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Healdsburg exploring higher fees for new hotels, new nonprofit to boost affordable housing stock

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Healdsburg will explore an array of new funding programs to preserve and expand affordable housing for its workforce, including additional fees for future hotel projects and formation of a city nonprofit to seek federal dollars unavailable to local governments.

The Healdsburg City Council on Monday asked staff to settle on the amount of potential fees required of hotel developers to support housing construction. Under a plan in the works for nearly two years, the city would charge up to $100,000 in fees for each room. A formal proposal including that provision isn’t expected until early next year.

Every two hotel rooms built in the city creates the need for one housing unit to accommodate the employees required to staff the commercial property, said Stephen Sotomayor, Healdsburg’s housing administrator. And while the city has been successful in negotiating with developers for housing in several recent hotel projects, he said, Healdsburg needs additional tools to better ensure it meets growing need for workforce housing.

“One of the strengths that our city has for funding affordable housing is that we have political will to do so, and we have a community that supports us in doing so to expand these opportunities for our residents,” Sotomayor told council members Monday. “Over the lifetime of this, depending on the number of hotels that are developed within the city … this could be a potential large funding source.”

Healdsburg is one of Sonoma County’s most expensive real estate markets, and one of the slowest to build because of a residential growth cap that voters passed in 2000. Including apartments and single- family residences, the city has about 5,000 homes for its population of roughly 12,000 people.

Rents and home prices in the city have continued to climb, threatening to price out middle and low-income residents. In September, the median monthly rent was $2,950, while the median sale price of a single family home stood at $799,000, according to San Francisco-based online real estate service Trulia.

In its attempt to confront the crisis, the City Council went back to voters in 2018 to ask for an exception that allows production of more rental for individuals making less than $104,000, or $149,000 for families of four.

Now, the council hopes to carve out a similar exception that allows for more new homes to be built for sale.

The turn to hotels for housing support isn’t new. The city collects a 14% tax from overnight guests — the highest bed-tax rate in the county. About 15% of that revenue goes to a voter-backed fund to build and preserve affordable housing. More than 70% goes to the city’s parks, open spaces and recreational facilities, and the remaining 15% is designated for public safety funding.

Council members signaled interest in adjusting those ratios so more of the bed-tax revenue goes toward the voter-approved housing fund. That shift, too, would require a ballot measure, and was tabled until city staff can review the implications on parks funding.

Vice Mayor Leah Gold advocated for seeking the change as early as next spring.

“I would like to put that more as a front-burner item,” she said Monday. “Because as the thought has been suggested before, it doesn’t do much good to have a lot of great parks if you no longer have children in your town. So we have to consider both sides of that equation.”

The council endorsed more work to develop its own nonprofit that can apply for affordable housing funds otherwise unavailable to local governments. Sonoma County already has such a tax-exempt entity to obtain federal monies for qualifying municipal projects, taking in about $800,000 a year, according to Sotomayor.

A housing nonprofit could help steer money to projects that would keep the city vibrant and diverse, officials said.

“I think there’s some real passion in the community for pursuing that kind of approach,” said Councilman Joe Naujokas. “One of the interesting aspects of our housing mix is we do have that kind of blend of, within a stone’s throw there’s a six-unit apartment and a huge, very high-cost mansion. If there could be a mix of affordable with market-rate … it seems like that would be really interesting, and have a good potential.”

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

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