The Sonoma City Council recently decided to allocate $2 million of its $2.8 Affordable Housing Trust Fund (AHTF) as an incentive to nonprofit housing developers. Philosophically, it’s a good thing to do but strategically, it’s unlikely to result in many homes; $2 million used to be real money, but today it barely builds one house.
Before everyone started calling it Affordable Housing (government-regulated, deed-restricted, income-limited, price-controlled) we called it Subsidized Housing. That term, accurate though it was, had negative political overtones smacking of socialism, and was set aside for the more politically comfortable term “Affordable Housing.” That change didn’t and doesn’t change the facts, however; Affordable Housing needs government subsidies or it doesn’t get built.
The creation of the Affordable Housing Trust Fund happened nearly a decade after Redevelopment Agency funding was ended by the State of California, a pause in revenue that still resonates today. Redevelopment Agency funding required that 20 percent of it had to be spent on Affordable Housing, and its loss put a serious crimp in its construction. The AHTF was intended to become a new source of money for housing, but the revenue contributions made by the City of Sonoma were slow to materialize, have been sporadic and are unrealistically low.
Unless the funding for the AHTF increases dramatically, little in the way of Affordable Housing is going to be built; the likelihood of the City meeting its obligation to the state’s Regional Housing Number Allocation (RHNA, and commonly pronounced “Reenah”) during the next five-and-one-half years is minimal.
So what can the City of Sonoma do to increase the AHTF funding? We’ve suggested a number of ideas over the years, but none have been acted upon. The two percent Tourism Improvement District (TID) fee charged hotel guests amounts to over one-million dollars and is used to promote tourism. The agreement with the TID was approved last year for another ten years with no modification. When first formed, the TID’s revenue amounted to $400,000 a year. Now it’s more than double that. The City could have renegotiated a lower percentage to one percent and increased its Transient Occupancy Tax by the same amount and have put that half-million dollars into the AHTF. It’s not too late; we suggest an immediate renegotiation.
The City could also change to a Charter Law city rather than remaining a General Law city, which would enable it to double, triple or quadruple the Real Estate Transfer Tax, which is presently fixed at a paltry $.55 per thousand.
The Sonoma Valley Chamber of Commerce receives $100,000 plus in funding from the City. This was originally done to fund hiring a business retention and recruitment employee at the Chamber, but that position has been unfilled for many years. Nonetheless the funding continues. Given that the high cost of housing has been identified by Chamber members as the number one difficulty in hiring employees, that money would be better spent in the AHTF.
By changing the formula for how money is put into the AHTF, it could grow much faster and even allow some housing bond issuance. If the City of Sonoma is serious about the creation of Affordable Housing, it has to get serious about how it is funded. It’s not rocket science, just the reality of Affordable Housing and its continuing need for subsidies.
Sonoma Valley Sun Editorial Board
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