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Atascadero looks to stimulate affordable housing development 

Atascadero needs to generate approximately $800,000 a year in matching funds for affordable development projects to keep up with the state's housing goals for the city.

That would help developers and nonprofits build an average of 32 low- to very low-income housing units per year, according to Ashleigh Kanat, a city-contracted consultant with Economic and Planning Systems. Kanat spoke to the City Council during a May 24 discussion about how best to expand the city's affordable housing development toolkit.

click to enlarge UNAFFORDABLE The Atascadero City Council discussed ways it can to raise money to support affordable housing projects in the city. - FILE PHOTO BY JAYSON MELLOM
  • File Photo By Jayson Mellom
  • UNAFFORDABLE The Atascadero City Council discussed ways it can to raise money to support affordable housing projects in the city.

"In general, it's the low- and very low-income units that are the most challenging to get," Kanat said. "How can we continue moving in the right direction?"

Between 2014 and 2019, 562 new housing units were built in Atascadero, according to a city staff report. Although the city met and exceeded the state's Regional Housing Needs Assessment (RHNA) goals for moderate- and above moderate-income housing, Atascadero fell short in the low- and very low-income categories.

Atascadero Community Development Director Phil Dunsmore said the city almost always exceeds RHNA outlined objectives for moderate and market-rate housing. He added that a lot of low-income and very low-income project developers call the city to ask for contributions, "which we don't have funding for."

About 373 housing units are currently under construction in the city, Dunsmoore said during the meeting, but only three of those units are considered to meet the very low-income level threshold ($26,450 for a three-person household) and 15 meet the low-income level ($44,050). Although the city has already approved projects that could generate approximately 220 low-income housing units in Atascadero, Dunsmore said the projects are grant-funded and will likely require city contributions to move forward.

One of the ways to generate that money is through an inclusionary housing fee charged to developers, Dunsmore said.

Kanat said the most common way to do that is to charge developers per square foot. She gave council members four potential options based on the city's history of housing development, the cost of building housing, and the cost of purchasing or renting housing. Atascadero could charge developers a flat rate of $5.88 per square foot of new housing or a flat rate of $6.40 per square foot on new housing units that are greater than 1,000 square feet. Or the city could exempt the first 1,000 square feet of any new housing unit, charging $14.81 per square foot after that. Or Atascadero could opt for a more complicated tiered structure.

City Councilmember Charles Bourbeau said he thought that houses built under 1,500 square feet should be exempt from inclusionary housing fees.

"I don't feel comfortable charging an affordable housing fee to someone or a developer who's developing a moderate-income house for someone who's struggling to afford a market-rate house," Bourbeau said. "People building a 3,500 or 5,000-square-foot house could afford that."

Atascadero Mayor Heather Moreno added that she was also concerned about burdening lower income households with a fee, when higher income households could better handle the extra cost.

Atascadero built about 813,000 square feet of housing between 2014 and 2019, city staff said, and 1,500 square feet was the median size of a home. If the city exempted the first 1,500 feet of housing built, staff said that inclusionary fees would have to be much higher than what was presented.

Bourbeau added that the city's inclusionary housing fee shouldn't be include "a cliff," where "that next square foot is going to cost you a significant amount of money."

City Council ultimately directed staff to come back at a future meeting with more information on an inclusionary fee structure that would exempt the first 1,000 feet of any new housing unit built and include a tiered structure. Δ


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