HomeMy WebLinkAbout05_24-25_2017 PC Correspondence - San Luis Ranch (Rioux)
71 Zaca Lane, Suite 130, San Luis Obispo, CA 93401 (805) 543-5970 www.slochtf.org
May 23, 2017
Delivered via email to advisorybodies@slocity.org, ddavidson@slocity.org, xfowler@slocity.org
Planning Commission
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Re: Support for San Luis Ranch
Dear Planning Commissioners:
I am writing to support the approval of the San Luis Ranch project because San Luis Obispo des-
perately needs additional housing of all kinds and price levels. San Luis Ranch proposes a great
mixture of relatively small housing products including detached single family homes, attached
single family homes, townhouses, condominiums and potentially rental apartments.
While quite innovative and fairly responsive to local above moderate income housing needs, the
project can better serve the broader housing needs of our community with some minor changes,
which I will recommend below.
Local Housing Crisis
San Luis Obispo City and County are among the least affordable housing markets in the world
due primarily to our shortage of housing. The imbalance between supply and demand resulted in
the National Association of Home Builders ranking our county as the 11th least affordable
housing market in the nation for the first quarter of 2017. Even Honolulu, Miami and New York
City are more affordable. If data were available for the City, the situation would be even worse.
The City’s recent vacancy rates are indicators of the severity of our crisis. The City’s ownership
housing vacancy rate was only 1.0% for 2011 through 2015 according to the Census.1 For
comparison, the county’s rate was 1.7%, the state’s was 1.4% and the nation’s was 2.0%.
The situation is even worse for renters. The 2010 Census found that 35.8% of our county’s
renters had a severe housing cost burden.2 At that time, only 22.3% of renters in San Francisco
and 30.5% of those in Los Angeles had the same burden. While current data on severe housing
cost burden is not available, 61.0% of the City’s renters had a housing cost burden in 2011
1 Through its American Community Survey (ACS).
2 A severe housing cost burden is when the tenants or owner of housing pay over half of their income for housing
costs, including utilities. Those who pay over 30% have a housing cost burden.
Planning Commission
May 23, 2017
Page 2 of 4
through 2015. For comparison, the county’s rate was 53.8%, the state’s was 54.0 % and the
nation’s was 47.9%.
While local rental vacancy rates fluctuate far more than the ownership rates, our county had the
absolute lowest multi-family vacancy rate in the nation in 2013 at 1.7%. For 2011 through 2015,
the City’s rental vacancy rate was 2.6%. For comparison, the county’s rate was 2.8%, the state’s
was 4.1% and the nation’s was 6.5%.
Increasing the housing supply is the only way we can improve our local housing crisis. Even
providing more units for the top third of our housing market will help those near the middle.
This is because fewer higher income people will compete for the less desirable units. However,
the market alone will produce housing that is affordable to lower income households, who repre-
sent roughly the lowest third of the City’s population.
A Reality Check
While I support the project as a whole, I think that people are mistaken if they think that any of
the for-sale homes at San Luis Ranch will be truly affordable unless they are deed restricted.
While these homes will be more affordable than those in most new developments, they will be
unaffordable to the vast majority of people who live and work in the City.
A quick look at our real estate market confirms that even homes in the NG30 zone will be unaf-
fordable to moderate income buyers. The homes in the NG10 and NG23 zone will be even less
affordable. While the condominium flats may be close to the moderate income price levels, the
compact lot townhomes will probably sell for more than the County’s affordable prices for so-
called workforce homes. Only rental units will be affordable to moderate income households.
The City's affordable prices for two and three bedroom moderate income homes are currently
$291,375 and $336,700. For comparison, the lowest priced two and three bedroom homes cur-
rently listed for sale in the City are $307,900 and $451,767. The two bedroom unit is a 30+ year
old condo conversion with one bathroom. The three bedroom unit is on leased land and has
many restrictions. The two and three bedroom condominiums at San Luis Ranch will all sell for
more than $291,375 and $336,700.
The County's current affordable prices for two and three bedroom workforce income homes are
$446,000 and $498,000. The condominiums at San Luis Ranch will probably all sell within the
workforce price limits. However, none of the townhomes planned for the NG30 zone are likely
to be affordable at this level. Villa Rosa, which is fairly comparable to these townhomes, cur-
rently has both two and three bedroom homes listed for sale. The 1400 SF two bedroom unit is
$519,000 and the 1500 SF three bedroom is $529,000.
Recommendations
The specific plan states that San Luis Ranch will “provide housing opportunities for a range of
incomes” and is consistent with Housing Element policies concerning diversity and affordability.
This will not be the case unless the plan is modified to ensure that a significant number of apart-
Planning Commission
May 23, 2017
Page 3 of 4
ments be built. As it stands, only 34 of the 580 units are guaranteed to be affordable to those
earning less than 120% of the Area Median Income. Over 94% of the homes will only be afford-
able to above moderate income households. For comparison, the City’s qualified objective for
above moderate income housing is only 42%.
I offer the following recommendations as ways to increase the number of rental units and
maximize housing affordability at San Luis Ranch. Increasing the number of rental units is the
only way to ensure that more units in the project will be affordable to moderate income
households. Unless San Luis Ranch has more rental units, the project will conflict with many of
the City’s Housing Element (HE) policies.
1. Very Low Income Affordable Units. In order to qualify for a 20% density bonus, the
developer committed to provide 26 very low income affordable units. The specific plan
includes the option to either sell or rent the very low income units. The plan also states that
these units may be managed by an affordable housing property manager. Under state density
bonus law, these units may either 1) be deed restricted for 55 years as affordable rentals or
2) sold with an equity sharing agreement that only applies to the original owner. The state’s
equity sharing agreement lacks the recapture provisions of the City’s equity sharing agree-
ment. Once these units are sold or transferred, they will be lost as affordable units. These
units will be considerably more valuable to the community as rental units.
Recommendation. The specific plan should include an irrevocable agreement from the
developer to provide the deed restricted very low income units as rental units and to transfer
the completed units to a qualified affordable housing property manager under terms that they
will remain affordable for 55 years.
2. Rental Housing. While the specific plan will allow both condominiums and apartments in
the NG30 zone, there is no commitment or requirement to build any apartments. In fact, on
Page A-31, the specific plan skirts the HE’s goal of providing a variety of forms of tenure.
Recommendation. The specific plan should require that at least half of the stacked units in
the NG30 zone be rental apartments. This will probably increase the number of homes that
will be affordable to moderate income households by 75 to 100 units. Given market rents,
this will not increase the number of low income units.
3. Accessory Dwelling Units (ADUs). ADUs provide relatively affordable rental units and an
income source to help buyers afford their homes. As a master planned community, it will be
very difficult, if not impossible, to add ADUs to San Luis Ranch after the homes are built.
Recommendation. The specific plan should require that between 5% and 10% of the homes
in the NG-10 and NG-23 zones be built with ADUs. In addition, the specific plan should
1) exempt ADUs in San Luis Ranch that are created at the same time as the primary units
from the City’s general ADU policies and regulations and 2) exclude these ADUs from the
calculations of average unit size under the inclusionary ordinance. This will add 15 to 30
units that can be moderate income rental units.
4. Timing of Highest Density Housing. I am very concerned that the two highest density
housing products at San Luis Ranch – the condominiums and apartments – are in the last
residential phase. We saw in Serra Meadows how contentious the final approval process can
Planning Commission
May 23, 2017
Page 4 of 4
be for apartments after home owners have moved into a master planned community.
Recommendation. The specific plan should grant the apartments and condominiums in San
Luis Ranch the right to be built without any further planning and design reviews if the devel-
opments are generally consistent with the standards set out in the specific plan. In addition,
they should only be subject to staff review if they are not consistent.
5. Affordability by Design. The project has reduced its inclusionary housing requirements by
55% by proposing to build smaller and denser homes. Small homes built at higher densities
are generally less expensive than larger homes on larger lots. Unfortunately, in this market,
they are still not affordable to low or moderate income households.
Recommendation. The specific plan should set the proposed average unit square footages
for the three residential zones in concrete and include a mechanism for ensuring that the
commitment to building smaller denser homes is met.
6. Non-Residential Inclusionary Housing. I am concerned that the specific plan does not
specify how the non-residential portion of the project will satisfy its inclusionary housing
requirements. It is generally better to have affordable housing built rather than to receive
fees. This is because it is so difficult and time consuming to obtain the development approv-
als and financing for affordable housing projects. By not addressing inclusionary housing at
this time, it is more likely that fees will be paid. This will be a lost opportunity since so
many homes are being approved at San Luis Ranch. More of them can easily be affordable
and they should be.
Recommendation. Encourage the developer to commit to providing on-site affordable units
for the non-residential portions of San Luis Ranch.
In concluding, I repeat that I generally support the project. It will provide much needed housing
for the community. It will reduce greenhouse gasses and improve the circulation system. It will
add significant recreational facilities, including bike trails. It has many other things going for it.
The project’s only shortcoming is that it doesn’t provide enough affordable or workforce
housing. Please do what you can to improve this.
Thank you for your time and consideration.
Sincerely,
Jerry Rioux
Executive Director