After years of stalemate about how to ease the affordable housing crisis in San Luis Obispo County, the Board of Supervisors on Tuesday compromised on a historic, bipartisan plan that will generate millions of dollars to build workforce homes.
The new housing deal was recommended by a coalition of community organizations as a way to generate more homes for multiple levels of incomes, specifically low-income and working families in a county where second homes have made up a bulk of construction in recent decades.
The plan calls for fees on new homes over 2,200 square feet to help fund low-income housing — a reform to the home-builder fees that conservatives dislike — and to reform the environmental permitting process to streamline projects and get more housing to market — a precarious proposal for environmentalists.
A new region-wide infrastructure and housing plan was also built in to the deal; supervisors directed staff to work with city officials and other community members to identify infrastructure projects that will sustain a growing population.
“I don’t think there is anything more important to our economic development than to address the very serious housing issues we have,” District 3 Supervisor Adam Hill said before the vote. “If we can move forward today, we’ll have made serious progress forward to address this in a way that we have to.”
Supervisors Debbie Arnold, Bruce Gibson, Adam Hill and John Peschong all signed on with enthusiasm. Supervisor Lynn Compton was absent due to a family illness.
A landmark agreement
The most tangible of the goals set by the board is a three-year pilot program to set aside between $2 million and $4 million a year in local dollars that can be leveraged to win outside funding for construction of low-income and worksforce housing. Local nonprofits say they can often pull in $5 for every one local dollar contributed.
Where those local dollars come from is yet to be determined, but it will likely be a combination of revenue generated by new fees applied to builders of large homes, as well as a potential increase in taxes or fees applied to vacation rentals and hotel rooms.
The policy recommendations emerged from a coalition of organizations that have sometimes been at odds when lobbying, including the Home Builders Association and Peoples’ Self-Help Housing. Representatives of eight local organizations negotiated to find a path forward that the politically divided county board would accept. Supervisors John Peschong and Bruce Gibson worked with the group.
“The bold and bipartisan leadership shown by the Board of Supervisors today marks a significant moment in our region’s history. Their collaborative action to meet the magnitude of the housing challenges we face will undoubtedly make a significant impact on the lives of many of our community’s residents,” said Melissa James of the San Luis Obispo Chamber of Commerce and spokesperson for the Housing Coalition.
The board in coming months will discuss options for creating the new revenue, including:
- A rental impact fee of $2.73 per night applied to 1,377 vacation rentals in unincorporated areas of the county, which could generate $675,000 to $920,000 annually.
- An increase to the transient occupancy tax rate by 1 percent that could generate $1.06 million annually.
- A 0.25 percent increase in sales tax that would generate $2.5 million annually.
- A $7,000 property tax surcharge for second homes that could generate $648,000 annually.
- An affordable housing bond.
Much work ahead
The plan is a vision that includes a package of policies. Each policy change will have to work its way through a process, and the details must be approved by a board majority to be enacted. Any new tax would have to be approved by voters.
“We know what the problem is. We’re short on housing by the millions in our state, and we’re short by thousands if not tens of thousands now and in the future, here locally. It’s the most important issue in our community and certainly in our time,” Hill said.
Three out of every four people in the county can’t afford the median home price. And in the last four years, only 24 percent of the projected housing needs for the community have been built, James said.
“But today is not a study session on the problem,” James said to the board. “Today is about taking action.”
The need for relief is felt by thousands of residents in the coastal community where housing prices have soared and wages have failed to keep up, a scenario replicated across the state of California.
The housing shortage is seen as an economic crisis by some, including by businesses unable to attract workers because they can’t afford to live here. Meanwhile, those who can’t afford to buy are over-burdened by rent, dolling out their cash to landlords with fewer dollars left to spend at local businesses.
A crushing problem
In general, those who spoke during public comment offered overwhelming support with a hint of desperation that action is long-due.
A resident of Los Osos offered an anecdote to describe the local woes.
Anneka Scranton said in her neighborhood workers are building a 6,000-square-foot second home for a wealthy Ventura County resident. Neighbors have come to know the workers who come daily to build the home. Many of them live in their cars or trucks. Others live in hotels, including up to dozen to a room in Cambria.
“It’s painful to see those people build a home that will hardly be used, and not have to pay any fees,” Scranton said.
If board members follow through their on new housing deal and adopt the agreed-upon policies, fees on a new home that size could be $60,800, based on Tribune calculations of a draft proposed fee structure.
The new housing deal is the only major action the board has taken on affordable housing since 2008, when it adopted the Inclusionary Housing Fee, also known as Title 29. The program required home builders to include low-income units or pay a fee that goes into an affordable housing fund.
That policy wasn’t fully enacted during the recession, and the board in subsequent years has been unwilling to raise the fee, making the funds it generates inadequate, according to housing advocates.
The new deal calls for a fee per square-foot on all new homes with an exemption for the first 2,200 square feet.
The new housing deal is “a good start,” said the county’s top administrator, Wade Horton. “Gibson and Peschong did a good job working together and creating a compromise.”
Peschong said it was essential that the deal be a “community-wide initiative,” to be successful. To him, the discussion “is about how do we got more workforce housing.” Similarly, Gibson said, it’s the “question of housing the next generation.”
“It’s a crushing load. It’s a big mountain to climb for the next generation,” Gibson said in a phone interview with The Tribune.
The Housing Coalition is made up of Peoples’ Self-Help Housing, the Housing Authority of San Luis Obispo (HASLO), the Paso Robles Housing Authority, the San Luis Obispo County Housing Trust Fund, Habitat for Humanity, the Economic Vitality Corp., the Home Builders Association and the San Luis Obispo Chamber of Commerce.
Correction: A chart of potential taxes and fees in an earlier version of this story contained an error and was updated Dec. 5. An affordable housing bond could raise up to $140 million.