Affordable Housing for Whomst?

Richard Mehlinger
Nov 6 · 8 min read

Last week, a post went up in a Sunnyvale nostalgia Facebook group about an affordable housing project being built near Sunnyvale downtown.

The project in question is being built by Related California and supported by Housing Choices. The project is located at Mathilda and Iowa on a 1.44 acre city-owned lot called, charmingly, Block 15 (confidential to city staff: please come up with a name that doesn’t sound like a German POW camp). Most of the units will be affordable to low-income residents, with a section reserved for developmentally disabled adults.

But group members were suspicious. One asked, “ Yeah, but affordable for who?” Another wrote, “Affordable at only $5500 a month utilities and parking not included. Plus hoa and first and last month upfront no pets with credit score of 750+”.

Rendering of the Block 15 Affordable Housing Development

Every pro-housing advocate I know sees this sort of response. When a market rate housing development is proposed, people say “but we need affordable housing!” When genuine affordable housing is proposed, though, it gets the “but affordable for whomst?!?!” treatment.

I think a lot of this comes down to a misunderstanding of nomenclature. People do not realize that “affordable housing” is not just a marketing term (unlike “luxury” housing, which is just a marketing term). Rather, to describe a development as “affordable housing” has legal implications about who can live in it and what they’ll pay.

The Basics

Let’s start with the terminology. “Affordable housing” does not simply mean “housing that happens to be inexpensive”. Rather, it is a technical term. Affordable units are available only to residents in certain income groups, and their rent is pegged by the county, state, or federal government to be “affordable” to those income groups. What does “affordable” mean? Well, the federal government standard is no more than 30% of one’s pre-tax income.

There are four income levels that are served by affordable units, defined in relation to area median income (AMI): moderate income (80–120%), low income (50–80% AMI), very low income (30–50% AMI), and extremely low income (0–30% AMI — typically an adult on SSI disability). If you don’t fit in the income band, you can’t rent the unit. So if you make 100% AMI (about 100k/year for a single adult), you’d be eligible for a moderate income unit, but not a low income one. Some affordable housing units are also restricted to senior citizens, adults with disabilities, or the formerly homeless; in the latter two cases the units also typically come with supportive services on site. Block 15’s extremely low income units will be for adults with developmental disabilities.

Table of Affordable Income Levels
+----------------------+------------------------+----------------+
| Income Level | Definition as % of AMI | Maximum Income |
+----------------------+------------------------+----------------+
| Extremely Low Income | 0% - 30% | $30,570 |
| Very Low Income | 31% - 50% | $50,950 |
| Low Income | 51% - 80% | $81,520 |
| Moderate Income | 80% - 120% | $122,280 |
| Median | 100% | $101,900 |
+----------------------+------------------------+----------------+

There are two different kinds of affordable housing: rental and ownership. Rental is what I’m focusing on here, since that’s what Block 15 will be. But it’s worth a brief discussion of ownership affordable housing (also known as BMR). BMR ownership units are typically available to first-time home buyers with moderate income (80–120% AMI), sell at a vastly discounted rate, and come with a discounted loan. However, equity does not accrue to the owner of a BMR unit in the same way that it does to the owner of a regular single family home, and there are restrictions on how it can be resold. You can learn more details here: https://housingtrustsv.org/below-market-purchase-program/.

California rental units classed as affordable housing come with a 55-year deed restriction.* For the duration of the deed restriction, the rent or purchase price for that unit is set at levels dictated by the county, state, or federal government. Those rates are pegged to the number of residents in the unit, area median income (AMI), and the level of affordability of the unit. Because this is a deed restriction, these conditions persist no matter who owns the unit. Block 15 will be affordable rental housing, consisting of studio and one bedroom apartments as well as a two bedroom manager’s unit.

How does it get built?

Affordable housing gets built in two ways. Nonprofit developers will build affordable housing projects, financed through tax credits, public grants, and philanthropy. Some of that money comes from affordable housing impact fees that private office and housing developers pay on their projects. Every dollar non-profit developers raise can be leveraged several times over through loans.

For-profit developers will also build affordable units as part of market rate developments. Some of these are required by local governments — Sunnyvale recently passed an inclusionary zoning ordinance requiring 15% of new apartments to be set aside as low and very low income affordable units. Prior to its passage, developers could instead pay an impact fee. 12.5% of units in ownership developments are also required to be set aside for the city’s BMR ownership program.

Other affordable housing units are built voluntarily by developers, who get to claim federal and state tax credits for doing so. Adding affordable housing also allows developers to utilize California’s state density bonus, which can allow them additional height and density over what is normally allowed by the city zoning code, and can also allow them to claim variances on things like parking and setbacks.

But what do they cost?

Rents in an affordable unit are pegged to be affordable for the income group it serves. That means that they can’t exceed more than 30% of the resident’s income. What do those rents look like? Consider a single person renting a low income studio. According to the city of Santa Clara, that person could expect to pay $1,427 per month. Most studios in Sunnyvale go for around $2,000 per month. What about a very low income family of four living in a three bedroom rental? Well, they could expect to pay $1,274 in rent. At market rate, one would struggle to find a three bedroom home of any sort under $3500 per month.

In short, affordable housing is a really good deal. It’s a LOT less than what you could expect to pay for a market rate unit, and you have the security of knowing that your rent can’t go up more than cost of living. There’s strong evidence that poor and working class children do far better when raised in a wealthier neighborhood than when raised in a poor one, for the simple reason that they get to go to better schools and face less exposure to crime and environmental toxins. So building deed restricted affordable housing is straight up one of the best things we can possibly do as a society.

And what do they look like?

So what do affordable housing developments look like? Well, the massive housing projects of the 60s and 70s that gave affordable housing such a bad name are no longer being built; the Nixon administration banned any more federal government spending on high-rise affordable housing. Instead the federal government now subsidizes private development of affordable housing through tax credits and the Section 8 program.

The fact is, most modern affordable housing developments look just like any other apartment building. Because non-profit developers are competing for public and private grant money and also typically need public approval, they work hard to ensure the developments they build are attractive and well-integrated in the community. You may not like the blocky faux-modernist design that seems to have taken over modern apartment construction, but at least it’s the same style as what most of the market rate units are being built in. And it’s certainly not the soul-crushing Brutalist towers of the 60s.

Edwina Benner Plaza, an affordable housing project that opened in 2019

The Catch

There is, unfortunately, a catch. It turns out the region has a massive shortage of deed-restricted affordable housing units in the county. SPUR estimates that the nine-county Bay Area built 700,000 units fewer than we should have from 2000–2018; more than half of those missing units needed to be affordable below AMI. It’s not uncommon to see dozens of eligible applicants for a single affordable home. Which one of those dozens actually gets a home is decided by lottery.

This isn’t some random happenstance. It’s not because of the evil developers, or of big tech, or even our nice weather. It’s the result of political failure. It’s because cities in the Bay have added hundreds of jobs without adding housing for those workers to live in, because people didn’t want new apartment buildings in their backyards. Throughout the entire Bay Area, cities have added massive amounts of jobs and very little housing. Land is thus extraordinarily, devastatingly expensive.

The cost of land is also driving up construction costs, since construction workers need a living wage. Local zoning ordinances (including Sunnyvale’s!) typically ban even fourplexes, let alone apartment buildings, on the vast majority of residential land. This makes it very difficult for affordable housing developers to find places to build, even when they can get the funding.

And getting funding isn’t easy, either. Previous generations of California voters passed regressive measures like Prop 13 — the biggest handout to landowners in history — and Article 34 of the state constitution (a segregationist measure passed around 1950 that bans local governments from building public housing without a referendum). The result is soaring rents, crushing traffic, and a slow-motion environmental catastrophe.

That’s why Block 15 is so important. We desperately need every unit of affordable housing we can get. If I had my druthers we’d be building even more here. There’s good news, though. The state has recently passed legislation protecting renters and making it easier to build affordable housing, and there’s legislation pending that would legalize multifamily housing throughout much of the region (much as Minneapolis did).

Building affordable housing won’t destroy Sunnyvale’s neighborhoods. It will enrich them. It will bring a more diverse set of people will be able to live in our community — not just doctors, software engineers, executives, and people who bought a long time ago. It will ensure that the people we need for our city to function will actually be able to afford to live here. It will alleviate the traffic that is being caused by having workers commuting in from Tracy. It will cut carbon emissions. It’s a small but important step toward building a racially equitable society. And you know what? It’s the right thing to do.

So please: write to council and advocate they build as many affordable units at Block 15 as possible. And the next time an affordable housing project comes around your neighborhood, speak up for it.

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