The false promise of ‘workforce housing’

June 22, 2019 by Fred Allebach

What is meant by the non-legal, non-binding term ‘workforce housing’? In the case of project at 1211 Broadway, discussed at a June 13 meeting of the Sonoma Planning Commission, I believe it’s a misrepresentation by the developer, as the proposed unit prices are closer to market rate levels. I’m concerned that in a housing affordability crisis, business as usual keeps producing more and more market rate projects that are out of reach to the actual workforce — those whose earnings are on a spectrum of the area median income, or AMI.

Six housing units are currently proposed. By having five or more, the project is subject to the city’s inclusionary ordinance, which stipulates that 20 percent of the units, in this case one, must be affordable housing. The one affordable unit here is the existing 113-year-old historic building, a generous offer by the developer.

The definition of “affordable” in the city’s inclusionary ordinance is 120% AMI, which is an income $111,950 a year for a family of four. Any and all city inclusionary units will be at 120% AMI and nothing below. Note that for a family of four, the 2019 county median income is $93,300.

Banks and lenders have a scale of who can afford what for housing; 120% AMI can afford a $400 to $500,000 home price, depending on how much is paid down. The May 2019 Zillow market rate median home price in Sonoma is $735,000.   

The North Bay Jobs with Justice research document, State of Working Sonoma 2018, by Jesus Guzman, shows that the people who need housing the most, the actual workforce, are earning nowhere near enough to afford median rents or median home prices.

Take home points: one, both the city inclusionary ordinance and the developer inflate the definition of affordable to be 120% AMI and above; two, they both exclude any and all at lower area median incomes; three, median and 120% median incomes cannot afford market rate housing.    

During the applicant’s presentation for the Broadway pproject, various terms were used to describe project housing, as “workforce housing”, “economical”, “starter home for first time buyers and young families”, and as “attainable prices.”

But are they? At a break in the hearing, I asked the developer what the projected price points would be. He said the inclusionary unit was what made the workforce term applicable. It’s true he did not have to have five or more units and thus have an inclusionary unit. He said price points would be: some in the low $500,000s and some in the high $700,000s, and that compared to what some Sonoma real estate is going for in the $1 million plus range, his projected prices were lower.

However, given the project unit’s square footage and the costs of building, it is more likely that unit costs will be between $800,000 and $1 million, hardly “workforce housing.” My understanding of workforce and affordable housing is that it centers on the AMI spectrum, of which 120% AMI is the top level.

Market rate developers always say that serving the AMI cohort does not “pencil out.” Maybe this developer can buck that trend, but as of now he is advertising a workforce project, but with market rate prices.  

Sonoma’s Development Code allows for what is called a Planned Development, where various exceptions can be made for projects on odd-situation lots. A Planned Development costs the applicant more, but allows more flexibility; in the case of this proposed project, the narrow, long lot is an odd size.

A Planned Development has various requirements and criteria that have to be met, a number of which say there has to be “affordable housing” included, that the project “meets identified housing needs”, has “well-designed affordable units”, and that a Planned Development “shall not be granted on the basis of maximizing development potential.”  These are just some of the criteria that emphasize affordability, but there are other criteria as well, and it is not clear which take precedence to the Planning Commission. Or if only some need to be met?

How would the Planning Commission gloss the above affordable criteria? That one required inclusionary unit at 120% AMI is adequate for a Planned Development’s affordable parameters? Are the terms above just talk? Are the likely above market rate prices equivalent to “maximizing development potential?”

The project is interesting, well done, and looks great, but it’s not family or workforce housing. Some truth in advertising needs to be done by the developer here. Spinning market rate as workforce and affordable housing is just not accurate.