Providing Affordable Housing Requires Filling the Gap

First, there’s what housing actually costs. Second, there’s what the federal Department of Housing and Urban Development (HUD) says people can afford to pay. At least in coastal California counties, the second figure is much lower than the first. For a city to provide affordable housing requires filling the gap between the two figures.

The state Department of Housing and Community Development (HCD) uses HUD’s figures. HUD says housing costs 30 percent of total income. The latest figures available at post time were for 2018. See the full details here:

http://www.hcd.ca.gov/grants-funding/income-limits/state-and-federal-income-limits/docs/inc2k18.pdf

To simplify things a bit, HUD and HCD use a four-person household and the county’s median income as benchmarks. The figures for other income categories are percentages of the median. The city of Encinitas has designated only the Very Low and Low Income categories in its affordable housing plans, so I’ve included only those in the chart below.

San Diego County 4-Person Area Median Income: $81,800

# People	1	2	3	4	5	6	7	8
Median	57250	65450	73600	81800	88350	94900	101450	108000
VeryLo	34100	38950	43800	48650	52550	56450	60350	64250
Low	54500	62300	70100	77850	84100	90350	96550	102800

The term “affordable housing” is tossed around without definition. To make it meaningful, it has to be expressed in dollars. Going with the 30-percent-of-income allowance for housing, here’s what a four-person household can afford to pay per month in San Diego County:

Very Low Income: $1,216

Low Income: $1,946

Say a four-person household needs a two-bedroom, two-bath unit. That’s tight but let’s not get extravagant. At post time, Zillow showed 20 rentals with those specifics in Encinitas. Of those, 13 were under $3,000. The range was $2,145 to $2,900. The average was $2,561.

Using that average and the HUD/HCD figures for affordability in San Diego County, here are the gaps the city would have to fill per rental unit:

Very Low Income: $1,345

Low Income: $615

None of this is exact and not everybody is in a four-person household. But putting affordability in dollar terms using the accepted benchmarks gives some idea of what the city of Encinitas is up against. Incidentally, the wait list for HUD Section 8 housing funding in San Diego County varies a bit from city to city, but it’s about 10 years long. Effectively, there’s no new Section 8 funding.

In her April 24, 2019 commentary in the Union-Tribune, Mayor Blakespear wrote: “Our housing plan accommodates zoning for 1,504 housing units designed to be affordable for lower-income people, spread across 15 different sites throughout the city.” That’s not correct. (The income figures the mayor gives are also wrong.) A maximum of 15 percent of the units the upzoning permits would be “affordable for lower-income people.” If that actually happens, which is doubtful, there would be 226 affordable units.

What can the city do to fill the gap between what housing costs and what HUD/HCD say Very Low and Low Income people can afford to pay? The city has to provide some form of subsidy. One way is to build the housing on city-owned land. That takes a substantial cost out of the calculation. The deal the city struck with Habitat for Humanity to build housing on city-owned land on the corner of Urania Avenue and Leucadia Boulevard did that. City-owned site L7 on Quail Gardens Drive could have done that, but the majority of then-City Council members struck the L7 site from consideration.

A way the city now fills the gap: It owns 16 condos at Pacific Pines on El Camino Real. They’re a mix of one and two bedroom units with one or two baths. The rent range is $962 to $1,406 per month. The highest rent is $1,155 below the $2,561 average given above.

Facing the problem of having to fill the dollar gap for 1,504 units, what did the city do? It gifted developers at least 1,278 market-rate units for the sake of maybe getting 226 affordable units. The city shifted the subsidy from itself to the buyers of the market-rate units. The developers won’t pay the subsidy; they’ll pass it on to the market-rate buyers.

The city also forced the suspension of voter-approved Proposition A. Rather than abiding by Prop A as several residents demonstrated could be done while still satisfying HCD’s mandate, the City Council compromised the law, gifted developers and broke faith with the residents they were elected to serve. 

— Doug Fiske