By David M. Greenwald
I appreciate the sentiments of our guest piece from three members of the Social Services Commission (who were writing for themselves) when they pushed for more affordable housing at the University Commons project.
The current proposal is 13 studio units to low-income households and 13 two-bedroom units to moderate income households with the 26 units requiring a total subsidy of $244,296.
The argument from the group is: “While the revisions are more robust than the original proposal, our subcommittee feels that the revised proposal falls short of “commitment to the creation of affordable housing in the city.” In particular, the proposal does not advance our city towards meeting the unmet need of extremely low-income and very low-income families as specified in the Regional Housing Needs Assessment (RHNA).”
Vertical mixed-use has been a problem for the city. Up until 2018, the city’s Affordable Housing Ordinance actually exempted vertical mixed-use from affordable housing requirements.
Staff had continued to recommend that the city outright exempt vertical mixed-use projects from affordable housing requirement. But council was not comfortable with zero.
As Will Arnold put it, it’s a “balancing act.
“Fifteen percent is not feasible,” he said. But then again, “zero percent is unacceptable.”
Councilmember Arnold rightly pointed out that “if the thing doesn’t get built because we’ve put an onerous requirement on there, then no one gets to live there… So that’s the balancing act that we have in front of us.”
Mayor Brett Lee added, “The idea here is that it’s not zero.”
But what is viable?
In 2015, Plescia & Co. found that such housing was “unlikely” based on the estimated return-on-investment.
In 2017-18 Gruen, Gruen & Associates along with Plescia found basically the same thing—except worse.
They wrote: “The two vertical mixed-use prototypes that include combinations of residential and commercial space with covered podium parking have total development costs of approximately $410,000 to $444,000 per unit.”
Worse yet, they warn that the research was conducted in late 2017, and since then “construction costs have increased.” They note that “growth in rents have not kept pace with the rise in construction costs,” therefore, “the returns from development of the prototypes would be likely be lower than those presented in this report.”
Even in a 100 percent market rate scenario—thus no affordable housing at all—they found that the two vertical mixed-use prototypes “are not estimated to support positive land values. In other words, a feasibility gap likely exists for these two 100 percent market rate alternatives.”
That’s the backdrop that we are looking at.
When the applicant originally submitted their proposal the requirement was for them to do exactly zero affordable housing, as it was exempt. The council, however, modified the code to require five percent and the applicant has met that, and now has even exceeded that.
This is the dilemma that we are up against—we lack sufficient amounts of affordable housing in town, we have been slow to build market rate housing that can finance affordable over the past two decades, construction costs have gone up through the roof and subsidies for affordable housing are far less than they once were particularly with the end of redevelopment.
Will Arnold and Brett Lee a few years ago then were correct—zero cannot be the answer, and now the project has created a proposal where the number is not zero. But we have to balance it because the economics of feasibility are tricky and driving up the costs too much means that we get nothing.
Still I think this group did the right thing. As members of the Social Services Commission their job is to advocate for more affordable housing in proposals. They need to keep pushing hard to get as much affordable housing as they can. That is their job.
The council also needs to push for as much as is feasible. It is the job of the city and the applicants to determine what that number actually is. But if they don’t push for more, then we settle for the proposal that is on the table.
There is definitely a tricky element here. We have heard calls for more affordable. We have heard calls for downsizing the project if possible. Those pushes are largely at cross-purposes.
Probably we won’t be able to both downsize and increase affordable—the council is going to need to decide their priority if they support the project at all. If they don’t, then the number of affordable units added to the city will be zero.
—David M. Greenwald reporting