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THE SUTTERTOWN NEWS
Volume XIX, Number 1
March 25 - April 1, 1993

HOUSING: RUNNING IN PLACE

By Bill Kirk

Sacramento's central city is "job rich and housing poor," according to Art Gee of the city's Planing Department. "Conceptually, we knew we had a complex problem which called for a long term solution." What the city didn't have, added Gee, was a strategy to aid a housing starved central city.

So the Planning Department Roberta Monday and Associates in 1991 to help develop what is known as the Central City Housing Strategy. Ironically, however, even with the city's best efforts over the next two decades, Sacramento may not be able to improve the current jobs-to-housing ratio. Experts estimate that by adding 6700 housing units downtown in the next 20 years, we'll just stay in place.

Gee described a three-part strategy developed by the consultants: Using a corridor approach to determine where housing could most effectively be added, they first looked for available space where large single-site housing units could be built. Next, they suggested eliminating legal roadblocks to facilitate adding small housing projects through a proces of "infilling." Finally, they proposed ways to maintain the city's existing housing stock by investing in "neighborhood preservation."

As part of its housing strategy, the city is trying to figure out ways to integrate new housing into its retail corridors. For example, the Planning Department has liberalized its permit process so that housing projects can be approved without having to get the special permits normally required for housing to be built in commercial zones.

For example, in the mixed housing-retail strip along 10th Street south of I-5, the city is encouraging the development of "good neighbor" retail businesses, such as grocery stores and small shops. The goal is to make this stretch more housing friendly by limiting businesses which residents would not want near their homes, such as a noisy auto repair facility. Finally, the city is discouraging the massing of lots for construction of large office buildings to preserve a balanced housing-retail mix in this corridor.

"Overall, the idea is to add housing wherever possible so that people can live closer to where their jobs are downtown. We want Sacramentans to feel like they have a real choice of whether to live downtown or elsewhere," said Gee.

Putting the housing picture into perspective, Jeff Archuleta, a planner with the city Planning Department, explained that downtown Sacramento currently only had potential land space for 1,100 units given existing land use rules. To determine the number of housing units the city should plan to build by the year 2012, the consultants first estimated the number of jobs there would be in the central city in 20 years.

Then, using the "jobs-to-housing ratio" which existed in Sacramento at the time of their study, they estimated that the city would need to build 6700 additional housing units during the next two decades just to maintain the present ratio. "Doing the math, it is easy to see the city is in a housing deficit, and will be for a number of years. Now we have the data to prove it," Archuleta said.

The solution to the housing shortage may not include highrise residential buildings. Although on paper those kinds of buildings would increase the number of housing units, studies have found that lenders are reluctant to underwrite large residential buildings due to the financial risk involved. On top of that, the rental market seems to support smaller-scale housing structures, which are less costly for lenders to finance and more attractive to Sacramento renters, who aren't accustomed to highrise, high-density apartment or condo complexes."

"There is a bit of a Catch-22," says Archuleta. "We need more housing. But because investors do not believe that high density housing projects can pay for themselves, the big projects are generally not considered economically viable without sizable government subsidies. That kind of funding is in short supply right now."

John Danberg at the Sacramento Housing and Redevelopment Agency (SHRA) agrees. "Although SHRA is in the business of encouraging housing development throughout the city, the subsidies we can and do offer are not designed to keep a large housing project solvent."

So the Central City Housing Strategy boils down to finding ways to adjust the existing zoning and permit processes to allow construction of smaller-scale projects along housing friendly enterprise corridors, and limiting the number of both highrise office and highrise residential projects.

The goal is to add 6700 new units to the downtown central core by the year 2012. The underlying prerequisite for the success of the strategy is dollars and cents, both from the perspective of the developers who would invest and the would-be residents who will pay the rent. The challenge to the city will be to allow developments with enough profitability to attract investors while preserving neighborhood residential life.

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