There is a current debate about if we can fix the pieces of the IZ (inclusionary zoning) ordinance that we have solutions for, or if we have to wait to get consensus on all of the different pieces of the IZ ordinance. Fixing IZ boils down to four major issues: 1) The equity model 2) The incentives 3) Waiver 4) Marketing. (Yes, there are other issues, but in my opinion, these are the 4 biggest issues.)
We have a solution to the equity model. It took a couple months and 6 or so meetings of the Mayor’s Workgroup to come up with something called the “Sanborn equity model”. The equity model says that the homeowner gets it’s percentage share based on the percent of the IZ price of the home compared to the appraised price at the time they purchase their home. The model also gives a 5% bonus to homebuyer to (theoretically) reimburse them for improvements.
Example:
IZ price of home: $180,000
Appraised price of home: $200,000
City share = 10%
Buyer share = 90%When the house sells, if it sells for $300,000 the seller gets 5% of the value or $15,000. They also get 90% of the remaining $285,000. So the homeowner gets $271,500 and the City gets $28,500 to reinvest to keep the home affordable for the next homeowner or to help keep other homes affordable.
The incentives discussion is about if the builder/developer gets enough compensation from the City to provide the affordable housing. This is the current discussion we are having. Downtown Madison, Inc. has presented an intriguing proposal and we will be talking about it again next week . . . and probably for weeks to come. It looks like we may have the basis for fixing the ordinance, but it will take some time. If it works out, it may also fix the “waiver” issue as well.
That leaves the marketing discussion which has yet to begin. It could be September or so by the time the Mayor’s workgroup resolves that issue.
Meanwhile, every other Monday, the Plan Commission is seeing projects and we need to make decisions about approvals. Also, we are losing IZ homes due to the marketing period expiring and the homes not getting sold in part due to the complicated equity model and in part due to the lack of reasonable marketing criteria.
So, why can’t we fix the ordinance as we come up with solutions? If we have a solution for the equity model that fixes that portion of the ordinance, why wait months while we lose more homes? If we have additional incentives we want to provide to the developer, why can’t we change the ordinance so they can be certain they will get those incentives?
