Santa Barbara Council Kills Affordable Rental Program with Kindness

What makes the geography of the gluteus maximus so mystifying that so many of us can’t find ours with both hands even in broad daylight? Watching the Santa Barbara City Council in its frenzied state of inaction yesterday, I witnessed no fewer than 14 hands scrambling blindly to locate their respective posteriors, but all coming up tragically short.

The issue before them, as almost always, was housing affordability. And for once, the specific action they were being asked to take was agonizingly simple. It was also about six years overdue and would, in fact, genuinely help make a bad situation somewhat better. But with a rare combination of incompetence, incoherence, and ​— ​I suspect ​— ​a dash of bad faith, our councilmembers managed to screw things up, demonstrating that in their totality they’re considerably less than the sum of their parts.

On the table was a modest proposal to ensure that 10 percent of new rental housing units built with the help of certain City Hall subsidies will be set aside for moderate-income tenants at prices they can actually afford. In the deliberately opaque lingo favored by urban planner types, this set-aside is known as “inclusionary housing.” 

It was a very belated, after-the-fact fix on the city’s notoriously successful ​— ​and even more incomprehensibly named ​— ​Average Unit-Size Density (AUD) housing program. Hatched in 2011 and crafted into reality in 2013, the theory was that by allowing developers to build nearly three times as many rental units as existing zoning otherwise allowed ​— ​and also by requiring only half as many parking spaces ​— ​perhaps they (the developers) could be “bribed” (they prefer the term “incentivized”) into building rental housing. 

Such extreme measures were deemed necessary because in the 50 years prior, private developers had seen fit to build absolutely zero units of rental housing. The buzzword at the time was “Affordability by Design,” which we quickly learned was magical thinking. Developers charged whatever the market would bear, and the market bore a lot. At one especially infamous project, two-bedroom units went for $3,500 a month. That’s “affordable” only to households making $126,000 a year, not to households maxing out at $75,000, which defines the so-called “missing middle.”

A lot of people hate the AUD program and for real reasons. They’re often out of scale with their neighborhoods; tenants in “under- parked” projects tend to park their cars on city streets already overparked. Developers laugh all the way to the bank thanks to City Hall subsidies, and the tenants “helped” by all this, it turns out, make enough that they need no such help. I ran into a couple of friends the other day who caustically pointed out the AUD next door in which a two-bedroom, two-bath unit first listed at $4,300 a month. You need to make $130,000 a year to afford that. Under what design could such rents be deemed affordable? Magical thinking. 

The fix is simple and should have been quick: require that 10 percent of all AUD units be set aside at below-market rents. I say 10 percent because the economic consultants hired by City Hall concluded developers could still make an attractive profit ​— ​17 percent ​— ​with such an exaction if they sell the property. At 15 percent, however, they found the economics got dicey and could strangle the program. Inevitably, some developers squawked, but they’ll squawk about anything. It’s worth noting that the investors who own the real estate under Sears said they’d happily abide by a 10 percent set-aside if they were allowed to build 500 units of rental housing ​— ​or maybe more ​— ​at La Cumbre Plaza.

Here’s the deal: We need the AUD program because we need the rental housing. But the inclusionary rule is the spoonful of sugar necessary to make that medicine go down. In the three years the council has been studying the matter, 230 units of rental housing have been produced, and another 850 have lined up on the drawing boards. Were the 10 percent requirement imposed on all these, that would be 100 units ​— ​ real and potential ​— ​of affordably priced rental housing. The AUD program ​— ​always deemed experimental ​— ​was written to expire about a year from now. 

Many in Santa Barbara’s always vibrant “Get off My Yard” movement would be popping champagne corks should that happen. But what the zoning allows is more mondo grande condos for the rich, the super rich, and the filthy rich. That’s what the market was building before. That’s what it would build again. 

With this in mind, Councilmember Eric Friedman moved to approve the 10 percent solution. It appeared the votes were there. But then, Councilmember Jason Dominguez ​— ​now rumored to be running for five different offices ​— ​pushed for 15 percent in the form of a substitute motion. The conventional wisdom, to which I subscribe, is that 15 percent is the kiss of death, politically and economically. Dominguez has always hated the AUD program, so his move made sense. But other councilmembers ​— ​like Oscar Gutierrez, Kristen Sneddon, and Meagan Harmon ​— ​who claim to support the program should have known better. Gutierrez, in fact, has repeatedly pushed for 25 percent even after being repeatedly informed that the State of California ​— ​desperate to get housing built ​— ​would likely challenge it. More magical thinking? 

Here’s a key wrinkle. Under the rules of the game, the council needs four votes just to get the item on the table; but it needs a five-vote super-majority to get anything passed. Last night, the council voted to put something on the table for which five votes clearly did not exist. And even if they magically materialize, the 15 percent requirement will effectively kill a program that could do a lot of good if just tweaked a little. 

After last night, I can’t find my ass anymore either.