A county affordable housing program used to build units for low-income families won’t be fully funded any time soon.
The San Luis Obispo County Board of Supervisors on Tuesday rejected the results of a housing study that recommended increasing and restructuring the developer fees that feed the program, known as the Inclusionary Housing Ordinance, voting 3-2 to retain the status quo.
The program, enacted in 2008, requires that developers build affordable units into their projects, pay in-lieu fees or donate land to be used for cheaper housing. By the end of 2018, the ordinance will have helped pay for 610 units of affordable housing over its 10-year life, according to the study.
Five of the county’s seven cities have versions of this ordinance — Paso Robles and Grover Beach are the only ones without such requirements.
The county’s fees — which most developers pay instead of building affordable units — were to be phased in over time and top out at $3.75 per square foot. The original schedule called for the fees to be fully phased in five years after the ordinance was adopted.
But after the Great Recession hurt the housing market, the county opted to retain the first-year fee of 75 cents per square foot for years, only raising it to $1.50 per square foot in December 2016.
The Home Builders Association of the Central Coast began lobbying to repeal the ordinance this summer, saying the county should consider other ways to pay for affordable housing, such as bond measures and special parcel and sales taxes. Developers say the additional fees add to the cost of new homes, unfairly burdening buyers.
A builder constructing a 2,100-square-foot, $550,000 house in a county development would currently pay a $3,150 fee, about 0.6 percent of the home’s value.
“We don’t want the burden solely on developers,” said Andrew Hackleman, executive director of the Home Builders Association, at the meeting.
Housing study recommendations
The program requires the county to conduct a study every five years to assess its impact and the state of housing in the county.
The 2017 study recommended the county eliminate the fee on modest-sized units up to 1,600 square feet to encourage developers to build smaller, more affordable homes. It also suggested adding a tiered rate structure, so higher fees would be attached to bigger homes.
The study recommended making the phased fee increases automatic, so supervisors wouldn’t be required to consider a new rate hike every year.
Hackleman said the Home Builders Association now sees adding amendments to the program, such as the tiered rate structure, as an alternative to repealing it entirely.
Melissa James, San Luis Obispo Chamber of Commerce director of economic initiatives and regional advocacy, said the Chamber did not originally support the ordinance, but is in favor of seeing it continue until a broader funding stream is identified.
John Fowler, president of the nonprofit Peoples’ Self-Help Housing, said he supported the changes the study recommended.
“When you get the community coming together for a fix that helps everyone, it’s a no-brainer,” he said.
Supervisors split on affordable housing
But prior to the supervisors’ vote, the board’s conservative and liberal factions could not agree on a strategy to move forward. Supervisors Lynn Compton and Debbie Arnold called the fee a “tax” and said they were concerned about passing on fees to homebuyers.
“You are burdening a small group,” Compton said. “They’re passing that tax on.”
Supervisor Bruce Gibson said he wanted to send the proposed amendments to staff, so the board could bring them back for consideration in the spring. Some of the changes would have required additional hearings, which would’ve given the public a chance to provide input.
“We can’t just let this sit,” he said. “We need to move forward.”
Ultimately, Peschong, Arnold and Compton voted to keep the fee at its current level and make no changes to the ordinance, a move that Gibson and Supervisor Adam Hill voted against.
Correction: This story has been updated with the correct spelling of Andrew Hackleman’s last name and a clarification to the Home Builders Association of the Central Coast’s current position on the county’s Inclusionary Housing Ordinance.