REPORT TEMPLATE – Housing Market Analysis Palo Alto

178 Pages·2005·4.24 MB·English

by  Trevor Macenski

City of Palo Alto
2200
Final
May 2005
City of Palo Alto
2005 – 2010 Consolidated Plan

Planning & Community Environment
250 Hamilton Avenue Palo Alto, California 94301
Steve Emslie, Director

For Information, Please Contact:
Eloiza Murillo-Garcia, Associate Planner, CDBG
Planning Division, City of Palo Alto [phone]

P&D Consultants
Table of Contents

Table of Contents

Contents
Chapter 1: Introduction..........................................................................................4
1.1 Purpose and Content.......................................................................................4
1.2 Coordinating and Managing the Process....................................................5
1.3 Housing and Community Development Needs ..........................................5
1.4 Five-Year Strategy.............................................................................................6
1.5 2005 – 2006 Action Plan...................................................................................7

Chapter 2: Coordinating and Managing the Process.......................................11
2.1 Institutional Structure......................................................................................11
2.2 Coordination ...................................................................................................12
2.3 Monitoring........................................................................................................13

Chapter 3: Housing and Community Development Needs..............................14
3.1 Population and Household Characteristics................................................14
3.2 Current Housing Needs..................................................................................19
3.3 New Construction Needs...............................................................................30
3.4 Housing Market Conditions...........................................................................30
3.5 Public and Assisted Housing Needs.............................................................40
3.6 Barriers to Affordable Housing......................................................................43
3.7 Fair Housing......................................................................................................48
3.8 Homeless Needs..............................................................................................51
3.9 Community and Economic Development Needs.....................................89

Chapter 4: Five-Year Strategy.............................................................................97
4.1 Methods for Identifying Priority Needs.........................................................98
4.2 Resources for Housing....................................................................................99
4.3 Housing and Community Development Strategy..................................105

Appendix A: Agency Consultation and Community Outreach.....................124
A.1 Agency Consultation ..................................................................................124
A.2 Community Outreach.................................................................................131
A-3 Countywide Telephone Survey .................................................................133

Appendix B: Citizen Participation Plan.............................................................156

Appendix C: 2005 – 2006 Program Year Action Plan .....................................162

City of Palo Alto 1 2005 – 2010 Consolidated Plan
Table of Contents
List of Tables
3-1: Race and Ethnicity by Person and Household (2000)...............................14
3-2: HUD Income Definitions..................................................................................15
3-3: Household Income by Race/Ethnicity (2000).............................................17
3-4: Lower Income Households by Race/Ethnicity (1990-2000).......................17
3-5: Housing Problems by Household Income....................................................21
3-6: Licensed Community Care Facilities............................................................23
3-7: Types of Disabilities..........................................................................................26
3-8: Large Household Profile..................................................................................28
3-9: Location of AIDS Cases, Santa Clara County.............................................29
3-10: Housing Growth...............................................................................................31
3-11: Housing Type – 2004........................................................................................31
3-12: Mobile Home and RV Parks in Santa Clara County...................................32
3-13: Housing Tenure.................................................................................................33
3-14: Median Home Prices (2003-2004).................................................................34
3-15: Rental Rates in Selected Santa Clara County Jurisdictions......................35
3-16: Fair Market Rents in Santa Clara County.....................................................35
3-17: Affordable Housing Costs by Income..........................................................36
3-18: Age of Housing Stock (2000)..........................................................................37
3-19: Housing Stock Deficiencies (2000)................................................................37
3-20: Housing Occupied by Lower Income Households with Potential Lead-
Based Paint Hazard........................................................................................38
3-21: Section 8 Participants and Applicants in Palo Alto....................................40
3-22: Palo Alto Subsidized Rental Housing Developments (January 2005)......41
3-23: Assisted Housing Units At Risk of Conversion to Market-Rate ...................42
3-24: Homeless and Special Needs Populations (Palo Alto)..............................52
3-25: Homeless and Special Needs Populations (Santa Clara County)...........53
3-26: Emergency Shelters, Santa Clara County...................................................84
3-27: Transitional Housing, Santa Clara County...................................................86
3-28: Permanent Supportive Housing, Santa Clara County...............................89
3-29: Community Development Needs Priorities .................................................93
3-30: Major Employers of Palo Alto Residents.......................................................95
4-1: Public and Private Resources Available for Housing and Community
Development Activities...............................................................................100
4-2: Priority Housing Needs..................................................................................107
4-3: Special Needs and Goals...........................................................................115
4-4: Summary of Specific Homeless/Special Needs Objectives...................116
4-5: Community Development Need, Priorities, and Goals..........................118
4-6: Summary of Specific Housing/Community Development Objectives.119
4-7: Strategy for Overcoming Barriers to Affordable Housing.......................122
A-1 Zip Code of Survey Participants.................................................................137
A-2: Household Size...............................................................................................139
A-3: Age of Householder.....................................................................................140
A-4: Education Level ............................................................................................140
A-5 Race and Ethnicity.......................................................................................141
A-6 Household Income.......................................................................................142

City of Palo Alto 2 2005 – 2010 Consolidated Plan
Table of Contents

List of Figures
3-1: Concentration of Minority Populations........................................................16
3-2: Concentrations of Lower-Income Households...........................................18
3-3: Location of Residential Care Facilities.........................................................24
3-4: HIV/AIDS Cases by County Region...............................................................29
3-5: Elevated Blood Levels by Zip Code..............................................................39
A-1: Zip Code of Survey Participants.................................................................138

City of Palo Alto 3 2005 – 2010 Consolidated Plan
Introduction

Chapter 1
Introduction

1.1 Purpose and Content

The City of Palo Alto’s 2005 - 2010 Consolidated Plan describes local conditions and resources,
identifies priority housing, human service and community development needs, and outlines a
strategy to address the identified needs. The Consolidated Plan was developed under the
guidelines established by the Federal Department of Housing and Urban Development (HUD),
and it serves as the application for four major HUD formula programs:

• Community Development Block Grant (CDBG)
• HOME Investment Partnerships (HOME)
• Housing Opportunities for Persons with AIDS (HOPWA)
• Emergency Shelter Grants (ESG)

Of the four formula programs, CDBG funds are the only ones received by the City of Palo Alto on
an entitlement basis directly from HUD. Funding from any of the other sources would require a
successful grant application in a competitive process administered by either the State of
California or HUD. The Consolidated Plan serves as a guide to insure that Federal funds are
directed toward the most urgent community needs, and that funding decisions are consistent
with identified priorities and strategies. The Plan links identified community needs to the federal
and local resources available to meet those needs.

Additionally, the Consolidated Plan is intended to initiate a collaborative process whereby a
unified vision is established for community actions, and partnerships are strengthened among all
levels of government and the private sector. The Consolidated Plan serves four separate, but
integrated, functions: as a planning document for the jurisdiction; as an application for federal
funds; as a strategy to be followed in carrying out HUD programs; and as an action plan that
provides a basis for assessing performance.

National Goals: The Consolidated Plan must primarily benefit low-income persons in accordance
with the three basic goals of the four formula grant programs:

• Provide decent housing
• Provide a suitable living environment
• Expand economic opportunities

The City of Palo Alto has prepared its Consolidated Plan for the period 2005-2010 in compliance
with 24 CFR 91 and the ensuing regulations of the U.S. Department of Housing and Urban
Development.

City of Palo Alto 4 2005 – 2010 Consolidated Plan
Introduction
1.2 Coordinating and Managing the Process

The City’s Department of Planning and Community Environment administers the CDBG Program
addressing housing and affordable housing programs. The Department of Community Services
oversees the annual allocation of General Fund Human Service contracts; works with the Human
Relations Commission on needs assessments, diversity issues, and provides staff liaisons to
Citywide volunteer task forces (i.e. Child Care, Mediation, and Youth Council). The Housing
Authority of the County of Santa Clara (HACSC) administers the local Section 8 housing subsidy
program, and has provided bond financing for the acquisition of affordable housing projects
within the City.

The majority of housing and human service strategies will be accomplished by supporting local
non-profit organizations that provide programs and services for lower income residents. The City
will cooperate and work with these groups to ensure the development of affordable housing
and appropriate services within the community.

As part of the development process of the Consolidated Plan, the staffs of the CDBG entitlement
cities of Palo Alto, Sunnyvale, Gilroy, Mountain View, Cupertino, Milpitas, San Jose, Santa Clara
and the County of Santa Clara met a number of times to discuss data resources and to
coordinate requests for information to both public and private county -wide agencies.

Palo Alto City staff actively participates in the Santa Clara County Collaborative on Housing and
Homelessness. This Countywide group brings together governmental agencies, homeless service
and shelter providers, homeless persons, housing advocates, and affordable housing developers
to develop coordinated approaches to homeless issues. This increases cooperation and
coordination among the participants in developing more effective programs to address the
problem of homelessness and lack of affordable housing in Santa Clara County. These efforts
are expected to continue.

1.3 Housing and Community Development Needs

As in 2000, a top issue of community concern has been the increasing gap between housing
costs and low- and moderate-income wages. This gap not only creates a need for more
affordable housing (particularly rental housing), but also threatens individuals and families at the
lowest income levels with homelessness. Extremely high housing costs also impact the ability of
low- and moderate-income households to pay for other necessities (health care, child care,
transportation, etc.) and affect access to housing choices in a tight housing market.

A second priority need continues to be preventing homelessness and moving the homeless to
self-sufficiency, with permanent housing, life skills for self-sufficiency, and employment skills.
Homelessness is both a local and regional issue with which Palo Alto and its neighbors in Santa
Clara and San Mateo counties have grappled for years. Federal funding for homeless facilities
and services emphasizes two principles: 1) providing a continuum of care to move homeless
individuals and families from shelter to permanent housing and eventual self-sufficiency; and 2)
ending chronic homelessness within ten years.

Other important housing needs are: 1) to preserve the limited supply of affordable, subsidized
rental housing in Palo Alto potentially at-risk of converting to market rate housing (400 units), and
2) conserving the condition of pre-1970 housing (owner and rental) that shelter low- and
moderate-households, estimated at nearly 2,700 units.

City of Palo Alto 5 2005 – 2010 Consolidated Plan
Introduction
Since 2000, economic opportunities for Palo Alto’s low- and moderate-income residents have
also become a high concern. Santa Clara County has experienced a loss of approximately
200,000 jobs in technology industries and businesses that serve those industries since the
adoption of the 2000 Consolidated Plan. Although the region is experiencing a slow economic
recovery, much of the growth in employment is in industries with jobs that pay low- to moderate-
income wages.

The City has also determined that improvements to existing facilities that provide services to low-
and moderate-income residents, public services for special needs individuals, and accessibility
improvements for persons with disabilities remain ongoing priority needs. The priority needs
include: 1) improving opportunities for all residents to live independently and self-sufficiently, 2)
greater access to public areas (streets, sidewalks, buildings, etc.), and 3) ongoing support for
individuals and families with poverty level to extremely low incomes (zero to 50 percent of
median income).

1.4 Five-Year Strategy

The provision of affordable rental units continues to be the most significant need in Palo Alto.
The City will continue to use CDBG and other available funds to pursue the creation and
preservation of all types of affordable housing. Two critical housing needs are identified in the
Consolidated Plan: the alleviation of the high cost of housing for lower income renter
households; and the provision of affordable housing for the very low-income, homeless and
persons with special needs.

Over the next five years, the City of Palo Alto will pursue the following primary goals:

• Increase the number of permanently affordable rental units;
• Support the rehabilitation needs of non-profit owned multi-family rental housing projects
that are affordable to lower income households or individuals;
• Provide additional shelter beds and services for homeless families and individuals;
• Support public facility improvements (accessibility, modernization, rehabilitation, etc.) for
organizations that provide services to low-income or special needs populations;
• Improve the community quality of life by supporting human service organizations that
provide a safety net of services to low-income, homeless and other at-risk populations,
such as persons with disabilities and the elderly; and
• Take affirmative measures to ensure equal opportunity in housing for all, regardless of
race, color, religion, national origin, sex, familial status and disability.

Specific goals contained in Chapter 4, Five-Year Strategy, are:

• Increase the supply of affordable rental housing.
• Preserve the supply of affordable rental housing at immediate risk of conversion to
market-rate housing.
• Conserve the condition of existing affordable rental housing.
• Continue the below market rate (BMR) program.
• Continue to participate in the mortgage credit certificate program.
• Provide for rehabilitation loans to very low-income single -family homeowners in
emergency or crisis situations only.
• Provide assistance and supportive services to low and very-low-income Palo Alto
residents to keep them from becoming homeless.
City of Palo Alto 6 2005 – 2010 Consolidated Plan
Introduction
• Continue to support an indoor facility for the provision of supportive services with the
potential of a housing component.
• Continue to support the operating (and/or rehabilitation) costs of shelters and transitional
housing programs that serve the Palo Alto area.
• Continue to support mental health outreach and other supportive services for the
homeless.
• Continue to cooperate on countywide approaches to the issues of homelessness.
• Support the activities of area non-profit organizations that provide transitional housing
and supportive services to the homeless.
• Continue to support the shelter plus care program in Palo Alto and increase the units
available in the program to include families with children.
• Continue to provide accessible transportation services.
• Continue to provide services to prevent homelessness.
• Continue to support food and meal programs.
• Promote a vital system of community-based human services through facilities to house
those services.

The City’s proposed 2005-2006 Annual Action Plan activities support and promote the
accomplishment of the stated goals and objectives.

1.5 2005 – 2006 Action Plan

1.5.1 Resources Available to the City

Palo Alto has identified a number of local, state, federal, and private resources to implement
Consolidated Plan activities during the 2005 – 2006 program year. The major funding sources are
described below.

Community Development Block Grant Program

The City receives CDBG funds as an entitlement grant through the U.S. Department of Housing
and Urban Development (HUD). In fiscal year 2005 - 2006, the City will allocate $915,639 in
CDBG funds to eligible activities that address the needs identified in the Consolidated Plan. The
amount of the City’s CDBG entitlement grant from HUD is estimated to be $779,281, estimated
program income is $45,000, and reallocated funds total $62,570. Program income is income
directly generated from the use of CDBG funds that is returned to the CDBG program and
reallocated to new activities.

Estimated FY 2005/06 CDBG Entitlement Grant $779,281

Program Income:
Estimated Program Income 2005/06 (HIP) 35,000
Estimated Program Income 2005/06 (PAHC) 10,000
Excess Prior Year Program Income 28,788

Reallocated Funds:
Miscellaneous Reallocations 62,570

TOTAL ALLOCATION $915,639

City of Palo Alto 7 2005 – 2010 Consolidated Plan
Introduction
City Affordable Housing Fund

The Affordable Housing Fund is a local housing trust fund established by the City Council to
provide financial assistance for the development, acquisition, and rehabilitation of housing
affordable to extremely low, very low, low and moderate-income households. The Affordable
Housing Fund is the umbrella name for five distinct sub-funds for affordable housing. The two
primary local housing trust funds were formerly known as the Housing Reserve Fund, but on
October 27, 2003, the City Council approved new guidelines for all of the City’s affordable
housing funds including the ones composed of federal housing monies; the funds were renamed
as part of those changes. The Affordable Housing Fund is now composed of:

Commercial Housing Fund – this fund is used primarily to increase the number of new affordable
housing units for Palo Alto’s work force. It is funded with mitigation fees required from developers
of commercial and industrial projects. As of April 30, 2005, the Commercial Fund had an
available balance of approximately $1,900,000.

Residential Housing Fund – this fund can be used for acquisition, rehabilitation, new construction,
and predevelopment of low-income housing. It is funded with mitigation fees provided under
Palo Alto’s Below Market Rate (BMR) housing program from residential developers, and money
from other miscellaneous sources, such as proceeds from the sale or lease of City property. It is
also used to pay for administration and consultant contracts necessary to carry out the BMR
program. As of April 30,2005, the Residential Fund had an available balance of approximately
$750,000.

Housing Trust of Santa Clara County (HTSCC) – The HTSCC is a public/private initiative, dedicated
to creating more affordable housing in Santa Clara County, using a revolving loan fund and
grant-making program to complement and leverage other housing resources. The City of Palo
Alto contributed $500,000 toward the initial $20 million investment capitalization and provided
an additional commitment of $150,000 to be expended over fiscal years 2004-05 and 2005-06.
The City’s contribution will be used exclusively for qualifying affordable housing projects located
within the City.

Multifamily Housing Program (MHP) – The Multifamily Housing Program (MHP) is a relatively new
source of funding for affordable housing as a result of the passage of Proposition 46 in
November 2002. The purpose of this program is to provide low-interest loans to developers of
affordable housing. The MHP General funds may be used for multifamily rental and transitional
housing projects involving new construction, rehabilitation, or conversion of nonresidential
structures. MHP Supportive Housing funds may be used for multifamily rental housing projects
involving new construction, rehabilitation, acquisition and rehabilitation, or conversion of
nonresidential structures for permanent rental housing only. Palo Alto Housing Corporation and
Community Working Group/Housing Authority of Santa Clara County (Opportunity Center)
applied for and received funds since the inception of the program.

Multifamily Housing Program (MHP) Local Housing Trust Funds – Another component of
Proposition 46, the housing bond approved by voters in November 2002 is funding for new and
existing local housing trust funds. A local housing trust fund is a public or private partnership
created to receive on-going revenues for affordable housing production. Local revenues
supporting the fund can include commercial impact fees, ongoing fundraising, or local taxes
such as Transient Occupancy Tax, as well as local government’s general funds. The City of Palo
Alto applied for and received an award of $1,000,000 in February 2004. The City’s $1,000,00
award will be used to help subsidize a future rental housing project, either new construction or
acquisition and rehabilitation, to be determined in the next two years by the City Council.
City of Palo Alto 8 2005 – 2010 Consolidated Plan