To provide more affordable housing, Sussex County should consider designating areas for high-density housing to encourage more multifamily projects and apartments and incentivize developers to build affordable units in those areas.

Those are among recommendations made by LSA Planning housing consultants after eight months of research and meetings with stakeholders, county staff and officials.

The recommendations, falling within three categories, were presented during the Oct. 29 Sussex County Council meeting.

The recommendations include:

• Establishing a local housing trust fund using seed money from the county

• Preserving the existing supply of affordable housing

• Modifying the zoning code to allow higher density where multifamily housing can be built by right, including an update to the county's current bonus-density program for developers who provide affordable units.

The consultants have already published a detailed report with housing data to support the need for more affordable housing in the county. According to their findings, given the large portion of the population who work in relatively lower-wage jobs and support the tourism industry, retail sector and agricultural industry, there is a significant need for rental housing with monthly rents – plus utilities – under $1,000.

The need is also particularly great for households that can afford homes under $200,000. One-third of the county workforce can afford no more than a $200,000 home, but only 13 percent of new homes are listed at $200,000 or less.

Lisa Sturtevant, LSA president, said people with incomes under $30,000 have a hard time finding affordable housing. “There is a gap in what's available and what's affordable. There is a great demand for housing at these income levels. Why is it not being built?” she asked.

She said factors include the cost of land, labor and materials, and regulations.

She said 10,700 county homeowners spend 50 percent or more on housing costs, when 30 percent is considered a financially stable percentage.

She said people in lower-income levels tend to settle for substandard housing that is not safe, live with others in crowded conditions or leave the county. In addition, they have to make choices to spend less money on food and medical care because they are spending more than 30 percent of their income on housing costs.

Maintaining existing homes

LSA's Jennifer Skow said preserving existing affordable housing is often overlooked.

She said upgrading houses that already exist can be less expensive than building new units. Improving existing homes preserves affordability and prevents displacement as nearby property values and rents rise.

The Sussex County Community Development and Housing Department is charged with administering housing rehabilitation. Annually, the department uses about $1.5 million in federal funds and $175,000 in emergency county funds to repair homes throughout the county. However, there is a waiting list of more than 900 homes.

Skow said the county could inventory vacant and abandoned properties that could benefit from the county program by expanding the current county-run rehabilitation program. She suggested the $25,000 cap on repairs per home could be increased, and the county could consider providing another $250,000 to upgrade more homes.

She said subsidies of 500 affordable units in the county are set to expire over the next 10 years. Skow said there is a risk of losing the units to conversion to market-rate units. Subsidized apartment complexes typically operate on a 30-year cycle before subsidies expire.

She said county officials could consider providing no- or low-interest loans to small rental property owners to rehab their homes in exchange for maintaining affordable rents; provide financing to assist larger affordable rental housing owners with repairs; and provide relocation assistance to tenants who have been displaced from affordable housing.

She made it clear that the county's role in housing preservation would be facilitating, and not as a contractor, operator or owner of affordable housing.

Creation of a trust fund

Skow said county officials should consider establishing a 501c3 housing trust fund started with county funds, overseen by an advisory board and administered by the county or a third party. Additional funding could come from banks and private donors or from other sources approved by county council.

Those could include a .5 to 1 percent impact fee on all new residential development, a tax on short-term rentals, a property tax increase with a homestead exemption for year-round residents, or collecting a percentage of the lodging tax.

She said county council would establish how the funds would be used. “County council can set the regulations in the fund, which allows for more flexibility than in state and federal programs,” she said.

Skow said the trust fund should support projects that lead to access to or production and preservation of affordable housing. The consultants suggested targeting projects for homebuyers or renters with incomes 80 percent or below the county's average median income, which is $40,400 for one person and $57,680 for a family of four.

Skow said it's best to set the fund up as a revolving-loan fund to recycle money for future projects.

Funds could be used to provide no- or low-interest loans for new-home construction or rehabilitation of existing housing, financing for site acquisition, construction loan guarantees or operational capital or financing to reduce developers' up-front costs.

According to the report, other criteria used to select projects for funding could include housing for the homeless or disabled, targeting homebuyers or renters earning below 50 percent of the county median income, housing in areas near amenities and employment opportunities, and leveraging other resources including grants and low-income tax credits.

Skow suggested once the fund is established, the county could do a pilot project to get it off the ground.

Among data compiled by the consultants:

In the top 10 Sussex job sectors, half of the workers can afford a home costing around $200,000, based on two workers in the household making approximately the same wage.

Of the 81,000 Sussex County workers, nearly 50,000 are employed in four job sectors: accommodation and food services; retail trade; healthcare and social assistance; and manufacturing, including poultry-processing related employment.

Workers in the hospitality sector have an average annual wage of just under $21,000, and can afford monthly rents up to $515 and homes costing up to $144,000.

Retail workers have an average annual wage of $28,000, and can afford monthly rents up to $700 and homes costing up to $196,000.

Workers in healthcare and social assistance have an annual average wage of $54,000, and can afford monthly rents over $1,000 and homes from $316,000 to $379,000.

Workers in manufacturing have an average annual wage of $45,000, and can afford monthly rents up to $1,100 and homes costing $317,000.

The average annual wage in the county is $41,000, which allows workers to afford $1,000 monthly rent and homes costing up to $284,000.