SAN JOSE — As Silicon Valley’s lack of affordable housing has escalated from bad to full-blown crisis over the last few years, people at the bottom of the economic scale increasingly have been squeezed out of the red-hot rental market.
Even those fortunate enough to receive a golden ticket — a subsidized housing voucher — still have difficulty finding landlords willing to accept them. So in an effort to get around that problem, the Housing Authority of Santa Clara County is expanding a different strategy: Instead of tying all the housing vouchers to recipients, the agency will attach 1,000 vouchers to newly built housing aimed at low-income residents.
“The reality is we’ve had people spend months and months looking for housing units that simply don’t exist,” said Alex Sanchez, the housing authority’s executive director. “They’re looking, but they just can’t find housing. This is the only solution in a hot market like ours where there simply are no vacancies.”
The housing authority, which administers the federal Section 8 voucher program, serves 17,000 local households consisting of working poor, the elderly and those on disability. The vast majority of these subsidies are “tenant-based” — meaning they are provided to individuals who then use them to secure rental units on their own. The vouchers cover about two-thirds of their rent and often can be the only thing preventing recipients from slipping into homelessness.
The problem in Silicon Valley, an epicenter of the Bay Area’s exploding housing costs, is that landlords are ignoring Section 8 voucher-holders when others are willing to pay higher rent. Sanchez said there are 600 people with subsidies who currently can’t find places to live.
But “project-based” vouchers are different. They’re attached to a specific unit, not a person. The idea is developers will enter into agreements with the housing authority to build projects designed for low-income residents — using the subsidies as a key financing tool.
Sanchez said the 1,000 vouchers, which will become available through regular turnover, represent about $222 million in funding over the 15-year commitment period. When matched with other funding sources and tax credits, the total value could reach upward of $700 million in financing for developers who build affordable housing projects.
“If someone is looking for housing right now, they obviously wouldn’t benefit from this,” Sanchez said. “It will take a long time to get these projects built. But this is what we need to solve the housing crisis.”
And make no mistake, this effort would put only a small dent in arguably the biggest problem facing Silicon Valley. Santa Clara County has a shortfall of more than 67,000 affordable homes available for low-income renters, according to a California Housing Partnership Corporation report released in April. But affordable housing advocates still are praising the housing authority’s change in focus.
“This could be a great opportunity,” said Jennifer Loving, executive director of Destination: Home, a private-public partnership focused on ending homelessness. “There is no single entity or program that is going to solve homelessness in Silicon Valley. But this can be a good piece of the pie to create affordable housing. It has to be a group effort.”
The county has 7,567 homeless according to the most recent survey, the 2014 Annual Homeless Report to Congress. An updated snapshot of how many people are on the streets will come when county and San Jose officials are expected to soon release the results of a Point-in-Time homeless count that was conducted in January.
Meanwhile, a groundbreaking study released this month — commissioned by the county and Destination: Home — found that homelessness costs $520 million annually in services throughout the county. The lion’s share of that expense comes from a relatively small group of persistently homeless.
In the new housing authority program, at least 300 project-based vouchers will be targeted toward supportive housing for special-needs individuals, such as people with disabilities who are chronically homeless. That’s the type of housing Fremont-based Abode Services builds. The nonprofit currently has seven projects operating in Santa Clara, Alameda and Santa Cruz counties with several others in the planning stages.
The vouchers can create an incentive that makes affordable housing projects attract other investment by being more viable, said Louis Chicoine, Abode’s executive director.
“It’s really hard to make these kinds of projects pencil out,” Chicoine said. “Those vouchers can be the cornerstone of any supportive housing project. So there’s some very creative thinking behind this. And if you look at the study about the cost of homelessness, you realize that it’s a win-win for everyone to get people housed. It’s all there in black and white.”
Project-based vouchers are not a new idea. The housing authority already has 1,200. But this could become the new model moving forward. The agency will request proposals from developers in the coming weeks and Sanchez, who is retiring at the end of the month, is expecting a lot of interest.
“We’ve all seen some pretty dramatic increases in the rental market,” he said. “Our clients can’t compete when the market spikes like this. This is something we have to do.”