Can new California student housing bill boost affordability?

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August 29, 2018
San Francisco Business Times
Can new California student housing bill boost affordability?
For decades, developers and universities have struggled to build student housing in California.

But after the California Legislature passed a new student housing bill (SB1227) this week, there may be help in sight.

Senator Nancy Skinner (D-Berkeley) pushed the bill, which now awaits Governor Jerry Brown's signature. It would permit student housing developers to benefit from California’s density bonus law if they restrict 20 percent of the units to lower-income college students.

Under current density bonus law, developers who include affordable units in their residential projects are allowed to increase the number of housing units in their projects by up to 35 percent to cover the cost of the affordable units. Developers are also eligible for certain concessions, such as the ability to build fewer parking spaces, which can mean big cost savings.

Until now, student housing projects have not been able to take advantage of the density bonus because for potential renters to prove their eligibility for affordable units, they need to show tax returns and other documents that prove they earn 50 to 60 percent of the median income.

In other words, they need to be employed.

But, as Denise Pinkston, a partner at TMG Partners who helped draft the bill, pointed out, “Most students have no income, and there’s no way to prove that they are eligible to live in the affordable units.”

The affordable units in residential buildings near college campuses are often rented to non-students, and buildings that were intended to be used as student housing become more like typical apartments.

“Students aren’t the beneficiaries (of the affordable units),” Pinkston said.

Skinner said another problem is that the old density bonus law is based on the number of units in a project, but a dorm usually has "shared space, a kitchen, multiple beds, multiple bedrooms, not multiple units. We had to fix the definition so that the student-type housing configuration could work.”

The bill fixes the definition by allowing 100 percent student-serving housing projects to apply the density bonus based on the number of bedrooms or beds as opposed to the number of units.

It also fixes the employment loophole by allowing students to prove their eligibility for the affordable units with financial aid documents. They also must be full-time undergraduate, graduate or professional students enrolled at an accredited college or university.

The rent for the affordable units will be calculated at 30 to 65 percent of the area median income, said Pinkston.

“When we interact with students about the biggest difficulty they have staying in school, it’s the lack of housing,” Skinner said.

Universities throughout the Bay Area are struggling to build more housing. San Francisco alone is home to 30 institutions of higher education that enroll more than 80,000 full-time students with only nine schools providing about 9,000 beds.

“The Bay Area was the push behind this bill,” said Pinkston. “Every single campus and university in the Bay Area has identified student housing as the No. 1 problem they face in attracting and retaining students.”

SF State's President, Les Wong, has said that housing is his No. 1 concern. UC Berkeley Chancellor Carol Christ hopes to add 7,500 new beds for students over the next 10 years.

"We house only 22 percent of our undergraduates," Christ told the Business Times last year. "That’s just the freshmen, and housing is very expensive. So many of our students are living in places that are too expensive, too far away, too crowded. It will compromise Berkeley even in the not-so-long run if we don’t have more housing."

David Meckel, director of campus planning at California College of the Arts in San Francisco, expressed doubts in an email that housing developers will line up to do student housing even when the legislation removes roadblocks, due to the higher prices they can get for market rate housing.

However, he also acknowledged that he hasn't studied SB1227 in depth, adding, "Of course we're in favor of anything that incentivizes adding housing of any type to California and initiatives that specifically add student housing are of interest too."

Tomorrow CCA will open a new student housing building at 75 Arkansas St., which will house about 1,000 students.

Pinkston said the bill won't single-handedly fix the problem.

“There’s no affordable housing project that doesn’t have a waiting list of thousands of people,” Pinkston said, “but every university (in California) can now work this law to their advantage to get their housing to where it needs to go.”
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