Welcome back for the third episode of Land Use and You, a new series that explores the latest in cutting edge and good old fashioned land use policy. So far we’ve explored how Small Lot Subdivisions and Conservation Subdivisions can be used to add more single-family homes to Humboldt’s beleaguered housing stock.

This month’s episode is a little different. Instead of priming your brain with ideas for how to create housing. we’re taking a moderate-depth dive into an often discussed but poorly understood topic: affordable housing.

What is affordable housing? In Humboldt, affordable housing is typically an apartment whose rent is artificially lowered to a predetermined level in order for it to be affordable to a family at a certain income level. The opposite of affordable housing is market-rate housing, where the landlord is able to charge whatever rent they think someone will pay. There are pros and cons to both affordable and market-rate housing — and it’s important that both types are built.

Area Median Income (AMI). As you might imagine, “affordability” is a relative concept. If you make $186,432 per year, a brand new $64,280 Ford F-150 King Ranch® V6 Turbo Diesel 4x4 pickup truck might well be an affordable vehicle. If you make $29,120 per year ($14/hr CA minimum wage), then that pickup truck is clearly not affordable to you. When it comes to housing, it’s necessary to have a single benchmark against which the rents of affordable housing can be set. This benchmark is called the Area Median Income (AMI), and it’s set on a county-by-county basis. In Humboldt in 2021, the AMI for a four-person household (e.g. two adults and two kids) is $72,000. That’s to say that half of the four-person households in Humboldt earn more than that in a year and half earn less.

The “Big 4” Income Levels. Once you have the AMI benchmark in hand, you can establish affordability levels. In the great state of California, there are four levels that are considered affordable housing:

  • Moderate Income: 80% to 120% of AMI
  • Low Income: 50% to 80% of AMI
  • Very Low Income: 30% to 50% of AMI
  • Extremely Low Income: 0-30% of AMI

The rent levels also vary depending on how many people live in the household. Naturally, the more people being supported on an income the greater the income needs to be. For this reason, the numbers scale proportionally to the size of the household. Some households have a single earner (e.g. single parents) while others have multiple incomes (e.g. both parents work). For housing purposes, all of the incomes are added together to get the total household income. But enough of the planning wonk gibberish — let’s look at the actual Humboldt County annual household income levels:

If you live in a four-person household…

  • “Moderate Income” means a total household income up to $86k per year
  • “Low Income” means a total household income up to $56k per year
  • “Very Low Income” means a total household income up to $35k per year
  • “Extremely Low Income” means a total household income up to $27k per year

If you live in a three-person household…

  • “Moderate Income” means a total household income up to $78k per year
  • “Low Income” means a total household income up to $50k per year
  • “Very Low Income” means a total household income up to $32k per year
  • “Extremely Low Income” means a total household income up to $22k per year

If you live in a two-person household…

  • “Moderate Income” means a total household income up to $69k per year
  • “Low Income” means a total household income up to $45k per year
  • “Very Low Income” means a total household income up to $28k per year
  • “Extremely Low Income” means a total household income up to $17k per year

If you live in a one-person household…

  • “Moderate Income” means a total household income up to $61k per year
  • “Low Income” means a total household income up to $39k per year
  • “Very Low Income” means a total household income up to $25k per year
  • “Extremely Low Income” means a total household income up to $15k per year

Affordable Rents. An affordable rent (or mortgage) is defined by the State of California and the United States Department of Housing and Community Development (HUD) as costing no more than 30% of a household’s pre-tax income (including utilities). So now that we have the annual income categories sorted out, let’s take a look at an imaginary family to see how much they might be able to pay in rent and whether they would qualify to live in an affordable housing development: Humboldt, say hello to the Baumgartner family.

Those darned Baumgartner girls, pictured here in roughly February 2023 thanks to new LoCO technological advances. Photo by Tim Bish on Unsplash.

The Baumgartner Family. The Baumgartner family consists of Frank, Sandra, and their three-year-old twin daughters Pebble and Stream. Third-generation Eurekans, Frank earns $18.50/hr as a forklift driver and Sandra earns $14.50/hr working in retail. They both work full time, but Sandra doesn’t always get scheduled for forty hours per week at her job. Last year they earned $52,340 total, which works out to $4,361 per month before taxes. Thirty percent of $4,361 is $1,308. However, we need to back out the monthly cost of utilities from that number. If we assume that power/gas/water/garbage cost about $300 per month for a family of four, then the final affordable rent is about $1,000.

Given their annual income of $52,340, the Baumgartner family would qualify for as a “Four Person - Low Income Household” and could (with luck) snag an apartment in an affordable housing development. They would pay around $1,000 per month to rent a 2 or 3 bedroom apartment.

Affordable Housing is Not Free. A common misconception is that it is free to live in affordable housing. This is simply not true. As the income limits show, nearly all people that live in affordable housing work and pay rent every month just like everyone else. Exceptions include housing for low income seniors (social security is the income) and residents of certain developments that provide permanent supportive housing (e.g. disabled veterans). Without affordable housing, lower income households end up paying 30-70% of their income on housing. A household that overpays for housing is less able to save money and otherwise meet their needs.

Conclusion. At this point I hope you’ve picked up a few pointers on the how and why of affordable housing. So the next time someone runs up to you raving about the horrors of a proposed affordable housing development, you can calmly reassure them that they have nothing to fear from service workers. Put another way, if you can stand bravely in front of the cashier at the grocery store — you can stand bravely in the face of an affordable housing development.

If you’re curious, you can read here about how the AMI is calculated and compare Humboldt with other California counties.

###

Brian Heaton is a local pro-housing advocate with a professional background in city planning. Views expressed are his own and do not represent those of any government.