Housing meant for the Bay Area’s poorest residents is slowly vanishing | The Kansas City Star

As Bay Area communities struggle to build enough housing for their poorest residents, one factor keeps threatening their progress: the affordable housing they already have is slowing disappearing.

The five-county Bay Area has lost 2,128 subsidized affordable homes since 1997, according to a report released Tuesday by the California Housing Partnership. Another 5,128 homes – or 5 percent of the region's existing affordable housing stock – are at risk of becoming too expensive for their low-income tenants.

As the Bay Area grapples with an affordable housing shortage, the slow drain of its existing low-cost units is undermining efforts by local governments, developers and nonprofits to house the state's poorest residents. Developers essentially are pouring water into a leaky bucket: as they build new units, older units fall out of the supply when their government contracts expire and landlords sell the buildings or convert them to market rate rents.

"In some communities, these homes are some of the last homes where low-income people, particularly low-income people of color, can remain as the pressures of gentrification have increased," said Matt Schwartz, California Housing Partnership president and CEO.

Bay Area rental prices have climbed to staggering heights over the past few years, forcing low and moderate-income residents to move farther from job hubs in search of cheaper housing. An average apartment rents for $2,870 in Santa Clara County, and for $2,613 in Alameda County, according to RentCafe.

The state and federal government offer subsidies to landlords who agree to rent their properties at discounted rates to families making less than the area's median income. But those deals typically come with an expiration date. Landlords who work with the U.S. Department of Housing and Urban Development, for example, generally sign 20-year contracts. During that time, low-income tenants pay up to 30 percent of their wages, and the federal government makes up the difference between that and a pre-determined market rate.

Another option is low-income tax credits, which grant property owners a one-time subsidy in exchange for longer term agreements to charge discounted rents.

When those agreements end, landlords face a choice: renew and continue serving low-income tenants, or let the deal expire and raise the rents to market rate. In today's red-hot rental market, raising the rent is becoming an increasingly attractive option.

"The issue is: are there still incentives for people to get out of the federal program if they're not locked in?...And the answer's yes," said Olson Lee, former deputy director of San Francisco's redevelopment agency. "If they think they can make more than what the federal government is willing to subsidize, then that creates an incentive."

Throughout the state, 15,044 units of affordable housing have been lost since 1997, and 34,554 more are at risk of turning into market-rate housing in the next 10 years – 8 percent of the state's current affordable housing stock, according to the California Housing Partnership report. Meanwhile, the state has a shortage of 1.5 million homes for its lowest-income residents.

Santa Clara County, which has the most existing affordable housing stock in the five-county Bay Area, also has the largest number of units at risk of conversion – 2,059, or 7 percent of its existing affordable housing stock. At the same time, new housing is being added to the supply. The county approved 1,596 new units for low and very-low income families between 2015 and 2017, according to the Association of Bay Area Governments.

San Francisco is a close second, with 1,584 units at risk – or 6 percent of the county's affordable housing stock. Though San Mateo County has just 622 units at risk, that's 13 percent of its affordable housing stock; Alameda County has 346 units at risk, or 2 percent of the county's affordable housing stock; and Contra Costa County has 517 units at risk, or almost 4 percent of the county's affordable housing stock.

While the number of affordable units lost has remained relatively steady over the past few years, Schwartz worries the problem could get worse. The federal government allowed about 1,000 affordable housing contracts to expire nationwide during the recent partial government shutdown, Schwartz said. Other landlords were left confused and uncertain, and at risk of missing their payments – an experience that likely will scare away some property owners, he said.

"The shutdown sent shock waves through anyone with a rent subsidy contract with the US government," Schwartz said.

To combat the loss of low-income housing, state and local governments need to create extra incentives – such as additional tax credits – to entice property owners to remain in the affordable housing system, Schwartz said.

State lawmakers took up the issue in 2017, passing a law that requires owners of expiring affordable rental properties to accept a market-rate purchase offer from an organization that will preserve the building's low-cost housing.

Every unit of affordable housing is important, because there is such a shortage, said Jennifer Loving, CEO of Destination Home, an organization working to end homelessness in Santa Clara County.

"We have thousands of people on our wait list," she said. "Thousands of people apply for new units."