Preservation with Carrots and Sticks
by Nick Welsh
About two months ago, the Santa Barbara City Council approved the demolition of a worn-out 10-unit apartment complex on North La Cumbre Road — over the tearful objections of the tenants — to make way for a cluster of well-designed new condos. Most of the councilmembers were convinced they had no other choice. And many haven’t stopped feeling bad about it since. In hopes of securing a wider range of policy choices for the next time they confront an apartment tear-down, on Tuesday the City Council, along with members of the city’s Planning Commission, convened a special three-hour meeting. On the table was a Chinese menu of options designed to protect Santa Barbara’s existing supply of rental housing from what affordable housing advocate Mickey Flacks referred to as the “condomification” of Santa Barbara.
While there was no shortage of consensus that something must be done, there was disagreement between some housing advocates — like Flacks — and certain councilmembers — like Iya Falcone — over which is more effective, the carrot or the stick, in dealing with landlords and private developers. “Keep in the forefront of your mind the carrot,” Falcone said, urging her colleagues to focus on incentives, rather than restrictions. In response, Flacks shot back, “I think we’re at the point where all the carrots are being eaten up.” Flacks urged the two political bodies — one elected, the other appointed — to require property owners who demolish rental housing to build condos to pay offsetting “in-lieu” fees so expensive that “they act as a deterrent to condo conversion.” And like many affordable housing advocates, Flacks urged the two bodies to clamp down on condo conversions. Currently, property owners building 10 units or more are required to ensure that a certain percentage are affordable. The threshold, she said, should be reduced to as low as four. Even more radical in his remarks was former councilmember David Landecker, now the president of the Citizens Planning Association. Landecker expressed skepticism about in-lieu fees, no matter how high, saying they were rarely enough to do any good. Instead, he urged the council to change the zoning rules to discourage the construction of market-rate housing and to encourage affordable housing.
Councilmember Das Williams expressed great enthusiasm for imposing new development fees — up to $25 a square foot — for new residential construction, the proceeds of which could be directed toward affordable housing. Planning Commissioner Bill Mahan suggested another source of revenue, urging City Hall to ask voters to approve an increase in the real estate transfer tax. If real estate agents get their cut from real estate sales, he said, so should the City of Santa Barbara. “Right now that fee is so small that nobody knows how much it is,” he said.
Councilmember Brian Barnwell cautioned, “We can’t build housing for everybody.” He argued that Santa Barbara’s exorbitant land prices drive the cost of housing, and pointed out that the cheapest land in Santa Barbara could be found in neighborhoods zoned for industrial uses. If developers agreed to build affordable housing there, Barnwell suggested that City Hall might allow residential development — normally off-limits in industrial zones — to take place.
Councilmember Helene Schneider said a greater appreciation of rental economics might help the council devise programs to encourage developers to build apartments. “I don’t know what they mean when they say, ‘It doesn’t pencil out.’ Is it they can make more elsewhere, or that they actually lose money?” Craig Zimmerman of the Towbes Group responded that rents in Santa Barbara have remained fairly level while construction costs — as well as the price of land — have skyrocketed.
Part of the conundrum facing these politicians is which actions to take now and which to delay until the general plan update process begins next year. Barnwell argued that many of the actions contemplated Tuesday should be incorporated into an overall planning scheme. Flacks countered that if the council waits much longer to act, “There won’t be anything left to save.” In the meantime, Planning Commissioner John Jostes said the council and the planners already have several tools at their disposal that remain inadequately deployed. First, he said, don’t grant discretionary bonus densities to huge condos with 2,200-square-foot bedrooms. Secondly, he said, environmental law already gives decision-makers considerable discretionary authority to deny special breaks and modifications to projects — and developers — that don’t meet the community’s obvious need for affordable rental housing. No actual decisions were made Tuesday, and it remains to be seen what — if any — new initiatives are actually pursued.