The housing market in San Luis Obispo is changing as the state pushes housing legislation that requires more affordable housing be offered with some exceptions. 

With an average cost of about $1,000 per month for a one bedroom apartment, San Luis Obispo faces a great demand for cheaper rates.

The city is planning to take on 4,000 more affordable units by the year 2035, according to the San Luis Obispo community development housing coordinator Cara Vereschagin. 

The potential for more ‘granny units’

San Luis Obispo city council recently passed an emergency ordinance that may make more housing available to Cal Poly students via granny units.

Previous law required that homeowners must live on-site in order to rent out an accessory dwelling unit (ADU). This barred many landlords who own houses surrounding Cal Poly from renting their ADUs because they were also renting out the main house. However, this is no longer the case. 

Landlords are free to rent both the main house and the ADU. 

Accessory dwelling units, or granny units, are additional living spaces on an existing residence, usually meant for one or two people. According to assistant community planner Kyle Van Leeuwen, ADUs are required to have a kitchen and a bathroom.

 Whereas junior accessory dwelling units, on the other hand, are not required to have these facilities, but Van Leeuwen said that he does not expect to see many junior units.

Because this ordinance was made as an emergency solution, it went into effect the day after the vote, rather than after a 44 day buffer period. Meaning, students may see more leasing options as soon as this quarter.

“We will absolutely see an increase in available housing for everyone, workers and students,” Van Leeuwen said.

However, Van Leeuwen said he is not sure that an increase in housing will have any effect on rental rates throughout San Luis Obispo. 

“The state legislation was written more for housing stock than housing prices,” Van Leeuwen said.

Although a common economic effect of increased supply is lower prices, it is unclear at this point how the market will respond in San Luis Obispo. Van Leeuwen said he is also unsure of how many units will be built. 

Required affordable housing units

Whether or not the granny units have a significant affect on housing prices, the city will be forced to offer lower prices to comply with affordable housing standards set by legislation passed by Gov. Gavin Newsom in 2019. Any new housing development that contains at least five units must include one affordable unit. 

According to the city’s website, affordable housing is defined as housing in which total costs do not exceed 30 percent of total income. Not only does affordable housing allow for low-income residents to reside in the city nearer to work or school, but it also makes contributions to the local economy so that less money is paid toward rent, and more is paid toward goods and services. 

Currently, the Academy Chorro is the only student living facility that has partnered with the Housing Administration of San Luis Obispo (HASLO) to offer affordable housing. 

HASLO aims to help foster affordable housing for residents of San Luis Obispo and offers a list of properties that contain affordable units. They are offering a workshop Feb. 24 to assist with the affordable housing rental application process.

The Academy Chorro offers four affordable units for $725 per month, a price that is set by the city, according to a front desk employee. Students can qualify for the affordable units only if they are self-dependent and are not given any outside allowances. These units are for residents that make less than $29,150 a year. 

Despite the new legislation, developers have the option to pay a fee that will waive the affordable housing requirement. The fee can cost between five and 15 percent of the development value depending on the zoning site, according to Vereschagin. 

The city does offer incentives to implement affordable units such as reductions in site development standards, such as square footage, a reduction of cost of housing development or a waiver of application fees, according to section 17.140.070 of the municipal codes.

The city’s priority

“Housing production is a major city goal,” Vereschagin said. “We’re really trying to facilitate the production of housing that’s affordable to every income level.”

Vereschagin said the city wants to plan for housing in relation to job growth. She said although the city works with the university, providing housing for students is not as much of a priority as providing housing for “recent graduates and young professionals” for the city. 

Although “Cal Poly students fed $179.2 million in 2012 into the local economy through off campus housing, [Cal Poly and Cuesta] sometimes pose a challenge, as student lifestyles can conflict with community priorities and housing demand drives up housing costs, affecting affordability,” according to the city’s Economic Strategic Development Plan.

The process to get funds for affordable units through tax credits, state grants, federal loans, local city money and local housing trust funds can take years which takes a toll on how quickly those affordable units can be built.

“It really does take a village and a lot of coordination between a lot of different people in order to get things financed,” Vereschagin said. 

Vereschagin said one thing to look forward to is the increase in density bonuses for affordable developments. State legislation allows for an 80 percent increase in occupancy if all units are affordable, which would mean not only lower prices, but more units available with lower prices.

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