Affordable housing dominates Santa Rosa residential debate

April 19, 2009

Affordable housing dominates Santa Rosa residential debate

Subheading

Mike McCoy

Santa Rosa has 10 weeks to adopt a policy shaping residential development for the next 26 years — a future clouded by competing forces.

The flashpoint of the public policy debate is a tug-of-war over how to provide low-income housing, where to provide it and how to finance it.

Should it continue to be built primarily as larger multi-family complexes on the city’s west side? Or should units be required of all developments and thus be sprinkled throughout the city?

“That is at the heart of the issues being debated,” said Advanced Planning Director Wayne Goldberg.

The controversy, and other housing issues, currently are being played out in a series of Planning Commission hearings on the city’s updated general plan, a document that serves as a blueprint for how the city should develop through the year 2035.

The next public hearing by the commission will be at 4 p.m. Thursday in the City Council chambers at city hall.

The general plan revision calls for a more urban-looking city of 233,520 residents based on projections of 24,000 new houses, apartments and condominiums. The current general plan predicts a city population reaching 195,300 by the year 2020.

Unlike past revisions, which covered a range of issues from land use and transportation to growth management and arts and culture, this one largely focuses on housing.

The policy framework, called the housing element of the general plan, by law must be updated every five years. Cities and counties must show how they will house their fair share of the state’s growing population. They also are required to establish policies to spur development that can accommodate all economic segments, from very-low-income families to those with higher incomes.

The revised plan, 18 months in the making, was unveiled Jan. 5 and is scheduled to reach the City Council for review and adoption June 2, in time to meet the state-imposed adoption deadline of June 30.

So far, the debate over the revised housing element has been contentious. Supporters contend the proposal will result in low-income housing being built throughout the city, instead of the predominantly on the less-affluent west side of town. And they’d like to see the percentages of lower-income housing required to be built by private developers increased.

“Santa Rosa has historically and disproportionately located lower-income housing on the west side of town,” said Daisy Pistey-Lyhne, local field representative for the Greenbelt Alliance.

But opponents of the proposal say the changes will result in fewer units being built for the poorest of low-income families and that new proposals to help fund those units could hurt the city’s economic recovery.

“That’s not their (supporters) intention,” said John Lowry, executive director for Burbank Housing Development Corp., the county’s largest nonprofit, low-income housing developer, “but that will be the unintended consequence.”

Traditionally, Santa Rosa has relied on two methods to help meet low-income housing quotas passed down by the state.

One requires developers of projects larger than 15 acres to set aside 15 percent of the residences for low-income residents. However, few of those inclusive projects were built because builders kept their developments under 15 acres in size.

For projects of less than 15 acres, builders are required to pay an affordable housing fee based on the size of each residential unit being built. A builder of a 910-square-foot residence pays $91, while a home of 4,500 square feet or more carries a fee of $38,430.

Those fees raised more than $20 million through 2007, money the city used to help nonprofit developers build nearly 1,200 units of subsidized rental housing affordable to low- and very-low-income families.

But critics contend that method largely has produced large-scale housing projects that can potentially contribute to a ghetto-like feel.

“No one wants to see concentrated poverty,” Pistey-Lyhne said.

She said her organization and others support the proposed change that would require developers to finance their own construction of low-income housing within their projects, regardless of acreage.

She said that would guarantee lower-income housing is spread throughout the city “and ensure we are not gentrifying parts of Santa Rosa,” she said.

A survey of low-income developments built in Santa Rosa indicates nearly all the 1,200 units built with with the aid of the fee were located west of Highway 101, where land costs are considerably cheaper.

Under the proposal, the decision whether developers would have to build lower-income units on-site would depend on the number of residential units planned, regardless of acreage.

Senior planner Lisa Krantz said the number that would trigger on-site development in lieu of charging the affordable housing fees has not been identified.

The push to have developers build rather than pay the fees is perplexing to Keith Woods, executive director of the North Coast Builders Exchange.

“I can’t figure out why they are so anti-fee unless they think developers are trying to get out of their responsibilities,” he said. “You get more bang for you buck with the fees and there are groups that can do more with those fees than developers can,” Woods said.

Goldberg and Lowry say that’s generally true.

Goldberg, the city advanced planner, said an analysis of the proposal indicates either the on-site development requirement or the payment of in-lieu fees could have resulted in 1,400 units of low-income housing being built in Santa Rosa over a recent 10-year period.

But Goldberg said the analysis showed almost none of the developer-built units would have been affordable to very-low-income families because of the greater subsidies they require.

Goldberg said builders must rely on the profits from the other units within their subdivisions to finance low-income units, and the very-low-income units require greater subsidies to cover construction costs because of the lower rents those residents are charged.

David Gouin, the city’s economic development and housing director, said the subsidy required to build a low-income unit ranges from $50,000 to $70,000; for a very-low-income unit, it can be up to and up to $100,000

But Gouin said nonprofit builders have an additional advantage over private ones — easier access to tax credits and state and federal housing funds that can increase the amount of subsidy they can pour into a project.

“Those fees are the bread-and-butter to reaching the needs of the very-low-income targets,” Lowry said.

An equally controversial counterpart to how and where to build lower-income housing, is a housing element recommendation on how to fund it.

The draft calls for the elimination of exemptions from low-income housing and fee requirements for developers who build mixed-use projects — those that provide residential units as part of a commercial, retail or industrial project.

That mixed-use exemption was largely developed to encourage developers to build downtown and along the city’s Railroad Square transit corridor, where thousands of new homes and retail development are planned.

There is some concern (the added fee) would make those projects infeasible,” Goldberg said.

Chris Lynch, vice president of the Santa Rosa Chamber of Commerce, said his organization worries that eliminating the exemption could have an impact on jobs that would also be developed as part of a mixed-use project.

“Our attitude is if we are in the deepest recession since the Great Depression, we want zero job loss,” he said.

Pistey-Lyhne said there are other ways to help fund low-income housing. “We don’t expect private developers to take on the entire burden,” she said.

Among the possibilities she cited are redirecting more of the tax increment money raised by the city’s Redevelopment Agency and implementing a commercial linkage fee, a move rejected by the City Council several years ago.

Goldberg said the commercial linkage fee, which places a per-square-foot charge on commercial and industrial development, is not part of the housing element update, although some groups are pushing for it to be added.

The County of Sonoma and cities of Rohnert Park, Petaluma and Sebastopol use such fees to subsidize low-income residential development.

The county’s fees range from $2.26 to $3.90 a square foot, while Rohnert Park’s fees range from 69 cents to $1.19 per square foot.

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