Following a report indicating Millbrae is far from on track to produce enough affordable housing to satisfy state laws, councilmembers this week shared ideas they said could boost below-market rate home construction in coming years.
The city was assigned 663 units, the majority below-market rate, to be permitted between 2015 and 2023 per the Regional Housing Needs Allocation, a state law that assigns growth in 8-year cycles. But so far the city has permitted just 447 units, nearly 70% market rate, without plans to pick up the slack by the end of the year. And significantly larger allotments are looming in the next cycle, in which the city will need to permit 2,199 units of housing by 2032, 1,267 of which will need to be below-market rate.
The increased numbers are part of a regional push for residential growth in job rich areas, particularly those with worsening housing affordability where some local governing bodies have resisted allowing new development.
“I think everybody can see how important it is for us to continue to produce affordable housing so that we’re not going to be slapped by the state,” Councilmember Anders Fung said, referencing the penalties for noncompliance.
Failure to meet allocations can result in some loss of local land use control. Senate Bill 35, a law already leaned on locally, allows developers to build without a discretionary review process in cities failing to permit enough housing. Because Millbrae is short only in the affordable category, new projects seeking approval per the law are required to have half or more of their units below-market rate.
Councilmember Reuben Holober said the city should target smaller-scale projects to contribute to affordable housing production. He said the report underscored the need to continue to require below-market rate units in developments submitted in accordance with Senate Bill 9, a law that took effect this year that permits up to four units where previously only single-family homes were allowed. The city enacted an emergency law, set to expire later this year, requiring at least one of the new units be made affordable to residents who earn 80% or less of the county’s median income.
Holober also said the city should extend fees that go into the city’s affordable housing fund to smaller projects, like accessory dwelling units and single-family homes.
“I think we’re losing out on a lot of the housing that’s being built and our ability to collect those fees,” he said.
The additional funding could be applied to subsidize affordable housing in various ways, like purchasing land for nonprofit developers to build on or by injecting money into projects to increase affordability levels.
For Fung’s part, he recommended the city establish its own density bonus rules — those which allow developers to construct more units on a lot than typically allowed in exchange for including affordable units. While the state has its own density bonus rule, Fung said the city could create options that would be “even more enticing” to developers. South San Francisco is exploring a similar idea, with plans to reduce parking requirements or allow taller buildings in exchange for more affordable housing than required by state law.
“That’s one way for us to kind of gain back our local control and guide development in the way we want it,” Fung said.
Nathan Chan, a Millbrae resident and housing activist, said he supported the density bonus idea. He said additionally the city should look to increase allowable density in its downtown area, something that would allow greater quantities of affordable housing.
But he said the SB 9 ordinance would not be effective, as requiring below-market rate units in small projects would not allow them to pencil out financially.
“Just based on the land cost alone, there’s no way any sort of developer … could realistically recoup the amount of money they’re spending if they have to hold down the rent,” he said.
Councilmembers largely blamed state laws that make it harder for local jurisdictions to deny housing developments for the city’s failure to meet affordability marks. The city recently was forced to approve a 384-unit development with 5% of its units below-market rate. The developers of the apartments sued the city after approval was not granted, relying on the state Housing Accountability Act which prohibits cities from denying projects that fall in line with city zoning.
“I think the public realizes [that] development was a blow to only get 5% affordable,” Vice Mayor Gina Papan said. “This council continues to battle for the affordability.”
The city now requires 10% of units be affordable — a rule was passed after the project was submitted. The Housing Accountability Act barred the city from tacking on the rule after the fact.
Councilmember Ann Schneider requested that the city report to state leaders the perceived shortcomings of state housing laws.
“We would be building more affordable housing if these guys would get out of the way,” she said. “SB 35, [the Housing Accountability Act] and the other housing laws are reducing our ability to build affordable units.”
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