Petaluma debate: Who should pay for affordable housing?

The city is considering requiring developers to pay a greater share of affordable housing costs to help stem the housing crisis.|

Petaluma officials have acknowledged that the city’s affordable housing crisis will continue to worsen without a solution. How much that solution will come from developers is an ongoing debate that continued this week.

The Petaluma City Council on Monday put off increasing fees charged to developers of market rate housing projects, but signaled a willingness to ask developers to pay a higher share to encourage more affordable housing.

The move, now set for a July 9 workshop and Aug. 6 council meeting, is seen as the city’s biggest policy tool to build affordable housing since the loss of state redevelopment money. Petaluma, like many cities in the Bay Area, has struggled with rising housing prices and a lack of units that those with lower income levels can afford.

Developers say that increasing fees too high would discourage the construction of any kind of housing in the city, which would exacerbate the crisis.

Petaluma’s current policy allows residential developers to either dedicate 15 percent of their units as affordable housing or pay a fee that the city would use to build affordable housing projects. Under the proposal Monday, the current fee of $9,022 for a 2,000 square foot unit would more than double to $20,240, essentially making it cheaper for a developer to build the affordable housing rather than pay the fee.

“Until we have an incentive for construction of on-site affordable housing that is equal to or greater than the cost of building, we’re not going to get the affordable housing program we need,” Councilman Dave King said. “If it costs X to build 15 percent (affordable units), then the in-lieu fee should be at least X.”

Two speakers representing developers told the council that they would reconsider building in Petaluma if the fees were too high. Developers with projects already in the pipeline wondered if they would be able to pay the existing lower fees.

The proposal states that projects with an application that is “deemed complete” by Sept. 1 would be able to pay the lower fees. In continuing the item to a later council meeting, officials proposed allowing developers with complete applications by Jan. 1, 2019 to use the current fee schedule.

Developer Richard Coombs said that even Petaluma’s current fees were higher than anywhere else in Sonoma County.

“Your fees are higher than any city in the county today,” he said. “You have the highest fees.”

Matthew Grey, an attorney representing Merlone Geier, which has proposed building 124 residential units at its Deer Creek mixed-use project, said increasing the cost on developers will make the housing crisis worse.

“The changes now being considered by the council will exacerbate the already severe affordability crisis here in Petaluma,” he said. “Significantly increasing the in-lieu fees will stall projects like the Deer Creek project. The overall result will be less housing in general.”

Mayor David Glass said he “basically begged” Merlone Geier to build housing in the shopping center anchored by Friedman’s Home Improvement.

“But Merlone Geier would have none of it,” Glass said. “It could have been in, could have been done, could have been completed, and it would have been under the old (fee) scale. Too bad.”

Councilwoman Teresa Barrett said something needs to be done to encourage more affordable housing. She said that a fee that is at least as high as the cost of building affordable housing would encourage more of the much needed units to be built.

To meet state targets, Petaluma needs to build 199 units in the very low income level and 103 units in the low income level, according to a staff report. The city has issued just 9 very low income building permits and 23 low income building permits.

“Low income housing is not being built,” Barrett said. “It’s just not part of the development community’s desire to build. Without this incentive that we are proposing, we’re not going to get that for our community. We can talk about that we want affordable housing for our community all we want, but unless we do something about it, we aren’t going to get it.”

Councilwoman Kathy Miller said she is in favor of increasing fees on developers, but she did not want scare away developers who have been planning projects in Petaluma under the assumption of paying the current fee schedule.

“We’ve been talking about (increasing fees) since last fall, but some of these projects have been going on a lot longer than that,” she said. “I firmly believe we have to raise the fees to give it a little bite so that people go back and look at building more affordable housing, but what I don’t want to do is to be unfair to people who were working under certain rules and assumptions.”

King said the city’s housing policy will set the tone for what the community will look like years in the future.

“If we don’t build affordable housing, this town is going to be a city for the wealthy or the people who were able to get in early,” he said.

(Contact Matt Brown at matt.brown@arguscourier.com.)

UPDATED: Please read and follow our commenting policy:
  • This is a family newspaper, please use a kind and respectful tone.
  • No profanity, hate speech or personal attacks. No off-topic remarks.
  • No disinformation about current events.
  • We will remove any comments — or commenters — that do not follow this commenting policy.