Fred Allebach
5/16/14 Sonoma Planning Commission meeting public comment
First Street East (FSE) project agenda item 4.1
Kelso Barnett, FSE developer
5/15/24
-see acronym list at bottom
Primary comments and suggestions (approx. 700 words)
Ø Bring FSE project back for another hearing. If all approved in one shot the public will see this as a developer give-away/ sweetheart deal flying under the radar. There are no news articles on it as of 5/15/24. The packet came out five days before the hearing, no time for public to adequately digest it all. Best course IMO will be to allow the public more time to become aware and weigh in before totally approving the project.
Ø The Project needs to be reviewed for consistency with AFFH, Affirmatively Furthering Fair Housing. The staff report did not do this. The Project site has RHNA potential for 50 total units including five Moderate-income and five Low-income units. The Project proposes 31 units, a 25% inclusion of 31 is eight units. By using the 850 sf exemption the Project burns six affordable housing (AH) units. These are the only 6th cycle Low-income units slated for the whole east side. Given that the Project is in a Tax Credit Allocation Committee (TCAC) High Resource Opportunity Area, tops to be integrated with, such an outcome can be read as not materially consistent with AFFH. AFFH in the city Housing Element (HE) is about fostering integration throughout the city, lower-income units are a proxy indicator for racial diversity; does this project help AFFH integration or does it perpetuate segregation?
Ø Suggestion: Add deed restriction in perpetuity for six 850 sf units, three at 140% AMI, three at 160% AMI. AMI = area median income. This will satisfy the intent of the 25% inclusionary ordinance to have eight of the 31 units be affordable at some level and show good will by the developer by earmarking “missing middle”/ affordable by design units for the local young professionals that need that type of housing. Alternately, make six of the 850 sf units to go as three Mod and three Low to voluntarily conform with the 25% inclusionary ordinance. Perhaps since the 850 sf exemption does allow gaming of the intent of the 25% inclusionary ordinance, some type of mitigation for this could be made by the Planning Commission (PC) and the developer.
Ø Move the deed-restricted units to separate buildings to not concentrate them all in one place, spread them throughout the development.
Ø Disclose in writing projected price points of 850 sf units so as public and city can determine if they fit the 120-160% AMI affordability range.* A couple making 140% AMI can afford a $550,000 home, that with $50,000 down and a $3,300 a month mortgage. What will be done to see that the 850 sf units do not all go to the highest bidder as second homes? How to prove the affordable by design theory? If no solid price point then there’s no way to measure the affordable by design thesis.
Ø While the FSE Project is legal by the books, the 850 sf exemption is inconsistent with the intent of the 06/2021 25% inclusionary ordinance; it brings an unintended consequence. Within six months or sooner, staff, PC, and City Council can take note and either remove this exemption or modify the 25% inclusionary ordinance to close the 850 sf loophole. Modify it to set missing middle size limits, deed restrict missing middle units, whatever ever it takes for the next step by the City in this cat and mouse game. Try to eliminate developer’s choice to take the path of least AH production. Bob Felder, in 4/21 PC meeting, did not want to see smaller units trend to market rate prices like on the Broadway auto lot project; “don’t give a developer a chance to do what was done on Broadway again.” With no changes the city will set a precedent for Hanna, SDC, and Springs Specific Plan affordable by design claims by developers.
Ø Could the Project be refigured to take away some of the private and common space and thereby make more room for AH units of various types? Is a pool necessary? Or does a higher density market rate project get to a plateau tipping point where returns are not as great with higher density?
Ø Project mentions local investors. Are there any local investors who are on the PC, Council or former PC and council? What decision makers need to recuse?
Ø Was the Project site purchased in a window that overlapped the 850 sf exemption being proposed as a Code change?
Ø Please take note of subjective terms used around this Project and how they do not meet objective standards to justify development projects: compatible (for who?) with neighborhood and town character (for who?), quality of life goals (for who?), sustainable neighborhood (for who?), missing middle, missing middle income, affordable by design
Entitlement process grand slam
-Staff recommends to entitle FSE all in one shot on Thursday 5/16/24, this is exactly the same process PC members complained bitterly about in the Darius hotel. Project has a number of what’s good for the goose is not good for the gander items.
-normally developers would be heavily challenged on everything, on FSE it is especially clear that the intent of the 25% inclusionary ordinance is being undermined, and that the city will be losing AH units in this deal, will anyone call this out?
--Darius hotel opponents (Vic, Johanna, Carol) were objecting strongly over potential loss of three or four units; FSE loses six to eight
-the normal PC modus operandi is to question and hit developers hard and ask for changes; in a previous I-T interview Kelso said he expects FSE to pass the PC with no troubles
(*Kelso 5/15/24 but this is what I said:
-if this passes all at once with no future reviews, and no AFFH analysis, it will look like a sweetheart, inside baseball deal
FSE Project Narrative
-Project narrative mentions that 850 sf/ smaller units are “theorized to be affordable by design (ABD)”
-Need a written price point from Project to calibrate this theory, peg it to an AMI, if no objective calibration then we can expect a repeat of Mockingbird Lane price inflation, which everyone cites as an abuse of process and misleading claim
6th cycle RHNA site inventory, no net loss, RHNA excess capacity
-The FSE site is counted for 50 6th cycle RHNA units: 40 Above Mod, 5 L, 5 Mod
-with 31 total proposed, FSE will result a RHNA net loss of 17 Above Mod-income units, four Mod, and four L
-Sonoma RHNA excess capacity for VL is 29, L is 30. There is no excess capacity for VL or L on east side
-with FSE approved as is there will be only one Low-income unit in 6th cycle RHNA for the whole east side
Private space at FSE: a boon or a waste?
-317 sf private space per 1 BR, 960 sf private space 2 BR
-8,642 sf total private space, this is a luxury Sonoma amenity, opportunity hoarding of space
-Siesta Way senior apts. has only a small balcony/ patio private space per unit
-the PC and Council pulled for smaller units in the 2021 hearings
-private space uses up valuable city space for upper-end quality of life amenities and makes sale prices go up; lower density overall means GHG goes up per capita, lower density/more private space means more exclusivity = unsustainable neighborhood
FSE Staff Report comments
Inconsistency with AFFH is minimized
-AFFH is state law in the HE; HE has to be consistent with AFFH, why no staff analysis?
-in Martinez v Clovis 2023 WL 2820092, Clovis land use and low-density zoning perpetuated segregation and both Clovis and HCD lost on a certified 5thcycle HE. Clovis needed to upzone.
-the Clovis parallel is with the Sonoma east side where RHNA site inventory has it so if FSE is approved as is, there will be only one L unit on the east side for the whole 6th cycle; the city HE and Code have effectively locked off the east side from lower income housing.
-how is that not maintaining segregation in the TCAC highest opportunity areas of the city?
General Plan consistency, comments
AFFH
-no focus on project’s impact on AFFH, all on consistency with the character and neighborhood compatibility side, even as FSE continues a Sonoma pattern of Above Mod RHNA over-production
-GP says everyone who works here should be able to live here, is the Project consistent with that?
Encourage infill development
-with infill like this, space keeps getting taken up by Above Mod units, gradually squeezing out potential for VL and L and for AFFH in Sonoma; this is Sonoma housing BAU and how Sonoma is sorting to wealthier and wealthier
-project errs heavily to preservation of small-town character justifications
-dense infill was part of the UGB bargain, what we are getting IMO is excuses, lower-density market rate gentrification, and lack of political will to address exclusionary zoning and segregation
Community Development Element (CDE) /Opportunity Site
-FSE will be another Opportunity Site lost to AH even as project is consistent with this element and staff says FSE is “consistent with city AH goals”
-it is my understanding that the Growth Management Ordinance is now not in play for the 6th cycle HE, but the staff report cites the CDE for GP consistency to “limit growth to rate based on cost-effective provision of services”; why even cite this?
Preserve and enhance scale of neighborhood
-promote higher density while ensuring scale is compatible with neighborhood and town character; more subjective terms
-there seems to be a systemic city bias against AFFH and towards character and compatibility
HE MM unit type diversity
-quality of life goals is another subjective term; the current HE claims that inclusionary units are the main source of AH in Sonoma; here we have a project that is then materially inconsistent with AFFH and AH production
-Sonoma appears like an eternal sitting duck for market rate housing oversupply; city needs to ramp up focus on AFFH, show political will
Maintain sustainable neighborhoods that fosters neighborhood character
-subjective phrases again, what is a sustainable neighborhood?
Promote environmental sustainability that minimizes reliance on natural resources
-FSE, by choosing lower than max density and taking no density bonus, more resources per capita will be used; the focus on character is environmentally unsustainable because wealth correlates with unsustainable GHG footprint and the more market rate units, the more wealthy residents, the less sustainable overall
Fire risk?
-the fire risk is essentially the same as Donald Street area and SDC
-will there be similar public outcry? Do those folks even know this project is up for entitlement in one fell swoop? It was this exact same lack of comprehensive notice that precipitated the Donald group’s opposition to the Springs Specific Plan
-with fire insurance being dropped in CA, and insurance needed to get a mortgage, MM buyers will get squeezed out by cash buyers who can pay for high-risk insurance
Fred’s current General Plan (GP) comments
-Sonoma has a fundamental planning and housing tension between exclusion and inclusion
-this shakes out as tension between character preservation that has effect of maintaining segregation and policies like upzoning and dense infill with VL and L units that would foster AFFH and integration
Affordable by Design (ABD)
-ABD is aimed at the “missing middle income” (MMI) cohort, a subset of Above Mod who can’t quite afford market rate
-for MMI people to get units in their price range, MMI units have to be set aside so market rate cash buyers don’t bid up the price and get them all
-how to calibrate ABD? How to get these units to the intended buyers?
-the FSE project is in a 2024 TCAC High Resource Opportunity Area, in a 2023 TCAC Highest area; FSE is an extremely desirable location, walk to Plaza, creme de la top location in Sonoma, one minute to the Mission, to dining, wine tasting, a stroll on the Plaza, perfect for second homes and work from home
-in all likelihood all FSE units will sell at max highest market prices making any ABD intent moot, who will turn down a street legal windfall profit?
-ABD is highly unlikely to be affordable to the MM cohort in Sonoma unless price is deed-restricted to 120-160% AMI
-without objective price calibration, ABD is not an objective standard; it’s an unproven theory but one thing is known, the market jacks up all prices as high as possible, trusting the market to voluntarily create affordability is naive, as SDC opponents to ABD have pointed out, you can try to justify ABD as actually affordable but there is little proof
-trailers in Sonoma are not ABD, average space rents are now $1,100- 1,200, these plus utilities and other related housing costs inflate monthly trailer housing costs well above 30% annual income level
-it is generally assumed that ABD is not possible in Sonoma, unless claiming it helps someone’s interests
-an FSE entitlement that buys the proposition that the 850 sf unit are ABD will create a precedent, based on the 6/21 25% inclusionary ordinance, that ABD is a valid affordable housing category that will also work also at SDC and Hanna
UC Berkeley Terner Center take on ABD prices
UC Berkeley Terner Center: no uniform way to measure non-deed-restricted affordability: “Policies and programs seeking to address the shortage of units affordable to middle-income households must carefully consider how to determine eligibility thresholds, in order to ensure that proposed solutions will reach the people that they are designed to support.”
*Fred’s ABD calibration
-A “studio” apt is @ 600 sf
-SB-9 units, ADUs and FSE 850 sf condo units all closely overlap in size
-some ADUs are counted as Mod for City RHNA, even as no proof that Sonoma ADUs are Mod-priced
-SB-9 units and 700/ 750 sf units were said by the public and by PC members to never be ABD in Sonoma
-Sheila in 2021: “750 sf sells for market rate”; Bill Willers said the same when seeking to show that SB-9 units would never be affordable
-ABD can’t be infeasible one day but then magically feasible another depending on who’s interest are at stake
-SDC opponents have totally poo-pooed ABD as a valid category, as developer BS; ABD is a good-sounding idea but does it pan out for price point? Let’s see.
CA/ SoCo 2024 AMI is $102,500 for 2-people
-140% AMI is $143,500 in 2024 for a two-person household
-two people at 140% AMI can afford a home of up to $550,000 with a monthly payment of $3,300 and $50,000 down
https://www.ccu.com/learn/calculators/home-affordability-calculator/
-$167,000 is 160% AMI and this is in the top 10% of US earners which is nowhere near the “middle” (“missing middle” and missing middle income as a subset of Above Mod are a SUBJECTIVE TERMS ISSUE!)
-nevertheless, a 160% AMI couple will not be able to compete with a wealthy cash buyer in a bidding war, and Sonoma needs many mid to high level professionals to be able to live here…
-the top 5% and top 1% is killing the top 10%
-owner occupied units cost over $800,000 in Sonoma in 2021
-for “MMI” earners making more than the AMI, 85.5% are not cost burdened, only 10% use 30-50% of annual income on housing (as per 2021 Sonoma-ABAG staff report); MMI housing is in some respects a solution in search of a problem
-top MMI earners have money, they maybe just can’t buy a house, as compared to Mod, L and VL renters who don’t have the money to pay Sonoma prices at 30% of their annual income
Conclusion:
-For FSE, 140% AMI will not be able to afford an 850 sf condo unless the price point is $550,000. -160% AMI needs a price point they can afford to buy a home
-neither 140% or 160% can be termed “middle” when the real middle is totally left in the dust for housing. Calling Above Mod levels of income “middle” is like Starbucks calling a small cup of coffee a “tall”
-deed restricting ABD units and missing middle units is the only way to stop local missing middle people looking to buy a house from being outbid by wealthier people
25% 6/21 inclusionary ordinance loophole
-I hope the PC and council are keyed in that the 25% ordinance has a loophole that allows the main intent of the ordinance to be evaded
-without the 850 sf exemption there would be eight inclusionary units, not just two
- in two 4/21 meetings, the PC never discussed the potential consequences of this 850 sf exemption, the focus was all on VL, L, and Mod, and MM (“missing middle”) inclusionary units; none of these were discussed as an affordable by design or ABD strategy
-ABD and the 850 sf exemption sat as an unnoticed Trojan Horse loophole
-the prime intent of 25% was to cover a long-term city underproduction of VL and L units
-in 2021, Sheila was cognizant that developers game the rules, in a cat and mouse game; with FSE we have a case of that, the loophole needs to be shut for future projects, no one on PC or council called out or saw the implications for abuse of the 850 sf exemption, that it could actually run counter to the prime intent of the ordinance
2021 Background meetings of PC, Council, and PC/ Council ad hoc committee that set table for 25% inclusionary ordinance, notes and comments
-Code ad hoc committee : Mayor Logan Harvey, Council Member Kelso Barnett, PC Chair Ron Wellander, PC members Larry Barnett, Bob Felder
4/8/21 PC meeting
Mayor Harvey wanted ad hoc recommendation to be not baked, but 850 sf and ADU exemptions slid by with no change and no discussion, it was a Trojan Horse
Kristina: “trying to address the (25% ordinance) holes we have now, we have very few VL and L units”
-a non-deed restricted Mod unit is an ADU
-Kristina: “zoning code implements the GP and HE”, but Kristina told me that land use map controls zoning and that land use map is contingent on GP, and that is why there was no upzoning in Sonoma 6th cycle HE, because land use map had not been changed yet…
-over and over it is claimed how city RHNA has been met and exceeded, never an assessment of 2000- 2020 RHNA underperformance, like failing to disclose to your doctor you smoked for 20 years
Willers: “relate density to affordability”, tie higher density to most affordability and lower density to the least
Storer: Harvey wanted category for 140% AMI/ MM
-don’t see any ad hoc recommendation for ABD, only “discussions on size and affordability”; Harvey for 140% missing middle
-“affordable” for the city is an AH unit; consistent with the most recent policies of city of Sonoma
-Larry Barnett, limited number of significant sized parcels to be developed in Sonoma, a land rush by developers, securing options, looking to move on applications
-intent of 25% is to get ahead of developers looking to max their advantages, 25% will push projects into greater diversity of pricing and levels of affordability
-“get a dollar amount”, what are market prices of units?
-we are out of balance with market rate, 25% intent is to beef up deficit of VL and L, “a rebalancing effort”; Felder agrees
Sheila: people manipulate the system really well, game the system, savvy people will find a way around desired city goals
Patri and Aftergut: reward ownership units as highest priority, (even as rental is greatest need)
4/22/21 PC meeting
-a Sonoma ABAG study produced by staff confirms need for VL and L units
-39% of households in Sonoma subject to displacement
-Above Mod RHNA overproduction by a lot
-city has few similar size chunks of land to Alta Madrone on Broadway, and no 100% AH projects in the works
-fact is, past RHNA performance was bad and looks to stay bad, but now there are at least a few teeth like SB-330 streamlining after four years if RHNA not met
Storer: Healdsburg, added middle income definition 121-160% AMI; he says missing middle and middle income are synonymous, interchangeable terms (The middle between poor and rich? Not the actual middle or median?)
-MM for ownership sale price for between 140 and 160% AMI is related to current mortgage prices, “if the related max housing price, as computed by the city, would require a mortgage exceeds that SoCo amount of a conforming mortgage loan”
CDC has no MI or MM category, these are individual city categories
(If 25% intent was to open up an MI category, FSE overproduces it and counts on a putative ABD as justification; this is out of balance, and price point will likely be far over what 140% AMI can afford anyway_
(Note, PC is on record with recent Cooperage project as saying it is not PC’s job to consider the developer’s economics; what is important to PC is that city rules and policy intents get followed, in the case of FSE the application is by the rules but uses an unexamined/ untested loophole to evade the prime sense of the 25% ordinance)
The overwhelming time here was spent on AH requirements, not the exemptions which were not discussed for possible gaming
Storer, for 25%. AH requirements “eliminate developers’ choice”, so as to get more VL and L units
(As far as constraining development, 25% is not constraining development now, it is the city being picayune with Montaldo, city has a reputation of being hard for developers to deal with)
Sheila, “I know that developers are gamers”
Kristina, costs of rent/ sale based on # of BRs more than sf total
Felder does not want to see smaller units trend to market rate prices like on Broadway project; as Kelso seems to be doing; “don’t give a developer a chance to do what was done on Broadway again”
-sizing issue relates to developer gaming of process, 850 sf exemption is a loophole that needs closing
Sheila, Broadway auto lot proposed project AH units at 453 sf were way too small, “750 sf is being sold for market rate”
5/21 Council meeting
Not one mention of 850 sf exemption the whole time
Wellander, MM unit can be $1.2 million
Does not support size limits, we don’t need to live in huge homes, give developer a range of sizes none less than 1,200 sf and not more than 1650 sf, if smaller allows for greater number of units overall, cluster units with less personal space each so as to get another unit
Logan, MM is very close to market rate, having a deed-restriction at MM levels allows MI people to compete with market rate second home buyers, intent is to try to make sure locals can buy in to a house
(-ABD Is not in 25% as an AMI level, only implied
-for FSE 850 sf units, will prices get jacked up like at Mockingbird? This exemption is showing now to not meet the goals of the 25%)
Kelso, “under impression that Mod is very close to market rate”
-“anytime you have a policy like this there will be unintended consequences”
-back up unit costs and income ranges with real data and price points
-Kelso is lone No vote in 255 ordinance based on lack of specificity on tagging income ranges to unit prices
Kristina, consider alternate methods of limiting size, asks if anyone has any issues with exemptions in the 25%ordinance? None.
-Kristina: one goal of this is to help city comply with RHNA, VL and L are primary goals (but many PC and council see current RHNA and AFFH as illegitimate)
Amy does nice job of negotiating the 25% split for rentals and ownership
A House Divided
Short movie by Norman Lear; very clear points on US systemic segregation.
https://americadividedseries.com/a-house-divided/
-Milton Friedman, government’s job is to act as a backstop to market excesses; people who see segregation is a problem will seek to do something about it; AFFH is a strong lever…
Acronyms
TCAC CA Tax Credit Allocation Committee
RHNA Regional Housing Needs Assessment
sf square feet
AH affordable housing
PC Planning Commission
AMI area median income
VL Very Low-income
L Low-income
Mod Moderate-income
Above Mod Above-moderate income
MM “missing middle”, a vague descriptor of housing unit type or a level of Above Mod income
MMI “missing middle income” between 120% and 160% AMI
FSE First Street East project
AFFH Affirmatively Furthering Fair Housing
ABD affordable by design
ADU accessory dwelling unit
BAU business as usual
BRs bedrooms
GP General Plan
HE Housing Element
CDC Sonoma County Community Development Commission
IMO in my opinion
SDC Sonoma Developmental Center
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