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In just four years, Mountain View has added more affordable housing units to its stock than it did in the previous 20. Looking to build on this success, the city is working to improve on that progress, exploring new ways to get more below-market rate (BMR) units built.
“The high-level goals of the program are to increase the diversity and supply of affordable housing to deliver integrated BMR units along with market-rate units in mixed income developments,” said Housing Director Wayne Chen, who added that this would facilitate more inclusive and economically sustainable communities.
City Council members supported the objectives of the affordable housing program, but had different perspectives about the policy directions proposed by staff at a study session held Tuesday evening.
At the heart of the discussion was the issue of how to encourage property owners to incorporate more BMR units in residential developments. When the city established its affordable housing program in 1999, it required that developers set aside 10% of their units as BMR housing. But they also could pay an in-lieu fee instead, an option that most developers took, resulting in fewer on-site BMR units, according to the council report.
Nearly 20 years later, in an overhaul to the program, the city increased the affordable housing requirement to 15% for rental and ownership market-rate projects and bumped up the in-lieu fee to $34.57 per square footage. The city also provided additional options to further housing opportunities, like allowing land dedication or the development of off-site BMR units in certain circumstances.
Still, providing on-site BMR units remained the gold standard of the city’s affordable housing program, offering access to resources and opportunities for lower-income families and households, Chen said.
While the city has made strides in the past four years, with nearly 300 BMR rental units and 46 ownership units in the housing pipeline, demand for these units continues to outpace supply. In the past two years, one-bedroom BMR rental units had an average of 41 applicants per unit, two-bedroom BMR rental units had an average of 74 applicants per unit and a three-bedroom ownership unit had 131 applicants, according to the council report.
Complicating the issue of offering more on-site BMR rental units is the passage of a state law, AB 1505, that requires cities to offer housing developers alternate ways to meet their affordable housing obligations. That includes like in-lieu fees, land dedication or the development of off-site units, and these alternatives cannot be of greater value than the on-site BMR units.
Council member Lucas Ramirez questioned the viability of these mitigations and their impact on the city’s affordable housing stock, given that construction and land costs are so high.
“The concern I have is, when I think about the fees that we’re collecting, realistically, you know, will they amount to a meaningful development off-site? Or, a meaningful amount of land dedicated to the city?” he said.
For these reasons, Ramirez categorically opposed in-lieu fees, stating that the value loses its purchasing power very quickly. He also expressed concerns that alternative mitigations, like land dedication or off-site development, would not do much to support affordable ownership opportunities. “I don’t think we have good options here,” he said, adding that the proposed mitigations would not advance the city’s inclusionary housing goals either.
Taking an opposite stance, Council member Margaret Abe-Koga said her priority was building as many BMR rental units as possible, even if this meant collecting in-lieu fees or allowing other options, like land dedication. “That’s really the beauty of the funding is that we can leverage other funds and potentially build more units,” she said.
Recognizing that in-lieu fees, which are adjusted based on the Consumer Price Index, are not equivalent to the costs of on-site BMR units, Council member Lisa Matichak proposed using other kinds of indices, like a construction cost index, to scale the fees – something that other council members supported as well.
While council members split on the type of housing mitigations to allow – such as in-lieu fees, land dedication or off-site development – they unanimously supported the option of acquiring and preserving existing BMR units. This option was successfully implemented with a development project at 660 Mariposa Ave. that led to the rehabilitation of 49 rent-stabilized apartment units in 2021.
Council members also supported the idea of a community land trust as a possible mitigation to on-site BMR units, which Council member Pat Showalter proposed.
Other suggestions from council members included the possibility of exploring BMR home ownership programs. “We really need to create as many opportunities (as possible),” said Council member Ellen Kamei. “And so where the number might seem low for the ownership opportunities, to me, that’s at least one ownership opportunity versus zero.”
The study session also clarified some of the guidelines of the city’s affordable housing program, like adding more explicit language that the maximum annual rent increase is 3% for existing tenants, a clarification that Council member Emily Ann Ramos said she appreciated as tenants frequently had questions about it.
Ramos also asked for staff to include guidelines to protect tenants from the situation of having amenities taken away, like laundry facilities, after they signed a rental agreement.
Staff expect to bring back the code amendments to the Environmental Planning Commission and the City Council next year, with the next large-scale review of the BMR affordable housing program occurring in 2028.
If demand outpaces supply of any housing, prices will rise and there will be unmet demand. Rather than the city council trying to fight the market, it could encourage developers to make any kind of housing. People will move from different levels of housing and rents will drop correspondingly. Take a look at rent controlled areas and note the scarcity of units.
I think the real problem here is that after all is said and done, it is costing $1M to build a BMR 2+2. There just isn’t enough money to subsidize the number of units needed. I really think we need to work on the demand side which at the top level is driven by too many good jobs. Let’s not build any more office space (at least for businesses that are not directly serving the local community) until we can get into some kind of balance. Historically (FDR said in 1933) 1/3 of the population is under-housed, so some of the shortfall is a long-overdue and legitimate need to upgrade housing opportunities all the way down the spectrum, but trying to do that by taxing new market rate units (someone has to pay for the BMR units) just drives up housing costs for the market rate buyers and renters which pressures them to bid up the cost of what used to be lower cost housing, hence the plight of the missing middle. We’ve got to get demand under control!