Sonoma County: News and Notes

This week Santa Rosa enacted its first rent control. This covers a relatively small part of the total number of rental units - about 11,000 out of 78,000. But it does highlight the problem that I have been posting about this year. Sonoma County housing costs are out of control compared to incomes.

The problem with this rent control is that it affects so few and so it won't actually relieve the problem. On the other hand, it is like a line in the sand was crossed and the folks against rent control are already recruiting to get it repealed. That can not happen before it goes in place on September 29th, but there it is. Battle lines are drawn. Nobody will be happy and yet the actual problem will remain. Pricing will remain too high.

The problem is that the only thing that will reduce prices or at least make increases smaller is to add more housing. Given our current occupancy rates above 96%, this means that adding a few homes here or there is not going to work. We need to add literally 1,000s of units. To get to 90% occupancy, this is over 5,000 units. In Santa Rosa. More if we want to reduce the burden on all of Sonoma County.

What are the impediments? First, regulation. Construction costs and timeframes are greatly increased by the cost of the regulation. This is particularly true in Santa Rosa but is true throughout Sonoma County. On top of that, there are height issues as well (which I will add in below). This means that builders want to maximize the value of construction. And that means, higher end units are preferable.

The second impediment is land. We have significant Green Belt initiatives and work that keep the construction boundaries smaller. We all love how beautiful the county is but do realize that taking land away from construction means an increase in home prices. The most obvious answer would be to build up in Santa Rosa. However, this is not something that is going to fly anytime soon. If we can't build up and we have to build to a certain size and within specific zones, then we have real limits to what we can do in adding more housing.

The third impediment is transportation. We are a cul de sac. I like to call us the end of civilization in Northern California. (I am not sure the following is true but its close)...I think there are as many people in Santa Rosa as there are along 101 from Santa Rosa to Oregon. On top of that, we have a complete lack of Mass Transit that connects us to the larger employment markets in the East Bay, South Bay, and San Francisco. This is not something the SMART Train will fix. This means that a company in San Jose will have difficulty managing a significant office in Petaluma. That is the reason our tech economy does not grow. When the companies get purchased, most of them move away over time. Unfortunately, the businesses that do stay are those that generally offer lower wages.

And now we have reached full circle. We need more housing to support our local economy. We struggle with where and how to build this housing. We are not honest with ourselves about our situation and our decisions around it. I don't have the one answer that will fix it all. I am not sure that anybody does. But we need all of us to get to (what I think) is our common goal. We want a county that we can love to live in.

Have a great day!

Jim Sackman
Focal Point Business Coaching
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