If we thought we had a housing shortage before the fires, we really have one now. While the developers of the Vineyard Crossing housing development on Lover’s Lane in Ukiah are determined to work with the county to make the development a success, they and developers like them face significant hurdles as they try to remedy our local housing shortage. Between inclusionary zoning, proposed school impact and fire impact fees, and new building codes, it is more challenging than ever to develop new housing in our valley.
Inclusionary zoning is particularly frustrating. It requires real estate developers to give the county a certain percentage of the lots they develop or to pay a fee in lieu of the “gift”. In the city of Fort Bragg, I believe the required gift is 20 percent of the newly developed lots in subdivisions of 5 or more lots. In the county, developers can either include low-income units as part of their development or build low-income housing in a different location as a condition of approval for their main development.
Obviously, when developers must pay a fee, give a percentage of their lots to the local government, or make similar concessions, the cost of the housing they’re building will go up to cover their costs. If we want to solve our housing shortage, maybe we could start by rewriting state regulations which tie the hands of both the local governments as well as developers with unnecessary requirements.
I know local government decision makers often have little choice when it comes to state mandates. If the state requires a certain percentage of housing to be “low-income” or insists that new buildings include fire sprinklers, we must comply. Be aware, that sprinklers would have made absolutely zero difference as to which house survived the Redwood Valley fire. In fact, sprinklers would have hindered fire-fighting efforts by draining the water supply, but I digress.
Can you imagine any business that would survive if they had to give 20 percent of gross sales to the government (not profits, but sales before the cost of goods is considered)? If you add inclusionary zoning fees (potentially worth hundreds of thousands of dollars) to all the other building expenses ($12,000 sewer hookup fee, $3,000-$5,000 water hookup fee, $3.48 per square foot proposed school impact fee, fire impact fee and building permits)—all before a shovel hits the ground—you can see why only the brave or crazy get into this business.
I have attended some public meetings where people implied it is the greed of developers causing our local housing shortage. I’m not suggesting developers are altruistic. Their goal is to maximize profits from real estate projects of all kinds. However, their greed isn’t causing our housing shortage. If profit margins are thin in Ukiah and thick elsewhere, developers will go elsewhere.
While I’m tempted to place full responsibility for the housing shortage at the government’s doorstep, that’s not fair, either. Market conditions definitely contribute to the problem: home prices and the cost of rent still remain somewhat low here compared to construction costs. So, the solution to the housing shortage will come from one of two places. Either real estate development and construction costs will have to go down or housing and rent prices will have to rise. Until this happens, our shortage will continue.
One way construction costs could go down is by reducing the red tape. Many building codes start with safety in mind, but somewhere along the way, common sense gets thrown out the window. If we want to find a remedy to our housing shortage, maybe we should take a look at the codes on the books and see if we can bring a little common sense back into the process.
If you have questions about real estate or property management, please contact me at firstname.lastname@example.org or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.