On Tuesday, the San Luis Obispo County Board of Supervisors will decide between increasing the inclusionary housing fee or taking yet more inaction at the expense of our most vulnerable residents. The inclusionary housing fee is an important resource that helps hundreds of hardworking residents and leverages millions of dollars of both public and private investment through a relatively small developer fee.
It is no surprise that housing affordability is a growing problem in our community. A well-publicized article by RealtyTrac recently declared San Luis Obispo County to be the sixth most unaffordable place to live in the United States. Additionally, according to data collected by the National Low Income Housing Coalition, the average employee earning the mean hourly renter wage of $12.64 would need to work 61 hours per week to afford a one-bedroom apartment at the fair market rent of $1,009 per month. That work week is even longer for employees earning minimum wage or in need of more than one bedroom.
On Nov. 22, the Board of Supervisors adopted a workforce housing ordinance that acknowledges the lack of affordable housing for our middle class. Although it is certainly important to consider the repercussions of the expensive housing market on white-collar workers, we must not simultaneously neglect low-income families, veterans, seniors and other special needs groups that remain the most impacted by volatile rental and for-sale home prices.
Since the implementation of the inclusionary housing fee in 2012 at 20 percent of its fully committed amount, the county has helped finance construction of 334 units for low-income households. Although it is difficult to predict how many more units and jobs could have been created if the inclusionary fee had been raised to its intended amount, any new development created for struggling low-income people helps us come closer to meeting the overwhelming demand in our community.
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It is important to also note the role of local funding as an important resource for leveraging other public sources and private equity through California’s highly competitive low-income housing tax credits. A successful bipartisan product of Ronald Reagan’s Tax Reform Act of 1986, the program remains the most effective producer of affordable housing to date, by far.
With only a small contribution from local jurisdictions, affordable housing developers have the ability to literally turn thousands of dollars into millions. In fact, it is not uncommon to leverage $10 in private equity for every public dollar committed. It’s a win-win-win solution that allows the county to receive a high return on investment, stimulates the local economy by bringing in private capital as well as jobs, and, most importantly, provides much-needed stability for severely cost-burdened households.
Although many private developers argue that fees create additional costs that stifle growth, there is no substantive evidence linking the county’s low level of housing production to the inclusionary housing fee, which remains relatively low when compared with other development fees and costs. As a matter of fact, since the introduction of the inclusionary housing fee in 2012, interest in new residential construction in the county has remained at its highest since the Great Recession. The same phenomenon is evident in the city of San Luis Obispo (which utilizes a fully implemented inclusionary housing fee), where the city is inundated with a record number of building applications.
This begs the question: Does the board’s continued rejection of an increase to the inclusionary housing fee serve our community, or does it serve private developers?
On Tuesday, we hope the Board of Supervisors will make the right decision and support access to safe, stable and affordable housing for the most vulnerable members of our community.
John Fowler is president and CEO of Peoples’ Self-Help Housing.