Requiring developers to build affordable housing units is first step. More help is needed.

Developers would be able to opt out by paying a fee, but various incentives would be put in place to encourage participation.

City leaders said IZ would serve as another tool when tackling Savannah's affordable housing problem.

“This is just one tool of many. It's not a silver bullet that's going to answer all of our affordable and workforce housing challenges that we have,” said Bridget Lidy, the City of Savannah's senior director of Planning, Zoning and Urban Design.

Credit: Richard Burkhart/Savannah Morning News

Credit: Richard Burkhart/Savannah Morning News

Developing an inclusionary zoning ordinance requires a deliberate approach. City officials are researching best practices and City Manager Jay Melder has targeted 2022's end for implementation.

The first step is an economic assessment on the local housing market, to be conducted through a third-party consultant by May 1. A community engagement process will follow from May to September.

Once the ordinance is developed it will go to the Metropolitan Planning Commission and then to council by Nov. 1.

Learning from others 

As the City of Savannah works to develop the IZ ordinance, officials are looking to the City of Atlanta and the City of Decatur for guidance.

Atlanta leaders needed about a year to develop its ordinance while Decatur spent upwards of 18 months on its zoning measure. Savannah’s goal of presenting the IZ ordinance to council by November is aggressive by comparison.

"We're confident in our relationships with Atlanta and Decatur, as well as working with our legal staff here that we'll be able to engage the community and come up with something that will be of value and will be one of many tools in our tool chest to help with the affordable housing crisis that we have," Lidy told Savannah City Council during a recent workshop.

Communities that have IZ programs typically provide incentives to entire developers to include affordable units in their projects. These inducements are typically exceptions to other requirements in the zoning code, such as an extra floor's worth of building height or loosening parking minimums.

Savannah offers similar carrots as part of its Historic District ordinance, incentivizing property owners to build or renovate in a historic style.

Developers can buy their way out of meeting the inclusionary zoning ordinance by paying an in-lieu fee, with those funds set aside to build affordable housing elsewhere within the community.

The City of Atlanta launched the first leg of its IZ ordinance in 2018. The ordinance, which is implemented as an overlay, applies to neighborhoods targeted because of their proximity to one of three recent public investments projects: Mercedes-Benz Stadium, home of the Atlanta Falcons and Atlanta United; the BeltLine, an urban park and trail network built on a former rail line; and Westside Park, a 280-acre recreation area centered around a reservoir..

As of last month, 26 IZ projects have been launched since 2018. Of those, nine are currently leasing and 17 are in development or under construction. Combined, the projects will produce nearly 550 IZ units - 176 units at or below 60% AMI and 370 units at 80% AMI.

No developer has opted to pay the in-lieu fee, which an Atlanta official said starts in the "hundreds of thousands of dollars."

Incentives as part of the approach

As for what exactly Savannah’s ordinance will look like, many of the questions, including the percentage of units set aside, possible fee amount and whether or not the ordinance would apply citywide, will be answered with the completion of the economic assessment.

Incentives are a move favored by Brent Watts, president of Cabretta Capital, a Savannah-based specialty finance firm that is primarily an equity provider for Section 42 low income housing.

Under Savannah’s updated zoning ordinance adopted in 2019, known as NewZo, apartment complex developments are required to have one parking space per unit. Watts said this can create a barrier for developers when it comes to offsetting the cost of including the required amount of parking spaces.

“I think they need to let up on some of the parking requirements, or maybe height variants. Those are the two things that you run up against the most,” he said.

He believes the incentives will serve a greater purpose than the in-lieu fee and would also like to see the ordinance implemented city-wide.

“I don't like the idea of penalizing people who don't do it, because then they just won't do developments. And that's not what we need. We do need developments to happen. We need to offer positive incentives instead of penalties,” he said.

“... If it's across the board, then it's totally fine. Because then that's taken into the value of the land, and everyone is subject to the same rules. And that's okay. So if we had a 10% requirement to have 80% (area median income) units in every new deal, I don't think that's a big deal at all.”

Looking ahead

Aside from developer incentives, the Center for Housing Policy recognizes four other key points when it comes to successful inclusionary zoning programs: a strong housing market; a recommendation that the program be mandatory, not voluntary; clear program guidelines and flexibility with compliance options.

“The development community is watching this, hopefully, the development community will be at the table and participating in this to ensure that it's something that is uniquely Savannah and fits our marketplace,” Lidy said.

Watts said it’s important to remember that affordable housing units don’t exist only in a vacuum.

“Whether you build a Class A that only the richest people in the world can afford, or you build the cheapest affordable housing thing in the world, either one of those is going to help the situation,” he said.

“We have a supply and demand imbalance right now. There's demand for a lot of housing and we have to build all types of housing.”

Watts also expressed concerns with the city's timeline. It’s unlikely that Savannah’s IZ ordinance would go into effect before 2023; meanwhile, the city is seeing an influx of new housing projects that are already in progress.

“...  I hate to say that we've sort of missed the boat on it, but there's at least 10 new apartment complexes that could have had this," he said. "But I think if we move really quickly, maybe there's 10 more coming.”

Katie Nussbaum is the city and county government reporter for the Savannah Morning News. Contact her at knussbaum@savannahnow.com. Twitter: KnussSMN

This article originally appeared on Savannah Morning News: Requiring developers to build affordable housing units is first step. More help is needed.