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When Hotel Petaluma's owner announced in February he would be transitioning the building from low-cost, monthly rentals to more expensive nightly rates and asked his current renters to leave, it sent many of the tenants on a frantic search for affordable housing in Petaluma.

They discovered that it's scarcely to be found.

While some moved in with family members or were fast-tracked into an affordable housing complex, others ended up in temporary housing at the Committee on the Shelterless.

About half of those who sought help through Sonoma County Fair Housing, a program run by Petaluma People Services Center, were forced to move out of town, according Melody Sea, a fair housing assistant at PPSC.

These tenants' stories highlight an underlying issue in Petaluma: the high cost of rentals is driving many working individuals and families out of town or into homeless shelters.

"You don't have to be down and out and poor for rent to be a factor here," said Mary Jo Wheeler, who moved out of Petaluma with her husband after their landlord prepared to raise rent by $80 a month.

Wheeler receives a disability check each month, while her husband works full time as staff assistant at a high school and earns about $35,000 a year. They didn't consider themselves a low-income couple, but when their landlord's rent increase put the cost of their two bedroom, one bath duplex at more than $1,400 per month plus utilities this year, they found the cost untenable.

The rent had been steadily increasing for years, she said, and finally it became too much. After a long search, they found a place half the size of their former apartment in Sebastopol, which costs them $1,250 a month.

"We're middle class, we're not down and out, but a huge amount was going to rent," Wheeler said.

The couple's story is not unusual in Petaluma, where a high demand for rentals brought on by people losing their homes during the recession and joining the rental market has combined with the general desirability of the area to create rents that many working individuals and families cannot afford.

Indeed, the Santa Rosa-Petaluma metro area ranked as the 13th least affordable place in California and the 24th least affordable nationwide according to a "housing opportunity" index created by the National Association of Homebuilders and Wells Fargo. The index, based on data from 2012, compares median earning potential in an area to cost of housing.

The disproportionately high prices mean that low-to-medium wage earners who make enough to be above the cutoff for much subsidized housing may still find themselves priced out of a market rate home.

For instance, those earning below 50 percent of the area's median income are eligible for a Section 8 housing subsidy, in which they receive a voucher to help pay for rent. But because demand is so high, most of the limited number of vouchers go to those earning below 30 percent, according to the Sonoma County Housing Authority. That leaves many people trapped in a space between not qualifying for housing assistance and being able to afford market rate rentals.

Many of the roughly 250 people who cycle through the Committee on the Shelterless's emergency shelter each year without finding permanent housing do so not because they're unemployed, but because they're simply not earning enough to meet the high cost of rent, according to Mike Johnson, chief operating officer at COTS.

"People are working but are not able to (afford to) live in the dignity of a home," said Eileen Morris, who runs the Rent Right program at COTS.

While Petaluma has a comparatively high number of affordable housing complexes, there is little in the way of private, market-rate housing.

A survey the city conducted of Petaluma's 30 apartment complexes that have more than 30 units showed that the apartments' vacancy rate is less than 3 percent, which officials called an "unhealthy" number.

Meanwhile, affordable housing complexes are in such high demand that they have 3- to 5-year waiting lists. Some waiting lists are so long they've been closed, so as not to give people a false sense of hope, said the city's Fair Housing Director Bonne Gaebler.

"It's beyond tough — it's almost impossible — to find decent housing in Petaluma if you're low-income," affirmed Martha Cooper, a rental property manager with Century 21 Bundesen in Petaluma. She said any low-cost rental that comes on the market draws four to five applications.

That's what former Hotel Petaluma resident Ben Duncan, 27, found when he began looking for a new place to stay after receiving his 30-day notice to vacate. As he searched for other rentals in town, the lack of options led him to believe he'd have to move back to Santa Rosa. "At the time, everything was well over a thousand dollars a month," he said.

But after two weeks of scouring Craigslist and following up on any posting that seemed remotely affordable, he found a place — more expensive than the $800 a month he was paying at the hotel at a little more than $1,000 —— but within his price range.

With a good credit history and a stable job as an inside sales rep, he beat out about 30 other applicants for the Kentucky Street apartment, which he says is a bit bigger than his old room.

Duncan's new rent is now consuming about half his salary, and he says he finds himself in a tenuous financial situation.

"I was living within my means; now I'm pushing it," he said.

But Duncan recognized there were many tenants in a more precarious situation than his.

"There were others who couldn't afford anything else (in town)," he said.

Ruth Bird, for instance, recently moved to Los Angeles. She lived in the hotel for almost 14 years, working as the assistant hotel manager for many of them. She went to L.A. because she could stay with a friend while she looked for permanent housing. But, that meant moving away from her son and grandchildren who live in Petaluma.

"I loved Petaluma," she said. "I'm heartbroken not to be there anymore."

"A lot (of the tenants) didn't want to move out of Petaluma, that was the hard part for them," said PPSC's Sea. "The man isn't an ogre," she said of the hotel's owner, Terence Andrews, who has been strongly criticized by many tenants and local Occupy groups for the manner in which he implemented the change at the hotel. "He's trying to build his business. A place (as affordable as that) couldn't last forever downtown, and that's a sad part about Petaluma."

The dearth of affordable housing isn't for lack of trying — Petaluma officials have made building low-income housing a priority in recent years and the city is ahead of many of its peers in what it offers.

"Petaluma is kind of the poster child for affordable housing, and I give the City Council all the credit in the world for that," said Gaebler. But, she recognized, there is a gap between the supply and demand for low-income housing — a gap that's unlikely to be filled soon.

Two affordable housing projects are under construction in Petaluma at the moment — PEP Housing's Kellgren Apartments for seniors and Burbank Housing's Logan Place Apartments.

But those could be the last built n Petaluma for a while. That's because local funding for such projects dried up when the state dissolved redevelopment agencies last year. Petaluma's redevelopment agency funneled about $3 million a year to affordable housing projects, which nonprofits then leveraged to get federal grants and fund new housing developments.

Despite the economic challenges, local nonprofits are looking for creative solutions to the rental crunch and the resulting homelessness.

COTS, for instance, is gearing up to expand a program called Integrity Houses, where unrelated adults share a house in order to reduce each individual's rent. With three to five adults sharing a house, their combined rents add up to about the going rate.

"Since redevelopment, we're really encouraging people to look at shared housing," COTS' Morris said.

Currently, there are nine Integrity Homes in Petaluma. Within five years, COTS hopes to expand that number to 50.

The limiting factor is the number of homeowners willing to participate.

Karen Saunders was one of the first homeowners to participate in the program. She's been renting out her McGregor Ave. home since 2008. She says she gets just about the going rate for the house, which she leases to four tenants. They send their checks to her each month, with COTS stepping in if there is an issue among the renters or if a renter needs to be replaced.

"We're really happy about it," she said.

For now, though, the current Integrity homes are full, wait lists at apartments are long, competition on Craigslist is fierce, and people are doing the best they can to stay in the community they love.

Duncan, the former Hotel Petaluma resident who grew up in Santa Rosa and has always liked Petaluma, was circumspect about the situation.

"Given the location, you've got to expect you're gonna pay more," he said.

Yes, his rent is higher now, and yes, it's a stretch to balance the bank book at the end of the month. But, he said, it's worth it: "I like the history, the architecture, all the hustle of beautiful downtown Petaluma. The ability to walk my neighborhood is worth the price."

(Contact Jamie Hansen at jamie.hansen@arguscourier.com)

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