EVERYONE'S VALLEY

EveryoneÕs Valley provides a comprehensive review of the causes of Silicon Valley's housing crisis and the serious magnitude of its impact on area residents. Through a careful inventory of our region's housing stock, and an analysis of area development and finance policies, employment data, and other indicators, it also offers a prospectus for change. In particular, EveryoneÕs Valley reveals the scale of solutions necessary to make improvements to the situation. In doing so it fills a long-standing vacuum in the discussion of Silicon Valley's escalating housing shortage.

This report points out that while our community stands at the crest of the New Economy of hightech information technologies, some of the same market forces that gave rise to Silicon Valley's growth, if unaddressed, could also prompt its decline.

As noted in earlier studies by Working Partnerships, the rise of high-tech and information technologies has fostered the growth of a local economy shaped similar to an hourglass. At one end is a growing number of well-compensated positions in management and highly skilled technical fields. However, at the other pole we see a far greater expansion of low paying service and even lesser skilled technical positions. By the year 2004, Santa Clara County will witness the creation of 32,000 new jobs in the traditionally low-wage food service and building maintenance industries and the retail sector. Barring the creation of new public sector entitlements or the expansion of collective bargaining, there is little prospect that workers holding those new jobs will join the middle-class. This polarization is reflected in, and exacerbated by, Silicon Valley's housing market. Without policy commitments at the level noted in this report, it is increasingly doubtful that low-income working families can continue to reside within the Silicon Valley region.

Major findings of this report include:

A Contracting Housing Market:
Faced with the influx of new residents, housing in Silicon Valley is scarcer than ever.
  • Last year, the Santa Clara County vacancy rate fell to a three-year low of 1.1%. Though high-income residents are able to "compete" for rental housing, moderate and low-income families are not.
  • Today, over 90,000 Santa Clara County residents pay more than 30% of their incomes in rent. 43,000 residents pay more than half their income in rent.
  • In 2000, only 16% of homes for purchase were affordable to average-income households in Silicon Valley.
  • At least 38,000 families in San Jose live in overcrowded conditions.
High Housing Costs Worsen Traffic and Undermine Employee Retention:
The lack of affordable housing forces 133,000 Silicon Valley workers to live outside Santa Clara County.
  • Traffic congestion now costs area drivers in excess of $1.25 billion annually.
  • As highly skilled professionals face a choice of staggering rents or lengthy commutes, Silicon Valley business is hampered in its efforts to attract and retain workers.
Crisis Dwarfs Current Response:
The scale of the problem our community faces has overwhelmed housing programs in Silicon Valley. The response by Silicon Valley's 14 local governments has been poorly coordinated and largely ineffective.
  • Eleven thousand families in Santa Clara County now receive public housing assistance. However, at least two and a half times as many still need assistance.
  • Significant "loopholes" and weak enforcement of local rent control measures have allowed landlords to excessively boost rents and evict low-income tenants, further reducing the supply of affordable housing.
  • California fiscal policies effectively reward local governments for promoting revenue "producing" commercial development over housing.
  • The valleyÕs zoning measures, which initially allowed low-density sprawl and now belatedly preserve open space, have significantly contributed to the lack of affordable housing.
An Effective Response Can Be Crafted:
Though Silicon Valley's housing crisis has been intractable, it is hardly irreversible. A careful review of the available choices suggests that, together, a series of policy alternatives can help preserve and create new affordable housing, particularly in the Mid-Coyote Valley. Silicon Valley can implement housing programs that reduce the gap between the affluent and working poor, restore equity to our community, and sustain a region in which families from diverse income levels can live together.

Increasing the Supply of Affordable Units

  • Inclusionary zoning in the Mid-Coyote Valley and other infill areas would create coordinated programs, imposing obligations on both the public sector and developers, to create housing thatÕs affordable for families and profitable to business. Approximately 8,600 units of additional housing, including thousands of units for extremely low and very low-income families, could be developed at a cost of $1.2 billion.
  • A housing "superfund" can be created to finance new affordable developments. This "superfund" could be composed of revenue generated through a temporary increase in the sales tax or the issuance of general obligation bonds. When combined with other available funds, commitments from developers, and capital generated by a marginal increase in the percentage of redevelopment agency (RDA) funds allocated to housing, the "superfund" could underwrite the cost of the entire inclusionary zoning program.

Preserving the Supply of Existing Affordable Units

  • Strengthening the rights of area renters is essential to protect the existing supply of affordable housing from gradually being transformed to costlier units. This could be achieved by improving Silicon Valley's current rent control measures, enacting rent control in communities lacking protections, and establishing safeguards against unjust evictions. Cities can further prevent the loss of units by supporting a county-wide investigation to determine whether publicly financed affordable properties set for conversion actually have longer term affordability requirements.

 

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