Why Santa Rosa’s $699 million affordable housing pipeline might not be enough

Santa Rosa is nurturing a $699 million affordable housing pipeline that could lead to the development of more than 1,200 new homes, including about 950 in the next few years.

While that reflects the creation of homes for a small town’s worth of people, only four of 18 projects in the pipeline are actually under construction, and the list is still hundreds of millions of dollars short of full funding. Even building all of the projects would still leave Santa Rosa short of the city’s current and upcoming state-mandated housing goals.

Santa Rosa’s current goal — a figure known as the Regional Housing Needs Allocation — is 5,083 units from 2015 to 2023, including about 1,700 homes for residents with low and very low incomes. In the next cycle, from 2023 to 2031, the goal is set to drop to 4,685, including about 1,900 low- and very low-income homes.

From 2015 to 2020, Santa Rosa has issued building permits for 2,200 new market-rate homes, according to new city data. But progress on affordable housing has been much slower, with building permits issued in that time frame for only 496 units targeted at people with moderate to extremely low incomes — marking only 20% progress toward a combined goal of 2,471 affordable units.

Still, that’s a lot more housing than Santa Rosa has shown it can build in the face of those goals. And the city’s next target may be adjusted upward if Santa Rosa must absorb some of the units currently allocated to unincorporated Sonoma County — a move made in the current plan.

Updated data for Santa Rosa’s housing progress is usually presented in an annual report to the City Council in the summer. Last year’s report, with data through 2019, found that Santa Rosa had only issued building permits for a little over a third of the housing projects needed to meet its state target.

“They’re challenging numbers to achieve,” said Megan Basinger, the city’s interim director of housing and community services.

This year, at least, has potential to bring significant boons to the local affordable housing development scene, headlined by the Housing Authority’s award, pending state approval, of $38 million in loans to five large projects in January. Then there’s the authority’s upcoming annual bidding opportunity, which this year will allow developers to seek a share of about $8 million to bolster their projects.

Basinger identified a recent shift in local strategy: giving one project a lion’s share of available funds, as opposed to parceling smaller amounts out to a range of potential developments. The idea is to provide what housing policy aficionados call “gap funding” — monetary awards that pale in comparison to a project’s total cost, but that are substantial enough to help the project succeed.

“We’re trying to push projects forward instead of kind of piecemealing things together,” she said.

It’s a similar approach to that adopted by the Renewal Enterprise District, a joint city-county endeavor to turn $20 million in PG&E wildfire settlement funds into loans for several local developments.

Basinger noted that the amount of money needed for Santa Rosa to have a shot at meeting its goals is likely in the hundreds of millions. She pointed to a 2018 city measure that would have raised property taxes to fund a $124 million housing bond for hundreds if not thousands of new homes — an item city voters rejected.

“Affordable housing does need a fair amount of local contribution in order to keep the rents at a level to compete for tax credits and bonds,” Basinger said.

State lawmakers, including state Sen. Mike McGuire, D-Healdsburg, are working on a $6.5 billion bond measure for affordable housing that would go before California voters in November 2022.

McGuire acknowledged the need for California to be “an active and engaged partner” with local governments and touted the bond measure as a way to help the state continue spending about $2 billion per year across California for affordable housing projects.

“One of the top priorities that the Senate has is to get this bond onto the ballot and passed in 2022,” McGuire said. “Santa Rosa, Sonoma County, this entire state desperately needs a financial shot in the arm for affordable housing.”

McGuire also credited Santa Rosa in particular for recent development initiatives to foster denser housing downtown, calling the city “one of the more progressive municipalities in the state when it comes to housing.”

As Santa Rosa readies for the upcoming housing goal update, it will need to submit a revised housing plan. And as it does so, a new band of housing advocates will be prodding city officials to continue existing efforts to remove barriers to development.

Enter Generation Housing, a fledgling nonprofit housing advocacy group that plans to rally support in the coming months for pro-housing policy changes, such as rezoning to allow for denser development in affluent parts of town, said Jesús Guzmán, the nonprofit’s policy and advocacy director.

That includes getting the public interested and involved in the update of the city’s housing plan, which Guzmán termed “the most important planning document that the least amount of people have heard of.”

Guzmán noted that state lawmakers have already started to act to force cities and counties to allow for new developments. One example is SB 35, which requires cities that aren’t meeting their housing goals to allow certain projects to pass through a streamlined planning process in which local control is dramatically reduced.

Basinger said she was aware of only two such projects that have been approved that way in Santa Rosa: the Cannery project and the Mahonia Glen development at Highway 12 and Calistoga Road, both of which are planned as 100% affordable housing developments. She acknowledged the city may lose control over some projects but noted that Santa Rosa has been active over the past few years in incentivizing housing — not just by offering developers cash but by creating a smoother and more predictable planning process to sweeten housing deals.

“We’ve done a lot of policy work in the last few years to try to promote housing,” Basinger said.

Guzmán said he was “cautiously optimistic” about Santa Rosa’s willingness to support new dense housing projects, citing the downtown-specific development plan the City Council approved.

“Everything we seem to be seeing from City Hall and City Council signals that they’re pretty serious about trying to meet these housing goals,” he said.

You can reach Staff Writer Will Schmitt at 707-521-5207 or will.schmitt@pressdemocrat.com. On Twitter @wsreports.