A new San Luis Obispo County housing policy could raise $1 million per year for affordable developments — leaders’ first step toward addressing a sizable funding gap for such projects.
The county Board of Supervisors on March 12 voted unanimously in favor of an overhaul of the inclusionary housing ordinance, which requires developers to build affordable units or pay fees that go toward their construction.
Supervisors Bruce Gibson and John Peschong worked to create the new policy with members of the Coalition of Housing Partners — a housing solutions collaborative made up of eight agencies and organizations.
The board officially approved an amended inclusionary housing ordinance the supervisors signed onto in December — aside from Lynn Compton, who was absent due to a family emergency.
The new ordinance is part of a package of funding mechanisms supervisors are exploring to help generate the $2 million to $4 million the coalition estimates is needed to develop badly needed affordable housing in the county.
The previous ordinance generated an average of $25,000 per year — the new policy could bring in closer to $1 million, according to a county staff report.
This summer, county staff will present a series of other strategies to fund affordable housing, including an affordable housing bond, a transient occupancy tax increase and a sales tax hike.
Inclusionary ordinance overhauled
The updated policy, which takes effect July 1, would require that developers make 8 percent of their units affordable or pay in-lieu fees that are tiered based on a home’s square footage.
The county then allocates the fees to organizations — such as Peoples’ Self-Help Housing — that leverage the money to generate funding for affordable housing developments.
All new homes 2,200 square feet and smaller would be exempt from the fees, which start at $8 per square foot and go up to $16 per square foot.
For example, a 3,000-square-foot home would generate $8,400 in fees under the new rate structure. The amended ordinance applies to all new houses, while the previous policy included only projects with two or more new homes.
The ordinance also requires supervisors to reconsider the ordinance in three years, at which time they could decide to repeal it if they’ve found other effective funding mechanisms.
An affordable housing compromise
Supervisors and housing advocates said they were willing to compromise on the plan in order to take the first step toward building an effective affordable housing policy for the county.
“We have a massive affordability problem,” Supervisor Adam Hill said at the meeting. “This county has not been a part of solving it.”
A 2017 nexus study examining the county’s affordable housing fee suggested exempting homes that are 1,600 square feet or smaller. However, coalition members said they wanted to avoid impacting homes of that size that could be affordable for the county’s workforce.
Residents and developers in some unincorporated North and South County areas also build bigger homes than those in San Luis Obispo, said Jim Dantona, SLO Chamber of Commerce CEO, in a Monday phone interview. He called the 2,200-square-foot exemption a “balance spot.”
“The idea is to make sure we we don’t do something with the unintended consequence of completely stymieing building throughout the county,” Dantona said.
Affordable housing advocates and home builders alike supported the amended ordinance.
“What we’re really enthusiastic about is that the board is trying to get something done on this,” said Ken Trigueiro, executive vice president of Peoples’ Self-Help Housing, on Monday.
Andrew Hackleman, Home Builders Association executive director, said he was proud of helping to push housing policy in the right direction, “especially symbolically.”
“It’s not a perfect solution, but it’s part of something that should make a difference,” he said on Monday.
Ultimately, even Compton — who’s historically opposed the inclusionary housing ordinance — voted in favor of the new policy, leading to a unanimous decision.
“This is the beginning,” said Supervisor John Peschong at the meeting. “This isn’t the end — it’s the beginning.”
The Coalition of Housing Partners is made up of the following housing organizations and agencies: Peoples’ Self-Help Housing, the Housing Authority of San Luis Obispo, the Paso Robles Housing Authority, the San Luis Obispo County Housing Trust Fund, Habitat for Humanity, the Economic Vitality Corporation the Home Builders Association of the Central Coast and the San Luis Obispo Chamber of Commerce.