Planning Commission - Regular Meeting

Good evening, Planning Policy. Good evening, guests. Good evening, staff. We'd like to call this meeting to order. It's currently 6.32 PM. Today's meeting is a hybrid meeting. The Planning Policy Commission is in person, but staff, members of the public, as well as a consultant, may be attending virtually, as well as in person. So staff, do we have a quorum this evening?

OK, great. And we do see Commissioner Zacharoff on our screen. I got you. All right, we want to open with public comment for this meeting. So right now, we're going to hold general public comment for the topics being discussed by the commission. Please note that as part of tonight's special meeting, there will also be an opportunity to provide public comment after the staff presentation. Staff, has anyone signed up to make general public comments right now?

All right. For anyone who is speaking publicly, we do ask to follow a few house rules. Please mute your microphone when you're not speaking. These are virtual rules. If you're having any technical issues, please try joining the meeting using a different device, such as a smartphone or tablet. You can also use the call-in information in the meeting invite to call in as well. This is an important part of the public process. All of this is taken seriously and factored into the decisions that the Planning Policy Commission makes. Again, we do ask that people keep their comments limited to five min

Great. Thank you, Carl. What did Avalon Bay change its name to?

Great. Thank you, Carl. All right, Amanda. Is anyone else signed up to speak virtually? Okay. All right. Well, thank you, Carl. We'll move along to regular business. And our only regular item today is a briefing on continued work related to the Promoting Building Investment Code Amendments. Tonight's focus will be a presentation from Planning Manager Kristen Leeson and BAE Urban Economics that has been assisting the city, along with ARCH, on potential updates to inclusionary zoning, floor area ratios, the city's density bonus and multifamily tax exemption programs. Kristen, please go ahead.

I think we have questions. Great presentation. Thank you, Matt. And thank you, our in-house wizards, for trying to turn up your volume. You know what I was thinking, Matt? I don't know if on your end you can turn up your microphone output. Maybe give that a shot, see if that helps a little. Okay.

It might be us, maybe not you. Okay, well, we appreciate it. I mean, we could hear. It's a little hard.

Tricks of the trade. Okay, I do believe I saw Commissioner Adair with her hand up.

Hi, Commissioner Adair. Thanks for this great presentation. If you could scroll back a couple of slides, I have a question about the savings for the MFTE of the eight year versus 10 year, I think it was forward. Okay, so this one, when you're looking at these total costs of $4 million and $6 million, does that include for the eight-year MFTE any affordability requirements, or is that without affordability requirements?

A quick question on this slide as well. With the 12 year and the state policy requirement of 20% affordable, do we know what AMI that affordability is at?

Commissioner Ulner. Just a suggestion, going back to your very early slides where you looked at increases in rents and construction costs over a period of time. And this came up in a different context with something else I've been working on. But it would be helpful to graph along with those increases what the increases have been in CPI or mean wages over the same periods of time to really start to get a better sense of where the gaps are.

Hi, I had a question about the AMI that's targeted in the study. It looks like you start at 50% AMI, and then our big, huge gap of 72% is under 50%. So is this just a study to stimulate some development, and then we're going to try to claw something back to get the gap that we need for the lower AMI? I'm a little confused on, yeah. I'm looking at that one too, the housing targets. So we need 72% under 50% AMI.

Hi. Would a potential option be removing affordability requirements but not providing an MFTE? Does that make sense? Because it looks like if you even reduce the affordable housing requirements to 5% at 60% AMI, the developers are getting a savings that is similar to the eight-year tax relief, correct? Am I understanding that correctly?

So if you got rid of affordable housing requirements, that wouldn't be beneficial? Am I understanding that correctly?

Is it fair to say, Matt, that basically it's think to even carl's point earlier it's just the feasibility as far as building with all the construction costs what they're being especially the rental ones they're they're just they're not keeping pace and it's it's not necessarily one thing but it's multiple factors and if you got rid of the affordability piece yes that would be a boon for developers because they just keep the mfte to fund their you know help subsidize some of their project with both of them, which was what the city's goal was, was to originally try and kind of balance that so yo

Oh, I was saying to get rid of the affordable and get rid of that. Right, right. So it would be like you have 0% affordability requirements, but we're not. I'm just, this is just a hypothetical. It's not, I'm just playing around with hypotheticals.

Well, what's interesting too is I think Carl made the comment that we didn't look at the eight-year MFTE maybe as a city, but it does show in Matt's presentation that eight-year MFTE, and basically if I understood you correctly, Matt, that was, you know, in its essence without the affordability requirements on that one slide. So you're seeing that, I forget what that percentage was. 3.7%, so that was a boon. But what's interesting is when you take it farther, if you get the 12-year MFTE with 20%, at 80% AMI, that's actually better for developers, according to the numbers, correct Matt?

MR. Didn't think it was possible, Matt, but — MR. Who knew? MR. We appreciate you struggling with us, but — yeah. But I think we caught that, and yeah, so I think understanding, I think we're both on the same page. Commissioner Krause?

Thank you, Commissioner Kras. And I apologize, we also have Commissioner Millinder-Irwin online? Commissioner Zakaroff? I don't see him on my little screen. There they are.

For me, this is Commissioner Melinda Erwin. OK, thank you. I have a question. A couple of slides back in regards to the moderate policy change for the eight year MFT. I want to know if there were any affordable units factored into. That particular number. It was the 4.6 million.

Commissioner Allner. Just a clarification. Can you, Matt, tell us what you've assumed as a cap rate for developers?

This is kind of a weird question, but one thing that Washington has that other states don't have is tax on labor. And so I'm assuming all of these big projects you're doing has a 10% or whatever it is in the county you're in, tax on the labor when you're building these apartments. Has the state ever thought about them giving a tax exemption for building while we're trying to build all of these units? I mean, I know that's something out of our jurisdiction, but it would be kind of nice if this is their goal for us to meet, that they kind of put in that hand to kind of give us a tax break on lab

Let's give it one more round. Does anyone have any further questions for Matt? Well, thank you, Matt. That was a fantastic presentation. It is a lot of information. I think we'll probably all be reading these graphs and looking at these charts again, trying to find which dial to turn up, which dial to turn down to try and find and strike that balance that we're all trying to find. I won't be the Debbie Downer that Commissioner Kras is. We can find it, it's out there. So we'll move along and yes, it's not something we often do, but let's see where I am. Okay, as noted at the beginning of this m

Thank you. Thank you, Carl. Would anyone else like to speak while we have the floor open? Somebody who clocked in while we were having that great presentation. No? No. OK. commissioners any any thoughts any other questions I mean obviously you can definitely talk to Carl after the Commission's meetings Matt thank you again for the presentation that was great it's very helpful Kristen promised us a information packed meeting this evening and it was and it's a real life eye-opener and like I said we've got a lot of different things to look at as you know this continues to move forward this PBI o

I got the acronym right. That's what matters most.

Kristen, I've got a question. The urban core is where the PDE recommended taking out parking requirements completely, correct? And that was just for the two pioneer, that was for the urban core.

The pioneer program is in the urban core, correct?

And the pioneer program is still just the first two certain amountings. Why don't we take the affordability requirements off those two units and return back to what the original recommendation from the pioneer program was, which I think was no affordability requirements. Let's burn that development. Sometimes it takes somebody to jump in the pool first and maybe other developers follow. But I think that was the original recommendation was from us, which was, so they've already did. of some big heavy lifting by, you know, and that's a PDE, the full council hasn't voted on it. But maybe we say,

I mean, it's, we're not, again, Kristen mentioned the cyclical nature of, you know, markets. Okay, again, this is two developments we're talking about. We're not talking about multiple, multiple developments. We're talking about the first two that put in their application.

To see if that'll even... At least for me, that would be something I'd like the PDE or whoever, I'd like them to look at because, again, that was our original recommendation. We didn't really get any traction with the Pioneer program. They've already done the heavy lifting by taking the parking out Let's strip the inclusionary zoning requirements and stick with the eight year MFT and see if anything bites. I'd like to at least see that myself. Commissioner Adair.

Well, to those ends, I would point out that, yeah, 5% savings isn't huge, but if you see that we need to get down 20% or 30%, well, that gets us a quarter of the way there or a sixth of the way there when coupled with other things. So, yeah, I think... I'm looking at the eight-year with no affordability would be great. The eight-year with the, I believe it was 5% of affordability, just so we can compare numbers for feasibilities. And then the 12-year with the 20% at eight would be, just to see those numbers and see what, but I overall agree with Jason, I think, let's put some kind of cap limit

Give them a little goose. And again, to your point, that's just the MFT that Matt was showing us, but again, the PDE has already recommended also parking, which is another big factor. And then to Kristen's point earlier, some of the design standards we've taken, you know, relaxed, I guess is a better word than stripped, because we still want our designs, certain aspects. So I think, at least for me, that's a good point as far as the affordable housing part. Let's see what happens.

Yeah, no, I appreciate that, because again, like you said, if we're going to do this pioneer program, let's see what all the incentives, everything happens together and see if there's any movement. And to Commissioner Adair's point, you know, it is a tough building environment right now, especially in our state. And that's everything. That's commercial, that's residential, that's everything.

Commissioner Ohliner. I'm gonna play a little devil's advocate here. We have an affordability problem in our city and the region. And I feel like this discussion is kind of kicking the can down the road a little bit It's a it's a complicated difficult problem and I don't know that this Commission can solve that problem through all of these tweaks, but I don't want to lose sight of that as an overarching goal of what we're trying to do in terms of building housing as if we're building housing at market rates and School teachers, firemen, they can't afford to live here in the city that they work

Yeah, the only thing I would counterpoint is, again, this is capped at two projects. I understand. Yeah, so that was the pioneer program. Again, the city has always had that problem. It's not a new problem. And again, I agree, it's not something we want to lose sight of at all. Any other comments as far as the first piece, the affordable housing requirement?

Right, but my recommendation is strip that requirement.

That's my recommendation. But again, there's one. And I don't want to forget also. That's what they did last time and then they bumped and all of a sudden it didn't go anywhere. That's what I'm saying. I'm trying to see if we can spur it. Again, they've already put in the good ingredient, which was the parking. So let's see what happens. Again, there's only two projects. That's my thinking. And you're right. You're not going to solve the affordability problems we hear in two projects regardless. Anybody else would like to add? Vice Chair Patterson.

I'm once again trying to string together a one thought with like 500 things going on in my mind. I do think that as I've collected from our development community that's spoken in various public comments as well as our consultant that shared tonight is the Pioneer Program has at least kind of moved things in the right direction. It just hasn't fully taken off. And so I do agree with this approach of modifying that to be more appealing and hopefully do get the two projects over the line that we were aiming for. So I'm in favor of looking at removing the affordable housing requirement for the Pio

I took my finger gun out first. So again, yeah. I think also the other thing too is looking through the presentation, you know, those lower 60% and below, I mean, they really do, I mean, depending on the percentage of the units, they do sink the feasibility. And if you want to go to 80%, that's more feasible, but you are getting closer to market rate. It's really just, again, and that's why I think it's so helpful to have Arch and Kristen and these guys continue to explain it to us, but that also seems to be a big drag. You know, these lower units, and I forget the housing targets. These 30% l

Okay. All in favor of moving the Pioneer Program, it's currently at eight-year MFTE is what our pioneer program's at, without any affordability requirements, please raise your hand.

I also want to put on the, like, I live here hat for a moment and just explain to some of our developers and staff and everything about, like, I think why we're so apprehensive to going full tilt boogie on like, we want, you know, a year at MFT across everything. Like, I think that obviously there's a lot of consideration into like what the long-term impacts are, what the downstream impacts are of like, you know, you heard about it a little bit tonight of, you know, what about the schools? And those are all, I think, legitimate concerns is if you live here, you don't want to sacrifice those th

Yeah, hesitancy is good. So again, there's nothing wrong with hesitancy. That's kind of the reason I like the Pioneer project. It's not something we're going to write into code. It's just a recommendation to council. We already have this thing set up. Let's see what two projects can do. But having said that, I want to give everyone else an opportunity that rose their hand or did not raise their hand if they want to speak on that. OK. Well, did you get what you wanted?

Yeah, right. Well, I thought we just did the first one. I thought we were going to actually now talk about NFTE incentives.

Yeah, yeah. So like I said, nice segue. We're now moving into MFTE incentive. Again, you can see the different options laid out before you. We can maintain the eight-year MFTE in return for affordable housing. I think as far as currently only project-based MFTE incentives, only eight-year MFTE. Yeah. Anyone would like to go first?

Please, Vice Chair Patterson. More of a question on this, but I think one thing that would be helpful, especially considering beyond the Pioneer Program, would be to understand some of the impacts of MFT. If there's any data available or anything that we could understand to say, what are we potentially sacrificing? That's an intense word. But what are we missing out on by doing that from a city perspective? And just a little bit more on that would be helpful.

Matt, I have a question for you. That 12 year MFT program that required 20% affordable, that was at the 80% AMI, correct?

Okay. Maybe we do something, you know, Consider a 12-year because that seems to get the most bang for your buck, but maybe drop that. Not the affordability. Everyone's like, no, you're not. No, drop the AMI. So maybe instead of 80, we try to get down to a 65 or a 70 because that one gets them. The 12-year MFTE, that seemed to move the needle the most. And then again, you got the parking that helps move that needle. But maybe there we can squeeze and get a little bit more of our AMI down. This is the dials, John. This is the fun stuff, right? This is where we're trying to do this and this. Abso

And again, that's great, and I don't disagree with you at all. I was thinking in my head, kind of Kristen's comment about this can be something with a set time limit for two years to see what type of action we get. So again, I don't know how that would work with code or how we'd write that as an amendment, but I was thinking more of something that actually did have a time constraint.

So this would be the Pioneer Program again?

Can we just leave the Pioneer program alone? The eight year MFTE, the no parking, just in the urban core, and then see what happens with the 12 year MFTE.

No, in the urban core, but again, the Pioneer program was just for two buildings. They actually weren't even a time, I don't even think there was a time, it was just the first two developments.

I'm just, like I said, well, we definitely will. I'm just like, I'm just trying, like I said, I, that one seemed to have the biggest impact to me and it, I mean, we don't have to do anything. Right. But like I said, you're in the urban core where the PDE has already recommended getting rid of parking. So that's a big hurdle. The urban core is where we want to build. It's the only place in the city we don't build, ironically enough.

Right. I'm just saying PDE recommended it. So it hasn't gone to the whole council. But I'm just, like I said, if this is what we're trying to do as per development in the UC. Sorry, Commissioner Day.

Yeah. So I guess my overall takeaway right now is I'm kind of with crass in that I would love to read this Heart Lake memo and kind of digest it and dive into the numbers with my numbers person. sort of look at that. But I also, my takeaway right now is I'm definitely open to doing MFTEs of different time spans, but I would like to cap either the number of projects or the time they are available to apply for. So we're not digging ourselves deep in a hole. And then now suddenly we have five projects that don't have property tax and we're in a budget crunch. So that's where I am. I'm open, but I

Yeah, no, and I think that's even something I brought up last time is, again, you're going to be those resources as the city, as the population increases, we have shortages, whether it's the IPD, other things. So, again, it's something to think about for sure. That's why I like time constraints. Is that Commissioner Matthews?

I was going to suggest something similar, but is it possible to, we just voted on the Pioneer Program, but just have two options in the Pioneer Program. You could get an eight-year MFTE if you have no affordability, or you could do a 12-year MFTE if you have 60% affordability or whatever. You know, just have two different options and see which one bites. That's a great suggestion. I would be fine with that.

So eight years without any affordability requirements in the UC for the two first developed buildings. They come through the pipe, that one's not time limited, it's just the first two. No affordability requirements, eight year MFTE or they can opt for the 12 year MFTE program that does require 20% affordability and then we can set that at what? 80% is pretty close to market rate as Matt mentioned. this might be a time where you might be able to get a little bit more or less AMI. I mean, I don't want to go down to 30. I think closer to like 65. 65 or 70. Yeah. But I think that's a great point,

Okay. As far as you can make me say it again. Yeah. So as far as giving them an option for a 12-year MFTE for, again, the Pioneer Program with those first two developments, eight years without affordability requirements, no inclusionary zoning. or they can choose from a 12 year MFTE program, which state requires 20% affordability, and we'll set that affordability at 65%.

And can I just point out that that doesn't necessarily benefit us either because if we're trying to hit these RGI targets, then we need them in the specific areas. So I would suggest we incentivize building in those areas that we need.

Begs the question, how is our infrastructure in the urban core? In our regional growth center?

I can speak to this a little bit from what I've picked up from listening at dinner. So right now we are... I would say making do with what we have budget wise. We are not in a budget crisis. We are doing pretty well, but our reserves are low. They were depleted by COVID. And so The city is going to have and is looking at how to make investments in getting that infrastructure back up to where it should be to have a nice, safe, comfortable infrastructure. Does that make sense? In terms of streets, water issues, etc. there is a big expense coming down the pipeline with regards to water that we ha

I think it was our storm system plan that was like 20 years.

I know we did, but I want to say the last time I saw that header, it was like 2003.

Any thoughts as far as the density bonus program? If I understand it correctly, it's quite a lot of hoops for people to jump through in order to get it. What if we just took that away and let them build to the max and they still have the affordability requirements? Any thoughts on that?

So wait, what hoops would we, if they still have to meet affordability requirements, what hoops would we be removing?

So what are the things that trigger them to allow them to build the max, the max bar?

calculations are difficult they need the density and either way you get affordable okay I do want to make a pause because we have Commissioner Zakharoff who's been waiting to in raising her hand so please Commissioner Zakharoff

Thank you so much. So I hope you can hear me well. Well, to me, the development bonus program is actually the program that should kind of allow developers to build more if they want to. But at the very same time, we want them to build more. So it's kind of like at this point, it's a little bit doesn't make sense. It's not like it doesn't make sense, but we want them to build more. We need more produced house units. So I would be in favor of eliminating development bonus program. Just completely.

Clarifying question for you, Kristen. Is that a citywide program or just an urban core or central Issaquah? In that case, I'm a little bit more in favor of it.

Yeah, I mean, I think to Commissioner Crass's point earlier, we just have so many different goals and we have to really get down to what are the priorities. I mean, again, we've got goals as open spaces, we've got goals as affordability, I mean, goals to develop housing. So at some point, these goals are coming into conflict with one another. And if the goal is to develop, okay. Let's do what we can in order to spur that forward. If the goal is solely affordability, that's fine. All of this is going to have to be arranged more towards affordability. But again, you can see the data that's comin

I don't even think there's a price on the ones on Front Street yet. I don't think so. I think the ones for Newport have a I tried to look it up like last week, and it still hadn't had anything.

Sorry, I was going to go back to Commissioner Zakharov's comment about the development bonus program, and I also think that that might be something that's duplicated that we may get rid of, and maybe the city picks up. some of the open space requirements because I know that the parks department has goals for having X amount of parks. So maybe that's a trade that we do get rid of the development bonus program and then the city helps locate and build parks that might be more expensive. I'm not really sure what it costs to develop a site into a park, but it might be something to consider.

That's a good suggestion. I mean, when we consider everything. And I do want to make sure, Commissioner Zachroff, is that your hand again? No?

I guess my one apprehension on eliminating the development bonus program goes to my earlier point of knowing what the city's plan would be for affordable housing. It seems like if we're to get rid of the affordability requirements in lieu of the MFTE and not having affordability requirements, it's one of the few levers we have left that I'm aware of right now that that would exist. but maybe it sounds like that might not be the right vehicle, so maybe there's an alternative.

So make sure that I get this right too, Kristen. So even if we got rid of the development bonus program, those developments would still have an affordability piece?

As far as the planning department, would you say the, I won't ask for numbers, just give me a one to five, like a pain level, right? Like the doctor asked, on a pain level of one to five, five being the highest, how much is the burden to go through the density bonus program? 3.5 okay so it's relative it's actually painful i mean yeah that's pretty painful i would say so in order they still have the affordability requirements we're just letting them get the density that they want in order to get the the units and get the project to come down a little i have that right very very crude i know but

Right. And I know everyone's scared of that, even though all codes can be re-amended, but I know that freaks people out. Yeah, I guess I want more information. The go-to response, right? More information. But I could very easily be convinced to get rid of the density bonus program and see what happens. Do we see these again? Are we going to see this again?

Oh, that is Anne. Commissioner Zakharoff.

Thank you so much. So should we be also thinking about increasing the floor area ratio from 2 to maybe 2.53? Should we talk about that?

Further comment? Questions? You get what you needed?

All right. That's going to do it for regular business this evening. Yes, and yes, thank you very much, Matt, and appreciate your presentation. That was great. I want to say thanks, Carl, also for his remarks and staff who always do a fantastic job. We're going to move on to reports, and we'll start with City Council updates. If there are any.

That was funny. Okay. Any community updates? Issaquah updates, city of Issaquah updates?

Yeah, that's great. So do we officially have a rivalry with Kirkland?

Yeah, like I said, Team Isoquel all the way. Okay, any other business or announcements? Anything for the good of the order? Commissioners? Commissioner Adair?

hi yeah so as you may have heard uh last week pde took our recommendations on transparency and decided to go in a different direction right they dramatically lowered it to 15 from 45 percent um and that goes for not just multi-family residential but also along natural context areas So as I believe a lot of us reiterated during our meetings that 15% is considered too low, especially in long natural context areas. I was going to ask if we'd like to put together a letter to city council who's meeting on September 22nd that would just basically fully explain the planning policy commission's reason

I don't have a problem with that. Is there any legal reasons why that would be weird? No. Okay. And then the only question I would have for Kristen and staff is, in our recommendation, did we Did we make clear why we chose those numbers? Was that not clear to the PDE?

Okay. Well, they went from 45 to 40 for commercial, so they basically stayed in line with commercial. went a very different way.

Well, actually, yeah. Oh, sorry, just to correct you. We had 70% in central urban, and they went down to 40%. So we had 45 across Issaquah, but with 70% in the urban core. And they went down to 40 everywhere.

All right. Thank you. Okay. Yeah, I don't think there's a real problem having Commissioner Adair draft a letter that would just buttress the staff report. I mean, do you see a problem with that, Kristen? Okay. I'm fine with that. Obviously, you know, the commissioners, so how would that work as far as the commissioners would get it through an email, we all sign, or would this wait until another meeting?

Perfect. Let's do that. Okay. Thank you, Commissioner Adair. Any other... Any other items before we close out? All right, well, thank you, everybody. Again, thank you to Matt and thank you to Carl and everyone else. We will adjourn this meeting of the Planning Policy Commission at 8.29 p.m. Have a good night.