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City asks: Should developers fund more affordable housing?

Original post made on Nov 25, 2014

City officials want to know if residents think developers of offices and housing should pay more for the development of affordable housing in Mountain View.

Read the full story here Web Link posted Tuesday, November 25, 2014, 4:34 PM

Comments (31)

Posted by Been There, Done That
a resident of Cuernavaca
on Nov 25, 2014 at 4:45 pm

Wait -- this is an actual question? Isn't the answer obvious? (And for those who wonder what the answer is: HELL YES.)


Posted by Sparty
a resident of another community
on Nov 25, 2014 at 6:27 pm

Sparty is a registered user.

It's just going to get subsidized by units that go for even higher rent. And as it is, landlords are willing to just sit on vacancies until they get someone to take the higher rent.


Posted by @sparty
a resident of another community
on Nov 25, 2014 at 7:37 pm

Sparty's comment is completely wrong. Landlords will rent all of their units at the highest possible market rate. If some of the apartments are "affordable", it doesn't make the tenants agree to a rent they are unwilling or unable to pay.

If an apartment complex/monstrosity of 400 units has 300 units at market rate and 100 at "affordable", then that means that 300 units will only be afforded by the more affluent residents and 100 would be available to the less affluent.

Likewise, if the complex has all 400 units at market rate, then that means that all 400 will only be afforded by the more affluent. Zero will be available to those less fortunate.


Posted by I'm not an economist
a resident of Blossom Valley
on Nov 25, 2014 at 8:03 pm

@sparty makes a statement about quantity but forgets the price impact of restricting the supply of market based units. Fewer market based units will result in restricting supply and raising prices paid by the affluent residents. Similarly more market based units will increase supply and lead to a lower market price. It is landowners and consumers that subsidize this silly policy. A better way to provide subsidized housing would be to provide vouchers. Forcing developers to provide newer and larger units results in larger subsidies and more income redistribution to the few lucky lottery winners who get BMR units.


Posted by Don't forget
a resident of Blossom Valley
on Nov 25, 2014 at 8:27 pm

There are a lot of apts in place. They aren't going to play by new rules but can serve their own interests with rent control affecting other developments. (Except in places where there are stipulations on date of build of course)

We can already see landlords holding out. Take a look at Latham and California. Lots of vacancies. And the prices have all gone up. These apts have piggybacked off new development to raise prices as well as market rate.

Doesn't anyone have kids? Pretty simple high school AP Econ material. Price ceilings and price floors. It's not like Halloween where leftover candy is 75% off.


Posted by @not an economist
a resident of another community
on Nov 25, 2014 at 8:35 pm

"@sparty makes a statement about quantity but forgets the price impact of restricting the supply of market based units. Fewer market based units will result in restricting supply and raising prices paid by the affluent residents. Similarly more market based units will increase supply and lead to a lower market price."

This is a very reasonable comment. The so-called "Law of Supply & Demand" is very logical and reasonable and true. It's hard to argue otherwise...

HOWEVER, the statement that "Fewer market based units will result in restricting supply and raising prices" is not relevant to the Mountain View situation. The real question to ask:

"Will requiring X% of units built by developers be "affordable" cause a SIGNIFICANT rise in prices?" The keyword here is "significant". If it causes an average $5/month raise in rent to the rest of the units, then I think we can all agree that while the Law of Supply and Demand seems to apply, the ACTUAL impact of this law is insignificant and ought not weigh into the decision.

If let's say 10% of all new units must be designated "affordable" in a 400 unit development, that means that only 360 units would be at "market rate". If we only have, say 400 potential residents actively interested in moving into these units, then I would agree that the difference in pricing pressure would be significant. However, we have thousands (and thousands) of people that have a desire to move into nice areas of peninsula/south bay, so the availability of plus/minus 40 units is such a drop in the bucket of the demand, there would not be much of a pricing difference.

One could say, "So, only 10% could have affordable housing? Why bother?" Well, because 10% is infinitely better than 0%, which is what we are heading to.

The argument that it's not fair to people who don't win a spot in one of these units is goofy. Why not ban the state lottery (most do not win)? Or ban any company that doesn't hire everyone that applies?


Posted by I'm not an economist
a resident of Blossom Valley
on Nov 25, 2014 at 10:25 pm

Some fair comments. First of all, the subsidies are huge ranging from 500k to one million per unit. As Ben Powell and Ed Srtingham have shown in thier research, this has a huge impact on prices.

You misunderstood my comment on lotteries. Why should we hand out such huge subsidies to only a lucky few. Why not subsidize all needy people instead of just a lucky few.


Posted by m2grs
a resident of another community
on Nov 25, 2014 at 11:54 pm

BMR in general is a very bad idea. As many pointed out, only few lucky families benefit.

Funds allocated for BMR should be used to create a city-wide rental voucher program to subsidize rents for teachers, social workers, seniors, etc., similar to Section-8 program. A lot more people can benefit. This would be a much better utilization of tax dollars.


Posted by m2grs
a resident of another community
on Nov 26, 2014 at 11:09 am

Let me give one simple example.

Say a unit has fair market price of $800K. For BMR the price is $300K. The net economic value contributed by developer is $500K.

However only one family will benefit from the $500K subsidy. This is extremely inefficient and unfair to others.

Let's say you create a voucher system in which each qualified family gets a $1500/month rent subsidy. Then $500K can sponsor 27 families for 10 years!

Much wider coverage and fair distribution of government benefits.



Posted by A resident of San Antonio area
a resident of another community
on Nov 26, 2014 at 12:34 pm

I agree with m2grs. BMR is a bad bad idea, it targets a few lucky family (how do you chose) in a completely unfair manner, you can't accommodate everyone!
It also has the effect of making *only* new resident or people that rent the non-BMR units paying more for a few selected ones while not solving any problem overall. This does not seem to be an efficient way of redistribution.
Family with resources just above the BMR limit are excluded of the system, yet can't afford market-rate rent or can't afford buying a house here.
Raising BMR means also raising the normal market-rate, thus hurting the many that are struggling with their rent, while not being eligible to BMR (or not selected).

The underlying problem is supply and demand, we know that the latter won't go down soon, yet the council just decided that it is completely fine to just avoid providing more supplies by voting the NBS plan that includes multi-millions sq feet of offices and NO housing...


Posted by Greed
a resident of Old Mountain View
on Nov 26, 2014 at 2:25 pm

It seems that the people opposed to affordable housing programs in Mountain View are either resentful or greedy. The argument that since this solution will not benefit EVERYBODY, then we shouldn't do it. So, it's better to help out absolutely nody, then some?! Very transparent greed.

Permanent BMR units are valuable, because they are assured of always being there to support people who cannot afford a market rate home.

The temporary rent subsidy voucher proposed by developer/profiteer m2grs does not take into account what will happen when that money runs out. Or when housing prices escalate? Those who were receiving the vouchers will be kicked out. Permanent units that are designated BMR will keep on providing a service regardless of what market rates are available.

Voucher system IS a good idea, but should be funded through other sources in addition to BMR.

I know that property developers don't like BMR, because they want to be able to tell their future residents that the poor will not be able to live among them. This exclusionary, greedy and heartless practice is embarrassing to those of us who care about our fellow citizen.


Posted by Steve
a resident of another community
on Nov 26, 2014 at 2:44 pm

How about the developers pay the cost to improve the (already overtaxed...) infrastructure instead? As they should have been required to all along.
And some of us objecting to subsidized housing are neither greedy nor resentful. It is objectionable strictly for its own lack of merit.


Posted by BayAreaBill
a resident of Waverly Park
on Nov 26, 2014 at 4:28 pm

"Affordable housing" is just a fairy tale myth dreamed up by economically ignorant liberal idiots. Mountain View already has far too much substandard rental housing and rental residents. Why should we invite more when the demand is a bottomless pit? We should take a serious lesson from Los Altos. "Just say NO" to compromising our housing standards or the quality of our residents.


Posted by Betsy
a resident of Cuesta Park
on Nov 26, 2014 at 8:22 pm

OK. Two things are going on here, and they're stuck together.
*All* communities need *some* BMR housing as a way of giving a helping hand to the temporarily unlucky -- those folks that have lost a job unexpectedly, or gotten hit with major medical bills. Similar to Welfare, social programs like BMR can do a great job of bumping families back to self-sufficiency.

The issue in Mountain View is not that we have a lot of temporarily unlucky folks who need medium-term help. The issue in Mountain View is that we employ a heck of a lot more people than we have housing for -- and so the invisible hand of economics has made living near where you work impossible for some and really, really expensive for the rest. This has all kinds of negative social consequences, not the least of which is that people spend a lot of time commuting that they otherwise would get to spend with their families. BMR will not fix this problem. Permitting developers to build more houses will fix this problem.

Oh, and BayAreaBill: if you arrived in town with your current income and no property here, would you be able to afford to live in Los Altos? And would letting you into Los Altos compromise the quality of their residents?


Posted by Greg
a resident of Cuesta Park
on Nov 26, 2014 at 8:45 pm

"The argument that since this solution will not benefit EVERYBODY, then we shouldn't do it."

No, that is not the argument. The argument is that BMR helps exactly as many families as it hurts. A 40 unit complex helps 40 families. If you set aside 8 units as BMR, there are 8 happy families that you helped. There are also 8 families who you hurt: the ones who would have lived there had it been market rate.

Helping one set of 8 families at the expense of another 8 families is not a good use of a million dollars.


Posted by @Greg
a resident of another community
on Nov 27, 2014 at 12:28 am

"If you set aside 8 units as BMR, there are 8 happy families that you helped. There are also 8 families who you hurt: the ones who would have lived there had it been market rate."

What are you talking about Greg? The so-called "hurt" 8 families that can afford market rate housing can go bid for it like everybody else. The families that cannot afford to live in our community, but ought to (like schoolteachers, firefighters, police, etc..) are the ones that you are excluding. Those are the people that get priority on the BMR housing.

I agree that it is the greedy, ignorant or profiteering citizens who are against affordable housing.

I also take the position that simply building more housing in Mountain View will do nothing to provide affordable housing. Put in 5,000 units next year and it would just be a drop in the bucket given the vast ocean of demand. That's why BMR programs are so important. They should be significantly funded and supported.


Posted by BayAreaBill
a resident of Waverly Park
on Nov 27, 2014 at 7:36 am

@Betsy: I'm glad that I offended you to the point where you started sank to hurling insults, so I'll counter with more civility than you.

We easily could afford to live in a comfy neighborhood in Los Altos. We chose to live in Mountain View because we're settled in a nice house in a still-nice neighborhood (thank God!) near gridlocked Grant Road. Also, we find Los Altos to be a bit, shall we say, stuffy? We're simple at heart and want simplicity and peace and quiet.

I have a Ph.D in physics and my wife advanced degrees in English and Chemistry, so we'd fit into Los Altos just fine if we wanted to.

My point is that Mountain View already is overrun with too much cheap, substandard rental housing and residents, so maybe it's time time to clean up the mess we already have before we make it even worse, as Steve suggested just before my earlier comment. I was responding to Steve, whose comment makes a great deal of sense --- to me anyway. I was not responding to you.


Posted by Garrett
a resident of another community
on Nov 27, 2014 at 3:00 pm

Rentals and home prices are tied to market forces. If older apartments have trouble find tenants then lowering of rents will happy. If no new rental housing is built then older apartments will demand higher rents.

Market principles apply for ownership housing. Older homes will fetch but the structure is ripe for complete tear down to satisfy wealthier owners.


Posted by @BayAreaBill
a resident of another community
on Nov 28, 2014 at 12:40 pm

BayAreaBill. You wrote above "My point is that Mountain View already is overrun with too much cheap, substandard rental housing and residents, so maybe it's time time to clean up the mess we already have before we make it even worse, "

You think this city is overrun with substandard residents?! You say you have a "Ph.D"??? I think not. Anyone with an advanced degree knows that the correct abbreviation is "Ph.D." or "PhD". It is clear that you are one of the many unwashed, uneducated republicans that infest this town and are frustrated with the number of Hispanics that are still able to live here.

Sorry, "Bill", but you are the one that is "substandard" and deserves to be expelled from this country.


Posted by Name hidden
a resident of Bailey Park

on Nov 28, 2014 at 5:30 pm

Due to repeated violations of our Terms of Use, comments from this poster are automatically removed. Why?


Posted by USA
a resident of Old Mountain View
on Nov 30, 2014 at 2:37 pm

USA is a registered user.

City asks: Should developers fund more affordable housing?

There are two problems with that question.

1) This is subsidized housing, not affordable housing. It's not like the city or the developers found some new magic way of build housing at a lower cost. This is simply transferring the cost from one group to another.

2) Developers do not "fund" it. Unlike the government, developers cannot print money. Every dollar a businesses spend has to come from their customers. It is the other buyers and renters who will pay for this subsidy.


Posted by @USA
a resident of Old Mountain View
on Dec 1, 2014 at 11:29 am

Unfortunately, Mr. USA, once again you are demonstrating a lack of knowledge of economics.

"This is subsidized housing, not affordable housing."

Actually, it is both. It is a tax on developers who are building expensive, unaffordable housing to also build some housing that will always be affordable.

"It is the other buyers and renters who will pay for this subsidy."

That is incorrect. Unfortunately, the uneducated and uninformed have latched onto the of mantra Supply and Demand, "More Supply, Lower Price". Therefore, "Lower Supply, Higher Price". The problem is that there is only a small amount of being built at all and of that amount, only a small percentage would be "affordable", so it simply not enough units to affect housing prices more than a few cents.

In fact, the economics of the situation might force to build the units a little smaller or a little more cheaply to offset the costs of the subsidy, which would result in cheaper market rate rents. So, affordability would be achieved regardless.

The alternative is to simply raise taxes on everybody, rather than just the development project. With a name like "USA", I'm sure you will lobby against that too.


Posted by resident
a resident of Monta Loma
on Dec 1, 2014 at 2:43 pm

The answer is a flat no. Extorting this money from developers is plain wrong. So is the Section 8 vouchers (welfare) that is presently used by some low income people for rent assistance. The solution is to live where your means allow and commute if required. If the city wants to really have BMR housing then it has the power to relax the building code for lower cost buildings to be constructed (I concede that the MV land is still expensive though). Many architects in the past have proposed low cost dormitory style apt. buildings that don't get built because extravagant California & local building codes raise the cost of construction.


Posted by hmm
a resident of Monta Loma
on Dec 1, 2014 at 4:41 pm

Should developers fund more affordable housing?

Answer is, we already have too much housings and too much office buildings.

We need to stop all new buildings so that traffic can take a breath as well as the infrastructure. Like Steve said, how about having developers look into funding infrastructure.
[Portion removed due to disrespectful comment or offensive language]


Posted by bmr housing not a lottery
a resident of another community
on Dec 2, 2014 at 12:28 am

It's been claimed a number of times that BMR housing is a lottery - including by Mr. Hoffman, who is quoted twice in the article (toward beginning and end). Please make sure you understand that there's prioritization. See here:

Web Link

TL;DR: Public safety employees and public school teachers receive priority.

You may want to consider this - market rate housing is unattainable for some of these groups; so while the BMR program isn't perfect, it's currently the only way to help public school teachers (for example) to live in their community. Thanks.


Posted by bmr housing not a lottery
a resident of another community
on Dec 2, 2014 at 12:28 am

It's been claimed a number of times that BMR housing is a lottery - including by Mr. Hoffman, who is quoted twice in the article (toward beginning and end). Please make sure you understand that there's prioritization. See here:

Web Link

TL;DR: Public safety employees and public school teachers receive priority.

You may want to consider this - market rate housing is unattainable for some of these groups; so while the BMR program isn't perfect, it's currently the only way to help public school teachers (for example) to live in their community. Thanks.


Posted by bmr housing not a lottery
a resident of another community
on Dec 2, 2014 at 12:28 am

It's been claimed a number of times that BMR housing is a lottery - including by Mr. Hoffman, who is quoted twice in the article (toward beginning and end). Please make sure you understand that there's prioritization. See here:

Web Link

TL;DR: Public safety employees and public school teachers receive priority.

You may want to consider this - market rate housing is unattainable for some of these groups; so while the BMR program isn't perfect, it's currently the only way to help public school teachers (for example) to live in their community. Thanks.


Posted by Steve
a resident of another community
on Dec 2, 2014 at 2:26 pm

Back to the myth of the underpaid teacher? And as far as 'public safety' employees needing subsidized housing... that concept is just a sad joke.


Posted by Confused
a resident of Cuesta Park
on Dec 3, 2014 at 10:34 am

I have a difficult time understanding why developers are stuck subsidizing low(er) income housing. Why are we targeting a particular business sector for contributions to teachers, firefighters, etc? We don't require grocers to donate food to teachers or doctors to donate free healthcare or attorneys to do pro bono work, corporations to provide free products, services etc. It seems incredibly inequitable that developers (whether large or small) are forced to subsidize housing.

And the teacher priority is it's own topic. Are they contributing more to society/ the economy than other job sectors? Is there a particular reason they should not have to commute to work while thousands of others commute long distances to their jobs? The myth of the overworked, underpaid teacher is just that- a myth. They only work 3/4 of the year, , they have short days, they're better paid than many jobs requiring more education, they get fabulous benefits and they have guaranteed, lifelong jobs without having to merit them.


Posted by developer-awareness
a resident of another community
on Dec 3, 2014 at 12:34 pm


The subsidized housing topic seems pretty complex. So I won't
comment on what one should require from developers in this regard.

As a general issue however....
Leave the developers alone --- they shouldn't be required to
provide any amenities for the public? If so, expect the
developers to:

(1) Build with no setbacks.
(2) Build as many stories as possible.
(3) Remove heritage trees and just pay pittance in fines -- even
$5million won't be enough per heritage tree. But the city is
happy to take a few thousand dollars as fines.
(4) Build high density with no concern for the traffic mess and
destroy livability of a town.
(5) Build cheap with no architectural aesthetics.
(6) Charge high rents because the young recent grads working
for world-class companies are able to afford it.
(7) Don't show any interest in the community and not worry
about schools for the kids living in the 1000 apartment
complexes. Pretend that since the residents today are
20-somethings, there will never be small children ever
in those apartments.
(8) Pave concrete everywhere and not provide ADEQUATE green
space for the 1000's of apartments and offices they build.
(9) Focus only on the returns for the developers themselves
and their far-removed investors.
(10)Add inexpensive glitz and glamour to the development and
pretend that the buildings are upscale.
(11)Present studies that show no traffic increase when the traffic
is already a disaster for everyone to see and experience today.

But are there any checks and balances to ensure the livability of
a town? Yes -- but it is only as good as the citizens that are
willing to elect the right officials for city administration.


Posted by confused
a resident of Cuesta Park
on Dec 3, 2014 at 6:13 pm

@developer-awareness - who said anything about letting developers build without any codes/ restrictions? What I said was that I think developers (as a business sector) are being unfairly burdened with the obligation to subsidize housing whilst other sectors have no such requirements. All the issues you mention can be addressed with building codes, zoning, etc.


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