14-2G-8: AFFORDABLE HOUSING REQUIREMENT:
   A.   Purpose: The purpose of this section is to:
      1.   Create a more inclusive, just and sustainable Iowa City;
      2.   Reduce concentrations of low and moderate income households in Iowa City;
      3.   Increase the multi-family housing stock near the university and the City's urban core;
      4.   Promote the construction of housing that is affordable to the community's workforce;
      5.   Increase opportunities for people of all income levels to work and live near key employment centers;
      6.   Promote a balanced community that provides housing for people with diverse income levels;
      7.   To reduce the number of housing cost burdened households; and
      8.   Promote household stability and reduce the threat of homelessness.
   B.   Definitions: For purposes of this section, the following definitions shall apply to these terms:
   AFFORDABLE HOUSING: The collective reference to "owner occupied affordable housing" and/or "affordable rental housing", as those terms are defined herein.
   AFFORDABLE RENTAL HOUSING: Housing that is rented for no more than the HUD fair market rent for the Iowa City, Iowa, HUD metro FMR area, as adjusted annually, and rented to an income eligible household, or housing that has received Low Income Housing Tax Credits (LIHTC) through the Iowa Finance Authority and rented for no more than the LIHTC rent limits for Johnson County, as adjusted annually, and rented to an income eligible household.
   INCOME ELIGIBLE HOUSEHOLD: Except as set forth herein, a household is an income eligible household for purposes of purchasing an owner occupied affordable housing dwelling unit if that household has an annual income equal to or less than one hundred ten percent (110%) of the area median income (AMI) for Iowa City, as adjusted annually. Except as set forth herein, a household is an income eligible household for leasing affordable rental housing if that household has an annual income equal to or less than sixty percent (60%) of the AMI for Iowa City, as adjusted annually. Households with greater than one hundred thousand dollars ($100,000) in assets, excluding Retirement Assets, are not income eligible households.
   OWNER OCCUPIED AFFORDABLE HOUSING: Housing that is sold at a price no greater than the most current published housing and urban development (HUD) homeownership sale price limit for existing and new homes to an income eligible household.
   RETIREMENT ASSETS: Financial assets whose liquidity is limited or penalized until a person reaches retirement age, including, but not limited to 401(k)s, IRAs, pension accounts, IPERS, and TIAA-CREF, not including distribution of or income from the assets.
   C.   General Requirements:
      1.   Affordable Housing Requirement: Except for developments providing affordable housing pursuant to a development agreement with the city executed prior to June 6, 2016, and except for developments exclusively providing elder apartment housing, any development containing ten (10) or more dwelling units on land zoned a riverfront crossings zoning designation is required to provide affordable housing dwelling units in an amount equal to or greater than ten percent (10%) of the total number of dwelling units. Should ten percent (10%) of the total number of dwelling units result in a fractional number, this fraction shall be rounded up to the nearest whole number for any fraction over fifty percent (50%) to establish the required number of affordable housing dwelling units. Any exempt elder apartment housing developments shall be subject to periodic inspection to ensure compliance with the zoning code regulations of this title of such use.
      2.   Methods Of Achieving Affordability: The affordable housing requirement may be satisfied through the provision of one or more of the following methods:
         a.   On site owner occupied affordable housing;
         b.   On site affordable rental housing;
         c.   A fee in lieu contribution to an affordable housing fund;
         d.   Off site affordable housing; and/or
         e.   Contribution of land.
If the owner desires to utilize methods in subsection C2d or C2e of this section, the owner must establish that methods in subsections C2a, C2b, and C2c of this section cannot feasibly be satisfied, as reasonably determined by the city.
      3.   Affordable Housing Agreement: Upon rezoning to a riverfront crossings zoning designation, the property owner shall enter into an affordable housing agreement with the city establishing which method or methods it will utilize. This agreement must be executed prior to the close of the public hearing on the rezoning ordinance. Upon application for a building permit to construct any development for which affordable housing is required, the property owner shall enter into an agreement with the city detailing how it will satisfy the obligations of this code, which shall include details of the programming and development requirements if applicable. The city manager is hereby given the authority to execute such an agreement, which shall be recorded in the records of the Johnson County, Iowa recorder's office at owner's expense.
      4.   Term Of Affordability: The affordable housing dwelling units shall remain so for no less than ten (10) years from the issuance of the certificate of occupancy for the dwelling unit and recording of the deed restriction described below.
      5.   Occupancy: No affordable housing dwelling unit shall be occupied by anyone other than an income eligible household. Households that wish to purchase or rent affordable housing dwelling units shall be subject to verification of their eligibility in accordance with the applicable income verification provisions set forth below and as set forth in administrative rules adopted to accomplish the purposes of this section.
      6.   Deed Restriction: A deed restriction documenting the affordable housing requirements, selected method of achieving affordability, term, applicable resale restrictions, and applicable occupancy and rental restrictions shall be placed upon the owner occupied affordable housing dwelling unit or, in the case of the affordable rental housing, shall be placed upon the land being developed contemporaneously with the issuance of the certificate of occupancy. This deed restriction shall be recorded with the Johnson County, Iowa recorder and referenced in any deed conveying title of any such unit or land during the term of affordability. This deed restriction shall automatically upon the expiration of the term of affordability. The city manager is hereby authorized to issue any release of this deed restriction, as may be necessary and appropriate, in a form approved by the city attorney.
      7.   Parking: Affordable housing dwelling units shall be exempt from providing the parking spaces otherwise required by the zoning code.
   D.   Owner Occupied Affordable Housing: Owner occupied affordable housing must satisfy the general requirements set forth in subsection C of this section and the following requirements:
      1.   Development Requirements:
         a.   Dwelling Unit Types: The affordable housing dwelling units shall be comprised of the same mix of dwelling unit types in proportion to the market rate dwelling units within the development.
         b.   Dwelling Unit Size And Quality: The affordable housing dwelling unit size shall be at least eighty percent (80%) of the floor area for the market rate dwelling units of the same type, and shall be of similar quality, or as approved by the city manager or designee.
         c.   Location: The affordable housing dwelling units shall be distributed throughout the development to achieve integration and avoid concentration or segregation of the affordable housing dwelling units, unless a different distribution will result in the provision of additional affordable housing dwelling units than that which is required by this code, as approved by the city manager or designee.
         d.   Timing Of Construction: The affordable housing dwelling units shall be constructed and issued a certificate of occupancy concurrently with or prior to the market rate dwelling units in the development.
      2.   Program Requirements:
         a.   Occupancy: An affordable housing dwelling unit shall, at all times during the term of affordability, be occupied by an income eligible household as the household's primary residence.
         b.   Income Verification: The annual household income shall be determined according to the HUD part 5, section 8 regulations on annual income codified in 24 CFR 5.609, as amended, and verified by the city prior to close of the sale.
         c.   Rental Restriction: An owner occupied affordable housing unit may not be rented, except an owner may rent or lease a bedroom in the unit.
         d.   Sale Restrictions: In addition to the deed restrictions required above, all required owner occupied affordable housing dwelling units shall be subject to the following sale restrictions during the term of affordability, compliance with which shall be verified by the city manager, or designee, prior to closing on the sale.
            (1)   Approved Purchasers: A seller of an affordable dwelling unit must sell the unit only to an income eligible household.
            (2)   Sale Price: The sale price of any affordable housing dwelling unit shall not exceed the purchase price paid by the original income eligible household purchaser or the HUD homeownership sale price limit, whichever is greater, with the following exceptions:
               (A)   Closing Costs: Customary closing costs and costs of sale.
               (B)   Real Estate Commissions: Costs of real estate commissions paid by the seller to a licensed real estate agent.
               (C)   Permanent Capital Improvements: Reasonable value added to the dwelling unit due to permanent capital improvements installed within the unit by the seller pursuant to a properly issued building permit.
               (D)   Special Fees: The seller of an affordable dwelling unit shall not levy or charge any additional fees or any finder's fee nor demand any other monetary consideration other than provided in this chapter.
   E.   Affordable Rental Housing: Affordable rental housing must satisfy the general requirements set forth in subsection C of this section and the following requirements:
      1.   Development Requirements:
         a.   Affordable rental units shall be provided in accordance with the development requirements for owner occupied affordable housing set forth in subsection D1 of this section.
         b.   If a tenant initially deemed an income eligible household for purposes of occupying an affordable housing dwelling unit pursuant to this chapter, but is subsequently deemed no longer income eligible upon annual examination of household income, that tenant's unit shall not be considered an affordable housing dwelling unit and the rent can be adjusted to market rate. To maintain compliance with the affordable housing requirement, the next available rental unit in the project of comparable size or larger must be rented to an income eligible household. To that end, the affordable rental units need not be specifically designated in a fixed location, but may be floating throughout the development.
      2.   Program Requirements:
         a.   Rental Rate: The monthly rental rate shall be either:
            (1)   no more than the fair market rents as published by HUD for the Iowa City, Iowa, HUD metro FMR area, as adjusted annually; or
            (2)   for projects that have been awarded LIHTC through the Iowa Finance Authority, no more than the LIHTC rent limits for Johnson County, as adjusted annually.
         b.   Occupancy: Affordable rental units must be rented to income eligible households.
         c.   Income Verification: The landlord shall annually verify to the city that the affordable rental housing units are occupied by income eligible households. Prior to the commencement of a lease, the landlord shall determine a potential tenant's annual household income according to the HUD part 5, section 8, regulations on annual income codified in 24 CFR 5.609, as amended. Upon extension or renewal of a lease, the landlord may determine a tenant's annual household income based upon federal income tax returns for all adults in the household.
         d.   Owner Verification Of Compliance: The owner must annually verify to the city that it is in compliance with these program requirements, and provide any documentation as deemed necessary by the city to determine compliance, which may include examination of the documents used to verify tenant income. Any violation of this requirement may result in immediate suspension of any rental permit issued for the applicable unit.
   F.   Fee In Lieu Contribution: In lieu of providing affordable housing dwelling units, an owner may contribute a fee to a riverfront crossings district affordable housing fund to be established by the city. The contribution per dwelling unit shall be determined biennially by resolution of the city council based upon a formula that analyzes the difference between renting a market rate unit for the term of affordability and renting a dwelling unit affordable to an income qualified household. The fund shall be utilized solely for affordable housing purposes, which may include administration costs, in the riverfront crossings district.
   G.   Transfer Of Affordable Dwelling Units Off Site: Upon the owner establishing that the affordable housing requirements cannot be satisfied on site, as reasonably determined by the city, it may be satisfied by designating off site existing or newly constructed dwelling units in the riverfront crossings district as affordable housing dwelling units. Any transferred affordable housing units shall in no way waive or reduce any obligation to provide affordable housing units within the development to which the obligation is transferred. In addition to satisfying the general requirements set forth in subsection C of this section, these units must satisfy the following requirements:
      1.   Development Requirements:
         a.   Provision Of Units: Off site affordable dwelling units, whether they are owner occupied or rental units, shall be provided in accordance with the development requirements for owner occupied affordable housing set forth in subsection D1 of this section. The city reserves the right to deny a request to transfer affordable housing units to a particular development if it would result in an undue concentration of affordable housing units within that development.
         b.   Timing: Where the affordable housing requirement is to be met through the provision of newly constructed dwelling units, such units shall be constructed and pass final inspection no later than the date the occupancy permit is issued for the development creating the need for the affordable housing, unless otherwise agreed upon by the city manager, or designee. Where the affordable housing requirement is to be met through the provision of existing off site dwelling units, they shall be established as affordable housing dwelling units prior to issuance of any occupancy permit for the development creating the need for the affordable housing. The marketing of the affordable housing dwelling units should occur no later than one year after the first market rate dwelling unit in the site that generated the requirement passes final inspection, unless otherwise agreed upon by the city manager. The affordable housing agreement pursuant to subsection C3 of this section shall be recorded prior to issuance of a building permit for the development creating the need for the affordable housing.
      2.   Programming Requirements:
         a.   Where the off site affordable dwelling units are to be owner occupied affordable housing, those units shall comply with the programming requirements for owner occupied affordable housing set forth in subsection D2 of this section.
         b.   Where the off site affordable dwelling units are to be affordable rental housing, they shall comply with the programming requirements for affordable rental housing set forth in subsection E2 of this section.
   H.   Land Dedication: Upon the owner establishing that the affordable housing requirements cannot be satisfied on site, as reasonably determined by the city, it may be satisfied by the dedication of land to the city of Iowa City or an entity designated by the city of Iowa City for construction of affordable dwelling units in accordance with the provisions of this section, upon consideration of the following factors:
      1.   Location: The land shall be located in the riverfront crossings district, in an area appropriate for residential redevelopment, as determined by the city;
      2.   Number Of Affordable Units: The total dwelling units possible on the land shall be equal to or greater than the number of required affordable housing dwelling units;
      3.   Dwelling Type: The land shall allow for the provision of affordable units of equivalent type (single-family, multi-family, townhome, etc.), floor area, and number of bedrooms to that which would have been otherwise required;
      4.   Land Value: The value of land to be dedicated shall be determined, at the cost of the developer, by an independent appraiser, who shall be selected from a list of certified appraisers provided by the city, or by such alternative means of valuation to which a developer and the city agree; and
      5.   Right To Refuse: The city reserves the right to refuse dedication of land in satisfaction of the affordable housing requirement if it determines, in its sole discretion, that such a dedication is not in the best interests of the public for any reason, including a determination that the city is not likely to construct or administer an affordable housing development project in a timely manner due to the unavailability of funds or other resources. Additionally, where the value of the land proposed to be dedicated is less than the value of the fee in lieu contribution established in accordance with the provisions above, the city reserves the right to require an owner to contribute a fee making up this difference in values.
   I.   Administrative Rules: The city manager or designee is hereby authorized to establish administrative rules deemed necessary not inconsistent with any ordinance adopted by the city council in order to assure that the purposes of this section are accomplished. A copy of the rules shall be on file with the city clerk and available on the city website. (Ord. 16-4668, 7-5-2016, eff. 8-1-2016; amd. Ord. 19-4813, 12-3-2019)