Affordable Housing in Santa Cruz

The opening of the Riverwalk apartments on River Street in Santa Cruz.

The opening of the Riverwalk apartments on River Street in Santa Cruz.

Yesterday I had the pleasure of touring most of the existing affordable housing sites within the City of Santa Cruz, and beyond the heavy rainfall, I actually learned a tremendous amount about what are affordable housing stock looks like, and how much effort it takes to develop. The tour was organized by members of the Economic Development and Planning Departments and covered 21 different projects throughout the City. These projects varied heavily in design and style, terms of rental, and funding sources. And while the housing units themselves seemed pretty straight forward, the complexity in terms of process could not be understated. Put simply, affordable housing is not easy to plan, build, or finance, but through the dedicated effort of capable individuals willing to navigate the maze of the process and various funding sources it is possible to build more.

Most of the projects we visited yesterday were in some way reliant upon tax credit equity, or money that was formerly available through the local redevelopment agencies (which is deeply troubling given how important these agencies were to meeting local housing needs and how abruptly they were dissolved in 2010). Other funding sources included State Housing Grants, funding from the federal department of Housing and Urban Development, locally managed funds from the housing authority, and some other smaller pots and unique financing tools.

Many projects also relied on Section 8 funding, which comes in two forms: project based, whereby the project is built to certain specifications and then managed by HUD, and vouchers, which give prospective tenets the ability to choose where they want to live. However, the current waitlist to receive a housing voucher is more than 4,000 people at the County level, and has since stopped accepting new applications. The project specific waitlists, like the one to get into the Tannery for instance, aren’t any better and are extremely competitive.

So how do we get more affordable housing? Well I also had the privilege of attending the Monterey Bay Economic Partnership (MBEP) State of the Region conference last week, which had a panel of local and state housing experts discussing this very topic in the context of the Monterey Bay Region. To me there were three major takeaways:

1) Funding is a very defined but very real problem. In a post redevelopment world most local smaller cities and communities do not have the available funding on their own to meaningfully contribute to affordable housing projects. Redevelopment agencies used to have millions of dollars per year available for community improvement projects, with housing being the primary recipient. Now, most agencies either don’t exist, or are dealing with numbers in the hundreds of thousands. And when your average affordable unit costs at least $200,000 (best case scenario) the numbers simply don’t make sense.

One of the solutions developed in other communities, and even in the most recent election in San Francisco, is the development of a Housing Trust Fund. San Francisco just increased their’s through a tax measure to exceed a billion dollars annually. Over in San Jose/Santa Clara, their Housing Trust Fund was originally established through the cooperation of multiple private companies who put down millions of dollars to create a revolving loan fund that has since grown and received more funding.

2. Overly burdensome regulation is a serious issue and has severe impacts on the ability of private companies to line up financing. According to the research of Dr. Lynn Reaser, who nationally known and was one of the panelists at the MBEP event, in looking at the community of San Diego, government regulation and fees accounted for over 40 percent of the cost of new housing. 40 Percent!!! I will link the study below so you can dig into it for yourself, but the gist of it is that time is money, and the development process takes a lot of time, and is wildly inconsistent. You don’t know if it’s going to take months or years, and in some unfortunate situations, decades. And again at these price points, it’s hard to justify an indefinite loan worth millions of dollars without having some process certainty.

Here is the study.

3. Neighborhood resistance and the open process give a small group of people the ability to derail and delay almost any project. Without a larger coalition of people willing to go to bat for housing in general, most often a smaller group of people who don’t want to see more housing near them can stop a project by both showing up at public meetings, or by filing law suits on environmental grounds. The burden of proof for most of these suits is so severe and time consuming that many people will simply cut their losses and give up on a project.

The real shame about this last bullet point is that most of the time resistance to these projects is based on misinformation and assumptions about character. All of the affordable housing projects I visited yesterday appeared to be just normal housing developments and were near impossible to tell from the surrounding community. Furthermore, much of the affordable housing I saw was built for specific groups of people, such as seniors, families, and artists.

It’s for this reason why that tour was so valuable, because it really puts the challenge into perspective. But don’t take my word for it, see for yourself by reading the materials I received below:

 

5 Comments

  1. Matt Farrell says:

    Robert, Thanks for this post. I think we all have a real opportunity to shape the character of our community through our housing policies and decisions. Thanks for bringing up this opportunity and responsibility! Matt

  2. Very well written and informative summary. It has given me a lot of new and relevant information. I will be thinking about this and hope to hear more. I have nothing to contribute myself at this time because I am just becoming inerested to look below the surface.

    scottm

  3. CM Berger says:

    Thank you for your time on this.

    Unfortunately, tenants themselves are the absent party in all these law makings, meetings and discussions. There must be a reason for that. On one hand, the power elites – local or not so local – do not consult tenants – since there is no representative organization of tenants – really, in the entire USA. It’s a matter of educating tenants of what is strangely absent from their calculations – that their housing is their biggest business interest in their lives and they need to form union in order to negotiate better regulations on their own behalf, since they are close to 40 percent of the population in California.

    Hmm, the average unit in the best case scenario? Logic tells me that an average isn’t based on a best case scenario, but rather on a mathematical formula that takes construction costs from many units and calulates the average. I’m not understanding what a best case scenario means in this context.
    Also, tenet is not tenant.

  4. Khristina says:

    Thank you, Robert—lots of good information here. I think it is also important to mention that precious tax dollars go much further when efforts are focused on working with affordable housing developers that receive fee waivers and tax credits, often times in perpetuity, for providing our community with such a valuable resource. They are best able to leverage economies of scale, and can be held to best practices in terms of environmentally friendly building practices and any prevailing wage requirements.

  5. Jeff says:

    Civinomics- My #1 source for local news and analysis that’s interesting, intelligent, and enjoyable. Thank you as always!

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