Two single-family homes under construction
Santa Clara County received $700 million to build affordable housing last year, down from about $925 million in fiscal year 2022. File photo.

State and federal funding for affordable housing took a steep drop in Santa Clara County last year, putting more of a burden on local governments to address the housing crisis.

The cuts in state and federal funding declined by 24%, resulting in a $225 million funding decrease for affordable housing, according to a report released earlier this month by housing think tank California Housing Partnership. The county received $700 million to build affordable housing in fiscal year 2023, down from about $925 million the previous year.

The reduction stems from significant cuts to a federal program that helped fund housing for extremely low income families and the exhaustion of revenue from Proposition 1 — a state housing bond passed by voters in 2018 that helped veterans and low to moderate income families buy homes.

“The loss of $225 million in state and federal funding will likely continue and lead to a reduction in the number of affordable housing options,” Preston Prince, executive director of the Santa Clara County Housing Authority, told San José Spotlight.

In addition, Gov. Gavin Newsom is proposing to slash hundreds of millions of dollars more in state initiatives for affordable housing.

Destination: Home Chief Operating Officer Ray Bramson said the cuts in state and federal funding will put the onus on local governments to subsidize affordable housing.

“It makes local funds all the more important,” Bramson told San José Spotlight. “We’re going to need the city of San Jose and the county to fill the role of a ‘soft lender’ (to subsidize affordable housing).”

Bramson points to the importance of preserving San Jose’s Measure E funds toward affordable housing, money the city has proposed to use to clear out the waterways of unhoused individuals and to construct temporary shelters. Measure E is a property transfer tax approved by voters in 2020, mainly for the purpose of building affordable housing, although up to 25% can be used to help the unhoused residents with programs and services. Building affordable housing is the key to preventing homelessness, Bramson said.

Three-quarters of extremely low income families are already spending more than half their monthly wages on housing, according to the report, and 54,600 low-income households aren’t able to find affordable homes. People need to earn approximately $60 an hour to afford the asking rent of $3,000 a month. San Jose’s minimum wage for most workers is $17.55 an hour.

As rent and cost of living continue to rise, Bramson said it will price out more vulnerable families and drive them into homelessness.

“They are one paycheck away from homelessness,” he said. “We have thousands of people out on the streets right now, and we are going to see more elders, families and individuals outside on the streets if we don’t continue to significantly increase the production of deeply affordable housing.”

As of last year, the county’s homeless population has grown 3% since 2019, totaling 10,028 people, of which 1,026 are in families. For every one Santa Clara County household that was housed in 2023, nearly two households became homeless, according to the county’s year-end analysis of its 2020-25 Community Plan to End Homelessness.

In 2016, the county passed Measure A which put $950 million toward building affordable housing. But that money has been completely allocated as of this year. The county’s sources to fund affordable housing remain largely uncertain at the moment, Bramson said. Come this November, voters will decide if they want to support a regional bond that would put between $10 billion and $20 billion toward affordable housing in the Bay Area. Santa Clara County could receive up to $2.4 billion, and San Jose could receive another $2 billion from the bond.

“The reduction in state and federal funding and the subsequent negative consequences could be reversed if the State Legislature places an affordable housing bond on the ballot this November and the voters approve it,” Prince said.

Contact Joyce Chu at [email protected] or follow @joyce_speaks on X.

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