Costs of land, building materials and fees add to pricetag of homes
As ideas for tackling Truckee’s affordable housing problem surface, more obstacles appear. A recent spike in building material prices, for example, has made lumber twice as expensive as last year.
But the biggest hurdles that affordable housing faces are not new, such as the scarcity of suitable land zoned for the high-density housing, high land costs, and the limited subsidies for developers, said Greg Sparks, regional housing director for Mercy Housing.
The Workforce Housing Association of Truckee Tahoe (WHATT) has advocated the idea of land banking for affordable housing. Since land is the most vital component of affordable housing, identifying suitable sites and setting them aside to contribute to Truckee’s affordable housing solution is a very important first step, according to WHATT.
But having properly zoned land is not even half the battle. Land costs and fees, which often total around $77,000, according to the Sierra Business Council, can make housing costs jump even before the structure goes up.
Add to that building material costs that are up across the board, and home builders have a hard time keeping prices down. Steel and lumber prices that are nearly twice what they were this time last year, have already begun to slow construction in Nevada.
A portion of the problem can be attributed to an imbalance in supply and demand. Statewide there is just more of a demand for housing than there are units available, experts say. Land costs are fueled by this imbalance. According to the Sierra Business Council, a single lot can cost around $50,000.
“We have, I believe, a market failure in our state for housing,” said Diane Spaulding, executive director of the Nonprofit Housing Association of Northern California. “We need to dramatically increase the supply of housing.”
The fees and land costs lead to another problem. Even when developers seemingly have all the pieces in place, like high-density zoning and a suitable site, they often develop large homes at a lower density, which garner the most money on the housing market and cost roughly the same in fees. The Truckee region has seen this phenomenon most recently with Hopkins Ranch in the Martis Valley, a 280-acre golf course project that proposes 65 units. With golf courses and large single family homes eating up a lot of the land, the opportune locations for affordable housing diminish.
One tradeoff that the town and East West Partners have both agreed on at Gray’s Crossing is increased density in the project in exchange for more affordable units. Gray’s Crossing will have 225 affordable units out of 725 total units.
Because of the up-front development fees, subsidies are often required for an affordable housing project to be truly affordable. Proposition 46, a $2.1 billion bond measure for housing and emergency shelter passed in 2002, will provide money to help fund affordable rental housing for about another year and a half, when the funding will dry up.
However, developers of affordable rental housing in Truckee often rely on government tax credits that can be transferred or sold and are a more surefire type of funding. Riverview Homes and Truckee Pines are two rental locations in Truckee that have taken advantage of tax credits to finance housing for renters making less than the median income.
There are certain pressures from neighbors and the community to reduce impacts on neighboring housing by putting less dense projects on the ground, Sparks noted. Often referred to as NIMBY’s (Not In My Backyard), their opposition to a dense project can force reduced density, which often threatens affordability, or stall a project in the approval process. While criticism of a proposal can often yield positive results in design and environmental considerations, a lengthy delay in approval, or a redesign of the project, translates into increased cost, which is almost always handed down to the renter or home buyer.
Opposition often arises from a persisting misconception of affordable housing that many people have, said Sparks.
“I think that it takes people in their mind’s eye to, ‘I’m in inner city Chicago,'” said Sparks. “That’s not what affordable housing is today. Affordable housing can be indistinguishable and meet the design standards of the community.”
Nonprofit Mercy Housing has experienced the opposition firsthand. Four years ago, when putting together the Riverview Homes project, they decided not to ask for an increased density that would allow multi-family units, because they feared that neighborhood opposition could stall the planning process.
Still, Riverview’s 41 units on 7.5 acres are an example of successful affordable housing program. The units are available to renters making 30 to 60 percent of the median income, and the popular homes have little turnover.
Measures to combat the affordable housing shortage are being placed in Truckee’s General Plan update. Inclusionary zoning, which will requires a percentage of affordable housing in each development proposal, and a jobs/housing linkage program, which makes developers responsible for employee housing, will both be included in the updated General Plan.
But by looking at what makes housing so unaffordable, housing advocates and local officials say that market-rate projects will better meet the housing needs of the area.
Affordable housing experts agree that attacking the problem on all fronts and with a variety of methods is the best way to solve the region’s dilemma.
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