The following commentaries having to do with Affordable Housing in Napa County can be found below:

1. Affordable Housing - Part 1
2. Affordable Housing - Part 2
3. Accept Housing Quotas for Napa
4. Rent Control Information Applicable to the City of Napa
5. "Preserve and Promote the Unique Quality of Life That is Napa..."
6. Napa's Other Dirty Secret
7. Napa City Council Should Approve the Draft Housing Element
8. The Case Against Rent Control
9. Why Sheveland Ranch Should Be Approved Now
10. City-County Regional Housing Plan
11. Why Napa Needs Affordable Housing Plan Now

Affordable Housing – Part 1

Skip Keyser, CCIM

2002 NorBAR President

*(Originally published in the NorBAR News, Official Publication of the North Bay Association of Realtors®, Lake, Napa, Mendocino and Sonoma Counties – March 2002)

This is the first of a two-part commentary on affordable housing that stems from having had the opportunity to serve for 15 months on the City of Napa Housing Element Steering Committee. During this period, 15 individuals from all aspects of the community (including Realtors®) put together a Housing Element which was recently approved by the State of California.

This month’s commentary will examine the basics of housing elements and affordable housing. Next month’s segment will expand on this and discuss data recently developed for Napa which puts the housing affordability crisis facing California in general, and the north bay in particular, in perspective.

To start off with, a Housing Element is one of several “elements” of a city or county’s General Plan. In the City of Napa there are nine elements to the general plan. These are Housing, Land Use, Transportation, Natural Resources, Health & Safety, Community Services, Parks & Recreation, Historic Resources, and Economic. The first five are mandated and the last four are optional. Other jurisdictions such as Napa County, Santa Rosa, or Ukiah, may have a different mix of elements.

The California Government Code (Chapter 5, Division 1, Title 1, Section 6500 et seq.) lays out the requirements for a Housing Element. Generally speaking, a certified (i.e., compliant) Housing Element consists of “identification and analysis of existing and projected housing needs and a statement of goals, policies, quantified objectives, financial resources and scheduled programs for the preservation, improvement, and development of housing.” Specifically, the Housing Element must identify adequate sites for rental housing, factory-built housing, and mobile homes. It must also make adequate provision for the existing and projected needs of all economic segments of the community. This last requirement probably accounts for most of the misunderstanding and the majority of public concern with Housing Elements.

Before we go too much further, we need to define some terms, not the least of which are the “economic segments” of the community. Frequently these terms are loosely used, but they do have formal definitions. The definitions used in this article come from Federal and state housing guidelines:

Affordable Housing = housing that requires less than 30% of an individual’s (or household’s) total income.

When discussing affordable housing, their are four recognized categories or economic segments of the community:

Very Low Income = households that earn no more than 50% of the Median Income for the area. Median Income depends on family size and is set by the U.S. Government Bureau of Labor Statistics and is derived from census data. In Napa, for example, the Median Income for a family of 4 is $55,700 per year. This is the income at which half of the 4-person households in Napa (actually Napa-Solano, which is the demographic unit used in this case) earn more and half earn less. It is not the average (or “mean”) income for all 4-person households in Napa-Solano.

Low Income = households that earn more than 50% but less than 80% of the Median Income.

Moderate Income = households that earn more than 80% but less than 120% of the Median Income.

Above Moderate Income = households that earn more than 120% of the Median Income.

Now, we’ll get into this more in the second installment of this commentary, but for now let’s take a minute and see what all this means for someone who lives in Napa-Solano. For this area, the Median Income is:

Household Size Median Income/Year

1 $39,000

2 $44.600

3 $50,100

4 $55,700

Recall that we said “Affordable Housing” means a household spends no more than 30% of its income on housing. This means affordable housing for a median income family should not cost more than:

Household Size Affordable Housing Cost/Month

1 $ 975

2 $1,125

3 $1,253

4 $1,392

Begin to get the picture?

Let’s look at this another way. Based on income level, what constitutes affordable housing?

Annual Income Affordable Housing Cost/Month

$20,000 $ 500

$40,000 $ 1,000

$60,000 $ 1,500

$80,000 $ 2,000

$100,000 $ 2,500

So, if your household makes $60,000 per year, then your total monthly housing costs, including debt service, utilities, taxes, insurance, etc. should not exceed $1,500 per month in order for your housing to qualify as affordable. If you spend more than $1,500 per month (i.e., more than 30% of your total income) on these items, your housing is not affordable.

Let’s get back to the basics of a Housing Element. Where do the projected housing needs come from? As everyone has probably heard, housing “numbers” (the quantity of very low, low, moderate and above moderate housing needed by a city or county) come from – at least for the north bay area - ABAG (the Association of Bay Area Governments). ABAG is what is referred to as a “regional council of governments” and is empowered by law to “…determine the existing and projected housing need for its region…” But these housing needs projections are not picked out of thin air. They are developed by the State of California Department of Housing and Community Development (HCD) in conjunction with local jurisdictions and regional councils, and are based on economic, housing and demographic forecasts for the state.

There are about a dozen of these regional councils of governments throughout the state, and every 5 years (on a rotating basis) the jurisdictions within each region must update their housing element, that is, review the allocation of housing needs, modify their housing element, and submit it to the jurisdiction’s planning commission and city council/county board of supervisors, and then to HCD for approval. For jurisdictions within ABAG, the current cycle was to have been completed by December 31, 2001.

To recap, HCD develops and assigns housing needs numbers to each regional council of governments, which in turn apportion these identified housing needs among the jurisdictions making up the region. In a perfect world, each jurisdiction would then revise the housing element of its general plan to address (“come into compliance with”) these housing needs. A city or county which does not prepare a satisfactory housing element (a housing element that does not meet the requirements of the California Government Code and therefore fails certification by HCD) is said to be “out of compliance” or lacking a certified housing element.

Presently, an out-of-compliance jurisdiction does not suffer significant monetary or funding penalties, but this may change based on legislation proposed last year. More on this next month.

Also next month, why a Deputy City Attorney and 4-Year Certified School Teacher, with a combined income of $118,872 a year, can’t afford the average 3 Bedroom/2 Bathroom home that sold in Napa during the first half of 2001.

Affordable Housing – Part 2

Skip Keyser, CCIM

2002 NorBAR President

*(Originally published in the NorBAR News, Official Publication of the North Bay Association of Realtors®, Lake, Napa, Mendocino and Sonoma Counties – April 2002)

Last month I discussed the basics of general plan housing elements (required of each city and county) as well as some general nomenclature having to do with Very Low, Low, Moderate and Above Moderate Income levels. Last month’s article also discussed how housing “numbers” (the required amount of housing units) are developed and the role regional councils of governments (ABAG, or Association of Bay Area Governments in the case of most areas of NorBAR) play in assigning these numbers to each city or county.

This month’s article will complete this two-part series by discussing specifics of the housing affordability crisis facing California and the North Bay and briefly outline some pending legislation designed to bring non-compliant cities and counties (those who don’t have certified or approved housing elements) into compliance with California law.

Let’s start with a general characterization of the housing situation in the North Bay:

· Without a viable inventory of affordable housing, most cities in the North Bay area will continue to be highly desirable places to live but with many more job opportunities than housing opportunities.

· Job development throughout the North Bay increases demand for housing. For example, Napa City (with which I am most familiar) currently requires more than 2,600 units of new housing over the next 5 years (2002 through 2006).

· Creation of housing which is affordable to each city’s local workforce is important now and will remain so in the future.

· Housing costs are high in the North Bay area compared to salaries for many (some would say “most”) local jobs.

· Market rate housing is not generally affordable to very low and low-income households, that is, households making up to about $30,000 to $40,000 per year for a family of four.

· Except for grant-subsidized housing (such as that built by Napa Valley Community Housing throughout Napa County), the private sector has primarily been building single family homes, and the price of these new homes has risen to the point that they are affordably only to above-moderate income households (those making over 120% of the median income).

· There is an extremely low vacancy rate for market-rate rental housing in the North Bay. It is generally accepted that this lack of rental inventory (not the lack of rent control) is what causes high rents. In a recent survey, the rental rate in many North Bay communities was less than 1%, in some cases well less than 1%.

How desperate is the housing situation in the North Bay? Using statistics derived from homes sold in Napa during a recent 6-month period, the following examples, based on the recommended limit of spending no more than 1/3 of a family’s total income on housing costs, bring the problem into perspective:

· A bus driver making $36,000/year and a retail clerk making $19,500/year with 2 children would only need an extra $21,192 per year to afford the average 2BD/1BA home that sold in Napa City during the past 6 months.

· The same couple would need to earn an extra $60,616 to afford the average 3BD/2BA home that sold in Napa City during the past 6 months.

· A bank teller making $21,000 a year and a secretary working for the City of Napa making $41,000/year with 2 children would only need an additional $15,326 to afford a 2BD/1BA home, or an additional $54,750 of income per year for a 3BD/2BA home.

· A City of Napa police officer making $60,000/year and a City of Napa Accounting Clerk (Level II) making $36,000 a year with 2 children could only afford the average 3BD/2BA home if they had an additional $20,000/year in income.

· A Deputy City Attorney making $80,600/year and a school teacher making $38,272/year with 2 children, that is, a family of 4 with an annual income of over $118,000/year, could just barely afford the average 3BD/2BA home selling in Napa City during the past 6 months.

That's the type of housing affordability crisis we're faced with in the North Bay area for a family wishing to purchase a home.

When it comes to renting a home or apartment, the situation is equally (if not more) grim. In a recent survey conducted by the Rental Housing and Apartment Association of Contra Costa, Solano and Napa Counties (March 2001), the average rental prices in Napa were:

1BD/1BA unit $850/month

2BD/1BA unit $990/month

3BD/2BA unit insufficient data

For a 2BD/1BA apartment with utility costs of $75/month, this average housing cost rises to $1065/month. Using the 1/3 total income guideline, this means a family of 4 wishing to rent a 2BA/1BA home in Napa, should be earning at least $38,340/year. This equals (for 2 full time wage earners) $9.25/hr each, or about the average wage for a full-time bank teller or retail clerk. By comparison, the Minimum Wage is only $6.75/hour. Anyone making less than that either has to have a second (or third) job, live in substandard housing or (as is too often the case) live two families to a home.

Creation of housing which is affordable to our local workforce is important. Do not, for a moment, assume "workforce" means unskilled, entry-level, or blue-collar employees. As the examples cited above illustrate, housing affordability transcends very low, low and moderate-income levels. This means the housing affordability crisis in the North Bay area applies to people employed as Winery Retail/Bottling Workers at $8.50/hr, Retail Clerks at $9.35/hr, full-time Bank Tellers at $10.00/hr, City Employees (such as an Accounting Clerk II) at $17.31/hr, fully-certified School Teachers (with 4 years experience) at $18.40/hr, Carpenters at $27.50/hr, and Police Officers at $28.90/hr.

To the extent that individuals such as these can not afford to live in our communities, then we should expect a less viable, less resilient, and less dynamic community. As a result, the citizens of each community may well have to pay more for teachers who have to commute from less expensive areas, will have fewer resident contractors and construction trade people to assist the community in recovering from natural disasters (such as earthquakes); and will have fewer of their sons and daughters able to live in the community in which they were raised.

Interestingly enough, when one looks at the demographics of the State of California as a whole, and the United States in general, the south-western shift in population and growth in California’s population underlines the fact that the housing affordability situation in California will continue to be one of the state’s most significant issues. Consider for example that:

· California currently has a population in excess of 33,000,000.

· Based on the 2000 Census, 1 in 8 people living in the US, lives in California.

· We can expect to see an increase in California’s population of an additional 11,000,000 over the next 18 years, meaning that in 2020, approximately 1 in 7 people living in the US will live in California.

· State-wide, according to the state Department of Housing and Community Development – HCD, approximately 220,000 new housing units are needed each year between now and 2020, just to keep up with population growth.

· In 2000, the last year for which accurate data is available, only 150,000 new housing units were built in California, leaving a deficit for just one year of 70,000 housing units (in a time of strong economic growth).

· For those who think the solution is to keep people from coming to California, more than half of the 11,000,000 population growth cited above will come from growth in the existing population (native birth) and not by migration or immigration. Specifically, there is a fairly consistent growth of about 600,000 per year in California’s population, as follows:

Birth Rate = 525,000/year

Foreign Immigration = 300,000/year (about 1/3 of all the US)

Death = (225,000)/year

Net = 600,000/year

· In the Bay Area, approximately 1,000,000 new jobs will be developed by 2020.

· These 1,000,000 new jobs will bring with them about 1,500,000 people.

· At 2.7 individuals per housing unit, this will result in the need for an extra 556,000 housing units in the Bay Area by 2020, or about 31,000 units per year.

[Note: these figures were obtained from the California State web site – www.ca.gov; the US Census Bureau’s web site – www.census.gov; and from presentations by or discussions with Mark Stivers, California Senate Committee of Housing & Community Development; The CAA - California Apartment Association “Making California Housing Affordable” handout; the June 2001 C.A.R. Affordable Housing Forum in Sacramento; and the September 2001 Napa County Economic Summit.]

Not surprisingly then, there is substantial interest in the California legislature about housing affordability. And there is, to be blunt about it, substantial frustration with those cities and counties who are unable or unwilling to develop housing elements that are in compliance with state law. It should therefore come as no surprise that several pieces of legislation have been introduced that deal with housing affordability:

· AB 999 (Keeley) Expanding the California Housing Loan Insurance Fund (CaHLIF)

· SB 193 (Burton) Creating a State Level Voluntary Security Deposit Guarantee Program

· SB 1227 (Burton) Statewide Housing Bond of 2002 ($2,000,000,000)

And last, but not least:

· SB 910 (Dunn) Revising the Fair Share Housing Allocation Process

It is this last bill which proposes to create economic penalties for local governments (cities and counties) that fail to comply with the state fair share housing allocation process, as well as create legal consequences of housing element noncompliance. In its present configuration, the State of California Controller could withhold an increasing percentage of street and highway repair and maintenance funds from a local government whose housing element is out of compliance two cycles in a row.

This then, in a nutshell, is the affordable housing situation in California and the North Bay area as it stands today. It is one of, if not the most, significant problems facing cities, counties, and Realtors® and will likely remain so for the next several years. As professional real estate practitioners, we should be conversant with, and locally involved in, solving this problem.

Accept Housing Quotas for Napa

By Skip Keyser

(Unpublished)

“Reject Housing Quotas for Napa,” a recent commentary in this paper, suggested Napa County and cities ‘just say no’ to the Association of Bay Area Governments (ABAG) regional housing needs allocation for the next housing cycle (2007-2013).

The author of that commentary frequently speaks before the city council on the issue of housing. While I usually disagree with her point of view, she is nevertheless articulate, forthright, sincere and – most importantly - involved. Would that the rest of the community was as concerned with the critical issues facing the city and county of Napa.

And the idea of exempting Napa from legislation applicable to other counties is not unique. Napa County already enjoys special legislation allowing it to obtain a percentage of its regional housing allocation from the City of Napa.

Additionally, in the hope that American Canyon, the City of Napa and Napa County can forge a regional approach to housing which allows the county to achieve a certified Housing Element, the possibility exists for further exemptions. This regional approach enjoys the support of Assemblywoman Wiggins and that bodes well for its success at the state level, if we can only get it off the ground locally.

However, these efforts seek to work within the regional housing allocation rather than “reject[ing ABAG] housing quotas for Napa.” In this regard it might be helpful to consider how these numbers are formulated and the context in which such a rejection would be viewed by ABAG, the other regional Councils of Government (there are 24 such COGs in California in addition to ABAG), and by state legislators outside of Napa County who would have to approve such exemptions.

ABAG is mandated by state law and the California Department of Housing and Community Development (HCD) to allocate the expected housing needs for our region on a fair share basis. These housing allocation numbers are developed from studies of state and regional growth in employment, market demand for housing, changes in the economy, and increases in population. Currently the California Department of Finance anticipates about 6,000,000 new California residents each decade through 2040. This means California’s population of 35,000,000 is expected to grow to about 60,000,000 within the next four decades.

‘Them’s a lot of people,’ and they’re going to have to live somewhere. John Steinbeck’s “Grapes of Wrath” aside (it was a social satire, not a blueprint for managed growth), the approach of turning back ‘them Oakies’ at the state border didn’t work in the 1930’s and it won’t work now.

To begin with, it’s neither legal, moral, nor – more to the point - feasible. And the expected growth in California’s population only partly comes from migration and immigration. If nothing else, the birth rate of the existing 35,000,000 citizens will keep the population growing by about 3,000,000 per decade – even if we sealed up California’s borders.

So the seeds of growth – and increased housing needs – are already planted. We might stop immigration, we might even be successful in stopping migration, but we’re going to have a hard time stopping Californians from starting families.

Next, consider how a request from Napa to obtain housing allocation relief will be viewed by the rest of the state. Here’s this “special” county, already the beneficiary of unique legislative exemptions for housing, using its self-imposed Measure A to seek further relief from its fair share of needed housing - and asking the other 56 counties absorb the difference to boot. Let’s see…on a probability scale of 1 to 10, I’d give this one a -5. Make that -8.

Alternatively, instead of seeking special legislation at the state level, it’s been suggested we just inform ABAG that “…the county and the cities within our county simply cannot willingly continue to accept ABAG’s allocation of housing…” Hellooooo? I’m know I’m not the sharpest knife in the drawer, but I fail to see why the surrounding ABAG counties would agree to accept an increased housing allocation just so Napa can take the easy way out of dealing with the housing crisis facing all of California. They already think there’s something strange in the water we drink.

Nor, as has been pointed out in previous commentaries, is such an approach in the best interests of maintaining the agrarian nature and strong social fabric of our community. Painting ourselves into a housing corner such that our teachers, retail employees, farm workers, trades people and municipal employees don’t have an equitable opportunity to live here is not a smart thing to do.

What is the smart thing to do? We need to keep pressure on our elected and appointed officials to:

Develop a regional approach to housing which emphasizes location of residential housing inside the Residential Urban Limits (RULs);

Set inclusionary fees at an appropriate level and insist developers make the most efficient use of the remaining residentially developable land;

Tailor our zoning and development regulations to accommodate the development of higher density housing, including the creation of mixed-use housing; and

Put in place an identified, dedicated funding stream to assist in landbanking and development of equitable inventories of very low, low, moderate, special needs and workforce housing;

Failing to adopt such an approach to housing leaves the door open to special interest groups such as the Western Center on Law and Poverty, California Rural Legal Assistance Foundation, California Coalition for Rural Housing and the California Housing Council to challenge Measures A and Z – the mainstays of the agrarian nature of our county from which we all, directly or indirectly, benefit.

We in the cities and county of Napa do not live in a vacuum. And we should not approach our housing issues as if we did.

Keyser is a local Realtor®

Rent Control Information
Applicable to the City of Napa
Prepared by Skip Keyser

President, Napa Chapter, North Bay Association of Realtors

(Background information for a presentation on affordable housing/rent control to the City of Napa Council)

Facts & Figures:

· Rent control does not increase (or even sustain) the inventory of rental units. US Census data for 1980 and 1990 shows that Berkeley lost 3962 rental units, 14% of its rental units, over this 10-year period.

· From 1980 to 1990, communities with rent control (e.g., Santa Monica, Berkeley, etc.) show a disproportionate drop in numbers of students, elderly persons, disabled persons and female headed households with young children. Throughout California, during the same period, the numbers of persons in these groups increased.

· Rent control programs are expensive to administer. Berkeley spends $2,500,000 annually to regulate 18,000 units; Santa Monica spends $4,700,000 to regulate 28,000 units.

Enacted Legislation:

· Costa-Hawkins Rental Housing Act - CCC Sections 1954.50-1954.53

ü Rent control can not be applied to housing built after February 1, 1995

ü Rent control can not be applied to existing single family residence

ü Rent increases can not be controlled when unit is vacated

· CCC Section 1947.15 – mandates certain restrictions on cities with rent controls with respect to which costs must be included in calculating fair rent.

· Ellis Act – CGC Sections 7060 ff: Owners in rent controlled jurisdictions must give 120 day notice before withdrawing property from the rental market and prohibits such withdrawal for 1 year following notice for rental units occupied by persons 62 or older or disabled who have lived in the unit for the last year. Provides for sanctions if unit is returned to rental market within 2 years.

Pending Legislation:

· SB 1621 – prohibits the adoption or extension of an interim ordinance by a local city or county that denies needed multifamily housing unless officials can specifically identify the adverse impact of the housing.

Recent Rent Control Litigation:

· Galland v City of Clovis - $1,000,000 damage award against the City of Clovis for depriving Galland’s of fair return on their [rent controlled] property. Upheld on appeal to 5^th Circuit Court. Currently on appeal to the California Supreme Court.

· Cashman v City of Cotati – US District Court found that Cotati’s mobile home rent control (enacted with the specific goal of improving availability of affordable housing) constituted a “regulatory taking by the city” and therefore owners must be compensated by the city.

Arguments Against Rent Control:

· Rent controls discourage private-sector capital investment in rental units as investors look (and invest in) more profitable markets or investments.

· Rent controls reduce the number of rental units and increases competition for available housing, thereby exacerbating the affordable housing inventory problem. This places low and moderate-income residents at a disadvantage because they must complete with higher wage earners for scarce rental housing.

· By reducing profitability, rent controls discourage capital improvements, maintenance and repair, effectively reducing any benefit derived from lower rents.

· Rent controls are costly to administer.

· Rent controls reduce property tax revenue.

· Rent controls tend to politically polarize the community, thereby undermining the ability to focus on consensus solutions to affordable housing.

Sources:

1. “Santa Monica Kisses Rent Control Bye-Bye,” www.channel2000.com/CBS Channel 2 News, article dated January 1, 2000

2. “States Move to Ban Rent Control,” National Center for Policy Analysis policy paper extracted from “Rent-Curb Crusade Plays Last Stop in New York,” Wall Street Journal, June 13, 1997.

3. Tucker, William: “Rent Control Drives Out Affordable Housing,” USA Today (magazine), July 1998.

4. Bannon, Thomas K: extract from prepared notes for Contra Costa Times – Saturday Forum (radio show), July 18, 2000

“Preserve and Promote the Unique Quality of Life That Is Napa…”

by Skip Keyser

(Originally published in The Napa Valley Register, August 21, 2002)

The words that title this commentary appear above and behind the mayor’s chair in the City Council chambers. Perhaps they ought to be placed behind the public seating area where the mayor and council members can keep them in view.

I refer to the mayor’s opening remarks and the council’s failure to take action in regard to the single most important aspect of easing the housing affordability crisis in Napa: a dedicated, continuing funding stream to assist in the creation of equitable amounts of privately-developed affordable housing.

One item being looked at in some communities is a city-based Real Estate Transfer Tax (RETT).

The proposal to use a city-based RETT to fund private-sector or quasi-public development of affordable housing envisions a transfer tax similar to the county-based transfer tax on the sale of real estate, currently at $0.55 per $500 of sales, a little over 1/10^th of 1 percent.

A city-based RETT dedicated to improving housing affordability in a typical 70,000 population city would generate approximatley $270,000 per year. Most private sector not-for-profit affordable housing organizations, such as Napa Valley Community Housing, have the capability of leveraging this by 4 or 5 to 1, so that $270,000 in seed money can result in $1,350,000 of affordable housing.

Notwithstanding the inevitable “Over my dead body” response to this proposal, there is a case to be made for a city-based RETT to improving housing affordability.

First: if there is any chance to actually put affordable housing on the ground, an identified, dedicated, continuing funding source must be established. These funds can then be used by private developers and private not-for-profit organizations, as seed money for matching federal and state grants, as well as to acquire land ("land banking") for future private-sector affordable housing development.

Second, having equitable inventories of affordable housing directly benefits our communities. Improved housing affordability, resulting in increased amounts of housing that is available to teachers, police and fire personnel, retail workers, contractors and building trades personnel, and allows more segments of a community to reside in the area they grew up and work in. Families who work, but cannot afford to live, in our communities must reside elsewhere and commute to work. It should come as no surprise then that we as taxpayers will have to compete with other cities for the services of the very individuals who form the fabric of our infrastructure. This means higher taxes to pay the wages necessary to compensate for the increased cost of commuting to or living in our communities. Therefore, the lack of affordable housing already directly increases the cost to homeowners and indirectly degrades a community’s infrastructure by causing relocation of the skills outside the community.

Third, the lack of affordable housing is a serious, and present, problem. Based on the average sales price for a 2 bedroom 1 bathroom home in Napa during the last 6 months ($270,540), it would take a combined income of $94,852 to afford such a home. For the average 3 bedroom 2 bathroom home that sold during the same period ($369,302), the combined income must be $129,478. Clearly we are not talking about the poor and impoverished. For a four-year certified school teacher ($38,272/year) and a city police officer ($60,112/year), their combined income of $98,384 leaves them only $31,094 short of being able to afford such a 3 bedroom 2 bathroom home.

Fourth, a city-based RETT is not particularly onerous, burdensome or expensive. For a 0.11% transfer tax such as is now levied at the county level, the additional transfer tax on a $300,000 home would be $330. This is not far above the price of the average appraisal and, whether borne by the seller or passed on to the buyer, it’s doubtful that $330 will make or break any given transaction.

What are some of the mythical arguments used against city-based RETTs? For the most part they are of “The sky is falling!” variety. Chief among these are:

a. MYTH: It’s unfair on property owners to enact a city-based real estate transfer tax to ease the housing affordability crisis. FACT: Inasmuch as those fortunate enough to own real property and to have benefited from the substantial rise in housing prices over the past decade are also those who stand to benefit from more affordable housing, it is reasonable to ask them to bear a small additional cost for this related issue.

b. MYTH: A city based RETT won’t pass the 2/3 majority required under post-Proposition 13 legislation. FACT: While a 2/3 majority is required for non-general fund revenue items, only a simple majority (50% + 1) is required for general fund items. How do we ensure the funds are then spent on affordable housing? The easiest way is to pass a companion measure (again only requiring a simple majority), expressing the intent of the voters that the revenue so generated be spent on the stated purpose. To the extent that elected members of the city council feel bound by such voter mandates, this ensures the increased revenue is allocated to its intended purpose - affordable housing.

c. MYTH: City based RETTs are unheard of. FACT: A surprising number of cities in the North Bay area have RETTs, many above the county-based $1.10/$1000 level. For example:

Petaluma - $2.00 per $1000

Cotati - $1.90 per $1000

Sebastopol - $2.00 per $1000

Rohnert Park - $1.10 per $1000

Cloverdale - $1.10 per $1000

Santa Rosa - $2.00 per $1000

d. MYTH: This is just the camel’s nose under the tent flap. Pretty soon everyone will be adding taxes to real estate to fund their pet project. FACT: If a majority of the voters approve such taxes this is true. History, however, especially in California, proves otherwise, particularly in light of Proposition 13. Time and again, if fiscal oversight appears to be lacking or the case for special funding is not clearly spelled out, voters have been reluctant to pass new tax and revenue measures. However, where such oversight and demonstrated need can be shown, voters will respond affirmatively and judiciously.

And last, but certainly not least, the rallying cry of reactionary individuals everywhere is sure to rear its ugly head in the form of "This is a particularly egregious violation of Property Rights!”

To that, I can only say that with property rights come property responsibilities.

Furthermore, when it comes to a city-based real estate transfer tax designed to ease the housing affordability crisis facing California and the Bay Area in general and Napa in particular, I think the 3-R test is satisfied. It’s Reasonable, it’s Related, and it’s Responsible. And I think it warrants further consideration.

Keyser is a business owner in Napa

Sidebar: WHAT IS AFFORDABLE HOUSING?

If you're not familiar with some of the terminology used in this article, affordable housing is housing that can be purchased or rented without spending more than 30% of a person's total income.

Housing is further categorized into one of four categories: very low income housing (affordable to those who earn less than 50% of the median income); low income housing (between 50% and 80% of the median income); moderate housing (80% to 120% of median income) and above-moderate housing (more than 120% of median income).

Median incomes are based on US Census data and published by the Department of Housing and Urban Development. They are based on family size. In the Napa/Solano demographic area, median income is:

Family Size Median Income

1 $39,000

2 $44,600

3 $50,100

4 $55,700

Median incomes (or housing prices) are not average incomes (or prices). They are the income (price) that is in the middle. A simple example is to take three incomes of $25,000, $40,000 and $1,000,000. The Median income is $40,000; the Average income is $355,000 ($1,065,000/3).

To put Median Incomes in perspective, for a family of four living in the Napa/Solano area, affordable housing is housing that costs less than $1393/month ($55,700/year = $4642/month x 0.30 = $1392). The average 2 bedroom 1 bathroom home recently sold in Napa costs $2371/month; the average 3 bedroom 2 bathroom home in Napa costs $3237/month. These figures are based on the average recent sales price from MLS, with 5% down, 7.5% financing, 30-year mortgage, 0.0125% taxes, and typical insurance and PMI costs.

Sidebar: WHAT’S HAPPENING IN CALIFORNIA

One factor driving the housing affordability crisis in California is the growth in population. Herewith some facts and figures about our state:

California has the 5^th largest economy in the world, larger than that of France, and we’re closing in on #4, the United Kingdom.

California has a population of roughly 35,000,000. Put another way, 1 of every 7 people living in the United States lives in California.

Based on information presented at the 2001 Napa City Economic Summit, California’s population is expected to increase by 6,000,000 every decade over the next 40 years. By 2040, California is expected to have a population of close to 60,000,000.

Where does this growth come from? In California, the annual population change is driven by:

525,000 Births

300,000 Net Immigration (foreign) and Migration (domestic)

-225,000 Deaths

600,000 Annual Increase

If you think the housing affordability crisis is serious now, just wait a few years. You can stop development, and you might even be able to reduce immigration, but you can’t stop the growth from the birth rate.

Napa’s Other Dirty Secret

by Skip Keyser
(Originally published in The Napa Valley Register, February 18, 2003)

The fault, dear Brutus, is not in our stars, but in ourselves. Julius Caesar, Act I, Scene II

On December 21, 2002, in an editorial entitled “Downtown Housing Needed for Napa Renters,” the managing editor of the Napa Valley Register published what can only be characterized as a rant against Napa rental housing in general and Napa landlords in particular. This editor attempted, by extension, to play his having lived in his car, the difficulty in renting with a pet, and various and sundry encounters with drug-using, ranch-owning, children-hating, code-violating, racially prejudiced owners of residential rental units into a condemnation of all Napa landlords.

It certainly appears that the managing editor lives a colorful and interesting life. Fortunately, he was able to find temporary shelter in a barn, arranged by some friends of his mother. Thanks, Mom.

Since at the time of his diatribe, I currently had four vacant apartments in a downtown Napa Victorian 4-plex that were being repainted, carpeted, cleaned and readied for new tenants, I felt his editorial might be a bit wide of the mark. These four units, consisting of a studio and three 1-bedroom apartments, on a landscaped lot with off-street private parking (and within walking distance of the Napa Valley Register) were being rented for $680 to $815 per month. They admittedly have very small bathrooms, but the owner keeps them in good condition, and in fact has spent over $30,000 since buying the property a few years ago in fixing up the building and renovating the apartments.

The managing editor further characterized the condition of local rental property as “a dirty Napa secret.”

As luck would have it, one of the managing editor’s new reporters applied for one of these apartments.

That’s when Napa’s other dirty secret became obvious – the low pay some employers, including The Napa Valley Register, pay their employees.

For this experienced reporter was being paid $2000/month by The Napa Valley Register. That’s about $11.54/hour for a full 40-hour work week. And judging by what I’ve seen of most Register reporters, 40-hour work weeks are few and far between.

How does this wage stack up vis-à-vis housing? The generally accepted criteria for affordable housing is that an individual (or family) should pay no more than 30% of their total, pre-tax, income for housing. This includes, for a renter, rent and utilities. Thirty-percent of $2000/month is $600/month for housing. If utilities cost $40/month, this leaves, on the reporter’s income, $560/month for affordable rent. That’s a tough nut to crack in Napa, and even – I suspect – in Walnut Creek.

Let’s look at it another way. What should The Napa Valley Register be paying a reporter to afford a modestly-priced studio apartment in downtown Napa? Dividing $680 rent and $40 for utilities by 30% results in $2400/month, or $13.85/hour for a nominal 40-hour week. That’s about five dollars an hour over the starting wage at In-N-Out Burgers.

Does Napa need to do more to increase the inventory of housing affordable to the individuals and families who work and want to live here? Absolutely. And there are many things that can be done, including mixed-use development, density bonuses and fee-reductions for developers who include affordable units in their projects, increased funding support for affordable housing development, and efficient use of the remaining developable land inside the Rural-Urban Limit (RUL).

And Napa employers can help by paying a decent wage to their workers.

Keyser is a local Realtor who serves on Napa’s Housing Advisory Committee

Napa City Council Should Approve

the Draft Housing Element

by Skip Keyser

(Originally published by The Napa Valley Register, August 7, 2001)

The Napa City Council has before it the opportunity to create a legacy as important to the future of the City of Napa as Measure A and Measure J have been to the future of Napa County. I speak of the draft Housing Element revision to the General Plan.

Certainly no council member and few members of the public need to be reminded of the housing affordability crisis with which California in general and Napa in particular are struggling. There is a critical shortage of affordable housing in Napa, even for those earning up to 120 percent of the median income (i.e., up to $66,840 for a family of four). This shortage threatens the continued viability of our world-class city. Yet little has been done.

Now, with the unique and creative Housing Element drafted by 15 individuals from widely different background and constituencies, aided by input from the public, city staff and others, something can be done. For this Housing Element goes beyond the minimum requirement to put in place a plan that might work and actually provides a plan that will guarantee the development of equitable amounts of housing, including special needs housing, for all segments of Napa’s population. In other words, it can actually get attractive, well-planned, moderately priced housing built.

But this plan is not without its detractors.

Despite the fact that the plan is created of tightly-woven complimentary recommendations that will work together to create needed housing, those opposed to creating an equitable inventory of housing for all of Napa’s citizens have started to pick away at selected portions.

Items such as the amnesty program for already-built second units, dedicated funding for affordable housing, a growth pacing strategy, density bonuses, elimination of the already-breached feathering policy, provision for required second units, and affordable housing overlay zones have come under attack.

This is death by a thousand cuts.

Worse yet, these attacks have the unforeseen potential to threaten the Rural-Urban Limits (RULs) that safeguard the unique nature of Napa Valley.

The long and short of the housing situation in the City of Napa (and Yountville, St. Helena and Calistoga) is that absent creative and thoughtful use of the limited land inside the RUL, there will be increasing pressure to expand or develop outside the RUL.

If we are to maintain the agricultural nature of Napa County, the RUL must remain in place. If we are to maintain the RUL in place, we must develop housing inside the RUL. It’s as simple as that and we can’t have it both ways.

To this end, the proposed Housing Element recommends:

Granny Units – in those new developments of more than 10 homes, at least 20 percent of the units must contain a second (“Granny”) unit. Such a requirement will actually go a long way towards satisfying the lack of affordable housing in Napa as well as providing a very marketable product.

Feathering – perhaps no issue is so misunderstood, misused, or pilloried as is the recommendation to eliminate feathering. Currently, the policy is to feather (I.e.,. reduce) housing density within ¼ mile of the RUL. In fact this sacred cow is more observed in the breech than in the keeping. Numerous areas adjacent to the RUL Dry Creek Road in the vicinity of Orchard Avenue, mobile home parks, etc.) have non-feathering densities with no adverse impact on or exacerbation of the agrarian-urban interface. Yet several individuals are apparently more concerned with using feathering as a red herring to frustrate any attempt to create adequate housing for Napa. We should not be misled: continuing the feathering policy is inimical to creative and effic9ient use of scarce land within the RUL.

Density – Hand-in-glove with responsible use of land is the need to increase housing densities within the RUL. To its credit, the Planning Commission and City Council have already seen this need, and have withstood localized not-in-my-backyard pressure, and approved Hawthorne Village on Solano Avenue. The draft Housing Element makes provision for creating further needed housing at the upper ranges of zoning densities.

As pointed out in the housing affordability workshops attended by the public, and as highlighted in several “best practices” symposia held with local builders and regional housing experts, the single largest hurdle to the creation of adequate housing is an identified, continuing, dedicated funding stream.

The Housing Element makes numerous recommendations in this respect. Whether additional sales tax, city-based real property transfer tax, creation of an affordable housing redevelopment agency, earmarking Transient Occupancy Tax (TOT) revenues for housing, or any of the other recommendations, this aspect of the Housing Element is critical to its success.

But we should make no mistake about it: there is, in fact, no such thing as a free lunch. This revenue must come from somewhere.

To their credit, those who are willing to make a small sacrifice for the long-term benefit of Napa Valley have already acknowledged this fact and stepped forward, most notably with the flood control project. We should do the same with regard to housing. It’s that important.

One last item needs to be addressed – private property rights.

Time and again the shibboleth of private property rights is raised to defeat beneficial land-use programs. It is time that we acknowledge that with private property rights come private property responsibilities.

Those of us who have benefited from private property ownership have a responsibility to help those who have not. Approve the draft City of Napa Housing Element.

Keyser is a local businessman who serves on the City of Napa Housing Element Steering Committee.

The Case Against Rent Control

by Skip Keyser

(Originally published by The Napa Valley Register)

The City of Napa lacks sufficient affordable housing and rents are high. Rent control has again surfaced as the solution to Napa’s lack of affordable housing. Rent control does not work.

In 1984 the City of Napa charter was amended to prohibit rent control. On Tuesday September 19^th, the City Council will consider a ballot measure to rescind this charter amendment, thereby opening the door to rent control.

Rent control will not solve the problem of affordable housing in Napa. The goal of the City of Napa ought to be to increase the supply of affordable rental housing. Rent controls are costly, litigious, inequitable and decrease the supply of affordable housing.

On a state-wide basis, current rent control measures were instituted (and in some cases later revoked) in selected California municipalities starting about 1978. To date, only 12 of over 400 California cities, including Berkeley and San Francisco, have seen fit to enact rent controls.

Yet several pieces of legislation restrict rent control to a small portion of the rental market. By law (the Costa-Hawkins Rental Housing Act) rent control can only be applied to multi-unit residential housing built before 1995; not on existing-single family housing; not on townhouses or condos; not on any housing built after February 1, 1995; and not on rent increases once a unit has been vacated. Other state laws (The Ellis Act, California Civil Code Section 1947.15, etc.) provide additional restrictions on rent control.

Not surprisingly then, especially in the litigious State of California, attorneys have had a field day with rent control as it relates to private property rights. Two recent cases of interest:

· Cashman v City of Cotati – The US District Court found Cotati's mobile home rent control (enacted with the specific goal of improving the availaibility of affordable housing) to constitute "regulatory taking by the city" and therefore the city must compensate mobile home park owners.

· Galland v City of Clovis - Resulted in a $1,000,000 damage award against the City of Clovis for depriving Galland of a fair return on Galland’s [rent controlled] property (upheld on appeal to the 5^th Circuit Court and currently on appeal to the California Supreme Court).

However, the most egregious aspect of rent control is that it doesn't do what it's supporters say it does. Specifically, rent control:

· Does not increase - or even maintain - the inventory of affordable housing. US Census data shows that Berkeley (which instituted rent control in November of 1978) lost 3962 rental units, 14% of its rental inventory, over the 10-year period of 1981 to 1990.

· Displaces those it claims to help. From 1981 to 1990, communities with rent control (e.g., Santa Monica, Berkeley, etc.) showed a disproportionate drop in the numbers of students, elderly persons, disabled persons and female-headed households with young children when compared with an increase during the same period in the numbers of persons in these groups throughout the rest of California.

An additional aspect of rent control that often escapes notice is that it is expensive to administer. As reported in the legislative analysis of the Costa-Hawkins bill, the taxpayers of Berkeley spent $2,500,000 annually to regulate 18,000 units (over $11 per unit per month) and the city of Santa Monica spent $4,700,000 to regulate 28,000 units (almost $14 per unit per month). Concurrently, a 1980 study by Rand Corporation found rent control saved California tenants a mere $8 per month.

Rent control does not work. Instead, government regulation of rent:

· Discourages private-sector capital investment in rental units as landlords sell or invest in more profitable alternatives.

· Reduces the number of rental units and increases competition for available housing, exacerbating the affordable housing inventory problem. This places low and moderate-income residents at a disadvantage as they compete with higher wage earners for increasingly scarce rental housing.

· Reduces any benefit tenants derive from lower rents by reducing rental profitability and discouraging capital improvements, maintenance and repair.

· Is costly to administer. These funds could be much more effectively used for programs to increase the supply of affordable housing.

· Strips property tax revenue from local government by reducing the value of rental income property. These lost revenues must either be made up by higher taxes or reduced services.

· Polarizes the community, thereby undermining the community’s ability to focus on consensus solutions to affordable housing.

If the goal is to place the social cost and burden of Napa’s lack of affordable housing on the shoulders of a few individuals - those who own pre-1995 multi-family residental units - then rent control will accomplish this.

If, however, the goal is to devise a viable, equitable consensus solution that will increase Napa’s inventory of affordable housing, then the last thing the city or county of Napa should try is rent control. The city charter was amended to provide this restriction and the ammendment ought to remain in place as a statement to future generations that time, effort and taxpayer’s money needn’t be wasted on an unworkable “quick fix” panacea for the problem of affordable housing.

Rent control doesn’t work.

Keyser is a Realtor and currently serves as president of the Napa County Chapter of the North Bay Association of Realtors. He has been a landlord since 1969 and owns several rentals in Sacramento County (none in Napa). His firm represents the owners of approximately 40 rental properties in Napa, including Section 8 subsidized housing and several multi-unit residential complexes.

Why Sheveland Ranch Should Be Approved Now

by Skip Keyser

(Originally published by The Napa Valley Register, August 1, 2003)

On December 4, 2001, after some 17 months of work by a diverse group of citizens and residents, the City Council adopted the current General Plan Housing Element, which is based on two key concepts:

· Recognition that without a fair-share development of very-low, low, and even moderate income housing, Napa will become so expensive and stratified that teachers, police, retail workers – and even health-care providers, nursing aids and staff necessary at The Meadows at Napa Valley – could not afford to live here.

· Acknowledgement that the limited amount of residentially developable land within the RUL mandates economic, efficient, equitable use of this scarce resource to benefit all of Napa’s residents and help alleviate the critical housing affordability problem facing Napa.

To its credit, the Napa City Council, together with the Planning Department and the Planning Commission, has made substantial effort to improve the quality of life for all Napans by working with concerned citizens, developers and neighborhood residents to ensure residential projects coming before the council are well designed, compatible with surrounding housing and adequately address neighborhood concerns.

And, as was inevitable, the City Council is now faced with a litmus test of this enlightened approach to easing the housing affordability crisis in Napa: Sheveland Ranch.

This project proposes to develop the 21-acres at 1029 Sheveland Lane into 180 attached homes and 124 apartments (plus accessory buildings) at an overall density of 14½ units/acre. This is below the maximum density of 15 units/acre allowed for this land and well below the 20 to 40 units/acre necessary for efficient use of Napa’s remaining residential infill land.

While Sheveland Ranch is acknowledged by many to be the “poster child” of an intelligent, well thought out, multi-family residential development, it would be misleading to ignore the localized opposition to this project from some residents at The Meadows.

There is no doubt that this opposition is sincere and – when this project comes before the City Council for approval on August 5^th – will be vocal. Fairness dictates that these individuals be heard and their concerns be given weight. However, the City Council ought to keep in mind, and give equal – if not greater - weight to the larger issue of housing affordability in Napa, and particularly what Sheveland Ranch will do to implement the goals of the Housing Element, address the city’s fair-share housing requirement, and help mitigate the housing affordability problem.

In this light, as one attempts to parse the likely vote of the five council members, there appears to be some thought that Sheveland Ranch can be delayed a couple of years with no adverse impact, or that this development is in the wrong location, or that too many housing projects have recently been approved.

Such is not the case. To be blunt about it with regard to providing some modicum of housing for Napa’s residents – if not now, when? And if not Sheveland Ranch, where?

Consider for example:

· The average sales price since January for a 2-bedroom, 1-bathroom home in Napa was $356,610, while the average for a 3-bedroom, 2-bathroom home was $451,056. This is up from an average sales price of $240,800 (2 Bd/1Ba) and $365,990 (3 Bd/2 Ba) in mid-2001.

· For the 2-bedroom, 1-bathroom home to be considered affordable, an income of $111,796 per year is necessary. For two full-time wage earners, this equates to $27/hour each.

· For the 3-bedroom, 2-bathroom home to be considered affordable, an income of $141,405 is required, just over $34/hour each for our two full-time wage earners.

· For renters, the picture is even bleaker. Despite the additional apartments coming on line at Montrachet (Soscol Avenue), Hawthorne Village (Solano Avenue) and smaller developments such as Quail Run, middle-of-the-range 2-bedroom apartments are expected to continue to rent for $975 to $1250/month. To be affordable to our two full-time wage earners, renting a $975 apartment requires earning over $10/hour each, well above the minimum wage.

Obviously, to pay nearly half a million dollars for the average 3-bedroom, 2-bathroom home in Napa says we’re already on the verge of pricing our teachers, police and fire fighters, middle-class office and retail personnel, and most of the rest of us, out of the possibility of living in the same community we work in.

This situation does not bode well for the long-term economic and social well being of our community. We need to continue to develop equitable amounts of housing for all of our citizens, including those who work at our health care and senior citizen retirement communities, and we need to do so now. It is not going to get any less expensive two years hence.

We can pay for our fair share of housing now…or we can pay later.

Keyser is a Napa Realtor®

City-County Regional Housing Plan

by Skip Keyser

(Originally published by The Napa Valley Register in October 2003)

A non-event was recently held in the city council chambers. It was billed on the agenda as a Community Workshop to discuss the proposed City/County Memorandum of Understanding (MOU) relating to housing, revenue sharing and future development in the south county.

In true minimalist fashion, the council members and county/city staff outnumbered the rest of us by 14 to 9, including the press. By the time the workshop ended, they outnumbered us 14 to 6.

On the face of it this is unfortunate, not because we 6 couldn’t hold our own against the city staff and elected officials but because of the long-term importance of what was being discussed.

What was being discussed was no less than a major paradigm shift in city-county relations. For the first time in recent memory, true cooperation between the City of Napa and Napa County is on the horizon in the form of a regional housing agreement.

No doubt this change in attitude is precipitated by the recent legal action brought by various housing advocates taking the county to task over its lack of a certified housing element. As was pointed out at the workshop, the county should have had a certified element several years ago and has made relatively little progress until recently. In some respects this sounds a little like asking how you teach an elephant to tap dance. The answer is that you first have to get the elephant’s attention. It appears the county is finally paying attention.

It’s probably a good thing too, not only for the county but for the city. On the surface, it would appear that the city is in the driver’s seat, with the land, a certified housing element, and the wherewithal, political will and public support to achieve reasonable housing development over the next several years. We also have the infrastructure.

On the other hand, the county, particularly after the incorporation of American Canyon and under the constraints of Measures A and J, has very little residential development infrastructure, and – judging by the tone of the California Department of Housing and Community Development’s October 23^rd, 2001 review of the county’s draft housing element – very little ability to achieve a certified housing element.

While the proposed MOU will not, in and of itself, achieve a certified county housing element, it will make substantive progress toward this long overdue goal. As pointed out in the draft MOU, the county will:

* Work with the city to update their housing elements to obtain ABAG approval for the City of Napa to include sites for 664 housing units (534 multi-family residential and 130 single family residential) which will be credited to the county through 6/30/06;

* Contribute $900,000 - subject to approval by the Community Affordable Housing Trust Fund Board - to the city to purchase 5.37 acres at Lincoln Avenue and Garden Court for future multi-family residential development;

* Pay $100,000 from its Proposition 40 allocation for youth and community recreational services located within the city’s jurisdiction;

* Enter into a revenue sharing arrangement with the city to provide an ongoing funding stream to compensate the city for additional costs of each residential unit. [The city considers that residential units are revenue negative, costing the city $1500 per residence per year over what is brought in by property taxes, sales tax and vehicle license fees];

* Designate the Airport Industrial Area as a joint city-county study area and limit land uses to industrial/corporate instead of tourism/community or regional retail use;

* Commit to working though the Napa County League of Governments (NCLOG) to formulate a countywide visitor-serving development policy;

* Reserve the parking lot at 1195 Third Street for development of a future parking facility;

* Develop and implement a detailed program for updating the county’s general plan with involvement by all five cities in Napa County;

* Work in partnership with the city to identify future water needs and find long-term solutions;

* Grant the city a right of first refusal to purchase any county-owned property within the city’s jurisdictional boundaries;

* Continue to cooperate regarding annexations within the city’s RUL;

* Support creation of a joint Park and Open Space Agency to preserve open space for public access, environmental protection, and agricultural uses;

* Undertake the creation of a joint city-county Soscol corridor financing district or redevelopment area for land cleanup, assembly, and infrastructure upgrades to encourage infill housing and commercial projects; and

* Agree not to pursue development or intensification of uses at the Syar, Dillingham and Pacific Coast Builders properties on the Napa Vallejo Highway until such time as a study is completed as part of the county’s general plan update.

This represents a significant effort on behalf of the county and the city. While it is true that the MOU lacks some detail and could be more specific, it nevertheless represents an important first step and warrants approval at – or soon after - the joint October 7, 2003 City Council-Board of Supervisors meeting.

With regard to approving this MOU, the council and board should do it.

They should do it right.

And they should do it right away.

Keyser is involved in local housing issues

Why Napa Needs Affordable Housing Plan Now

by Skip Keyser

(Originally published in The Napa Valley Register, July 17, 2001)

The City of Napa is faced with a housing affordability crisis that will, if not solved, adversely impact the social fabric of our world-class city. Starting on July 18^th, the City of Napa Planning Commission and the City Council will have before them a revised Housing Element to the General Plan. Approval of this housing element is critical to developing an equitable supply of housing for Napa’s very low, low and moderate income citizens (those making up to 120% of the median income).

Approval of this plan and certification by the state will have far-reaching benefits. Failure to approve and implement this plan can only result in continued degradation in the supply of housing which is affordable to the people who work in Napa.

Here are some brief points about the housing situation in the City of Napa:

· Without a viable inventory of affordable housing, Napa will continue to be a highly desirable place to live but with many more job opportunities than housing.

· Job development throughout Napa County increases demand for housing in Napa City. Currently Napa requires more than 2,600 units of new housing over the next 5 years.

· Creation of housing affordable to our local workforce is important now and will remain so in the future.

· Housing costs are high in Napa compared to salaries for many local jobs.

· Market rate housing is not generally affordable to very low and low income households, that is, households making up to about $30,000 to $40,000 per year for a family of four

· Except for grant-subsidized housing (such as that built by Napa Valley Community Housing), the private sector has only been building single family homes in Napa, and the price of these new homes has risen to the point that they are affordably only to above-moderate income households.

· There is an extremely low vacancy rate for market-rate rental housing in Napa. This lack of rental inventory (not the lack of rent control) is what causes high rents. In a September 2000 survey, only 16 of more than 1,800 apartments in Napa were vacant (less than a 1% vacancy rate). This situation improved since then: a similar survey in April of this year found 13 vacancies out of 1,521 units surveyed - a vacancy rate of less than 85/100ths of 1%.

How desperate is the housing situation in Napa? Consider the following examples based on the recommended limit of spending no more than 1/3 of a family’s total income on housing costs:

· The same couple would need to earn an extra $60,616 to afford the average 3BD/2BA home that sold in Napa City during the past 6 months.

That's the type of housing affordability crisis we're faced with in the City of Napa for a family wishing to purchase a home.

1BD/1BA unit $850/month

2BD/1BA unit $990/month

3BD/2BA unit insufficient data

Creation of housing which is affordable to our local workforce is important. Do not, for a moment, assume "workforce" means unskilled, entry-level, or blue collar employees. As the examples cited above illustrate, housing affordability transcends very low, low and moderate income levels. This means the housing affordability crisis in Napa applies to people employed as Winery Retail/Bottling Workers at $8.50/hr, Retail Clerks at $9.35/hr, full-time Bank Tellers at $10.00/hr, City of Napa Employees (such as an Accounting Clerk II) at $17.31/hr, fully-certified School Teachers (with 4 years experience) at $18.40/hr, Carpenters at $27.50/hr, and Police Officers at $28.90/hr.

To the extent that individuals such as these can not afford to live in Napa, then we should expect a less viable, less resilient, and less dynamic community. As a result, the citizens of Napa will have to pay more for teachers who have to commute from Vallejo, Fairfield or Vacaville: will have fewer resident contractors and construction trade people to assist the community in recovering from natural disasters (such as earthquakes); and will have fewer of their sons and daughters able to live in the community in which they were raised.

We will, in short, not have a world-class city. A truly world-class city exhibits world class concern for its citizens. This includes jobs, food and affordable housing.

The City of Napa can not afford not to afford affordable housing.

Approve the new Housing Element.

(Keyser is a local Realtor®)

A View from Napa

Affordable Housing

Pending Legislation:

Recent Rent Control Litigation:

Sidebar: WHAT’S HAPPENING IN CALIFORNIA

Keyser is a local Realtor who serves on Napa’s Housing Advisory Committee

Not surprisingly then, especially in the litigious State of California, attorneys have had a field day with rent control as it relates to private property rights. Two recent cases of interest:

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