When Governor Brown and the California legislature eliminated redevelopment agencies across the state in 2012, it was the result of two coinciding factors: California was in the midst of a severe budget deficit and redevelopment money was being used inappropriately to line the pockets of developers and to back-fill poorly managed government budgets.
Twenty percent of redevelopment funds, however, had been designated specifically for the creation of affordable housing, and the loss of those funds has brought the creation of such housing to a near standstill. Local government, caught off-guard by the rapid dissolution of state redevelopment funds, can be excused for taking some time to figure out other ways to provide the revenues needed to subsidize affordable housing, but that time has run out and so has government’s time for excuses.
Rental prices in Sonoma County have increased 30 percent in the past three years, and the proliferation of online vacation rentals, combined with tight supply and few new affordable projects, has effectively squeezed renters from the housing market from both ends. Low wages just make the matter more desperate. The time for action is now, and that action means raising revenues to insure that affordable housing gets built.
During the past months we have suggested any number of methods to raise revenues, both in the City of Sonoma and in the County, but government has not seen fit to even discuss their merits. The reasons for such inaction are likely many, but we’re not inclined to spend time psychoanalyzing government or trying to understand its passivity. We once again urge action, and for the record want to repeat the ideas suggested previously to generate funds for affordable housing.
- Create a non-profit Affordable Housing Authority into which new revenues would be placed and to which tax-deductible contributions can be made.
- Raise the TOT (Transient Occupancy Tax) paid by tourists by 2 percent; in the City of Sonoma this would generate over $500,000/yr. and in the County it would be millions.
- Explore the expansion of what guest charges are subject to TOT; spa treatments, valet parking, and other amenities commonly offered to tourists at hotels and resorts currently remain untaxed.
- Explore ways of raising the Real Estate Transfer Tax; at present it’s $1.10 per $1,000, a mere $550 cost added to a half-million dollar purchase. It should be doubled, tripled or quadrupled.
- Impose significant Commercial Development Housing Impact Fees; commercial development creates jobs (which is good) but housing is too expensive for local workers. Every new commercial development should be contributing to the creation of affordable housing.
The point here is that there is no absence of options to raise revenues, but an absence of courage to do so. There’s enough money here to fuel luxury resort and hotel developments to satisfy a tsunami of wealthy tourists, builders of starter mansions, subsidies to Chambers of Commerce and so forth; funds to create affordable housing, however, get put on the back burner in budget after budget. Elected representatives need to stop worrying about offending their campaign contributors and begin worrying about responding to the needs of their constituents
Government whining about the loss of redevelopment funds has run its course; that ship has sailed and is long gone. It’s time for local city and county government to stop blaming the state for its failure to create affordable housing, demonstrate leadership and take decisive action.
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