Fall Real Estate 2008

Publication Date: Friday, October 10, 2008

Housing perks lure new hires
Peninsula employers cope with sky-high housing costs

"The success of an athletic program, law firm or any other organization is largely dependant on the quality of its staff. We need to be able to compete with other markets, or we risk loosing the caliber of people we're after," Bowlsby said.

While the Peninsula's reputation as one of the country's most desirable places to live has not diminished, private employers, city government and local school districts are aware of the challenges facing prospective staff in finding affordable homes and rentals here. To attract and retain capable people, more and more organizations are offering help in the form of housing incentives, subsidies and stipends.

Employers are beginning to see housing incentives no longer as merely "perks" of employment, but as an increasingly necessary measure for drawing a strong workforce to this area.

Spearheaded by Bowlsby, and backed in part by billionaire Stanford booster John Arrillaga, Stanford Football's program aims to make life on the Peninsula appeal to prospective coaching staff who may be on the fence about whether to uproot their families and move to this incredibly expensive area. In the past, the area's high cost of living meant that much of Stanford's coaching staff spent long hours commuting to and from their homes outside the area, picking up the burden of commuting costs, as well as the loss of time with their families.

A four-bedroom, 2,200-square-foot home in Palo Alto costs roughly $1.68 million on average, approximately $300,000 more than a comparable one in the nation's next most expensive college town, Chestnut Hill, Mass., home of Boston College.

Bowlsby took the position of athletic director at Stanford in 2006, in part because Stanford offered him a monthly stipend to help with the cost of housing. He immediately recognized how the football program could benefit from implementing similar programs for its coaching staff.

By November 2007, Stanford had already purchased six houses, and was aiming to own anywhere from 20 to 40 homes and apartments for the university's football coaching staff. According to Bowlsby, the university's athletics department has a number of programs for housing aid that vary according to position and terms set by negotiation. Stanford owns all homes and apartments used by coaching staff.

Housing aid at Stanford is not limited to its athletic department though. Managed by Faculty Staff Housing, a division of the office of the provost, Stanford offers several programs to aid its academic faculty with housing costs. According to Jan Thomson, the university's director of communication services, the vast majority of eligible Stanford faculty take full advantage of the F.S.H. programs, which are for tenured faculty, and apply to buying a home as well as renovating or remodeling an existing one.

Programs include a deferred-interest loan, as well as an interest-only home loan. F.S.H. also offers what is called the Housing Allowance Program, which is a taxable fringe benefit to supplement a faculty member's income when a new home is purchased or renovations are made to an existing one. A variation of H.A.P. is a lump-sum, taxable payment equal to the gross of the Housing Allowance Program.

Some organizations are countering the area's high cost of living by building affordable housing for their staff.

In December 2004, the San Mateo Community College District (SMCCD) opened a 44-unit apartment complex called College Vista for full-time faculty and staff. Built on what was once a parking lot, the complex offers district employees one-, two- and three-bedroom apartments at roughly half the average market rate.

According to Sue Harrison, executive assistant to the district chancellor, SMCCD's board of trustees first envisioned College Vista in 2002. At the time the school district was having difficulty recruiting staff at all levels, and was facing a yearly staff turnover rate of 10 to 11 percent. Prospective faculty members were opting to live and work elsewhere, due in large part to the area's impossibly high cost of living.

The school district could not afford to raise salaries, and instead began offering inexpensive second mortgages as an early measure to help its faculty afford homes. Still, most teachers were unable to meet the 3 percent down payment required for the loan. Many of the district's younger teachers were recent college graduates, still carrying the burden of student debt.

According to a 2007 report by the nonprofit group Sustainable San Mateo County, San Francisco, San Mateo and Marin counties are the nation's most expensive, "based on the hourly wage required to rent a two-bedroom apartment."

Additionally, the report stated that, "a household in San Mateo County needed an annual income of $118,159 to buy a median-priced condo for $550,000. The income needed to buy a median-priced single-family home for $869,000 was $186,691." Salaries for full-time SMCCD faculty range from $54,265 to $65,351 annually. The disparity between the average cost of a home and the salary earned by a full-time college employee illustrates the broader problem faced by thousands who want to live and work in this area but simply cannot afford to.

The district built College Vista as a means to provide affordable homes for its staff; because profit was never a motive the district has been able to set rent prices ranging from $840 to $1,400 per month. In addition, the school district avoids the expense of property tax, as it owns the tax-exempt land College Vista is built on.

Permanent district staff members get a higher priority on the waiting list for College Vista, which was 92 people strong in November of last year. Residents are allowed to live at College Vista for five years, which is the amount of time the school district estimated to be sufficient for a full-time staff member to save money for a home.

A new project on the Canada College campus, aimed at addressing the same needs as College Vista is in the planning stages. Called Canada Vista, the 60-unit complex is projected to open sometime in 2009 and will be constructed on what is now the college's underutilized parking lot #3.

According to Barbara Christensen, the SMCCD's director of community and government relations, the district conducted a survey of its staff last year, asking which campus they would prefer the district build a staff housing development on: Canada or Skyline. "Canada was the overwhelming response," Christensen said.

The Woodside-Redwood City border runs directly through the site of what will be Canada Vista, slightly complicating the building's early planning. The Town of Woodside originally wanted to annex Redwood City's portion of the land, but lacked the multi-family zoning and existing infrastructure such as sewer and water lines necessary to accommodate the building. Christensen and District Chancellor Ron Galatolo succeeded in convincing the Woodside Town Council to agree to preliminary plans for de-annexing the property to Redwood City.

"Recently they've (Woodside Town Council) said that they want to have some input into the building's design, so we're holding some meetings with a subcommittee of the Council. It all seems to be going well, and I'm not anticipating any delays in the project," Christensen said.

Palo Alto's city government has used housing incentives to secure a number of its department heads.

"The city is an equity partner in my Palo Alto house, since they wanted its chief executive to live in Palo Alto," said former City Manager Frank Benest. The city helped Benest purchase his home on Bryant Street when he moved here for the city manager job in 2000. The city owns 56.8 percent of the house, and Benest owns 43.2 percent.

"In some cases we offer some types of housing assistance to department directors. For instance, the city may pay points on a home loan. In the past, we have provided a home loan to a department head," Benest said.

Benest retired in August 2008, and according to his employment agreement, must sell his home no later than 2017. In December 2007, the City Council voted 9-0 in favor of an amendment to Benest's employment contract, such that he and the city will share the cost of any "improvements, upgrades or beautification efforts" to increase the home's value by the time of sale, provided that they are approved by the city's administrative services director.

"I see it as a good measure to protect our investment. The city owns 56.8 percent of the property that was originally acquired at about $1.58 million. The appreciation of homes in Palo Alto has been significant and the city wants to ensure the investment is maintained properly for when it comes time to sell," said Lalo Perez, the city's director of administrative services.

Many private local businesses, such as Facebook are getting in on the act as well. According to a Facebook spokesperson, the company offers "a $600 per month housing subsidy to employees who live within one mile of the office."