There are thousands of middle-class Californians who don’t make enough money to live comfortably near their jobs. Yet they make too much to qualify for affordable housing. Here’s how some local governments are trying to fix that.
In hopes of plugging the state’s affordable housing shortage, some California government agencies are purchasing buildings, usually luxury ones, and doing the opposite of most real estate buyers. They’re lowering the rent.
The Los Angeles City Council is awaiting a staff report on the possibility of joining. In Northern California, the San Jose City Council declined to participate after city staff concluded “the risks and costs of joining ... outweigh the potential benefits.” The Serenity at Larkspur apartment complex in Marin County, one of several offering subsidized housing for teachers, emergency responders and other workers that qualify as middle-income.
Schoolteacher René Maher stands near a fire pit and pond at Serenity at Larkspur, where she is able to rent a one-bedroom unit in part because of a special subsidy given to teachers.She said she initially lived so far away from the school because closer apartments were rundown, in neighborhoods that felt unsafe or lacked appliances such as washers and dryers.
Cities can force a sale or refinance as soon as 15 years from the bonds’ issuance, though that would make it harder to get their money back. In some cases, after a building acquisition, rent for some units at the upper income limits hasn’t dropped and market rate is being charged, but backers say that over time limitations on rent increases embedded in the programs mean those units should become cheaper than they otherwise would have been.
Millions of Americans, especially low-income tenants, are accumulating debt amid the COVID-19 pandemic, threatening to create a downward financial spiral. Schwartz said the analysis suggests many people renting through the programs could find cheaper housing not funded through public subsidy that could otherwise go toward schools, police and other services. He added that the higher quality of homes on offer is “nice, but it shouldn’t be the standard for using public funds in our view.”Concerns over levels of affordability have also surfaced in some city deliberations.
The San Jose City Council decided the opposite. In May, it voted 11 to 0 to not join any of the established programs after staff raised concerns over loss of property tax revenue, lack of city oversight and how compensation paid to project participants limited affordability to levels it considered “modest.
Given the historical rise in real estate values, program backers said it’s unlikely a city would not get more tax revenue back than it deferred after it sold the building or kept it and took out a loan on the property.
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