Healdsburg requires developers to include greater share of affordable units

Healdsburg has passed one of Sonoma County’s most aggressive affordable housing requirements for new residential developments, mandating a fifth of houses and apartments on future projects be dedicated to lower- and middle-income earners.

The City Council adopted the updated rules Monday after advancing the plan earlier in the month with a 5-0 vote.

The new requirements follow recommendations from a community housing group to help produce more housing for the local workforce in one of the county’s priciest real estate markets, with a citywide measure that also limits annual growth.

The rules will apply to both single-family and multi-family sites of five or more market-rate homes. They will increase the share of affordable units that must be built in such developments from 15% to 20% of the total. The update also increases the fees developers often choose to pay toward a housing fund instead of building affordable units on site, while tying those fees to the region’s actual cost of construction.

“We’re not in it to extract the fees. We’re more in it to get the housing built,” said Councilman Joe Naujokas. “And if we can’t get the housing, let’s make sure that the inclusionary fees are well thought out and well calculated.”

The new rule takes effect in mid-July and makes Healdsburg among just three other local governments - the cities of Sonoma and Sebastopol and Sonoma County - with the highest affordable housing mandate for developers. The move comes as local and state lawmakers have stretched to find a range of ways to both order and offer incentives for developers to boost affordable housing creation in the high-cost Bay Area.

Last year, Petaluma changed its affordable housing requirement by removing a developer’s option to simply pay a fee in lieu of building actual units on site. Now, builders must get City Council approval to take that step. When they do get clearance to pay the fee, the amount must cover the cost of meeting the 20% threshold - 5% more than the city’s standard mandate. Santa Rosa is also considering amending its requirement and fees to encourage more affordable units. The city’s current mandate is 15%.

“It’s an interesting balance to find between those two things,” said David Guhin, Santa Rosa’s assistant city manager. “You try to find sweet spot and actually see some units built. I don’t know the exact right answer on that, but we’re going to try.”

As part of Healdsburg’s approach, new developments offering homes for sale will have to hit the 20% mark, with resulting affordable units divided between two categories.

Three quarters of the units will be limited to moderate-income buyers - up to $112,000 per year for a family of four - and the remaining quarter for those in the next higher income tier - up to $149,000.

On new rental housing, three quarters of the affordable units will be for those with the moderate-income households and a quarter will go to low-income tenants, making up to $60,000 for an individual and $86,500 for a family of four.

Roughly 5,000 housing units, including homes and apartments, exist in Healdsburg. The median sale price for a home has surged to $827,000 in 2019, while the median monthly rental rate is more than $3,100, according to San Francisco-based housing service Trulia

“In the last 10 years, we’ve been producing very high-end housing and very low-end housing and nothing in the middle,” said Councilman Shaun McCaffery. “That’s where we really have a deficit. So we’re just trying to incentivize the developer to be able to build the houses with less cost and build more of them.”

Builders in Healdsburg will also be able to meet the new conditions by dedicating land to the city, building the units outside the development or buying existing market-rate units and restricting them to affordable prices. Those options would require advance approval from the City Council.

The overhaul approved Monday is one of several by the council this year to help address the growing housing crisis in the city, one that has squeezed out some of its lowest-wage earners critical to its tourist and wine industries. Last month, the City Council voted 5-0 to waive fees for residents who wish to build a granny unit under 850 square feet, and halve fees for secondary units up to 1,200 square feet.

More changes may be on the way. Those include a tenant relocation fund that landlords must pay into for lower-income renters.

“We’ve been making a lot of progress in a lot of different areas,” said Stephen Sotomayor, the city’s housing administrator. “The real question now is which populations are we looking at and how do we best leverage those dollars to help.”

You can reach Staff Writer Kevin Fixler at 707-521-5336 or kevin.fixler@pressdemocrat.com.