Home Builders Association doesn’t like SLO County’s affordable housing fee. Too bad

We support San Luis Obispo County’s affordable housing fee. If anything, it should be increased—not eliminated.

Since the fee was approved in 2008, it’s generated just a little over $1 million, but by leveraging those dollars to attract other funds, nonprofit home builders have added roughly 250 affordable homes and apartments around the county. More are on the way.

Yet the Home Builders Association of San Luis Obispo County wants the fee gone, and it’s looking to the county Board of Supervisors to do that.

The board should absolutely resist such pressure.

The affordable housing fee—technically called an “inclusionary” fee—is already set so low it barely registers as a blip on the price tag of a new home.

As reported last week by Tribune writer Lindsey Holden, the fee on a 2,100-square-foot house in the county is $3,150. In the city of San Luis Obispo, it’s $27,175 on a house of the same size and cost.

But the Home Builders Association isn’t attacking the city’s affordable housing fee. Nor is it going after fees enacted in the cities of Atascadero, Pismo Beach, Morro Bay or Arroyo Grande.

It’s hoping to overturn the fee in the one jurisdiction where it stands the best chance of success: the unincorporated county, where a conservative majority controls the Board of Supervisors.

The affordable housing fee is not the enemy.

It’s helped build 242 units—another 32 will be added this year—for local residents, many of whom had given up hope of ever finding decent, reasonably priced housing in San Luis Obispo County.

Yet it’s the affordable housing fee that’s been singled out as a problem—not road fees or school fees or park fees.

Opponents of the fee say there are other, more effective ways to encourage construction of smaller lower-cost homes. That may be, but we haven’t seen much progress.

For years, we’ve heard talk about rezoning more land for housing, encouraging greater density and streamlining the permitting process. Yet we still see many large, higher-end homes going up in the county, rather than the modest “starter” homes of a generation or two ago.

Opponents also say the fee—which is typically passed onto the homebuyer—is especially hard on young people trying to purchase their first home.

Don’t buy into that.

First of all, given the size of the housing affordability gap in San Luis Obispo County—the median income here buys a house of around $320,000, yet the median home price is around $505,000—a few thousand dollars added to the selling prices makes almost no difference.

Also, the county already has made concessions to help middle-income homebuyers. Last November, the board adopted a pilot workforce housing policy that, among other incentives, exempts workforce homes from the affordable housing fee as long as the units fall within a certain price range when they are first sold. (The price can be jacked up when the home is resold.)

Consider, too, that the affordable housing fee is assessed on a sliding basis; the larger the house, the bigger the fee. Most young people trying to buy their first home aren’t likely buying a new, 4,000-square-foot mansion. Even if the fee is increased, it won’t be as onerous as critics make it out to be.

But if the Board of Supervisors is concerned about first-time homebuyers, we urge it to modify—not eliminate—the fee. Permanently exempt homes under a certain size—say, 2,000 square feet—and raise the fee on the mansions still being built in the county.

The board also should at least consider the Home Builders Association’s recommendation to spread the cost of subsidizing affordable housing projects, so it doesn’t just fall on new homebuyers. The association has suggested a sales tax increase, a parcel tax or a bond measure—all require voter approval.

Our first reaction: Not a hope in heck, especially in a county as conservative and tax-averse as San Luis Obispo.

Yet as unrealistic as that may sound, it’s had success elsewhere in California. Voters in Alameda, Los Angeles and Santa Clara counties recently approved bond measures to fund affordable housing. In Santa Monica, voters approved a sales tax increase and in an accompanying advisory vote, agreed that half the proceeds should be spent on affordable housing.

It may be a long shot in San Luis Obispo County, but it’s worth having a serious discussion.

It would, however, be premature to eliminate the affordable housing fee on the slim chance that local voters may, at some point, agree to tax themselves to pay for affordable housing.

The Board of Supervisors should keep the fee in place. It is not a heavy burden that’s preventing young, first-time buyers from purchasing a home; in fact, it’s assisting first-time buyers realize their dream of home ownership.

This story was originally published August 21, 2017 at 10:48 AM with the headline "Home Builders Association doesn’t like SLO County’s affordable housing fee. Too bad."