May 29, 2018
By John Lowry, Housing Opportunities
While there is a widespread understanding that our housing situation is becoming increasingly desperate, some local public policy seems to be turning away from low and very low income housing and implying that the problem that can be addressed by expanding the supply of market rate rental housing and accessory dwelling units (ADUs).
While any increase in supply does remove some of the upward pressure on rents and prices, no amount of supply will provide any new housing for lower income households because development costs increasingly exceed income growth for lower income people. And the amount of new building needed to push down the value of current housing stock to the point that it would become low income affordable would be unrealistically large, particularly with limited supply of buildable land and other costly constraints placed on housing development.
With regard to ADUs, there is no reason to believe that rents will be any lower than market rate rentals. They may even be seen as more desirable than apartments with higher rents.
As for opportunities for moderate income households, it seems that access to homeownership, most likely in the form of town homes and condominiums should be a priority. Homeownership provides greater personal autonomy and choice. And it provides a path for asset growth, which has been the basis of a middle class in the USA and around the world. The situation where you need to have an income well over the median income to own a home is clearly undesirable. Public policy should be crafted to expand ownership opportunities.
This is not to imply that the development of market rate rental housing or ADUs is a bad thing. They should be encouraged through the relaxation of constraints and faster entitlement and plan check processes, but to see them as the solutions to our affordable housing dilemma is a mistake.
Of course some low income affordable rental housing can be produced as a component market rate rental housing development where government has provided a benefit such as in the sale of public land to developers. But in these projects the numbers of affordable units is small in relation to the total number of units produced, and the variety of levels of affordability is generally limited.
The alternative is a greater policy focus on low income affordable rental housing. While these developments could be combined with market rate rentals or homeownership on the same site, the proportion of affordable apartments, with opportunities raging from 30% to 80% of median income should be a policy priority. This housing could also include supportive housing and housing that could be available to homeless persons.
Of course this type of housing can support only a modest level of mortgage financing, so most of the costs need to be paid from direct or indirect subsidy sources. However, Sonoma County has had a history of success in obtaining these resources based on the commitment of local governments and the available development capacity. Burbank Housing, based in Sonoma County, has been the largest single producer, with over 2500 low income affordable apartments, but other Bay Area regional nonprofits have produced significant low income affordable rental housing as well.
Additionally, for profit developers using many of the same resources, including low income housing tax credits, have produced long term rent restricted housing in Sonoma County. On a per capita basis Sonoma is among the most successful counties in the state in providing affordable rental housing.
For example, some sites will not be eligible for low income housing tax credits based on insufficient proximity to a variety of community services including shopping, schools, medical facilities, employment and public transportation. Sites with proximities to these amenities should be given serious consideration for low income affordable housing. Another state program targets significant funding resources for developments in proximity to public transit.
One of the key factors in successfully obtaining a commitment of low income housing tax credits, which can provide 60% of development funding, is the degree to which a development has financial support from other public sources. It is important that local governments strategically plan for the most effective use of their housing resources.
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