Squeezed out

On a recent afternoon, Mario Chandrakumar visited the construction site of his home in Orland. He was dressed to the nines—blue blazer, gold cufflinks, slacks, shiny dress shoes. Sure, he looked out of place, but becoming a homeowner was a special occasion, he said.

“This isn’t just the American dream, it’s a lifetime dream to own a brand-new home,” he told the CN&R. “The blessing is tremendous.”

Originally from Sri Lanka, Chandrakumar came to Chico about 10 years ago to put his daughter through college. He started working as a custodian at Chico State and thought he had found a place to settle down, he said. “I felt that Chico was where I would end my life, you know?”

For years, he tried to buy a home in Chico, but ultimately he was priced out of the market. Now, he’s building one in Orland instead.

Through the Community Housing Improvement Program (CHIP), Chandrakumar and seven of his soon-to-be neighbors are helping each other into home ownership through sweat equity. They are building their homes together in an up-and-coming subdivision on the outskirts of town. The homes cost around $200,000, but CHIP waived the down payments and offered each homebuyer a low fixed-interest rate. Each household works 30 hours a week, and nobody moves in until all the houses are completed sometime later this year.

Once he’s moved in, Chandrakumar plans on commuting to work. It’s not ideal, but that’s the reality of the housing market in Chico, he said. “Of course, I couldn’t afford it.”

More and more people are finding that housing isn’t all that affordable in Chico. It’s no San Francisco, but keep in mind: In this community, nearly a quarter of households are below the poverty line. And as supply falls well behind demand, the market is tightening up. Rental rates have increased 6 percent in the last year, while the median price of a house has jumped to over $300,000 (see info boxes). Low-income residents, especially, are feeling the squeeze.

The housing shortage is driven by several factors. Chico is undergoing it’s first real building boom since the Great Recession, but it went several years with very little new construction, and the housing stock has yet to catch up. Meanwhile, the stream of federal and state monies that used to support local low-income housing has slowed to a trickle, and there’s no incentive for private developers to fill the gap.

According to the 2017 Chico Housing Snapshot, a report by a consultant hired by the city, there are 2,819 subsidized rental homes and apartments in Chico, and an unmet need for 8,090 more.

“In this sort of market, people who can pay higher rents tend to get served, and the people who can’t tend to really struggle,” said David Ferrier. He’s president and CEO of CHIP, a nonprofit that builds subsidized housing from Marysville to Redding. “They either overpay or accept a poor living situation, and it can force people to choose between food and housing. It’s amazing that people have to make that decision in our economy.”

The U.S. Department of Housing and Urban Development considers paying up to 30 percent of income for housing a reasonable, affordable expense. In Chico, 35 percent of households pay more than 50 percent of their income toward rent or a mortgage. People in this subgroup may be a paycheck away from losing shelter, Ferrier said.

“Really, what seems to happen is that people go homeless and live on the streets or sleep on people’s couches,” he said.

Another sign of the squeeze is the apartment vacancy rate, a statistic published quarterly by the North Valley Property Owners Association. In 2009-10, the vacancy rate for apartments in Chico was about 6 percent, a level that provides enough market fluidity for people to move around and find apartments. However, the vacancy rate has been in a nosedive for several years, and recent reports show it hovering between 1.5 percent and 2 percent.

Landlords with low vacancy can be picky about whom they rent to, said Ed Mayer, executive director of Butte County’s Housing Authority. He oversees administration of the Section 8 program, also known as the Housing Choice Voucher, which provides assistance to very low-income families and people who are elderly or disabled. Those who qualify use the vouchers to secure housing on the private market and the federal government pays participating landlords directly.

It’s taking people who have Section 8 vouchers much longer to sign a lease. In 2014, it took voucher-holders an average of 53 days. Last year, it took 70 days. The Housing Authority now anticipates wait times of more than 90 days.

“Landlords don’t have to take Section 8 vouchers,” Mayer said. “It’s a big red flag that says, ‘Hello, I am low income.’”

Samantha Dennison is a single mother of four. She says the “single” part probably won’t change anytime soon, because she hesitates to bring someone new into the life of her 6-year-old son, Christopher.

“For a kid with autism, everything is based on routine and structure,” she said. “Everything needs to be stable. I really can’t blend households with somebody, and I really haven’t found anybody I want to mesh with and settle down with.”

It’s not like she has much free time anyway. Caring for Christopher is a full-time job. He is intelligent and kind and excels in creative ways—“he has an opera singer’s voice,” Dennison said—but he’s slow to process sensory perceptions and make decisions based on them. Due to his condition, the state of California recognizes Christopher as a disabled child, which makes him eligible for In Home Supportive Services. Through that program, Dennison receives a monthly stipend to serve as his official caretaker.

Dennison shares a CHIP-subsidized, three-bedroom apartment in north Chico with Christopher and her 18-year-old daughter. She recently sat down with the CN&R for an interview in her living room. In the afternoon light, the apartment was bright and clean. Dennison loves the place. She remembers how difficult life was without it—how, five years ago, she was unable to work and her family teetered on the verge of homelessness.

Finding a stable home turned it all around, she said. “Say you’re down on your luck and have come to a place in your life where you know you need to change up your priorities,” she said. “Well, first, you need housing.”

As a whole, California isn’t building enough homes to meet the demand. “We’re experiencing it locally, but really, it’s a reflection of a larger dynamic that’s playing out statewide,” Mayer said.

Despite the recovery from the Great Recession, incomes haven’t kept pace with the rising cost of housing. California’s overall rate of home ownership—53.7 percent—is the lowest since the 1940s, and the third-lowest in the 50 states, according to the California Department of Housing and Community Development. On average, about 80,000 new homes were constructed annually for the last 10 years—well short of the projected need of 180,000 additional homes. Based on population trends, current models estimate that California needs to build 1.8 million new homes by 2025.

Chico, at least, is getting to work. Bulldozers, backhoes, dirt and orange hard hats; these are signs of a building boom.

“Things are good,” said Leo DePaola, the city’s building official. “The economy’s doing well, from a building standpoint. We’re looking at numbers we haven’t seen since 2005 and 2006.” Developers are set to spend an estimated $130 million building more than 300 single-family houses and 800 apartment units in fiscal year 2016-17, he said.

More homebuyers are opting for new construction because they can’t find an existing home to purchase, says Steve Kasprzyk. He has worked as a local real estate agent with Century 21 Jeffries Lydon since 1991. For the last several years, he said, an average of 230 or 240 homes were for sale in Chico at any one time, but recently that number is closer to 110.

“It’s very competitive, and there’s a lot of luck involved,” he said. “It’s frustrating for the average homebuyer because they’re putting down offers and getting beat. … As fast as homes are listed, they go pending.”

It’s especially difficult for first-time homebuyers to jump into the market because homes are selling above list prices and many people are paying with cash, Kasprzyk said. “If people take out an FHA [Federal Housing Administration] loan, they’re getting beat.”

Suffice it to say, the uptick in construction will not relieve the affordable housing shortage. None of the apartment projects currently underway in the city are below the market rate, DePaola said. Not a single unit is reserved for affordable or subsidized housing.

Urban builders are investing in student housing instead. DePaola pointed to the $60 million, 173-unit apartment complex under construction on Nord Avenue, just north of Walgreens, which will house 600 students. In a college town like Chico, such a project is a relatively safe bet, he said. Moreover, there’s very little financial incentive to serve low-income people.

“There isn’t a whole lot of government money out there to stimulate those sorts of projects,” he said. “Without subsidy money, it’s hard to encourage developers to invest below market. If you can build 100 units at the market rate, why would you build 100 units below the market rate?”

Indeed, over the last decade or so, less money for building affordable housing has trickled down from the federal and state levels. Perhaps most significantly for Chico, in 2011, Gov. Jerry Brown dissolved redevelopment agencies (RDAs) in an effort to ease the state’s fiscal crisis. Prior to the decision, more than 400 local redevelopment agencies in California used property tax revenues to pay for projects, including housing, that mitigated blight.

Chico took a $6 million hit when the RDA was dissolved and the city’s housing staff was downsized from six employees to one—Marie Demers. Today, as the city’s housing manager, Demers uses what funding is available to help low-income residents in Chico find housing, but her effectiveness is limited by the lack of resources, she said.

For instance, the city used to offer a mortgage subsidy program for first-time homebuyers that it can no longer afford. And in years past, her department made greater investments in multifamily complexes. Currently, most of the city’s housing resources go toward Habitat for Humanity, which builds about two houses a year, Demers said. The city also contributed about $200,000 to construction of Valley View Apartments, a 14-unit complex near the Torres Community Shelter for people who are homeless, at risk of homelessness, or living with mental illnesses.

She’s keeping an eye out for the next project to fund, but said “it will be a pretty small amount.”

Quite simply, the community’s affordable housing efforts are hamstrung, said Ferrier, the CHIP CEO. “Without the RDA, and with cutbacks in federal and state funding, it’s pretty much impossible to build new rental units for people who really need it.”

Dennison couldn’t keep a steady job after Christopher was born. At 9 months old, the first signs of autism emerged and his general health wavered. “My son was hospitalized a lot,” she said. “He was always really sick, having all these surgeries. He was on breathing machines.”

In 2011, Dennison split up with Christopher’s father in Riverside and decided to move closer to her mother in Chico. She was also drawn by the farmers’ markets, the tight sense of community and strong services for children with special needs.

“I was looking into different programs,” she said, “and I found that Chico was a hub with all the working parts of a big city, a lot of things to help a human out.”

She packed the family into her car and drove north up Interstate 5, despite not having a place to stay when she got to the North State. Her family was living on a monthly income of about $500 from Supplemental Security Income—not enough to rent a multiple bedroom apartment. She rented a small, poorly heated room in Paradise for herself and Christopher, and her daughters stayed with their grandmother in Chico.

It wasn’t much, but it was a starting point to find something better.

Local leaders can look at policies adopted by other cities in California as examples of what to do—or not to do. For instance, more and more cities in the Bay Area are resorting to rent control—capping the amount landlords can charge for rent—despite a wealth of research that shows it does not increase the availability of housing in the long run.

“If you’re using rent control, you’re already so far behind the demand curve,” said Mayer of the Housing Authority.

During the Chico City Council’s recent discussions on homelessness, some members of the public floated the concept of inclusionary zoning—i.e., mandating or encouraging new housing developments to make a certain percentage of units affordable for low-income residents. During an interview, the CN&R posed the idea to Councilman Randall Stone, who works as a financial adviser and real estate developer. He said it’s unreasonable to expect urban builders to pay for all of the community’s affordable housing needs, but some of the onus is on them because they are pricing people out.

“I think we all have an obligation to provide affordable housing,” he said. “Typically, I am uncomfortable mandating that businesses in a single industry must pay for social ills that they’re not entirely responsible for. I get a little gun shy about these sorts of things. However, the development industry is responsible for some of the market gap.”

Not to mention, the value of any housing project is tied to the quality of the area’s public parks, schools and roadways. For developers and nonprofit builders like CHIP, it’s a privilege to do business in the community, Ferrier said.

“The economic model of pushing developers to include units for low-income people makes a lot of sense, but it does drive the cost of housing up,” he said. “I’m on the fence on that, because it’s difficult enough to build housing as it is, and there’s no economic incentive for developers to buy into the concept.”

Chico Mayor Sean Morgan said he’s open to the idea of an inclusionary zoning ordinance, particularly as a means of addressing homelessness. “If we can make space for more affordable housing units and try to get people back on their feet, that’d be great,” he said. “That’s how people get started.”

However, he too has reservations about adding to the cost of construction—or more red tape to the development process.

“It comes down to free enterprise,” he said. “If the developers can make money building affordable housing, they will. It’s that simple.”

Rob Wiener is executive director of the California Coalition for Rural Housing, a statewide nonprofit based in Sacramento that works to expand affordable housing opportunities. During a phone conversation with the CN&R, he argued fully in favor of inclusionary zoning.

“Absent inclusionary housing, market-rate developers aren’t going to produce a single unit for very low- and extremely low-income people,” he said. “Under an inclusionary policy, developers are obligated to share the cost—and we all pay for the social cost of not having adequate affordable housing.”

When people are forced to live outside the communities they work in, it creates longer commutes, hurts the economy and environment, and increases traffic congestion. If they’re forced into rural areas, they may not have access to quality health care and education. And more broadly, Wiener argued, low-wage workers are valuable to society as a whole.

“Who’s going to work in the gardens, do the plumbing, be the nannies? We need a wide range of workers to have a holistic, stable community,” he said. “Why shouldn’t developers have to share the cost, especially when we have limited land, and they are building market-rate units and pricing minimum-wage workers out of the community?”

During the year Dennison rented that small, cold room in Paradise, she applied to every subsidized housing program in Chico she could find, including Section 8. As she found out, the waiting lists are often months or years long. Also, to qualify in the first place, she needed a decent credit score—and hers wasn’t good.

She started meeting with a credit counselor at CHIP, and together they worked on righting her debts. She was haunted by defaulting on car and motorcycle payments years before, and still had an unpaid $1,400 phone bill from 2009. “I would do it—whatever this lady said, I would do it,” she recalled. “I learned how to contact creditors and offer them a settlement amount. I learned that if I paid this amount for this debt, it would be squashed.”

She called two creditors a month, and “in no time, I had paid off the majority of my debt,” she said. Then she had the breakthrough: In 2012, her application for rental assistance was accepted by CHIP, and she moved into her three-bedroom apartment near DeGarmo Park for $335 a month. “It was an amazing feeling,” she said. “A stable, nice, clean apartment for your family. That was golden.”

Reflecting on the journey, Dennison remembers a lot of small hurdles. Appointments, thick paperwork, long waits. She can see how some people might find it insurmountable, especially those who struggle to function due to mental disorders, disability, disease or addiction. But she emphasized that it’s doable.

“As long as you put your name on every list known to man in this town, within a year, year and a half, you’re bound to get something affordable,” she said.

Dennison heads up her apartment complex’s neighborhood watch and sits on CHIP’s board of directors. In the mornings, she volunteers for the autism program Christopher is enrolled in at a Chico elementary school.

In the afternoons, she returns home and waits to pick him up. Lately, during those breaks, she’s been dreaming about taking the next step and buying a house in Chico. After some research, however, she doubts whether she can afford a monthly mortgage payment. She might expand her search to the surrounding area, but living in towns like Corning or Orland wouldn’t be ideal, given the level of care her son needs.

“If I move 30 miles away, somewhere that doesn’t have programs for him, it’s just not going to work out,” she said. “It’s important to keep up with the services, because they slowly but surely increase his ability to live life as a normal person.”