Photograph by Rory McNamara
Home, Sweet Home: The Soto family (from left, Luz Anabella, Socrates, Julio Jr., and Julio) must struggle to make ends meet in order to live in Sonoma County.
A jobs-housing linkage fee seeks to alleviate the lack of affordable housing
By Joy Lanzendorfer
Julio Soto has lived in Sonoma County for 11 years. He’s married with two children, and though both he and his wife work full time–he as an electrician’s apprentice and she as a housecleaner–they don’t have any hope of buying a home in the near future.
“At this point, it’s just unrealistic,” Soto says. “Someone who wants to buy a house in Sonoma County could not do it with the wages I’m earning.”
Soto is hoping that in four years, when he becomes a full-time electrician, he’ll be able to begin looking into buying a house. By then he will be making $30 an hour under the Local 551 International Brotherhood of Electrical Workers union. He’ll be 47.
“I am one of a good percentage of people who are all in the same boat,” he says. “Because they make low wages, it’s difficult for them to even contemplate buying a home. What are these people going to do, who can’t afford to buy a house or, in some cases, even pay rent?”
Soto’s story is a common one in Sonoma County. As one of many people making below the median income of $62,000, he is essentially locked out of the housing market. Many local people have no hope of buying a home for their families. Others are struggling just to pay rent, having to double up in apartments or commute for hours from cheaper areas like Mendocino or Lake counties.
These are the people who hold the county together: the people who pick the grapes, bag our groceries, teach our children, save our lives, or hold our hands when we’re sick. People born and raised in Sonoma County, who come back from college and find they can’t raise families where their roots are. Young and old, educated and not, more than 40 percent of the county’s population is staring the median $390,000 home price in the face and wondering how in the world they will ever be able to afford a home.
The need for affordable housing is urgent, especially lately with hundreds of people being roughly pushed out of jobs through layoffs. To help combat the problem, coalitions in Marin and Sonoma counties are pushing for adoption of a jobs-housing linkage fee, which would require new commercial development to contribute to affordable housing. Though all involved agree that the fee is just a drop in the bucket for a much larger problem, many feel that it is a step in the right direction.
Money for Housing
In Sonoma County, the jobs-housing linkage fee would be an incremental fee ranging between $1.80 to $3.50 per square foot for new commercial development. If a developer wanted to build a new retail complex, for example, he would have to pay a certain amount of money, depending on the size of the building. The money collected from the fee would go into a fund for affordable housing, and the developer could pass the fee on in the form of higher rent. The proposal is still in its early stages, though a coalition of advocacy groups staged their Housing Action Forum on March 22 to raise awareness of the campaign.
Marin County is currently drafting a proposal that tackles the need for affordable housing slightly differently. Though Marin initially considered a jobs-housing linkage fee, after much discussion with various groups, they opted to propose that developers build affordable housing units along with certain kinds of commercial construction.
“If a developer wanted to build a new 100,000 square-foot Costco, for example, he would have to calculate the number of retail employees and income ranges, and based on that, the planning department would figure out how many low and moderate-income housing units he would have to build,” says Barbara Collins, affordable housing strategist for the Marin County Planning Department. “Ideally, the units would be on the same land as the new development.”
Last year, Marin County released a study stating that since 86 percent of county land is devoted to open space, and the median housing price is $700,000, half of all local employees live outside the county and must commute to their jobs. About a quarter of these people drive for over 45 minutes each way to get to their jobs, adding to the traffic problem. With no affordable place to live, employers have trouble recruiting employees, and young people are fleeing the area, leaving an aging population behind.
“In Marin County, it’s been thoroughly established that employers lose employees due to the high real estate cost,” says Collins. “Employers here understand the relationship between affordable housing and jobs. It’s costly to everyone when an employee lives in Vallejo and drives three hours every day to get back and forth to work.”
Sonoma County’s circumstances are not that severe yet. Most of the people who work here live here, though a growing number of people are being forced to commute longer distances. It doesn’t take much imagination to see how Sonoma County’s situation could get worse in the near future, especially since housing prices continue to rise (the median price reached $391,250 in February).
According to a housing report from UC Berkeley, a third of homeowners spend more than 30 percent of their income on housing. And rent is too high for many incomes. To rent a two-bedroom apartment, a family needs to have a combined income of nearly $42,000, or $21.32 per hour. Yet in 2000, nearly half of the local jobs paid less than $26,500 per year. Low-wage jobs in the service and retail sectors accounted for 44 percent of all new jobs in the last seven years.
The jobs-housing linkage fee is not new to Sonoma County. In December 2001, a study by the consulting firm Economic & Planning Systems made a strong case for the fee, but Santa Rosa tabled it after business interests complained the fee would give the city a competitive disadvantage by driving up the cost of commercial real estate, forcing potential employers to go elsewhere. But the proposal is far from dead. A working group with a representative from each city is in the process of creating an ordinance to be adopted by the entire county.
“At this point, we are trying to come up with language that will work for all the cities,” says Larry Barnett, a Sonoma city councilmember and member of the jobs-housing linkage fee group. “We’re trying to develop an ordinance that provides flexibility. What applies to Santa Rosa doesn’t necessarily apply to Cotati, so there needs to be language that accounts for everyone. After we draft the ordinance, each city will vote on whether to adopt it.”
The fee is expected to raise $35.5 million over a five-year period if growth continues at the current rate, which is roughly 10 percent of the money needed to build affordable housing. Marin County’s jobs-housing ordinance accounts for 10 percent of the total problem as well.
Down to Business
Many in the business community say the jobs-housing linkage fee will hurt business because it would increase the price of real estate and keep new businesses from coming into the area. Though it is a small fee, it is one of many that developers have to pay. They are also required to pay environmental fees, design review fees, sewer fees, approval fees, and school district fees, among others. Though the fees are considered part of the building process, many say they contribute to the high cost of real estate.
“The argument could be made that there are already a number of regulatory barriers and hurdles for businesses to jump,” says Bill Arnone, an attorney with Merrill, Arnone & Jones, and chairman of the Santa Rosa Housing Authority. “Continuing to add them may pose significant problems for businesses wanting to come into the area.”
But housing advocates say the added affordable housing far outweighs the incremental fees.
“A jobs-housing linkage fee is not in the top 10 reasons why an employer would or wouldn’t come to Sonoma County,” says Kelly Brown, the Sonoma and Marin counties field representative for Greenbelt Alliance, which is promoting the proposal. “They are going to be more concerned about things like affordable housing for their work force, transportation, and healthcare.”
To protect independent businesses, Barnett hopes to add a size threshold to the ordinance so that smaller businesses won’t be squeezed out. But even if the fee does contribute to the high cost of real estate, the long-term benefit of affordable housing outweighs the short-term, as other communities that have initiated the fee have found out.
San Francisco has a jobs-housing linkage fee of roughly $7.50 per square foot on commercial real estate. Though the San Francisco business community was initially against the fee, they turned around when they did research on the cost of recruiting and the decreased productivity of people who commute long distances, according to Barnett.
Another benefit of the fee is that it holds employers responsible for their part in the affordable housing problem, believes Martin Bennett, a history professor at Santa Rosa Junior College and the head of New Economy Working Solutions.
“Shared prosperity is in everyone’s best interest,” says Bennett. “It’s pragmatically in the employer’s self-interest to provide affordable housing, because it helps the long-term economy. We don’t want this area to turn into Silicon Valley. If a company coming into this community doesn’t want to take on its fair share, maybe it would be better off somewhere else.”
But with the jobs-housing linkage fee only helping with 10 percent of the total problem, all sides agree that by itself the fee is just a drop in the housing-crisis bucket. But combined with other things, it is a useful tool. For one thing, it would help in lobbying for affordable housing funds from the state of California, which is tighter than ever, thanks to the current budget crisis.
“The jobs-housing linkage fee is not the whole picture,” says Brown. “But it’s still an important fee because it shows local support with sellers and the business community when we’re competing for state housing funds. It would help leverage further funds.”
Proponents of the jobs-housing linkage fee made additional recommendations for the affordable housing problem in a report by UC Berkeley in conjunction with several local groups, including the Service Employees International Union, the Faith Based Coalition, New Economy Working Solutions, Greenbelt Alliance, the Living Wage Coalition, and others.
Written by Ph.D. candidate Nari Rhee, some of the recommendations, in addition to the jobs-housing linkage fee, include creating a housing trust fund devoted to affordable housing; increasing redevelopment agencies fees from 20 percent to 30 percent to go to affordable housing; creating limited equity co-ops, which allow families to buy into a housing complex that gives them specific tax breaks; and reforming the local housing element, which is the amount of affordable housing the state requires local communities to build.
Running Out of Land
Rhee’s aggressive recommendations are based on what she sees as a serious land issue in Sonoma County. “One problem with Sonoma County is that there is a lot of single-family housing, which is basically housing for rich people,” she says. “If they don’t do something about that kind of housing, they are going to run out of land.”
While other parts of the Bay Area have had a housing crunch for decades, Sonoma County’s started in 1990 with the economic boom. Between 1988 and 2001, employment increased by 40 percent in Sonoma County. Santa Clara County, by contrast, added only 20 percent in new jobs. People flooded into the county for work, and though income increased, the price of housing rose much faster.
Because of the single-family developments, most of the land is already used up, according to developer Alan Strachan. “Even if you could build enough affordable housing to meet the demand, 80 [percent] to 85 percent of developable land is already used,” he says. “Even if you did a total build-out on the remaining 15 [percent] to 20 percent of land for multifamily subsidized affordable housing, you wouldn’t be able to meet the demand for the housing at the current rates.”
It doesn’t take a genius to see why people want to live here. The weather is perfect most of the time; it’s rural but within driving distance to a major city; and despite the current downturn, the economy is stable and diversified.
And it’s a beautiful place to live, something that is greatly underestimated. Beauty is the underlying tension in Sonoma County’s housing problem, with some groups trying to protect the beauty and others trying to harvest it. It’s a difficult balancing act for everyone involved. While environmental regulations protect the open space that so many people in Sonoma County love, it also limits the supply of land, driving up the cost of housing.
“With a mobile economy, people have more freedom to live where they want, where 50 years ago they had to live near wealth creators, like railroads, mines, or factories,” says Strachan. “Sonoma County’s beauty is fundamentally driving the cost of housing. It’s not so much a supply versus demand thing with housing. The real thing that is in short supply here is the beauty.”
As more land gets used up, more political pressure is put on the open space.
“In the future, the need for housing will put political pressure on the green land,” says Rhee. “That’s why affordable housing needs to be addressed now, before these issues become worse.”
Beyond the Government
No matter how you slice it, governmental fees and regulations won’t be able to completely solve the problem of affordable housing. How much they do or don’t help the situation is debatable, but almost all agree that it is just a part of the total solution.
Some believe that focusing on the economy may be the solution to the problem. When the economy is going well, employers find a need to create more housing for their employers, as some tech companies did during the telecom boom, with employers recruiting engineers with the promise of housing assistance.
“I’m a big believer in the free market,” says Arnone. “As the economy improves, people are more prosperous and it will raise the standard of living for people, and, as a byproduct of that, lessen the affordable housing problem.”
But an improved economy will still lock out the poorer part of the population from housing. With 57 percent of the population earning less than $12.50 per hour, one solution may be to increase wages through more unions or a living wage.
“You have to pursue the wage and benefit side of the affordable housing issue,” says Bennett. “You can’t build your way out of a crisis. You have to enable people on the bottom to earn a decent wage through developing high skills and high rate of unionization. You need to provide good jobs first. Affordable housing is the other side of the issue.”
The housing issue isn’t likely to go away soon. But as hard as it is, it has always been a concern for people living here, along with other issues, like crime, healthcare, and transportation.
“This is one generation’s version of an old issue,” says Arnone. “Housing is a problem that’s been here before we came along and will be here when we’re gone. All we can do is address the problem while we’re here, and do the best we can.”
From the March 27-April 2, 2003 issue of the North Bay Bohemian.