Plans are underway to break ground in the next several months on an educator-housing project in Palo Alto that was proposed more than five years ago. The housing project involves over half a dozen local school districts and coordination among Santa Clara County, two nonprofit developers, the city of Palo Alto and Meta.
Once built, the aim is to provide affordable housing for teachers and other school staff, allowing them to live near their jobs. As the project takes shape, numerous questions have arisen about the development's funding, management, school district involvement and rental requirements.
Below are answers to some of those questions, based on public documents and interviews, including with Santa Clara County Supervisor Joe Simitian, a representative from the developers, school board members and a Meta official.
What's the basic concept for the project?
Santa Clara County is partnering with nonprofit developers to construct 110 apartments at 231 Grant Ave. in Palo Alto, which would then be rented at below-market rates to teachers and other staff members in participating school districts. The county donated the land for the project, which sits across from the Palo Alto Courthouse.
What's the history of this project?
Santa Clara County Supervisor Joe Simitian first formally proposed the idea in January 2018. He said that the high cost of living in the region was making it difficult for educators to reside in the communities where they work. The idea was to provide units at an affordable price to local school staff who make less than the area's average income but typically more than is required to qualify for traditional affordable-housing projects.
Why do proponents say this project is needed?
Supporters say that students benefit when their teachers live in the community and don't have to endure long commutes. They also believe that districts may be better able to attract and retain employees if subsidized housing is available.
The idea of educator housing has gained traction in recent years, with the Mountain View Whisman School District breaking ground on its own subsidized teacher housing project last year.
Has anyone raised concerns about the project?
Some have questioned how acute the staffing challenges that districts face actually are, and whether there are better ways for districts to spend the money that they are contributing.
There also have been questions about why school staff are getting subsidized housing versus other public or private-sector employees. As is typical for dense new housing developments, some residents have opposed the size of the proposed building.
What's the project timeline?
The intent is to break ground on the project in the next few months, with school staff able to move into their units in late 2024 or early 2025, Simitian said.
Which districts are participating?
The Los Altos School District, Mountain View Whisman School District, Palo Alto Unified School District and Foothill-De Anza Community College District's boards have all signed off on participating in the project. The Mountain View Los Altos Union High School District's board is expected to review a funding agreement for the project in the coming weeks.
Employees of south San Mateo County schools will have an opportunity to participate as a result of a $25 million contribution from Meta, formerly called Facebook, which is headquartered in Menlo Park. The Ravenswood City School District, Menlo Park City School District, Las Lomitas Elementary School District and certain schools in the Sequoia Union High School District are specifically named in an agreement between Meta and Santa Clara County.
How many units is each district getting?
Los Altos, Mountain View Whisman and Foothill-De Anza have agreed to each have a dozen units set aside for their staff. Palo Alto Unified approved 29 units for its staff. The Mountain View Los Altos Union High School District is expected to be offered a dozen units. The south San Mateo County districts will have access to 32 units total. One unit will be saved for a property manager.
Why is Palo Alto getting more?
That's a question that Palo Alto Unified board member Todd Collins raised, saying he found it "suboptimal and basically unfair" that his district was getting more units, despite having what he described as less of a problem recruiting and retaining teachers. Collins was the sole vote against approving his district's participation in the project.
When a preliminary analysis of how many apartments the site could fit was initially conducted, the county was given a range of 60 to 120, Simitian said. To avoid overpromising, he said they assumed 12 units for each of the five Santa Clara County districts. Meta then contributed $25 million and wanted units for south San Mateo County educators. The project plan ultimately settled at 110 units.
According to Simitian, there were three major reasons why Palo Alto got more units. First, because they expressed interest in a greater number of units from the outset. Second, because the development is located in Palo Alto. Since a goal of the project is to embed teachers in the community where they work, Simitian said it was ideal for Palo Alto Unified employees to live there. Third, the city of Palo Alto contributed funding to the development.
You mentioned the city of Palo Alto and Meta have contributed money. How does the project's funding work?
The project relies on funding from various sources. Santa Clara County donated the land and set aside $6 million from the Stanford Affordable Housing Fund, which comes from fees Stanford University pays to the county that are reserved for affordable housing within a 6-mile radius of the campus. The city of Palo Alto agreed to kick in $3 million, using the proceeds from fees that real estate developers pay the city, which are set aside for affordable housing. Meta put in $25 million. The Santa Clara County school districts are being asked to pay $50,000 for each unit that their employees would get priority access to.
The rest of the financing is up to the developers — Mercy Housing and Abode Communities — to handle. The project isn't part of any state or federal low-income housing programs, Simitian said.
According to Kelly Hollywood, associate director of real estate at Mercy Housing, the remainder of money is a mix of conventional loans and funds from private lenders. The eventual rent proceeds will be used to pay off these loans, Hollywood said.
Why do districts need to contribute $50,000 per unit? How was that number picked and what does it get them?
The idea was to have school districts put in money so that they have "skin in the game," Simitian said. He was open about the fact that $50,000 is a somewhat arbitrary number, but said it was meant to be manageable for districts, while also providing them a stake in the property.
The money doesn't give the districts ownership of the apartments, but rather means that their employees will have priority access to the units. Mercy and Abode will jointly own the building, according to Maegan Pearson, associate vice president of development at Abode.
Where are the districts getting the money to pay their share?
It depends on the district. Foothill-De Anza and Palo Alto Unified both plan to use money from their respective general funds, which is the main pool of money that districts use to pay most of their expenses. Mountain View Whisman is using money from a bond that voters approved in 2020. The Los Altos School District is using lease revenue from a site it owns in Mountain View where the district intends to build a school, but which is currently occupied by multiple businesses.
When Palo Alto Unified's board voted to approve spending $1.45 million for 29 units, district staff recommended using the general fund for now, noting that there were open questions around using bond money. Superintendent Don Austin told this news organization that because the districts don't own the units, it is unclear if construction bond funds can be used to pay for it, even though its bond measure listed employee housing as a potential use of the money.
"We have essentially purchased access to a set number of units," Austin wrote in an email. "There is still room for debate if this meets the standard to utilize bond funds."
If the district's lawyers determine that bond funds would be appropriate to use, the board could revisit the funding source in the future, Austin said. He noted that districts are relying on their own legal teams to work through the details of the agreement, which means that there can be different interpretations of the law.
Mountain View Whisman, on the other hand, has decided to use its bond funds. A major difference is that the district has already used bond money to pay for its own teacher and staff housing project, which is currently being built in Mountain View. In that case, the school district also doesn't own the land, but rather will have a 55-year ground lease with the developer. Superintendent Ayinde Rudolph told this news organization that his district's lawyers have said that it can use bond proceeds for both staff housing projects. The important part is that the district retains access to the units for the 25-year life of the bond, Rudolph said, a requirement that the district's lawyers believe the projects meet.
Will the school districts now be acting as a landlord for their employees? Who's actually going to be managing the units?
The plan is not for school districts to handle the day-to-day operations of the apartment complex, a role that Simitian said it was clear districts did not want to take on. Mercy Housing Management Group will instead be acting as the property manager on the site, Hollywood said.
Who will have access to the units? What's required to qualify?
There will be several requirements to rent the units. First, at least one member of the household has to be employed by a participating school district. Second, the total household income can't exceed 140% of the area median income (AMI), Hollywood said. Households also must earn a minimum of 60% of the AMI, Pearson said. Santa Clara County's 2022 AMI is $168,500 for a family of four. Those numbers are updated annually.
To determine eligibility, the income of all eligible household members — including partners, spouse and roommates — will be included, not just the pay of the school employee, Hollywood said.
The plan is for 39 units to be set aside for households earning less than 80% of the area median income, currently $134,800 for a family of four, according to a draft of a regulatory agreement between the county and the developers.
How much money do educators make?
That depends on the school district. In Palo Alto, teachers earn roughly between $76,000 and $154,000, depending on education and years of experience. Mountain View Whisman pays teachers roughly between $75,000 and $134,000. In the Mountain View Los Altos Union High School District, it's from $97,000 to $183,000. Los Altos offers teachers between $64,000 and $118,000. Ravenswood pays teachers between $63,000 and $141,000. In some districts, additional pay is available for certain degrees or certifications.
It's also not just teachers who will qualify for the apartments. Various other school employees earn substantially less than teachers. A bus driver in the Mountain View Whisman School District earns between $53,000 and $72,000. A librarian technician earns from $46,000 to $62,000.
How much are the units going to cost to rent?
Rents will be set based on a household's income and the size of their unit, and will be updated annually, Pearson said. The developers plan to use rental rates set by the state and federal government for affordable-housing projects, which are specific to each county and are updated yearly.
The idea is that rent shouldn't exceed 30% of a household's income, Simitian said. He estimated that rents might be $800 to $2,500 below the going market rate, but stressed that it's still somewhat of a moving target, because the future rental market isn't certain.
How will residents be picked?
A lottery process will be used if more people apply than there are units available, Hollywood said. How the lottery will be run is still being developed in accordance with fair housing laws, Pearson said.
How big are the units? How was that decided?
There will be 24 studios, 61 one-bedroom apartments and 25 two-bedroom apartments, Pearson said. The distribution of unit sizes was decided based in part on the results of a survey, Hollywood said. A spokesperson for Mercy declined to release the survey results.
Palo Alto Unified conducted a survey of its staff in fall 2022 and received 292 responses. The results showed that 7% of respondents wanted a studio, 34% a one bedroom and 60% a two bedroom.
How much parking will be on the site?
There will be 113 vehicle parking spaces on site, Hollywood said. Bicycle parking also will be available.
How long can residents stay in their apartment? When do they have to move out?
According to Hollywood, individual districts will have the ability to set term limits on how long an employee can stay in an apartment. Whether districts will set those limits and how they would work is still to be determined, Hollywood said.
If a tenant stops working at a participating school district, they would have to move out, but how long they would have to do so isn't yet finalized, Hollywood said. The same applies if a household's income increases and exceeds the limit.
What if a district can't fill their units? Do they lose them?
Again, the specifics aren't yet locked in, but Hollywood said that a district would not permanently lose access to the unit. The plan is to look for a qualifying employee in another district. When the next vacant unit in that district becomes available, it will be offered back to the first district, Pearson said.
You mentioned that Meta contributed $25 million to gain access for south San Mateo County districts. How does that work?
Meta has reserved 32 units for staff in certain San Mateo County schools. The priority order for the units is split into two time periods: until the end of 2029 and from 2030 onward, according to a grant agreement between Meta and Santa Clara County.
Through 2029, 22 units will be reserved for Ravenswood City School District employees or staff at nonprofit schools, including preschools, within the geographic boundaries of the Ravenswood district. If not enough applicants come forward, the second priority will be for staff in the Menlo Park City School District, Las Lomitas Elementary School District or at Menlo-Atherton High School.
The remaining 10 units will have a roughly inverse allocation. Staff in the Menlo Park City School District and Las Lomitas Elementary School District, as well as at Menlo-Atherton High School, Tide Academy, East Palo Alto Academy and the Sequoia District Adult School will get first priority. Second priority will be for Ravenswood employees or staff at nonprofit schools within their boundaries.
Meta currently pays part of the rent for 22 school employees living in an apartment complex at 777 Hamilton Ave. in Menlo Park. Once the Grant Avenue project opens, the plan is for these households to get priority to shift to the new building, said Anu Natarajan, Meta's housing initiative lead.
Starting in 2030, all 32 units will have the same priority system. Ravenwood staff, as well as staff at nonprofit schools in their area, will have first priority. Second priority will be for staff in the Menlo Park City School District and Las Lomitas School District, as well as employees at Menlo-Atherton High School, Tide Academy, East Palo Alto Academy and the Sequoia District Adult School.
If at any time there aren't enough applicants to fill the units, the units would be offered to those working in public safety professions, which would include police officers, firefighters and nurses, according to a draft of a regulatory agreement between the county and the developers. If there still aren't enough applicants, the units would be offered to employees of "public-interest nonprofit organizations," the agreement draft states.
Because of Meta's contribution, the San Mateo County districts won't have to contribute financially to gain access to their units.
Because the project is still in progress, some details haven't yet been determined and others could change over time. Have any questions that aren't answered here? Reach out to reporter Zoe Morgan at [email protected]
Another Palo Alto neighborhood
on Feb 3, 2023 at 10:00 am
on Feb 3, 2023 at 10:00 am
This is fantastic. I hope we will see another project at San Antonio on school district property?
A few concerns:
1) These projects are hard to develop and fund. I object vehemently to the possibility of their sunsetting after 25 or even 50 years. What happens after 25 years, in the case of the Mountain View project? Can we ensure these properties remain affordable units in perpetuity?
2) 30% of income is high. Can the rent be a lower % of income, or the rents structured to encourage longterm employees and their financial success? Thinking along the lines of half of rent going into an interest-bearing fund that each employee can access after so many years to use as a down payment for their own purchased housing IF they remain employed by the district. Or maybe all of rent could be used IF the purchased property becomes a district BMR unit and benefits both the employee and future employees in housing costs in some way, similar to existing BMR programs. The intent would be to encourage longterm employment, bringing family homes into a BMR program, assisting teachers and other district employees with longterm financial goals in order to remain in the district longterm, and increasing BMR housing stock for essential employees.
3) the elephant in the room is what happens to teachers who don’t make tenure, or who do but aren’t performing well. Sure, it’s ideally a great performance incentive to keep the housing but it’s also a great incentive for poor performers or cliques to game the system. How to prevent this must be thought through or it will poison the program.
4) again, 30% of income is a lot. As some approach income limits, they may no longer qualify yet be unable to afford market housing; it would help if income from rent is set aside as funds for deposits or down payments on their own housing when they move out, if they remain employees, or to support other public safety employees.
on Feb 3, 2023 at 10:55 am
on Feb 3, 2023 at 10:55 am
Shocking and strange to read that Todd Collins voted against this but happy that he's an outlier. I've lived here most of my life and when I was a PAUSD student many of my teachers lived in the community. Now that's impossible given housing costs - glad this project will make that possible for a lucky few at least.
on Feb 3, 2023 at 11:00 am
on Feb 3, 2023 at 11:00 am
I believe 30% has always been the rule of thumb for housing, i.e, rent, house payment.
on Feb 3, 2023 at 2:26 pm
on Feb 3, 2023 at 2:26 pm
It would be very informative to understand the how equity in this project is managed at the end of 25 years. The key documents, especially bond convenants, should be available to the public and instructive to all of the stakeholders.
There are at least two primary issues. First, Long-term ownership and control of the real estate provided by Santa Clara County. Second, control and ownership of the building(s) and improvements. These issues and others must be spelled out now by binding agreements.
I agree with Silver Linings. What happens to each of these "equity" interests in 25 years?
on Feb 3, 2023 at 3:30 pm
on Feb 3, 2023 at 3:30 pm
Hope the project works to help hire and retain good teachers. Commutes are horrible. A young teacher surely will benefit. But when that young teacher decides they want a family and a home of their own, well, good luck on the Peninsula.
on Feb 16, 2023 at 4:02 pm
on Feb 16, 2023 at 4:02 pm
How will this be equitable? People who get the units via lottery will be getting de facto raises from the district.
Palo Alto has 635 teachers, and then add all the other staff, say 1000 employees in all, for 28 units. With rents $800 to $2500 less than market rates, that is a nearly $10k to $30k savings annually for the lucky 2.8% of employees who are apartment winners. I’m not against building affordable housing, but this seems like a valid issue.