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Affordable housing? Where?
by Lisa McCormack

When Stowe developer Jerry McDermott unveiled his proposal to build 93 townhouses in Waterbury, it was the type of development that working people and affordable-housing advocates have been clamoring for years.

The complex would be conveniently located on Blush Hill, near Interstate 89. More importantly, the units were expected to sell for between $150,000 and $200,000 — far less than the half-million-dollar price tag for most new homes in that neighborhood.

But McDermott’s plan, which calls for 10 buildings, hit a snag: it doesn’t comply with a zoning rule that requires at least 40 feet between buildings.

McDermott says he can comply with the ordinance without reducing the number of units, and advocates of moderately priced housing are lauding his efforts. But they also say that plans like his are far and few between in Central Vermont, where most new construction is geared toward the luxury home market.

Housing is considered to be affordable when a household is paying no more than 30 percent of its gross income for mortgage, taxes and insurance. Based on the median income in Lamoille County, a home would have to cost $120,000 or less, according to the Vermont Housing Finance Agency. In 2004, however, the median selling price for homes in the county was $165,000 — a huge difference.

In the past decade, soaring real-estate prices have pushed the dream of homeownership out of reach for many who work in the retail and service sectors. While some towns caught up in the real-estate boom, including Stowe, are scrambling to keep housing attainable for middle-income workers, experts fear those efforts are too little, too late.

Soaring land costs
Stowe addresses affordable housing in its town plan, and town officials support affordable housing in theory, but no zoning rules require it. And, soaring land values are exacerbating the problem.

“Land here is so expensive that it’s difficult to find a place to build affordable housing,” said Tom Jackman, Stowe’s director of planning.

The town does offer a financial incentive for developers to build affordable housing — what’s called a 50 percent density bonus. That means a developer can build, and sell, half again as many units as normally allowed on a site, provided they meet the town’s criteria for affordable housing.

So, in an area zoned for 2-acre minimum lot sizes, a developer with 20 acres could build 15 units, rather than 10, if they’re affordable.

In addition, Stowe makes it relatively easy for property owners to build accessory apartments — usually located over garages or in guest cottages. That adds to the number of rental units in town, while helping homeowners to pay their mortgages.

And new state rules which take effect this September could force Stowe to re-examine an affordable housing project it blocked last year.

The new rules say towns can’t have zoning rules that exclude or place unreasonable limits on affordable-housing developments. Developers can complain to the state attorney general’s office if they think a town is purposefully excluding affordable housing.

The Lamoille Housing Partnership, an affordable-housing advocacy group, had proposed 42 units off Sylvan Park Road, in Stowe’s lower village. The Stowe Development Review Board rejected the project, saying it would be too large and out of character with the rest of the neighborhood.

The housing partnership appealed the ruling to the Vermont Environmental Court, but the court ruled in the town’s favor.

Now, the group plans to apply again for an Act 250 permit, and hopes the new rules and a revamped design will win state and local approval this time. The proposal will probably go to the Stowe Development Review Board this summer; construction could begin next spring.

What other towns do
Some Vermont towns, especially where development exploded in the past decade, are trying to make sure that the people who work in town can afford to live there, too.

Faith Ingulsrud, a planning coordinator for the Vermont Department of Housing and Community Affairs, tracks methods that towns use to promote affordable housing. Some towns offer strong incentive programs; other incentives are so weak, they are rarely used.

Burlington, for example, has really pushed affordable housing. Its “inclusionary zoning” system requires that, in every development of a certain size, a percentage of units must be affordable or moderately priced. That strong “stick” is balanced with a “carrot” that allows more units per acre than normally allowed.

“Burlington’s inclusionary zoning has been in place for a while and refined over the years, and, from what I hear, appears to be a success - achieving the goal of promoting construction of more affordable units while meeting the needs of developers,” Ingulsrud said.

But very few communities do what Burlington does, Ingulsrud said.

Williston, Burlington’s neighbor, is trying actively to solve its housing crunch, while avoiding overdevelopment - offering incentives to build affordable housing, while requiring that developments be phased-in over time.

New construction has transformed that former farming community in recent years.

Williston “has very limited sewage-disposal capacity, so is using growth-management techniques like development phasing to avoid using up all the capacity all at once,” Ingulsrud said

Earlier this month, the Williston Select Board adopted zoning rules that encourage residential growth, including affordable housing, near Taft Corners and other areas that have a mix of commercial and residential buildings. The town also offers density bonuses for developers to build moderately priced housing.

Closer to Stowe, Waterbury and Morristown have been forced - by an influx of new residents and a surge in real-estate prices — to examine the issue, too.

Morristown has no density bonuses in its zoning, but may add them down the road. Planning administrator Mark Leonard said the town plan recommends considering density bonuses if developments meet affordable-housing criteria.

The town plan also says Morrisville needs more moderately priced housing, and sets a goal of having varied housing units that accommodate residents of all income levels and ages.

Waterbury is also trying to incorporate affordable housing into its zoning laws and town plan.

“It’s certainly a desire of Waterbury to provide as much affordable housing as possible and to maintain what we have,” said Community Planner Steve Lotspeich.

Waterbury recently amended zoning rules for its village commercial district, including the Blush Hill area where McDermott wants to build. The new rules allow multifamily housing that could help ease the housing problem. In addition, the town offers bonus densities of up to 25 units to developers who build affordable housing.

Not much to buy
The surge in housing prices is having a serious impact on state agencies that coordinate low-interest loans to low-to-middle income homebuyers.

Sarah Carpenter, executive director of the Vermont Housing Finance Agency, has spent most of her professional life working to provide Vermonters with affordable housing. Her agency provides homeownership education seminars, below-market interest rates on mortgage loans through participating lenders and construction loans for developers who want to build affordable housing.

Her agency’s success, however, has been limited by both the lack of existing moderately priced housing and the lack of interest among many developers.

“Builders don’t want to put a $100,000 house on a $50,000 lot,” Carpenter said.

Many qualified low- to middle- income home-buyers, some with preapprovals in hand, can’t find anything in their targeted price range. Central Vermont Community Land Trust, for example, has 65 mortgage-ready clients searching for affordable homes.

Carpenter blames the affordable housing shortage on “a whole combination of factors” — lack of land with town water and sewer serviced; the length of the state permitting process; the cost of construction.

Despite the bleak outlook for people looking to buy, when it comes to affordable housing rental units, the outlook is a bit brighter because of the way federal subsidies are set up, Carpenter said.