How rich is poor?
Because the value of urban land reflects the residual profit to be made from developing it, when the locality is rich, prices rise, and with it rises the definition of ‘affordable housing,’ at least within the town. If the town is rich enough, then what may elsewhere seem rich is the new local poor, as revealed in this Boston Globe article:
SANTA BARBARA,
Saint Barbara, renowned for her beauty
Not that Los Angeles is exactly cheap …
But this is
When land is scarce, prices rise further.
The City Council is considering whether to use the property to build affordable housing, a condominium complex called Los Portales for families earning up to $160,000 a year.
Now, “it’s hard to get sympathy for people making $160,000 a year if you’re down in
But in this city — where the median home price is about $1.2 million — that person needs help.
I need help to buy a house for one … million … dollars!
Affordability in
1. $1,200,000 house price, 20% equity means $240,000 down payment.
2. 80% loan-to-value means a $960,000 mortgage.
3. For simplicity, figure an 8.0% debt service constant. The mortgage payment is $76,800 annually, or $6,400 a month.
4. If payments equal 30% (the Federal affordability standard), this means annual income of $256,000.
5. So the $160,000 ceiling is 62.5% of local median income, barely over the implicit affordability ceiling.
For Santa Barbara, those income levels are low.
Surprise, surprise, surprise!
And the Housing Authority of the City of Santa Barbara is about to become the rare public housing agency to assist the well-heeled along with the poor, to build shelter for those whose business cards come in designer leather cases and include such words as “doctor,” “lawyer,” “director.”
Except that those aren’t the people
People who need access to affordable housing are no longer simply those families who are at or below the poverty level, the disabled or low income seniors. It now includes a growing number of our middle class who earn a decent living but can no longer afford housing in our community.
And we depend on this latter group to meet a variety of our needs as well as to preserve our economic vitality—they include public safety personnel, teachers, health care professionals, and retail workers, to name a few.
The groups at the extreme ends of this income range - the homeless and middle income workers - are particularly vulnerable to our housing market and often have little or no recourse to deal with their respective housing dilemmas.
Decisions, decisions
Nor is
El Carrillo Studios is our newest project and is now under construction at
As might be expected with very deep affordability comes financial complexity, and a multiplicity of sources:
The partners needed to make El Carrillo a reality is an amazing [financing — Ed.] quilt, woven by several private and public organizations. Our partners include the Housing Trust Fund of Santa Barbara, an important and relatively new local nonprofit which strives to expand the production, renovation and preservation of affordable housing within
Listen for the cavalcade of the four kinds of money: hard debt, soft debt, hard equity (the city’s land contribution), soft equity, and more than likely income subsidy (in the form of Housing Choice Vouchers):
They are currently providing $1,000,000 of needed construction financing for El Carrillo at a below market interest rate. Other important subsidies and capital resources are coming from the City Redevelopment Agency, Garden Court, Inc., Santa Barbara Housing Assistance Corporation, Apollo Capital (our tax credit investors), Santa Barbara Bank and Trust, and last, but not least, ourselves—the Housing Authority, who has spearheaded and is the developer and operator of this much needed project.
Back to the Globe:
“It’s getting into a market that we shouldn’t be spending much time on but, stunningly, needs it,” said Robert G. Pearson, the agency’s executive director. “It’s rare for housing authorities to get involved in a project like this. We have our plate full dealing with the poor.”
Because if they can’t live in
Same metropolitan area! 90 minutes apart
Santa Maria Mayor Larry Lavagnino can’t decide which part surprises him more, the last lot or the helping hand. His working-class city is home to a chunk of its ritzy neighbor’s displaced workforce, men and women who have been priced out of the rarefied market 75 miles south.
“I can hear the water swirling” down the drain, he said of
By building housing whose affordability is capped by the financing.
Note well — demand-side interventions will not solve
Actually,
Prospective buyers would probably be “a cop married to a teacher, a nurse married to a guy who owns a plumbing store,” Councilwoman Iya Falcone said during a recent City Council meeting. “Some of the people who are going to buy the higher-priced units are doctors and lawyers. But lawyers are people, too. . . . I love this project.”
Council member Iya Falcone, on the ordinance committee
Not ordnance!
Here we see the true mixed-income housing:
Santa Barbara fancies itself America’s Riviera, with its wide, white beaches and perfect weather, its rugged mountain backdrop and clear-day views of the Channel Islands, its building codes tended as meticulously as its lawns.
The city can achieve income mixing for one and only one reason: it controls the land:
This is believed to be
The city is zoned for 40,005 housing units. About 38,000 have been built, and the only housing construction these days is in-fill: a few units here, a few there. Unlike other land-poor cities,
The tallest building here is the eight-story Granada Theatre, built in 1924. It could never be replicated today, in part because the City Charter strictly limits buildings to 60 feet, about four stories. And even four stories is a hard sell.
In fact, residents and the council balked at early plans for the Los Portales complex: 90 condos, four stories, with the first floor containing 8,000 square feet of commercial space and a parking garage smaller than municipal requirements.
NIMBYism is real, yet the very same neighbors want to exclude the undifferentiated ‘those people.’
The project has been in the works for nearly three years, since the Housing Authority bought the vacant lot. The land originally was a bracero camp, or quarters for migrant workers; then it was used as a lemon processing plant. After a while, a research and development operation moved in and then out. It is zoned for industrial use.
Zoning is destiny; and low-density zoning is high-income density, because housing demand is elastic, as earning power rises, so do total market occupancy costs — and therefore, so does the value of housing.
“If you’re looking at completely vacant, developable urban land, this is our last big lot,” said Paul Casey, the city’s community development director. But the council “would not have rezoned this land for market-rate housing. They were willing to rezone this property for the benefit of affordable housing only.”
There it is: the value proposition of inclusionary zoning — towns that reject virtually any other form of development will bring in affordable housing, even if affordability is defined by their gargantuan local standards.
These are my intake limits.
