City of Iowa City staff are working with U.S. Department of Housing and Urban Development officials to decide the next steps after the city was awarded $3.75 million to help address the affordable housing crisis in June.
The city received approximately $1.8 million less than the city had proposed in its grant funding application. Now the city must work with HUD technical assistance teams to determine if the city can decide which programs to fund or if HUD will determine which programs make the cut.
The city originally committed $2.85 million in affordable housing funds in the proposal, and with the $5.6 million in grant funds proposed, the total budget in the grant proposal was $8.45 million. However, since the city is only set to receive $3.75 million of its $5.6 million ask, the amount of city funds committed could change.
While the city waits to hear from HUD on how it can use the grant money, the city’s original grant application lays out a three-pronged approach to tackling the affordable housing shortage, including looking at regulatory barriers to increasing housing supply, immediate housing assistance, and the development of more affordable housing units.
The grant comes as Iowa City grapples with a lack of housing supply for the city’s projected growth. The city’s 2022 Affordable Housing Action Plan says the city needs 4,500 new housing units to address the needs for the city’s current population growth. With a deficit of new housing units, housing costs and rent prices have increased, according to the plan.
Anne Russett, the City of Iowa City’s senior planner, said the number of residential housing permit applications in the city has dramatically decreased over the years, leaving less room for the growing city.
“What we know is we have people coming here and we have a desirable city, and at the same time, we’re not keeping up with that need,” Russett said. “It’s a complicated issue, and the one thing — at least with planning and zoning — we know we have control over is the policies and regulations. So those are the things that we’re looking at.”
Russett said many of the projects included in the grant have been on the planning and zoning staff’s to-do list, but limited time, funds, and staff have prevented the city from taking a more ambitious approach to the reforms.
“These funds are really going to help us move these projects forward and do them in a quicker timeline than we would have been able to without the funds,” Russett said.
The grant application also includes plans to hire full-time employees funded by the grant.
Continuing zoning code changes
The city has recently changed its housing code to allow Accessory Dwelling Units or “mother-in-law suites” and recently allowed duplexes to be developed anywhere in residential zones rather than just corner lots.
The city is planning to expand on current zoning code changes to help increase the housing supply by making construction more affordable.
The budget for planning-related activities in the grant application is $650,000, including a handful of studies to look at the impact on the cost of development of several city codes and documents.
Tracy Hightshoe, the director of Iowa City Neighborhood and Development Services, said the planning portion of the grant application “looks at long term the regulatory barriers and how can we improve our zoning to make housing that increases supply and increases affordability.”
The grant application includes a $250,000 study of the city’s parking regulations that require developers to have a certain number of parking spots available based on the land-use type and number of expected occupants.
Kirk Lehmann, Iowa City assistant city manager and former associate city planner who worked on the grant application, said if the city requires more parking than needed, it can affect construction costs. The study would look at the city’s current parking regulations and investigate potential code revisions to decrease costs for builders.
The application also includes $150,000 for a Regional Housing Study to look at housing needs in Tiffin, North Liberty, and Coralville to understand how the city can meet its share of affordable housing needs for the region.
The city is also looking to initiate higher-density rezoning in prime areas in areas of the city that can suit it to the city’s comprehensive plan, according to the document that governs land use zones throughout the city. The suitable areas for higher-density zoning would be located near transit centers, Lehmann said.
Taking a proactive approach to rezoning, these lots would decrease uncertainty for developers who would otherwise have to navigate the rezoning process themselves to make higher-density developments, Lehmann said.
The city is also looking to update its comprehensive land use plan to better align with affordable housing goals. Hightshoe said the updated plan would look at including more diverse housing types in all of Iowa City’s neighborhoods.
Russett said the reforms will take time to see impacts but long term will hopefully increase affordable housing supply.
“It takes a bit more time to see the impacts of those changes when you’re changing policy and thinking about land development,” Russett said. “But the sooner that we can do it, the sooner we should be seeing change in our community and seeing more diversity in the housing options that exist.”
Individual assistance and counseling
The grant application also proposes using $200,000 to provide housing counseling services through a certified HUD housing counselor who would provide home buyer education and credit repair services under the Iowa City Housing Authority.
The city would also use $750,000 in immediate housing assistance, including temporary rental assistance and security deposit assistance for those at risk of becoming unhoused.
Iowa City Housing Authority might move to developing affordable housing
Under the grant application, the largest pot of funds is devoted to a $5.8 million Affordable Housing Development Pilot Project that would create a Housing Development Division under the Iowa City Housing Authority.
The new division would develop permanent affordable housing units owned and managed by the City of Iowa City. It currently owns and operates 86 public housing units.
The city, however, has never built its own affordable housing units, instead acquiring and rehabbing units for public housing needs.
Along with the pilot program is a $50,000 feasibility study, to study what it would take for the city to implement the program.
The program would allow the city to build its own affordable housing units due to a lack of development capacity in the community for affordable housing units.
The program would look to construct at least 24 permanent affordable housing units to help increase revenues for the already 21 non-federally funded affordable housing units the city owns to make the program self-sustaining. The program’s revenues would also be supplemented with developer fees.
Hightshoe said the program would look to scatter affordable housing units throughout the city to give low-income residents more options on where they want to live.
“As a city, we might have more opportunity to buy more expensive land or to build affordable housing in areas that we call underserved affordable housing opportunities,” Hightshoe said. “And that gives lower-income people more choice about where they want to live and what neighborhood.”