SLO is far from hitting its housing goals, so why was it named a ‘pro-housing city’?

The city of San Luis Obispo has evaluated whether or not it’s on track to meet its housing goals, and the answer is no, though not for lack of trying.

Nevertheless, just a month ago, the city was awarded a “pro-housing designation” by the California Department of Housing and Community Development.

But how does a city get recognition for its housing efforts when it’s far off on meeting its state-mandated goals?

By rolling out policies that at least try to make progress in improving affordability for its residents.

The state housing department praised the city for implementing programs such as the Downtown Flexible Density pilot program and for making efforts to streamline permitting, removing subjective design standards and making changes to the inclusionary housing process.

At a March 5 City Council meeting, the council heard an update on San Luis Obispo’s progress toward its 2020-28 housing cycle goals that found the city is far behind in its efforts to approve more low-income housing.

Despite the city’s efforts to implement pro-housing policies, many have yet to make a dent in the sizable gap between the high demand for below-market-rate housing and the actual available inventory, San Luis Obispo housing policy and programs manager Teresa McClish said.

For example, the city has issued more than 2,126 permits for above-moderate-income housing — far exceeding its 1,406-unit goal for the current cycle — but has built just 21% of the 1,948 below-market-rate homes required by the Housing Element’s Regional Housing Needs Assessment, which range between moderate to extremely low-income housing.

Though San Luis Obispo is running behind on its below-market-rate housing goals, McClish said, “It should be noted that several below-market-rate projects have received entitlements or have been deemed eligible for building permit issuance, or have or are expected to pull permits in 2024.”

SLO lagging behind below-market-rate housing goals

According to the city’s Regional Housing Needs Assessment determined by the California Department of Housing and Community Development, San Luis Obispo must approve the construction of a total of 3,354 units by 2028.

Historically, above-moderate-income homes have been perennially popular to build in San Luis Obispo County. During the previous housing cycle, the county reached its RHNA goal of 1,347 housing units for the period, but only 297 of those units were for low- and moderate-income households, according to the county’s RHNA assessment.

Affordable housing is broken down into four categories based on the local area median income, with extremely low-income households making 15-30% of the AMI, very low-income households making 30-50% of the AMI, lower-income households making 50% to 80% and moderate-income households making 80% to 120%.

Just a week after the City Council meeting, the San Luis Obispo County Board of Supervisors reviewed the county’s RHNA progress and found a similar predicament, with data showing the county must approve more than 1,600 units of below moderate-income housing by 2028.

SLO County is way behind on its state affordable housing goals. What it needs to do to catch up

Similar to the city of San Luis Obispo, the county has already exceeded its goal for the above-moderate-income category, permitting 1,485 units when the state only required 1,365.

But it has a big hole in lower- and middle-income housing for cities such as San Luis Obispo to fill.

To date, the city has issued 71 of the 603 required permits for moderate-income units, 194 of the required 520 for low income and 142 of the required 825 for very low income.

In addition to conventional forms of housing, San Luis Obispo currently is home to 170 units of permanent supportive housing, with another 121 units still in the pipeline, San Luis Obispo homelessness response manager Daisy Wiberg said.

More units of this kind are on the way in the form of the 25-unit Calle Joaquin Homekey project, Wiberg said.

The city also features 12 existing transitional housing units, with another 52 still in the queue, Wiberg said.

McClish added that projects such as the Housing Authority of San Luis Obispo’s Bridge Street Family Apartments and Maxine Lewis Apartments will help the city make “significant RHNA progress next year.”

She said receiving HCD’s Prohousing designation allows the city to apply for up to $750,000 in program incentive funds, and the city plans to use the money for more affordable housing.

Are ‘pro-housing’ policies actually creating housing?

Whether or not these newer pro-housing policies can help make a dent in the city’s looming below-market-rate housing goals remains to be seen, as several of the city’s policies have yet to see real-world implementation, McClish said.

However, 2021’s zoning amendments have been highly effective at getting homes permitted on commercial and manufacturing lots. McClish said a total of 621 homes are either under review or have been permitted to build in commercial and manufacturing zones around the city through the amendments.

These changes to zoning and density rules have a chance to boost the number of units that can be built in existing city-approved housing plans such as the 2004 Margarita Area Specific Plan that covers the area bordered by South Higuera Street, Broad Street, Tank Farm Road and the ridge of the South Hills in San Luis Obispo, McClish said.

McClish said city staff is currently preparing a request for proposals for amendments to the Margarita Area plan to add more missing middle homes, along with mixed-use development.

“In 2021 the Airport Land Use Plan was amended,” McClish said in an email to The Tribune. “As such, several areas of the (Margarita Area Specific Plan) are either available for residential development (where it was not allowed before) or available for higher density residential development.”

Facing a shortfall in permitted lower-income homes, the city will explore more ways to improve housing policy through the end of the current housing cycle, McClish said.

“As we’ve mentioned, ownership is out of reach for many community members, and housing production and this category is critically important,” McClish said. “The numbers are showing that programs are working — or at least not hindering — production so far.”

Where can SLO improve housing policy?

During public comment, some people proposed expanding existing city housing policy or exploring new policies entirely.

Tricamo Construction owner John Tricamo said he wanted to see the city expand its Downtown Flexible Density program — which incentivizes the creation of smaller, denser units — beyond downtown city limits.

“We really should get rid of policy that limits growth if we’re a pro-growth city,” Tricamo said.

Damien Mavis, a co-founder of market-rate housing builder and developer Covelop Inc., said there were fewer incentives for market-rate developers to use than affordable housing.

He said roughly 62% of residential land in San Luis Obispo is zoned for single-family residential homes, which can cost on average more than $900,000 — meaning a buyer needs an income 225% of the area median income.

Mavis said exploring initiatives that would function similarly to the city’s inclusionary housing ordinance would be a good start for incentivizing more housing that would be attainable for San Luis Obispo workers.

Housing Authority of San Luis Obispo executive director Scott Collins said while the city has made “tremendous” progress, with HASLO building or rehabilitating 350 units since the start of 2022, most HASLO or People’s Self-Help Housing projects have long wait lists. He said the city should work to get market-rate developers more involved in building affordable housing.

“These measures will help sustain the pace of development by us and by PSHH,” Collins said. “However, projects that we provide typically have 500 to 1,000 people on the waitlist — people who are eligible to get into our housing but can’t because there’s not enough.”