SLO County supervisors OK affordable housing incentive program. What does it do?
A new program that will give developers incentives for building affordable housing in the unincorporated parts of San Luis Obispo County has received final approval from the county Board of Supervisors.
At its Tuesday meeting, the board voted to approve its new Regional Housing Incentive Program, amending the inland Land Use Ordinance to loosen some building code restrictions for developers who build affordable units.
Developers looking to make use of the program’s benefits can contribute to affordable housing production by either including affordable units in new multifamily builds from the start, or by giving money to the county’s affordable housing fund in exchange for exclusive benefits.
After the ordinance to adopt the program was approved 4-1 in September, the final approval of the program received unanimous support from the Supervisors on Tuesday.
District 2 Supervisor Bruce Gibson, who cast the sole “no” vote the last time the board discussed the program, maintained his criticism of the program but voted to approve the program anyway.
“As I indicated in the previous discussion, I look at the establishment of this incentive program, and my conclusion is that it’s unlikely to accomplish much, as the staff report indicated,” Gibson said. “It’s targeting only to raise about a third, or less than a third, of the funds we need to address the minimum target for producing affordable housing in this county.”
How does incentive program work?
Under the new incentive program, developers can choose to earn “incentive points” by either voluntarily building more affordable housing units into their developments or by contributing in-lieu fees to the county’s affordable housing fund.
For every affordable unit constructed in a multifamily project, a developer can earn two incentive points.
A developer can also earn one incentive point for every $30,000 in in-lieu fees contributed to the county’s affordable housing fund, though the amount of money contributed per point may be subject to change by the Board of Supervisors.
Those in-lieu fees will then be redistributed to local affordable housing nonprofits by the Department of Social Services, according to the staff report. Regardless of how a developer earns those incentive points, they can be spent on a variety of exceptions to existing housing production regulations, with incentives for parking, design standards, density, floor space and land uses, according to the staff report.
The first category of incentives would allow developers to spend an incentive point to waive requirements for commercial use or affordable housing that would be required for a project on land zoned under Option Pending, Commercial Retail and Commercial Service, according to the staff report.
Incentive Category B allows for developers to either exceed maximum residential density or maximum floor area guidelines, according to the staff report.
A developer can spend anywhere from one to six incentive points to get exceptions for additional units, with one point worth two additional units per acre and six points netting up to 12 additional units per acre.
A developer who wants to exceed the maximum floor area typically allowed can spend one or two points to raise the level of intensity — in this case, the percentage of a parcel that will be covered by floor area — of a building plan, while spending three to six points waives the maximum floor area entirely.
Meanwhile, Incentive Category C allows developers to reduce minimum off-street parking, with the number of points spent dictating how much parking will be required, according to the staff report.
One point waives the minimum requirement for guest parking, while two points waive the guest parking minimum and lower the parking requirement by 0.25 parking spaces per unit and three points lower the parking requirement by 0.5 parking spaces per unit.
Normally, under the updated baseline parking requirements, a developer needs to build one parking space for each one-bedroom unit, 1.5 spaces for two- and three-bedroom units and two spaces for each four-bedroom unit.
Finally, Incentive Category D would allow developers to exceed maximum height guidelines in several ways. A developer can spend one incentive point to get a 5-foot increase in maximum height, two points for a 10-foot increase, three points for a 15-foot increase or four points for a 20-foot increase, exceeding the normal baseline of 40 or 45 feet typical to most types of commercial or residential zoning.
It also allows developers to spend one point to halve the baseline setback requirement for the front of buildings of 20 feet or side and rear setbacks of 10 feet, according to the staff report. Developers can also reduce the minimum amount of open space required by either 5% for one point or 10% for two to four points.
All of the incentives that a developer can earn can also be stacked with the state’s density bonus program, which allows some multifamily development to pack more units into a lot by accomplishing certain affordability requirements, according to the staff report. In total, the county hopes to generate close to a half-million dollars each year from in-lieu fees and related funds, which would go into its Regional housing Fund.
A step, not a solution
While Gibson continued to express concerns that any of these incentives can amount to an actual dent in San Luis Obispo County’s affordable housing gap, others were more optimistic about its downstream effects.
Production of low- and very low-income homes — a category in which San Luis Obispo County is woefully behind — has proven to be a consistent issue under the current 2019-28 Regional Housing Needs Allocation Plan, which calls the approval of a total of 3,256 homes in the county’s unincorporated communities.
Between 2019 and 2024, San Luis Obispo County approved permits for a whopping 83% of the required 1,365 above-moderate-income homes it was required to build — nearly double what it had permitted for the moderate- and low-income brackets, according to data provided by the county.
In that time, the county has only permitted 1% of the required 801 homes for very low-income households.
Board Chair and District 3 Supervisor Dawn Ortiz-Legg said the program is a first attempt at providing incentives to developers to accomplish the county’s housing goals, but not the last.
“It is not established to raise all of the money that’s needed to build affordable housing, because that’s a quite a big, heavy lift,” Ortiz-Legg said. “It is one of the tools in the toolbox.”
Ortiz-Legg said she hopes that the funds derived from the program — estimated at around $450,000 each year — will help developers such as People’s Self-Help Housing get more projects across the finish line while boosting multifamily housing options for county residents.
Going forward, the county must follow this initial foray into incentivizing affordable housing with more incentives and more streamlining of the development process if it wants to make good on Gibson’s concerns that the program doesn’t do enough to address the shortage, Ortiz-Legg said.
“It isn’t perfect — we’re going to be able to review it in a year,” Ortiz-Legg said. “We’ll see how it works, but I’m very pleased that we’re at this point, that we’re moving quickly to create incentives.”
