$1.1M ‘affordable’ housing? San Jose, L.A. policies more sensible

The depressing and oxymoronic quality of California’s “affordable housing” policy is on full display in the city of San Diego’s embrace of a plan to turn its vacant 101 Ash Street office tower into a 247-unit residential building.

The latest estimates from the MRK-Create development team put the project’s cost at $267.6 million, with the per-unit cost creeping up to nearly $1.1 million, according to a July 20 U-T report.

It’s plain that Mayor Todd Gloria, who once seemed open to thinking out of the box on housing, is now just one more California pol who is comfortable with an absurdly expensive approach — even if it is not working well. Homelessness is still rampant — and the idea of homeownership feels like a cruel joke to the many millions of households in the Golden State with income far higher than the national median of $75,000.

The failure of this status quo is clear to Gov. Gavin Newsom and the state legislators who won passage of surprisingly strong revisions of the California Environmental Quality Act in late June. But that doesn’t change the fact that aggressive NIMBY groups flanked by unions and environmentalists still wield vast power at the local level.

Thankfully, there are two recent developments that offer hope in housing, at least if local officials are willing to show some spine and try something new. As state Sen. Catherine Blakespear, D-Encinitas, detailed in a recent CalMatters commentary, San Jose is seeing real progress in sheltering the homeless by using interim modular housing on vacant land like parking lots, fairgrounds and civic centers. The relocatable cabins, which include onsite social services, can be built for as little as $50,000 per unit. That’s a tiny fraction of the $650,000 average for permanent housing. Unlike conventional projects that take four or more years, San Jose is opening more than 800 modular units in just 18 months.

But what might be even more of a game changer is the emergence of a seemingly brand new strategy in Los Angeles. Better Angels, a new nonprofit founded by tech entrepreneur Adam Miller, touts a market-driven model for housing that breaks from the traditional, subsidy-heavy “affordable” approach. Unlike competitors relying on tax credits and government grants, Better Angels believes that by using a mix of private equity (30%) and conventional loans to cut timelines and costs, it can reduce per-unit expenses to around $215,000 — roughly a third of typical tax-credit projects.

Though its units may not be much direct help to the neediest of the unsheltered, Better Angels has come up with what amounts to a bold and interesting private sector-led experiment.

Both the San Jose and Los Angeles programs deserve close attention from San Diego City Hall. Once the mayor and council are done patting themselves on the back for their handling of the 101 Ash Street project, they should consider road trips north to see what more promising policies look like.