Fresno has a shortage of affordable rental housing. What’s happening to fix that?

As housing costs soar in other parts of the state, Fresno County remains a relatively affordable place to live. The median rent for apartments is the second lowest among California’s largest cities.

But for families and households scraping just to make ends meet, what’s “affordable” for rent is in the eye of the beholder.

In Fresno County, almost 60 percent of renter households are “rent burdened,” or overpaying for rent under federal housing guidelines because they pay at least 30 percent of their gross income on housing-related costs such as rent and utilities.

In lower-income neighborhoods, however, the U.S. Census Bureau estimates that as many as three-quarters of all renter households are rent burdened. Typically, the lower the income of a household, the greater the share of the family resources spent on rent and utilities, said Preston Prince, CEO and executive director of the Fresno Housing Authority.

“We know in Fresno that the average very-low-income household is paying 73 percent of their income toward shelter,” Prince said. By comparison, “median-income families pay about 27 percent of their income toward shelter. So in our world, they would not be rent-burdened.”

“But at some level, even 27 percent is still a pretty big chunk of money,” Prince added.

City and county officials say the high rates of rent-burdened households can be chalked up to a few key issues plaguing Fresno County: lower-than-average household incomes and higher than average poverty compared to the rest of the state, and an acute shortage of apartments and other rentals that are affordable for low-income residents.

How acute? Prince said his his agency provides Section 8 Housing Choice vouchers for subsidized housing to about 13,000 families in Fresno County, but Prince said there are another 40,000 eligible families on the agency’s waiting list. “I think there’s probably more like 50,000 or 60,000 income-eligible households,” he added.

Finding ways to close or at least shrink that gap – either through the development of more affordable housing or improving the economy and boosting family income – is the goal of both the Housing Authority as well as city and county leaders.

More housing needed

The Fresno Housing Authority is a joint effort between the city of Fresno and Fresno County. Combined, it received more than $86 million in Section 8 funds from the federal Department of Housing and Urban Development in 2017. The vouchers are primarily aimed at families whose incomes are less than 30 percent of the median income for the area and fall into the category of “extremely low income” under federal housing guidelines.

For a family of four, Prince said, those are families making about $15,000 or less per year. “Our (clients’) average household income is about $11,000 a year,” he said.

Among public housing authorities in California, Prince said the Fresno Housing Authority is one of the largest developers of new affordable housing in the state. The authority owns or co-owns about 5,000 rental units across Fresno County, and it’s constantly in the process of planning for more.

“We might do four real estate projects a year, but other (housing authorities) like Tulare or Bakersfield might do one a year,” Prince said. “And then you go to Stanislaus and Stockton and they’re doing their first ones right now. We’re starting to build up our capacity so that we can meet the housing needs.”

Still, the authority doesn’t have enough of its own properties to serve all 13,000 of its voucher holders. The agency also has agreements with participating landlords in the Section 8 program to accept the vouchers. Tenants cover a share of rent up to 30 percent to 40 percent of their income, and the vouchers cover the balance of the contract rent on the apartment.

Affordable housing apartments, part of the Kings Canyon Connectivity Project, are being constructed along Kings Canyon Avenue east of Willow Avenue. Photographed Thursday, Jan. 31, 2019 in Fresno. ERIC PAUL ZAMORA ezamora@fresnobee.com

Landlords participating in the Section 8 program are subject to inspections of their properties to remain eligible. But there are plenty of other properties – and no one seems quite sure how many – that charge rents that may be “affordable” but are substandard.

“Section 8 is not a complete picture of the inventory,” Prince said. “Landlords who provide substandard housing aren’t eligible to participate in Section 8. Other landlords say the contract rental rates reimbursed by the county aren’t high enough. so they choose not to participate.”

The net result is that just because someone gets a Section 8 voucher from the housing authority, it doesn’t necessarily mean they will be able to find a place to live. In 2017, for instance, more than 36,000 people applied to the agency’s interest list. Of that number, vouchers were issued to about 1,800 – only about 5 percent of those who applied. But among those who received the coveted vouchers, fewer than 1,100 were able find a place to rent.

“Our role is just to figure out if they’re suitable for a voucher: are they income qualified and do they pass a criminal background check?” Prince said. “After that, it’s decided by the landlord. The reasons they don’t get leased up could be bad credit, something in their criminal background, or just a landlord who says they don’t want to rent to them. Or maybe they just can’t find an affordable place. … There’s a number of issues out there.”

One of the big questions confronting housing officials is, what’s the best way to accommodate more families? “Do we expand rental assistance? Is that the way to go?” Prince asked. “Or do we grow the number of units owned by nonprofits or housing authorities? … A private landlord is always going to be maximizing the profit, so they’re going to sell it or do whatever it is that allows them to charge a higher rent.”

Some private developers have undertaken projects that have at least some units that are reserved to be affordable to qualifying low-income families. But those are enabled by tax credits and other economic incentives that allow a project to be profitable even with lower rents.

Workers begin to gather tools at affordable apartments being constructed along Kings Canyon Avenue east of Willow Avenue. Photographed Thursday, Jan. 31, 2019 in Fresno. ERIC PAUL ZAMORA ezamora@fresnobee.com

Higher incomes needed

Fresno Mayor Lee Brand acknowledges a need for more rental housing that is affordable for low-income residents. “But it’s not so much that we have an affordable housing problem in terms of high rent,” he said. “We have low wages. So I’m taking kind of a dual approach to solve the problem.”

“One thing is to find ways and models and incentives to build units (and) have more production at less cost,” he added. “The other is to get people jobs and opportunities so they have the income to qualify.”

Brand compared rents in Fresno to those in places like San Francisco and the Bay Area, where rents can run as high as $3,000 to $4,500 a month. “You can still get a decent rental in Fresno for $1,000 a month. That’s still pretty reasonable by any standard, but the issue is affordability,” he said. “If you’re working at $10 an hour, and you’re not getting any benefits, even with two people it’s sometimes hard to qualify to make those (rent) payments.”

As mayor since 2016, and as a Fresno City Council member before that, Brand has strove to bring not just more jobs to the city, but better-paying ones. He points to major new employers such as Amazon and Ulta Beauty, each of which opened major distribution centers in Fresno last year and generated about 2,000 new jobs.

“If you take Ulta, for example, for a four-day, 10-hour shift they make about $20 an hour, something like $3,400 or $3,500 a month,” Brand said. “One person there could qualify for a $1,000-a-month unit, which is market rate housing. Two people working at Ulta could qualify to buy a median-priced home in Fresno.”

“So by employing more people and getting them out of poverty – liberating them from poverty – then their life is changing,” he added.

On the housing supply side of the equation, the tools available to the city are limited since California did away with redevelopment agencies about eight years ago. Redevelopment used property tax increment funds – the difference between old property tax rates and new rates based on improvements – to generate money for affordable housing and other needs for cities.

“Think of how many downtown Fresno projects would not have been funded without redevelopment,” said Brand, particularly citing an array of mixed-use residential properties by developer Darius Assemi. “Every one of those Assemi projects had a component that would not have been a business model that would work without having a 25 or 30 percent subsidy in the cost of doing that.”

Brand is hopeful that legislation working its way through the state Capitol would restore redevelopment.

In the meantime, the city is trying to smooth its bureaucratic processes. Better zoning rules, tax credits and incentives called density bonuses can all help reduce the cost for developers to build affordable housing in areas of the city that most need it.

“The cost to build downtown is the same as up north. But up north you can get $2 per square foot and downtown you get $1 per square foot. It doesn’t pencil out,” Brand said.

Fresno’s new development code provides density bonuses, or allowances to build more affordable units than ordinarily permitted, particularly along some of the city’s key bus-transportation corridors.

“We’ve worked really hard to make the zoning piece relatively easy across the city,” said Jennifer Clark, director of Fresno’s Development and Resource Management department. “We’ve tried to ensure that we have adequately zoned sites throughout the community, not just centered in one or two areas, at all sorts of density levels.”

“There’s an opportunity to make a proposal that’s going to be successful because the zoning is already in place,” she added.

Just because the land is zoned for multi-family or affordable housing, however, doesn’t mean developers will come flocking to it. That, Brand said, underscores the need for the financial credits and incentives.

“What does it cost to buy the land? What are the soft costs, development fees, school fees, architectural engineering? And then you get into your hard costs. There’s a shortage of labor and the cost of materials is going up,” Brand said. “All these things together create a final product that’s just too expensive to reproduce on a large basis.”

If redevelopment programs and tax increment funds are restored, however, “we could have that method and maybe a few other options, like waiving off-site improvements or impact fees, to make it worthwhile.”

Fairview Heights Terrace.JPG
Fairview Heights Terrace, not far from Edison High School in southwest Fresno, represents an older style of public housing that the Fresno Housing Authority is trying to shift from in its newer affordable housing projects in Fresno and across Fresno County. Tim Sheehan The Fresno Bee

When the process works

The idea of “public housing” raises stereotypes in the minds of neighbors who fear what it could mean for their neighborhoods and their property values. Such deep-seated perceptions about affordable housing give rise to objections rooted in NIMBYism – Not in My Back Yard – whether a project is publicly or privately developed.

In almost every neighborhood where the Fresno Housing Authority contemplates developing an affordable housing project, neighbors raise concerns.

In a southwest Fresno neighborhood near Edison High School, already dotted with aging public housing projects, the relatively new Bridges at Florence provides nearly three dozen affordable apartments for senior citizens in attractive, Cape Cod-style single-story buildings.

Even there, objections were voiced. “As we do development throughout Fresno County, we experience people who have questions and concerns,” Prince said. “The way we overcome that is we start with design. … If people see that we’re bringing quality housing into their neighborhood, they’ll be supportive.”

Parc Grove Commons, a Fresno Housing Authority development at the southeast corner of Clinton Avenue and Fresno Street, across the street from the Veterans Administration Central California Healthcare System in central Fresno, is a highlight for the agency’s efforts.

For more than 60 years, the site was home to about 200 units of World War II-era housing, originally built as military housing to serve Hammer Field (now Fresno Yosemite International Airport) and later used as public housing. Those bleak buildings were eventually torn down to make way for about 350 units of attractive, affordable apartments, including one 40-unit building, Renaissance at Parc Grove, for formerly homeless veterans.

Parc Grove Commons stands in stark contrast to the nearby Summerset Village, a privately-owned 220-unit complex where gas pipeline problems forced about 1,000 residents to go for weeks without heat or hot water in November 2015. City code inspectors subsequently found more than 1,400 code violations and the out-of-town owner was ultimately hit with fines of nearly $175,000.

The problems at Summerset Village helped spur the city of Fresno into several tough-on-slumlord measures, including the creation of a rental-housing registry and a program for regular inspections of rental properties throughout the community, regardless of whether they are apartments or houses or where in the city they are located.

Both public housing or privately-owned apartments, though, confront strong biases by neighbors.

“After six years on the Planning Commission and eight years on the City Council, I can tell you that every time an apartment project comes up, (people say) ‘You’re going to ruin the neighborhood.’ ‘Crime is going to up.’ ‘My resale value will fall,’ ” Brand said. “There was a deal at Alluvial and Chestnut avenues (in northeast Fresno), when someone wanted to be rezoned for apartments, and a sign went up that said, ‘Look out for Section 8 housing.’ … It had nothing to do with Section 8. A lot of that is just overblown fears that people have.”

Prince said he believes the concerns over public housing are a matter of misunderstanding that can be overcome if the agency works to educate the neighbors in advance, before a proposed project takes them by surprise.

“It’s about good-neighbor policies, having communication before we do a development with community members,” he said. “And then it’s about maintaining our properties really well. If we show it’s a good asset and that residents are adding value to the overall neighborhood, the overall community, we can overcome NIMBYism.”

“I think the biggest myth is somehow that people lack values or morals. But they have morals. They just have low incomes,” Prince added. “They’re looking after their families, they’re investing in their kids and their kids’ education, and that’s what happens when people are not spending 72 percent of their income on rent.”

“These are good people. They just happen to have low incomes.”

Zoom in or out on the map above and click on a Fresno County census tract to see the share of rental households that are “rent burdened” (spending 30 percent or more of their income on rent and utilities). Green: 20 percent or fewer; yellow: 20 to 40 percent; orange: 40 to 60 perent; red: more than 60 percent of households. Source: U.S. Census Bureau American Community Survey, 5-year estimates 2013-2017. Map: Tim Sheehan / The Fresno Bee
Lifelong Valley resident Tim Sheehan has worked in the Valley as a reporter and editor since 1986, and has been at The Fresno Bee since 1998. He is currently The Bee’s data reporter and covers California’s high-speed rail project and other transportation issues. He grew up in Madera, has a journalism degree from Fresno State and a master’s degree in leadership studies from Fresno Pacific University.