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Larry Barnett
Public Citizen
Larry Barnett

How to create affordable housing

I'm referring to government-regulated affordable housing -- deed restricted to keep it affordable for 55 years, rent controlled and appreciation-limited, subject to income verification. Large projects of regulated Affordable Housing are rarely built in Sonoma, and the reasons are all about money.

When the State of California eliminated funding for Redevelopment Agencies in 2012, the 20% set-aside in that funding for the creation of Affordable Housing disappeared. When it was available, the 20% set-aside was used to issue bonds for housing development; the stability of the property tax revenues from which funding was taken made bond issuance a viable option. Bonds of 20-30 years, paid-off using ongoing tax revenues, provided millions of dollars to subsidize non-profit homebuilder projects or the purchase of land that was donated to facilitate a project.

Unfortunately, the City of Sonoma did nothing to replace the lost Redevelopment Agency revenues until recently. Had the TOT tax been raised, housing impact fees levied, and other revenue-raising avenues been implemented in 2013, today the City of Sonoma would have millions to use for low-income Affordable Housing. This is important because without government subsidy, significant numbers of Affordable Housing does not and will not get built. A higher TOT and impact fees are now being imposed, but it will take many years to accumulate significant funding.

Some argue that the problem is one of land cost; the high cost of land in the city and valley does pose a hurdle to the creation of low-income housing. Similarly, the high cost of construction, now pegged at well over $500/square foot, has raised the bar. This is why government subsidy is necessary, and always has been. All real estate projects need to pencil-out for investors over a 10-year period; lower-priced housing produces a lower return on investment, and real estate investors, non-profits and otherwise, will not wait 20 or 30 years to get a sufficient return. It's the reality of housing economics in a capitalist system, unfortunately.

Others aver that neighbors and NIMBYS object to higher-density housing; higher-density is one way of lowering development costs. But the evidence is that approval of such project applications overcomes such objections. The City of Sonoma, the Planning Commission and the City Council have all supported higher-density projects, and if proposed and funded, the city will continue to do so. This sustains a commitment to the creation of Affordable Housing that has been city policy for the past 30 years, at least. What's changed is the availability of money.

The Urban Growth Boundary (UGB) limits the expansion of the city limits, but makes an exception for adding land for low and very-low income housing. In fact, its the only type of housing an expansion of the UGB will allow. Without government funding however, even this exception will not be utilized; again, whether it's a non-profit or profit-based home builder, a project must pencil-out or it won't happen.

Arguments that Affordable Housing creation in Sonoma is governed by issues of class, segregation, bigotry and greed are wrong; history shows that when government funding is available applications are approved. The problem is a lack of applications, and that's due to a shortage of government money. When it comes to the lack of Affordable Housing, it's not NIMBYS or class-warfare at work, it's good old-fashioned capitalist economics.

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