It’s time to unfreeze SLO County’s affordable housing fee

On Tuesday, the San Luis Obispo County Board of Supervisors will once again consider increasing the affordable housing fee applied to new residential and commercial construction — a fee that’s been frozen for years.

An increase is overdue. The fee is an effective way to generate funds for affordable housing projects for low-income families, and an increase could net hundreds of additional units.

The fee — set at 75 cents per square foot for residential construction — hasn’t been raised since the county’s inclusionary housing ordinance passed in 2008, even though the original intent was to gradually increase it over five years. The schedule was derailed by the Great Recession, and supervisors were reluctant to further burden an industry already hard hit by the economic downturn, which made sense at the time.

Yet here we are, eight years into the program. Residential construction has picked up, housing prices are escalating, and young people are once again wondering whether they’ll ever be able to afford to buy here. Many can’t even afford to rent.

County supervisors aren’t ignoring the crisis. They recently adopted a new workforce housing program aimed at making homeownership more attainable for middle-income buyers. But that won’t help families in the low- and very-low-income categories.

Inclusionary housing programs — which typically require developers to either pay a fee or include some affordable homes in their projects — have proven to be one of the surest ways to increase the supply of low-cost housing, especially because fees can be leveraged to attract other financing.

In the city of San Luis Obispo, $8.7 million in fees have been collected since 1999 and about 500 housing units have been built, either through the use of the fees or by developers who opted to include affordable homes in their projects.

By comparison, the county’s program has helped support construction of 242 affordable units.

As for fees, the county has been averaging between $50,000 and $80,000 per year, though this year it collected $614,531 from the 90-unit Monarch Dunes project in the South County.

The county needs to catch up, and it needs to do so now.

We’ve already seen what happens when too many people are priced out of the market. It becomes harder to attract employees. Young professionals leave the area. Entire businesses may even pick up and move. (Remember Ernie Ball, the guitar manufacturer that moved most of its operations to Palm Springs on account of the high cost of housing here?)

We strongly urge the board to increase the fee to at least the second of five tiers. For a 2,100-square-foot residence, that would amount to $3,150, compared with the current fee of $1,575.

Even with the increase, fees still would be lower than what many other jurisdictions charge.

Keep in mind, too, that local home builders were involved in drafting the fee ordinance and ultimately supported its 2008 adoption.

There are other ways to encourage affordable housing construction and, by all means, the county should pursue those. Zone more land for housing. Cut red tape. Offer incentives, such as density bonuses, to developers. But those options often take time to implement and can be derailed by neighborhood opposition.

Inclusionary housing programs have a track record of getting homes built — but they aren’t effective if fees are set too low.

We urge the Board of Supervisors to have the political will to tackle the affordable housing shortage by getting the inclusionary housing program back on track.

This story was originally published December 3, 2016 at 8:51 PM with the headline "It’s time to unfreeze SLO County’s affordable housing fee."