Healdsburg City Council changed the city’s inclusionary housing ordinance by a 5-0 vote at its June 3 meeting at city hall, 401 Grove St.
“Our ultimate goal is to get deed-restricted, affordable units in Healdsburg,” Mayor David Hagele said of the changes.
The new requirements for housing projects rise from 15% to 20% of units built to be income restricted. Those units for sale will have to have 15% in the moderate income bracket and 5% in the middle income. Those for rent will have 5% dedicated to low-income and 15% toward moderate income. Projects of four or fewer units can pay an in-lieu fee.
Low income is considered 51% to 80% of annual median income (AMI). Moderate is considered 81% to 120% of AMI. Middle income is in the range above 120% AMI. The AMI for Healdsburg is $93,900, according to the staff report, up from $84,100 last year.
Senior Housing Planner Lisa Kranz worked on the ordinance revision and led the staff report.
Councilmember Evelyn Mitchell asked how this breakdown of 20% would work for projects that could not be split. Kranz said it would be discretionary but lean toward the more affordable income bracket.
Fractions of units that need to be inclusionary when using this percentage would either be rounded up or be required to pay a fee.
The in-lieu fee will be determined each year. The Engineering News Index will be used to update the in-lieu fee annually. Its calculation is based on the percentage of inclusionary housing and ability to pay for all units compared to the cost of construction, according to Walter Keton.
There will be a cap of $41,750 for fees on for-sale units and $3,692 for rentals. Rates for each type are $8.35 for sale and $3.80 for rent. Units that are between 850 square feet and 1,200 square feet will pay half that fee. Those under 850 square feet will be exempt.
There is also the possibility now to become compliant by converting existing units into income-restricted units.
Units providing ADUs will be exempted if restricted to low-income households. The life of the exemption would be set by the city, and is typically 55 years.
During public comment, speakers objected to the cap on in-lieu fees. There was general consensus from council that the cap be removed. The removal of the fee cap was generally thought of as a way to encourage a smaller scale of new housing.
“It seems like if a developer wants to build these mega-homes then he should have to pay the freight,” Vice Mayor Leah Gold said.
City Manager David Mickaelian said he would be more comfortable changing the fee cap after staff had time to examine the impact. The fee structure is likely to be brought before councilagain at the second meeting in August.
One member of the public said that an even number on the threshold to provide inclusionary housing would make more sense from a multi-family unit builder’s perspective due to shared walls.
Mitchell and Naujokas shared that concern. Naujokas thought five units was properly vetted, though, and said he wasn’t going to “bog this down” by exploring that and other options.
Naujokas was also interested to know what type of refund options there might be for fees if a unit is sold at lower deed-restricted brackets and whether other metrics than square-footage could be used to determine affordability.
Though lower square-footage is not necessarily correlated to affordable units, others including staff felt there was a logic to the comparison. One member of the public noted that even if a small unit was originally built as a luxury home, it would hopefully end up as an affordable unit as it aged and changed hands.
“There are going to be very nice 850-square-foot units. There’s not much we can do about that,” Hagele said.
Councilmember Shaun McCaffery wanted clarification that there would be a significant jump in fees from 1,200 to 1,201 square feet. Staff said that there would be, but that those sweet spots were inevitable in this style of policy.