Best Way to Build Middle-Class Housing?
City Officials Disagree Over Economic Report
Everybody taking to the City Council microphone agreed: Santa Barbara needs a new ordinance requiring that a percent of all rental housing units built with city density subsidies be set aside for families in the “missing middle” — those making $64,000-$76,000 a year. But there was very little agreement that the proposed ordinance now on the table is any good.
City planning staff is recommending that 10 percent of all rental units built under the city’s Average Unit-size Density (AUD) housing program — which allows developers to build more units with fewer parking spaces to stimulate the development of rental housing — be set aside for the missing middle. That plan was widely panned by developers, architects, and members of the Planning Commission, which voted 6-1 four months ago to deep-six it. Critics contend the economic analysis behind the plan is flawed. Construction costs, the council’s ordinance committee was told, are nearly three times higher than that report indicated and the rate of return required by S.B. developers nearly 50 percent higher than the report suggested. To saddle the experimental and controversial housing program with additional burdens without providing offsetting incentives, critics argued, would kill it.
In the past six years, 233 new units of rental housing have been built courtesy of the AUD initiative. Hundreds more are in the pipeline. But of those, only four units were approved that are affordable to missing-middle households. State housing regulations require the City of Santa Barbara to approve 816 more by 2023.
Arguing in favor of the inclusionary requirements was Rob Fredericks with the city Housing Authority. He said his agency vetted the numbers of the city’s economic consultant and found them accurate. Yes, he argued, inclusionary requirements may cost developers a little more, but rents are going up, interest rates are holding steady, and Donald Trump’s new tax law provides developers new ways to offset those costs. He urged the council to enact inclusionary requirements sooner rather than later. Critics suggested they be sent back to the Planning Commission for review. If such requirements are to be adopted, they argued, the council should provide additional density bonuses to mitigate the new costs.
