‘We’re at a crisis point.’ Merced adopts new policy to boost affordable housing
Merced leaders took another step this week down the road toward managing the city’s housing crisis — but some community members said they fear that road is heading in the wrong direction.
A resolution passed Monday by the Merced City Council is the latest attempt to increase the local affordable housing supply. Affordable homes have costs fixed so that lower-income occupants spend no more than 30% of their income on housing.
The new policy initiates a unit production plan requiring certain private development projects to devote a minimum of 12.5% of units to affordable homes.
Developers can still voluntarily build a higher percentage of affordable units, if they so wish.
The unit production plan impacts developments subject to the City Council’s discretion over land use. That includes projects going through a development agreement, pre-annexation development agreement and legislative action agreement.
Rental and ownership projects alike are subject to the new policy direction. Unit production will be spread across extremely low, very low, low and moderate-income levels, according to the resolution.
Policy reignites inclusionary zoning debate
Prior to the resolution passing Monday, some residents and elected officials both lauded and criticized the policy as a more radical approach to boosting housing.
Others said it is nothing more than words without bite.
Mayor Matt Serratto and Councilmember Kevin Blake cast the two dissenting votes against the policy. Blake said his objection was because of its similarity to inclusionary zoning — a policy that he and other City Council members have consistently opposed.
Inclusionary zoning requires new market rate housing projects to allocate a certain percentage of units to affordable housing. The effect is that affordable housing units are integrated within traditional market rate developments.
“I think this is a component of inclusionary zoning. I don’t support any percentage,” Blake said of the unit production plan.
After inclusionary zoning was repeatedly shot down by a majority of the City Council, its members directed staff to develop a different process that would accomplish a similar goal, resulting in Monday’s resolution.
City staff said the unit production plan differs from inclusionary zoning, in part because the policy allows for several exemptions.
For example, projects with less than 36 multi-family units or 60 single family units are exempted, as are any development the City Council judges as not feasible due to a range of possible factors.
“This, again, is not inclusionary zoning,” said Development Services Director Scott McBride. “This is a policy that kind of skirts through that and follows a very unique path.”
Community members in support of bolstering affordable housing tools pointed to the policy’s exceptions as a way to undermine its potency.
The list of exemptions could potentially allow for affordable housing to be excluded from every development, critics said.
“This plan does nothing,” said resident Fue Xiong.
Merced leaders split over affordable housing
The divergent opinions expressed Monday were representative of a debate that largely dominated Merced last year and continued since.
Community and council members have aired diverse stances over which strategies are appropriate to elevate housing stock, often divided over leveraging affordable housing tools or leaning on the free market to increase supply.
As an advocate for the free market, Blake said during Monday’s Council meeting that he believes Merced has already invested significantly in affordable housing, referring to the $6.5 million in federal American Rescue Plan Act funds allocated toward its construction.
Now, the city’s goal should be to promote building overall — not just affordable housing, Blake said. But the affordable housing requirement could jeopardize that by driving developers out of Merced, he said.
Some council members echoed Blake’s fears about stifling development, including Councilmember Fernando Echevarria. But eclipsing that concern is the present reality of Merced’s ongoing housing crisis, Echevarria said.
Merced’s low vacancy rate, recently cited by city officials at less than 1%, coupled with the city’s rapid growth poses a challenge for renters and low-income residents competing for a place to live.
“As much as I hope building a lot of housing is going to bring down cost, that may not be necessarily true,” Echevarria said. “I hope it does . . . It’s common sense. But common sense isn’t driving our market. We’re at a crisis point.”
In August, UC Merced was forced to delay the start of in-person instruction as about 10% of the student body continued to search for housing just days before school started.
State Auditor data shows Merced’s severe cost-burden rating, overcrowding, and unavailability of units are all high.
While Merced’s mayor said he supported the 12.5% affordable housing requirement for developments, Serratto said he voted against the resolution because of an added stipulation.
The final motion instructed the city to conduct a nexus study examining the effect of market rate development on the need for affordable housing. The city must hire a consultant for the study, and results likely won’t come before the council publicly for another six to nine months, city staff said.
The nexus study was included in the vote as a compromise after several elected officials and residents said the unit production plan should go further.
Depending on the findings, the City Council will reevaluate whether the minimum affordable unit threshold should be raised from 12.5% to 15% or more.
Anything over 15% could require they city to adopt an inclusionary zoning ordinance.
