Mayor Alan Webber’s administration has several key city departments — Land Use, Public Works, Finance, Community Services and the City Attorney’s Office among them — headed by highly competent women.
Most were selected by this mayor. But one person, Alexandra Ladd, has toiled at the city for multiple mayors. Thank goodness she is there.
Until a few months ago, Ladd served as director of the Affordable Housing Office. She has been picked to be the city’s interim Economic Development Department director, a role she also took on prior to the hiring of Matt Brown, a transplant from the San Francisco Bay Area, in 2017. Brown has since moved on to San Antonio, Texas.
Ladd recently rolled out draft changes to the Santa Fe Homes Program (the so-called Inclusionary Zoning Ordinance) with specific new rules on affordability requirements for newly built multifamily rental projects over 15 units. It is a great piece of work reflecting lessons learned, voices heard and a keen read of market forces.
As background, the city in 2005 added multifamily rental requirements to the Santa Fe Homes Program and said at least 15 percent of the rental units in any new apartment project must be subsidized units with rents based on U.S. Department of Housing and Urban Development guidelines of affordability, which are based on area median income. Remember 2005? It was a peak boom year of building nationally and locally. Easy development money was readily available everywhere. But no market-rate apartments were built in Santa Fe because no lender would touch a project with 15 percent of the product being money-losers.
Ten years later, with the rest of the country seeing an explosion of new multifamily rental projects, the city woke up and essentially asked: What if we charged a “fee in lieu” instead of forcing 15 percent on a project, having learned the hard way that 15 percent of zero is zero.
The Javier Gonzales administration passed such a waiver in 2015, and the floodgate of property owners seeking the option of paying their way out of compliance was opened. The fee was based on a rational calculation with a nexus predicated on HUD data, but it was a sweet enough deal to see developers of some 2,500 units apply for and get the waiver — but with a big if.
The big if is that the gift will expire if the property owner does not secure a vertical building permit by the last day of 2019. That means probably half of those entitled will miss the deadline because if they don’t have a project in for permitting today, they’re not likely to make the deadline.
The draft new rules provide three new compliance options:
1. Pay the waiver fee but pay 25 percent more on Jan. 1 and then more over time until the fee doubles.
2. Allow market-rate units that are rent-fixed to 120 percent of the area median income. For a couple renting a one-bedroom apartment, that’s rent around $1,000 a month with a combined household income of $70,000. That apartment would be tied to a HUD calculation for 10 years, after which the owner could raise rents to whatever the market will bear, or sell as condominiums.
3. Weave in 15 percent subsidized units with rents pegged to 65 percent of the area median income, which for a couple in a one-bedroom unit would be $38,000. Those rental restrictions would terminate after five years, and then the market could take over.
These options are good, but even better, property owners won’t have to worry about income verification because the issuers of vouchers will ensure the units have qualified renters, and the city’s Affordable Housing Office will over see the entire program. Plus, all three options provide a 15 percent density bonus, and options 2 and 3 reduce development fees 15 percent and 30 percent, respectively, for all the units in the project.
It is a great start, and Ladd is to be commended. The contentious issue will be how quickly the ramp-up doubles the fee in lieu. More on that next week.
Kim Shanahan is a longtime Santa Fe builder and former executive officer of the Santa Fe Area Home Builders Association.