City OKs inclusionary housing tweaks

By ERIC LINDBERG — May 13, 2009

As firefighters poured into the foothills to battle the newly sparked Jesusita Fire a week ago, Santa Barbara city leaders were dealing with a considerably less intense but nonetheless important topic: plans to expand affordable housing requirements to smaller building projects.

On a 6-1 vote, the council agreed to require developers to pay fees or build a percentage of affordable units for new projects or condo conversions between two and nine units.

Although Councilmember Dale Francisco decried the plans on ethical grounds, his colleagues seemed hopeful the city’s amended inclusionary housing ordinance would provide more housing for middle-income residents.

“Without putting a great burden on each of these projects — it’s scaled appropriately — we’ll be able to accumulate or aggregate over time some meaningful funds that can be used, maybe even more so in these difficult times, for people who are not able to afford market-rate homes to give them a chance to stay here in the community,” Councilmember Grant House said.

Prior to the vote, only projects with 10 or more ownership units had to provide a percentage of those units as affordable to middle-income families.

While an in-lieu fee option was available — to pay into a city fund for affordable housing rather than building the affordable units — no developer has decided to take that route since the ordinance went into effect nine years ago.

“We made a commitment, a promise to the community, that we would address this loophole, this incentive to build nine units instead of 10 units — essentially an incentive to convert some of our rental stock into upper-income condominiums without a giveback to the community,” Councilmember Das Williams said.

Francisco, however, said the amended ordinance will, at the most, result in 30 new housing units during the course of two decades.

Citing a continuing impact to staff time, he said it would be difficult to find “anything less effective than this.” Francisco also pointed out that it will be a burden to smaller developers and retirees who are planning to build a second or third unit on their property as an investment.

“There’s no justice in this,” he said. “It provides virtually no benefit. It burdens staff with fulfilling what I think is a useless and, in my opinion, immoral function.”

In essence, the amendments to the ordinance will require projects of between two and nine units to pay a 5 percent in-lieu fee. City officials don’t expect any developers to decide to build an affordable unit instead of paying the fee, although that is an option.

City leaders also decided to exempt one unit from the in-lieu fee for projects with between two and four units in a move they said will protect “mom and pop” developers. They also plan to defer payment of that fee, which is currently set at $17,800 per unit, until occupancy in another attempt to protect smaller developers.

Steven Faulstich, the city’s housing programs supervisor, said all of the 10 condo conversion projects approved in the past two years had fewer than 10 units, making them exempt from the previous inclusionary housing ordinance. Eight projects currently in the pipeline would have also been exempt.

Faulstich noted that the Planning Commission had recommended against the revisions on a 4-0 vote with one abstention before the issue came to the City Council.

“Some of the members felt this would be better addressed through the General Plan update process and also felt that during these bad economic times we shouldn’t be making development of housing more difficult,” he said.

However, Faulstich said he is confident that the new ordinance won’t represent a burden for smaller homebuilders.

“Many of the smaller projects that we see are condo conversions and we don’t think this would be a hardship on those,” he said.

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"our"? : 5/13/2009

I don't know about "immoral", but this will be ineffective. Imposing an additional tax on all new projects will mean fewer new projects. Of course when Williams talks about "some of our rental stock" -- as if the City owned the private property the fees / taxes will be imposed on -- it shows the council won't bat an eye at essentially stealing from private landowners to pander to the interest groups. That is immoral. And you have to ask - who would want to build in a City like this?

Howard Taggart

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