Placer County Housing Affordability Crisis Initiatives

Placer sets new goal for affordable housing construction, proposes new private housing trust

AUBURN, Calif. – Responding to a growing crisis of housing affordability, the Placer County Board of Supervisors approved a series of new initiatives aimed at kick starting the construction of 2,640 new affordable homes over the next 20 years.

Framed around a goal of eventually meeting Placer’s state obligation for new affordable housing units, the board approved funding for the implementation of a new pilot program to accelerate affordable housing construction and directed staff to work with stakeholders to consider creation of a new private housing trust to close an expected funding gap to build them.

Private Trust

Placer already manages a public housing trust, filled by developer fees that are used to help fund a variety of affordable housing projects and existing housing programs. A private trust would offer more flexibility to accept and incentivize private donations and fewer restrictions on the use of funds, providing more opportunities for the private sector to contribute to housing solutions.

With differing housing needs in the eastern and western sides of the county, staff expects to create separate trusts for each to allow community members to make contributions that benefit their own communities.

“We are not going to solve this problem without working cooperatively with the home building community,” said Board Chair Kirk Uhler, speaking in favor of the new trust. “I think that we ought to embrace the home builders and the steps that they’ve already taken to reach out to the donor community.”

Though in recent years Placer has successfully partnered with the building industry to bring forward several affordable and workforce housing projects, the number of affordable units being built continues to lag behind demand.

More than 79% of extremely low income households are paying over half of their income on housing costs compared to just 5% of moderate income households, according to a recent report on Placer County by the California Housing Partnership. The federal definition of housing affordability is spending no more than 30% of gross income for total housing costs.

Acute Issue

“Housing is an acute issue throughout much of the county, and many feel it is a crisis in Tahoe,” said District 5 Supervisor Cindy Gustafson. “I’d like the county to lead by example. We need to look at how we can reduce fees, how we can streamline approvals, and provide land and funding for affordable housing construction.”

Affordable housing projects typically cost more to build than the restricted rents they can charge will cover, with responsibility for closing the cost gap often falling to local governments – on average about $100,000 per unit, according to a recent Placer-commissioned study by BAE Urban Economics.

“Affordable housing is a challenge throughout the state and our community,” said Board Vice Chair Bonnie Gore. “Building affordable homes in our county must begin but we’ve got to look beyond county funding to make this happen. We will work with stakeholders throughout the county – builders, businesses, advocates, nonprofits, the faith community – to find innovative solutions.”

Based on housing need projections, and with a goal of meeting Placer’s regional housing needs obligation, Placer would start a new pilot program with $500,000 as seed money from the county general fund, then ramp up annual funding from a variety of sources, including the new private trusts, to $2.39 million a year as resources become available.

Placer’s new housing goal is to eventually ensure that 10% of all housing built in unincorporated areas of the county is affordable; resulting in 30 affordable units a year based on current projections of 300 new home construction starts annually.

Goal: 2,640 over 20 years

In addition to those, initial efforts would be focused on meeting the housing needs of Placer residents facing the highest cost burden for housing; representing about 5% of the current housing stock of 40,886 units in unincorporated areas of the county. Together, Placer’s goal amounts to 132 affordable units a year, or 2,640 over the next 20 years.

Staff expects to return to the board with a proposed framework for a private trust this fall.

In a related item, the board also approved the county’s 2019-2020 Housing Program Work Plan, an annual road map of tasks the county will undertake to comprehensively address housing affordability challenges and accomplish the housing element of the county’s general plan.

The work plan continues efforts to update county code and policy to reduce regulatory barriers to housing construction and help reduce construction costs, and facilitates ongoing support for the proposed Mercy Housing affordable housing project in North Auburn and the Dollar Creek Crossing achievable housing concept in Tahoe City, still being refined with community feedback.

The $1.3 million cost to complete work plan tasks is included in the county’s fiscal year 2019-2020 budget.