City staff reviewed the affordable housing measures included or referenced in the recommended 2026 budget and asked council to confirm support before final budget adoption.

Key items reviewed:
- ADU (Accessory Dwelling Unit) incentive: staff said $125,000 currently exists in 2025 and would be carried forward into 2026 to continue an ADU production incentive program. Staff said a pending DOLA grant application could increase available incentive funding to $325,000 if awarded. The ADU program has supported roughly 22 ADUs in 2025, and staff said the incentive and related outreach have correlated with increased ADU production.
- Downtown Development Authority (DDA) terminal project commitment: council previously passed a resolution committing “up to $1 million” to the DDA terminal project; staff noted the commitment exists but would not be drawn against the unrestricted fund balance until funds are actually expended; timing could slip into 2027 depending on grants and the capital stack.
- Affordable housing production incentive (fee waivers/backfill): staff summarized eligible projects identified to date that would qualify for fee waivers under the recently passed council resolution. Projects discussed included a Salt Flats senior/veteran project (62 units), Brickwell in Salt Flats (144 units pursuing a special limited partnership), Rural Homes modular homeownership (48 units), Habitat for Humanity (6 units), and Ninth Path (149 units at a South Seventh Street infill site). A previously listed “New Beginnings” project has withdrawn. If all eligible projects proceed and the city applies existing CDBG funds to water/sewer tap fees, staff estimated the total fee backfill would be about $1,380,000 with approximately $408,000 remaining to be covered by one-time funds.

Why it matters: council members characterized the ADU incentive and housing production fee waivers as cost-effective ways to leverage public dollars to produce housing. Staff noted some of these commitments rely on external grant awards and partnership with the housing authority or other funders; delay in grant awards could shift expenditures into future years.

Council direction and discussion highlights:
- Council members expressed broad support for proceeding with the ADU incentive carryforward and for the staff approach to the housing production incentive, noting the expected leverage of relatively modest city investment for a larger number of housing units.
- Council confirmed awareness of the existing DDA resolution committing up to $1 million to the terminal project and discussed timing (could be expended in 2026 or 2027 depending on capital-stack timing and grant schedules).
- Staff clarified that some water and sewer fees may fall to outside jurisdictions or districts and the city’s policy does not always permit covering those third-party fees; staff identified CDBG and previous fee-commitments as partial offsets.

Next steps: Council indicated support for staff recommendations and asked staff to include the ADU carryforward and to track grant decisions closely; staff will bring a final consolidated housing incentive funding recommendation during the November budget process.