By John Fowler
It goes without saying: housing costs on the Central Coast are high and not expected to decrease anytime soon.
While it may be perceived as an uphill battle, the challenges also create opportunities for thoughtful and creative strategies that could provide the framework for new approaches, collaborations and replicable solutions.
It’s important to note that the cost of building affordable housing is surprisingly comparable to a market-rate project. Public sector grants and loans at below-market interest and loan terms, along with tax credit funds generated from private investors can provide funding that makes reduced rents possible.
To qualify for affordable housing, residents must meet certain income criteria. In SLO County this means earning a household income that is less than 60 percent of the median income in the area, up to $46,260 for a four-person household in San Luis Obispo.
The good news is there is help for low and very low income residents. But what becomes of households whose earnings exceed these figures, including our nurses, firefighters, teachers, construction workers and so many others in our community?
More often than not, they too are paying a higher-than-affordable percentage of their incomes towards rent and mortgages, forcing many to commute longer distances to and from communities where housing is more affordable.
Unfortunately there are few, if any, public-sector resources available to build housing that could be affordable for this segment of our population, households earning between 60 percent and 160 percent of area median income. The market itself often produces price points that are simply too high to enable ownership and subsequently, quality and reasonably priced new rental opportunities.
Any conceivable solution to address workforce housing needs will require the formation of new partnerships, collaborations, financing, and potentially new development and design standards. One such example that has emerged is “affordability by design.”
This concept suggests higher densities of developments (more units per acre) which would require smaller units resulting in lower purchase and/or rental prices.
Another option could be new design standards that strategically incorporate multi-modal transportation options into developments, so bike paths, public transportation and walking paths become integral parts of the design addressing parking challenges. These developments would optimally be located in close proximity to jobs and family services.
To take full advantage of these opportunities, new partnership structures between public, private, non-profit and possibly faith-based groups, would need to be formed in order to combine resources and interests and identify creative financing and building solutions.
Additional options could involve opportunities for employer-based housing, encouraging philanthropy through land donations and/or reduced land prices, and reducing development costs, all of which could result in lower rents and home prices.
From a private investment perspective financial institutions could re-evaluate current lending products that will continue to ensure sound investment practices while still being underwritten with a great level of flexible loan terms and conventional rates of return. Local housing trust funds and other evolving lending models, such as community development financial institutions (CDFIs) can also play a role in this conversation.
Housing is an asset that presupposes long-term roots in our community. That it remain reasonably available to a diverse cross-section of community members who live and work here is a laudable and attainable goal requiring new, creative ways of thinking with expanded and broadened collaboration and engagement.
John Fowler is the president and CEO of Peoples’ Self-Help Housing in San Luis Obispo.