How California is making a rural housing crisis worse with its own policies and neglect

The recently released state budget proposal solidified a long-standing trend in California: the prioritization of housing development resources away from rural communities and toward the urban core.

Encouraging urban growth may lessen development pressure in wildfire-prone areas and reduce vehicle miles traveled for environmental benefit. But the reality is that rural counties need significant housing development resources to sustain their local workforce.

As in urban areas, dwindling housing supply has sharply increased prices in many rural counties.

From 2020 to 2021, Nevada County experienced more than 20% increases in housing prices, among the largest in California. Compounding this issue is the significant growth in the use of properties as short-term rentals for visitors.

An eastern Placer County study found that short-term rentals accounted for roughly 28% of housing stock, leading the county to consider a new ordinance capping this growth and mitigating neighborhood impacts. Short-term rentals place a drain on an already limited housing supply.

The result is a slow loss of workforce, as housing barriers hinder residents of all income levels from continuing to live in the community in which they work. Positions become difficult to fill as locals, particularly younger generations, must look for housing elsewhere. Meanwhile, a shortage of housing stock makes it challenging to recruit talent from other locations to meet labor demands.

In the small communities within Sierra County, the top three employers are in health care, government, and school districts. These industries are essential to the health and well-being of the public and yet filling vacant positions is a struggle because of limited housing availability.

Because housing needs exist everywhere in California, the state requires that all communities plan for the building of new homes, known as the Regional Housing Needs Allocation.

Rural local governments have worked diligently to establish zoning attractive for housing development, and typically have permitting requirements that are substantially less complex and costly than urban areas. However, the primary issue here is a lack of funding.

Building housing in rural California is particularly expensive. Topography and lack of necessary infrastructure increase the price of development significantly. To reduce costs and limit sprawl, the state encourages the construction of high-density housing, requiring multiple units on small lots.

In lower population counties, developments tend to be smaller than in urban areas, with lesser economies of scale that ultimately discourage private investment.

Consequently, local governments must seek out public funding. These funds are limited and complex, forcing small counties with minimal staffing to acquire and expertly braid together multiple sources.

However, current state and federal programs are also very competitive, with formulas that favor projects in more urban areas and require established infrastructure.

Even California’s Low-Income Housing Tax Credit program, which includes set-asides for rural housing, uses such a broad definition of “rural” that parts of large urban counties, like San Diego County, will qualify. The program also favors developments near amenities such as public transit that are far less common in truly rural areas.

Many rural counties are simply unable to compete.

To sustain the workforce, rural counties need adequate public funding for construction and infrastructure development of housing for all income levels. This funding should include rural set-asides that recognize the unique topography and populations of small communities in their allocation formulas and encompass a more realistic definition of “rural.”

All Californians benefit from the work performed in rural communities, which includes providing essential services for those recreating in rural communities, agriculture, forest conservation, and water storage and delivery. These essential workers need workforce housing which will require greater state and federal investment, not less.

This story was originally published February 16, 2022 at 5:30 AM.