Marin softens housing development affordability requirements

Marin County has adopted new rules that will ease requirements on housing developers to make a portion of their homes affordable to low-income renters and buyers.

The change is aimed at maximizing the total amount of new housing being built in the county. The state has mandated that Marin County and its municipalities permit some 14,000 new residences by 2031.

Of the 3,569 homes assigned to unincorporated Marin County, the state is requiring that 1,734, or about 48%, be affordable. The county defines affordable as residences for households at or below 80% of the area median income, or AMI. The AMI for a four-person household in Marin County is $175,000.

“Our previous policies focused on using inclusionary requirements to create low- and very-low-income units,” county planner Molly Kron told supervisors on Tuesday. “However, thinking has shifted over the years. We’re looking at using the requirements as an opportunity to impact middle-income housing and create more options for diverse housing.”

Governments use inclusionary housing regulations to require developers to make a certain percentage of their homes more affordable than they would otherwise be. Sometimes they allow developers to pay a fee in lieu of providing the lower cost housing. The fees go toward an affordable housing fund.

Six Marin municipalities — Corte Madera, Fairfax, Larkspur, San Anselmo, Sausalito and San Rafael — have been working in tandem with the county to review their inclusionary housing regulations, and their planning staffs are recommending similar changes to their councils.

Currently, the county requires developers who are building two or more market-rate homes to make 20% affordable to households earning 50% or 60% of the area median income. The lower percentage applies to rental developments, while the higher percentage covers for-sale projects. Fifty percent of AMI is $87,500, while 60% is $105,000.

It is commonly believed that people paying more than 30% of their income on rent are overburdened. As a result, developers are required to set maximum annual rent levels at 30% of $87,500, or about $2,187 per month.

While 20% of new dwellings will still be required to comply with inclusionary requirements, under the new rules developers will have a much broader set of options based on the number of dwellings they are creating.

For example, a developer building 10 dwellings or fewer will be able to choose between two options: making 10% of them affordable to people with very-low incomes and paying a $362,817 fee on 10% of the residences, or building 15% low-income dwellings and paying the same fee on 5% of them.

A developer building 30 or more dwellings, on the other hand, will have these options: making 15% of them for very-low-income households and 5% for moderate-income households, or paying a fee on 5% of them; or making 10% of the dwellings for very-low-income households, 5% for low-income households and 5% for moderate-income households.

Using a four-person household as a model, the maximum allowable rent for very-low-income renters would be $2,187 per month; for low-income renters, $2,843; and for moderate-income renters, $4,375.

The new regulations also require developers to ensure that renters or buyers meet certain income requirements.

Once again using the four-person household, renters of very-low-income dwellings must have incomes between $52,500 and $87,500; renters of low-income homes must have incomes between $87,500 and $140,000; and renters of moderate-income residences must have incomes between $140,000 and $210,000.

Supervisor Katie Rice expressed concerns about how the public might react to the changes. She asked staff to flesh out the rationale for the new approach so she could “communicate to the public about why we’re setting these bars where they are and can’t set them higher and expect any housing to come forward.”

LeeLee Thomas, deputy director of the Marin County Community Development Agency, said that over the years she has seen a number of developers reduce the size of their projects because they considered the county’s inclusionary requirement too onerous.

“One of the things that the state now evaluates,” Thomas said, “are inclusionary policies that are too high as a barrier to developing housing.”

According to Kron, developers told planners heard that being limited to building either low- or very-low-income residences to meet inclusionary requirements made it hard for them to make their projects economically feasible.

“So we’re ending up losing units,” Kron said.

Riley Hurd, a land use attorney in Marin, wrote in an email that he commends the county “for leading the effort to establish uniform inclusionary standards throughout Marin.”

“The previous patchwork of rules throughout the various jurisdictions was difficult for developers with multiple projects to navigate,” he said.

Hurd added, however, that he has been “involved in multiple deals where a 20% low-income requirement has prevented the project from moving forward, thereby resulting in no housing whatsoever.”

“This is why cities like San Rafael and San Francisco have recently reduced or eliminated their inclusionary housing requirements …. 20% of zero is zero,” he wrote.

Kron said these and other development code changes approved by supervisors on Tuesday will help the county comply with the state’s mandate to “affirmatively further fair housing.”

One of those code changes will allow developers to locate their inclusionary housing in census tracts that are different from where the majority of their residences are built, provided that the alternative locations are “racially concentrated areas of affluence.”

“This is defined by the California Department of Housing and Community Development as neighborhoods where populations have disproportionately higher rates of white residents and affluence,” Kron said.

Kron said that in the past developers have occasionally sought to locate some of their inclusionary homes in racially concentrated areas of poverty. For example, Kron said, the county rejected a request from a developer building a project in Tiburon to build his inclusionary dwellings in Marin City.