Should SLO County spend millions of dollars building affordable homes? These groups say yes

Hundreds of families in San Luis Obispo County are on waiting lists to move into low-income housing; less than a quarter of county residents can afford to buy a median-priced home; and some renters spend half their income on rent.

While county leaders have done little to address a lack of affordable housing in recent years, on Tuesday the Board of Supervisors will consider a package of potential policy changes — including a proposal from a coalition of nonprofits and industry groups that would pump millions of dollars into workforce housing, something they say is necessary for the economy.

Adopting the housing package could be a bold, aggressive move toward increasing affordability, according to Melissa James with the SLO Chamber of Commerce and Andrew Hackleman with the Home Builders Association.

“The housing affordability crisis is a countywide community challenge,” James said, speaking on behalf of the coalition that also includes the SLO Chamber, Home Builders Association, Peoples’ Self-Help Housing, Economic Vitality Corp., Habitat for Humanity, Housing Authority of San Luis Obispo, Paso Robles Housing Authority and the Housing Trust Fund.

“What we’re putting forward is much more of a comprehensive housing policy, instead of a whack-a-mole approach as we’ve been doing,” James said.

She and Hackleman say addressing affordability is essential to the region’s economy, particularly when the local economy will soon be hit by the Diablo Canyon closure.

Businesses can’t grow when workers can’t afford homes, they said, and when residents are overburdened by rent, less money is funneled back into the local economy.

Proposed solution

The coalition says the county needs to set aside between $2 million and $4 million each year for affordable housing, improve the permitting process to bring housing to market more quickly and work with local cities to create a region-wide housing plan.

That big pot of money would be leveraged to get matching funds from state or federal grants, sometimes at a ratio of five to one. Meaning the region could receive $5 to build low-income projects for every one local dollar spent.

Those working to house the poor say $2 million might not even be enough, as the demand on low-income housing is expected only to increase in the next decade.

“The truth of the matter, on the low-income side, we’re falling behind and we’re not keeping up with low-income housing and it’s getting worse and worse. If we get to $2 million, we’re holding the line. That’s what we need to ensure more people aren’t falling into the critical range,” said Michael Hopkins-Tucker, policy analyst with Peoples’ Self-Help Housing.

Where that big pot of money will come from will likely be the meat of the discussion on Tuesday.

How to raise the money

For years, supervisors have debated over an Inclusionary Housing Fee assessed on developers who don’t include low-income units in their projects.

The coalition proposes a three-year pilot pilot program to raise the money from a handful of sources. It would require the county to pony up nearly $2 million in 2019. In the subsequent years, funds could increase from adjustments to the Inclusionary Housing Fee, or revenue earned from new fees or taxes.

The Planning Department outlined four potential sources of revenue.

Those include shifting existing revenues which would require “substantial cuts to existing services or reserves” — the option favored most by the Coalition of Labor and Business — or fees on large homes, new taxes either on vacation rentals or a sales tax, or from other taxes like cannabis.

Currently, county funds come from the Inclusionary Housing program, which hasn’t generated a lot of revenue.

In a typical year, the existing program generates about $35,000 from new housing developments, or less than 1 percent of what county staff call the “$4 million funding gap.” Applying inclusionary fees to custom homes over 1,600 square feet could generate $1.6 million, or 40 percent of the gap, according to a staff report from the Planning and Building Department.

While none of the proposed changes would bring immediate relief to struggling families or single workers, backers say the actions would “represent meaningful progress on addressing housing needs for low- and middle-income populations.”

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