Dick Spotswood: We need more ways to fund needed housing in Marin

Mill Valley Councilmember Stephen Burke and I were brainstorming the difficulty of building workforce housing in Marin. We acknowledged the question was not whether it needed to be built. The stumbling blocks are financing and identifying appropriate locations.

Financing is foundational. While the private sector can erect townhouses and apartments efficiently, “affordable” projects will always require a subsidy so that developments pencil out. Finding a source of that money is elusive.

Here’s one approach that arose during our conversation. Until 2012, California authorized redevelopment agencies to clear “blight.” That’s the polite word for “urban slums.” Once demolished, new developments – usually upscale – were authorized.

When the new structures were completed, the land on which it sat was reassessed for property tax purposes. The difference between the property taxes assessed before demolition compared to the land and improvements taxes on the buildings that replaced them is called “tax incremental financing.” That sum was reserved to fund future projects.

Redevelopment was often abused. The law authorizing redevelopment agencies was repealed during Gov. Jerry Brown’s first administration in the late 1970s. What shouldn’t be forgotten is tax incremental financing. Use it now to finance workforce housing. It’s not a silver bullet but it should be in the financing toolbox to facilitate subsidized housing.

Here’s how it could play out: A developer selects a site and applies for permits to build multi-unit homes. Half would be market rate to generate profit; the remainder will be affordable for our workforce, including first responders and teachers.

That initial housing development, like all that follows, will need to be subsidized. To get the ball rolling, those dollars for Project One will need to come from an existing public sector source.

When completed, that real property along with its new improvements will be reassessed for property tax purposes. The incremental difference between the amount of the “before tax,” and the “after tax” determined once construction is complete is reserved. Designated local governments then use that sum to fund the next affordable project, and on and on.

Applying tax incremental financing to fund workforce housing is another example of thinking outside the box resulting in new, if yet untested, approaches to housing finance.

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Finding new approaches to address the ever-increasing cost of renting or owning a Marin home is a challenge. One Marin town has taken a new path by launching its “lease to locals” program.

Mill Valley is offering property owners who are not long-term renting their housing unit a one-time $14,000 cash grant to convert their property for a minimum of one year into a year-round rental house for the town’s workforce.

The offer is made in partnership with nonprofit Community Housing Foundation and Placemate Inc. The latter is a marketplace that innovated the concept in American towns where multiple homes are vacant for much of the year.

Examples include Truckee near Lake Tahoe, Nantucket and Provincetown, Mass. There, as in Marin, workforce-priced housing is in short supply. The plan is a near-term answer to the housing quandary that uses the carrot, a cash incentive, rather than the stick.

Mill Valley Councilmember Caroline Joachim explains, “Instead of waiting for development opportunities, the city is pioneering an approach to leverage our existing housing stock that sits vacant or is underutilized for much of the year. This is an opportunity to create more affordable, workforce, and year-round housing options for families and local workers to live and thrive.”

Housing opportunities shouldn’t be a numbers game. More can be better, but that’s not always true. Using existing structures as in “Lease to Locals” and retaining dwellings that are now affordable are essential strategies.

The notion that the “build, baby, build” approach will lower the price of homes is a myth. When the demand for homes in booming and desirable Coastal California is insatiable, the rules of supply and demand fail.

Columnist Dick Spotswood of Mill Valley writes on local issues Sundays and Wednesdays. Email him at spotswood@comcast.net.