Should SLO reevaluate plans to increase work-force housing?

August 7, 2016
Allan Cooper

Allan Cooper

OPINION by ALLAN COOPER

Many residents in San Luis Obispo who work to preserve the quality of their environment support increasing the supply of so-called “work force housing.” This is fundamentally good for the environment because it could reduce long commutes in and out of our work centers.

However the SLO City Council holds these same citizens hostage to a pro-ratio allocation system that supplies a paltry number of work force housing units in return for too many high-end housing developments and too many tall buildings housing mixed use commercial development.

The late George Moylan, who served 18 years as the former executive director for the Housing Authority of the City of San Luis Obispo, had correctly said that the private sector could never adequately address San Luis Obispo’s chronic shortage of work force or affordable housing. This shortfall would have to be primarily met through public assistance.

The state – through a state-required regional housing needs allocation process – mandates that we identify and address our existing housing needs through our housing element. In this sense, the state is mandating that we address our jobs-housing imbalance because if we don’t the state will be burdened with increasing transportation infrastructure and air pollution costs associated with urban sprawl.

However, this mandate has become the private sector and the city’s “Trojan Horse” with which they can justify a 25 percent increase in our population from 46,730 to 58,626 by 2035 (and this in comparison to a 10 percent increase in population which took place between 1990 and 2014).

In exchange for providing affordable housing, the developer is exempted or deferred on a per-unit basis all planning, engineering, building review, permit processing, development impact and water/sewer hook-up fees. In exchange for providing affordable housing the developer receives a density bonus, exceptions to development standards, city funded off-site improvements and even direct financial assistance. The developer also receives reductions in parking standards, building setbacks and exceptions to limits on height and lot coverage.

I’ve heard that one council member believes that growing to 58,626 by 2035 will do everything we want it to do: create workforce housing, create affordable housing and reduce commuting.

But with a projected population increase of 11,000 or more people, we will receive a mere 220 low income housing units, a mere 22 percent increase over what we currently have assuming all new development capitalizes on city incentives. And these 220 units will become available to today’s 4,905 working households currently living at or below the poverty level. The wage earners within these households work primarily in the food prep, food servicing, healthcare support, grounds maintenance and personal care employment sectors.

In other words, our government programs that help developers build affordable housing will barely meet a fraction of the need.

Doesn’t this sound like we’re “giving away the store” in the name of inclusionary housing? And given imminent cataclysmic climate change and its impact on future water shortages here in California, should the city now feel it is justified in pushing population growth beyond 1 percent per year between now and 2035 simply because our population growth over the past 24 years has averaged 0.42 percent per year?

Even without considering the “water issue,” San Luis Obispo’s recent history of slow growth has demonstrably enhanced our quality of life through protecting the small town ambience and historical charm that most of us wish to preserve.

Public housing, i.e., housing built by government directly instead of government giving developers incentives, should be the most favored alternative. We should not be dependent on significant population growth in order to provide a modicum of affordable housing.

Instead of allocating $450,000 this year to a rental housing inspection program, this money could have been earmarked for the San Luis Obispo County Housing Trust Fund. Instead, the City should apply for Affordable Housing funds and HOME Investment Partnerships Program grant funds to address our local affordable housing needs. Also, more of the city’s HUD’s Community Development Block Grants monies should be set aside for affordable housing.

The city should put a stop, once and for all, to the conversion of our existing housing stock into commercial properties and explore enacting some form of rent stabilization. About 15 California cities have some form of rent stabilization, including Los Angeles, San Francisco, San Jose, and Oakland. And instead, the city should increase its in-lieu fee requirement, paid by developers to meet inclusionary housing requirements.

In conclusion, our “carrot” approach of luring developers with financial incentives is insufficient and full of unintended consequences. Our leave-it-up-to-developers policy has failed to produce results because of innumerable imperfections in the “free market” for housing.

Alan Cooper, a long-time San Luis Obispo resident, is the secretary of Save Our Downtown.


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mazin

I question if any of these affordable housing programs do anything. All it takes is one article in Sunset magazine outlining how wonderful SLO is and bingo … up go the housing prices. We are a micro micro micro market. It is a charming provincial attitude to think that our little efforts change anything. So what can be done? Employer sponsored and supported public transportation. Their workers cause the problem … so the employer pays. I suggest for poverty level employees a reverse public transportation toll. Ride the bus for a week, the employer pay a bonus to the employee. That would make it happen.


obispan

How long does this pointless discussion have to go on? This is rapidly filling up coastal California, Santa Monica, Ventura, SB, SLO, Monterey, SC… nothing is going to make it affordable. The beach cities will be for the very rich, the coastal valleys for the rich and north of the Grade for the very comfortably well-off. Building permits for the build out will awarded in the political arena. Every last unit will be built and the price will not be one penny less if all fees were waived. You want affordable? There is a duplex in Bakersfield on craigslist right now for $96,000.


slolusion

Im really wondering who these projected 11k people are going to be. They can’t be people interested in building wealth, because SLO is no place to do so. Must be either college kids, who won’t be buying much of anything other than beer and cheap sunglasses, or old folks who won’t care about schools, roads nor crime.


San Luis has a bad mix of ‘population problem’ in addition to a bad housing stock problem. Correcting one will still leave the other.


SLO_Johnny

SLO will have multi-millionaires,their servants, government workers, students


slolusion

And an enormous and growing poverty class. It truly is amazing how different America can be. From East St Louis to Reading PA, to Charlotte NC, to San Luis O.


All is not equal in this most free country. And you want to be like Charlotte and not Reading.


Rich in MB

The US Constitution does not grant nor guarantee Equality of outcome…that is a liberal lie. The Constitution guarantees Equality under the Law. We are not a Communist Country ….. well YET anyway….


slolusion

Thats true.. But if you go to one of the old rotted out, industrial cities, the constitution won’t protect your life from the decay that has destroyed the city and the way of life.They have too much reality to be burdened by high minded old documents.


Will SLO get that bad? No.


SLO’s future is more on par with FL. Old people who are looking for their next Pinochle game. And the people who are young that stick around? Well lets just say they aren’t salt of the earth.


kayaknut

regroup that, checking government salary and pension reports, those multi-millionaires are government workers and most students are servants while in school, and then in debt when out.


CentralcoastRN

That’s pretty much what we have now.


CentralcoastRN

Well, the first thing that should happen is that when someone DOES build affordable housing, SLO county residents should have FIRST dibs on it. They should have to provide PROOF of SLO county residency. 3 months of bills, etc.


Senior housing was recently built in Morro Bay, and I spoke to a resident that lives in them. At least two apartments went to people that were from out of the area.


At present, “affordable” housing is being constructed for families on South Street in SLO. It should be done or almost done:


http://www.roemcorp.com/projects/south-street/


This structure according to the website cost 14.1 million to build and will be home to 43 families. So, the real math is probably more than 14.1 million, as construction is often underestimated, and then the government subsidizes the company that builds these homes in rent by a HUD approved formula. So, each one of these complexes is very pricey.


The government cannot afford to house families, which is why they give financial incentives to private companies to do so. At least these complexes are guaranteed a certain amount of rent, regardless if their tenants pay or not. The government subsidizes repairs as well. The “catch” is that private companies that bankroll these units cannot pick and choose who rents. The housing authority oversees and ensures that these units are rented per HUD rules.


I think what I am trying to say is that while I agree that more affordable housing is desperately needed, it isn’t going to happen for all. We are headed back down that path of multigenerational homes and households; I have seen more people buying land where they can put an extra granny unit, modular home, and now there are pre-fabbed “tiny houses”. I think we are going to see more “mini compounds” popping up in rural and even some suburban neighborhoods. Governments won’t be able to stop it forever.


hijinks

Another affordable housing scandal is the short-term of the resale controls “affordable” units that benefit from taxpayer help have in SLO. This is for owner-occupied private “subsidized” housing. These units have controls on how much profit the subsequent seller can gain, since the initial cost is written down by public subsidy. Ideally, the term of the controls should be forever, since that assures this housing will remain affordable for many future owners. In SLO the resale control term is often a mere 20 years, sometimes even less. This makes purchase of this housing a bonanza for the person lucky enough to get in: buy it at a subsidized price, live in it, then sell it for full market in year 20. Intelligent cities don’t do it this way, they have essentially perpetual controls, 100 years or even longer, to assure the public subsidy that made these units possible remains helpful for as long as possible. But, then, as I said, “intelligent cities” do this.


Mr. Cooper doesn’t talk about this, but such owner-occupied below market housing, if produced in sufficient number, would be a huge benefit to the workforce in general, but if there were enough of it also might exert a bit of downward pressure on “the market,” which would be good for everyone needing housing. Since the powers that be understand this fact quite clearly, one can conclude the city’s dragging its feet on genuine affordable housing production is simply another favor they pay to the real estate establishment, whose self-interest is to see housing prices as high as possible.


Oh, and another thing: One of the easiest-to-provide forms of affordable housing is mobile homes, which even today remain affordable in SLO. But the city has made zero room for mobile homes in its city planning, so there will be none in the city’s expansion areas. That’s because the city serves the profit-seeking of the development establishment, not people who need housing.


We need a new mayor and a new city council.


Mr. Holly

I always have to ask the people who seek developers to sell their investments at below market value, would they sell their homes at below market value? Or, would they like to invest in these projects? The other problem you have is that when developers are seeking financing the banks balk on making loans when there is no profit.

The entire situation is a mess and new people, with experience, need to be put into place that know the housing industry and put together a program that will work. I have found that most people in government who try to make these decisions have little to no business experience and have never been held accountable for their errors.Deed restricting these homes forever is not the answer, part of home ownership is building equity in the home and moving up if one wishes.


SLO_Johnny

Let’s get one thing straight from the start, the Government doesn’t pay for anything. The TAXPAYERS pay for everything. Rent “control” or “stabilization” will cause a shortage of affordable housing because no on will build any.


There are more than $50,000 is fees and assessments on each new housing unit before even a teaspoon of dirt is dug up. That cost is passed on to the buyer. The city demands low density, open space, public trial/pathways, parks and all those costs are passed on to the buyer. The city has driven up the cost of housing. By blocking responsible development, the city is the biggest factor driving up housing costs.


The last thing we need in a new San Luis Obispo Soviet style POLITBURO central committee controlling all development so that they will have the power to control who is allowed to stay. It failed in the Soviet Union and it would fail here.


hijinks

“Rent “control” or “stabilization” will cause a shortage of affordable housing because no on will build any.” Circular thinking — Nobody’s building any today, so why the hostility to something that over time could work quite well here, as it has in many other cities. Rent control doesn’t hurt builders, it simply controls the rate of increase over time, which, since costs of building are factored into initial rents, doesn’t hurt the owner one bit, other than controlling her greed.


SLO_Johnny

As rents increase, it motivates builders to build more units…. supply and demand …. ever hear about it. So, you see, it is not a circular argument at all. Why just rent control? Lets set price controls across the economy. Let’s have the government decide the “fair” price of everything and then make sure that everyone pays their “fair share” of the taxes. We don’t know how to use our money properly so the government should take it from us and give out to the right people who should have the money; just to be “fair”.


isoslo

John, additionally every piece of material and every minute of labor that goes into the construction costs more in california due to fees, regulations and taxes that are also passed on to the consumer. If anyone truly wants to help they need to shrink government, not expand their myriad of escalating costs all in the name of helping us.


unlisted

First, rent control doesn’t apply to new construction. State law (CC 1954.52) exempts units built after February 1, 1995 from rent control. Rent control also doesn’t almost never applies to single family homes.


In addition, rent control doesn’t apply when units turn over – it’s called vacancy decontrol. When you first rent a unit that is “under” rent control, the landlord can charge whatever the market will bear. Only your rent increases will be controlled.


Mr. Holly

I almost fell of my chair when Mr. Cooper listed all of the benefits granted to developers mentioned in Paragraph 6. Please identify anyone who has received all of these benefits? The Building Code alone requires engineering standards that can not be overlooked. Fees are possibly the #1 negative impact on whatever anyone wants to call affordable. The average costs for fees, hook-ups etc. for small 2 bedroom units will usually run around $50,000.

And then if you get the government involved anyway financially the project goes to prevailing wages. If you look at the so called affordable housing projects that all of the politicians show up for their photo ops no one mentions that on the average these apartment units cost between $350,000 to $400,000 per unit, which is 2-3 times the average cost in the private sector.These costs don’t include the associated costs with all of the different governmental agencies that review these projects and over see them.

The bottom line on why developers can’t provide work force and/or affordable housing rests entirely on the shoulders of government. Until the government wants to become partners with these projects they will only spend thousands and thousands of dollars earmarked on housing to feed themselves.

How much has been budgeted to HSOC (Homeless Services Oversight Committee) to achieve their goal of doing away with homelessness in 10 years. They have about 2 years to go. What has been accomplished.


hijinks

He’s basically correct. You, like most residents, are unaware of all the public gifts our city council bestows upon the developers who finance their election. In one project that’s making its way through approvals, for example, a complex with an occupancy of 160 persons got density bonus and parking reduction to an absurd level simply by providing two (2!) “affordable” studio units. This project will get all sorts of fee reductions as well. This is a scandal unexplained to the people by our mass media, and concealed by the developers’ political patrons at city hall.


Mr. Holly

Please identify who is getting fee reductions. I have never really seen this happen. Although fee reductions as I have stated certainly would be a start. Government usually say that their budgets (salaries & benefits) will not allow for that. There are tax incentives that are given but that usually doubles or triple the costs of the project. And guess who is picking up the tab for these? We the taxpayer.


RonHolt

I’m not saying your wrong about your critiques of the current plans for increased housing but it seems to me that the solutions you suggest have just as many negatives.


Have the city itself build more low-income housing? Nothing I have seen would indicate that process wouldn’t be just as prone to corruption and inflated expenses as the current process of developers buying off politicians.


“Rent stabilization?” Look hard at where it has taken place if you think there aren’t some significant problems with that.


You also dodged the water supply issue but that is a distinct and real problem that needs to be addressed.


Maybe the best solution would be to elect politicians who aren’t in developers’ pockets and would insist on a higher ratio of truly affordable housing as part of any development deals. But that would require a much better-informed, more cynical and politically active voting public than we currently have.


shishkabob141

If Arroyo Grande doesn’t want politicians who are in developers’ pockets–don’t vote for Caren Ray for your city council.

She has a proven record of being in the pockets of Grossman, Tompkins and any other who contributes to her campaign.

They pay, she plays.


Rich in MB

Carey Ray…not again….


Rich in MB

“Work Force housing” is better known as “The Projects”.

The more Government meddles in the housing supply the more problems they create.

Let the marketplace determine the cost of housing but propping it up, giving subsidies and building “Projects” isn’t the proper roll of Government.