Palo Alto City Councilmember Greer Stone called the $2 billion for housing investments in the 2022-23 California state budget “absurd,” after receiving updates about the 2022 Legislative Session from the city’s Federal and State Legislative advocates at the monthly Policy and Services Committee meeting Oct. 11.
In July, California adopted a $307.9 billion budget. “Far less than 1% of the state budget going toward housing — mostly affordable housing building,” Stone said.
The $2 billion breaks down into two pots: $1 billion for homelessness, which includes funding to cities, counties, and continuums of care to address homelessness issues, and the other $1 billion for accelerating the development of affordable housing.
“That’s better than nothing,” Stone said. “If I’m starving to death, I’ll take a slice of bread if you give it to me, but when you’re sitting on a king’s feast and that’s all you give me, that’s insulting.” This year, California has a record budget surplus of nearly $100 billion.
The committee, nonetheless, welcomed Sacramento’s approval of a $26.6 million Homekey award that will go into developing “an interim housing shelter with the capacity to serve over 300 individuals annually with on-site support service,” according to the city’s news release.
The Palo Alto City Council is in the process of adopting the Sixth Housing Element, a state-mandated plan updated every eight years that delineates the city’s strategy for meeting the housing needs of the community.
Covering the next eight-year planning period (2023-2031), this updated Housing Element will include a Regional Housing Needs Assessment (RHNA) allocation plan, another state-driven effort to quantify the housing need for all income levels in each region. Palo Alto received an allocation of 6,086 new housing units, 3,465 of which will be affordable and below-market-rate (BMR) housing.
Building 3,465 affordable housing units in the next eight years won’t be easy.
According to UC Berkeley’s Terner Center for Housing Innovation, the cost of building a 100-unit affordable project in California increased from $265,000 per unit in 2000 to almost $425,000 in 2016.
Now, the cost almost doubled again — Wilton Court, a 59-unit project in Palo Alto now finishing up construction, costs $780,000 per unit. The building is property of Alta Housing, an independent non-profit agency that develops and manages low- and moderate-income housing in Santa Clara and San Mateo Counties.
“There’s this huge mandate from the state to build housing, but the state hasn’t backed it up with new funding and financial programs in order to make that a reality,” said Alta Housing COO Sheryl Klein. Klein and her team are carefully putting together funding—donations from private agencies, corporations, and individuals—to make sure the projects aren’t dependent on future funding from the state or the federal government.
According to the statistics from Alta Housing, Palo Alto was a leader in building affordable housing in the 1970s, but the production decreased: in 1970-1979, 902 affordable and BMR housing units were built, but four decades later, in 2010-2019, only 268 units.
“The decrease is really due to a lot of factors,” Klein explained. “The lack of state funding, but also a lack of support from the City Council over time.”
Stone called on Governor Gavin Newsom to help the city fund new affordable housing construction. “Put your money where your mouth is.”
“They’ve created an unreasonable standard” and aren’t “providing the funds to help us meet that goal,” Stone added.
“The state has kind of focused its housing tools around deregulation and really making it easier to build market-rate housing, which in Palo Alto is luxury housing for millionaires,” Stone said. “But the California housing crisis is not about market-rate housing — it’s an affordable housing crisis.”
