The ‘year of housing’ in Sonoma?

We are pleased to see Mayor Logan Harvey’s efforts to direct the attention of the City Council to the continuing crisis of affordable housing in the City of Sonoma. At the same time, it is frustrating that our local government has moved so slowly over the years to address this long-standing problem.

Way back in 2015, we ran several editorials focused on ways to raise city revenue for the purpose of creating significant government-regulated affordable housing that remains affordable for 55 years, satisfying the housing needs of low and very-low income workers – those who earn the least, such as restaurant and hotel workers. 

Now it’s 2021, and during the half-decade that’s passed, the City of Sonoma still has little in the way of funds to contribute to housing. Such funds have always been necessary to subsidize low-income housing.

The recommendations we made in November, 2015:

1. Create an affordable housing “trust fund” to which donations are tax-deductible, and use those revenues to facilitate the creation of housing.
2. Raise the TOT (Transient Occupancy Tax) by 2% and place those revenues in the affordable housing fund for land purchases, buyer subsidies, or non-profit developer assistance.
3. Dramatically increase commercial “housing impact fees” on new development and add those revenues to the affordable housing fund.
4. Look into the ramifications of increasing the Real Estate Transfer Tax paid upon the sale of property and, if increased, place those revenues into the affordable housing fund.

Only very recently have some of these ideas been adopted, and as a result funding available from the city remains very limited. The TOT was increased, but only 1% is being dedicated to affordable housing; money placed in the Affordable Housing Trust Fund has been used for rental assistance, not housing creation; development impact fees are negligible; and as far as we can tell, no effort has yet been made to increase the Real Estate Transfer Tax.

Meanwhile, market-rate housing developers are snapping up options on the larger remaining parcels in town. The recently constructed homes on land bought from Sonoma Valley Hospital are selling in the range of $1.2 million each, a 59-unit project at 5th Street East and Napa Road is being proposed, and several other properties are now under option. Lacking funds, the city is not in the position to compete for the purchase of parcels and hold them for non-profit low-income housing development. The pandemic has pushed demand for non-urban housing higher, and Sonoma and Sonoma Valley are feeling that pressure. 

Requiring that 20% of market-rate housing developments be affordable to “moderate” income renters or buyers is a drop in the bucket. Sonoma needs housing projects that are 100% affordable to people at the bottom of the income ladder, and it needs far more units than the 20% inclusionary requirement will ever produce. 

Ultimately, the City of Sonoma must determine ways to generate predictable, stable, and long-term revenues for affordable housing so that it can use its bonding authority to issue long-term bonds in the millions of dollars. Only such methods will produce anything close to what’s needed. The question is, does the city have time or will market-rate developers grab everything for themselves?