In remarks to Silicon Valley Business Journal reporter Janice Bitters, Silicon Valley at Home Executive Director Leslye Corsiglia said she was encouraged by Stanford University’s proposal to increase the production of affordable housing as part of a planned campus expansion.
Facing potentially big fee increases, Stanford gets creative on affordable housing proposal
By Janice Bitters
Stanford University has gotten creative about affordable housing in its attempt to waylay talks of drastically increasing development impact fees that it could have to pay as it embarks on a massive expansion.
Currently, Santa Clara County officials are weighing requests by the university to build 2.27 million square feet of new academic space and 3,150 new residential units for students, faculty and staff as part of its 2018 General Use Permit (GUP) application. But conversations about the entitlements in May took a turn when county officials mulled the idea of sharply increasing the university’s impact fees for its development to help fund more affordable housing in the area and offset the impacts of adding academic and office space.
County records show Santa Clara county leaders have considered imposing fees as high as $143.10 per square foot of new academic space and more than $69 per square foot of new residential space. That’s up from $35 per square foot of academic space that Stanford pays in its current GUP agreement.
If those maximums were adopted, Stanford would pay more than $361 million in impact fees for its expansion, according to county records. County leaders are slated to pick the conversation up again this month.
Pre-empting that talk, Robert Reidy — the university’s vice president of land, buildings and real estate — last week offered an olive branch to Santa Clara County. In an eight-page letter, Reidy proposed a three-part effort that Stanford could take on to create affordable housing on and around its campus — and avoid the massive fee increases.
“Stanford shares the Santa Clara County Board of Supervisors’ view that the region is experiencing a housing crisis that is severe and urgent,” the letter, dated July 27, reads. “It requires innovative solutions that have the potential to be more impactful than traditional means.”
The university has laid out a framework that would provide the county $14.3 million as soon as its 2018 GUP is approved, guarantee 200 affordable units directly on campus and create a new fund that would provide low-cost loans to developers trying to build affordable homes.
“Big picture, we are really encouraged that Stanford is listening to some of the concerns that have been raised, and they have moved from their original position, which was a little more rigid and was clearly not acceptable to the county,” Leslye Corsiglia, executive director at housing advocacy nonprofit SV@Home, said in an interview on Wednesday.
Corsiglia noted she hadn’t yet had a chance to review to proposal in-depth, so couldn’t comment on the content of the proposal.
Breaking down Stanford’s proposal
The third part of Stanford’s proposal — the fund offering low-cost loans — continues a recent trend in Silicon Valley where housing advocates and tech companies alike are beginning to create funds that allow housing developers to reach a pool of low-interest loans that can fill in funding gaps on complex affordable housing projects.
Stanford would kickstart the funding pool with $21.7 million initially, which the university says would help generate a minimum of 217 units affordable to people considered “low income” and “very low income.”
The university is calling the pool the “evergreen fund,” promising that money repaid by developers that borrow from it will stay in the fund in perpetuity, so it can be redeployed repeatedly to nonprofits and others trying to create affordable housing. It may also inspire other philanthropists to place money in the pool, strengthening its impacts, Reidy suggested.
That concept is similar to the TECH fund rolled out last year by the Housing Trust Silicon Valley, in which giants like Cisco Systems, LinkedIn, The Sobrato Organization and the David and Lucile Packard Foundation have contributed money that can be loaned out as gap funding to developers trying to keep or create affordable housing. Though the fund is still fairly new, the Housing Trust had no trouble finding projects to help, the nonprofit says.
The group last year also announced it was helping to manage a Facebook-funded $18.5 million affordable housing fund, known as the Catalyst Fund, for the Menlo Park area.
Jim Mather, chief lending officer for the Housing Trust, says Stanford’s proposal is a good place to start.
“In terms of what the numbers are, or should be, I think that is a negotiation between Stanford and the county,” he said. “But it seemed to me that the proposal is trying to address everything from an extremely low income up to a moderate workforce level that … is ineligible for the typical affordable housing subsidies.”
Stanford asks for extra credit
The 200 affordable units that Stanford is offering up on its campus could be transitioned from existing market-rate apartments on Stanford’s land, or the university could build new residential units and subsidize some. Half of the units would be set aside for the university’s staff, and all would be available for occupancy before the university moved into more than 1 million square feet of its new academic space, assuming the 2018 GUP is approved.
One interesting component of Stanford’s proposal to create in the near-term 200 affordable units on its own land is that the university seems to want extra credit for providing physical units instead of offering money to the county or developers.
The letter suggests the county count each affordable residential unit the university creates on its campus as 1.6 residential units as Stanford aims to create a solution that would create 575 affordable residential units — a number that has popped up through county studies as Stanford’s share of affordable housing if it were to move forward with its 2018 GUP.
“Stanford, county staff and the Board of Supervisors are in alignment that providing units on Stanford’s land is more valuable than paying a fee, and Stanford should be incentivized to provide housing over paying a fee,” the letter reasons.
Indeed, county officials told the university in May that its goal wasn’t to fine Stanford, but create affordable residential units in a part of Silicon Valley where they are desperately needed.
Mather isn’t taking a position on what sort of credit Stanford should or should not get for building new or allocating existing units to be affordable, but he acknowledged in an interview Wednesday that coming to the table with homes is a valuable proposition.
“Having the units actually built is worth a lot,” he said. “It takes out a lot of uncertainty.”
Of course, part of Stanford’s solution is also to pay money to the county in the form of $14.3 million that the university says the county should use to create 38 units that are affordable to people who are considered “extremely low income,” in Silicon Valley.
Taken together, Stanford says its three-pronged solution would create or help create a minimum of 455 affordable residential units. Count in the calculation that gives the university credit for 1.6 homes for each of the 200 units it would dedicate on its campus, and Stanford officials say it will have met its 575-unit goal though the proposal.
“This proposal also depends on reaching a mutually acceptable agreement as to the amount of the affordable housing contribution that Stanford pays under its current, 2000 General Use Permit,” the letter states, adding that the proposal “automatically is rescinded if the county adopts an affordable housing fee ordinance or inclusionary housing ordinance that applies to Stanford’s lands.”
Now for the potentially $361 million-dollar question for Stanford: Will the concept will be convincing to county leaders? That’ll become more apparent this month. The County Board of Supervisors is expected to the issue back up on Aug. 28.