Should Merced use local money to build more affordable housing? Big decisions loom
Merced city leaders remain divided over how to locally mitigate one of California’s greatest challenges: building affordable housing for residents.
The city council debated the issue late into Monday night but didn’t reach a decision.
Affordable housing units have costs fixed so that very-low to moderate income-level earners spend no more than 30% of wages on housing.
The conversation was spurred because of the city’s $320.1 million 2021-22 budget, which is open for public comment until mid-year approval by City Council.
When the budget was first introduced at the prior meeting, it was lauded by councilmembers as the best budget in years for not only being balanced but having a surplus — despite COVID-19-caused economic challenges. Several residents also praised the budget for noting a commitment to investing in affordable housing.
But several members of the public and City Council on Monday asked that the budget go further than merely noting affordable housing as a priority. Real money must be allocated to begin solving the issue, proponents said.
“We have to do more than just talk about it. You guys have to allocate the money,” said resident Corinthia Hurley. “I would like you to take a look at this and start putting your money where your priorities are.”
Council debates how to spend Merced’s extra money
In Merced and across the state, California’s housing crisis has driven up prices for owners and renters. Merced’s long-time low vacancy rate exacerbates the city’s housing difficulties.
Councilmember Jesse Ornelas on Monday shared that his own family has been searching for new housing for three months without luck.
A home on his street became vacant recently, he said, and within one day of its listing, there were more than 100 applicants. He said the individual who got it ended up paying hundreds more to move in and agreed to higher rent.
“I think we have an opportunity to end the gentrification that’s happening in Merced,” Ornelas said Monday night.
California needs about 180,000 new housing units a year to keep up with population growth, according to the state. It is averaging hardly half that number. The resulting climb in housing costs has largely contributed to California having the nation’s highest poverty rate.
Merced’s proposed budget sets aside about $7.3 million for housing, largely made up for state and federal dollars. That’s about 2% of the overall budget.
The city’s general fund, which pays for many essential city-provided services, does not include affordable housing — the question of whether it should left the council split.
Advocates of the idea said there should be a local investment in affordable housing, especially when there are available funds in the general fund surplus. Opponents said using the funds that way isn’t appropriate and, regardless, wouldn’t make a meaningful dent in covering the exorbitant cost of building affordable housing in California.
Councilmember Bertha Perez motioned to set aside $500,000 of the general fund’s more than $920,000 available dollars to an affordable housing trust fund.
“We’re setting an example that for the future and here forward, we will always put money aside,” Perez said.
Councilmembers Ornelas and Fernando Echevarria joined her in casting their votes, while Mayor Matt Serratto, Sarah Boyle, and Delray Shelton voted “no.” Councilmember Kevin Blake was absent.
With the even split, the motion failed.
More affordable housing discussion to come
Serratto said he was hesitant to devote city funds to affordable housing because its construction is traditionally a job for the private market.
He instead floated the idea of leveraging funds like the over $27 million awarded to the city through American Rescue Plan Act funds. Merced City Council on Monday unanimously voted to accept the millions of dollars, but how to spend it will be decided during a future public meeting.
City staffers are combing through federal guidelines that dictate how the money can be spent. But funding sources like this that are supplementary to the city budget, Serratto said, would be more appropriate to spend on something like affordable housing.
Serratto also noted that building affordable housing is not affordable.
Project costs far exceed typical activities budgeted by the city and are mostly funded by a complex system of state and federal tax credits granted to developers. “Allocating general fund dollars isn’t going to do anything,” Serratto said.
The mayor agreed that the city must improve housing options for residents. In Merced, no new affordable housing developments have been completed since 2014.
The Merced City Council recently spent a large portion of a preceding meeting discussing various methods to make housing more affordable. City leaders at the time were also divided over how to approach the housing challenge.
The council ultimately directed city staff to come back with a presentation during an August or September meeting with a deeper dive into how Merced-specific policies could look.
Monday’s debate over the role of city money should play in getting affordable housing built will likely be continued during that meeting, too.
Even with the actual decision-making pushed off until after the budget is approved, residents said the City Council must still consider its upcoming financial decisions with affordable housing in mind.
“I want to make sure this budget is inclusive of the implementation of whatever programs or affordable housing tools we decide to go forward with,” said Merced resident and Leadership Counsel for Justice and Accountability policy advocate Sheng Xiong.
This story was originally published June 8, 2021 at 10:34 AM.
