It’s a boom time for development in San Luis Obispo.
Nearly 3,800 homes are in various stages of review or building citywide right now, along with 78 commercial, mixed-use, hotel and parking projects that are under planning consideration or construction.
SLO officials say the trend can be attributed to high demand for housing and a ripe economy for construction after years of sluggish building activity during the recession years.
“There is a huge demand for housing,” City Manager Derek Johnson said. “In order to help meet that demand, you have to increase the housing stock. Also, the state of California is requiring us to meet new housing obligations and holding cities accountable if they don’t.”
On average, about 300 planning applications were filed per year between 2013 and 2018, according to data in the city’s General Plan, compared with about 200 per year between 2008 and 2012.
In 2018, 178 permits were issued for single-family and multi-family homes, totaling 294 residential units, and more than $100 million was invested privately in new building construction in 2018, up from $42 million in 2017, the General Plan stated.
While some residents and groups such as SLO U40 (representing residents under 40) are supportive, others contend the pace of growth will put a heavy strain on city infrastructure and overrun SLO with traffic and high-priced homes.
“You can’t build your way to affordability,” said Kathy Borland, of the community group Preserve the SLO Life, which says it is committed to maintaining SLO’s quality of life. “We planned for a diverse, healthy community, but that’s not what we’re seeing being built. The new homes going in are costing too much, many over $700,000, and we’re just adding gridlock.”
Most of the current or proposed developments are identified on a map on the city’s website under the link, “What development is happening in the city?”
New housing targeted throughout the city
An overview of major new housing developments includes:
▪ 720 homes, approved but yet to start construction, on a 150-acre Avila Ranch site, north of Buckley Road
▪ 580 homes on the San Luis Ranch property at Oceanaire Drive and Madonna Road on a 131-acre site
▪ 388 units are in the planning stages at the corner of Tank Farm and Broad Street, where two separate projects have been proposed —650 Tank Farm (249 residential units) and NWC Broad Street Mixed Use (111 assisted living units and 28 memory care beds)
▪ 304 houses at the new Righetti Ranch, currently under construction on the southeast end of town near the intersection of Orcutt and Tank Farm roads
▪ 172 homes under construction at the new West Creek site off Orcutt Road
About 40 other proposed or ongoing projects, ranging from about 10 to 90 homes, dot the city’s development map — in addition to several others of 10 or fewer houses.
SLO officials note project concepts often take years to complete depending on available funding and financing changes, some are re-imagined with adjusted plans, and some never come to fruition for various reasons.
An abandoned downtown SLO bowling alley and entertainment center proposal fell apart due to a soured relationship between the landlord and developer, for example.
“Projects have moved forward based on the continued performance of the economy,” said Michael Codron, the city’s community development director. “But we have experienced economic slowdowns in the past where they don’t move forward. Our planning adjusts to the ups and downs, and we see projects go in when the conditions are right.”
How much of the housing is affordable?
About 20 percent of constructed SLO housing over the past 15 years has included deed-restricted homes that are based on city inclusionary housing policies, Codron said. Inclusionary or affordable housing limit maximum pricing on homes to help those with lower to mid-range income levels get into the market.
Deed-restricted housing can limit homes to prices significantly lower than SLO’s typical market-rate price of $650,000 and higher that dominate the SLO market.
Under the city’s affordable housing guidelines, a family of four in the “an extremely low-income range” earning a maximum of $25,100 annually, a studio would cost $52,000 and a four-bedroom would be $101,225.
For a family of four “in the moderate income range” earning $99,850, a two-bedroom would cost $314,475 and a four-bedroom home would cost $405,000.
The demand for inclusionary homes far exceeds the supply, and nonprofit housing organizations have waiting lists for those seeking deed-restricted rentals.
Moving forward in coming years, Codron said he estimates that 15% of the new homes will be deed restricted under inclusionary housing standards.
The rest of the new homes would be at market-rate prices, which can range by size and demand.
Housing is one of SLO’s major city goals, targeting “increased production of all housing types designed to be economically accessible to the area workforce and low- and very low-income residents, through increased density and proximity to transportation corridors.”
A SLO council member’s perspective
Councilwoman Andy Pease acknowledges the City Council has some concern around the price tags of the new homes going in, emphasizing the council can’t dictate pricing. But through land-use planning and efforts to encourage smaller-sized homes, the council has done its best to reduce costs for buyers and provide more opportunities for commuters to live where they work, Pease said.
Pease said the council would like to have a steady, metered-out pace of construction, but “the economics of development is cyclical.”
“It’s a boom period right now, but trying to meter out the pace of construction is murky territory to wade into,” Pease said. “All of the development going in fits into our General Plan, and the city’s Community Development Department is keeping a close eye on the growth rate.
“We may have to delay some projects to keep within the cap.”
Pease added it also may take some “peer pressure” on the developers in regard to price setting.
“Projects like San Luis Ranch and Avila Ranch were developed with lower price ranges in mind,” Pease said. “In theory, they should be able to sell many of those in the under-$500,000 range. And unlike the Righetti project (where homes have been placed on sale starting in the $700,000s), they have locals-first and owner-occupied requirements. But it might take some peer pressure.”
Community voices of opposition
The flurry of growth doesn’t sit well with all San Luis Obispo residents.
Allan Cooper, representing the group Save Our Downtown, argues an increasing number of workers in SLO has created infrastructure problems for the city.
New employers shouldn’t come to SLO without the housing to accommodate workers, and the pace of job and housing growth should have measured pacing, Cooper said.
“I’ve been arguing for some time that the 1% commercial growth cap should be more accurately placed on the number of new workers coming into SLO, not on the percentage increase in square feet of new commercial space,” Cooper said.
The city estimates the jobs-to-housing ratio at 2.5 jobs for every one housing unit in the city (excluding Cal Poly related jobs and housing) and a total of 54,132 estimated jobs in city limits, according to the General Plan, numbers that have been questioned by SLO’s slow growth activists.
The city would like to see a ratio of around 1.5 jobs to one home. That split should be more achievable as some the larger new projects like Avila Ranch and San Luis Ranch go in over the next few years, said Tyler Corey, a SLO city planner.
Former SLO City Council candidate James Lopes cited information on the number of jobs in SLO being closer to 36,000, pulling from a San Luis Obispo Council of Governments report in 2014.
But Lopes already believes the city is too crowded with the daily influx of workers.
“We may already be past the juncture where the city can organize an effective housing development program which reduces this imbalance,” Lopes said in a letter to the city. “Job growth has already created a huge housing deficit, and the supply of commercial service land alone threatens to inundate the city and region with frustrated commuters who cannot afford to live where they work.”
Cooper also said he believes developers should pay higher costs to help fund infrastructure needs versus a “fair-share formula” used by the city to calculate infrastructure costs based on assessments of the project’s direct impact.
For example, he cited San Luis Ranch contributing $9.8 million to the future Prado Road overpass that will cost an estimated $26 million. The project will be funded from multiple sources, including taxpayer money.
Cooper and Borland also both contend new homes being built won’t produce true market-rate affordability.
“The houses being built in the first phases are mostly high-end homes,” Borland said in an email. “There is very little ‘affordable housing’ and ‘workforce housing.’ Who is going to buy these houses? The city currently has 35% owner-occupied housing, which means 65% are rentals.
“That begs the question, will many of these homes be bought by investors?”
Cooper added: “Though there are many who disparage rent control, there are also arguments that rent control, if carefully formulated, can work to stabilize housing costs without reducing the supply or quality of rental housing.”
And Borland said she believes homes are being approved without adequate environmental considerations, noting a proposal at Tank Farm and Broad in particular that she felt warranted a more comprehensive analysis for traffic and creek impacts.
“Growth needs to be phased in slowly with infrastructure keeping up with the demand,” Borland said. “Environmental impacts are of major concern as many projects are approved.”
The city’s policy limits population growth to 1% each year and forecasts buildout to a population of 57,200 with roughly 25,700 homes by the year 2035, according to the General Plan.
Commercial growth is limited to a 1% square-footage increase.
Council members such as Carlyn Christianson have long argued for new housing to help serve a high demand and reduce commuter traffic into SLO from outside communities.
“The most important thing is to have a council that says ‘yes,’” Christianson previously told The Tribune.
Christianson said the General Plan sets a pacing that is appropriate for the city, and “everything else is determined by the economy.”
“Over the past several years, we have not grown anywhere near the 1 percent per year,” Christiansaon said. “We’re not growing fast. We’re growing according to our planning. It’s working.”
Commercial space, hotels and parking garage also coming
The city’s development map lists more than 500 new hotel rooms, collectively, with most under construction or completed, such as the new 102-room La Quinta Inn on Monterey Street that was recently opened by developer Andrew Firestone’s company, StonePark Capital.
Other projects include:
▪ New parking garages: One garage with up to 445 spaces is being designed for the corner of Palm and Nipomo streets, and another in the preliminary planning stages could add 500 to 600 spaces at 1144 Higuera St.
▪ Office and commercial: A 27,000-square-foot, three-story building is under construction at the corner of Santa Rosa and Monterey, a project being led by local Nick Tompkins.. It’s set to open by the end of the year.
▪ French Hospital Expansion: More than 97,900 square feet of construction as part of a $100 million expansion will nearly double the size of French Hospital Medical Center.
▪ SLO Public Market: The 47,000-square-foot complex of artisan good shops and other businesses is set to open its first buildings in September.
▪ Downtown mixed use: An application has been submitted for a 75-foot-tall, mixed-use structure at Marsh and Chorro streets. It’s one of several mixed-use development proposals.
SLO’s plans encourage development to fill pockets in the urban core, rather than expanding development outward to open-space areas.
“Not only does it add economic value to the community, but it makes SLO a better place to live,” Codron said.
Infrastructure a critical piece
Two key planned projects to help traffic flow include the Prado Road overpass and northbound on-ramp at Highway 101 and the extension of Buckley Road to South Higuera, near the Avila Ranch project site.
Existing northbound access exists at Highway 101 and Prado, but new ramps would need to be elevated, in addition to adding a traffic signal at the ramp intersection. Southbound freeway access is envisioned for the future but won’t be part of the project, pending funding and because the traffic need isn’t as urgent for those heading south, according to city officials.
And the city has long-term plans to encourage alternative forms of transportation and improve roads, likely through a sales tax measure in 2020. The measure could also help bring to fruition new facilities, such as a new police station, widened roads and improved intersections, and new bike pathways.
The City Council will decide on whether to float the new tax for voter consideration next spring.
Johnson said those key infrastructure improvements, including $30 million in planned bike pathways that the city believes would encourage safety and more cyclists in place of drivers, likely will depend upon voter approving the sales tax increase.
“With the growth, we have to address land-use needs,” Johnson said. “People who live and work in SLO will make fewer car trips, and that will reduce traffic as commuters move into the city from surrounding communities. We believe we can reach a goal of getting people to drive about half of the time, and then bike, walk and take public forms of transportation the other half.”
Pease said the sales tax would be a good option because many out-of-town residents would pay those taxes, thus relieving the burden on city residents to cover it all in the form of a bond.
“We’re sharpening our pencils on infrastructure projects to make sure to be really responsible about how that money would be spent,” Pease said. “We don’t want anything on the list to be dreamy.”
Still, opponents of growth wonder if it will be too little, too late.
“Instead of adding new, necessary infrastructure before developments come in, we’re only being reactive, squeezing in additional traffic and turn lanes and not looking at the bigger, cumulative picture,” Borland said. “We need to make some long-term, big-picture improvements.
“If the developments want to move faster than what our infrastructure can support, then we have a problem.”