For the first time since I’ve been in elected office, the city of Encinitas is going to participate in a project to help build affordable housing.
The private market builds a small amount of housing restricted to lower-income people every year due to regulatory requirements that accompany development projects. But because the city doesn’t own much land available for housing, and the City Council has had other priorities, we haven’t recently participated in helping address the affordable housing crisis.
At our council meeting last week, we approved a Habitat for Humanity proposal to pursue building two homes — with the possibility of two accessory units — on a remnant of land owned by the city at the corner of Leucadia Boulevard and Urania Avenue. The city would essentially lend the land via a low-cost, long-term lease and Habitat will build, finance and sell the homes to lower-income families.
The proposed project is adjacent to a planned 13-home Shea Homes subdivision on a former greenhouse site. Our unused and almost unusable 16,700 square feet (two-fifths of an acre) next to a busy road has been used for occasional storage in recent years.
The reason it’s important to provide affordable housing in Encinitas is because our residents fall into every income category. By 2020, we’re expected to have 10,000 households earning under $75,000 a year, out of a total of 24,800 Encinitas households.
Additionally, we have jobs based in Encinitas that lower-income residents fill. By 2020, our two largest employment sectors are expected to be education and health care at 4,900 jobs, and leisure and hospitality at 4,300 jobs. The total number of jobs in Encinitas is expected to be 27,200, according to data provided by SANDAG.
We want a diverse population, with our adult children, aging parents and lower to middle income earners able to live here. It’s unquestionably better for the worker, the employer, the city and the planet if local jobs are filled by local residents.
A very interesting part of the affordable housing equation, to me, is the math behind a project with the city’s land.
We lease our land to Habitat for a 55-year lease term, which is the maximum allowed by law. Habitat would then build the homes and sell the homes — not the land — to current Encinitas residents making between 50 and 80 percent of area median income, which translates to about $70,000 for a family of four. The family will spend about 30 percent of their income on all housing costs, so their monthly payment is between $1,000 and $1,300 a month, including mortgage, taxes and insurance. The mortgage is provided through Habitat, which offers a 0 percent, 30-year loan of about $250,000. The property taxes are lower than fair market value because the county gives a break on taxes according to a complicated formula.
Instead of money, the down payment is 500 hours of sweat equity into any Habitat project, which may or may not be the specific home purchased. We have asked Habitat to screen potential applicants based on whether they already live and work in Encinitas. We want to provide for our residents first.
If the owners want to sell the home, they sell it back to Habitat and essentially recoup what they paid into the mortgage. In order to qualify as lower income to buy the home, Habitat looks at three years of tax returns to verify income level. If the homeowners get a raise and a promotion and make more money, there’s no penalty — they’re moving up in the world! They don’t have to sell or move out. If they lose their jobs and can’t pay the mortgage, then Habitat takes back the home and finds a new family to buy it.
At the end of the 55-year lease, the city may sign another lease with Habitat for Humanity, but if this nonprofit is no longer existing or the city has other needs for the land, we have flexibility. Speaking personally, it’s important for the city to keep our land and not sell it, so a long-term lease was the only appealing option. It seems short-sighted to sell off assets that can generate income and provide for future city needs.
I’m excited to support this project providing even a small amount of newly constructed affordable housing in the city. I recognize that on the one hand this is just a “drop in the bucket,” when it comes to the affordable housing crisis, but on the other hand, “little drops make a mighty ocean.”
Catherine S. Blakespear is the mayor of the city of Encinitas. She was elected in November 2016, after serving two years on the Encinitas City Council and the four previous years on the city’s Traffic & Public Safety Commission. Her monthly column in The Coast News runs the first Friday of the month. She can be reached at email@example.com.