by Mary Kaiser
As California makes affordable housing a Mission: Impossible, we risk our future.
Say it together now: “California has a housing problem.” And as I’ve repeatedly said in lectures and past articles, we’re all in love with the problem—quick to identify it but less quick to identify whose role it is to fix it. “Housing: Affordable” is our “Mission: Impossible,” without any heroics from the public and private sector to save the day.
Local companies think nothing of multimillion dollar capital investments to maintain a competitive edge. New equipment? Part of doing business. IT overhaul? We have no choice. Affordable housing for the workforce? Silence. Companies will acknowledge a “crazy real estate market” (again, “in love with the problem”) while their employees, and often their own children, are condemned to lengthening commutes between affordable homes and the workplace. Recruits from out of state don’t face the same challenge. They either decline job offers upon pulling neighborhood comps, or they grouse en route to the new executive office: “$1.6 million buys so much more in Minnesota.”
At the May 2nd Orange County Housing Summit, Carl Guardino, CEO, Silicon Valley Leadership Group, cited an economic pitfall. Hewlett Packard employees pay an average of $890,000 for a house in their HQ city, Palo Alto, compared to Dell workers in Round Rock, Texas, where the going price averages $250,000. In short, Silicon Valley will become a victim of its own success as workers—and by extension, their employers—are priced out of local housing. In response, Silicon Valley companies have started a housing trust fund, fueled by private donations, with the intent of helping workers acquire area housing.
photo: Andrea Church
The above scenario illustrates a new business mandate: employers providing help for real estate as they do for that other life essential, health care. As is the case with insurance, employers subsidize real estate options, not pay for them outright. How can employers who don’t have Silicon Valley-sized profits afford to get into the real estate business? Answer: the same way we encourage other desired behaviors—with public/private programs and incentives where government rewards the private sector for working together to solve problems that individuals can’t solve on their own, like housing affordability.
Companies could receive tax credits for workforce housing expenditures, either when they provide financial aid or below-market-rate properties for their employees. Density bonuses and parking relief provided by local municipalities would allow developers to build more overall housing units when they construct a number of units affordably priced for an identified workforce and/or placed close to transit corridors to lessen traffic burdens. Under such programs, tight housing inventory would get some relief, and our depressed homebuilding industry would get new projects.
The California State University is not waiting for systemic change. It has gone into the real estate business to support its primary business, education. University Heights is an important example—the second off-campus home ownership program of the CSU Fullerton Housing Authority, built for faculty and staff. The community comprises 42 duplex units built through a partnership of non-profit entities and the Elks Lodge of Fullerton. The Elks and general contractor Valeo developed a financing and land use plan that allowed construction of a new lodge on Elks property and provided space for University Heights on the remain parcels. The result: CSU Fullerton can recruit quality professors from across the country with the incentive of affordably priced housing.
A Cal State campus is a good place to learn another housing lesson. Every graduating class is one more army marching into the workforce without barracks. Educated as an investment in California’s future, they are unable to afford housing on entry-level wages. Soon, Kansas and North Carolina will receive our homegrown talent with open arms and reasonable real estate. Our publicly funded UC system and community colleges are generating a similar brain drain and heartbreak.
The echo boomers will leave nothing in California but an echo and their boomer parents lucky enough to get on the housing merry-go-round in an earlier, simpler, cheaper time. The City of Santa Barbara is a prime example of the new California. Average ages and housing prices soar. Bulging equity lulls the “haves” into thinking they’re sitting pretty. Not so. Essential workers and future generations are banished. The cops and nurses who keep the population safe and healthy have to live in other zip codes, if not area codes. Even housing for teachers was rejected in Santa Barbara in lieu of a new park. Kids and grandkids e-mail from Raleigh-Durham, “Love the new job. Check out our HUGE backyard. Wish you were here.”
So how do we write the happy ending for our Mission: Impossible? We can’t expect Tom Cruise to rappel to rescue. But wait! We do have an action hero at the ready. Message to Arnold Schwarzenegger: as you circumvent Washington in your quest for a better state and better world, look at the real estate listings. Ask local companies how those prices impact recruiting and retention. Your mission, should you choose to accept it, is to champion tax credits, density bonuses and other programs that will stimulate employer assisted housing. Good American that you are, Mr. Schwarzenegger, you must keep the American dream alive within California’s borders.
This piece originally appeared in the Modesto Bee.