A committee that has been reviewing proposed changes to the city’s economic development incentives has recommended scaling back a requirement to promote affordable housing.

The recommendation by the Public Incentives Review Committee decreases the maximum percent of residential units that developers seeking incentives would be required to set aside for affordable housing by 25 percentage points.

The committee is recommending that any project seeking city incentives that has at least 10 residential units be required to set aside 10 percent of the units as affordable housing.

That’s down from the original proposal made by city staff, which said any project with at least four residential units would be required to set aside a percentage of affordable housing units based on a sliding scale ranging from 10 to 35 percent, depending on how many units the development had. For example, projects with 50 or more units would have had to set aside 35 percent under the previous proposal.

“The key is to promote affordable housing, and if the goal post is too high, no one is going to go for the incentives and no affordable housing is going to be built,” said committee member Aron Cromwell.

The committee’s recommendation indicates that requiring such a high percentage to be set aside for affordable housing would function as a deterrent for larger projects. The recommendation states that “the committee has concerns about the 35 percent being too high with the end result being that projects are not completed and no affordable housing is created.”

Cromwell said he thought it was a good compromise.

“We have to come up with something that will work within the business community and be approved,” Cromwell said. “We have to get everybody on board: developers, advocates, the community. Hopefully, we’ve made our best attempt at tackling this sort of difficult issue and come up with this compromise.”

The shortage of affordable housing in Lawrence is designated through national health rankings as a “severe” problem in Douglas County. For units set aside for affordable housing, the committee is recommending that developers be required to charge income-based rent for those units only for the duration of the incentive period. The previous proposal said the units would have to remain affordable for the duration the project was incentivized, but no less than 15 years.

The affordable housing requirement is part of a larger package of proposed changes to city policies that govern economic development incentives. The city’s use of incentives was a key topic in the most recent election, with several commissioners advocating that economic development policy needed to be modified.

Other recommendations made by the Public Incentives Review Committee are as follows:

• Strike the “but for” requirement on Industrial Revenue Bonds as the only cost to the city from implementation of an IRB is a loss of the city’s portion of sales tax on building materials, which is small.

• Open up the cap on analyzing Neighborhood Revitalization Areas beyond the 10 year/50 percent level to allow the pros and cons of an individual project to be examined on its merits. “Changing this policy maintains flexibility to examine projects which may contribute greatly to our community’s goals,” the recommendation reads.

• Projects with less than $1 million in capital investment should be subject to a modest application fee (e.g. $100) to make it palatable for small projects to make requests, but still keep a flood of frivolous applications from being submitted.

• Add language on cost recovery to make it clear that any fees an applicant would be required to pay would be clearly defined upfront in an agreement with the city so that they have clear expectations and no surprises.

The City Commission will review the committee’s recommendations at a meeting in mid-October.