A public draft of an ordinance reserving a percentage of dwellings at new rental housing developments for lower-income tenants may be released as early as June, a consultant to Napa told the City Council on Tuesday.
If approved, the ordinance would bring back a requirement once imposed by Napa and other cities hit by soaring rents, only to be neutralized by a 2009 state court ruling that blocked such minimums as an illegal form of rent control.
Although Napa has since collected fees from residential and commercial developers to steer toward affordable housing around the city, housing advocates have called that revenue – more than $3.5 million in the 2017-18 fiscal year – far short of the sums needed to significantly boost the local supply of homes for lower-paid workers in service, hospitality and other industries.
“Our goal in an inclusionary ordinance is that it’s not easier for developers just to write checks instead of building affordable units,” Sharon Macklin, a member of the Napa Housing Coalition, told council members at City Hall.
In the so-called Palmer decision, an appeals judge ruled that mandatory set-asides of new lower-rent dwellings in the city of Long Beach unlawfully skirted a California law limiting rent caps to housing built before 1995. Napa withdrew its affordable housing minimum three years later in 2012, ending a 13-year stretch in which the city had gained 134 affordable rentals, according to a staff report.
State legislation in 2017 restored the ability of local governments to demand that developers set aside portions of new rental complexes for families earning less than the local median income, leading council members to start looking into a revived law last August.
BAE Urban Economics of San Francisco is studying a possible inclusionary ordinance by modeling financial and building data, and organized a stakeholders’ meeting in early April with a second forum set for May 23, according to BAE analyst Stephanie Hagar.
Still to be resolved is exactly what portion of rental developments the city will earmark for tenants on lower incomes. Assembly Bill 1505, which re-legalized inclusionary ordinances two years ago, permits cities to set the percentage of affordable units as high as 15 percent, or higher if they can prove a stricter requirement will not depress local building activity.
Striking a proper balance between delivering more lower-cost housing and not scaring off developers with unworkable profit margins will be the main challenge in crafting an effective law, predicted Hagar. “On the one hand, you want affordable units, but on the other hand, you don’t want to create burdens such that market-rate units don’t go forward,” she told the council.
Local housing builders appeared cool to a mandatory set-aside of lower-rent units, whatever the minimum percentage, predicting such a step – combined with high construction costs – would also decrease the number of market-rate homes as well.
“Residential builders aren’t causing the problem,” said Chuck Shinnamon, a Housing Coalition member who has questioned Napa hotel projects for creating low-wage jobs that force many employees to commute from outside the city. “There’s a real need to include affordable units within multifamily (projects) but we need to make it work. You, the city, the community need to give enough carrots that those projects actually work.”
At least one council member remained unsure where a happy medium between increased lower-rent housing construction and willing developers might be.
“We can make it so inclusionary that people will say, ‘Well, I’m not going to build now, I’ll hold off for two, three, four years,’” said Doris Gentry. “They’ll build a shopping center or they’ll go build somewhere else.”
If an affordable-rental plan is ready by June, it would be reviewed by the Planning Commission in July, followed by the council in August.