Developers gain ground

Sacramento County has cut a “backroom deal” with developers to relax the county’s affordable-housing laws. That’s the accusation from affordable-housing advocates, who fought for years to get an aggressive “inclusionary housing” ordinance put in place.

“They haven’t discussed any of this with us,” said Ethan Evans with the Sacramento Housing Alliance, which helped convince the Board of Supervisors to adopt the rules two years ago. “We worked for two and a half years to make sure there were affordable homes in Sacramento County. It doesn’t make sense to cut a backroom deal to change a policy that is working,” said Evans.

County lawyers recently announced a plan to settle a lawsuit the North State Building Industry Association (BIA) brought two years ago to throw out the new housing rules. But affordable housing advocates say the builders had little chance of winning in court and that there’s no need to settle the case.

Currently, the law requires that 15 percent of all new housing units built in the unincorporated part of the county (not including homes within the boundaries of cities such as Sacramento or Rancho Cordova) be made “affordable” to low-income families. Six percent of all new homes must be affordable to “very low income” residents, and 3 percent must be affordable for families in the “extremely low” income category. Extremely low income in Sacramento County is less than $17,000 a year for a family of three.

That was a big victory for local housing groups. The “ELI” policy represented the first time that any local government, anywhere in the United States, had required developers to pony up for the poorest of the poor.

According to the Sacramento Housing and Redevelopment Agency, the ordinance has led to agreements from developers to build almost 3,000 new affordable homes. More than 300 of those homes will be affordable to extremely low-income families. In exchange for the low-income housing, builders get permission to build their higher-cost homes. And the county gets more than $60 million for “in-lieu” fees—payments from builders who want to avoid building the affordable-housing units themselves.

The county Board of Supervisors adopted the new ordinance in December of 2004. In January of 2005, the BIA sued the county to throw the ordinance out.

But the new law had some powerful support. The office of the attorney general joined the suit as an “intervenor” to defend the housing rules. Then-Attorney General Bill Lockyer said that if the BIA prevailed, “the notion of an affordable home could become a relic of history.”

The legal-aid group Legal Services of Northern California also joined the suit, representing low-income residents.

The developers argue that these kinds of regulations actually stymie the development of affordable housing by piling more and more costs onto builders, costs that get passed on to home buyers. And they say it’s not their responsibility to build low-income housing.

“Just because you create a unit of market-rate housing doesn’t mean you create a poor person,” Dennis Rogers, senior vice president of the BIA, told SN&R.

In other words, building a $500,000 house doesn’t directly create a need for low-income housing—not in the same way that new construction creates the need for roads, sewer hookups, parks and schools.

Other businesses aren’t required to provide their products for free, Rogers said. Society, not the housing industry, has a responsibility to subsidize low-income housing.

“We don’t ask car manufacturers to give away their cars. We don’t make Raley’s sell a gallon of milk to a poor person for 25 cents. We have WIC and other programs,” Rogers explained.

The trial-court judge didn’t agree with that logic, and dismissed the BIA’s suit last spring “with prejudice,” forcing the builders to try their luck in the 3rd U.S. Circuit Court of Appeals.

That appeal was scheduled to be heard in the court on May 18. But the county sent a letter to the court on April 24, saying that private meetings between the BIA and the county lawyers had yielded a tentative deal.

It will be up to the county Board of Supervisors to adopt the terms of the deal, in a public meeting, or face the prospect of going back to court.

“What that letter says to me is ‘This is a done deal. We’ll see you at the show,’” said Evans.

The settlement offer has left the intervening lawyers scratching their heads, too. “It is beyond me why the county would settle,” said Mona Tawatao, an attorney with LSNC. “We had a complete victory in the lower court, and we had a very strong position in the court of appeal.”

One possible reason for the settlement: Since the ordinance was adopted, three of the five seats on the Board of Supervisors have changed hands. Most notably, District 2 Supervisor Illa Collin, a major champion of the affordable-housing ordinance, has retired to be replaced by former Sacramento City Council member Jimmie Yee, seen by affordable-housing advocates as more business friendly.

But county officials insist they haven’t sold out. “There seems to be this sense that the county has caved in. That’s just not the case,” said Sacramento County legal counsel Robert Ryan. The county and the developers have yet to reveal the details of the settlement, but Ryan said, “It may be slightly amended, but it’s not going to go away.”

Supervisor Roger Dickinson said the reason for settling was simple: Better the county be in control of the affordable-housing ordinance than the courts. “Just because you win at one level doesn’t mean you are going to win at every level,” Dickinson explained. He characterized the changes in the proposed settlement as “operational tweaks.” He added, “It was never the idea that we had drafted the perfect ordinance at the time we adopted it.”

He added that the settlement won’t be finalized without input from the attorney general’s office, LSNC and affordable-housing advocates. And the new rules will have to be approved by the county Board of Supervisors in a public meeting.

But Evans fears any settlement is only going to water down the rules. “There’s no doubt in my mind that it will reduce the obligation on the developers,” said Evans.

And affordable-housing advocates worry that while the Board of Supervisors will hold public hearings on the changes, it will only be for show.

“The public process has to mean something. You can’t just agree ahead of time to circumvent the public process. It can’t be a sham process,” said Tawatao.