One notable matter was the proposed adjustment to the fee in lieu of compliance under the Opportunity Housing Ordinance. City staff recommended increasing the fee from $9.60 to $12 per square foot to account for inflation, similar to measures taken by the City of Minneapolis. This change is intended to maintain the ordinance’s effectiveness without stifling development, offering a flexible, tiered compliance approach to adapt to current market conditions.

Key findings from consultants highlighted the transformation of Bloomington’s housing market, with the percentage of high-income households rising significantly. This demographic shift has influenced supply and demand, further complicating efforts to provide affordable housing. The Opportunity Housing Ordinance mandates that 9% of units in new multifamily projects with at least 20 units be affordable at 60% of the Area Median Income (AMI) or below. However, the consultants reported a mismatch between policy goals and outcomes, with most units built at the 60% AMI level, while only a small fraction were at the lower 30% AMI level.

Developers expressed concerns about the rising construction costs outpacing rental income growth, creating a “cost-revenue squeeze” that hinders the feasibility of affordable housing projects. Parking requirements, perceived as excessive by developers, were also cited as a barrier to development. The feedback called for better communication regarding incentives provided under the ordinance, as some were underutilized.

The council also discussed the in-lieu fee (ILF) structure, which allows developers to pay a fee instead of including affordable units in their projects. The current fee, set in 2018, may require adjustment to reflect actual affordable housing production costs. Options on the table included maintaining the current fee, adjusting it for inflation, or increasing it to better align with the financial realities developers face.

Additional recommendations included standardizing ownership requirements across housing types, which currently vary, to streamline the ordinance. The suggested amendments would require all single-family and multifamily developments to include 9% of units at 115% AMI, with an option for 4% at 80% AMI for developments with 20 or more units. This change aims to simplify compliance and make the ordinance more adaptable to varying market conditions.

The council acknowledged the need for a more robust framework to address these housing challenges and expressed interest in exploring additional policy options. During the meeting, concerns were raised about the effectiveness of current measures in achieving “deep affordability,” particularly for affordable homeownership, where financial barriers persist.

Furthermore, the meeting touched upon the implications of the Bloomington 2050 Comprehensive Plan, which serves as a long-term roadmap for the city’s growth and development. The plan emphasizes community engagement, seeking public input to shape its values and strategies. Council members stressed the importance of integrating equity and inclusion into the plan.

In closing, Council Member Lowman highlighted the need for stronger language around equity and inclusion, referencing other cities with dedicated chapters on these topics. The staff acknowledged this feedback, proposing that the community health and services element could focus on these discussions.