Dick Spotswood: State must incentivize affordable housing to flip expected RHNA ratio

Each of Marin’s 11 municipalities, plus the county government, strived to complete their revised general plan housing elements by Jan. 31.

Mandated by state law, each entity must outline how they’ll plan for and build the specific number of new homes required by the community’s Regional Housing Needs Assessment.

The goal, as set by the Legislature, is for Bay Area cities and counties to plan for and build 441,176 new homes by 2031. Of that unachievable total, Marin is allocated 14,405 new homes that are dispersed among its cities and in unincorporated neighborhoods.

Millions of dollars have already been spent on specialized consultants supposedly expert in preparing housing elements that’ll pass state scrutiny. Whether that will result in new homes of the type that’s badly needed is dubious.

The state law establishing RHNA requires that the new homes are further allocated according to four categories based on the tenant’s finances: very low, low, moderate and above average income. The latter is a euphemism for those available to pay the market rate for their home.

In Marin, 5,652 or 39.2% of the required new homes are in the market rate category. We already have an abundance of properties for rent or sale at full price. What we need is housing for our workforce.

Market-rate houses are the most likely to be built and the least needed.

If that comes to pass, current residents will be subjected to increased traffic congestion, crowded schools and less available water, plus new taxes for essential supporting infrastructure. What they won’t receive in exchange is a more economically and racially diverse community or a place for our local workforce to live so that they no longer need to endure commuting from outer suburbia to secure a residence they can afford to purchase or rent.

Building housing isn’t about altruism. It’s about economics. The housing envisioned in RHNA will be built by the private sector. That’s not an easy proposition in a region noted for high wages that lead to astronomical construction expenses. We must add in expensive raw land and high fees imposed by governments who ironically claim they want to foster new housing.

If projects don’t pencil out, new homes won’t be built. Given high development costs, the implication is that only the most lucrative to build housing – market-rate homes – will ever be erected. A relatively few homes that are affordable to blue-collar workers will come about, but the new construction is likely to be in the range of 80 to 85 market-rate units for every 15 or 20 in the “affordable” categories.

The Legislature failed when it half-heartedly tried to incentivize new workforce housing. The law’s meager affordable component bonus is part of the reason the 85% to 15% ratio of market rate to affordable is likely the new norm.

The failure stems from the motives of major interests that originally pushed for the housing mandates. The goal of the development and real estate industry, trade unions and the technology sector (until its recent bust) was simply to build more housing of any variety. That may be why the incentives to build homes for our workforce and lower-income folks are lacking.

The ratio needs to be flipped. The Legislature needs to create incentives facilitating construction of RHNA-required affordable housing. The goal should be a ratio of 20% at market rate to 80% affordable.

We can accomplish the task by having the state Legislature defer less essential spending and, instead, subsidize the purchase of land only for projects that are at least 80% affordable.

Remove the cost of real estate from the equation and simultaneously eliminate local development fees on affordable projects and we create a financial incentive to build the housing we want and need.