Last week’s blog post (“By the Numbers”) compared housing prices in Redwood City to those in our northern neighbor, the city of San Carlos. While the relative differences in rents and housing prices were the primary subject of that post, I did include some specific housing prices and monthly rents—numbers that I think we can all agree are pretty high. This week I want to discuss housing affordability and recent city actions regarding affordable housing in Redwood City.

Throughout the last several years, I’ve been watching as Redwood City’s City Council has endeavored to encourage affordable housing in the face of constantly shifting state ordinances. Since the dissolution of California’s Redevelopment Agencies—which were a prime tool used by cities to actively reduce neglected or blighted areas and create new housing—our state government has:

• Enacted SB 35, a bill that requires cities to streamline the review process for housing projects if they aren’t meeting regional housing needs at various affordability levels (I’ll get to those in a minute) .
• Amended the Housing Accountability Act, a bill intended to speed up the approval process for projects that meet certain criteria. The amendments give the act some additional teeth and limit a city’s ability to deny housing projects.
• Enacted AB 1505, a bill that allows cities and counties to impose inclusionary requirements on rental housing projects. That is, it gives cities such as Redwood City the power to require that a certain percentage of units within a residential housing development (that’s the “inclusionary” part) be made affordable, rather than allowing the developer to pay a fee that would go towards building affordable units elsewhere in the city.

Over the years our City Council has been making visible efforts to create affordable housing. For one, they imposed an affordable housing impact fee on both residential and commercial projects to create a pool of money to be used for affordable housing. As well, they’ve given city-owned land and funds to non-profits that are building affordable housing, including Habitat for Humanity and Mid Pen Housing (for the Bradford Street project). And, they’ve eased regulations for Accessory Dwelling Units (ADUs) in the hopes that many such units will be created and then rented to those who cannot afford market-rate housing. (There is some real question as to whether this is having the intended effect, however.)

On Monday, May 21, Redwood City’s City Council took their latest step. Taking advantage of the recently enacted AB 1505, they approved an ordinance that requires new rental housing projects (those that have not yet been approved) of twenty units or more to make 20% of their units affordable at various income levels. (Projects with fewer than twenty units have the option to instead pay the housing impact fee. Ownership projects must make 15% of their units affordable at the Moderate income level.) For now—the City Council is willing to consider shifting the percentages depending upon how things go—10% of a project’s units will be reserved for people at the Moderate income level, 5% will be for those at the Low income level, and the remaining 5% will be designated for those at the Very Low income level.

Those levels, in case you aren’t familiar with them, correspond to set percentages of the “area median income” (AMI)—which in our case is the median of all household incomes in San Mateo County. Each year the county publishes a table that specifies the median income for the county (determined by the federal government), along with the household income values that define each category. “Very Low,” for instance, is 50% of the AMI; if your total household income is less than 50% of the specified area median income (but more than 30%, which marks the next lower category), your rent is set at 30% of your category’s income limit.

In her presentation to the City Council, Diana O’Dell (a Principal Planner with the city) provided the following example. Consider a three-person household living in a two-bedroom apartment. In Redwood City an apartment like that typically commands a rent in the range of $3,600-$4,000 per month. If that household earned at the Moderate income level and was living in an appropriately rent-assisted apartment, however, the rent would be $3,112. At the Low income level the rent would be $2,371, and at the Very Low income level the rent for such an apartment would be only $1,481. Sounds great, right? The trick is in finding an affordable apartment: they are very few and far between. Thus, the need to build more affordable units.

Turning back to SB 35 for a moment, cities are required to streamline the review of residential projects if they aren’t meeting regional housing needs for affordable housing. Just how does a city know if it is meeting its “regional housing needs”? As you might expect, the Federal Government determines that. They determine a targeted number of units at various affordability levels for each city (the Regional Housing Needs Allocation, or RHNA), thus setting the bar that the city must meet. In the case of Redwood City, we need to construct 502 housing units serving the Moderate income level, 372 units at the Low income level, and 699 units targeting the Very Low income level—all by 2023 (when I presume the situation will be reassessed and new targets will be announced).

Designating 20% of our future rental housing projects (and 15% of our for-sale projects) as affordable may not get Redwood City all the way to its RHNA goals, but it is going above and beyond what most neighboring cities are doing: most have set their equivalent levels at 10% to 15%. Even higher than 20% would be wonderful, of course, but such a move would likely prevent new housing projects from being profitable and thus might well cause new proposals to dry up. Our City Council is betting that 20% isn’t too high; it’ll be interesting to see how developers react to it.

Regrettably, but understandably, this new Inclusionary Housing Ordinance cannot be applied retroactively to projects that have already been approved. Thus the 1548 Maple Street project (131 for-sale townhomes on Redwood Creek, pictured above), which was approved just three weeks prior to this ordinance being enacted, just avoided having to make 20 of those townhomes affordable.

By my reckoning there are currently seven projects not yet approved that have a housing component to them and thus would potentially be affected. Those projects are:

• 120 El Camino Real (the former Mountain Mike’s pizza restaurant). The proposal is for twelve condominiums, which, because the project is below the twenty-unit threshold, would not have to make any of them affordable (it still would have to pay the affordable housing impact fee, though).
• 31 Center Street. Here the proposal is to replace an existing single-family home (shown below) with seven townhouse-style condominiums. This project, too, falls below the threshold.
  
• 1601 El Camino Real. This is the multi-block development that would replace Towne Ford, among other things. Most of the development would be office buildings, but there is one building in the proposal that would contain 272 for-rent apartments. In the proposal the number of units set aside as affordable is already 20%, but all of those were being aimed at the Low income level. Redwood City’s new ordinance does allow developers to propose a shift in how the affordable units are allocated among income levels, as long as the net benefit works out to be the same (or better). Thus, this project might well be OK as-is.
• 504 El Camino Real. I wrote about this project late last year; it includes 33 for-rent apartments and ground-floor office space at the corner of El Camino and Whipple Avenue. The project proposal calls for five of the apartments being set aside for those at the Very Low income level, but our new ordinance requires that two more—seven in total—of the apartments be affordable. And of course the needed distribution among the income levels would have to be taken into account.
• 515 Cleveland Street. This project would replace seven single-family homes (and one ADU) at the corner of Harrison Avenue and Cleveland Street (near North Star Academy) with seventeen for-sale townhomes.  Because the project consists of fewer than twenty units, none of them would need to be affordable—although the project would still need to pay the affordable housing fee.
• 557 E Bayshore (the former Century Park 12 Theater site). SyRes Properties has proposed building 336 housing units (apartments, I believe) on the site. So far I don’t believe that they’ve indicated whether any of them would be affordable; our new ordinance means that 67 of them would need to be.
• 1401 Broadway (the site of the shopping center at Broadway and Woodside). This development would include office space plus 520 for-rent apartments. In the current proposal, 120 of them are slated to be affordable (30 for those at the Very Low income level, and 90 at the Low income level). Given that the ordinance only requires that 104 of the units be set aside as affordable, The Sobrato Organization (the project’s developer) seems to have neatly anticipated the city’s wishes.

After the City Council voted unanimously to enact the Inclusionary Housing Ordinance, they heard an appeal to the 353 Main Street project (shown above, in a rendering included with the preliminary plans submitted to the city), a project which in early March had been approved by the Planning Commission. I was not at all surprised that the Council unanimously voted to deny the appeal and allow the project to go forward. But relevant to this week’s discussion, that project, which will bring 125 apartments to Main Street (north of Veterans Boulevard), was already slated to make 15% of its units affordable. Of the 19 units, seven will be set aside for those in the Very Low income category, while nine will be for Low income earners and three will be for those in the Moderate income level. Because the project had already been approved it doesn’t need to meet the higher bar set by the new ordinance—although one Council member did note that if the developer was voluntarily willing to increase the number of affordable units, there certainly would be no objection. Me, I’m not holding my breath…

Redwood City’s RHNA target calls for the creation of an additional 1573 affordable housing units over the next four years or so. Redwood City currently has seven approved residential projects (including 353 Main Street) that have yet to begin construction; if built, those projects in total would add 191 new affordable units. Then, if all of the proposed projects I listed above were approved and built (which is by no means guaranteed), we would gain an additional 162 affordable units. That totals out to 353 units of affordable housing, or about 22% of the number that California says we need to build. We would have had even more, but unfortunately the 250-unit apartment project (50 of which were going to be reserved for those in the Very Low income bracket) scheduled for 801 Brewster—which had already been approved—was withdrawn by the developer.  353 units is a start, but we still have a long way to go…

Now it’s your turn! Redwood City is conducting a survey of its residents to help guide the city’s efforts in dealing with our housing issues at all levels. It doesn’t take too long—it took me just over six minutes to complete it—so when you have a bit of spare time, do consider giving the city your feedback. You’ll find the survey at http://www.redwoodcity.org/departments/city-manager/city-manager-s-initiatives/our-community-housing-and-our-future/our-community-housing-and-our-future-survey.