Healdsburg defends spending third of voter-approved affordable housing fund on staff, overhead expenses

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Measure S

Measure S, a tax on hotel visitors approved by voters in 2016 to increase the supply of affordable housing, has generated $1.3 million over the past two years. Nearly a third of the money has been spent on salaries and benefits for city staffers who oversee housing services.

_______

Revenue:

2016-17: $253,709

2017-18: $611,347

2018-19: $852,882 (Projected)

2019-20: $931,223 (Projected)

FOUR-YEAR TOTAL: $2,649,161 (Projected)

_______

Staff Expenditures:

2016-17: $102,067

2017-18: $167,168

2018-19: $238,338 (Projected)

2019-20: $249,363 (Projected)

FOUR-YEAR TOTAL: $756,936 (Projected)

Housing advocates in Healdsburg are growing increasingly critical of how the city is spending money from a tax increase intended to add to the supply of affordable housing for local workers.

Nearly a third of the money from the 2016 voter-approved tax on hotel visitors has been spent on salaries and benefits for city staffers who oversee housing services, drawing complaints from residents who want the city to spend more on projects that will increase the number of housing units in Healdsburg.

Their frustration boiled over at a City Council meeting earlier this month after the new owner of a small apartment complex downtown terminated the leases of low-income tenants in order to renovate the units. That left advocates questioning why the city did not have the money to buy the Piper Street apartment complex when it came on the market — it sold for $2.96 million — and prevent the displacements.

Former Mayor Brigette Mansell joined other angry Healdsburg residents at the Feb. 4 City Council meeting in calling on her former colleagues to stop spending money from the tax measure on anything but new affordable housing units.

“My deepest concern and primary goal is getting workforce housing,” Mansell said in an interview. “We’re not, in my opinion, demonstrating good faith by spending it on anything but housing. If we waste the money or aren’t getting anything done, then the public is not going to want to give us more money. Why invest in something that’s not working?”

City officials, however, are defending their use of funds from Measure S, a tax on hotel visitors that has generated $1.3 million dollars over the last two years. Of that total, the city has spent $368,352 — more than 29 percent — on staff compensation and other overhead expenses, according to city data.

The ballot measure requires the money be used “to increase, improve and preserve the city’s affordable housing stock” and related services. City Manager David Mickaelian called the spending on staff and overhead “an appropriate use of funds” toward housing.

“The reality of it is, housing programs and homeless programs, someone is developing those programs,” Mickaelian said. “They don’t just happen themselves. If I don’t have a person managing these programs, then they don’t exist.”

Stephen Sotomayor, who was brought on in January as the city’s new housing administrator, received a $143,676 compensation package, including $110,743 in annual salary, fully funded by Measure S housing dollars. Assistant City Manager Joe Irvin, whose job involves overseeing housing programs under Sotomayor, is paid $161,506 per year in salary and $41,451 more in benefits, with 35 percent of the total also coming out of Measure S funds.

Before each joined the city, the compensation for their predecessors came out of Measure S as well.

Early critics of Measure S say the city’s spending decisions illustrate some of the underlying reasons for their opposition.

“It’s a shell game, where politicians say one thing and do another and get away with it,” said Tim Hannan, president of the Sonoma County Taxpayers Association, who wrote the official ballot argument against Measure S. “The findings confirm our fears that we had back in 2016 — the new tax money raised by that measure is being shunted off in some other direction than affordable housing.”

Measure S

Measure S, a tax on hotel visitors approved by voters in 2016 to increase the supply of affordable housing, has generated $1.3 million over the past two years. Nearly a third of the money has been spent on salaries and benefits for city staffers who oversee housing services.

_______

Revenue:

2016-17: $253,709

2017-18: $611,347

2018-19: $852,882 (Projected)

2019-20: $931,223 (Projected)

FOUR-YEAR TOTAL: $2,649,161 (Projected)

_______

Staff Expenditures:

2016-17: $102,067

2017-18: $167,168

2018-19: $238,338 (Projected)

2019-20: $249,363 (Projected)

FOUR-YEAR TOTAL: $756,936 (Projected)

Healdsburg resident Keren Colsten, who with her husband owns the Hayden Street Inn bed-and-breakfast and voted against Measure S, said the 2 percent increase in the city’s hotel tax hurt their business. Overnight visitors now pay a 14 percent tax on hotel rooms — the highest in the county. Colsten said she wants the city to put the money toward building housing units, which could help some of her staff afford to remain in Healdsburg.

“Apparently the city passed this measure without a lot of planning or thought,” said Colsten. “They’re using these funds earmarked for affordable housing toward salaries, and I don’t know … if that’s the way the public thought the funds would be used. It just feels like it’s an uphill battle. They talk about wanting to make things better, but there’s no action” on housing.

The city counters that it’s making progress. Aside from meeting regional affordable housing requirements imposed by the state, officials cite the construction of 25 new affordable units at the Healdsburg Glen Apartments, a complex on city-owned property on Grove Street.

Vineyard worker Jose Luis Rodriguez, 27, and wife Yesenia Silva, 26, consider themselves fortunate to have gotten into one of the units. They lived in the recently sold Piper Street complex with their two young daughters, 6 years old and 10 months, and started looking for another rental they could afford the moment they received notice their apartment complex was put on the market this fall.

“We got lucky we found this place,” Rodriguez said in Spanish. “We’re lucky we’re not going through what our neighbors are going through.”

Another 37 income-limited units were built as part of a development agreement with Hotel Trio. The city is also involved in ongoing negotiations for a 23-unit apartment building rented to tenants at below-market rates off Prentice Street. The real estate agent representing the seller called those discussions “preliminary,” but that it remains his client’s preference to sell to the city for the $5 million listing price.

Other Measure S money has been spent on partnerships with outside groups that provide services to local homeless people, oversee existing affordable rental units, and to update older apartments.

Mickaelian said the city hopes to use Measure S money and other housing dollars to leverage other state and local grants, bringing in more money to build and preserve affordable housing units. The city has, for example, met with the new owner of the Piper Street complex to explore ways to renovate the units in phases, allowing the tenants to stay during the process.

“I don’t know if we can do everything that everybody wants us to do. We can do what we can,” said Mickaelian. “We’re looking at both the long-term and our obligation to the short-term realities we’re seeing today. But if you’re being displaced or the rent is being increased, all that stuff is irrelevant. I’m sensitive to that. If I was being evicted, I would have the same concerns.

“It doesn’t really matter what progress the city makes, it’s real for that person being evicted,” he added. “Yeah, it’s probably not enough.”

Housing development will again be a central focus of the City Council Tuesday night, when it will receive an update on the city’s master plan for affordable housing. It is scheduled to direct staff on several housing-related issues, including development fees and rules for accessory dwelling units, or so-called granny units. The meeting starts at 6 p.m. at City Hall.

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

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