Extreme inclusion

For Sheryl Grace, the numbers just don’t add up. Unemployed, with seven children ranging in age from 2 to 14, she receives $790 a month plus $624 in food stamps from general assistance. She saves as much as she can, but she can’t afford to save up the first and last month’s rent, and a deposit, that it takes to get into an apartment. “Housing in Sacramento has gotten so bad that I can’t afford anything at all,” the 31-year-old Grace explained. For now, she and her children are homeless and relying on Sacramento County’s emergency-shelter programs.

Grace is among the tens of thousands of Sacramentans who are classified as “extremely low income” and for whom decent, affordable housing is drifting further and further out of reach.

According to Ethan Evans, director of the Sacramento Housing Alliance (SHA)—a nonprofit group that helps people find affordable housing—most of the new jobs being created in the Sacramento region in the last decade have been low-wage and very low-wage jobs. Meanwhile, rents have increased dramatically in the last three years, far outstripping the wages earned by low-income citizens.

“This housing stretch occurs because there are no homes being built to accommodate them,” Evans said.

To help bridge the housing gap, the Sacramento County Board of Supervisors is considering a first-of-its-kind ordinance that would require developers to help foot the bill for providing homes to Sacramento’s neediest. The board will consider the proposed law on Wednesday, November 24.

“If this passes, we’re talking about actually building homes for families, about doing things that nobody else is doing,” said Evans.

Local governments across the nation have been experimenting for years with so-called inclusionary-housing laws, which require developers to donate land or money or actually build affordable housing units as part of their more lucrative market-rate projects.

The ordinance under consideration is similar to other inclusionary laws in that it requires a percentage—15 percent in this case—of all housing built in the area to be affordable. But this new law would require that at least a portion of the new housing be made affordable to the “extremely low income” group, families making less than $17,300 a year.

“Sacramento is the first government in the nation to include the extremely low-income bracket into an inclusionary-housing program,” said Sacramento County planner Leighann Moffit.

In the unincorporated area of Sacramento County, one in 10 households is considered extremely low-income, according to the U.S. Department of Housing and Urban Development. The new law would apply only to the unincorporated parts of Sacramento County, and not to cities like Sacramento, Folsom or Elk Grove.

The law gives developers several options to meet the affordable-housing requirements. They may choose to build affordable units themselves, and even integrate them into their market-rate projects. This “inclusionary” approach is similar to a law the city of Sacramento already has on the books. But the county ordinance also allows developers to donate land or pay a fee in lieu of developing the affordable units themselves. Those donations and fees will only partially offset the cost of the new affordable units, and tax credits or other housing funds from the state and federal governments likely would be cobbled together on a project-by-project basis.

Proponents of the measure say that new housing construction in the region has produced only a handful of affordable units. This measure would push that number up to about 300 units per year, according to county estimates. Under the new law, rent on a two-bedroom apartment for extremely low-income residents would be capped at about $360.

The county’s proposed ordinance is the product of two years of wrangling between developers, affordable-housing advocates and county staff. And although those negotiations are ongoing, activists like Evans are hopeful that the county soon will have a much-needed tool to help its poorest residents.

“It would be a huge win for this community and for people who work minimum-wage jobs,” Evans said. Disabled people who can’t work and who receive a fixed income also would benefit. “For folks who were trying to make it work with $760 a month while a studio is $500, that is exciting,” he added.

But many Sacramento-area developers aren’t so excited. They are more concerned about the costs they may absorb as a result of the proposed law.

Ardie Zahedani, a lobbyist for the Building Industry Association of Superior California, said developers know more affordable housing must be built, but they are concerned about unintended consequences of this particular ordinance. “Inclusionary housing is a tax on working families,” Zahedani contended. He said developers would have to pass the costs of the new affordable-housing requirements on to new home buyers. That could put median-priced homes out of working families’ reach, Zahedani explained.

Evans disagrees. “That’s the classic developer response, and it’s false,” he replied. “They say they would have to charge more to home buyers. But that assumes they aren’t already charging every penny the market will bear.”

If anything, Evans said, the new ordinance doesn’t go far enough to provide for extremely low-income families. SHA and other affordable-housing groups had been pushing for the 15-percent chunk of affordable housing to be split evenly among low-, very low- and extremely low-income projects. But the county Planning Department agreed with the developers’ concern that 5 percent set aside for extremely low-income housing would be too costly and scaled the portion back to 3 percent.

The supervisors have a chance to act on the ordinance on November 24, the day before Thanksgiving. But last week, Evans said, county staff was still struggling with a portion of the law that allows developers to donate land instead of building the affordable housing units themselves. That raises the possibility that action on the new law would be put off until after the board returns from Christmas break, in January 2005. By that time, the board will have two new members, further complicating efforts to pass the ordinance.

“Last month, we had a deal,” said Evans. “Now, we’re pretty nervous.”

Evans said that after two years of negotiation and public hearings, the prospect of not passing the affordable-housing law this year was “extremely frustrating.”

“It’s a now-or-never situation,” he said. “They are going to leave for Christmas, while other people are out there trying to figure out where they are going to live. We can’t go another Christmas without a plan to build homes for our families that are struggling.”