Bulletin #8
July 31, 2005
Introduction
When considering whether or not to support the creation of
the proposed San Juan County Housing Bank, it is useful to understand what is
known about the need for affordable housing in the county. We can piece
together a picture of the need by examining a variety of data sources, including
demographic data on various income and age groups.
NEED FOR SKILLED WORKERS
One segment of the population that is currently not served
by the existing non—profit housing providers is workers who earn
moderate-incomes (individuals or households whose incomes are between 80% and
95% of the county’s median income, or between $40,000 and $58,000 annually).
Many of these workers are employed in “infrastructure” jobs—jobs that provide
for the health, safety and education of our community, such as teachers,
police, paramedics, nurses. Most of these jobs are skilled jobs—jobs that
require advanced or technical training.
Moderate Income Skilled
Infrastructure workers: The recently
completed Infrastructure Employer survey on Orcas, San Juan, and Lopez Islands
identified the need for 60 to 80 homes for moderate income families over the
next 5 years to compete with neighboring mainland communities for skilled
infrastructure workers such as teachers, paramedics, deputies, medical staff,
utility workers and public employees.
This moderate income group represents approximately 25% of the total
number of infrastructure workers on
Other skilled
workers: Approximately 9% of the
total workforce (6,500 permanent year round workers) are
involved in providing basic infrastructure services. The remaining 91% of the workforce also
includes skilled, moderate income workers, but more of these workers earn
incomes below the moderate income range (in other words they have low or very
low incomes). We have not surveyed employers about the need for housing for
people in this category, however, we can make a rough
estimate that 5% of this group is likely to need moderate income housing. If
the attrition rate is the same as for infrastructure workers, there is a likely
need for roughly another 50-80 skilled year round workers over the next 5
years.
Total need for
skilled workers: Considering the
needs for skilled employees in the entire workforce, the majority of whom are
in the moderate income range, we estimate the need to hire approximately 110 to
160 workers whose skills are otherwise not available in the county over the
next 5 years.
NEED FOR NON-SKILLED
WORKERS
Most of the workforce
is low and very low income: 75% of
infrastructure jobs and perhaps as much as 95% of the remainder of the
workforce are non-skilled jobs—jobs that do not require technical training or
an advanced degree. Most of these jobs pay low and very low income wages
(paying less-than 80% of median income).
The median wage in
DEMOGRAPHIC CHANGES
Loss of family-aged
segment: Some of these workers are just changing jobs, but there is clear
evidence that some, especially young people, are leaving the islands and are
not being replaced. We have numerically
fewer residents in the 25-44 age group today than we
did in 1990 while the overall population has increased by 47%. Most of this decline has occurred since 2000.
Older workers: Across the board, we have an aging workforce. In some cases, we have recruited older
workers because they have built equity elsewhere and can afford housing
here. Recruiting becomes more difficult
as our prices increase. The cost of housing has now reached the point where
even older, mainland workers with accumulated equity
cannot be attracted to fill the jobs. San Juan Island Schools face retirement
of half of their faculty in the next 5 years – where will their replacements
come from and how will they be housed?
We can see this trend clearly in our population
demographics. In 2000, 11.3% of the
working age population was over 60 and in 2003 this number increased to
12.3%. Over the next 5 years, this
number will increase to nearly 16%. The
loss of workers through retirement further compounds our infrastructure
workforce problem. As our older
workforce retires, the demand for services will increase.
Low income need: The 2003 Housing Needs Survey in
Affordable housing
progress over the last decade:
HOMEOWNERSHIP
The following organizations have produced ownership housing
for households earning low and very low incomes:
Orcas: OPAL
Community Land Trust – 56 homes
Homes
for Islanders – 8 homes
Lopez: Lopez Community Land Trust – 22
homes
Private efforts at affordable ownership housing have
produced one noteworthy example:
The Oaks on
RENTAL HOUSING
In addition, under USDA loans and grants, the following
rental properties have been produced for low and very low income households
where rent is set at rates to allow households to pay no more than 30% of the
total household income:
Orcas: Lavender Hollow – 22 units
Orcas Longhouse – 16
units, restricted to elderly and disabled
OPAL
Community Land Trust, Reddick Property – 7 units
Harbor View – 20 units
Island Meadows – 19 units,
restricted to elderly
Islewood
– 18 units
Rosewood – 18 units
Suriva
– 20 units
Lopez: Westview – 18 units
Of the 178 apartments, 102 are 1BR, 66 are 2BR and 10 are
3BR
We note that the USDA 515 Loan program that made many of
these rental units possible was primarily aimed at very low income families
(less than 50% of median) and has since lost nearly all funding.
Applicability of
housing: For job candidates earning moderate
incomes, we need to be reasonably competitive with housing in neighboring
mainland communities. The current market
in neighboring mainland communities shows over 50 homes with at least 3BR and
2BA available in the price range of $200K to $250K. These are within the reach
of moderate income mainland households.
The substitution of double wide manufactured homes in the county for
stick built homes on the mainland is not an appealing solution for moderate
income households. Rental housing is
also not a satisfactory solution. While
rental housing plays a role in meeting our housing needs, especially for low
income and below, it is not competitive for moderate income and above except as
a temporary measure.
Roles for sources of
financing: The best available
approaches to private financing can not solve the problem for households
earning moderate incomes and below. Fortunately, these approaches will work for
a while for middle income (95% to 120% median income). The grants that we have relied upon for low
and very low income are drying up with cutbacks in federal programs. So, if
we want to build mixed income communities, we need to use a mixture of the
remaining federal and state programs with some locally generated real estate
excise tax money to address low income; we have only real estate excise tax
money to address moderate income; and we have only private money to address
middle income.
The best approach that we have to build affordable housing
is the land trust (or community land trust) approach, and the creation of
attractive, mixed-income projects. Land
cost is the biggest problem and if we remove the cost of land we can apply
creative financing across the spectrum to build mixed income communities.
Current costs: We are presently looking at a cost of $83K to
$96K for land per home plus improvements (assuming favorable zoning). Assuming that we can build a 1500 sq ft, 3BR,
2BA home for $100 to $125 per sq ft, land plus improvements plus structure will
cost $250K to $288K, within the range for middle income, but out of range for
moderate and below. Removing the cost of
the land reduces these prices to a level that is within the reach of some low
income and all moderate income households.
These are optimistic numbers and, at best, represent what we can do
today. By the time real estate excise
tax money becomes available for use, these costs will be higher.
Real estate excise
tax projections: If we do nothing more than buy land, the real
estate excise tax money for 2005 (based on 2004 sales) would allow us to build
16 to 19 homes. But, even though the
cost of land somewhat tracks real estate excise tax income, it doesn’t keep
up. Just three years ago, we would have
been able to build between 20 and 23 homes.
The numbers will be worse than this in the future since the cost of
construction is going up too. Even with
the full ˝% and modestly increasing real estate excise tax income, the number
of homes that we can build each year will decline. Realistically speaking, the best that we can
expect to do, if we do nothing more than purchase land with this money, is 12
to 16 homes per year or approximately 60 to 80 homes over 5 years. While this would meet the need for moderate
income infrastructure jobs, it falls short of the total need for moderate
income housing by half and is far short of the total need when low income
housing is included.
Can we do better? Possibly!
We have consistently argued that the real estate excise tax is only part
of the solution; an important part, but only part. There is potential availability of land from
employers and the county. There are also
additional sources of public and private funding. We have assembled two teams, one to address
creative approaches to financing and another to address creative approaches to
the design and construction of affordable housing. In addition, we have existing organizations
that are committed to providing affordable housing; the various community land
trust organizations as well as organizations pursuing alternative
approaches. Finally, our county planning
and permitting department has a mandate to accommodate affordable housing. We should give these organizations a bold
objective. We suggest that this
objective should be to find a way to provide 120 housing units (not including
rentals) covering the spectrum of need from low income to middle income over
the next 6 years. With such a specific
goal, perhaps we can focus on achieving economy of scale in every aspect of
addressing this problem.
As always, our most recent publications are posted at our
website http://orcasresearch.org/
and now also at http://SanJuanHousingBank.org/. You can contact us at any time at Losleben@rockisland.com
or Garrison@rockisland.com
Tax deductable donations to help
support the Housing Project and to help pay for educational materials and supplies
are gratefully accepted through Navigating Our Future, Housing Project,
Signed,
Lee Sturdivant,
Paul Losleben and Steve Garrison,
Sandy Bishop,