Billion-Dollar Boondoggle: Four Years After Measure A, Santa Clara Co. Has Little to Show for It

Four years ago, Santa Clara County voters narrowly approved a stunning $950 million “affordable housing bond” measure. The bold move to get people out of tents and creek beds and off of freeway ramps was hailed at the time by Ky Le, director of the county Office of Supportive Housing, as “an unprecedented opportunity ... to significantly address the housing needs of the community’s poorest and most vulnerable residents.”

The initiative would create 4,800 units of new affordable homes over 10 years to shelter half the estimated 10,000 unhoused county residents. The ballot measure, funded by the Chan-Zuckerberg Initiative and endorsed by more than 100 local officials and organizations across the political spectrum, authorized bonds to be paid back through an assessment added to homeowners’ property tax bills. The annual cost for a homeowner with a house appraised at $1 million would be $127 a year. With debt service, $1.9 billion would be collected from taxpayers to pay the bonds.

All county supervisors voted for the measure, but two took the lead.

Then-board president Dave Cortese signed the ballot argument and his chief ally on the board took authorship credit. “Supervisor Cindy Chavez [current board president] is the primary architect of the groundbreaking $950 million Measure A–a housing bond passed by voters in November 2016 to end homelessness in Santa Clara County,” her official county website touts today.

Far from ending homelessness or even cutting the population in half, however, Measure A has failed to even make a dent in the problem in the nearly four years since its passage, despite a quarter billion dollars in available funding awarded to date.

In the past three years since the first $250 million in bonds were sold, less than half the funds—$124,549,582—have been put to use. By anybody’s yardstick—measured by unhoused people, real estate developers, county supervisors, even the county’s own Office of Supportive Housing—Santa Clara County’s ambitious effort to increase affordable or supportive housing has fallen woefully short of its goals.

Measure A has only built and filled 146 units, an average of 36 a year since passage, and far short of the 2,900 units the county boasts of in its progress reports. Only one more project will be completed this year, and that’s a fix-up of an existing affordable housing project that won’t expand the available housing supply.

Concern about the pace of progress in providing new affordable housing prompted board President Chavez in March to ask county staff to identify ways to accelerate construction of new, Measure A–funded housing. The report delivered this week detailed delays for many of the projects already approved by the board.

The staff also recommended that and recommended that another bond issue would not be needed until 2021 because so many of the projects had been delayed a year or more, even though the supervisors have allocated nearly $422 million for 29 approved projects.

The board officially received the report at approximately 10:30pm Tuesday near the close of a marathon session that had begun at 9:30 that morning.

In addition to accepting the report, the supervisors asked the housing staff to come back in August to report on whether it had adequate staffing, and to set dates for completion of a consultant’s study of the Measure A progress.

Many of the units that Measure A claims as successes may have been built anyway, and datelines suggest that the initiative may have simply put money into projects already in progress rather than adding to the county’s affordable housing stock.

Planning submittals for the 84-unit Villas on the Park in San Jose and Gilroy’s 75-unit Monterey Gateway, for example, occurred fully half a year before the November 2016 vote. Together with two other projects, one in Morgan Hill and the other in Cupertino, the four new apartment buildings received $21.5 million from Measure A, plus another $11.6 million from local cities.

Now, as county supervisors look to spend more bond money for the slow-moving program, other long-planned projects are being pulled under its umbrella. Some of the money is now being directed to bankroll showcase projects on the valley’s most expensive real estate by a single politically connected developer.

One of those projects is on a piece of the valley’s most valuable retail land, catty-corner from Santana Row. It will place 54 units set aside as permanent support housing for homeless households across the street from Louis Vuitton, Tiffany & Co., Cartier, Longchamp, Gucci and Prada. The project, known as “The Agrihood,” will grow zucchini, okra and eggplant at the corner of Winchester and Stevens Creek boulevards and provide subsidized below-market housing for seniors.

The second is the proposed Gateway Tower highrise in downtown San Jose’s SoFA District, which project predates Measure A as well. It was submitted to San Jose in 2015 and is described on its developer’s website as “a 24 story, 300-unit, luxury high-rise apartment building located in the SoFA district of downtown San Jose” that’s “designed to appeal to the Silicon Valley’s sophisticated renter.”

“Gateway Tower will be THE place to live in the South Bay to get that dynamic, urban-living experience,” the website adds.

Core Development Vice President Christopher Neale confirmed this week that “it was going to be a market rate project” and that it will now be mostly affordable.

The county’s housing office said the project will have 220 affordable units, and 80 “workforce housing” units. Opening has been pushed back to the spring of 2024, as Core is seeking financing for the project.

Both Gateway and Agrihood are being developed by Core Development, which, along with its partner in Gateway, Republic Urban Properties, has generously given Measure A’s two champions, Chavez and Cortese, political donations over the years.

Together, the two Core Development projects, along with Measure A money used to freshen up and buy out financial partners at two apartment complexes that Core built in 2003 on Monterey Road, will consume more than $101,750 million of the housing bond measure. That’s nearly a quarter of the money that’s been allocated to date, and nearly double what any other developer has gotten.

Broken down, the county will pay $64 million to put formerly homeless and low-income residents in Core’s downtown highrise, $23.5 million for the agriculture-themed senior project adjacent to Silicon Valley’s largest concentration of luxury shopping and $14.2 million to re-subsidize two 17-year-old Core properties that had fallen into disrepair and needed debt restructuring.

Other Programs Stalled

The measure also aimed to offer rent subsidies to low-income families and individuals, plus loans for first-time homebuyers. As for subsidizing 1,000 first-time homebuyers’ loans, just 16 had been issued by mid-May, according to a staff report submitted to the county Board of Supervisors on June 23.

Another objective, funding and implementing 200 new “tenant-based rental assistance” programs for permanent subsidized housing, was established after the vote. As of mid-May, none of these had been set up, the staff reported. The county’s Office of Supportive Housing has issued progress reports announcing 2,416 new units and that it has “programmed” more than $422 million worth of projects, many of which are underway. This accounts for nearly half of the bond issue authorization in less than four years, which prompted some county officials to declare that several goals had been “attained.”

A look at the office’s report, however, shows that the “attainment” of a housing goal does not mean the housing has been provided—simply that contracts have been signed with local developers to build the projects, some of which are still searching for financing.

Of the nearly $422 million in programs allocated since the 2016 bond vote, the county reported that approximately $124.5 million had actually been spent by mid-May.

The projects offer incentives for real estate developers to make all, or a sizable percentage, of their new apartment units affordable for individuals or families earning at or below 30 percent of the county’s median income.

The latest staff report submitted to the supervisors this week identified 29 projects, totaling more than $375 million. More than half are behind schedule, some by a few months, some by more than a year, according to county staff.

“All of the developments are experiencing delays,” the staff report acknowledged. Later in the report, staff said, “the county is hitting unit production targets.”

County housing staff attributed the delays to a number of factors, including the impact of the COVID-19 pandemic, which didn’t hit until mid-March.

“The health crisis and changes to the way that the California Debt Allocation Committee allocates tax-exempt bonds and 4 percent tax credits have created some uncertainty in securing previously non-competitive tax credits,” the staff report explained.

Recommended solutions include creating another task force on homelessness and hiring a new consultant. The staff report also warned that the total number of projects the county can support with Measure A funds may be less than the original projection of 120 developments. The original goal was 6,000 units—3,600 new apartments and 2,400 dwellings with subsidized rents.

All of which means little to the county’s growing unhoused population.

The city staff said some delays can be avoided by streamlining some state legislation, but argued that “more creative and active solutions are needed.”

Staff recommended that the board add several staff positions to help improve the approval process. No decision was made on the staff expansion.

County supervisors agreed this week to create a new temporary task force charged with “identifying and contributing to feasible strategies to address homeless in the county, with a focus on emergency shelter and transitional housing solutions.”

The task force is to issue a report within seven months of its first meeting.

Staff asked the supervisors to adopt new strategies to accelerate the spending of the Measure A bond money to provide new housing for unhoused county residents. The first strategy they advocated is to focus on developing “rapid re-housing.” While claiming that “a significant portion of permanent-supportive-housing goals are ahead of schedule,” the concept of using tenant-based subsidies for rapid re-housing won’t work, the staff said.

The county administration will hire a new consultant “to assist in the development of an incentive program” to encourage the development of “rapid re-housing” units.

A second strategy advocated by the staff is to develop housing on county-owned land, with specific focus on land adjacent to newly acquired healthcare facilities, specifically St. Louise Hospital in Gilroy and DePaul Urgent Care in Morgan Hill.

Staff also advocated developing partnerships with cities, community colleges and school districts as well as hospital districts, to identify solutions for new affordable housing.

Recognizing that developers may need additional incentives to participate in affordable-housing development, the county administration is exploring a new borrowing program, providing pre-development loans of up to $100,000 to builders with units earmarked for affordable and supportive housing. Loan funds would be used to cover the costs of feasibility analysis; developers would be required to match the funding.

Dan Pulcrano contributed to this report.

7 Comments

  1. “Recognizing that developers may need additional incentives to participate in affordable-housing development, the county administration”

    When did we vote in supervisors with some sense? Now that’s news.

  2. Santa Clara County desperately needS a STATE audit. The mismanagement of money has been an on ongoing situation where the top two corrupted supervisors Chavez and Cortese are always the main players. This happens at all level of the county. The Mental Health Services Act funding is also being mismanaged. Some in the county decided those funding or portion of it will now cover some seniors nutrition programs at some local “non-profit” organizations. There should be County’s cuts of non-essential employees. Cindy CHAVEZ and Dollar DAVE have much more staff than what they need. They use their staff for political PR. The organizations better connected to these supervisors get the best chunk of these governmental scams!

  3. So predictable. And so predicted. By myself, by Bubble, by many others on this website. Just go back and read the OP-eds by the “experts” touting the virtues of Measure A back in 2016. And read the comments.
    But never mind. The sheep of Silicon Valley are still convinced that the geniuses like Dave and Cindy actually have a clue about how the world works and are prepared to follow them over the cliff to solve the next “crisis”.

  4. Republic Urban Properties is not partners with Core Companies on the South First “Gateway Project” as reported. We are partners with Core Companies on the Tamien LRT Station and at the Millbrae at Gateway Station at the Millbrae BART Station.
    Michael R. Van Every
    President and CEO
    Republic Urban Properties

  5. $125 million for 146 units is $850,000 per unit. Is that the net-net, or was some of the money spent elsewhere?

  6. In case you were born during the time of a complete moon, the effect will probably be better. Use the word We when you are writing what the additional person would say. The same objective may take pictures without any problems.

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