Monday, August 20, 2018

RECOMMENDATIONS FROM THE AFFORDABLE HOUSING TASK FORCE

On February 14, 2018, the Walla Walla City

Council voted unanimously to create the
Affordable Housing Task Force. This task force
What is “affordable housing”?
was created out of a concern over the lack of
affordable housing for residents in our
community, particularly for those making less “In general, housing for which the
occupant(s) is/are paying no more than
than the median area income. The task force was
30 percent of his or her income for gross
charged with investigating how other
housing costs, including utilities.”
communities have found success with
encouraging more affordable housing, as well as
Housing and Urban Development
meeting with local housing stakeholders across
public and private sectors to receive their
feedback on potential policy solutions.

The task force was comprised of three City Council members: Riley Clubb, Yazmin Bahena and Steve Moss.
We met a dozen times over a six-month period and have produced 19 recommendations for Council to
consider. Every recommendation is supported by the Comprehensive Plan Update approved by Council
on June 13th, 2018. Many of these recommendations have also been discussed and vetted by the public
on two separate occasions, May 31st and July 31st, at the Walla Walla Public Library.

The task force believes that the housing affordability problem can be explained in economic terms of
supply and demand. We believe that growth in demand has outpaced growth in supply and that this has
led to an increase in the cost of housing.

The task force recognizes that many factors contribute to the supply of housing, for example the input
costs of labor and materials in the construction of housing. We believe these factors in particular are out
of the scope of the City Council’s resources and authority to influence in a positive way. However, there
are other factors that influence the supply of housing, for example residential zoning, development
regulations of property and structure size, the number of housing units per lot, etc., that are within the
scope of the City Council’s resources and authority and therefore deserve the most attention.

The task force also recognizes that the distribution of household incomes relative to the distribution of
housing unit prices (both to own and to rent) is a crucial signal when looking for signs of a housing
affordability problem. By measuring these distributions more broadly, rather than relying on a median-
to-median comparison, we have gained a robust understanding of the relationship between supply and
demand at every income level.

The relationship between supply and demand is quite different depending on the income level. For
example, there are 8 affordable housing units on the market for every 1,000 households making $25,000
to $29,999 per year, whereas there are 51 affordable housing units on the market for every 1,000
households making $45,000 to $49,999 per year1.

1
See Appendix for more discussion of this data.

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Our recommendations are intended to accomplish the following goals:

1. Make housing more affordable through policy changes that encourage

more supply of housing.
2. Particularly the supply of housing affordable to income levels around 50%
(and below) area median income.
3. While maintaining a rich diversity of household incomes living within the
same parts of town.

Our recommendations are supported by the following policies contained in the Comprehensive Plan
Update:

• LU Policy 1.1 - Accommodate new residential and commercial

development in areas with available infrastructure and services.
• LU Policy 1.3 - Encourage infill development that provides additional
housing within the city.
• LU Policy 3.1 - Encourage mixed use development in Downtown that
includes new housing.
• LU Policy 3.7 - Support a variety of housing types such as tiny homes,
duplexes, multi-family development, cottage housing, and single family
residential.
• LU Policy 4.1 - Balance commercial, industrial, and residential
development with the conservation of natural resources and open
space by directing growth to areas already served by infrastructure.
• H Policy 1.1 - Provide an array of housing choices such as apartments,
small lot single-family housing, accessory dwelling units, townhomes,
manufactured homes, and cottages to meet the needs of people of all
incomes throughout their lifespan.
• H Policy 1.3 - Encourage the use of existing housing stock to provide
affordable housing for households with middle and lower incomes.
• H Policy 1.4 - Develop incentives for construction of housing affordable
to households with low and moderate incomes such as density bonuses,
waived fees, multi-family property tax exemption, or a transfer of
development rights program.
• H Policy 1.7 - Allow manufactured housing and accessory dwelling units
in single-family residential areas.
• H Policy 2.1 - Integrate housing for lower and moderate income
households and those with special needs into a variety of geographical
locations throughout the city.
• H Policy 2.7 - Develop a housing assistance program that helps
homeowners with low incomes with small remodeling projects to
improve weatherization, increase sustainability, and provide
accommodations for disabilities.

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The Affordable Housing Task Force recommends that Council take the following actions:

RESIDENTIAL ZONING
#1 Create two zones: Residential Neighborhood (RN) and Residential Multifamily (RM)
This will simplify our residential zoning and make it much easier
for a variety of housing to be built in the City.
#2 Create a density range of 4-20 units/acre in the RN zone
Having a range allows more flexibility within developments to see
even more mixture and diversity in housing types located in the
same area.
#3 Drop the minimum lot size to 3,000 ft2 in the RN zone
Many vacant lots within the City are 6,000 ft2. A 3,000 ft2
minimum lot size would create significant opportunity for infill
development.
#4 Allow for cottage housing in the RN zone
A growing number of residents are interested in “intentional
communities” or “co-housing” communities. Our code should
accommodate this interest.

MULTIFAMILY
#5 Expand the Residential Multifamily (RM) zone to include more developable land
Vacant land for new multifamily development is scarce and thinly
dispersed throughout the City. New multifamily construction will
require land zoned for development.
#6 Migrate some of the commercial zones to RM where appropriate
Moving lots to RM from commercial will provide a space for new
development and create more downtown central living without
requiring short-term rentals on the first floor.
#7 Expand the Multifamily Property Tax Exemption targeted area
The entire RM zone is located within the urban area of Walla
Walla and is lacking sufficient affordable housing.
#8 Consider surplus property as available for multifamily affordable housing
RCW 39.33.015 authorizes the City to transfer surplus property
for the purpose of affordable housing development.

ACCESSORY DWELLING UNITS

#9 Apply a maximum size limit of 800 ft2 for ADUs
This will simplify our ADU size requirements and make it more
attractive for more properties to build an ADU.

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#10 Remove the owner occupancy requirement for ADUs

The current owner occupancy requirement is unrealistic and un-
enforced. Removing it will allow more flexibility for ADU property
owners and will have no impact on the number of short term
rentals in the City.
#11 Adopt “Appendix Q Tiny Houses” from the 2018 IRC
A growing number of residents are interested in “tiny homes”.
Appendix Q provides internationally recognized safety standards
for the construction of tiny homes intended for permanent
placement on a foundation.
#12 Relax regulations on manufactured housing
Manufactured housing standards have improved significantly
and provide real opportunity for cost savings. One example of
relaxing regulations could be requiring Level I development
reviews rather than Level II.

HOUSING PRESERVATION
#13 Develop a City-wide Housing Repair Assistance Program
Supporting the maintenance and rehabilitation of the existing
housing supply is critical for long term sustainability of affordable
housing.
#14 Commit to having at least two code enforcement officers on staff
The City requires at least two officers on staff to ensure
compliance and property maintenance to protect the quality of
our housing stock.

OTHER
#15 No impact fees on residential development for the foreseeable future
We need to encourage more supply, not discourage it. Council
should not create any new fees on residential development so
long as affordable housing is seen as a problem for the
community.
#16 Create a parking requirement range based on beds per unit
Not every single bedroom and studio unit requires two parking
spaces. All new units should require one parking spot per
bedroom, with a minimum of one and a maximum of two.
#17 Add HB 2437 to the State lobbying agenda
This legislation would allow local governments to draw down a
portion of state sales tax for housing purposes with no tax
increase to local residents.

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#18 Appoint representative(s) to the Council on Housing

Walla Walla County is organizing a new entity called the Council
on Housing. This organization will involve public officials and
staff, housing agencies and service providers as well as private
sector organizations to pursue collaborative, County-wide
affordable housing policies.
#19 Explore an affordable housing tax initiative
There is a growing interest among residents to create additional
funding for affordable housing. A citizen driven committee
should be formed to survey residents’ interest as well as provide
scope and planning for such an initiative.

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APPENDIX

The most often cited measure of housing affordability is the Housing Affordability Index (HAI). This index
is a median-to-median ratio of household income divided by qualifying income (the annual income
required in order to afford a housing unit).

The problem with relying on this single metric is that it provides a very narrow look at the situation.

By focusing entirely on the 50th percentile (ie. the median), the HAI fails to provide any information about
the 10th or the 30th or the 90th percentiles, etc. The assumption may be that the relationship at the 50th
percentile is representative of the relationship at the others, however this assumption is false. The
distributions of household incomes and housing unit prices are quite different in shape, and the ratio of
household income to qualifying income at different percentiles is nonlinear.

Furthermore, the HAI fails to provide any information about the relative quantities of supply and demand
at every income level. By measuring the number of affordable housing units on the market at every
income level, and dividing by the number of households at every income level, we end up with a much
more robust understanding of the relationship between supply and demand across all income levels.

The Housing Opportunity Curve is a metric that shows how many affordable housing units are on the
market for every 1,000 households at every income level. For example, there are 8 affordable housing
units on the market for every 1,000 households making $25,000 to $29,999 per year, whereas there are
51 affordable housing units on the market for every 1,000 households making $45,000 to $49,999 per
year.

The Housing Opportunity Curve relies on active housing market data (to own and to rent) from
realtor.com, as well as median household income data from the US Census Bureau’s American Community
Survey (geography = Walla Walla city, Washington).

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APPENDIX

Notice that the numerator in the Housing Opportunity Curve includes all of the affordable housing units
at every income level. This represents the fact that the total number of affordable housing units at every
income level includes the number of affordable housing units for every prior income level. If you can afford
a $300,000 home, you can also afford a $200,000 home.

Looking at the distribution of affordable housing units priced to every income level relative to the
distribution of households at every income level reveals the problem with a median-to-median
comparison. Housing costs are somewhat normal with a concentration around the median, whereas
household incomes are bimodal with a depression around the median.