Nevada City exceeds its low-income housing allocation

Building affordable, multifamily housing can be difficult in any city, but it is particularly cumbersome in California’s rural, mountainous communities. A lack of buildable terrain, funding, and skilled labor, as well as the ever-present threat of wildfires, create new layers of uncertainty for housing financing. Uncertainty is the last thing that any developer wants. Uncertainty usually means delays, which always means higher costs. 

In Nevada City, these factors led to lengthy periods between multifamily developments, even when the community had access to a  reliable source of funding from the state. Before its most recent development, Cashin’s Field, Nevada City’s last large, multifamily development was built in 2001. Before that, the 1980s. So, what changed?

Location, location, location

The two biggest obstacles to affordable housing in communities like Nevada City are terrain and funding. The small, Gold Rush-era town of 3,152 sits on the western slope of the Sierra Nevada — right in the middle of a very-high fire severity zone. This means that developers must use more expensive, fire-resistant materials and implement stringent wildfire mitigation efforts. It also means that insurance costs go up. 

“Both of them [material costs and insurance] came in much higher than they would be a less risky area. So, everything is higher,” said Gus Becerra, the executive director of the Regional Housing Authority. The four-county agency helps fund affordable housing projects, provides rental assistance, and serves as a co-developer for projects. 

In real estate, location is everything, especially when it comes to affordable housing. Location can prevent communities like Nevada City from competing for already limited housing dollars. Most competitive grant programs rank applicants based on their distance to public amenities like medical care and public transportation. The farther a site is from a bus stop, the less likely it is to receive grant funding.

Smaller cities are not just cut off from competitive funding either. They are also ineligible for formula-based funding that many larger cities automatically receive each year from the federal government. Nevada City’s size also makes it difficult to pass affordable housing bonds. When it comes to funding, the deck is stacked against rural cities. When they have the staffing capacity necessary to compete for the few dollars that remain, they often compete with each other. 

Then there is the matter of the terrain itself. Nevada City has relatively lax zoning laws. For example, multifamily developments can be built in any commercial district. However, in practice, the number of suitable sites is relatively low due to a lack of flat terrain.  

“Without subsidized funding, it is very difficult housing for us up here to get very much housing,” City Planner Amy Wolfson said. “That’s just a reality: It’s very expensive. You add in the factors of Nevada City’s topography challenges, and we just don’t have a lot of land available for these kinds of developments. Developers can’t make it pencil out.”