LandWatch State of Monterey County Report 1999
3.4 Affordable Housing

A key provision of California Housing Element Law is that each jurisdiction is responsible for providing housing that is affordable to all income groups. The Department of Housing and Community Development determines a regional share of the statewide housing need, and the Association of Monterey Bay Area Governments (AMBAG) is responsible for allocating the region's share among the various jurisdictions within the region. The AMBAG region in which Monterey County is located includes Monterey and Santa Cruz Counties.

AMBAG completed its last Regional Housing Needs Plan in June 1990.(6) This plan indicated a need to construct 21,191 residential units in Monterey County between January, 1989 and July 1996. Of these units, 64% or 13,522 should have been "affordable," including an allocation of 21% to very low-income households, 18% to low-income households, and 23% to moderate-income households (Table 5).

Monterey County calculates low- and moderate-income home prices based on a number of assumptions. An "affordable" unit must be priced so that, at maximum, the units are affordable to lower-income households with an income no greater than to 80% of Department of Housing and Urban Development (HUD) or County Planning Area median household income, as adjusted by household size. To calculate affordable ranges, Monterey County presumes a 30-year mortgage, a 7.5% interest rate, a 90% loan/value ratio, $100/month in property taxes, and standard loan underwriting criteria. The selling prices for affordable ranges have been calculated for very low-, low-, and moderate-income categories based on 1998 HUD incomes for two-person and five-person households. These are as follows:

LandWatch asked the 12 cities and Monterey County for the total number of very low-, low-, and moderate-income housing units constructed since 1990. The cities of Carmel, Gonzales, Greenfield, Monterey, and Pacific Grove provided data on constructed affordable housing units broken down by income level. The cities of King City, Marina, and Soledad have no feasible method to define units constructed since 1990. The City of Salinas and the County of Monterey provided a descriptive list of the units generated from their affordable housing programs; however, dates were not included. There were no deed-restricted, affordable housing units built in Del Rey Oaks, Seaside, or Sand City. While specific data were not available, based on the existing sale prices and rents within the cities of Gonzales, Greenfield, King City, Salinas, Sand City, and Soledad, a significant portion of the market rate housing in those cities would be affordable to persons with low- to moderate-income levels.

Table 7 shows an estimate of the affordable housing built since 1990. The report on the construction of low-income housing units should not be interpreted as a comprehensive study of the total availability of low-income housing units throughout the county. For instance, converted units, rental units, and the housing market are not accounted for within these figures. Of the affordable housing units constructed in the county since 1989, the Community Housing Improvement Systems and Planning Association (CHISPA), a nonprofit developer of low-income housing, constructed 1071 units.

The policies in place to support the construction of affordable housing vary widely throughout the county (Table 8). For instance, Monterey County's inclusionary housing ordinance requires that 15% of newly constructed units be affordable to households earning 120% of median income, and allows the developer to opt for in-lieu fees rather than constructing affordable housing on-site. The City of Salinas' inclusionary housing ordinance requires that 12% of newly constructed units be affordable to households earning 80% or less than the median income and be constructed as part of the project. Other cities that have inclusionary housing ordinances include Gonzales, Greenfield, and Monterey. The cities of Marina, Seaside, and Sand City have inclusionary housing ordinances that are specific to redevelopment areas. However, as reported in the Monterey County Consolidated Housing Plan, the City of Seaside does not implement its ordinance. The cities of Carmel, Del Rey Oaks, King City, Pacific Grove, and Soledad do not have inclusionary housing ordinances.(1)

In April 1999, Monterey County Board of Supervisors adopted the Consolidated Affordable Housing Plan, the first report to assess on a countywide basis the activities in support of affordable housing. The Housing Plan proposes a plan to coordinate programs within the Monterey County Departments and among the local jurisdictions so that these agencies can begin to work together in a concerted manner to accomplish large-scale production of affordable housing. Specifically, the report recommends that Monterey County collaborate with the twelve cities to identify sites that can be used for housing that will not take prime agricultural land out of production.

Housing Costs
Between 1980 and 1990, home value and rent for Monterey County increased at a much higher rate than personal income. When compared with the state, the county's housing cost increases were higher, while the county's rate of increase in median income was lower.(1) Between 1996 and 1998, median home sale prices increased significantly in Pebble Beach, Pacific Grove, Seaside, Del Rey Oaks, and North Monterey County. In 1998 the most affordable homes were found in the Salinas Valley, while the most expensive homes were found in the Monterey Peninsula and the Big Sur area (Table 9).(8)

It is generally agreed that a household is overpaying for housing if it spends more than 25% of gross income for housing. In 1995 the Monterey County Grand Jury reported that approximately 45% of all lower-income households in the unincorporated area are overpaying for housing.(1) Nothing has significantly changed since that time.