from a body of law that enables cities to regulate development to achieve three broad objectives: --Ensure that approved projects do no harm by degrading existing conditions; --Ensure that projects conform to local policies intended to achieve community objectives; and --Achieve public benefits in exchange for providing incentives that increase development opportunities. More specifically, California cities can exercise their police power and statutory authority to: --Enact regulations that require discretionary review and allow the imposition of conditions on in order to protect public health, safety, and welfare on a case-by-case basis and after making findings based on information in the record; --Enact regulations that allow the granting of additional height, floor area, or other incremental increases in development intensity when requested by an applicant and in exchange for providing specific benefits; and --Negotiate development agreements to obtain benefits for the community that exceed those required by adopted standards and regulations. In exchange for granting benefits, allow incremental increases in development intensity or alternative uses that are consistent with adopted general plan policies, but exceed or differ from what would be allowed solely through implementation of zoning standards otherwise applicable to the project. While there is variation among the programs that municipalities have established to obtain community benefits, they typically have several characteristics in common: --Ability to offer a regulatory development incentive (most commonly a density or floor area bonus) within the confines of existing General Plan land use policies; --Existence of market demand for this added development potential; --Availability of vacant or underutilized sites where development can occur; and --Evidence that the increment of real estate value created by the density bonus results in a “producer surplus” (i.e., that in addition to being incentivized to seek the density bonus, there is sufficient additional economic value that the developer is willing to contribute toward community benefits). Establishing and Calculating Benefits and Incentives From a legal standpoint, a carefully crafted zoning approval process requiring a public hearing and Planning Commission approval or creating a ministerial program under the Zoning Administrator that offers specific incentives in exchange for specific benefits is preferable to case-by-case negotiation without objective standards and criteria. Incentive systems should be predictable, equitable, and easy to administer, with bonuses that relate to the quality and value of the amenities desired and/or needed by a community or specific area. Deciding whether the community as a whole should derive benefits from an incentive program, rather than directing benefits to the areas most affected by a project or those with the greatest need, is one of the critical decisions that City officials have to make when establishing a community benefits program. To minimize subjectivity, the proposed incentive program for the Mixed Use Zoning Districts avoids project-by-project negotiations that typically apply to development agreements. The basic idea is to establish a process for identifying specific bonusable elements of a development project, such as affordable housing, day care, incubator space for small businesses, and additional public improvements, and determining how community benefits will be calculated and the bonus height/intensity rewarded. Questions for the Planning Commission Subcommittee to consider include: --How will the relative value of benefits be calculated? There are many ways that municipalities have allocated awards for community benefits, including: (1) a point system where projects qualify for bonus points based on whether the project meets certain criteria; (2) development value/pro forma-based where the bonus is related to the increase in the project’s value; or (3) pass/fail thresholds, a menu of benefit options where bonus achievement is binary and ministerial. In each case, the points or thresholds are converted into a percentage increase in height or FAR, up to a defined maximum. --How will benefits be prioritized? Certain benefits may be applicable to all areas, while others may be specific to only certain types of development. For example, while streetscape may provide an important benefit in highly utilized pedestrian areas, it may not be a high priority in other areas, such as in lower-density neighborhood mixed use areas. The community benefits program can allow for greater bonuses in certain districts to ensure that the intent of the General Plan is met. --Who will decide? The regulatory program will also need to define the decision-making process. Are benefits allowed through a ministerial process (e.g., a menu of options that is available by right with clear findings for staff review and determination) or discretionary review (i.e., through the determination by the Planning Commission)? In order for incentives to work, they need to be grounded in local real estate economics—i.e., they need to really encourage developers to build what is wanted and they need to offer bonuses that exceed what would otherwise be available. The following table shows the proposed approach to assigning value to specific benefits that uses a point system. By earning points, a project could be entitled to additional height, additional FAR, additional density, or a combination of elements that would increase the intensity and value of the project. As the table shows, values can be assigned based on their monetary value, physical size, or percentage of the site. The suggested points can be further refined to reflect a more specific relationship between a benefit and the bonus increment, to demonstrative that the assigned value is justified. Table 1: Relative Value of Potential Bonus Features Type of Benefit Maximum Points Basis for Calculating Points (Pts.) Affordable Housing 50 5 points for each five-percent increment above the City’s inclusionary requirement of 15 percent affordable units (30 percent for small ownership for sale units) Day Care Center 10 Development must reserve space for a center at a below-market rental rate, as established by the City Council Green Building 20 Residential projects: 0.25 points for each point above the City’s minimum for a Green Building Award certificate1 Non-residential component of mixed use projects: 0.5 points for each point above the City’s minimum for a Green Building Award certificate1 Incubator Space for Small Business 15 Development receives 7.5 points for each 15-perent increment of space reserved for below-market rental rates for qualifying small businesses based on affordability standards set by City Council Public Access Easements 5 Easements provided for pedestrian/bike paths through project site connecting to a public street or other right-of-way Public Right-of-Way Improvements 25 Points to be based on dollar value of off-site improvements x 10 divided by average development cost per square foot or other case-by-case determination. Publicly Accessible Open Space 10 Pts to be based percent of space reserved for privately-owned publicly accessible open space (e.g. 50 sq. ft. per 1,000 ft. of floor area: 3 points) Structured or Shared Parking 20 Fractional points provided for each type of space. Transportation Demand Management 20 Pts based on meeting a menu of TDM elements (transit passes, bike lockers and showers, guaranteed ride home, etc.); 5-year TDM commitment required, and TDM obligations may be revised based on 5-year review Additional Public Benefit 15 Discretionary amount to be awarded by Planning Commission for undefined benefits proposed by applicant. Total Points Need for Maximum Bonus 100 (Theoretical maximum exceeds 100, but only a maximum of 100 points will be credited to the bonus FAR/density/height calculation.) Note: Information about the City’s Green Building Program, including checklists used to determine eligibility for the Green Building Award, can be found at http://www.cityofsantacruz.com/departments/planning-and-community-development/divisions/building-inspection-services/green-building-program. TESTING BONUS HEIGHT AND FAR ON SPECIFIC SITES To determine how a bonus height and bonus FAR might work, seven sites were studied, and massing diagrams prepared to show potential building configurations with alternative height limits. These are presented in Figure 1. The potential floor area on each site was measured, and the resulting FAR calculated. Parking was assumed to be “tuck-under” with the front of each building reserved for active uses on the ground floor. This testing process suggested some adjustments in the ranges for base and maximum densities and FARs that were presented in the Preliminary Draft Zoning Recommendations for Corridor Advisory Committee. --The minimum base residential density should be 20 units per acre for the MU-CC and 10 units per acre for the MU-NP. These limits are consistent with a two story/25-foot height limit. --The maximum residential density could increase under the community benefits program to 40 units per acre in the MU-CC and MU-N zoning districts and to 55 units per acre in the MU-NP and MU-V zoning districts. These limits are consistent with a three story/40-foot height limit in the MC-CC district, a four story/50-foot height limit in the MU-N district, and a five story/60-foot height limit in the MU-NP district. --Half of the “bonus density” could be achieved just by providing more affordable housing than the minimum required under the City’s Inclusionary Housing Program. --The maximum base FAR with lot consolidation is proposed to be reduced to 1.0 in the MU-CC; 0.75 in the MU-N and MU-NP and 0.5 in the MU-V zoning districts. --The maximum bonus FAR with the community benefits program is +0.75 in the MU-CC district, +1.0 in the MU-N, and +1.5 in the MU-NP and MU-V districts. This graduated approach is consistent with the General Plan. The preliminary recommendation for a 2.75 FAR for the MU-V district would create excessive bulk and not allow parking to be accommodated on-site. --Adjacent to residential zoning districts, a 45-degree inclined daylight plane would ensure that buildings are stepped back, while still allowing for reasonable development potential. Planning Commission Subcommittee comments on these adjustments will help ensure that the bonus density and bonus FAR parameters fit within building height limits and do not overwhelm neighborhoods along the corridors. What Other Cities are Doing Cities as diverse as Miami, Anchorage, Cincinnati, Tampa, Portland, and Austin have established some type of benefits program. Like the jurisdictions themselves, the programs vary widely, usually premised on a community’s specific priorities and needs, regulatory structure, and market conditions. Sunnyvale The City of Sunnyvale is considering a draft community benefits program in the context of a specific plan for Peery Park. The basic idea is to allow percentage increase in the base FAR if defined benefits are met. Individual benefit features earn from 3% to 17% FAR increments based on specified criteria plus additional FAR for a program of flexible benefits where the increment is not defined. The total additional floor area that could be achieved if the maximum FAR increase for each listed benefit were achieved would be about double the amount allowed as a base (104 percent, to be precise) without considering additional FAR that can be requested under the flexible benefits portion of the program. The defined benefits with “as-of-right” FAR increases include the following: --Innovation-Friendly Development: locate small scale tenant space adjacent to publicly accessible retail cluster or open space; provide a minimum percentage of ground floor space for small tenants; provide a mix of light industrial and office space in single development. --Open Space/Landscaping: provide specified proportions of the site as open space/landscaping, with greater percentages qualifying for more bonus floor area. --Publicly Accessible Open Space: provide specified proportions of floor area as publicly privately-owned, publicly accessible open space. --Public Access Easements: provide a new publicly accessible pedestrian/bike path(s) through site; provide new publicly accessible street(s) through site. --Retail: provide space for publicly accessible retail in a Small Activity Cluster configuration; provide a minimum square footage for publicly accessible retail in a pedestrian oriented Activity Center; orient publicly accessible retail towards publicly accessible open space. --Childcare: provide child care facilities (where permitted). --Publicly Accessible Recreation: provide minimum square footage of public recreational facilities. --Parking: get bonus floor area for each structured parking space or parking space designated as shared. --Green Building: meet Green Building Program LEED Gold thresholds for additional FAR; get bonus floor area for a specified number of LEED points up to Platinum. The City also has proposed a set of benefits where the bonus floor area where be negotiated on a case-by-case basis. There are called “Flexible Benefits” and include: --Innovation Anchor Facilities: Provide an innovative anchor such as a coworking/incubator/accelerator/maker space, training/education facilities, or shared meeting facilities. --Transportation/Streetscape Improvements: provide bicycle, pedestrian, transit, green street, or other sense-of-place amenities beyond the minimum required. --TDM Programs or Facilities: provide shuttle, parking, apps, or other transportation management or transportation management association services beyond the minimum TDM/TMA requirements. --Sustainability Project Elements: provide additional energy saving, water quality, low impact development, air quality, or other sustainability project elements beyond the minimum requirements. --Community Facilities or Services: provide community meeting space, district wi-fi, green infrastructure improvements or other community facility/service. --Community Programs: organize and manage community programs. --Community Benefits Fund: establish or contribute to a community benefits fund. --Other Community Benefits: other community benefits proposed by the applicant. Sunnyvale’s approach would work well where the base FAR is the same, but it does not allow for flexibility in the development increment to achieve greater intensity in identified nodes or corridors, as is the case in Santa Cruz. Also, because a qualifying project can request additional FAR for elements, with no overall cap, the total bonus FAR is not defined, which could lead to unacceptable environmental impacts. The program may well have a maximum FAR but, as it is still in draft form, the regulations and procedures have not yet been defined and circulated for public review. Emeryville The City of Emeryville allows additional floor area ratio, height, and/or residential density in exchange for a variety of amenities, including public open space, sustainable design, public improvements, and public art. Bonuses are allowed based on a point system, such that a project may qualify for a series of bonuses, up to a limit for the provision of qualifying public benefits, and subject to Conditional Use Permit approval by the Planning Commission. Qualifying public benefits are assigned a number of points based on the cost of providing the benefit and the correlated potential economic value of additional development potential. The basic idea is that a developer would be willing to invest in a bonusable feature if the added revenue from the additional floor area that could be built would cover the added costs. In approving a Conditional Use Permit for a bonus, the Planning Commission must find that the proposed project is compatible with the surrounding neighborhood with regard to building scale, form, and materials, and street orientation. For bonus height over 100 feet, additional findings related to view, wind, and shadow impacts and building separation must also be made. Table 2: Emeryville Public Benefits and Bonus Points Public Benefit Maximum Points Point (Pt.) Calculation Requirements Public Open Space 50 50 pts.: 15 percent of site area or 2,000 s.f., whichever is greater. 35 pts.: 10 percent of site area or 1,500 s.f., whichever is greater. 20 pts.: 5 percent of site area or 1,000 s.f., whichever is greater. Contribution to Citywide Parks Fund: 10 pts. for every 1 percent of project construction valuation up to 50 pts. Must be in addition to what is required by Article 3 of the Zoning Ordinance. Design must comply with applicable provisions of the Emeryville Design Guidelines and be approved as part of design review for the project. Open space must be accessible to the general public at all times. Provision must be made for ongoing operation and maintenance in perpetuity. Sustainable Design 35 35 pts.: LEEDTM Platinum or equivalent. 25 pts.: LEEDTM Gold or equivalent. 10 pts.: LEEDTM Silver or equivalent. Compliance of schematic design to be confirmed by Chief Building Official. LEEDTM or equivalent third-party certification required prior to issuance of certificate of occupancy. Alternative Energy 50 50 pts.: 100 percent of energy load (zero net energy). 35 pts.: 50 percent of energy load. 20 pts.: 30 percent of energy load. 10 pts.: 15 percent of energy load. Percent of total building energy load measured as kilowatt per s.f. provided by solar panels, wind turbines, or other renewable sources. No less than 50 percent may be in the form of Renewable Energy Credits (RECs) in compliance with California State laws and procedures. Any RECs must be available for the life of the project as evidenced by a long-term contract. Water Efficiency 35 20 pts.: Graywater reuse system. Reuse of domestic wastewater from plumbing fixtures such as showers, dishwashers, and clothes washers, but not including toilets and garbage disposals, to be used for toilet flushing and irrigation. System must comply with the requirements of the Emeryville Plumbing Code in Chapter 3 of Title 8. 15 pts.: Rainwater capture system. System that captures and store water from at least 75 percent of the project roof area for landscape irrigation and/or indoor water use. The storage system must be sized to hold all water from a 1-inch rainfall event (equivalent to 0.62 gallons per s.f. of roof area used for capture). System must comply with all applicable codes and regulations. Flexible Public Benefit N/A The Planning Commission or City Council, as the case may be, shall determine the number of pts. To granted for the proposed public benefit. Currently undefined public benefit proposed by the applicant that is significant and substantially beyond normal requirements. Sorce: Emeryville Municipal Code Section 9-4.204. Santa Monica Santa Monica’s 2010 Land Use and Circulation Element (LUCE) generally establishes a maximum base height of 32 feet and, in some cases, a maximum density or Floor Area Ratio (FAR), in areas where the LUCE directs future growth. In order to exceed these base standards, projects would have to incorporate features that will contribute to the community’s overall social, cultural, physical, transportation and environmental goals. The LUCE identified five categories of Community Benefits and provided examples of measures that fell into each category: --Trip Reduction and Traffic Management --Affordable and Workforce Housing --Community Physical Improvements --Social and Cultural Facilities --Historic Preservation The LUCE also established three approval tiers or procedural tracks to regulate development. The tiers, which are tied to the type, location, and level of development, provide for ministerial or by-right approval of projects that meet all applicable requirements and do not exceed the base standards and two discretionary tiers, both of which would require applicants to provide community benefits in order to receive approval to increase the project’s height and/or floor area. Projects eligible for Tier 2 would typically be subject to a Conditional Use Permit, while Tier 3 projects require the developer to enter into a development agreement with the City. Projects that include affordable housing on site in compliance with the City’s existing Affordable Housing Production Program or within close proximity to transit corridors are eligible for a four- to seven-foot height bonus, allowing for an additional floor of housing. Housing projects that include only affordable units are eligible to receive incentives, such as a building height that does not exceed the maximum height at the highest tier, as well as reduced parking requirements and potential reductions in required ground–floor, pedestrian-oriented uses, which may include community services, arts, and similar uses. Housing projects with 50 units or less that are affordable to households earning no more than 80 percent of median income are not subject to discretionary review but, like most new development, do require design review. These incentives are provided in addition to the bonuses available on State law. Both residential and nonresidential projects are also subject to Santa Monica’s Affordable Housing Production Program, which is supported by a nexus study documenting the impact of both types of development on the need for affordable housing. The Planning Commission decided to focus on a community benefits approach that requires Tier 2 projects to contribute through increases in fees or by providing additional on-site housing, both areas where contributions towards capital improvements can be measured. Other kinds of benefits that include a programming or operational component (e.g., senior and youth services) or an entire facility (e.g., a bike center) would be negotiated through Tier 3 development agreements. San Diego Downtown The San Diego Downtown Community Plan, adopted in 2006, anticipated tripling of downtown population to 90,000, and a total of 165,000 jobs, together with several thousand new hotel rooms and public facilities in one of the most intense planned settings in the country. In order to ensure that new development led to new community amenities, the City created an FAR bonus program where development may exceed the maximum allowable base FAR for certain sites in the Downtown if the applicant provides certain public benefits or development amenities. All applicants participating in the FAR bonus program are required to have restrictions recorded on the property to ensure that benefits or amenities provided to earn the bonus are maintained in perpetuity. The public benefits and development amenities that may earn an FAR bonus are the following: Table 3: San Diego FAR Bonus Program Public Benefit/Development Amenity FAR Bonus (to be added to maximum Base FAR) Notes Affordable Housing Consistent with the State Density Bonus Law Urban Open Space 10% of site 20% of site 0.5 1.0 Must meet certain criteria and be open to the general public between 6:00 a.m. and 10:00 p.m. Three-bedroom units 0.5 1.0 10% of the units must be three or more bedrooms Eco-Roofs Up to 1.0 Bonus based on amount of roof area that is planted or landscaped and designed to sustain and support vegetation Employment Uses Up to maximum bonus FAR for providing 100% employment uses Up to 50% maximum bonus FAR for providing 50% employment uses Public Parking 1 sq ft for every 1 sq ft of public parking area FAR Payment Bonus Program Up to 2.0 Green Building Up to 2.0 Incentives for buildings that exceed CALGreen standards Source: San Diego Municipal Code Section 156-0309-A; Dyett & Bhatia. In addition, in certain areas, additional FAR can be purchased and development rights can be transferred in order to provide new parkland and open space. The provision of new parkland and open space to match the increased intensities was an important objective of the Downtown Community Plan; acquisition and development of these was expected to cost approximately $200 million. To provide funding for these, a FAR “purchase” and a system of bonused Transfer of Development Rights (TDRs) for sites designated as public parks was established. Funds collected through this program must be used for parks, open space, or acquiring additional right of way for parks and open space in the Downtown. Seattle The City of Seattle allows bonus building intensity and height for both commercial and residential buildings in exchange for providing affordable housing (for residential developments) or making a cash contribution to the City for low-income housing (for nonresidential and high-rise residential developments): http://www.seattle.gov/housing/incentives/LandUseCode.htm. To receive a bonus increment of FAR above the base, residential developers must provide affordable housing or make a contribution of approximately $15 per gross square foot to the City to fund new affordable housing. In high-rise zones (greater than 85 feet), 25 to 40 percent of all additional floor area must be achieved through non-housing options, such as Landmark Transferable Development Rights/Transferable Development Rights Potential (TDR/TDP), Open Space TDR/TDP, and bonuses for on-site amenities. The bonus program is implemented through a staff-level process, which authorizes the Director of the Office of Housing to accept and execute a covenant as a condition of approval prior to issuance of a building permit. In practice, applicants have only achieved bonuses through the payment of in-lieu fees. The City is considering ways to prioritize the production of affordable housing over in-lieu payments. San Jose The City of San Jose has evaluated alternative financing strategies for a series of urban villages to be developed under new specific plans. Each strategy focused on “value-capture” approaches that capitalized on the increased development and land values associated with zoning changes, rather than requiring direct City funding or pursuit of competitive and uncertain intergovernmental funding. The City’s consultant created pro forma analyses that demonstrated the property value increases associated with proposed multi-family housing, with and without mixed-use components, compared to current commercial/industrial zoning or existing buildings. The consultant also illustrated how various tools and negotiations could ensure that the rezoning did not simply yield a windfall to landowners or developers, but rather provided funding sources for the desired public improvements. Examples included development agreements, impact fee programs, community facilities districts, business improvement districts, and an innovative but untested approach to auctioning the “public development rights” similar to a transferrable development rights (TDR) program. Following its initial study of potential traditional and innovative financing strategies for San Jose, San Jose went further to investigate approaches for estimating and justifying a “complete streets” impact fee on infill development in San Jose’s urban villages. Two different options were identified: (1) establishing an area-specific traffic impact fee that includes “complete streets” improvements in addition to roadway improvements, or (2) creating a unique impact fee for pedestrian/bike/transit facilities. Either approach would require estimating associated increases in trips from the urban village due to residents, employees, and patrons of new development and charging fees differentiated by land use as determined by each land use’s trip generation factor. Additional questions to be assessed include identifying the appropriate trip generation rates for the area in question; determining the current and required infrastructure capacity as well as the cost of the required infrastructure improvements; identifying the area and population served by the infrastructure; calculating the maximum nexus-based fees for various land uses based on trip generation rates; and assessing the feasibility for development in these areas to financially support the maximum fee level.
Community Benefits Program for Santa Cruz’s Mixed Use Corridors
Dyett & Bhatia, Draft for City Staff review, July 11, 2016
The proposed zoning for the Mixed Use Corridors includes a community benefit program based on the principle that in exchange for a development bonus that increases the value of property, the City and the community at large should receive benefits that are commensurate in value. In their most basic form, community benefits programs are a means by which new development is authorized to exceed a baseline floor area ratio, building height, or density limit in exchange for incorporating project features that exceed the basic requirements imposed to implement General Plan policies. Community benefit programs must conform to both statutory and case law, but also, for a defined benefits approach to work, the City must be able to entitle projects that will provide sufficient additional value to generate the types of benefits the community wants. This means that there must be additional traffic-carrying capacity on local streets and infrastructure capacity to accommodate additional development as well as market demand for the additional private sector costs such a program will incur.
Traditional approaches to land use regulation have long required development to meet minimum standards enacted to protect public welfare and to help achieve the community’s shared vision of a quality environment. The State has also authorized the use of incentive zoning to obtain certain benefits including affordable housing and child care. While some cities require an individual hearing before granting any incentive, another practice is to agree on the bonus conditions ahead of time and then grant the bonus without discretionary review. Investors need the predictability of knowing that if they offer an amenity that meets the city’s standards, they can budget on the additional height or space and avoid running the risk of having that reduced or denied in a discretionary hearing. This added certainty makes incentive programs work more effectively than if every detail has to be negotiated.
The legal basis for community benefits programs is derived from a body of law that enables cities to regulate development to achieve three broad objectives:
More specifically, California cities can exercise their police power and statutory authority to:
While there is variation among the programs that municipalities have established to obtain community benefits, they typically have several characteristics in common:
Establishing and Calculating Benefits and Incentives
From a legal standpoint, a carefully crafted zoning approval process requiring a public hearing and Planning Commission approval or creating a ministerial program under the Zoning Administrator that offers specific incentives in exchange for specific benefits is preferable to case-by-case negotiation without objective standards and criteria.
Incentive systems should be predictable, equitable, and easy to administer, with bonuses that relate to the quality and value of the amenities desired and/or needed by a community or specific area. Deciding whether the community as a whole should derive benefits from an incentive program, rather than directing benefits to the areas most affected by a project or those with the greatest need, is one of the critical decisions that City officials have to make when establishing a community benefits program. To minimize subjectivity, the proposed incentive program for the Mixed Use Zoning Districts avoids project-by-project negotiations that typically apply to development agreements.
The basic idea is to establish a process for identifying specific bonusable elements of a development project, such as affordable housing, day care, incubator space for small businesses, and additional public improvements, and determining how community benefits will be calculated and the bonus height/intensity rewarded. Questions for the Planning Commission Subcommittee to consider include:
In order for incentives to work, they need to be grounded in local real estate economics—i.e., they need to really encourage developers to build what is wanted and they need to offer bonuses that exceed what would otherwise be available.
The following table shows the proposed approach to assigning value to specific benefits that uses a point system. By earning points, a project could be entitled to additional height, additional FAR, additional density, or a combination of elements that would increase the intensity and value of the project. As the table shows, values can be assigned based on their monetary value, physical size, or percentage of the site. The suggested points can be further refined to reflect a more specific relationship between a benefit and the bonus increment, to demonstrative that the assigned value is justified.
Table 1: Relative Value of Potential Bonus Features
Type of Benefit
Maximum Points
Basis for Calculating Points (Pts.)
Affordable Housing
50
5 points for each five-percent increment above the City’s inclusionary requirement of 15 percent affordable units (30 percent for small ownership for sale units)
Day Care Center
10
Development must reserve space for a center at a below-market rental rate, as established by the City Council
Green Building
20
Residential projects: 0.25 points for each point above the City’s minimum for a Green Building Award certificate1
Non-residential component of mixed use projects: 0.5 points for each point above the City’s minimum for a Green Building Award certificate1
Incubator Space for Small Business
15
Development receives 7.5 points for each 15-perent increment of space reserved for below-market rental rates for qualifying small businesses based on affordability standards set by City Council
Public Access Easements
5
Easements provided for pedestrian/bike paths through project site connecting to a public street or other right-of-way
Public Right-of-Way Improvements
25
Points to be based on dollar value of off-site improvements x 10 divided by average development cost per square foot or other case-by-case determination.
Publicly Accessible Open Space
Pts to be based percent of space reserved for privately-owned publicly accessible open space (e.g. 50 sq. ft. per 1,000 ft. of floor area: 3 points)
Structured or Shared Parking
Fractional points provided for each type of space.
Transportation Demand Management
Pts based on meeting a menu of TDM elements (transit passes, bike lockers and showers, guaranteed ride home, etc.); 5-year TDM commitment required, and TDM obligations may be revised based on 5-year review
Additional Public Benefit
Discretionary amount to be awarded by Planning Commission for undefined benefits proposed by applicant.
Total Points Need for Maximum Bonus
100
(Theoretical maximum exceeds 100, but only a maximum of 100 points will be credited to the bonus FAR/density/height calculation.)
Note:
To determine how a bonus height and bonus FAR might work, seven sites were studied, and massing diagrams prepared to show potential building configurations with alternative height limits. These are presented in Figure 1. The potential floor area on each site was measured, and the resulting FAR calculated. Parking was assumed to be “tuck-under” with the front of each building reserved for active uses on the ground floor.
This testing process suggested some adjustments in the ranges for base and maximum densities and FARs that were presented in the Preliminary Draft Zoning Recommendations for Corridor Advisory Committee.
Planning Commission Subcommittee comments on these adjustments will help ensure that the bonus density and bonus FAR parameters fit within building height limits and do not overwhelm neighborhoods along the corridors.
Cities as diverse as Miami, Anchorage, Cincinnati, Tampa, Portland, and Austin have established some type of benefits program. Like the jurisdictions themselves, the programs vary widely, usually premised on a community’s specific priorities and needs, regulatory structure, and market conditions.
The City of Sunnyvale is considering a draft community benefits program in the context of a specific plan for Peery Park. The basic idea is to allow percentage increase in the base FAR if defined benefits are met. Individual benefit features earn from 3% to 17% FAR increments based on specified criteria plus additional FAR for a program of flexible benefits where the increment is not defined. The total additional floor area that could be achieved if the maximum FAR increase for each listed benefit were achieved would be about double the amount allowed as a base (104 percent, to be precise) without considering additional FAR that can be requested under the flexible benefits portion of the program.
The defined benefits with “as-of-right” FAR increases include the following:
The City also has proposed a set of benefits where the bonus floor area where be negotiated on a case-by-case basis. There are called “Flexible Benefits” and include:
Sunnyvale’s approach would work well where the base FAR is the same, but it does not allow for flexibility in the development increment to achieve greater intensity in identified nodes or corridors, as is the case in Santa Cruz. Also, because a qualifying project can request additional FAR for elements, with no overall cap, the total bonus FAR is not defined, which could lead to unacceptable environmental impacts. The program may well have a maximum FAR but, as it is still in draft form, the regulations and procedures have not yet been defined and circulated for public review.
The City of Emeryville allows additional floor area ratio, height, and/or residential density in exchange for a variety of amenities, including public open space, sustainable design, public improvements, and public art. Bonuses are allowed based on a point system, such that a project may qualify for a series of bonuses, up to a limit for the provision of qualifying public benefits, and subject to Conditional Use Permit approval by the Planning Commission.
Qualifying public benefits are assigned a number of points based on the cost of providing the benefit and the correlated potential economic value of additional development potential. The basic idea is that a developer would be willing to invest in a bonusable feature if the added revenue from the additional floor area that could be built would cover the added costs.
In approving a Conditional Use Permit for a bonus, the Planning Commission must find that the proposed project is compatible with the surrounding neighborhood with regard to building scale, form, and materials, and street orientation. For bonus height over 100 feet, additional findings related to view, wind, and shadow impacts and building separation must also be made.
Table 2: Emeryville Public Benefits and Bonus Points
Public Benefit
Point (Pt.) Calculation
Requirements
Public Open Space
50 pts.: 15 percent of site area or 2,000 s.f., whichever is greater.
35 pts.: 10 percent of site area or 1,500 s.f., whichever is greater.
20 pts.: 5 percent of site area or 1,000 s.f., whichever is greater.
Contribution to Citywide Parks Fund: 10 pts. for every 1 percent of project construction valuation up to 50 pts.
Must be in addition to what is required by Article 3 of the Zoning Ordinance. Design must comply with applicable provisions of the Emeryville Design Guidelines and be approved as part of design review for the project. Open space must be accessible to the general public at all times. Provision must be made for ongoing operation and maintenance in perpetuity.
Sustainable Design
35
35 pts.: LEEDTM Platinum or equivalent.
25 pts.: LEEDTM Gold or equivalent.
10 pts.: LEEDTM Silver or equivalent.
Compliance of schematic design to be confirmed by Chief Building Official. LEEDTM or equivalent third-party certification required prior to issuance of certificate of occupancy.
Alternative Energy
50 pts.: 100 percent of energy load (zero net energy).
35 pts.: 50 percent of energy load.
20 pts.: 30 percent of energy load.
10 pts.: 15 percent of energy load.
Percent of total building energy load measured as kilowatt per s.f. provided by solar panels, wind turbines, or other renewable sources. No less than 50 percent may be in the form of Renewable Energy Credits (RECs) in compliance with California State laws and procedures. Any RECs must be available for the life of the project as evidenced by a long-term contract.
Water Efficiency
20 pts.: Graywater reuse system.
Reuse of domestic wastewater from plumbing fixtures such as showers, dishwashers, and clothes washers, but not including toilets and garbage disposals, to be used for toilet flushing and irrigation. System must comply with the requirements of the Emeryville Plumbing Code in Chapter 3 of Title 8.
15 pts.: Rainwater capture system.
System that captures and store water from at least 75 percent of the project roof area for landscape irrigation and/or indoor water use. The storage system must be sized to hold all water from a 1-inch rainfall event (equivalent to 0.62 gallons per s.f. of roof area used for capture). System must comply with all applicable codes and regulations.
Flexible Public Benefit
N/A
The Planning Commission or City Council, as the case may be, shall determine the number of pts. To granted for the proposed public benefit.
Currently undefined public benefit proposed by the applicant that is significant and substantially beyond normal requirements.
Sorce: Emeryville Municipal Code Section 9-4.204.
Santa Monica’s 2010 Land Use and Circulation Element (LUCE) generally establishes a maximum base height of 32 feet and, in some cases, a maximum density or Floor Area Ratio (FAR), in areas where the LUCE directs future growth. In order to exceed these base standards, projects would have to incorporate features that will contribute to the community’s overall social, cultural, physical, transportation and environmental goals. The LUCE identified five categories of Community Benefits and provided examples of measures that fell into each category:
The LUCE also established three approval tiers or procedural tracks to regulate development. The tiers, which are tied to the type, location, and level of development, provide for ministerial or by-right approval of projects that meet all applicable requirements and do not exceed the base standards and two discretionary tiers, both of which would require applicants to provide community benefits in order to receive approval to increase the project’s height and/or floor area. Projects eligible for Tier 2 would typically be subject to a Conditional Use Permit, while Tier 3 projects require the developer to enter into a development agreement with the City. Projects that include affordable housing on site in compliance with the City’s existing Affordable Housing Production Program or within close proximity to transit corridors are eligible for a four- to seven-foot height bonus, allowing for an additional floor of housing.
Housing projects that include only affordable units are eligible to receive incentives, such as a building height that does not exceed the maximum height at the highest tier, as well as reduced parking requirements and potential reductions in required ground–floor, pedestrian-oriented uses, which may include community services, arts, and similar uses. Housing projects with 50 units or less that are affordable to households earning no more than 80 percent of median income are not subject to discretionary review but, like most new development, do require design review. These incentives are provided in addition to the bonuses available on State law. Both residential and nonresidential projects are also subject to Santa Monica’s Affordable Housing Production Program, which is supported by a nexus study documenting the impact of both types of development on the need for affordable housing.
The Planning Commission decided to focus on a community benefits approach that requires Tier 2 projects to contribute through increases in fees or by providing additional on-site housing, both areas where contributions towards capital improvements can be measured. Other kinds of benefits that include a programming or operational component (e.g., senior and youth services) or an entire facility (e.g., a bike center) would be negotiated through Tier 3 development agreements.
The San Diego Downtown Community Plan, adopted in 2006, anticipated tripling of downtown population to 90,000, and a total of 165,000 jobs, together with several thousand new hotel rooms and public facilities in one of the most intense planned settings in the country. In order to ensure that new development led to new community amenities, the City created an FAR bonus program where development may exceed the maximum allowable base FAR for certain sites in the Downtown if the applicant provides certain public benefits or development amenities. All applicants participating in the FAR bonus program are required to have restrictions recorded on the property to ensure that benefits or amenities provided to earn the bonus are maintained in perpetuity.
The public benefits and development amenities that may earn an FAR bonus are the following:
Table 3: San Diego FAR Bonus Program
Public Benefit/Development Amenity
FAR Bonus (to be added to maximum Base FAR)
Notes
Consistent with the State Density Bonus Law
Urban Open Space 10% of site 20% of site
0.5 1.0
Must meet certain criteria and be open to the general public between 6:00 a.m. and 10:00 p.m.
Three-bedroom units
10% of the units must be three or more bedrooms
Eco-Roofs
Up to 1.0
Bonus based on amount of roof area that is planted or landscaped and designed to sustain and support vegetation
Employment Uses
Up to maximum bonus FAR for providing 100% employment uses
Up to 50% maximum bonus FAR for providing 50% employment uses
Public Parking
1 sq ft for every 1 sq ft of public parking area
FAR Payment Bonus Program
Up to 2.0
Incentives for buildings that exceed CALGreen standards
Source: San Diego Municipal Code Section 156-0309-A; Dyett & Bhatia.
In addition, in certain areas, additional FAR can be purchased and development rights can be transferred in order to provide new parkland and open space. The provision of new parkland and open space to match the increased intensities was an important objective of the Downtown Community Plan; acquisition and development of these was expected to cost approximately $200 million. To provide funding for these, a FAR “purchase” and a system of bonused Transfer of Development Rights (TDRs) for sites designated as public parks was established. Funds collected through this program must be used for parks, open space, or acquiring additional right of way for parks and open space in the Downtown.
The City of Seattle allows bonus building intensity and height for both commercial and residential buildings in exchange for providing affordable housing (for residential developments) or making a cash contribution to the City for low-income housing (for nonresidential and high-rise residential developments):
http://www.seattle.gov/housing/incentives/LandUseCode.htm.
To receive a bonus increment of FAR above the base, residential developers must provide affordable housing or make a contribution of approximately $15 per gross square foot to the City to fund new affordable housing. In high-rise zones (greater than 85 feet), 25 to 40 percent of all additional floor area must be achieved through non-housing options, such as Landmark Transferable Development Rights/Transferable Development Rights Potential (TDR/TDP), Open Space TDR/TDP, and bonuses for on-site amenities.
The bonus program is implemented through a staff-level process, which authorizes the Director of the Office of Housing to accept and execute a covenant as a condition of approval prior to issuance of a building permit. In practice, applicants have only achieved bonuses through the payment of in-lieu fees. The City is considering ways to prioritize the production of affordable housing over in-lieu payments.
The City of San Jose has evaluated alternative financing strategies for a series of urban villages to be developed under new specific plans. Each strategy focused on “value-capture” approaches that capitalized on the increased development and land values associated with zoning changes, rather than requiring direct City funding or pursuit of competitive and uncertain intergovernmental funding. The City’s consultant created pro forma analyses that demonstrated the property value increases associated with proposed multi-family housing, with and without mixed-use components, compared to current commercial/industrial zoning or existing buildings. The consultant also illustrated how various tools and negotiations could ensure that the rezoning did not simply yield a windfall to landowners or developers, but rather provided funding sources for the desired public improvements. Examples included development agreements, impact fee programs, community facilities districts, business improvement districts, and an innovative but untested approach to auctioning the “public development rights” similar to a transferrable development rights (TDR) program.
Following its initial study of potential traditional and innovative financing strategies for San Jose, San Jose went further to investigate approaches for estimating and justifying a “complete streets” impact fee on infill development in San Jose’s urban villages. Two different options were identified: (1) establishing an area-specific traffic impact fee that includes “complete streets” improvements in addition to roadway improvements, or (2) creating a unique impact fee for pedestrian/bike/transit facilities. Either approach would require estimating associated increases in trips from the urban village due to residents, employees, and patrons of new development and charging fees differentiated by land use as determined by each land use’s trip generation factor. Additional questions to be assessed include identifying the appropriate trip generation rates for the area in question; determining the current and required infrastructure capacity as well as the cost of the required infrastructure improvements; identifying the area and population served by the infrastructure; calculating the maximum nexus-based fees for various land uses based on trip generation rates; and assessing the feasibility for development in these areas to financially support the maximum fee level.