Why cities in San Mateo County are planning for new levels of growth

With roughly 269,000 units of housing in the county and 2.8 people per home on average, the new housing could usher in upwards of 131,000 people, more growth than the county’s seen over the last 35 years. Combined with unincorporated land, the county’s total allocation for new homes is more than 47,000.

“It’s much different than it’s ever been in the past,” said Michael Lane, a state policy director with nonprofit public policy organization SPUR. According to Lane, political will to address housing affordability is mounting, and legislation aimed at increasing housing stock (that some cities in the past have skirted) have grown new teeth.

At the heart of state housing laws is the Regional Housing Needs Allocation, or RHNA, which assigns housing growth to jurisdictions in eight-year cycles. While the law is nothing new, the upcoming cycle’s numbers (the sixth cycle in the law’s history) are larger than ever before and nearly three times those for the county’s current cycle.

Lane said that’s because of recent state legislation requiring new allocations be based on a more stringent look at housing affordability, job growth and vacancy rates. The Peninsula between 2010 and 2019 saw 11 jobs created for each new unit of housing built. Meanwhile median single-family home prices have neared $2 million, triple what they were 10 years ago.

Cities are currently working to plan for where the new housing will go, the first step in fulfilling RHNA requirements. Documents indicating suitable sites for housing, called housing elements, will need to be submitted to the state later this year.

“The complaint in the past was that the housing elements never really had any teeth, there was no enforcement, and it became a plan that sat on the shelf,” said Lane.

Potential penalties

Lane said in prior cycles some cities have designated parcels that had existing uses or for other reasons were not practical for new housing. “Laws have changed to really drill down and examine those sites and make sure they are viable,” he said. Cities whose housing elements are found to be insufficient could face referral to the Attorney General’s Office for court action and financial or other penalties.

And once housing elements are certified, cities that do not permit developments that fall in line with the plans can also be penalized in a number of ways. Yearly assessments by the state determine if goals are being met, and cities that fall behind could lose the ability to deny new residential projects. Senate Bill 35, a law that became enforceable at the beginning of the year, removed cities’ abilities to deny projects that contain below-market-rate units if goals are not being met.

“If they do fall behind, SB 35 will kick in. Hopefully that will speed up housing growth and bring some of those cities into compliance,” said Dylan Casey, executive director of the California Renters Legal Advocacy and Education Fund, or CaRLA.

CaRLA recently used another enforcement mechanism by leaning on a similarly-minded state law, the Housing Accountability Act, forcing the city of San Mateo to reconsider its denial of a 10-unit condominium building. The law, passed in 1982 but recently popularized by housing activists, limits local governments’ ability to deny projects that fall in line with their housing elements. In San Mateo’s case, CaRLA leveraged the law to force the city to reconsider its denial of the development, in the process costing the city a $450,000 settlement and a similar sum in legal fees.

Casey said that because numbers in the upcoming RHNA cycle are significantly higher, more cities will likely fall out of compliance.

Compliance in the current cycle has varied on the Peninsula as some city councils have sought to meet allocations and others have been more resistant. Redwood City, assigned 2,789 units between 2014 and 2023 has permitted 2,935. Foster City, a smaller city with a smaller allocation, also exceeded goals by permitting 840 units compared with its 430-unit target.

Other cities permitted only fractions of their allocations. San Bruno, for instance, permitted 203 units of its goal of 1,155.

Affordability

A key challenge for many cities is creating affordable units. RHNA requirements mandate a certain number of new units be affordable to people of varying incomes. In most cases, offering below-market-rate rents require subsidies, which can come from cities, the state or federal government.

Raymond Hodges, San Mateo County’s Director of Housing and Community Development, said while most cities in the county have done very well meeting allocations for market-rate housing, providing below-market-rate units has been where cities come up short. For the upcoming RHNA cycle, nearly 57% of units will need to have below-market-rate rents or sale prices.

More than a quarter of overall units, 12,196 homes, will need to be offered with rents that would consume 30% or less of the earnings for households bringing home 50% or less of the county’s median income. That works out to $1,713 per month for a one-bedroom unit or $2,056 for a two-bedroom unit. Units affordable to those earning less than 80% of the median income and less than the total median income comprise roughly 15% and 17% percent respectively of the total allotment.

Hodges said funding for such units has increased significantly in recent years. The county in 2013 started its own fund to subsidize housing, and many cities have similar funds. That’s on top of expanding commitments from the state and federal government to provide financial aid.

South San Francisco officials last month announced they expect to put $122 million over the next 15 years into affordable housing, funding largely made available by city fees charged to commercial developers. Other cities have established similar funds.

Additionally, laws that require developers to shoulder some of the cost could see broader use. Inclusionary zoning — rules requiring new developments to contain certain amounts of affordable units that had previously been tied up in litigation — are now being increasingly implemented.

“I think we have a chance of doing it, it’s just going to require a lot of work,” Hodges said of meeting affordability requirements. “The [county’s] affordable housing fund has grown every year which is having a snowball effect on the number of units we finance every year.”

Community understanding

Hodges noted community outreach will be key moving forward with plans to fill allocations. He said while city planners and elected leaders generally strike a positive tone and understand the need for more housing, there are concerns, specifically around increased strain on transportation infrastructure.

“The narrative around housing today has a lot to do with transportation and access to the highway system we have, and the concern is that our highway system is pretty close to capacity already,” he said. “The cities are doing a good job with trying to push development to transit-oriented areas where there’s at least SamTrans bus access if not Caltrain access or BART.”

Concerns aside, “most people understand the need for housing,” he emphasized. As for whether the goals will be met, he said “it’s going to be a challenge, but I think we can.”

corey@smdailyjournal.com

(650) 344-5200, ext. 105