San Luis Obispo, California: Mixed-Income Affordable Housing at Moylan Terrace

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San Luis Obispo, California: Mixed-Income Affordable Housing at Moylan Terrace

 

Located between San Francisco and Los Angeles along the California coast, the city of San Luis Obispo is a desirable but expensive place to live. The median home value in San Luis Obispo was $519,500 in 2013; with the city’s median household income at $45,032, many households are experiencing a housing affordability gap. As a result, employers face the challenging task of hiring and retaining workers who can afford to live in San Luis Obispo, the seat of San Luis Obispo County and one of the region’s job centers. Affordable homeownership opportunities are especially hard to come by for those employed in service industries, such as health care, food services, and retail, who make up the majority of the city’s workforce.

Moylan Terrace offers 80 townhouses for sale to buyers with a range of incomes. The project’s architectural design and site planning allow it to maximize its density and minimize its public subsidy. The development’s environmental sustainability is evident in both its design and its proximity to existing transportation and neighborhood amenities.

Project Overview

The Housing Authority of San Luis Obispo (HASLO) is the developer of Moylan Terrace, its first for-sale development. Although public housing agencies do not typically produce affordable homeownership opportunities, Moylan Terrace is the realization of the vision of former HASLO executive director George Moylan. The project provides homeownership opportunities for the city’s very low-, low-, moderate-, and workforce-income populations (table 1).

Table 1. Moylan Terrace Unit Mix and Sales Prices
Income Category	Units	Sales Price
Very low (50% of area median income)	2	$104,000–120,300
Low (80% of area median income)	14	166,650–192,525
Moderate (120% of area median income)	11	291,375–336,700
Workforce (160% of area median income)	53	390,000–459,000

The unit mix was determined by the project’s financing structure, in which the higher-priced townhomes affordable for workforce households subsidize the production costs of the smaller units priced for lower income levels. According to Scott Smith, executive director of HASLO, the workforce units are priced at levels affordable to local workers but still considerably below median home values. Construction began in 2012 and is occurring over 4 phases, with the 36 units in the first 2 phases completed and occupied. Construction of the third phase’s 24 units is expected to be completed in July 2015, and work on the final phase of 20 units is planned to begin in late summer 2015 and end a year later.

Design and Sustainability

Moylan Terrace is composed of 14 buildings a block east of South Broad Street, one of the city’s primary corridors south of the downtown. The 1-, 2-, and 3-bedroom townhomes range from 809 to 1,675 square feet. The city supported Moylan Terrace from its inception and assisted its development by rezoning the site and waiving planning, building, and impact fees to assist in achieving the city’s affordable housing goals.

San Luis Obispo designated the Moylan Terrace site as a planned development overlay zone, with flexible zoning standards that allow greater residential density in exchange for higher quality design. Lot lines were drawn in such a way that each homeowner purchases the unit and the land underneath. Unlike condominium projects, Moylan Terrace was designed so that the side walls, roofing, electrical systems, and other features are part of each unit rather than shared with adjacent units. Putting fewer facilities in common ownership lowered construction costs, purchase prices, and homeowner association fees and insurance payments, according to Lenny Grant of RRM Design Group, the project’s lead architect. This includes the side walls between adjacent units, which structurally are two walls separated by five inches of air space that is masked by building material.

By using the state’s density bonus law, which limits required parking, among other adjustments, to allow greater density for developments with affordable housing, the developers were able to cut the number of required parking spots for the development by 20 percent, further reducing housing costs. The developers also reduced costs by providing parking in auto courts, which minimize the amount of land and improvements needed for car circulation.

Design features also reduce Moylan Terrace’s environmental impact. The buildings’ shape and orientation help increase energy efficiency by maximizing exposure to natural light. Tankless water heaters, roof solar tubes, and energy-efficient windows reduce energy costs. As a result, units at Moylan Terrace are between 26 and 46 percent more energy efficient than similar housing conforming to Title 24 of the California Energy Code, depending on their floorplan and location on the site. The buildings also rely on sustainable materials and systems, such as GREENGUARD-certified insulation and interior paint, to improve indoor air quality. In addition, Moylan Terrace supports the city’s sustainability goals because it is infill development that maximizes existing infrastructure and transportation resources. The project is within walking distance of the downtown area, schools, and a local bus line and rail station.

Financing

The total development cost for Moylan Terrace is $28,850,000 (table 2). HASLO partnered with banks and a local commercial developer, Madonna Enterprises, to make the development possible. Madonna provided Moylan Terrace with $1.1 million in working capital to satisfy the city’s affordable housing requirement on one of its commercial developments. HASLO did not rely substantially on public funding, with the major exceptions being $710,000 from the city’s affordable housing trust fund and $1.5 million from HASLO.

Table 2. Moylan Terrace Financing

New Vision for the Neighborhood

Moylan Terrace’s smart growth attributes align well with the city’s development goals for the neighborhood, which are reflected in the recently adopted South Broad Street Area Plan. Following the area’s transformation from a neighborhood settled by immigrants in the late 1880s into a largely industrial area, policymakers now envision South Broad Street as a higher density residential development that will meet the city’s need for affordable housing production and mixed land uses. Moylan Terrace, which was designed and approved while the plan was being prepared, fits in well with the plan’s vision for the neighborhood as a place to address the housing needs of very low-income to workforce residents, while enhancing livability and fostering a sense of community. According to Smith, the early results are positive, as residents in the occupied units at Moylan Terrace have already formed a tightly knit community. The planned onsite community building and garden will further strengthen the social life of the neighborhood surrounding Moylan Terrace.

Moylan Terrace accomplishes its affordable housing goal while also promoting environmental sustainability, both in the design and structure of the units and in the infill development’s efficient use of land. For these innovative features, Moylan Terrace received a 2014 Agency Award of Excellence from the National Association of Housing and Redevelopment Officials.