Monday, October 17, 2016

Burlington "Inclusionary Zoning" Affordable Housing--A Preliminary Analysis


Here are three arbitrarily selected examples of households and maximum rents (rent cap) which would be offered by a landlord for an inclusionary unit of housing. There is cap on how low the rent can be set, and presumably landlords would be somewhat flexible in terms of moving rents lower than the cap rental rate towards the objective of no more than 30% of income by a household for rent (including all utilities). The three households are: (1) a two person household near the income maximum who would pay less than 30% of income under the rent cap, actually 25%; (2) a single individual making $15 an hour who would pay almost 40% of income; and (3) a single parent or couple with one child who occupying a 2 bedroom apartment and in this case paying at the rent cap 37% of income for housing.

Maximum Incomes to Qualify for “Affordable” Inclusionary Zoning (IZ) Units

1 Person: $58,800 2 Person $67,200 3 Person $75,600 4 Person $84,000 ….8 Person $110,900

Three different households

(1) Couple with income $50,000 (needs 1 bedroom apartment)
(2) Single person with $31,200 income ($15 an hour) (applies to studio or 1 bedroom apartment)
(3) Single parent or couple with one child $40,000 income (needs 2 bedroom apartment)

Eligible in terms of household income at 100% Burlington median income or less?
(1) Yes ; (2) Yes; (3) Yes

Cap on rent (rent maximum)

For 1 bedroom

Rent cap is 65% of median rent for household size, then multiplied by 0.3 (30% of income to gross rent including all utilities). In this case rent cap calculated, 1.5 persons assumed with 65% set at: 0.65 x [(1 person median income $58,800 plus 2 person median income of $67,200 divided by 2) x (30% or 0.3) or (58,800+67200/2) x 0.3 ] or 0.65 x $63,000 x 0.3 or $12,285 rent maximum yearly ($1,024 monthly). This 1 bedroom rent cap applies to examples (1) and (2)

For 2 bedroom, this analysis assumes 3 persons ($75,600 income) with calculation of rent cap: (Income estimate using 3 person income x 0.65 times 0.3) or ($75,000 x 0.65 x 0.3) or $14,625 yearly or $1,229 monthly. The 2 bedroom rent cap applies in case 

Percent of income paid for rental at rent cap
  1. Couple with $50,000 income $1,024 a month rent 24.6% of income
  2. Single person with $31,200 income
($15 an hour wage) $1,024 monthly rent 39.4% of income.
(3) Single parent or couple with one child
$40,000 income, $1,219 a month rent 36.9% of income

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