“Inclusionary” Rent-Cap Amendments Proposed

The city’s new ​“inclusionary zoning” (IZ) law is likely heading back to the legislative mill to be amended in two months.

What does that mean for the version of the law set to take effect next week?

The former recommended outcome was taken up and voted on Wednesday night during the latest special Zoom-assisted meeting of the City Plan Commission.

The latter question was left unasked and undiscussed during the public meeting. It now hovers over whatever path city staff and the Board of Alders choose to take in their interpretation and enforcement of the legislation that has already been passed and will soon go into effect.

At stake is whether or not builders who submit development applications to the city between IZ’s official start date on Feb. 18 and the law’s potential amendment date in early April will ultimately be required to limit rents in apartments set aside for low-income tenants. Or will those potential applicants instead be able to point to city-admitted flaws in the existing law as evidence that they don’t have to follow the legislation’s intent? 

So.

What exactly happened Wednesday night? 

And what questions remain?

At the end of Wednesday’s hour-and-a-half-long meeting, the City Plan Commissioners unanimously voted to adopt an updated version of the so-called ​“Inclusionary Zoning Monitoring and Procedures Manual.”

That 26-page document describes in detail how the city plans to enforce a new years-in-the-making law that was passed by the alders in January and requires developers to set aside a certain percentage of units in new market-rate apartment buildings at rents affordable to lower-income tenants. (Well, kind of. See more on that debate below. And click here to read more about the geographically based tiers and the income-specific set-aside percentages detailed in the law.)

That law is set to take effect on Feb. 18. Any existing apartment complexes as well as any proposed apartment complexes for which a development application is submitted to the city prior to Feb. 18 are exempt from the provisions of the law.

But any development project applications submitted on or after Feb. 18 must follow the law as passed.

The IZ manual, in turn, is an instruction guide for how the city plans to monitor and enforce the new law to make sure that applicable developments going forward follow the affordable set-aside requirements.

In their unanimous approval of the IZ manual, however, the City Plan Commissioners included a condition that the manual will not take full effect until the alders pass a set of city-proposed clarifying amendments to the underlying legislation itself. 

Rents Capped At 30% Of Household Income

Which brings us to the meat of Wednesday night’s discussion. And to the lingering legal lacuna. 

Commissioners and city staff spent most of Wednesday night talking about a set of proposed amendments drafted by city Assistant Corporation Counsel Michael Pinto. 

He put those proposed amendments together after a host of commissioners — including Chair Leslie Radcliffe, Vice-Chair Ed Mattison, Alder Adam Marchand, and Alternate Carl Goldfield — raised concerns at last week’s meeting that the law as passed does not clearly allow the city to enforce rent caps on deed-restricted apartments. 

Instead, commissioners said last week, the approved law as written seems to permit the city to require developers to set aside certain units for tenants earning no more than 50 percent of the area median income (AMI) — but then says nothing about what those developers can charge those lower-income tenants in rent. (This concern first rose to the commissioner’s attention thanks to the public testimony of eagle-eyed East Rock resident Kevin McCarthy.)

The proposed amendments put forward by Pinto on Wednesday, meanwhile, explicitly make clear that the city intends to enforce rent caps on applicable set-aside apartments through this legislation.

They do so primarily through a proposed update to the Definitions section of the law, which now includes a definition for the term ​“IZ Affordable Unit.”

The relevant section of Pinto’s proposed amendment reads:

“IZ Affordable Unit” means a residential dwelling unit, which is a required or voluntarily set aside unit under this Section 50 and which is restricted for occupancy by households that have a combined total annual income for all members that does not exceed fifty percent (50%) of the New Haven Area Median Income as defined by HUD at the time of initial occupancy; and for which the costs for rent and utilities do not exceed thirty percent (30%) percent of household income.

The amendments also clear up any potential confusion between the city’s ​“IZ Affordable Unit” — which pertains to renters earning 50 percent AMI — and the city zoning code’s separate, existing definition of an ​“affordable” apartment, which pertains to renters earning 60 percent AMI.

Click here to read Pinto’s proposed amendments in full.

This is ​“setting a formula for determining the rent cap for every project” covered by IZ, City Plan Director Aicha Woods said.

Pinto agreed. The new definition — and the subsequent addition of the newly defined ​“IZ Affordable Unit” term to other relevant sections of the law — would clearly define that such a unit would have to meet three tests.

It would have to be one of the ​“required or voluntarily set aside” units under the IZ law itself.

It would have to be reserved for tenants earning no more than 50 percent AMI at the time they move into the apartment.

And its total costs for rent and utilities would have to be no more than 30 percent of the relevant tenants’ household income.

“That formula would then be written into the deed restriction,” Pinto said, pointing out that IZ-compliant units would have to follow these rules for 99 years, per the text of the law.

These proposed updates now ​“make explicit in the text” the city’s authority to impose rent caps. 

In response to Goldfield’s concerns that capping rent at 30 percent of a tenant’s household income for these units would encourage developers to rent to the highest-income earners eligible under this law, Marchand noted that the city legislature’s explicit intent when passing this law was to ​“contribute to the issue of creating more affordable units” amidst the city’s ongoing market-rate-apartment building boom.

The IZ law cannot solve the city’s affordable housing crisis in and of itself, he said. It likely will not do much to address the needs of the city’s poorest residents for ​“deeply affordable” rents. Nevertheless, he said, it should incrementally add to the city’s supply of below-market-rent apartments, and should help economically integrate some of the market-rate and luxury apartment complexes still to be built downtown and across the city.

The commissioners and city staff present on Wednesday acknowledged, however, that their endorsement of Pinto’s proposed clarifying amendments does not mean that those amendments will take effect right away.

Instead, in addition to approving the IZ manual, the commissioners also recommended in their accompanying staff report that the Board of Alders consider making clarifying text amendments to the IZ ordinance itself. They included Pinto’s draft amendments as examples of what the final version could look like.

Now, Marchand said, city staff still have to formally submit the amendment proposal to the Board of Alders. 

Per the typical, mandated path for updating city zoning law, the City Plan Commission will then hold a public hearing and vote on any proposed amendments.

An aldermanic committee will then do the same.

And the full Board of Alders will then hold two ​“readings” for any proposed changes before taking them up for debate and a final vote.

Woods, and City Plan Department staffer Esther Rose-Wilen said the city anticipates that IZ-amendment-review-and-approval process to be complete by early April.

What About Feb. 18?

What wasn’t discussed during Wednesday night’s meeting was that the IZ law passed by the Board of Alders — and subsequently criticized by City Plan Commissioners as unclear and legally vulnerable on the issue of rent caps — is set to take effect on Feb. 18.

That’s a good month and a half before the earliest that Pinto’s proposed clarifying amendments could take effect.

That may or may not be a problem.

If a developer submits an application to build a new IZ-applicable apartment complex between Feb. 18 and early April, then the current unamended law would hold sway.

That would put the city in the uncomfortable spot of having to enforce a law that City Plan Commissioners and staff both recognize needs to be amended to achieve the stated goal of the policy: that is, to require certain units in market-rate apartment complexes to be set aside at deed-restricted below-market rents for low-income tenants.

“I think we just need to get our heads together as the city staff and the board [and figure out] where we’re at, what we need to do next, and make sure that we do what we have to do,” Marchand told the Independent when asked about the Feb. 18 start date after Wednesday night’s meeting.

“I don’t want to venture a legal opinion” about this issue, he said. Instead, he reiterated the Board of Alders’ intention for the IZ law, which is that ​“we want developers developing residential properties in the target areas to include affordable units.”

“I’m hopeful that developers will do that.”