Affordable Housing and Leveraging New State Laws

Most people, including our local government cite burdensome regulations and lengthy approval processes as a problem limiting housing growth. Historically, this has been true but three measures passed by the state in 2017 aims to ease some of those rules. Senate Bill 35 requires cities to approve projects that comply with existing zoning if not enough housing has been built to keep pace with their state home-building targets.

According to the LA Times in an article on the housing bills that passed, “Assembly Bill 73 and Senate Bill 540 give cities an incentive to plan neighborhoods for new development. Under AB 73, a city receives money when it designates a particular community for more housing and then additional dollars once it starts issuing permits for new homes. In these neighborhoods, at least 20% of the housing must be reserved for low- or middle-income residents, and projects will have to be granted permits without delay if they meet zoning standards.

SB 540 authorizes a state grant or loan for a local government to do planning and environmental reviews to cover a particular neighborhood. Developers in the designated community also will have to reserve a certain percentage of homes for low- and middle-income residents and the city’s approvals there would be approved without delay.

Money to implement both laws could come from the new real estate transaction fee and the bond.”

Some of the bills that just passed incentivize developers to build more low-income housing. Usually, when developers agree to build low-income apartments, the agreement lasts a certain time, often between 30 and 50 years and the agreements aren’t always project-based. So one development could be McMansions and another, across town, low-income housing. I think all new projects should integrate affordable housing as a percentage of the project and SB1505 incentivizes that.

If our local government is willing to take a look at some of these new measures, we might be able to find solutions to our affordable housing crisis sooner rather than later. If elected, I plan to use all of the tools available in order to curb our community’s affordable housing crisis.

Trickle Down Gentrification

As we continue to see a housing shortage in California, renters and low-to-middle income families continue to be unfairly burdened with skyrocketing housing costs and trickle-down gentrification.

In an article titled, “Poor People are Running Out of Places to Live” published by Slate.com on October 25th, 2017, author Henry Grabar writes:

“What happened to all those apartments for people with very low incomes? Some of them are still occupied by very-low income households—nearly 40 percent of households with incomes between $15,000 and $30,000 pay more than half their income in rent, leaving them with little to spend or save. For households earning less than $15,000, that portion rises to more than 70 percent.

“But something else happened to those apartments: They became the homes of people with low incomes, who couldn’t afford low-income apartments that had been taken by people with middle incomes. And so on. It’s a kind of cascading national process of gentrification. Low-income apartments are desperately needed, but if you don’t build market-rate apartments for middle-income residents, it’s still those at the bottom who get hurt.”

When we talk about development and housing for our community, we must include affordable housing for a sustainable future for all Nevada County residents.

Increasing Affordable Housing

Question from Brent Phillips, college student: “What methods of increasing affordable or low income housing supply do you support or propose for Nevada County? I would imagine it’s very complicated, considering space currently rendered off-limits due to historic landmark status, reserved for forest or park space, rendered unsafe by past mining, or just already occupied by high-priced housing and businesses.”

My answer:

Housing is complicated but the restrictions you point out are actually less of a prohibiting factor than some might think. Relatively, there isn’t much land that is zoned for housing that is “rendered off-limits” due to historic landmark status, reserved for forest or park space, or rendered unsafe by past mining.

Nevada County is having trouble enticing builders and buyers due to cost-prohibitive regulations that make building new home structures or residential communities not competitive.  Current permits and regulations dictate small, single family homes at a starting selling price of nearly $400,000, even in Nevada County where property is still relatively affordable in the California market.

The rising cost of building new housing is complicated by state regulations and current property codes. The legacy of Prop 13 has made it difficult for communities to make ends meet and this phenomenon disproportionately effects rural communities.  While some communities might be able to wiggle incentives into a budget for builders to provide affordable housing, communities like western Nevada County do not have excess spending to provide any offset.

In her column published on April 9th 2017 in The Union, local Financial Adviser Mary Owens summarized Prop 13 by saying, “The basic premise of Prop. 13 was relatively simple. The maximum tax rate that could be assessed was limited to 1 percent of the value of the property. The real property values were set to the 1975/76 levels as the starting point. Thereafter, the only increases that would be allowed without substantial improvements or resale were further limited to a 2 percent maximum annual increase, and any special taxes needed to be approved by two thirds of the voters.”

Since Prop 13 passed, many communities have realized that the tax break benefits big businesses in a way that affordable housing for single family homes cannot compete with.  Sadly, overturning Prop 13 would require navigating an incredibly complicated initiative process. Any attempts to create community balance through incentives or public-private partnerships are non-starters because there isn’t enough money to get projects off the ground. Recently, the OC Register, noted that if the Disney company were assessed a fair and current tax rate, the company would be paying Orange County $4.6 billion more annually.  Underfunded coffers from legacy tax legislation like Prop 13 perpetuate the housing shortage and communities are going to have to get creative.

But there are other setbacks. Local tax codes also make it difficult for cities to find incentive to build new housing because often the services needed to support more housing (police, fire, etc.) are not supported by property taxes within the city limits. Property taxes largely go to county coffers and so enticing Grass Valley, for example, to build more housing would require investment and collaboration from county government which this community hasn’t seen in any promising way in recent years. I’d like to change that.

I would like to see smart growth in Nevada County paired with walkable neighborhoods and desirable market places that support the talent already in Nevada County.  Retail spaces for big box stores and large retail companies are quickly becoming vacant across our country. This is disproportionately impacting rural communities and we will soon enough see a direct impact of the “retail apocalypse” in Nevada County.

Rather than compromising our rural charm and submitting to suburban sprawl, compacted apartment buildings, and strip malls, we could collaborate with local small business owners to create affordable retail space for local people and build up, not out, to include an affordable housing component with each new business or shopping development where zoning will allow.  Where zoning won’t allow, we may need to rethink current zoning laws and building codes in order to come up with innovative solutions.

Further, we should be holding all landlords in Nevada County accountable to lawful building codes and mandated upkeep, bringing all rentals into compliance with state regulations for rental properties. If incentives are needed, I believe this would be a worthy investment for our community, an investment that would have rippling impacts.

Bringing rentals up to code won’t just improve the living situation for the average renter in Nevada County but could also help expand the Housing Choice Voucher market (also known as Section 8) so that those qualifying for subsidized housing have a larger pool to choose from.  Supporting low-income residents with housing helps to reduce rates of homelessness and homeless-related crime. 

Currently, Housing Choice Voucher regulations require inspections for building owners who need to be up to current code. While all building owners are required to be up to code, in very few instances are the owners ever subject to inspection.  Since so many property owners are not up to code, owners bow out of the Housing Choice Voucher program and Section 8 housing in Nevada County falls far short of supply. This supply shortage puts an unnecessary pressure on certain communities, specifically Grass Valley, to build housing that is designated for Section 8 voucher recipients.

Our approach to housing solutions must include workforce housing, introductory housing for young people and families, housing for retired couples and individuals, housing for seniors and the disabled, as well as housing for middle and upper income people. Nevada County can supply affordable housing. We need to approach the project with the entire community in mind. We must work together as a community to provide diverse and affordable housing with sustainable communities in mind. We can provide solutions without sacrificing our rural values and we can provide solutions with the whole community in mind.