SLO City Council just approved 3 new ways to increase housing. What could change?

Denser and more affordable housing could be on the way to San Luis Obispo following Tuesday’s City Council meeting.

Three different means of adding new housing to San Luis Obispo were approved at the meeting, paving the way for hundreds of new affordable units in the city.

The council voted unanimously to approve the Downtown Flexible Density Program, allocated funding awards for two Housing Authority of San Luis Obispo affordable housing projects and adopted a resolution to work with housing provider People’s Self-Help Housing.

Combined, these three measures could add hundreds of housing units to San Luis Obispo over the next decade.

“We simply could not do this without your support,” HASLO executive director Scott Collins told the council.

How could new density rules change downtown SLO?

The City Council voted unanimously to approve the Downtown Flexible Density Program at the meeting, paving the way for hundreds of new, low-density housing units.

The program was introduced as an ordinance in January and incentivizes the creation of as many as 500 studio or one-bedroom units in downtown San Luis Obispo.

The program, which expires Jan. 1, 2029, eliminates density restrictions for homes under 600 square feet, limiting the number of high-density units only by the area of the building.

Recently, the program was amended at the March 21 City Council meeting to exclude homestay rentals from units that qualify for the program.

Importantly, the program could change the makeup of who lives downtown, housing coordinator Kyle Bell told The Tribune in January.

“The program is intended to encourage the development of smaller units by offering housing developers more flexibility from standard density limitations, without imposing any increase to the scale or height of structures within the downtown,” Bell said in January.

The ordinance will go into effect May 18.

City, People’s Self-Help Housing to team up on Homekey project

The City Council also voted unanimously to approve a resolution authorizing a joint application and participation in Homekey’s third round of housing.

Homekey is statewide funding program that allows state, regional and local public entities such as governments and nonprofits to purchase properties such as hotels, motels and vacant apartment buildings and convert them into permanent, long-term housing for people experiencing or at risk of homelessness. It also allows for the construction of new single-family or multifamily housing in some cases.

The Homekey funding would be used to create a 20- to 30-unit supportive and transitional housing project at 920 Olive St., which would have a value not exceeding $18 million, according to the council agenda report on the resolution.

This potential project would be located at the Homestead Motel site, rehabilitating and repurposing the structure to house approximately 15 families in permanent supportive housing.

People’s Self-Help Housing would manage the site and provide supportive services, and will eventually include the “rapid deployment” of 15 tiny modular units for transitional housing, which would serve families, the report said.

Funding would be used to spruce up the property, expand existing motel rooms to include kitchenettes for family units, for demolition and utility connections, and for landscaping and property upgrades, the report read.

HASLO gets $3.2 million for two projects

The council’s approval of a $3.2 million funding award for HASLO will be split between two projects in San Luis Obispo.

The first project will be located at 736 Orcutt Road — the former site of the Maxine Lewis homeless shelter — and will create more than 40 affordable units for unhoused individuals and residents at risk of becoming homeless.

According to HASLO director of finance and chief financial officer Ken Litzinger, the Orcutt Road project will cost around $19.6 million.

The project at 279 Bridge St. will provide 94 units of affordable housing for large families and seniors in a mixed-use development when fully completed, though this funding award is only for the first of three phases.

The first phase of the project will bring 34 affordable units of one, two and three bedrooms geared toward families, HASLO director of Litzinger told The Tribune.

The first phase alone will cost around $25.6 million, he said.

Phases two and three of the project will consist of units geared toward seniors and families, respectively, Litzinger said.

If these projects receive tax credits from the California Tax Credit Allocation Committee when those awards are made in June, Litzinger said they could be completed in around 18 months, provided they start construction within 194 days of gaining the credit.

“Tax credits are really competitive, but we hope with this funding that these projects will be competitive and receive tax credit awards,” Litzinger said.

Collins thanked the city for its support for affordable housing during public comment.

Collins said local government funding is “critical” during the state and federal funding process, which often requires matching funds from local governments.

“Thank you to your staff for recommending the affordable housing funding for two HASLO projects — the Maxine Lewis (project) at 263 Orcutt Road and at 279 Bridge St.,” Collins said. “The Maxine Lewis (project) is going to be housing for homeless (individuals) and those who could fall into it very easily, and we desperately need more of these kinds of projects.”