The Vacaville City Council chose to move forward with inclusionary housing discussions but not to develop a full plan just yet, following a presentation Tuesday night from Josh Abrams of the Community Planning Collaborative. Abrams walked the council through a study on the potential pros and cons of inclusionary housing in Vacaville.
Abrams explained that inclusionary housing is a model in which some homes in a development are sold at affordable levels alongside market-rate houses. The approach is common in California, the eastern seaboard and many strong market areas. Abrams said the market in Vacaville appears ready to support a modest inclusionary housing requirement. He recommended an affordable rental requirement at 60 percent of Area Median Income and an ownership affordability requirement at 100 percent of Area Median Income, with 10 percent of homes built demanded to be affordable.
Rental units within that 10 percent inclusionary requirement could be about $1,358 for a one-bedroom and $1,528 for a two-bedroom, according to Abrams, and the cost to buy a three-bedroom home could be $330,000.
“The deeper the affordability the lower the requirements the market will be able to bear and vis versa,” he said.
Inclusionary sees less press than fully affordable buildings, Abrams said, as those often come with fanfare and groundbreaking events.
“It’s a very quiet way of getting affordable housing,” he said.
While Vacaville has done a nice job of creating above-moderate housing, he said, it lags behind RHNA numbers significantly in all other categories.
“In California, it’s probably the major way that affordable housing gets produced,” he said.
On a residential basis, development is generally feasible in Vacaville but may be somewhat less feasible with inclusionary housing. Land price adjustments reduce impacts, he said, and options are important for developers to find profits. Single-family homes would be able to hit the target profit margin, as would cottage clusters.
Commercial Development is at the borderline of feasible, he said. Commercial profits sit at or near the lower end of feasibility, Abrams added.
Mayor John Carli asked how long Vacaville will have a housing affordability crisis, to which Abrams replied that prices will almost certainly not come down without government intervention. Erin Morris, Community Development Director, said there are three affordable housing projects in Vacaville that are approved but unable to move forward because they lack the funding to move forward and are competing for state funds.
“A lot of times the competition is better when you have local funds to pair with state funds,” Morris said.
City Manager Aaron Busch said the city is not currently as competitive as it needs to be for statewide housing funds.
“We’re losing, we’re losing to other cities, predominantly in Southern California,” Busch said.
Economic Development Director Don Burrus said the city has toured 30 companies through the cities, each of which asks about housing. A lack of housing supply and a lack of options at various price points are limiting economic growth in the community, he said, driving businesses away.
“With the housing crisis that is happening here in California, with the housing cost that is happening in the Bay Area, we are a more affordable market but we do not have nearly the number of housing units that many of these companies are asking us to have.
Younger employees for these companies are the most likely to struggle to find housing in the region, Burrus said.
“Missing middle is now part of everyone’s vernacular,” he said.
Councilmember Greg Ritchie said the city needs to find a way to create economic conditions for housing growth in the community. Ritchie noted that 60 percent of AMI is still relatively high in Vacaville’s economy. In Vacaville, that mark would be about $67,800 annually for a family of four.
“Those are our teachers. Those are our X-Ray techs,” he said. “Those are the people who make sure our kids are safe and get care in the hospital, they deserve to afford to live in our community.”
Stockton asked staff what the city’s primary goal is with regard to housing.
“According to our RHNA our primary goal is to produce hundreds of deed-restricted affordable units at a variety of affordable prices before 2031,” Morris replied.
During public comment, developers were offered the opportunity to respond to the presentation. Lisa Vorderbruggen of BIA Bay Area called inclusionary housing a “drop in the bucket,” and a “lucky golden ticket” for a few, forcing the rest of a subdivision to pay the market rate.
“You get a few units, a few people are happy but the prices for everybody else go up, and you’re in this circular firing squad,” she said.
Todd Chambers with Lewis Plan Communities said he also participated in outreach meetings with the consultant and staff.
“We’re fundamentally opposed to an inclusionary ordinance,” he said.
Abrams noted that the developers are tied to market prices with or without inclusionary housing, and cannot pass all of these costs onto the public.
“Even in private they tell me ‘we can try to raise the rents all we want but we can’t because the market controls it,’” Abrams said of developers.
Stockton said he did not support inclusionary housing and argued that the city has to waive fees, reduce costs and incentivize building the type of housing that was discussed at the meeting.
“I personally think your time is better spent on incentives rather than forcing people to pay,” Stockton said.
Councilmember Ted Fremouw echoed worries that inclusionary housing would reduce affordability for other homeowners. He said the city “always has to be in pursuit” of inclusionary housing but not at the cost of others having to pay for some people’s “American dream.” He added, “somebody’s gotta pay for it.”
Councilmember Jeanette Wylie acknowledged the pros and cons but saw the opportunity for the city to try something different moving forward. A former council left the city with Lagoon Valley, she said, discussed earlier in the meeting for not offsetting its development agreement costs. Wylie expressed a willingness to leave future councils with a better housing mix than she inherited.
“This council is living with decisions that were made 20 years ago,” she said.
Wylie pointed out that many people as old as their 40s and 50s cannot afford homes in the regional market.
“If we don’t do something it’s never going to get better,” she said.
Ultimately, staff recommended the council move forward to phase 2, the development of a plan for inclusionary zoning in the city. Community Development Director Erin Morris offered a “phase 1.5” option, which keeps the issue alive in the city. A roll call vote on that plan finished 4-3, with Mayor John Carli and Councilmembers Ted Fremouw and Roy Stockton voting “no.”
Busch encouraged the council to continue the conversation on inclusionary housing. He said there has never been a better time for the city to consider this, with economic opportunity and growth possibilities on the table.
“This topic deserves further discussion in my professional opinion,” he said.