By Nick Brunner

The issues of lack of housing affordability and availability are likely to hover around Sacramento for some time, but there’s no shortage of ideas around how to tackle those issues. It’s an election year and while Super Tuesday may be over, we’re likely to hear lawmakers and candidates beating the drum around the topic all year. 

Advocacy groups, companies and nonprofit agencies all have their stakes in this too, and there’s a bevy of information to collect and analyze. This week, our talk is between two dedicated journalists — Ben van der Meer of Sacramento Business Journal and Chris Nichols of CapRadio — who regularly cover this multifaceted issue. The transcript below comes directly from Episode 1 of Solving Sacramento’s new “Equity in the Capital” podcast.

Van der Meer: There’s lots of discussion about the policy behind trying to create more affordable housing and what seems to be most effective. What seems to come up over and over again … say you’re building a 50-unit project, and the per-unit cost will be half a million dollars, in some cases. People say, oh, my god, that’s so expensive. How can anyone rationalize that? It comes down to, well, there’s just a lot of costs that go into affordable housing that counterintuitively make it more expensive than market-rate housing. But with that acknowledgement, what do you hear from a policy perspective that seems to work? … What are you running into?

Nichols: Well, just to stay on that issue of cost for a moment — because I think that’s really important — we are seeing projects [at], like you said, $300,000 to $600,000 a unit. … Only so much money comes to Sacramento … and maybe Sacramento gets a few million dollars for affordable housing projects a year, and you’re spending $600,000 a unit, you’re just not going to be able to build that much. 

There has been, I think, rising frustration in the community among residents, among elected leaders about how much this costs. So I am interested in seeing as we go forward … how does our region lower that cost, but still produce a safe and stable housing environment, whether it’s [for] someone who’s living on the street or someone on a fixed income? … There’s a frustration just from the general population of taxpayers, people who want to know how the government is spending their money. …

Van der Meer: The City of Sacramento has been in the early stages of talking about, at the council level, changing their inclusionary housing ordinance, which basically would for new housing projects — as they come up — attach a higher fee to them. Or in some cases, if you have a project with a certain number of units … making them affordable. I expect that’s going to be a very interesting conversation, because on the one hand, the people who’ve been discussing change say, “Look, we’re clearly not meeting demand with the number of units we produce. There has to be something else done.” 

I’ve also heard from developers of housing, who say, “I have enough costs as it is. If you are telling me I have to include units that are affordable, I’m going to have to think twice about whether I do a project at all,” which in the long run means you actually could get less housing. Now, obviously, there’s a lot of speculation about how well that would play out in reality. Would developers actually say, “No, I won’t do a project at all.” Developers, I like to think of them like sharks. Sharks are a part of the ecosystem. Sharks eat things. Developers are part of the ecosystem. Developers develop things. They’re never going to want higher costs. They will also never say costs are low enough. So in that sense, you have to kind of put that into context.

Nichols: There’s also another solution along the lines of what you’re talking about, but just a slightly different twist on it. It sounds like the city council is also open to discussing increasing the fee — the developer fee that would go to affordable housing. But there is also the debate as to whether to mandate a certain percentage of affordable housing for a development project, at least with the folks who are running for mayor in Sacramento … there are some [who] support that. 

But then there’s this other avenue that I think might get more traction — it’s called the in-lieu fee and raising that to meet inflationary costs. But it comes down to capacity, right? If you don’t have enough affordable housing, where would anyone go even if, say, they accepted a shelter, or we’re in a transitional housing program, you do need that next step for people.

I’ve really struggled to see how we’re going to, in the next few years, build our way out of this, which then leads to those interim solutions, which a lot of my reporting has focused on. The city and the county, I think they’re realistic: They don’t have the money to just build housing for everybody. But they have been opening a lot of what they call Safe Ground communities. It’s essentially a sanctioned place where people can camp or they can bring their vehicle and park [in] safe parking places. And then there’s a model that the county has put forward in South Sacramento that I’m interested in following this next year or so. …

But the county says we don’t want a bunch of tents in a sanctioned place; we don’t think that model is really going to work that well. The city has tried that here and there with some success and some failures. But what they did is they opened a few: 100 tiny homes in South Sacramento on Florin Road and Power Inn Road and a nearby location as well. These are like shed-sized cabins, people can go in, they can lock the door. It has heating and cooling. Meals are provided. There are restrooms and showers and services. And so they say this is a little bit better than just grouping people together in a bunch of tents. … So the county has not done this. Other places in California have tried tiny home villages and models. I’d like to see how successful they are. Do they truly connect people to housing? Are they sort of a jumping off point to get off the streets into something more permanent, more stable? And it looks like there will be more of those around our region in the next few years. I don’t know if that ever intersects with what you cover? Or if you have any thoughts on how that might work in the future?

Van Der Meer: I think one of the issues that will come up if you’re truly, really trying to do things at scale, you have to have properties big enough to do that. I heard some discussion in one of the mayoral debates that someone suggested, there’s a lot of empty lots along Stockton Boulevard that could be used for that. The funny thing is, I’ve been writing [about] a lot of those empty lots on Stockton Boulevard, [they] are starting to have proposals for development for housing. And a lot of that actually is the result of Aggie Square going in nearby that there’s going to be a need for housing to serve that population.

Interestingly, much of the discussion about Aggie Square has been the concern about its overflow effect on its surrounding neighborhood — that the people working in and going to school there are going to be more well-heeled than some of their neighbors and might push them out. … 

We don’t have a lot of big empty pieces of land that aren’t spoken for in some way where you can do these concepts and do them easily. I hear once in a while the discussion about Cal Expo similarly being talked about. If you ever go to Cal Expo, there is actually an awful lot of unused land over there. But I also know Cal Expo over the years has entertained offers to do other kinds of development. … Cal Expo could use a shot in the arm financially on its own. And it tends to be a very cumbersome process because it’s a state property, and there are certain requirements, and so on and so forth. So it then just kind of speaks to [the fact] that we really have a shortage of properties that are easily suited to doing those larger scale concepts. …

Nichols: We have an assembly member, Kevin McCarty, who has talked about his frustration. He was able to secure I think it was $25 million for the county to build, essentially, to find some sort of shelter or housing solution for folks along the American River Parkway. And his frustration is that it’s been almost two years, there really hasn’t been any headway. I guess one of the hurdles has been, like you said, a lack of land or available land, to place shelters. 

And, of course, you still have neighborhood opposition, you mentioned maybe there’s a little bit less stigma on affordable housing, but shelters, may be a different thing. In South Sacramento, the tiny homes I mentioned, there were a lot of folks that were upset. There’s a nearby church, its members were very concerned, [with a] day care there, and they were worried about safety with their children. The county spent a lot of time trying to convince folks that this was a worthy solution. 

What I’m interested in seeing is what kind of creative solutions come forward in the next year or so. Will faith-based groups open up their land? Are there ways to do this other than just looking for a giant slab of property? Will we see more efforts like at Camp Resolution in North Sacramento, where it’s sort of a self-governed homeless camp? Essentially, it has a lease that was created between the members of that group, members of that camp, and the City of Sacramento to sanction the camping. Could that be a model? 

I think those creative solutions are necessary, especially in a time when, like you said, the land is not there. The money is not always there. And so what are we going to see, the problem, is certainly there. I don’t think we can talk about this topic of homelessness without being realistic about the flow into homelessness. Sacramento Steps Forward is a nonprofit that does a lot of planning on this topic. They came out with a number last year that for every one person connected to housing in Sacramento County, three people fall into homelessness. … We still have more people coming in, and the problem gets larger. And so there’s no shortage of problems to, hopefully, find solutions to.

Van der Meer: In writing about real estate and development over the last decade, we saw a period there where rents were rising faster in Sacramento than they were anywhere else in the country. We were seeing and then we were writing about apartment properties built in the ’60s, ’70s that were selling at a higher rate. … When you start seeing those trends, it doesn’t seem very strange at all that we are having a problem of people simply unable to afford where they have lived before. If your rent goes up 50% in a single year, that would be a big bite for almost anyone. 

We, at the same time, didn’t produce anywhere near the amount of housing we needed relative to demand. … I think our market-rate apartments have started to come to a point where their rents have flattened out a little bit, but that is over 10 years. It takes a long time to see these things play out in real time. 

I was curious, you mentioned Assemblyman McCarty, of course he’s one of four people [who ran] for mayor. [We had] a couple of council races as well; at least one that I can think of where issues around housing, homelessness, equity are all playing a pretty large role. How much do you expect that’s [a] factor that people think about as they’re casting ballots now?

Nichols: I think it could play a big role. I mean, there’s few things that are more visible than homelessness. This problem doesn’t stay confined to just our downtown core. Camps have moved into neighborhoods and other business districts. So I would guess, as people go make their choices for council members, yeah, if their incumbent has made progress, or they feel progress has been made, that could be a deciding factor. And if the opposite is true, they may vote them out. So yeah, I also think those council members, whoever’s elected, I will be interested to see what they do, as far as new policies, new programs to help keep people in the housing they have? 

Because that’s the other side of this, if we’re going to get anywhere near a solution and say, the next decade or something and not have to be talking about this and another 10 years? Are there employment programs that Sacramento can bolster? Either at the state or local level? Are there subsidies to keep people who are sort of on that edge? Maybe they’ve experienced rent increases? Inflation certainly is high and landlords have increased rents to keep up with inflation, or because they made improvements, like you said. I’ll be interested to see some of those programs, maybe they’re not as flashy, maybe they don’t grab the big headlines, but they’re sort of, you know, these programs that can make the difference between a big spill over on the street and people staying housed.

Van der Meer: Yeah, it’s interesting in an election year, there’s bound to be more discussion of it, because there will be, candidly, candidates who say, Well, I think I’ve got a solution. And this is what it should be. The tough part is it’s very easy to say things on the campaign trail. … It’s very hard sometimes when you’re in office to make that same initiative or concept work. You got to work with other people. You’ve got to form coalitions. You’ve got to find money.

Unfortunately, … many times the people most directly affected by such policies, who tend to be at the lower end of the wage scale, renters, even in general, do not tend to be very good about turning out to vote. Oftentimes, people with more money or with existing property ownership, tend to be making their decisions for them in a way by who they decide to vote for, which probably explains why we have a gap and dynamic sometimes between what gets proposed and what gets implemented when it comes to local solutions all the way up the scale. …

Nichols: I think though, even if maybe younger folks, and the folks who are most impacted by the lack of affordable housing or homelessness, even if they’re not voting in large numbers, my sense is that big chunks of Sacramento, they want solutions that take place with some compassion. They want a nuanced approach. I covered Measure O, the city’s enforcement measure from a couple of years ago. And it did narrowly pass. But what I heard in my reporting was people want, yes, they want neighborhoods cleared of encampments, but they want a place for people to go to a safe, stable place. 

So these candidates, if they’re going to get elected in the primary, and then retain their seats in future years, they’re going to have to come up with these sort of multi-layered solutions. They can’t just push people from one block to another. I think that time is gone. If it ever was a viable solution. I’m not sure it ever was, but people want the person down the street, not only safe, but they want them to go thrive in the future. That’s what [I heard from] these candidates. I don’t think any of them just say, We’re just going to clear folks out. They all have their own idea for how to [have a] more nuanced approach to this.

I’m curious if … you’re seeing … momentum on taking some of the office buildings that are maybe at less capacity since the pandemic, and whether building housing is something that people are realistically approaching developers [about]?

Van der Meer: We have, of course, a couple that are downtown here that are state-owned buildings that are being looked at for that. And there’s some momentum toward that. I think wisely, they are being looked at with at least a percentage of them as affordable units, which makes a lot of sense. If you took a state office building, turned it over to a market-rate developer who then flipped it into 100 high-end apartments, probably some people would get upset, right? What we’re also seeing … [there] are these smaller, off-the-beaten-path office buildings — kind of ’60s, ’70s, maybe early ’80s — being also looked at as conversions. It’s on a small scale; you’re talking [about] a two-story office building being converted to 10,15 apartments… And it’s not with an affordability component, but the building itself is pretty old. So it’s unlikely they’re going to be able to rent them for the same level that a brand new building would be.

So there is a little bit of momentum. That isn’t going to happen on such a scale that it will save the office market. Most buildings just don’t lend themselves to that kind of conversion. … [There are] at least a couple cases, [buildings that were] originally built as apartments, became converted to offices about 40 or 50 years ago, and are now being talked about being converted back.

This story is part of the Solving Sacramento journalism collaborative. Solving Sacramento is supported by funding from the James Irvine Foundation and the James B. McClatchy Foundation. Our partners include California Groundbreakers, Capital Public Radio, Outword, Russian America Media, Sacramento Business Journal, Sacramento News & Review, Sacramento Observer and Univision 19.