Policy and cost-saving innovation can help our housing affordability crisis, but large amounts of funding and financing are also needed, to produce, rehab, manage, and maintain housing that does not pay market rents or market-rate mortgages. We need an array of funding streams, some of which will take years to establish and more years to produce substantial revenue. So we should start now to prioritize among these and begin the groundwork.
The City already has a small Affordable Housing Trust Fund. The Metro Chamber of Commerce operates a Sonoma County Housing Fund. Several Community Development Financing Institutions (CDFIs) already want to partner for Sonoma Valley projects. But all these entities wait for formal project proposals to come to them, and none have enough money to fix Sonoma Valley’s housing crisis.
Potential new funding mechanisms are described below, along with an approximate estimate of whether they are low, medium, or high in terms of likelihood, speed, and amount generated.
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High likelihood, high speed, moderate amount
The Renewal Enterprise District (RED) Housing Fund has the goal of accelerating higher density, multifamily housing production in Sonoma County. Currently it only operates in Santa Rosa. But its board has decided to revise the criteria they use to invest in a project. They are interested in loosening their requirement that projects be served by high-frequency transit, so that projects in places poorly served by transit (like Sonoma Valley) could meet criteria if they show they will reduce Vehicle Miles Traveled and/or greenhouse gas emissions.
The RED Housing Fund also can already fund projects in the area of the still-unfinished Springs Specific Plan, because that area is a Priority Development Area. There is a process by which the City of Sonoma could be added.
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“Tax increment financing… allows municipalities to earmark property tax revenue from increases in assessed property values within a designated district to fund economic development” (Enhanced Infrastructure Financing Districts: West Sacramento, 2019, Terner Center). Two Sonoma County Supervisorial districts (District 1 which includes Sonoma Valley and District 5) are pursuing an Enhanced Infrastructure Financing District (EIFD) that will be funded by tax increment financing, and which defines “infrastructure” to include below-market-rate housing. Note that because property values in Sonoma Valley are already high, they increase in value only slowly, so the EIFD would accumulate funding slowly. A new EIFD will likely not exist until 2030. The County areas of Sonoma Valley would benefit more than the City.
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High likelihood, high speed, moderate amount
Sonoma Valley has many affluent residents and visitors who love this place and its people. As more people of means realize the profound harm that the extreme cost of housing is causing to Sonoma Valley’s people, environment, community culture, and economy, more people are becoming interested in contributing to solutions, despite the complexity and size of housing-related problems. This Roadmap is a step toward teasing apart the housing affordability solution set, for this particular place of Sonoma Valley. There is more to do, to present the strategies in a more approachable format, perhaps like a menu, so that people can match up their interests, their capacity to give, and the best solutions.
Donations of land will be increasingly important as property values keep rising. As the Sonoma Valley Community Development Corporation develops, it can hold donated land either temporarily or permanently, for public benefit.
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Low likelihood, low speed, high amount
Larry Barnett suggests that once the City's Affordable Housing Fund has $3M per year in reliable recurring funding, the City can float a housing bond. The Bay Area Housing for All bond measure may return in 2028. Housing bonds will be unlikely to pass until the ⅔ voting threshold is lowered, which voters statewide decided not to do, recently. However, to create support for a future bond at any level, it is worth regularly talking about the appropriateness of a housing bond to support our community’s viability.
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Medium likelihood, low speed, low amount
This is a policy that grants to certain parcels (such as those within a Housing Opportunity zoning designation or a Priority Development Area) an exemption from all or some of future real estate taxes. If a project will greatly increase the value of a parcel, the tax increment exemption prevents the parcel’s property tax from increasing at the same time. This is another way to benefit the balance sheet of a potential project or property buyer.
It seems unlikely that local governments would pursue tax increment financing at the same time as tax increment exemptions. Perhaps TIEs could be applied to a smaller, special area within the future EIFD, such as school sites or shopping centers, which would then both receive funds from the EIFD and be granted an exemption from paying the tax increment.
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Medium likelihood, medium speed, high amount
The JPA can fund preservation of deed-restricted affordable housing or to convert market-rate units to deed-restricted affordable housing. See Strategy 4a Rescue affordability guarantees before they expire for more information.
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Medium likelihood, high speed, low amount
This strategy is regularly suggested. Note that this would take funding away from Sonoma Valley Visitors Bureau. In November 2024 the TID allocation to the Visitors Bureau was renewed for 10 years, to continue marketing Sonoma Valley as a destination. It would require a political groundswell to alter that commitment.