Affordable housing board considers new funding sources, including bonds, donations and development fees

The city’s Affordable Housing Advisory Board is considering five new potential funding sources — including a bond issue, voluntary donation and development fees for increased density — for the city’s affordable housing trust fund.

The potential funding sources are from a list of options presented Monday by city officials to members of the board, which was established to advise the city and county commissions on issues affecting affordable housing, as well as manage the trust fund.

“We’re talking about trying to fund the trust fund consistently, year to year in perpetuity,” said Scott McCullough, director of planning and development services. “You can see I’ve tried to develop some ideas that are directing the funds directly to the trust fund.”

The list McCullough provided to the board included nine new potential methods of funding the affordable housing trust, and the board voted to immediately pursue more information regarding five of the options. The board also made plans to discuss the funding options at a future City Commission work session.

“We think they’re all feasible and doable, but every one of these has hurdles,” McCullough said.

Board members will discuss each funding source in more detail at a future meeting, but wanted to identify the leading options as part of their meeting Monday.

“We want to have something move forward now for further conversation,” said board chair Matt Sturtevant.

A summary of the five options selected by the board for immediate review is as follows:

• Voter approved general obligation bonds: Seek approval to obligate a specific, dedicated amount of debt to support the trust. One mill of funding could support about $1 million annually.

• New transient guest tax: Direct TGT funds collected from online short-term rentals such as Airbnb to the trust. The state began collecting the city’s transient guest tax on Airbnb rentals this year for remittance to the city. It’s anticipated that about $26,400 annually will be collected from such rentals.

• Voluntary donation: Establish a way for residents to make a voluntary donation as part of paying their utility bill. A donation of $5 per month by 10 percent of customers would generate $182,400 annually.

• Pay for density: Set density for all residential projects to six dwelling units per acre. Projects seeking additional density would be required to pay for that density at a rate established per unit.

• Incentives for affordable housing projects: Establish an automatic incentives program that waives certain development fees for residential projects that set aside a certain percentage of units as affordable housing (or donation to an organization that produces affordable units).

The shortage of affordable housing is an acute problem in Lawrence, and national health rankings have designated the shortage in Douglas County as “severe.” One of the board’s goals for this year is to identify five new funding sources for the trust fund. City staff worked with an affordable housing consultant to prepare the list of nine potential funding sources, and none is completely out of consideration.

The new funding sources would be in addition to city funding already planned for the trust fund. The city allocated $300,000 toward the trust this year, and its five-year capital improvement plan includes another $300,000 in 2018 and $350,000 per year from 2019 through 2021.

The Affordable Housing Advisory Board voted to direct city staff to include the five new funding options for the city’s affordable housing trust in a draft recommendation, which the board will review at its meeting on April 10. The board’s recommendations are sent to the City Commission for ultimate approval.