A Way to Increase the Supply of Affordable Housing
A Mailbox and Roses in a Petaluma Neighborhood
The main reason we don’t have more affordable housing in my opinion is because of the complicated way we go about it. Typically, “affordable housing” is built by a nonprofit builder who seeks multi-million-dollar grants from various public sources, as well as tax credits. It is very expensive to create “affordable housing” in California.
The people who would move into these units must meet certain income requirements, or job status requirements, and you can easily get hundreds of people applying for dozens of “affordable housing” slots. The process is slow, expensive, and unequal in terms of who it helps.
An example of this is “Meridian at Corona Station”. This is an affordable housing development that will create 131 affordable housing units for people that make between 20% and 60% of the area median income (AMI) at the future Corona Train Station. If you make more or less money, or you don’t meet other criteria, you are not eligible to rent a home there. Meridian received a $20 million grant from the state of California, and they will also receive around $40 million in tax credits to create a $87 million dollar housing project. The subsidy from taxpayers for each unit built here will be over $450,000. This is very expensive “affordable housing”.
How did Our Grandparents do it?
We didn’t have nonprofits create affordable housing in the old days. Builders would just build apartments, boarding houses, or residential hotels, and people could choose to live in these inexpensive types of housing. If you look around the old westside of Petaluma, you will see many beautiful duplexes, fourplexes, and small apartment buildings sprinkled among single family homes. In many cases, you wouldn’t even notice these multi-family residential units without looking closely.
Why can’t we do that now?
To sum it up, we penalize the construction of small affordable housing units through “impact fees”. These are fees charged by local governments to recoup some of the infrastructure costs associated with new buildings. With the advent of Proposition 13, California cities charge particularly high impact fees for new construction.
This fee structure is horrible when it comes to small housing units. In Petaluma, impact fees for residential buildings are not based on square footage, they are by unit. There is a rate for single family residential, and a rate for multi-family residential units. The rate for multi-family homes is about $36,400 per unit, regardless of its size.
How do Impact Fees discourage Affordable Housing?
Let’s say I want to create 4,000 square feet of housing. If I build two townhomes that are 2,000 square feet as a duplex with a two-car garage for each unit, I will create 4,000 square feet of living space, and I would pay about $72,800 in impact fees. This is the fee I would pay before I hammered in a single nail.
If I want to create affordable apartments to fulfill a desperate need among young people, people who are downsizing, or low-wage workers, it will cost me dearly. For instance, a 3-story building near the downtown with ten 400 square foot condos and no off-street parking (an urbanist’s dream) would cost me $36,400 in impact fees per unit, for a total of $364,000. Because I am building 5 or more units, I must pay “In Lieu of” fees of $10.12 per square/foot for “affordable housing”, this adds another $40,480 in impact fees. So, the total I would have to pay to the City of Petaluma for the privilege of building 10 small affordable units without subsidies would come to over $400,000 before I nailed in a single board.
I Have a Proposal to Change This.
Before I suggest my solution, let me quote one of my opponents, Brian Barnacle, about my proposal. On his Facebook page he posted the following:
“Lance’s marquee housing policy was reducing fees for affordable housing. I had to remind him that we’ve already waived fees for affordable housing and don’t need to do it twice.
My opponents are really good at opposing things but today made clear that they are offering very little in terms of vision, ideas, and policy substance.”
Brian completely misunderstands what I am proposing, he thinks I am referring to the complicated nonprofit structure that creates $664,000 housing units, with $458,000 in taxpayer subsidies for each unit, for a select few people. I am not talking about that system at all.
I am talking about how we penalize builders who want to build affordable housing units for the open market. When I talk about “affordable housing”, I am talking about housing that is affordable, not a system that relies on massive taxpayer subsidies and a lottery system that picks who can live in a certain place.
What is my proposal?
It’s simple. Adjust impact fees for smaller housing units so that they are the most profitable type of housing to building in Petaluma.
For small housing units, I would cut the impact fee in the case I just mentioned by 90%, and there would be no “In Lieu of” fees tacked on for “affordable housing” if the builder is already creating affordable housing units. So, the 3-story downtown building with 10 condos would have an impact fee of $36,400, not over $400,000.
You might say, aren’t we subsidizing these condos if we do this? Yes, we are, and we are also building 10 times the number of affordable units at a cheaper cost to the taxpayers than one unit of “affordable housing” under the current system.
The M Group themselves mentioned this problem on page 21 of their 300+ page 2023-2031 Housing Element Report that was approved in March 2023. They state the following:
Program 8: Development Fees
The City’s development impact fees are established on a per-unit basis without consideration of unit size. This fee structure is not conducive to promoting the development of a range of unit sizes, particularly smaller units. The City will review and revise its fee structure to encourage a range of unit sizes and to facilitate the development of affordable housing.
They then make several recommendations (including some similar to mine).
Conclusion
I think this adjustment in impact fees will noticeably increase the supply of affordable housing in Petaluma. Let’s not have people sign up for lists and have to prove their income level or job status in order to find an affordable place to live.
The current system is not working.
Your Vote Matters!
Lance
An Endorsement from David Keller
former Petaluma City Council member & environmentalist
“I’ve decided to formally endorse you for Council.
You have demonstrated your sincere alignment to values and principles important not just for me, but for the health and welfare of our city.
Your commitment to broadly engage our citizens and stakeholders in important decisions is a breath of fresh air.
Your dedication to support and defend our historic downtown from careless and rushed proposals is welcome.
Your thoughtful consideration of issues and challenges facing our city and region is greatly appreciated.
All my best wishes in this campaign.”
David Keller
Former City Council member
To help spread the message of this campaign, consider getting a yard sign and/or making a donation. I am running against two incumbents simultaneously, and changing how our city is run isn’t easy.