Year: 2020

By Gennady Sheyner, Palo Alto Online, January 19, 2020

“A 59-unit residential development, entirely of below-market-rate units, won unanimous approval a year ago, becoming the first affordable-housing project that Palo Alto has approved since 2013. [But the development] failed to receive a $10 million HCD grant that it had requested.

“Given the funding shortfall for the project, which has an estimated price tag of $46.3 million, the city council was asked to fill the gap. On January 13, it did just that, voting unanimously to approve a $10.5-million loan for [the El Camino Real project] Wilton Court. …

“The development will target residents with incomes between 30 percent and 60 percent of area median income — less than $70,260 for a family of two. Monthly rents in the development will range from $659 for a one-person studio to $1,442 for a one-bedroom apartment for two people. The project also includes 21 units for adults with developmental disabilities.

“The council’s vote makes Palo Alto by far the largest financial contributor to the development, with a total investment of $20.5 million. …

“Sheryl Klein, chairwoman of the Palo Alto Housing board of directors, lauded the council’s action. ‘It’s extraordinary what they’ve done, really incredible.’ …

“Palo Alto’s $20.5 million contribution will come primarily from impact fees the city charges developers. This includes $11.7 million from commercial fees, $0.6 million in residential impact fees, and $7.7 million from residential in-lieu fees, which are paid by housing developers who wish to avoid the city’s inclusionary-zoning requirements.

“Under the terms of the loan, the funding will be repaid after the development is built through payments made from any residual receipts beyond the project’s operating expenses.”

Read more about this project here.

By Joseph Ronson, LifePulseHealth.com, January 16, 2020 

“The State of California’s Department of Housing and Community Development (HCD) recently awarded Many Mansions a total of $24 million for the purpose of developing new affordable housing to help address California’s housing crisis. The award, under the State’s Multifamily Housing Program (MHP), was for three affordable housing development projects. 

“Commenting on the awards Alexander Russell, Executive Vice President of Many Mansions, said ‘this funding will give a home to 147 families that are living on the streets or in substandard/overcrowded housing.’ With community support, these families will also receive services such as tutoring and college scholarships for the kids, and life skills and job training for the adults so that they can build a brighter future. 

“Many Mansions owns and operates 17 affordable housing complexes (with nearly 600 units) in Ventura County and has a number of new affordable housing communities in development throughout Los Angeles County. Many Mansions manages the apartment homes and provides critical services such as free after-school programs, summer camp, scholarships, job training and more for its residents.”   

Read more here.  

“But there’s a catch when it comes to SF”

By Adam Brinklow, Curbed San Francisco, January 15, 2020

“Traditional thinking holds that housing shortages drive up prices, and thus creating new housing relieves demand and pushes prices down.

“But in the Bay Area, especially in SF and on the Peninsula, contrary thought holds that factors like inflation and appreciation will always work faster than we can build. Indeed, neighborhood activists often insist that new housing drives rents up by gentrifying new areas and making them attractive to even more high-priced development, at the expense (literally) of existing residents.

“In December, the Upjohn Institute … published findings about the effect of new housing on housing prices in large U.S. cities, including in San Francisco.

“Generally speaking, the results were that for three or so years after a building’s completion, the adjusted effects on rents in the surrounding neighborhood ‘hover[ed] around zero,’ per Zillow data, and then afterward declined, by an average of about five percent.

“The big catch — and the reason why these numbers are unlikely to resolve the arguments in SF — comes in the form of the most common bugbear for any statistical outing: sample size.

“The team started with nearly 1,500 buildings to study. However, after narrowing that pool down with a variety of additional standards, they ended up with just 92.

“And how many of those final buildings were in San Francisco? By the time all was said and done, just one.

“So while this research does suggest that most housing markets react to traditional supply and demand incentives the way one would expect, the possibility that San Francisco (for whatever reason) is a special case remains frustratingly unresolved.”

Read more here.

By Christopher S. Elmendorf, Professor of Law, UC Davis, in City-journal.org, January 14, 2020

“Earlier this month, California state senator Scott Wiener began the third year of his push for a state law to override local zoning and authorize midsize apartment buildings near transit stops. The latest version of his bill, SB 50, comes with a twist that augurs well for its passage and eventual impact.

“Longtime residents, especially homeowners, resist neighborhood change. They’re also the dominant force in local politics. The preserve-the-neighborhood norm would be innocuous if it was limited to a few locales, but when all of a metro region’s municipalities throw up barricades to new housing, the cumulative effect is disastrous.

“The ambition of SB 50 is to turn the clock back to an earlier era — not just pre-1970, but before the Great Depression, when single-family homes in growing cities were commonly torn down and replaced by small apartment buildings.”

“Today, the expansion of urban housing stock is basically confined to formerly industrial and commercial zones. The majority of buildable land in major cities remains locked up in the zoning straightjacket. Once a tract has been zoned and developed for single-family homes, it’s stuck.

“To mollify opponents, Wiener has made it clear that his bill would not touch local authority over demolition controls, design standards, permitting procedures, impact fees, and more. But the less that the bill preempts, the easier it will be to evade.

“The new version of SB 50 deftly resolves this dilemma. Instead of immediately ‘up-zoning’ all residential parcels within a half mile of a transit stop — as the prior versions would have done — the bill defines a default zoning ‘envelope’ for these parcels. Local governments will get two years either to accept the default or propose an alternative ‘local flexibility plan’ that creates an equivalent amount of developable space…

“A flexibility plan takes effect only if approved by the state housing department; otherwise, the SB 50 up-zoning kicks in, by default.

“A local flexibility plan must ‘increase overall feasible housing capacity,’ as the new SB 50 declares. To deliver on that goal, the state agency could insist that a flexibility plan put reasonable limits on fees, permitting times, demolition controls, and more.

“California has long been the poster child for housing-policy dysfunction, but the problems facing San Francisco, Los Angeles, San Jose, and San Diego are also playing out in superstar cities across the nation and worldwide.”

Read more here.”

“Housing costs are being driven up by low supply, increased demand, poor wage growth, and a lack of proper financing tools.”

By Kelsi Maree Borland, GlobeSt.com, January 13, 2020

“The affordable housing crisis doesn’t seem to be getting better. At the moment, there is a perfect storm driving housing prices and rents up. The storm includes low supply, increased demand, poor wage growth and a lack of proper financing tools, all of which are helping to drive rents up.

“ ‘Although we have more resources today, high development costs for land and construction are making it harder to build financially viable affordable housing projects’, says Ceclie Chalifour, west division manager for Community Development Banking at Chase.

• ‘It isn’t only a severe supply demand imbalance, but also a shortage of funding tools and solutions to bring more affordable housing product to the market,’ says Chalifour.
• ‘Over the last couple of years across California, we saw major support from voters and elected officials for legislative and regulatory reforms, as well as additional resources to support the production and preservation of affordable housing, in response to the heightened crisis.’
• ‘The complexity of the tools to finance affordable housing can also present challenges. Developers and financial partners spend a tremendous amount of time, capacity, and financial resources to secure funds and structure transactions.’

“On the capital side, financing packages have focused on permanent supportive housing and workforce housing.

• ‘This has led to industry-wide constructive conversations on underwriting operating subsidies and market risk, capacity of new industry players, and the gap in financial tools,’ says Chalifour. ‘We also saw some innovative approaches to construction and finance, such as modular construction, public sale of bonds, 40-year amortization, and early rate locks, among others.’ ”

Read more here.

By Eric Westervelt, NPR, January 13, 2020

“Across California, … growing homeless encampments evoke shantytown ‘Hoovervilles,’ where hundreds of thousands of destitute Americans lived during the Great Depression. The encampments are frustrating residents, raising health and safety fears and fueling a debate over poverty and inequality in one of the nation’s wealthiest states.

“While homelessness is a hard-to-fix national problem, it is particularly severe in California. The state’s homeless population jumped 16 percent in the past year. And according to a January 2020 report by the Department of Housing and Urban Development, California’s homeless population of more than 150,000 accounts for 53 percent of all unsheltered people in the country.

“Across the state, residents are demanding robust coordinated action on what has now become a public health crisis. In Los Angeles County alone, the death rate for homeless people has risen steadily for years and in 2018 topped 1,000 — about three deaths a day.

“Public backlash in Sonoma County

“The fight over an encampment on a tenuous patch of a grassy drainage ditch along a bike trail in Santa Rosa underscores the challenges of finding a lasting solution to the growing crisis. Amid a growing chorus of outrage at filthy, unsanitary conditions and the presence of rats and used drug needles, the camp has divided locals and even prompted an effort to recall a local politician.

“ ‘I never thought that I would drive past a mile-long shantytown on my way to work. And yet, that’s the reality that we’re facing right now in Sonoma County,’ says County Supervisor Lynda Hopkins, whose district includes the encampment.

“ ‘It just showcases the failure of government at all levels to meaningfully have a safety net for human beings,’ says Hopkins. ‘There’s just no room for error now, there’s no safety net.’

“The federal 9th Circuit has ruled that homeless people essentially have a constitutional right to camp on public property if local governments can’t provide enough shelter beds and services. The U.S. Supreme Court declined to hear an appeal in that case. Those are services Hopkins says the county simply can’t afford now on its own.”

Read more here.

By Janice Bitters, San Jose Spotlight, January 9, 2019

“Sand Hill Property Co. is planning a new 91-townhome development in Saratoga, but the project comes with a twist: the prominent developer is using a controversial state law to streamline city approvals.

“Since Senate Bill 35 took effect in 2018, the law, which speeds up the development of certain housing projects, has been used only a handful of times in the Bay Area, generally for high-profile projects that have stalled in the past, or that developers fear may stall.

“On [January 9, 2020], Sand Hill Property Co. officials submitted plans to the city, announcing its intent to use the law to build the two- to four-bedroom townhomes alongside about 5,000 square feet of commercial space in place of the existing Quito Village retail center.

“If the project is approved through SB 35, each townhome would stand two stories tall, spanning 1,700 to 2,400 square feet and have a two-car garage.

“Of the 91 for-sale homes, 10 percent — or nine townhomes — would be set aside as affordable homes, though the prices haven’t yet been set,” according to Sand Hill’s director of planning and entitlement Steve Lynch.

“Sand Hill’s proposal opts to make those nine affordable units available to people who are considered very low-income earners, one step further on the affordability scale than required by law.

“ ‘We’re bringing new housing to a community that has shown itself to produce almost no housing over the last four years,’ Lynch said. ‘We’re excited to help them meet their RHNA numbers on a shopping center site that … is a dead vacant site.’ ”

Read more in the original article, including how Sand Hill Property Co. invoked SB35 to redevelop Cupertino’s Vallco Shopping Mall.

By Ally Schweitzer, WAMU American University Radio, January 9, 2020

“High housing costs affect those who can’t afford them — they also impact employers, local governments, your neighborhood coffee shop, and even well-to-do homeowners.

“High housing costs worsen traffic

“Traffic is often cited as a reason not to build housing. Add more residents to an area, the logic goes, and you put more cars on the road. But there’s evidence that not building housing can make traffic worse.

“When people can’t afford to live near jobs, they move somewhere cheaper and drive to work.

“A 2017 analysis by Portland’s public transit authority found that a drop in ridership stemmed from displacement of low-income workers from the Oregon city.

“That’s why a 2018 report by the Housing Leadership Council of San Mateo and ‘smart growth’ organization TransForm urged officials in the Bay Area to view housing production as a partial solution to the region’s intensifying traffic congestion.

“ ‘Reducing travel demand requires looking at what is causing the traffic,’ the report said. ‘One of the most important factors is the scarcity of homes local workers can afford, that are close to jobs and high-quality public transit.’

“Employers need workers at all wage levels

“High housing costs are a major problem for employers — from the federal government to your local hardware store.

“Both the public and private sectors rely on low-wage work. Fortune 500 companies and federal agencies employ low-paid contract workers like security guards and maintenance teams. Retailers need cashiers and restaurants need servers. The fast-growing hospitality industry depends on line cooks, room cleaners, and bellhops.

“Cost-burdened people buy less stuff

“Consumer spending accounts for about two-thirds of economic activity in the U.S. A lack of affordable housing can hurt local businesses and the regional economy. Increasing housing supply — and keeping housing prices in check — ‘could result in greater consumption of other goods and services that stimulate growth and employment gains in other sectors, which could have a multiplier effect,’ according to the Urban Institute.

“ ‘You have to clearly show what’s in it for every individual involved,’ said Arlington County Board Member Christian Dorsey. ‘We have to get people to understand that this is not just about your ability to afford housing versus someone else’s. It’s how this all impacts the functioning of a community.’ ”

Read more here.