City Council votes to slash fees for affordable housing construction
The Sacramento City Council Tuesday voted to slash most City impact fees to zero on affordable housing projects as part of an ongoing effort to address the crisis of rising rents.
The measure, approved on a unanimous vote, would waive fees on projects offering units affordable to people earning low to moderate incomes, defined as up to 120 percent of the area median. The units would have to remain income restricted for 30 years.
The fee waiver also applies to single family rental and ownership homes offered at affordable prices, such as those built by Habitat for Humanity.
Mayor Darrell Steinberg said the fee waiver is the first of many steps the City should take to address its severe shortage of affordable housing, from further streamlining approval of projects to building more accessory units and tiny homes.
He asked staff members to come back with timetables for a variety of other steps presented on Tuesday night to encourage affordable housing construction. “I would like some more action by the end of the year on what is ready to be teed up so we don’t lose momentum here,” he said.
Vice Mayor Steve Hansen said the fee waiver would address a lack of housing affordable to the “missing middle” of Sacramento residents.
“If you want to live in this community and you work in a restaurant, this is for you,” he said.
This fee waiver will save developers of affordable housing anywhere from $1.9 million and $2.7 million in savings on a 200-unit project.
The average rent in Sacramento is now $1,057, according to the U.S. Census. In 2017, according to Apartment List, the city experienced the highest rent increases in the country.
Wendy Saunders, Executive Director of the Capitol Area Development Authority, which builds and manages housing on state-owned land around the Capitol, said the fee waivers would help fill a funding gap for a mixed-income complex with the agency plans to build at 1717 S St. in midtown.
“It has become more and more challenging as our tools like redevelopment have gone away, and construction costs continue to rise. It’s pushing a rock uphill.”
Holly Wunder Stiles of Mutual Housing California said the fee waivers would cut the cost of building Lavender Courtyard, a planned low-income project for LGBTQ seniors, by $450,000.
“We’ve been paused for quite awhile due to a lack of funding,” Wunder Stiles said. “Tonight you have an opportunity to reduce the cost of that project by $450,000. It’s real. It’s helpful.”
Councilman Jay Schenirer said the waiver is “an incremental step” in terms of where the City needs to go, considering that the affordable housing need in the City is “thousands and thousands” of units, according to staff. Just three affordable housing projects are currently in the city pipeline.
Steinberg and others on the Council noted that the election on Nov. 6 could change the affordable housing outlook dramatically. Both Propositions 1 and 2 would provide billions of dollars for affordable housing statewide. Sacramento’s Measure U sales tax measure could also add to the City’s affordable housing resources.