The availability of affordable housing has been a big issue in California for decades. I received a mass e-mail from the California attorney general, Rob Bonita, the other day and he is concerned about “skyrocketing housing costs” and “a housing crisis of epic proportions.”
The current city of Lompoc Inclusionary Housing Ordinance specifies that “the default method of providing the affordable units is to build the units on the project site” thus creating mixed developments, versus pockets of gated wealth or swathes of low-income areas. One of 10 new units must be affordable to more households.
But the IHP (Inclusionary Housing Plan) offers a loophole for developers, “an alternative to constructing affordable units, developers may be permitted to pay a fee to the city” (an “in-lieu fee”), which can then be used by the city to “fund programs that help lower-income households obtain affordable housing.”
Rates were last set in 2007 and increased from the previous $86,000 to $113,998 per required affordable unit; enough to construct a 1,350-square-foot home deemed as adequate by the City Council for affordable housing; this money was deposited in a trust fund.
On April 13, 2022, the Planning Commission discussed a proposed change to the IHP that would “change the basis for the in-lieu fee to the maximum amount of financial assistance available to a single applicant under the Homebuyer Assistance Program. The new fee would be $72,500.”
That’s like comparing apples to oranges. Why? Because the IHP is designed to build new homes, while the Housing Assistance Program is used to purchase existing homes, not build new ones as the original IHP envisioned. Fewer new units increases the pressure on the affordable market as more people compete for fewer units.
Construction costs are now well above $250 a square foot when including land, so for a modest 1,350-square-foot home construction cost is $337,500.
For example, a development on the north end of the city is projected to build 476 homes; 47 of them would be affordable homes. Using an in-lieu fee of $72,500, it means the developer pays $3.4 million to avoid building them on-site.
But if you used the actual cost of $337,500 per unit it, would be nearly $15.9 million—for a cost avoidance bonus by the city to the developer of nearly $12.5 million—and 47 new affordable properties won’t be built.
Another in the southeast corner of town would build 257 new homes; 25 would be affordable. The builder could pay an in-lieu fee of $1.8 million instead of $8.4 million—for a city-provided bonus of $6.6 million and the loss of another 25 affordable homes.
Providing down payment assistance without adding new stock seems to be contrary to the goal of solving “a housing crisis of epic proportions.”
By the way, Councilmember Victor Vega, who is also a real estate agent, has benefitted financially from the Homebuyer Assistance Program and will likely do so in the future. This reeks of “conflict of interest,” and he should recuse himself from discussing this issue; however, he hasn’t in the past.
Ron Fink writes to the Sun from Lompoc. Send a letter for publication to [email protected].
