The number of affordable housing units built in the Truckee/North Lake Tahoe region in the past five years can be counted on one finger: a single moderate-income unit in the Coyote Run II development. Granted, this is an area where all development moves at a lead-footed pace, but housing for low-income earners — which make up over one-third of area households according to the 2016 Regional Housing Study — progresses at barely a crawl.
Barriers to affordable housing projects are many. High construction costs, impact fees, not-in-my-backyard attitudes, density requirements, and the simple fact that affordable housing is not viewed a “sexy” investment, all hamper progress. A few local projects sit on the near horizon, however, and with their promise of added units, we looked at the current state of affordable housing, the obstacles to building it, and the creative methods being tested to make it happen.
Affordable housing now
As of 2017, there were 348 deed-restricted affordable units in the Town of Truckee, 137 of those built in the past 10 years. Jane Carson was one of the original residents of Truckee Riverview Homes, a 38-unit Mercy Housing project built near the Truckee River Regional Park in 2000, and the only affordable housing project comprised of stand-alone homes. After moving in as a single mom with two children, ages 9 and 10, she has lived there ever since. The kids are now near 30, and she has since become the manager of the apartments — responsible for maintenance, resident relations, and a wait list that many hopefuls have clung to for up to eight or nine years.
The Riverview homes are hot commodities in the affordable housing world — the single-family homes with attractive amenities are deed restricted to only those making 60 percent of the Area Median Income (AMI). Other developments are slightly more attainable, but still come with multi-year wait lists.
“Now we have about 35 families on the wait list,” Carson said. “We haven’t had anybody move out in five years. The people who live here are helping to run the town. They work in the schools; they work in the hospitals; they work in the excavating companies; they work in the grocery stores and in the retail stores.” The list goes on.
She said most of the people on her wait list are currently living at one of the apartment-style affordable housing complexes in Truckee such as Henness Flats or Frishman Hollow, but she also is constantly contacted by other people who have hit hard times and are desperately hoping to find a less expensive place to live. Some people camp with their kids while they look for an affordable place, she said. Others are forced to move down the hill. One recent inquiry came from a woman who had lived in her Tahoe home for 20 years, managing a store in Squaw Valley, before being kicked out by her landlord following a dramatic raise in rent this year. At 70 years old, the woman’s options look bleak. “We lose too many good people,” Carson said.
At Sierra Village Apartments, across Old Brockway Road from Riverview, community director Carolina Herrera said its wait list is about four to five years long and currently holds more than 250 names. At Truckee Pines Apartments, just south of Riverview Homes, the wait list is over two years long according to one employee.
With wait lists hundreds of names long, there’s no question a need for lower income housing is there. But after a long stint in the developmental doldrums following the recent recession, it looks like a new funding source is jumpstarting some projects that have lingered in the planning stages for more than a decade.
“In order to make housing truly affordable, it just takes government money,” said Luke Watkins, a principal of Neighborhood Partners a developer on two affordable housing projects in Truckee. Watkins has wrestled more than $26 million from California’s Cap and Trade program over the last two years for his projects in Nevada and Placer counties. The affordable housing component of the Coldstream Specific Plan near the east shore of Donner Lake was awarded $10 million in cap and trade funds for 48 units in 2016, and the Meadow View project at Schaffer’s Mill was awarded $16.25 million in July of this year for 56 very low, and low income deed restricted units from the same funding source.
In fact, out of the 189 affordable housing realistically planned for the near future (the word is out on the 138 units obliged for Gray’s Crossing), 175 are being primarily funded by Gov. Jerry Brown’s cap and trade program, first instituted in 2013. When one door shuts, another opens — in 2011 Brown killed the redevelopment agencies that many entities had been relying on for affordable housing projects. The Artist Lofts project in the Truckee Railyard was one such project, seemingly doomed by the dissolution of the redevelopment agencies; but after the initial blow, developer Rick Holliday applied for and received $12 million in the first round of funding from the newly created cap and trade funds in 2015.
“We’re fortunate that three projects in this Truckee area were funded, one in each round … certainly, there’s no other rural community in California that has had that level of success,” Watkins said.
With the victories the area has seen in acquiring cap and trade funds for affordable housing development, it may seem an easy well to tap. It’s not. The funds are some of the most competitive in the state, and in the most recent round, Truckee was one of 19 communities in the state to achieve it.
“How we were able to compete, was we were able to very quickly bring the partners to the table for that soft financing side, which is committing to some matching funds,” said Seana Doherty, project director for the Mountain Housing Council. When it comes to low income housing, there are no investors in the traditional development sense, Doherty said, but Truckee/Tahoe excels in scraping together the matching funds needed to attract state funds. The Artist Lofts for example, used matching funds totaling millions of dollars from the Town of Truckee, the Truckee Tahoe Airport District, the Tahoe Truckee Community Foundation, and the Martis Fund. The Meadow View project took matching transportation dollars from the Town of Truckee and Placer County — but also required that the county bolster its bus schedule, adding four new electric buses and $726,000 to improve its trail systems. (Because the cap and trade funds are operated by greenhouse gas credits sold at auction, the projects need to exhibit a reduction in fossil fuel use.)
Looking forward, both Watkins and Doherty feel there’s no reason Truckee’s success in leveraging these funds needs to stop here — far from the state looking to pull back from the area in order to spread the funds around, three successful projects would actually make the area more appealing for public investment.
“We have a really hard time competing with Sacramento and L.A., so we hope this puts us on the map for bringing really good projects to the table at the state level,” Doherty said.
Local level funding
Cap and trade funding may prove itself a vital funding source pending the success of the three projects coming down the pipeline. Not all are guaranteed, but the developers are optimistic. The Artist Lofts plans to break ground next year; Watkins said construction on Meadow View will commence in spring of 2020 — it’s running late due to a $4 million funding gap; and Coldstream is on a similar timeline to Meadow View. To even have a chance at the state funding for these projects though, it starts local, and it starts with money — the question is where government entities build those funds.
For the Town of Truckee, the soft financing for these projects comes from two places: the town’s general fund and a fund built from housing in-lieu fees. Developers are required to build 15 percent affordable housing, but they have the option to pay an in-lieu fee, instead of building the actual unit, that goes toward the town’s housing fund. While the town said it would prefer that builders build rather than pay the fee, the cost of the fee is set to cover the financing gap between what it costs to build a deed-restricted affordable unit and the low to moderate income range it will be rented for. Therefore, while the town has raised the maximum fee from $79,680 per unit to $87,718 over the last two years in order to incentivize building, the fee is still significantly lower than building the required affordable housing. “I would say most developers want to do the in-lieu fee,” town associate planner Yumie Dahn said.
Since the program was instituted in 2009, it has brought in just over $1.9 million in revenues — $1.65 million was used as soft financing for the Railyard project, $150,000 for the Mountain Housing Council partnership, and roughly $75,000 on studies and calculations — although Dahn said the town has discontinued using the fund for studies. For future projects, this currently leaves $162,617 in the housing fund, plus $500,000 from the general fund earmarked for housing.
Placer County also charges an in-lieu fee, but unlike the town, Placer County Deputy CEO-Tahoe Jennifer Merchant said the county does not currently have a structure in place, and the amount is usually determined on a case-by-case basis. This practice was recently criticized in the 2017/18 Placer County Grand Jury Report, which stated that the county should “Develop a consistent in-lieu fee that enables affordable housing.” Merchant said the county is currently looking to create a structure for fees, and launched a study with Hansford Economics to determine proper fee amounts.
The current Placer County in-lieu fee revenues are allocated to a housing trust fund that holds about $1.5 million, of which about 75 percent was generated from the Tahoe area. Merchant said this fund could be used for any project related to housing, including the $3.6 million, 11.4 acre Nahas property near Dollar Hill in Tahoe City. The county intends to purchase the Nahas lot for “achievable” housing, a term coined by the Mountain Housing Council to include income levels ranging from below 30 percent of AMI, to 195 percent of AMI. The achievable definition is meant to include the “missing middle” income range in the housing conversation that is routinely neglected when strategizing affordable development.
As far as the effectiveness of the fees in getting affordable housing built in Placer County and Truckee, both entities agree that most developers choose to pay the fee — it’s far cheaper than building. But, it adds a tool to the belt, they say. The single affordable unit built in the last five years as opposed to paying the in-lieu fee, compared to the many units on the horizon, suggest the fees are a poor short term solution but could pay dividends down the line.
“[The in-lieu fee] is never going to build the same number of units that somebody would be required to [build] otherwise,” Merchant said. “But it gives us money in the bank to use to leverage other resources. It can be used for matching money; it can be used to buy land, to offset other fees.”
After funding, every conversation regarding affordable housing eventually circles around density. The local government’s responsibility to fund and drive affordable housing projects means the projects will have more units per acre than is typical for other housing developments, Dahn says. As developers forego building 10 to 15 percent affordable units, which would integrate those units into existing projects and spread them around the area, in-lieu funds are instead directed toward full scale affordable housing projects.
“If you’re building a residential project and you can put in affordable housing then these affordable housing units are integrated into our community rather than just being subsets of our community,” Dahn said.
The Town of Truckee is currently looking at some rezoning to increase density, such as the upper McIver Dairy Farm, near the west end of Truckee, to 18 units per acre, Dahn said. The highest density in Truckee is currently 24 units per acre in downtown. In Tahoe City, the county is looking at rezoning the Nahas property. According to Merchant, the property is zoned for 15 units per acre, but with a new designation for affordable housing, its zoning can be boosted by 25 percent, allowing for about 200 units on the site.
“Density is the best way to get walkability, and the best way to make something financially feasible,” Merchant said. “I don’t know that the community will be willing to except that many units, but that’s something we will be getting feedback on.”
What Merchant calls the “spectre of NIMBYism” or not-in-my-backyard-ism, is one of the last hurdles for many affordable housing projects. Doherty at the Mountain Housing Council said that although people are all too aware of the need for these projects, affordable housing still carries a stigma that needs to be overcome.
“There is time to get involved and help shape [housing] projects, but we can’t do all this work to get housing and then have them die because the public shuts them down,” Doherty said. “We have to start thinking about higher density and walkable communities and that kind of living that is new to our area but much needed.”