Inclusionary exclusion

Call it the ghost of housing votes from the past.

In the same month that angry tenants poured into City Hall to challenge Mayor Darrell Steinberg and other council members on their opposition to rent control, employees at Sacramento’s housing authority were prepping reports and taking actions that resurrected an old controversy connected to the region’s affordable housing disaster.

Just before the June 7 City Council meeting, staff quietly pulled Item 15 from the consent agenda. If they hadn’t pulled the item, the council would have been voting to allow one of their own, District 2’s Allen Warren, to be the latest developer to opt out of the city’s former inclusionary housing mandate. Ironically, Warren says the reason he’s making the request for his subdivision is so he’ll be able to offer North Sacramento something it desperately needs—more low-income rentals. But the request itself, coinciding with a dearth of affordable developments, and fresh outrage directed at the mayor around skyrocketing rents and evictions, has brought the 2015 decision to abandon the city’s including housing plan back under a glaring spotlight.

Tenant advocates say the folly of that move three years ago is now clear from the timeline: In 2000, the council adopted a rule that mandated developers set aside 15 percent of any building project as low-income units; in 2015, developers and business groups convinced the council to reverse course, eliminating that rule in favor of allowing builders to pay a meager, per-square-foot fee into the city’s fledgling housing trust fund instead; in September 2016, an SN&R analysis of data from Sacramento’s housing authority suggested the number of affordable units being constructed in the city and county had dropped by more than 56 percent in the first year of the rule being changed; at the same time, the data firm RentRange announced that Sacramento was suffering some of the highest year-to-year rent increases in the nation.

Things haven’t gotten better. A few months ago, real estate software engineered by Princeton University showed that the city of Sacramento averaged five evictions per day in 2016, while the county averaged 10 per day.

“Since that vote, we have seen a dramatic increase in homelessness and housing instability for low-income renters, as well as displacement of people who can’t afford to pay the ever-increasing rent prices,” said Delphine Brody, co-founder of the Trans and Nonbinary Housing Collective.

Brody was one of many speakers who appeared before the council three years ago and implored it not to abandon the inclusionary housing mandate.

“Now the city and county have both moved to an ordinance that has no teeth,” she said.

The latest subdivision by Warren’s company, New Faze Development, is landing in a hard-hit area of North Sacramento. Last month, just three miles from where New Faze is breaking ground, eight different units at the Plaza State Apartments were hit with eviction notices in the same week. Reports of other serial evictions have been on the rise, with some landlords clearing out huge sections of their complexes and then sharply raising rents for the next tenants.

When Warren’s new project, the Renaissance at Dry Creek subdivision, was first granted its permits by the city in 2008, it was under the inclusionary housing rule. At that time, the 63 single-family-home development had a different ownership group and was called the Patterson subdivision. The agreement stated that 15 percent of the project had to be constructed as affordable homes—meaning nine of its units.

On September 1, 2015, Warren cast a vote to eliminate the inclusionary housing rule, allowing developers instead to pay a fee of $2.58 per-square-foot of their project into the city’s housing trust fund. Every current member of the city council, with the exception of Steinberg, who was then in the State Senate, cast the same vote. In September 2016, Warren’s company bought the rights to the Patterson subdivision and rechristened it Renaissance at Dry Creek. Several months later, New Faze formally requested to be released from the agreement under the old mandate to build nine affordable units.

Instead of building physical units, New Faze is now asking to pay $110,200 into the same housing trust fund that’s failed to build any affordable units in the city since the rules were altered. But Warren told SN&R last week his company is making the request because of the worsening housing crisis, not in spite of it. Warren said the terms of the old agreement include deed restrictions that bar him from offering any of the project’s houses as rentals. A 2017 report from the California Housing Partnership determined that Sacramento County needs more than 62,000 affordable rentals to meet the needs of its lowest-income renters. Warren says he wants some of the units from Renaissance at Dry Creek to be directed at the problem.

“In Sacramento, what’s considered an affordable home is one priced at $300,000,” Warren said. “But there’s a lot of people here who can’t afford that. We want the ability to sell or rent.”

Charanjeet Tiwana, vice president of strategic investments at New Faze, elaborated on that claim in a letter to the city, saying Warren’s company wants to take “several” of the finished homes and “rent those units at an affordable rate to local community members that are unable to afford high rents.”

Warren thinks the city staff pulled his request from the June 7 consent agenda to reexamine their options on the agreement. Tiwana said she believes the city pulled it to make sure there weren’t any conflicts of interests. Either way, the move delayed Warren having to answer questions about whether he’d inadvertently given himself an alley-oop with his 2015 vote to kill the inclusionary ordinance. Warren says his commitment to offer affordable homes to working-class Sacramentans is clear from his company’s 30-year history.

“It’s not easy,” Warren stressed. “But we’re still here and we’re still keeping at it.”

The city’s community development department continues to maintain that allowing builders like Warren to pay into the trust fund rather than construct actual low-income units is still addressing the crisis because, in theory, it incentivizes more projects across the city. Guided by the same philosophy, the Sacramento County Board of Supervisors—minus Don Notolli—also voted to ditch their inclusionary housing rule. But the city and county’s respective trust funds aren’t actually used to build affordable homes; they’re used to patch funding gaps for private developers trying to make affordable units pencil out.

In 2016, officials from the Sacramento Housing & Redevelopment Agency, or SHRA, acknowledged that, since the inclusionary housing rules were terminated, the county’s trust fund only helped construct 48 affordable units, while the city’s trust fund helped construct zero affordable units. When asked last week if the trust fund had helped build any affordable units in the city since 2016, SHRA spokeswoman Angela Jones declined to answer.

For Russel Rawlings, of Resources for Independent Living, the silence isn’t surprising. Rawlings was another person who spoke out fiercely in 2015 when city leaders prepared to abandon inclusionary housing.

“We’re seeing the results, we’re seeing all the comments that we made play out,” Rawlings said. “We’re seeing the wrong kind of development. We’re seeing development that’s keeping people out. … That’s our new normal, and that’s a result of having an ordinance that was gutted—absolutely eviscerated.”

Meanwhile, council members may have been experiencing a feeling of déj&#;a vu June 19 as dozens of people chastised them on their handling of the housing crisis. The same intensity directed at the representatives back when they axed the inclusionary housing rule was now being mirrored toward their stance against rent control. And some tenants at the meeting said they were also feeling a sense of déj&#; vu: Back when they’d tried to defend inclusionary housing, the council was focusing much of its energy on finalizing the Golden 1 Center. Last week, as one person after another talked about being priced out of their neighborhoods, council members were stone silent. However, they soon came to life when discussing a $340 million restoration of the Sacramento Convention Center.

“You guys are wanting to do renovations on the convention center, and all these things you’re putting money towards, but nobody in this audience cares about that,” Danielle Boles, a state worker, said from the podium.

Other housing advocates present told SN&R it should be obvious why they’re following the lead of tenants in Richmond and Mountain View and bypassing the City Council by gathering signatures for a rent control ballot initiative. Many also cited concerns about the influence of special interest groups. Three years ago, when the council ignored the outcry over eliminating its inclusionary housing rule, its members were following advice from groups that included the Sacramento Metropolitan Chamber of Commerce and the North State Building Industry Association, both of which have given tens of the thousands of dollars to various council members’ campaigns. Those same groups oppose bringing rent control to Sacramento, along with the California Apartment Association, which has also poured tens of the thousands of dollars into various council members’ coffers.

At the start of June, Steinberg came out publicly against the rent control ballot measure, calling it “a threat” and telling The Sacramento Bee, “I want to work hard to maximize the chance that this doesn’t go on the ballot.”

Brody had a quick response to the mayor’s words.

“The City Council’s actions under the previous mayor, and the present mayor, and the decision to abandon inclusionary housing, are what the real threat has been,” Brody responded. “And shame on Mayor Steinberg for saying that. He doesn’t have to worry about being out on the streets from a rent increase.”