Council applauds changes to housing policy

ERIC LINDBERG
DAILY SOUND STAFF WRITER

Santa Barbara city leaders lauded proposed alterations to the city's housing policies, calling them creative methods of providing more affordable housing at Tuesday's City Council meeting.
The Council voted in approval of several significant changes and agreed to pass on several others to the Housing Policy Steering Committee for further review.

"What is proposed here ... uses a creative way of looking at impediments to producing affordable housing and attempts to correct that where we can," Councilmember Roger Horton said. "I couldn't be more happier or more supportive."
Among the items approved by the Council was an extension of the city's affordability covenant, essentially the length of time that the affordable housing remains under the city's control. Previously a "rolling" 45-year covenant, the new policy doubled that to 90 years, meaning that any owner will have to stay in the home for 90 years before it can be sold at market value.
Any sale that occurs during that 90-year period would not only have to meet affordability requirements, but would also trigger a new 90-year covenant. Although that feature drew cheers from Councilmember Brian Barnwell, who has been vocal in requesting a longer rollover period, Councilmember Iya Falcone expressed concern that it will create de facto perpetuity.
"Is that what we are doing here?" Falcone asked. "It's a little on the edges."
City Attorney Steve Wiley said the 90-year covenant meets state law and he is comfortable going forward with the proposal.
Another change authorized by the Council allows the selection process for buyers of affordable units to give preference to employees or residents of the South Coast. This is achieved by holding two lotteries, the first of which is open only to buyers with at least one member of the family living or working locally.
Councilmember Das Williams said he is very pleased with that alteration, saying, "I think it's just key to us continuing a good affordable housing program."
Barnwell asked about potentially creating two lotteries, one that gave preference to those working in the Santa Barbara area over those simply living here. Wiley said although that concept appears to be perfectly innocent, it is discriminatory and problematic, posing the hypothetical situation that someone gets a job in Santa Barbara, gets an affordable unit and then quits or loses the job.
The Council also approved changes to the lottery process itself, essentially formalizing the process already in use, in which buyers apply and are processed in order of their randomly determined position in line. Those who are eligible get first pick of the available units until all spots are filled.
"That has worked well," Steven Faulstich, city housing programs supervisor, said. "It's staff-intensive, but that's what we do."
Councilmembers also discussed less controversial changes, such as requiring a minimum down payment to ensure the buyer has a vested interest in maintaining the property. However, a suggested minimum credit score raised issues first with Horton and later with Councilmember Helene Schneider.
Both expressed concern that automatically denying someone based on a bad credit score won't take into account those with mitigating circumstances, such as identity theft. Although Faulstich said the requirement can be waived for good cause by the community development director, Schneider asked for an automatic review by the director instead.
Falcone tempered that suggestion to an appealable denial, arguing an automatic review process may place an undue burden on city staff. Schneider and the rest of the Council agreed and approved that slight change.
Faulstich said he will keep in mind a suggestion by Williams to create a permanent or annual lottery pool so potential buyers don't have to constantly reapply for each separate subsidized housing project.
Other more complex issues — eliminating market-rate density bonus units, increasing minimum unit sizes and changing price calculations — will be discussed by the Housing Policy Steering Committee before returning to Council for final approval.