Affordable living: Putting the money where the house is
Developers will receive subsidy to keep price points low
By Stephanie Bertholdo  bertholdo@theacorn.com

The Agoura Hills City Council last week voted in favor of providing a hefty subsidy to real estate developers who incorporate low and very low income housing in Agoura Village, the proposed mixed-use town center planned for the area south of the 101 Freeway off Kanan and Agoura roads.

In June, the panel approved an Affordable Housing Implementation Strategy, but at the Nov. 14 meeting pushed for a more specific housing plan for the village area.

Council members want affordable housing to be incorporated within Agoura Village that is "indistinguishable" from homes priced at the market rate. Developers, on the other hand, prefer to build the affordable housing "off-site" to bolster their profit margins.

According to David Hilliard and Ted Snyder of the Martin Group, developers who own a large swath of land in the Agoura Village area, the actual cost to build a 1,400-square-foot, two-bedroom condominium is $560,000. Very low income families earning $35,000 per year could afford to pay only $68,000 for the unit. The price gap between the cost to build the home and the sales price under current redevelopment law would be split between the city and the developer.

Under the redevelopment rules, a low income unit couldn't sell for more than $115,000 to be considered affordable, and a moderate income unit could be priced no higher than $195,000, Assistant City Manager Nathan Hamburger said.

"These numbers can change depending on household size and size of condo," Hamburger said. "We would assist up to 50 percent of the cost gap that either our staff or housing consultant developed based on the specific proposed development. The 50 percent would also be subjective based on the quality of the affordable units that would be produced."

"As you can imagine, the amount of the discrepancy in producing the units is significant," Hilliard said. He asked the council to offer the subsidy for moderately priced homes as well. Council members, however, voted to subsidize very low and low income units only.

City officials and developers couldn't settle on the specific cost of the gap. Hilliard said he would face a loss of $492,000 per unit designated for very low income families, but Hamburger said their shortfall includes a "profit of some margin." He said while the city doesn't agree with the numbers presented by the Martin Group, the two sides "agree to disagree."

The Agoura Hills redevelopment area, which includes portions of Agoura Village, calls for a certain number of affordable units to be built.

"The law requires that 15 percent of the number of units developed must be affordable units," Hamburger said. "Based on our projected buildout within the Redevelopment Project Area, we would be required to have 40 very low, 30 low, and 30 moderate units."

The units should be planned and potentially constructed by 2014, Hamburger said.

Snyder suggested that the city waive some of the fees to make the plan work. He explained that in addition to the high cost of land in Agoura Hills, subterranean garages add $25,000 per stall to the total cost. Each unit would include two parking stalls.

"The allowable sales prices are significantly below any estimation of the market," Hilliard said in a subsequent interview. "We want the city to keep as much flexibility as possible," he said of the approval of a subsidy for moderate income earners.

Councilmember Denis Weber asked about the feasibility of building affordable housing somewhere else in the city. Councilmember Harry Schwarz said that if affordable housing is built off-site, the owners or renters will be stigmatized. Separate housing could be easily identified as an affordable housing project, he said.

"It's counterproductive to do it that way," Schwarz said.

Rather than show "tokenism," Councilmember Bill Koehler said the idea behind Agoura Village was to weave affordable homes into the "fabric" of Agoura Village.

"We felt there was a need for low and very low income housing." Koehler said the city had a "moral and philosophical" obligation to subsidize housing for the residents who need it.

In addition to approving a program designed for the "public good," Mayor Dan Kuperberg said affordable homes will generate more redevelopment funds for the city.

Hamburger isn't worried about developers shying away from the challenge of affordable housing.

"There are actually many cases in other agencies where the city cannot or doesn't provide any affordable housing assistance at all and developers still move forward with their projects," Hamburger said.

"We would like to move forward as soon as the city is ready to move forward, and as soon as we can agree on a plan that is good for us and good for them," Hilliard said.

According to Schwarz, "It's always a balancing act."