Affordable Housing - A key tool that has helped over 1,400 affordable units be built

by Mike Van Houten / Oct 29, 2023

Yes, affordable housing units have been and are being built around the Reno area, and here's a program that helps the Reno City Council build those units. It's called the Affordable Housing Sewer Connection Fee Subsidy program. On November 1, the Reno City Council in a special workshop will review this program, which has been so successful, it's financial sustainability could be coming to an end as early as fiscal year 2025. The Reno City Council will discuss alternatives to funding, and take a hard look at the program this Wednesday. 

First, a little background. 

In July 2019, Senate Bill 103, codified in NRS 278.235, went into effect. This law gives the City the ability to reduce or subsidize, in whole or in part, impact fees, fees collected for issuance of building permits, and sewer connection fees for affordable housing projects. To implement the law, a new ordinance (RMC 1.08) was required, and an ordinance amendment (RMC 12.16.280) was needed. When the program was initially established, per NRS 278.235, the funding limitation put into place was that Council must make a determination that reducing or subsidizing fees will not adversely impair the ability of the City to pay when due on any outstanding bonds or other obligations.

Currently, the program subsidizes sewer connection fees up to 75% for affordable housing projects that provide housing for families with an average total gross income of 60% or less of area median income (AMI). Projects that are within a quarter mile of a bus rapid transit route or are within a mixed-use area or within one mile of an employment area as identified within the structure plan of the City of Reno Master Plan are eligible to apply for an additional 10% reduction. Affordable housing projects that provide housing for families with an average total gross income of 50% or less AMI are eligible to apply for a 100% sewer connection fee reduction.

The Reno City Council has approved $7,318,399 in sewer connection fee subsidies which has created 1459 affordable housing units.

Springview by Vintage  - approved April 14, 2021 -  180 units,  $735,075.00 subsidized
Marvel Way  - approved April 14, 2021  - 42 units, $228,690.00 subsidized
Washington Station -  approved March 9, 2022 205 units,   $837,168.75 subsidized
Orovada - approved March 9, 2022 40 units,   $217,800.00 subsidized
Pinyon Apartments - approved July 27, 2022 252 units,   $1,166,319.00 subsidized
Copper Mesa - approved July 27, 2022 290 units,   $1,342,192.50 subsidized
Dick Scott Manor - approved April 26, 2023 12 units,   $65,340.00 subsidized
Vintage at Redfield - approved June 14, 2023 223 units,   $1,032,099.75 subsidized
Marvel Way Phase 2 - approved August 23, 2023 45 units,   $245,025.00 subsidized
Sutro Street Sr. North and South  - approved October 25, 2023 170 units,   $1,448,690.00 subsidized

Approved Total  - 1459 units - $7,318,399.00

One issue though is, the program has been so successful that it is not financially viable in the coming years. Based upon projects already approved and potential projects, City of Reno staff estimates that the program’s cumulative total could exceed $11M by the end of FY2025. There is no funding source for this program aside from sewer fund revenues which are primarily derived from sewer user fees. The program needs fiscal and programmatic limitations to properly budget and plan for these expenses while appropriately funding ongoing maintenance, operations, and repair/replacement capital projects for the treatment facilities and collection system.

On Wednesday November 1, Staff recommends Council:

1. approve an additional $4M spending cap for sewer connection fee reductions out of the sewer fund through the end of FY25;
2. give direction to staff to evaluate sustainability and impact to sewer user fees to maintain an annual subsidy for this program as part of the biannual sewer fund sufficiency review (due January 2025); and
3. determine alternate funding sources for consideration during FY26 budget discussions.

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