Will this plan solve the homeless problem in Sacramento? It just might.
One of the least understood reasons why cities are so pitiful at creating enough housing for low-income and homeless people is how expensive it is to build housing for people who can’t pay much rent or can’t pay any rent at all.
A robust roster of rent payers generally funds buildings. Low-income or workforce housing, though, must be subsidized to make a project pencil out for developers. The pipelines to get those subsidies are pretty narrow: tax credits, grants, government loans.tax exempt bonds, etc.
How expensive can this get? For nearly a decade, Sacramento officials have been cobbling together the money to rebuild the aging Twin Rivers housing project on Richards Boulevard. The goal is for it to be a community of more than 200 housing units, to include people of low and very low incomes.
But it will cost nearly a half million dollars per unit to publicly subsidize a little more than 100 units for low and very low income people. The exact cost is $472,520 per unit, according to a city staff report.
Crazy, huh?
So what happens? There is an overwhelming need for low income or workforce housing in Sacramento. Twenty developers will apply for one pot of money. One developer will win, 19 will lose. So one small housing project will get built while the losing ideas – which are badly needed – will go in the shredder.
Politicians will cut a ribbon when the lone housing project winner comes online, giving the impression that they are really doing something about getting vulnerable people under roofs. And then everyone attending that celebratory event will step over homeless people on the street as they leave.
At the heart of the homeless crisis is an innovation problem. How do we figure out how to shelter people if they don’t have the money to make it possible to build them shelter?
It took eight years – eight years! – to build The Hardin, the block-long bank of studios and one-bedroom apartments at 8th and K that opened in 2018. As The Bee’s Tony Bizjak and Ryan Lillis reported, of the 5,550 housing permit building units issued in the city between 2015 and 2017, fewer than 100 were for low income residents.
As of 2018, the city was less than 10 percent of the of the way toward meeting its 2021 housing target for low- and very-low-income households, based on goals set by the Sacramento Area Council of Governments. Meanwhile, rents have exploded by 45 percent in the last seven years, according to a Bee analysis.
This is how Sacramento is squeezing people out onto the streets.
So what do we do? You can’t rent-control your way out of this cycle that is undeniably causing housing vulnerability among working people and students. Sacramento State is the institution that creates our future work force and future civic leaders and we have too many of those kids sleeping in their cars. Or campus security guards are looking the other way while our future leaders sleep in the libraries overnight because it’s well lighted and safe.
This is a disgrace. As a 30-year-resident of Sacramento, I read this about Sac State kids and I was filled with shame.
“The public money doesn’t get us there,” said Sacramento Mayor Darrell Steinberg.
Earlier this year, the city set aside $75 to $100 million for a housing production trust fund.
Steinberg is getting ready to define how this fund would create housing. It will be presented to the city council next month, Steinberg said. The goal is to provide the public funds for housing that could be built with subsidies no greater than $100,000 per unit.
“It would create a market for efficiency housing,” Steinberg said.
We’re talking about pre-manufactured homes, modular construction units, shipping containers, rooming houses. This would be a play for volume. It would seek to encourage developers to build less expensive housing, but more of it. The goal is to create housing that wouldn’t take eight to 10 years to build.
These funds would target low-income people.
“I think this would strongly encourage developers to think outside the box and be creative,” said Geoffrey C. Brown, president and CEO of USA Properties Fund , a Roseville-based developer.
Steinberg has been pushing for the city to be a catalyst for creating incentives for housing since he asked the Sacramento Housing and Redevelopment Agency to build 1,000 tiny homes in a year – a goal that fell flat because the old model of subsidizing housing for the needy doesn’t work.
This idea of the city as the catalyst for low-income housing could be a new way for California cities to fill the glaring need for affordable housing. Will it work? Who knows, but here is another question: Do you have a better idea?
This story was originally published October 14, 2019 at 5:40 AM.
