June 6, 2024

Heart and Home Column by Josh Ishimatsu- An Elephant in the Room


1 in an occasional series about the hard truths of affordable housing and community development

When somebody invokes “the elephant in the room,” they are pointing out a big, obvious problem that nobody is adequately addressing—a problem that we are all mostly trying to ignore.

According to my extensive research (i.e., reading a single Wikipedia article), the first print usage of the phrase “the elephant in the room” was in the New York Times in 1959: “Financing schools has become a problem about equal to having an elephant in the living room. It’s so big you just can’t ignore it.”  

It’s appropriate that the first usage of this phrase was for public finance because, today, one of the gargantuan problems that nobody wants to talk about is the scarcity of affordable housing funding.  That is, the elephant in our living room is that current funding for affordable housing is merely a small fraction of what we need to solve our ongoing housing crisis.

To hear most people talk about it, the biggest barriers to affordable housing production are NIMBYs and land use entitlement/permitting barriers.  But these are a group of solutions that would make existing resources go something on the order of 30% farther (numbers pulled a little bit out of my ass, but I stand by the larger point).  A significant gain, to be sure, and worth realizing.  AND the elephant in the room about these gains is that slaying these constraints, while helpful, would be inadequate given the scale of our current problems.  

Across multiple metrics, we are woefully behind in affordable housing production.  If we look at recent progress towards our Regional Housing Needs Allocation (RHNA) affordable housing goals (see Table I, below), we have failed to produce sufficient housing for low-income (LI) and very low-income (VLI) families.

Table I. Progress towards Regional Housing Needs Allocation Affordable Housing Goals

GeographyRough # of LI & VLI affordable homes COMPLETED 2018-2022 Estimated 5-yr production to meet RHNA Goals% of LI & VLI affordable homes completed over 5-yr period
Santa Clara County2,50015,00017%

Source: State of CA Department of Housing and Community Development

That is, in order to have kept pace with our need for affordable housing, we should have produced ~6 times more affordable housing.  The cumulative effect of decades of under-producing housing means that we are in deficit by tens of thousands of affordable homes – for e.g., a recent study by the National Low-Income Housing Coalition estimates that we need almost 60,000 new affordable homes to meet the current demand for affordable housing in our county.

And, at the current level of resources, we will continue to dig ourselves deeper into our affordable housing deficit.  For example, the low-income housing tax credit (LIHTC) – an essential source of equity for affordable housing that is a significant part of the funding for almost every single affordable housing development – is capped on an annual basis and is therefore structurally insufficient to fund enough housing to close our affordable housing deficit (see Table II., below).

Table II. Schematic/Estimated Annual LIHTC Capacity

GeographyRough max. # of affordable homes that can be funded each year with the LIHTCAnnual affordable housing production needed to meet future RHNA Goals% LIHTC capacity to meet LI & VLI RHNA goals 
Santa Clara County1,0006,00017%

Source: Author’s cocktail napkin calculations based upon CA Tax Credit Allocation Committee data

The bottom line is that we need substantially more affordable housing funding. While important, cost efficiency gains (i.e., building it cheaper) and time efficiency gains (i.e., building it faster) are an order of magnitude short of what we need. In order to reverse our current trajectory and do something about our elephant, we need transformational levels of investment.  

The proposed regional housing bond – $20 billion for the 9-county Bay Area, with approximately $4.5 billion to be directly administered by the County of Santa Clara ($2.4 billion) and by the City of San Jose ($2.1 billion) – would be a huge step in the right direction.  The regional bond would increase local funds available on the order of 4-5 times what we’ve had in recent years.  As San Jose Vice Mayor Rosemary Kamei said at a recent MTC Board meeting, this is an important chance to – “Go big or go home!”