Santa Clara County housing bond on track despite roadblocks, civil grand jury says

A Civil Grand Jury says Santa Clara County’s $950 million housing bond is working as promised, giving it an “A” rating in a recent report—despite the small number of low-income homes built since its approval.

Measure A, passed by 68% of voters in 2016, will provide funding to build 4,800 affordable homes across the county over approximately a decade amid an exploding homelessness crisis.

Six years into the initiative, Santa Clara County has finished 289 affordable units—about 6% of the ultimate goal. As of last September, 1,246 homes are in construction, with 1,302 still in the pipeline. That leaves about 41% of the county’s housing goal to be determined.

The nearly $1 billion commitment drew the ire of residents last year when accounting firm MGO said in an audit that Measure A “has not been effective in accomplishing its mission,” citing the slow rate of construction and delivery of projects as threats to providing housing for those most in need. An oversight committee also sounded the alarm in 2020 about the slow construction rates.

Slow construction 

The grand jury set out to investigate a complaint submitted last year about the small number of homes actually completed through Measure A. Its December report, called “Measure A earns an A,” found the county isn’t obligated to move construction ahead, as many roadblocks—such as oppositions and delays at the city level and difficulty securing matching state funds—are beyond the county’s authority.

The report also found that construction costs and potential inflation have not affected Measure A developments. The county has committed $108 million to buy 16 properties to avoid land cost increases.

Santa Clara County has had success in meeting its funding goal for permanent supportive housing and units for very low to extremely low-income populations, but the report shows it’s way behind schedule in funding rapid rehousing—a rent-subsidized program that provides residents a temporary place to stay. The grand jury urged the county to continue exploring the state’s Project Homekey program or reconsider its rapid rehousing goal by June.

It also notes the county and the bond oversight committee are working on new incentives to encourage more development and streamline the planning process. For the county’s responsibility, the housing bond is being spent appropriately and in a timely manner, the report says.

Local housing advocates said the county could always do more to address the housing crisis, but they acknowledge officials have done “tremendous” work with Measure A.

“There have been numerous articles that have talked about whether Measure A is too slow or too fast,” Mathew Reed, director of policy of SV@Home, told San José Spotlight. “We feel like the grand jury report did a very good job of assessing and understanding the multiple factors (in building affordable housing).”

Affordable housing projects in Silicon Valley take four to five years of planning and construction before residents can move in—even before the pandemic, Reed added.

Layers of obstacles 

One of the biggest roadblocks for affordable housing developers in the area is the ability to secure all funding sources, especially tax credits and bond allocations at the state level, the report notes.

San Jose, also shy of its housing goal, has made efforts to encourage more affordable housing, including removing a decades-old policy that requires some developments to dedicate the ground floor to commercial spaces.

Santa Clara County Assessor Larry Stone, who also chairs the bond oversight committee, said the slow construction rate is a serious concern.

“We talk about it in every meeting,” Stone told San José Spotlight. “We are not getting housing built as fast as we would like… but Measure A funds only provide a portion of the financing for the housing units.”

The 100-unit La Avenida housing project in Mountain View, for example, received $19 million through Measure A. But it still needed $15 million from the city and another $25 million from the state’s tax credit program to move forward, the grand jury report notes. The project would have remained dormant without the combined funding sources.

Stone said the pandemic has also slowed down numerous developments, as many workers in city housing and planning departments pivoted from their jobs to respond to COVID-19 needs. This has created a backlog across the county, he said.

According to Stone, local governments also need to take drastic steps to increase density in their cities, which would allow more housing to come in.

“You can’t build affordable housing in market conditions,” he said. “It’s impossible.”

Office of Supportive Housing Director Consuelo Hernandez, who oversees Measure A funding for the county, didn’t respond to an inquiry about the report. She has previously defended the county’s approach to the housing bond.

Since the oversight committee raised concerns about the slow progress, the county has used its influence to help affordable housing developers however it can.

“We’re putting as much pressure as we can on local governments and cities to approve projects,” Stone said.