A few days ago the Hollister City Council, staff, and members of the Hollister Planning Commission held a joint meeting to discuss housing development within the city and adjacent areas. No decision items were on the agenda and none were made, but it was, in my opinion, one of the most informative sessions I can remember. I believe these types of meetings are vital; being informed is always the first step in finding productive and effective solutions. The old joke, “Don’t do something, just stand there,” has some truth to it, looking with a critical eye instead of leaping blindly usually produces better results.
Here are some of the items that were discussed and my personal take on a few difficult issues. Others may have different views, but exchanging information and views was the real purpose of the session.
One must define what is meant by “affordable housing.” The local median income is in the $60,000 to $70,000 a year range. [Side note: if you had an income of $70,000 a year, $250 per month in debts, and could come up with a $20,000 down payment, you could “afford” a home that sells for $305,000 according to online calculators]. Since most new local homes are selling in the mid-$400,000 range, housing is not affordable even for those with a median income. This information agrees with most realtor surveys.
We should try to integrate more affordable housing throughout the community, not just in the low income areas. There are no obvious solutions. Less than $3 million is available for housing help to the lowest income category and that would not go far.
If single family homes are not affordable for a large swath of median income families, they are totally unobtainable for those in the low, or low-low income bracket. Apartments and condos, the possible alternatives, are scarce for many reasons, but two were new to me. The first was that litigation rates are very high scaring off developers; the second was that the larger – more than 4 unit – multi-family housing does not qualify for the best government guaranteed loans driving up the cost and risk.
Space is what we have to offer and space is why people want the more expensive homes here; you can buy more space for your dollar than you can in almost all of Santa Clara County. Big houses on big lots (compared to many other locales) compensate for the commute distance, but they drive up the price.
It costs what it costs and the market drives those costs (this includes the cost of public services). When all the costs are added and market taken into account, a home built in Hollister sells for twice what a similar home would sell for in southern Monterey County, but less, sometimes hundreds of thousands less, than what a similar home would sell for in Gilroy or Morgan Hill with their shorter commutes. That’s certainly not news, but it’s important to keep in mind.
City impact fees exceed $30,800 for a typical new home, add another $9,500 if the home is to be annexed from that county as so many are, and $10,500 for schools on 1,800 sq. ft. and you’re past $50,000 in impact fees for a single family home. Worse, those fees do not even start to cover the cost of highway construction.
In my opinion, the impact fee system does not work for several reasons. For one, It’s only designed to cover capital costs when, in the long run, it’s the long-term operational costs that are the really big ticket for government. Additionally, we are trying to forecast capital costs 30 years in advance and we can’t even do it, reliably, 10 years in advance. The long-term capital cost for public facilities have far outstriped the consumer price index so we get less bang for the buck.
Finally, the system asks for an enormous advance payment from many who struggle just to afford the basic housing costs. Assuming a fixed rate loan and little change in the tax code, inflation lowers the relative cost of a mortgage payment as time goes on; it also increases income and as people grow older their earning power and assets typically go up; therefore, a pay as you go system would be better for everyone. However, it should not be based on “value” a figure that produces no income to pay the taxes; impact fees are not based on value, they are based on impacts. Mello-Roos taxes would appear to fit the bill.
There was much discussion of lot size and density and the general feeling was that smaller lots and smaller units would increase affordability, but the added population would stress public services even further. Smaller lots would also use less water; landscaping accounts for 40 percent of waiter use in a typical single-family home.
Ideas were expressed of reducing front lawn sizes by building closer to the street and adding to the private space in the back. My view is that if you build the streets too narrow to begin with you will never be able to add bike lanes because there is no room to expand. Build the bike lanes in on day one.
Parks came under discussion, people want and value local parks, but traditional “pocket parks” are expensive to maintain (a good Mello-Roos item) and there is a move towards linear parks that interconnect the neighborhoods, too many of which have only one entrance and exit. I believe, a well-designed local linear park adds tremendous value to a neighborhood and are much better than massive regional parks that are even more expensive.
That’s not all of it, but it should get you thinking and that is the whole idea.