Creating affordable workforce housing
The demise of Sonoma’s Redevelopment Agency has effectively ended its creation of significant workforce housing, housing that’s affordable to the people who work here in the many service jobs in the hospitality and restaurant businesses — housekeepers, wait-staff, kitchen workers, janitors and maintenance. Redevelopment agencies employed a strange funding mechanism; money from the State of California was made available after (not before) an agency committed housing project funds. Thus the funding for a redevelopment agency was on a deficit basis.
Twenty-percent of State redevelopment funds were required to be used for affordable housing. Typically, the City of Sonoma would contribute either land it had acquired or the 20 percent set-aside from state funds and partner with a non-profit affordable housing construction and management firm. In this way substantial low-income housing, both rental and for-sale units, was successfully funded, designed and completed.
Unfortunately, State-funded redevelopment agencies (using money accumulated from property taxes collected by the State) also used this money for all sorts of other projects linked to “economic development.” Governor Brown correctly determined (he had been the Mayor of Oakland) that much of the redevelopment funding was used inappropriately, often lining the pockets of real estate developers and other entities while neglecting the purposeful creation of housing. When the State eliminated the funding for local redevelopment agencies, however, it unfortunately “threw the baby out with the bath water,” and support for local government-subsidized construction of affordable housing also ended.
The City of Sonoma now effectively depends upon its “inclusionary requirement” for the creation of workforce housing. Developers of housing projects with ten or more units must allocate a minimum of 20 percent of the units for affordable housing (five to nine requires 10 percent). Given the low number of large projects being built, the number of new affordable units has also declined. As real estate values have risen, availability of affordable rental units have shrunk, and the proliferation of vacation rentals has made the situation even worse. This community is increasingly in desperate need of housing for its workers.
The new City of Sonoma General Plan Housing Element notes: “An assessment of 2014 market rents and 2013/2014 sales prices in Sonoma reveals the following: Citywide median rents are well above the level affordable to very low and low income households, pricing many of the community’s lower income occupations — such as restaurant workers, construction laborers, retail salespersons, home health aides, and agricultural workers — out of the rental market. Sales prices of single-family homes are generally beyond the level affordable to moderate-income households, with the exception of some of the smaller units sold.” Again, that’s the City’s official conclusion.
Any real solution lies in developing new funding sources. Accordingly, we suggest considering the following options:
• Raise the TOT (hotel tax) 2 percent and place that income into a special affordable workforce housing fund. This option would produce more than $500,000 annually.
• Increase the real estate Transfer Tax. Given the high value of Sonoma property, a $2 per $1,000 tax (currently $.55/1,000 in the City of Sonoma; $1.10 in Petaluma) would generate $1,000 for each $500,000 home sold (about 500 homes/yr.) and this money ($500,000) could go into the workforce affordable housing fund.
• Explore the creation of a localized non-profit housing entity, contributions to which would be tax-deductible. Funds could be used for down-payment assistance to new lower-income homeowners or forms of rental assistance. There is enormous wealth in this Valley, and if wealthy donors know their contributions will be used properly for housing as promised, significant revenues could be collected.
• Establish housing impact fees tied to new commercial development.
Lacking a sustained commitment by our local government to replace lost funding (and the county could also use similar tactics) it’s unlikely the worker housing we so desperately need will be created any time soon. The result of this inaction will be increasing difficulty for businesses to recruit workers (especially as the economy improves and job offers increase in other areas), added auto traffic due to worker commuting (and increased pollution, pressure on parking, street maintenance), additional homelessness and unsafe crowding in the homes which are available, and the further stratification of the community into “haves’ and “have nots.”
We are at a crossroads; having provided no alternative to lost redevelopment funding or sufficient market incentives to provide worker housing, our city and valley is taking on the character of a “gated community.” We continue to ignore our housing problem at our peril, both ethically and economically, and we urge local government to take immediate action.
