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Guest Column: Affordable Housing Is Good for Business

Author: Shirlee Zane
July, 2015 Issue

An individual making $50,000 per year will expect to pay almost 40 percent of his or her gross wages for rent.

Creating more housing is good for business. Creating more affordable housing is particularly good for business. As one of the leading voices in support of programs to end homelessness in Sonoma County, and as a champion of affordable housing projects to meet this goal, you might expect me to support affordable housing simply because it’s the right thing to do. Without adequate shelter, it’s virtually impossible to live a safe, healthy and productive life. I do support affordable housing for these reasons, but my purpose here is to make the business case for affordable housing and to demonstrate why more affordable housing is good for our economy.
Our county is experiencing a housing crisis, with insufficient housing stock available to meet the demands of current residents as well as those who would like to relocate here for work. Real estate industry estimates conclude that Sonoma County has an average vacancy rate of approximately 1 to 2 percent, a scarcity that drives up rental rates, makes it difficult to find rentals even for those with financial resources and is less than optimum for a stable rental market. Conditions are worse for affordable housing resources. The following historical information shows the severity of the situation.
Sonoma County’s residential rental market, long considered to be one of the least affordable in the nation when comparing rent levels to income, didn’t share in the downward price adjustment that created a more affordable for-sale housing market following the Great Recession. The fair market monthly rent for a two-bedroom unit jumped 47.4 percent between 2000 and 2010, going from $886 to $1,306.
The affordability situation is only worsening, as the average apartment rent rose to $1,521 in 2014, a jump of 13.3 percent from the prior year. The rate of Sonoma County’s increase was the greatest of 23 metropolitan areas in California studied by Real Answers, a Novato-based rent research firm. Axiometrics, a rent research firm based in Dallas, Tex., reported in May 2014 that Sonoma County tied for fifth among U.S. communities with the fastest yearly rent increases.
The situation is worse yet for affordable housing resources and those who need them.
The lack of affordable housing stock in Sonoma County helps fuel the rate of homelessness for local residents. Preliminary results of the latest point-in-time homeless count, conducted this past January, show 3,097 people were homeless, with 2,060 of those sleeping out-of-doors. There are now 8,100 local households on the Sonoma County Housing Authority’s “Section 8” rental assistance program waiting list, many of which are homeless or at risk of becoming homeless as they’re forced to pay 50 percent or more of their income for housing.
As sad as this is, you might ask: How does this impact businesses in Sonoma County? How does it affect your own business and the local economy?
It impacts both greatly, and will continue to do so. The ability of businesses to attract and retain their workforce is key to success, and housing that’s both available and affordable is a key to attraction and retention of employees.
Here’s a troubling fact: For workers earning minimum wage, the fair market rent in 2013 required a household with at least three full-time workers. An individual making $50,000 per year will expect to pay almost 40 percent of his or her gross wages for rent. Employees who make less won’t be able to afford to come here to work, and those who are here now will be looking elsewhere for less expensive places to live. Both of these outcomes are bad for business. Workers who spend a high percentage of their income for rent can’t purchase the goods and services that fuel our economic engine. People who are suffering the effects of homelessness are similarly unable to be good customers for local businesses.
Further, homelessness often leads to repetitive use of services, like frequent emergency room visits, which are more costly to our public budgets than the alternative of providing permanent affordable housing. The financial consequence leaves fewer resources available for infrastructure investment such as road repairs, which, in turn, lessens the appeal of Sonoma County—again bad for business.
The cure for homelessness is permanent housing that’s both affordable and linked to necessary services. Once in stable housing, people can be helped with education and training to improve their skills, creating a more robust labor market, which is, again, good for business.
Local business will benefit from an economy in which customers are plentiful and have disposable income for discretionary spending, and in which productive workers are available for career employment. These conditions are served by creating the affordable housing essential for our shared prosperity.
Supervisor Shirlee Zane represents Sonoma County’s Third District, including much of Santa Rosa and Rohnert Park. She’s passionate about those issues that affect our quality of life, including housing, health care, economic development, transportation, human development and the environment.


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