Monterey County housing was the least affordable in the United States in 2002. Only 40 percent of the people living in Monterey County own their homes. The closure of Fort Ord in 1994 seemed to offer a bright, new opportunity to address the critical workforce housing shortage. In fact, one of the foundations of the Department of Army's no-cost economic development conveyance to The Fort Ord Reuse Authority (FORA) was that jobs would be created and houses would be produced for the people hired for those jobs.
FORA recognized the important relationship of housing to economic development and job creation in 1997 when the Board said in its Reuse Plan, “Residential development will be critical at the former Fort Ord to achieve the employment to generate development capture rates that are projected.”
Progress toward production of new workforce housing has been slow. Barriers to housing development such as complex regulatory procedures and approvals, antiquated infrastructure on the former Fort Ord, and environmental contamination and costly building removal have made the reuse of Fort Ord a particularly difficult challenge for any kind of development, including workforce housing. In order to remove these barriers to the production of workforce housing at Fort Ord, FORA must not only overcome these external forces, but must rethink and renegotiate those constraints imposed upon affordable housing by FORA itself.
The Clark Group recognizes that the professional staff at FORA has put a lot of effort into the redevelopment of the installation and this report does not assume there is any magic formula to solve the problem of affordable housing in the Monterey Peninsula. Any solution will take a disciplined, structured approach, a summoning of political will, and use of all the appropriate financial tools and strategies currently available for affordable housing development.
FORA retained The Clark Group to identify methods, strategies, and resources to increase affordable housing at Fort Ord.
To produce this report The Clark Group:
Based on this research and these interviews, The Clark Group focused its analysis on five main strategies for increasing production of affordable and workforce housing on Fort Ord:
The recommendations to carry out these strategies are summarized below. Additional details begin on page 49 of the Report.
The report is divided into seven chapters:
ESTABLISH A HOUSING AND COMMUNITY TRUST FUND
Finding: California jurisdictions that are producing workforce and affordable housing adequate to their needs devote other resources and revenues to that production besides 20% set aside funds. They, in turn, attract numerous grants, subsidies and loans from a variety of outside sources. Some of the most successful jurisdictions in producing workforce and affordable housing have done so through the creation of housing trust funds to (1) dedicate specific resources to increased housing production; (2) capture subsidies, grants and below market loans available to such non-profits; (3) leverage funds 5-10 times the contributions of participating jurisdiction(s).
Finding: To keep new housing units affordable in the long-term, some jurisdictions have created community land trusts, separate nonprofit corporations that retain ownership of the land on which for-sale affordable housing (and sometimes rental housing) is built, therefore keeping the dwelling appreciation from pricing future owners (or renters) out of affordable units.
Finding: FORA and its jurisdictions are blessed with several experienced nonprofit developers and experts in building and managing affordable housing who are available to assist FORA in developing affordable/workforce housing at Fort Ord.
Finding: According to the last FORA Capital Improvement Plan (CIP) available to The Clark Group, the CIP allocates over $76 million dollars to contingency costs, including $30.78 million dollars for “potential sound walls for major streets” and “street landscaping”; $14.40 million for “caretaker cost contingency”; and $30 million for a contingency reserve. The plan also projects net revenue of $13.57 million. These contingencies, reserves and revenues total $89,719,569, nearly one-third of the entire capital improvements plans cost. That figure is the FORA developer fee equivalent of 2,564 units of residential housing.
Housing is, in effect, taxed most heavily to pay for all other improvements, giving landscaping and sound walls, reserves and revenues a higher priority in the CIP than creating the housing that necessitates items such as sound walls.
ENHANCE FORA'S INTERNAL CAPACITY TO ADDRESS HOUSING
Finding: No FORA or jurisdictional staff with appropriate expertise are focused fulltime on developing and implementing a FORA workforce housing strategic plan. FORA's Affordable Housing Task Force has been given no measurable goals or deliverables, and has not made the task force or any other group responsible for delivering an affordable and workforce housing action plan.
These actions are recommended to be undertaken concurrently in order to move beyond discussion to action as quickly as feasible.
ATTRACT NEW FUNDING AND APPLY EXISTING AND FUTURE FUNDS
Finding: Nearly half ($145 million) of the Base Reuse Capital Improvement Plan revenues/costs are dedicated to transportation infrastructure.
Finding: There are a number of free services which would increase FORA's understanding of affordable and workforce housing finance. Fannie Mae, for example, has a variety of special mortgage products designed to increase affordable and workforce housing. Federal Home Loan Bank, Wells Fargo, Bank of America and other financial institutions also have special programs and products which will boost the effectiveness of a Housing and Community Land Trust Fund. FORA, through its recently received credit enhancement grant, can initiate these steps in a logical follow-up to its previous work.
Finding: The former Fort Ord made the Superfund list in 1990. Cleanup will include extracting and treating contaminated groundwater and capping the landfills to limit future infiltration and minimize additional leaching. Forty-one sites have been identified as potentially hazardous sites.
Finding: FORA has a grant to research innovative environmental remediation measures and with FORA's support, the U.S. Army Corps of Engineers Construction Engineering Research Lab (CERL), CSUMB and others are engaged in developing technologies and finding processes to reduce the costs of FORA building deconstruction and to prevent long-term environmental impacts from demolition. The potential exists at Fort Ord—and many other active and retired DOD facilities--for creating a public/private deconstruction program more cost-efficient than demolition, a program that could become a national model and provide an income center, local jobs and training programs. FORA has not factored in the full cost of disposing of these materials (such as landfill and opportunity costs)
There also exists the potential that millions of dollars can be saved through building deconstruction by companies and/or nonprofits. The materials that are salvaged can be reused or sold, the donated labor becoming “sweat-equity,” credited towards home ownership and relieving jurisdictions of some of the financial burden of building removal. Deconstruction also offers a better long term solution for the environment.
Finding: The state's recent passage of Proposition 46 offers FORA the opportunity to solicit funds from the new Local Housing Trust Funds program and other new programs.
Recommendation 12: Take full advantage of the provisions of Proposition 46—The Housing and Emergency Shelter Trust Fund Act of 2002. Programs of note:
Finding: The housing crisis in Monterey County is a regional problem requiring a regional solution. The jurisdictions that currently have the most very low and low income housing and do not need to create more to achieve a jobs/housing balance (Marina, Seaside) are the cities that will be responsible, along with the County, for creating most of the housing on Fort Ord. If Marina and Seaside are expected to create more affordable housing (moderate, low and very low income) at Fort Ord, all FORA jurisdictions who need affordable housing should share in the costs as well as the benefits of producing that housing on Fort Ord.
INITIATE REGULATORY CHANGES
Finding: Monterey County, in its East Garrison option announcement, gives its developer the flexibility to reduce developer fees on affordable units (increasing fees for above-market units as a cross subsidy). This is the most straightforward way to increase affordable housing in developments at Fort Ord given current redevelopment cost-recapture policies and is an available option for all landowner jurisdictions.
ENLIST LEGISLATORS TO ACHIEVE LONG-TERM GOALS
Finding: Some of the regulatory hurdles that FORA faces can be overcome by enabling legislation. Workforce housing challenges at Fort Ord are understood by its legislators, who are willing to help either by seeking funding or relaxing barriers. Two in your Congressional delegation sit on committees that directly affect appropriations and the reuse of military installations.
ENGAGE THE U.S. ARMY IN SOLVING THE WATER ISSUE
Finding: The U.S. Army has retained 1691 acre feet per year (AFY) of water at the former Fort Ord, even though its maximum foreseeable need for water is only 600 AFY. Each 100 AFY represents 400 potential units of workforce housing.