001be full of circles. I had been there in so many years. My father was in the Navy, so we moved a lot. Anyway, so I'm glad to be here. We're here to talk about workforce housing. My style is very conversational, so please feel free to interrupt me anytime you have questions. We can stop as many times as you want to stay on the point or seek more clarification. I talked a little bit about we're statewide and on page three, I know we're waiting for the screen, so I'm just gonna be following along for the paper for now. This is a very, very small sampling of the districts that we've been working with on various matters. By volume, we're the number one real estate provider of real estate services for public school districts in the state
002of California, something that we're very proud of. The breadth of what we do is at the bottom, well, on page four. So we do facility assessments when sometimes districts are just unsure of what they need to maintain in the sense where they want to supplement what they do with their maintenance team. That could be a closed school surplus site that's still in service. We do a lot of strategic asset management. And so when districts find themselves with surplus sites or underutilized sites, and they want to find a way to give those sites. either new life or turn those into resources. We do that strategic assessment. We do a lot of workforce education, workforce housing, development feasibility, development consulting. We sell and lease sites for districts that want to monetize on disposition. We do a lot
003of that these days. 7-Eleven Advisory Committee is something that is part of the surplus property process. We help with that. And stakeholder engagement, which is something that we think is most critical to everything that we do, is having a good stakeholder engagement process. So that just talks a little bit about what we do as an agency. Page five is the agenda of what we're going to cover this evening. So we'll talk about a little bit about the data. Okay, great. The presentation is really a synthesis of best practices. And so it's not intended to be exhaustive, but it's intended to be informative. And you should walk away with a working understanding of how workforce housing. comes to be, what the different models are. And so we'll walk through the data, we'll talk about what it
004is, we'll talk a little bit about the legislative framework, we'll discuss the different models that districts have employed, the financial component, which is one of the most critical aspects, some case studies, just so you can see what's going on. And then we'll talk a little bit about the details for sites and other key considerations. So that's just the general flow. Even though Q&A is at the end of the agenda, as I mentioned, please feel free to interrupt as often as you want. Just some data we always like to level set. We don't assume that folks are well-versed on education workforce housing, although some districts are. But just general statistics, California, as we all may know, is the second most expensive real estate market in the country, with $820,000 being the median home price. 90% of
005teachers, and these are general data points, say they cannot afford to buy a home in the district that they work in. The median home price in San Diego County is $930,000, which requires household income over $200,000. And California's housing crisis is severe and chronic, and there's a shortage of affordable housing. I think we all are generally familiar with some of those data points. Moving on to page seven, a little bit more data. 40% of teachers in California are considering leaving the profession, and a lot of that comes from housing pressure. Nearly one in three new teachers are thinking about leaving. We just talked about that. Seven-year growth trend for new teachers is in decline. I think that's something a lot of districts are familiar with. And there is a shortage of schools serving low-income and
006minority students where there's a lot of housing issues. Over approximately 10,000 school teacher vacancies in the state certificated. And then on the bottom of the page, by the slide eight, talks a little bit about the stressors. Teachers that do face high economic pressure, which housing being a major contributor of that, have a lower regard for teaching. So there's a quality of work issue there. They have lower school attendance. It could be from commutes or other factors. More likely to resign and are also more likely to leave the district. because of the economic pressure. Moving on to slide nine. This slide is an attempt to encapsulate what the crisis is. We talked about staff cannot afford to live where they work. And districts, some districts who have taken the step of conducting surveys are learning how
007far their employees are traveling to work, how many are rooming together. et cetera, et cetera. Teacher attrition affects student outcomes. If the teacher has to worry about commute, if the teacher wants to get on the road right after the bell rings because they don't want to be stuck in traffic, they're not going to be available for students. They may be less likely to attend events, and there's just a lot less student engagement outside of the traditional school hours. And workforce housing has emerged as one of the tools. So some districts... especially as the unions are really good at articulating, we want raises. So raises have been often right, it's the first strategy districts employ to maintain the employee relations. Workforce housing is now becoming an also effective tool. I would add something that's not on
008the page where I'm hearing a lot, and that is strategically looking forward and so there was one district that i was working with recently and they're surrounded by a bunch of districts and almost every district in their area and their county office of education geography were in the midst of a workforce housing program they were the only ones that weren't the cbo said something i'll never forget when they were talking and they're the well they're the best paid employees in the county He said that at some point won't be enough if they can get cheaper housing at the neighboring district. And that's a big factor. And I thought about that from a competitive perspective. Over time, as more and more districts bring housing online, that is a competitive variable for new employees to think about.
009So sometimes the salary is a big influence, but if housing, affordable housing is an option. there is something to think about in that regard just strategically as time goes on yes san mateo union high school district san mateo union high school district right yeah you're welcome that was in a public session so i can say that workforce housing in california slide number 10 and it just talks about how as districts have built housing they've seen an increase in employee retention And so 13% of California school districts have formally expressed interest in educator housing. And those that did move forward have seen great results of it. And this is a sample. Santa Clara came out first and they started early. There's a case study later. LA Unified, before the pandemic, did a couple of projects and
010they're still working on projects. Jefferson Union has become one of the case studies a lot of districts go visit. There are more recent example post pandemic in San Francisco just brought some affordable units online. So this is just to provide a sampling of districts if you want to do further research on what's happening, even though we will cover some of these in the cases. Moving on to the next slide, which is slide 11. I'll just read just briefly. Tony Thurman, who's the state superintendent, the evidence has shown that educator workforce housing can reduce and even eliminate staffing shortages in our schools. And so Jefferson Union has experienced that where they had 100% of their classrooms filled for the first time in a long time because they had housing available. I think there's a data point
011on that. Moving to slide 12. Well, now I'm getting into actually, I'm going to transition into a little from the data. Now I'm getting into the nitty gritty of what actually is workforce housing. Any questions thus far? Okay. So. Educated workforce housing, I would say first and foremost, it's purpose-built. So in other words, it's specifically built for your employees. Some of the models that districts are following, which we will talk about, aren't necessarily 100% educated workforce housing projects. They may be affordable housing projects where the employees get first offered the units, but once they're in, and because they're publicly subsidized, then they keep those units whether they're with the district or not. beyond their tenancy. Some districts are, and we'll talk a little bit about this, some districts are partnering with market developers and getting
012a small allocation. So we start off with purpose-built because you're building this exclusively for your employees. The goal is for you to be able to promote housing with the idea of retention and recruitment for your employees. It also brings them back into the local community, which we all know is a benefit. And most importantly, you're able to set rents at a below market price. And the way we like to do that, which I'll just elaborate on, is there's one thing, and you'll hear AMI, and there's a glossary that you may have received, which is the area median income. And it's a standard set by HUD, which are basically saying, based on the area median income, which... A subsidized affordable housing project is usually at 80% and below. And then what we call the missing middle,
013which means that people within the area that are making between 80% and 120%, they make too much to qualify for subsidized affordable housing, and they don't make enough to really afford market housing. So that's the missing middle. That's part of what workforce housing is attempting to solve for. The unique thing about school districts doing your own project is you can take it a further step just from looking at generic AMI data, which is set by HUD and is set regionally. You can actually map your rent levels to your salaries. So you can take your different classifications of salary. And then you can allocate what does 30% of that salary represent. And then you can set your rents accordingly so that you know you're meeting affordability for your employees specifically versus using a regional number that
014will cover some of your employees but may not cover them all. So the purpose of workforce housing is to not only build your own project, but to make sure it's deeply affordable for your employees by mapping it specifically to your local salaries. So let me ask you real quick, just to make sure I understand. Please. So what you're saying is that workforce housing, it's affordable housing, according to what you're saying. So based on whatever teacher or whatever employee, it's their status that's going to make the decision being affordable, other than... being housed? Just explain a little bit more. Sure. So I'll get into a little bit of the nuances. So there is a general... financial standard that housing is considered affordable to a family if they are spending 30% of their income or less on
015housing. It's considered affordable. So when you take your pie of income, 30% is classified as that's affordable for your family. But we know folks that are spending 40, 50, 60% of their income just on housing, which leaves less money to fund the rest of their life. So setting... affordability is two components. It's number one, keeping the rent levels within that 30% bracket for your employees, because then from a budgetary perspective, you can deem that affordable. The step beyond that is what you're attempting to solve for, which is the high market rents that they still have to compete for. So you're able to set what's affordable for your employees as a function of what market rents are. So if market, I'm just making these up. If market rents are $5,000 a unit and you want to
016set your rent at 50% of that, and that 50% covers a big majority of your employees, and it also coincidentally represents 30% on average of their salaries, you've now made... those units affordable from an economic market perspective as well as a family budget perspective. And you set those numbers. Okay. Or it could be based on their salary. So just say we have a classified staff member that makes $3,000 a month. Then $900 would be 30% of that. And we could set that rate. You will exactly do exactly what you just articulated. So what you will, I'm just going to use a ballpark of 100 units, just as a general number. You may have 100 units that you're going to construct, assuming that's the direction you're going. And then you're going to set different tranches for
017different. So you may say, OK, 20 percent of those units will be at this income level, another 20 percent at this income level, another 20 percent. So now you're being able to touch a different income levels of your employees. So you have classified employees and certificate employees. And then the stratus of the different salaries, you're able to kind of decide the programming for that. And so when we're talking about affordable housing, usually the housing authority or an affordable housing developer are the main drivers of affordable housing construction, even though you do have some for-profit developers. And so they are typically using public subsidies to fund affordable housing, which makes it available for the community that are at that 80% or below. And so what they do is they say, okay, a certain number of units
018need to be at 80%, but we also need to make sure we have 30% of the area meeting income met as well. So you're talking about people that have very, very low salaries all the way to folks who are at the top of that income affordability. So they stratify those income levels. Based on like family size or just the individual employee, that would be like the call of the district? So in the traditional, and we'll talk a little bit about in traditional affordable housing. It's driven by, in your case, you're able to set your rents. So usually one vehicle we use to determine what that should be is your survey. I don't know if you've conducted a, have you conducted a survey yet? Okay. So usually the survey is kind of, so first of all,
019you already know what your salary data is. So that's the first place we look is we look at your salary data and then we're saying, hey, 30%, and we get all of your classifications and we pull out 30% of each of those. Right? Just so you have, at least so you have an order of magnitude of what those rents should be, a schedule of rents per se. You then have this survey that's helping inform which salary levels, which job types are more interested in housing than others. Very experienced teachers that have been here for a long time. They started when housing was a little bit more affordable. They have families. They're probably not interested in a rental affordable house because they're sick. Then you have these new teachers that are like, oh, we need a
020place to live and we can't afford it. So your survey is going to have this bell-shaped curve of where is the greatest demand amongst your employees. which helps you set your income, your rent levels. But from a policy perspective, it's your discretion to say, oh, let's say we do two projects. This project will be 100% classified income levels. This could be mixed. So it's up to you to set the rents. Jefferson Union, they're in Burlingame. They just set it at 60% of market. They just fixed it. We're going to just always stay at 60% of the market. So whatever the market is, we're almost half of that. And that's just they fixed all their units at that income level, at that rent level. So you can have a diverse array or it's up to you.
021Did that answer your question? Did that answer your question as well? You sure? Okay. So on page 14, it's talking about the different structures. Option one are rental apartments, and that's usually the most common structure that districts who are funding their own housing. That could be a three-story walk-up apartment where you have three stories of apartments. So that's a 100% rental apartment that the district is building for its employees. Mixed income development means that you will still, maybe the numbers are a little tighter, and you say, based on the math, we need to... offer some units at market. So maybe it's 80-20. So maybe 80%, we build 100 units, 80 of them will be affordable for our employees, but 20% we're going to open up to the general public because we want those higher rents
022to help subsidize the project. So that's a mixed income. You set those levels. And that's usually a mathematical solution. Ground lease is usually an affordable housing developer, and you say, hey, we'll lease this property to you. and then they'll build most of the time subsidized affordable housing. So in Ventura School District where we just, this is public so I can share it. I'm always thinking what's public and what's in closed session. They just accepted in public session last week. they put out four sites. Two of those are, at least one is a ground lease to an affordable housing developer. And they're handing the site over to a developer who's the local housing authority, and they're going to build subsidized affordable housing first offered to district employees, but then to the general public. So that's another
023structure we do see. the price wouldn't be at the discretion of the district? In that case? In that particular case? No, in that case, the developer, because you're just becoming a landlord, so to speak, the programming, the district's hands off from the programming aspect of that project. And then there'd also be no for it to ever create any revenue at all because it... The buildings belong to the developer. Usually it's one of the lower revenue options for the district. So maybe the land, sometimes the districts are just giving the land because there's no other way to make the math work. Or the district's collecting a very, very low land lease payment. Their rationale is they just want housing and they don't have many options. Maybe they couldn't pass a bond. They don't have any surplus
024land to sell. They want housing and the affordable housing developer in town may be the only game for them. So they'll say, okay, well, at least we're getting some benefit. Public-private partnerships are emerging. They're not as ubiquitous, but that is an option. And what we mean by that is we've seen at least two cities, these are both in the Bay Area. I haven't seen it here yet, but I'm working on one that will be public soon. I can tell you what the model is. I just can't tell you what the district is. But the two that do exist where the city said. to the developer, why don't you offer some of your units below market to the local school district as part of your community benefit package? So the developers in both of those cases
025set aside a limited amount of units that will be exclusively offered below market to the school district as a partner. So that's a public-private partnership. The district's not making any resources, the district's not taking the risk to develop it, but the district can give employees housing through that model. So it does benefit employees at the end of the day. The one that's not on this paper, because I'm working on it, I'm working on a district in Southern Cal, I'm working on one in Northern Cal. It's very experimental, but I'll just share it. So in this case, and you might have heard it at the boot camp, but one district has a large piece of property that they're selling. And so you'll also learn it's very expensive to build housing. We quote about 700,000 per unit.
026Some districts I'm hearing are at 800,000 or 900,000 per unit. It just depends on what's going on with the cost of construction at that time. But they're very expensive to build. And when you look at new home builders just in the market. they're making their money selling homes retail because they put up the models, they want to sell homes. Well, they build those homes at wholesale so they can make the margin. So I was talking to developers. I said, well, if you buy the site from the district, instead of giving the district back $20 million, could you just give them back $20 million worth of units, which would be double the amount of units because they're building it at wholesale. So now I'm getting units delivered at $300,000 a unit, which is the developer's cost
027versus the district spending money at $700,000 a unit. So that's a public-private partnership I'm attempting to pioneer for the state as an option for districts. We'll see how it goes. Okay. So when you guys talking about a developer, right? Do you guys have a specific developer that you guys work with? Or they just, okay, this is going to be up for bids. You know, we'll see who got the lowest bids. Is that how it works? In the model I just articulated? Yes. Okay. In that particular case, what was unique was the district. Both districts wanted, and this is not public, so I won't tell you who, but both districts had to have a desire to develop or at least have available workforce housing for their employees. They did not, however, go on their own path
028to develop that, at least at this stage they haven't. So they've been wanting the market to solve that for them. So the sites that I'm talking about were released for sale or for lease via RFP. The developers are then responding and say, well, buy your side for $20 million or $30 million or whatever the value is. And they'll just buy it. This is a surplus, sell of surplus property. So part of the process, though, in order to feed two birds with one seed. I asked the developers, well, what if the district just, instead of just giving them a check, because they have this workforce housing thought in the back of their minds, but they just haven't prioritized it. Maybe in the money that they're going to raise from the solar surplus land is limited anyway.
029So why not see if they can get units instead of cash? They'll get more benefit that way. And so the developers were already going to buy the units. So instead of just giving the district check, they'll just give them keys. The beauty about that is the district gets, if this works, the district will get, you know, 100 units free and clear built at wholesale values and they collect income day one free and clear forever. And so. Taking those same dollars and building units themselves for $700,000 a unit, they get double the yield if the developer doesn't. So it was already an ecosystem of RFP process the developers had already bid. And so now, because those districts have waivers, they can negotiate. Okay, so we talked a little bit about what workforce housing is. Now we'll
030just talk very briefly about how the state has stepped in to make it easier for districts to develop housing. Now, pre-legislation, going through the local process of planning commissions, city council, board of supervisors, depending on the jurisdiction, is subject to public hearing and is subject to the neighbors saying, we don't want housing in our community. And now it goes to that local political process. Some jurisdictions have very good advocates and some of them have very good NIMBYs. And so... it was always a risk to develop housing in certain jurisdictions that are anti-multifamily or whatever. So the state stepped in and said, well, we're going to pass state legislation just to make it easier for districts to bypass some of those local restrictions. And so the Teacher Housing Bill of 2016 gave school districts the legal
031authority to develop workforce housing on school district property without... having to worry about the local zoning ordinance. Because if the zoning didn't match, then that's a reason for denial at the city level. Then in 2017, they allowed for certain properties to be exempted from taxes and certain surplus land act requirements. In 2020, they made it a little bit more flexible in how districts could fill units and leave units vacant. So this is not to be a legal process. I'm just letting you know that legislation is there as tools for districts. And in 2024, there was a streamlining that completely allowed districts to bypass local zoning, which is a big deal. Most school districts are zoned public, quasi-public. And if you need a housing designation and the neighborhood doesn't want that school. to change and they
032like playing in the field and like walking their dogs and the zoning doesn't align with housing, that's a grounds for a realistic denial at the local level, which would not be good for the district. So the state took away the ability for the local zoning to be a barrier for housing. So these tools are very favorable for districts. We're not all the way there. Yes, ma'am. Thank you. You're on 2017 tools funding. AB 1157 exempts complex from property tax. So if the state exempts us from property tax, are there any other provisions in the law that exempts us from other infrastructure things in the city? That's a good question that I would have to come back. But having to not pay property taxes just helps your bottom line. But I understand, is there some? Other
033issue associated with that. Yeah, we can find that out for you for sure. That's a very good question So at the end of the day what the legislative framework does is gives you streamlining And it gives you the ability to avoid certain processes like you don't to go through a surplus 7-11 committee Which is a process or also an opportunity for the community to organize Property tax exemption is very helpful when it comes to making a project financially beneficial the ability to streamline your entitlement process. The entitlement process is where most of the risk and uncertainty lies because that's where you apply for the development application and go through city staff or county staff and then the public hearing process and neighborhood meetings and that could be very positive or not. And so you're able
034to kind of... avoid some of those areas that otherwise could have been hurdles for the district to have to overcome. And you're spending time and money with that uncertainty. And so you might spend two years in an administrative process just to get to planning commission or council and get denied and you're out $500,000. So that uncertainty is kind of removed. Do you have a question? I'm thinking down the road here and the exemption from property tax, but again, locally, we're not exempt from local ordinance. Or county ordinance specific permitting. Land use. Right. So for the land use is solved because you don't have to go for zoning. But to your point, building permit process, you still have to go through. So structural setbacks, you know, massing, you still have to go through that process. It's
035just a lot more streamlined. And therefore, your architect. So when you're going through the land use. process, that's uncertain because it's like right now zone educational, will they approve a housing? So we have to amend the general plan. We have to get the zoning change. That's a yes or no vote. If it's just building requirements, your architect and team can then just build the project according to the statistics. I mean, according to the legal code. And so going into your application process, they're already understand what the structural requirements are, what the setbacks are, what the height restrictions are. And then your project's already kind of conforming prior to submission for the theoretically speaking. You have a question? Yeah, I just wanted to remind, Tristan, can you make sure that you're speaking into the microphone because
036we are streaming? Can you make sure you're speaking into the microphone because we are streaming? So your questions aren't being heard. Yeah. So on page 17, I think I mentioned AB 295 on a prior page. Let me just make sure. I did. It just reemphasizes the streamlining aspect of this. Now, I spent eight years as a planning commissioner, and it's a very, and I don't know if some of you may have served on planning commission or been to planning commission meetings, but, you know, it could be very political. And if folks are against the project, then they know how to line up the votes. And so taking this out of that type of process is very beneficial to school districts because your goal is to develop housing. when barriers are removed that makes your path
037easier, that's a great thing for your employees. And so we just appreciate the state taking the lead on this education, on this legislation to make it easier for districts. So that was the goal here, which is to let you know that you do have legislative tools available that makes this path easier to accomplish. And then, so moving on to page eight, it's building options for educator workforce housing. We talked a little bit about this on a prior slide, but what it allows you to do is really sit back and assess what are our goals and what's our timeline and what are our desired outcomes. And then if you fund it yourself, you can then deliver the project on a timeline that you relatively control. Because now it's the... You're not waiting on tax credits. You
038don't have the uncertainty of going through a planning commission hearing or city council hearing. It's basically, we have the funding. we have the site and we can build a property according to our specifications and our employee needs. And so, but as we talked about, depending on the district's capacity, the time availability, the will, then there are different models that you could employ. So this is just basically saying you're gonna wanna balance the financial requirements with timing. and how much control you want. So this is intended to just give you things to think about. Do we want control or not? Do we want to fund it ourselves? Do we want to partner? Is this very important for us to have online sooner, or can we just take our time? So some of these variables, as you
039deliberate and think through what your particular desired outcomes are, these are kind of to provoke thought. and to provoke discussion as you start thinking through. Do we wanna partner with the marketplace? Do we wanna go the affordable housing route? Do we wanna buy an existing building? There's a few districts that are just bringing online apartments that are existing in the market where they're acquiring them. That brings its own challenges, but it is an option. So districts have said, we don't really have land, but we do have some funding and there are some existing buildings that we can just go buy. So that brings a whole relocation and rehabilitation component, but it is an option. Okay, so this next section is really intended to just show out to you what your options are and who has
040to date provided some precedent for that. So on page, the top of the slide that's titled 19, this is one that I will say. thus far provides the district the most control because you're funding it via general obligation bonds or COPs and I'll explain that or some combination thereof. And what that allows you to do as the district is have total control over your project. So you're able to determine how many units, you're able to determine What the composition of those units are. How many studios? How many one-bedroom, two-bedrooms? How long do employees get to live at the property? So you are able to have full control. Now, obviously, you take all the risk, but you have full control. And so some of the districts that have used general obligation bonds and or certificates of
041participation. Are you familiar with certificates of participation? Which I can slow down and just explain what that is. Okay. So, General, I think we all know GO bonds go to the voters. A certificate of participation, COP for short, is a debt instrument. And districts have the ability to borrow. If you think about a bond, you can borrow this debt to help finance construction. So it's called a certificate of participation. And your financial consultant will take a look at what we call the pro forma operating budget. So your pro forma operating budget is saying how much revenue does the project develop, bring in from rent? How much does it cost to operate? So paying all the bills. How much in reserves do we need to set aside? And there's a thing called net operating income, which
042is what's left over. So your financial consultant can then look at this budget and determine the borrowing capacity that that particular project has. And then inform the district of your COP capacity. So in other words, they may say, oh, you can sell $20 million of COPs based on the projected financial performance of this particular project that you're contemplating. So that's a certificate of participation. The risk with COPs is although the project itself is theoretically supposed to debt service that debt payment, if for whatever reason there's an interruption and there's a gap and there's not enough revenue to debt service, the general fund is the backstop, which is very risky. So when I have this conversation with districts, certain districts are not worried about the general fund because they're just in, maybe they're in a very,
043very affluent area. There are a handful of them, right? They just have a lot of money and they have big parent groups and they have big education funds and they're just trying to figure out what do we do with all this money we have? I've had that conversation at least with three districts in my career where they're not just worried about money. Most districts are worried about money. And so... COPs are serious because when it's sunshine, it's great. But when it's raining, it's not so great. And so because you don't just know when there's a recession or when there's an issue, the general fund being at risk is just a liability that I'm uncomfortable with unless the district says, oh, we're not worried about that. We have great resources. So that is the downside of
044a COP. Geo bonds, as you know, are tax payer funded. The district doesn't have to pay them back. So they're a great tool if the community says, sure, we'll fund geo bonds to help with housing. And a lot of districts are putting housing in their bond language and district communities are rallying around that and supporting that. So option A, the geo bond route and or certificate of participation. is a very strong route to go, a lot of precedent there. A little bit of being able to sell surplus land, that's in here. I know of one district that had land that was because of where they were located, their land was enough to fund an entire project, but most districts would have to sell two or three sites to get that. and not all districts have
045enough sites to sell, but selling of surplus plus lands can also provide some funding just as an FYI. So you may say, if our project, if we need to raise 60 million to build and we can get 15 from selling a site and then we can get the rest from a geo bond, maybe we're comfortable doing a very, very small COP if our CBO says, oh, we're safe. It's a mix of funding usually. So sometimes the Geobon will say we'll be able to cover the entire construction value. And sometimes there's a combination thereof. But that option is where the district's in full control. And we like that. So Santa Clara, Soledad, Jefferson are three strong examples of that. Those projects are up and running and they're all successful. and they have waiting lists and the
046districts have been very happy and the employees have been very happy. And they've also done a good job of reserves for the older projects. Like Santa Clara has done a really good job. So, and also I'll say for COPs, districts also can project when they will refinance out of that. So there is risk because they may say, okay, we're not scheduled for a bond. Our next bond is probably two election cycles out. So we'll use COPs as a gap. But we're very confident. Our polling is great for our bond, assuming nothing changes. So they'll plan to retire the COPs with bonds. So there is a financial kind of structuring that's done tactfully, conservatively. But this option is really good. This is the one that I favor personally, unless you have a great site to sell
047or this public-private partnership model I'm working on works. Any questions about that? Okay. The next option. is where there is a partner with the marketplace. And I gave you that example earlier where the cities, it was the city manager in both cases, told the local builders that were already building rental housing, give some units to the district. I think they both already had inclusionary housing ordinances where they had to set aside affordable housing units anyway, but they said, let's give those to the district. And in those cases they did. The Mountain View Wisman example, has been in the news, at least in the Bay Area, because it didn't go well. It went really bad. And the superintendent ended up in trouble because they were upside down because somehow, some way, the district had to guarantee
048some units, which didn't make sense to me. Mountain View is a little bit better because they're just getting units. The district doesn't gain any benefit, as I mentioned earlier, financially, but their employees get the benefit of a low market. So that is not as ubiquitous at the moment. Let me give you just also just a quick thought before I move on to option C. So the product development lifestyle talks about first movers into a space and then the early adopters and then people come along and there's this bell-shaped curve. We're still very much at the early adopter stage for K-12 educator housing. Higher education, as we all know, have been developing housing for many, many decades as part of their strategy to attract tenured professors and folks that will come publish. And so they offer
049these great benefits. UC Irvine has a really big housing program. But K-12 is still very much in its infancy stage. Why do I say that? It's because there is still opportunity to be innovative, to be creative, to find different ways to deliver housing cheaper and faster. for employees and so these models are the models that districts have used but we're constantly looking for new ways to deliver housing so i just wanted to say that this it's going to be better as this list grows and grows and provides district with more options so option c which is page 21 is the classic affordable housing option la unified um we're one of the first districts to go out with this model They had some hard, I would call them difficult learnings because they weren't as informed when
050they first started. But this is where they partnered in districts will partner with an affordable housing developer. The affordable housing developer is most likely going to use state tax credits as one of the foundational components of the construction funding. Those tax credits are not only competitive, but they're highly regulated. And so there are limitations to income. And so any employee that makes over 80% typically is over income qualified. In an LA Unified's case, they were thinking they were going to get a lot of certificated employees into these units to only learn later that they made too much money. And so they did get classified employees placed, which was just as important. but they wanted to attract and retain teachers in particular. And so they didn't know that. And the other thing that districts have learned
051is if you're really excited about workforce housing for your district and this becomes a viable option and your employees are offered first units, the first option to move in, and as I mentioned, However, if they move to a neighboring district, they get to keep their unit. And so maybe you had a great majority of your employees in these units. And as time goes, people matriculate on, but they still can qualify. So where you were excited and you gave up your land, you may have the majority of non-district employees in units that you pioneered. So that is something to think about because affordable housing also has fair housing laws that they must follow. And most districts are being very careful to say, at least thus far. If you are no longer working at the district and
052you're in a subsidized unit, we're kicking you out because that could be challenged. No one knows yet the outcome of that. It hasn't been tested. So districts and the affordable housing developer partners are being very conservative in their approach. But it is a viable option for districts who... don't have many other options. This is the tax credit route most likely or the local city, county also have funding. This is that subsidized classic affordable housing, the income limit set by HUD. That's option C. So LA Unified's on here and I mentioned San Francisco just brought online their affordable housing units over the last couple months. And it was in the news that they're very frustrated because there's a small number of employees that qualified and there's a whole thing that people are not happy about with
053that option. Option D is something that Monterey and Oakland, I don't know any other districts that have done this. Oakland just ribbon cut a couple weeks ago. I know Monterey where they acquired, and some of them use partners, but they acquired an existing apartment complex. to convert to 100% district employees. So if there are tenants that are in the units when they acquire the units, then you have to relocate, which is a cost. And then sometimes you have to rehabilitate because it could be older. But that acquiring an existing building is an option. So it's not, again, it's not as ubiquitous, but districts have looked at that as a potential solution. I'll pause for questions. I know I have a lot of information. Okay. We talked a little bit already about, so I'm on page
05423. We talked a little already about the financial principles, but like many construction projects that are affordable in nature, there is a layered funding. And so you might have money from geo bonds, you might sell a site, you might have COPs. But usually you're looking at what are the options for funding and what fits best to our model and then kind of how do we make it all work. And so that's your development team, your financial consulting. walking through different models of funding. And we talked about certificates of participation, revenue bonds we didn't talk about, but I'll just bring it up. There's only been one case study I'm aware of, which is a junior college in Northern California. A revenue bond is functionally similar to a certificate of participation in that it's a dead instrument.
055And so the investors are buying these bonds. that are tied to a particular project or group of projects. They're paying for the opportunity to participate in the revenue, which is their investment. But because it's a bond, it's a low yield for them. The difference between a revenue bond and a certificate of participation, which to the market operate very similarly, is a COP, because it's guaranteed by the general fund, you get better pricing, so you get more equity available. In a revenue bond, there is no backstop. So the project itself is the guarantee. So if the project itself, for whatever reason, has an interruption in cash flow, and the bond holders don't get what their promised yield was. There's no recourse. So there's more risk, and because there's more risk, you get less equity. or less
056funding available. But it is available as an option. Usually it's something that you have to partner with the municipality, so a city or county, to provide revenue bonds, but it is an option. Conventional debt, I only heard LA borrow. I have never really heard school districts go to banks and borrow money, but I heard LA did it. So we just throw that in there because we heard that it exists. I didn't confirm that myself. Geo bonds we talked about, solo surplus properties we talked about, and public subsidies we talked about. which is tax credits and other sources of foundational and government funds. So looking at, at the moment, those bullets are kind of the funding models that districts are using to fund their housing programs. I talked about certificates of participation. That's on page 24,
057so we can skip over that. I talked about revenue bonds. I just mentioned that. Conventional debt, I just mentioned that. Geo bonds, I talked about that. And I talked about solo surplus property. I tend to get ahead of myself often, but that's just my style. Public subsidies we talked about as well, tax credits. And then lastly, I can close out with case studies. Just so you're aware of what's been happening. So on page 31, Jefferson Union High School District, they brought their program online in 2022. 122 units. They set their rents at 60% of market. And because of where they're located, there's a very, very, very high rent. And so they go up to 120% of AMI, meaning that they're really wanting to make sure that they're catching those certificated employees in that tenant mix.
058Their project costs $75 million, 33 in geo bonds, 45 in COPs. So that was their project that's up and running. A lot of districts have gone to tour that property. It looks great. It's a great success story. LA, we talked about. They opened a project in 20, I'm on page 32. This was 30 to 60% AMI. So they were really getting into that deeply affordable tranche of employees. lower paid teachers, classified employees. They opened up three projects, 2015, 2016, 2017, 90 units, 66 units, 29 units, funded by 4% and 9% low income housing tax credits. And just a note on that, usually the state law is that if you do go the tax credit route, and this isn't on the slide, you have to partner with an accredited tax credit developer. That's a law that
059they put in place not long ago. Prior to that, if you were a landowner and you had the will and the skill and the interest, you could just go apply for your own tax credits and make it happen. A lot of faith-based entities were doing housing as part of their mission and they would go out and get tax credits. And the state basically said, well, no, we're going to make it a little bit more arduous. And so they... now you have to be a qualified agent, meaning you have to have a certain amount of projects that you've developed using tax credits within a certain timeframe, which takes away the onesie, twosie landowners. So at the time, it was like, you have to have developed five projects in the last three years, which is only the
060affordable housing developers. So if you do go that route, you do need to partner with an affordable housing developer, whether it's a housing authority or someone who has deep experience doing this as part of the requirements to qualify for the tax credits. But this is a model. And these programs are open, so they're available for tours and discussions with the districts. Page 33. Santa Clara really was, at the K-12 level, the pioneer. They went out before everyone. And in 2012, opened 40 units. In 2009, opened 30 additional units. They're hitting... 80% of market with their rent and they're in Silicon Valley. So rents are very, very high there as well. And so they've always had waiting lists. They've always had, they've been a shining example of for, for housing. They like were the first in
061this space in California to do this. And so that's, those are the case studies. And then what I'm gonna kind of just talk about last is where do you go from here, right? Once you are as a district saying, you know, we really wanna take a step forward, how do we do that? And so what we're giving you on page 34 and on page 35, which I'll start walk through is kind of the blueprint for where do you go and how do you get started and what do you do? This also assumes you're going to pull in a development team of some sort, whether it's a consultant to drive the program. But the district is going to have to want to make some decisions to determine who to hire, right? So one thing is you
062want to confirm that there's political will and commitment, and that's really the board of trustees deciding as a board we want to do this. Certain districts will have... I was at a district where you had one board member of five. There was one champion, but the rest didn't have the will. So we did a study session, but the will of the board wasn't there. And then you had it where the majority is like, we want to do this, we must do this. And so just confirming that the board is united and thinking through the composition of the board. So when's the next election? Are we going to have this core group staying on? So you got to kind of think through that. When you start, can you finish as a district? The next thing I
063always recommend districts to do, and I preach this and I preach it and I preach it because sometimes districts, I think, misprioritize their investment, but identify funding up front. So I've seen a lot of districts pay consultants. Some have paid us to do studies. We have sites, pick a site for us, do a site plan, which is kind of laying out with the units, kind of do the financial modeling for us. And we get to the end and they spent all this money that I told them not to spend. And then it's like, well, how do we pay for it? So I would say, figure out how you're going to pay for it first. The easy part is getting it on paper because it's going to be easy to fit housing on. block diagram, but
064it's hard to figure out how you're gonna pay for it. So determine your funding sources to me is something that the district should do before you hire anyone. Early stakeholder engagement. Obviously you're starting internally. Surveys, talking to your different groups, your bargaining units, your parents, your community, just to get the sense of where people are. I tend to then recommend after you have an understanding that the district and the district's internal stakeholders are pretty well aligned, I then move very quietly, strategically, to a few influencers in the city. So maybe I want to talk to the senior planner, maybe I want to talk to the city manager, maybe the mayor, just to make sure there's alignment. Because sometimes... There isn't, and sometimes there is. But it's just good to know. Is the city with us
065on this? Are they going to be champions with this? We have to go through them, and we need infrastructure. We need to connect to water, and we don't want to have issues. So just those early conversations, very informal. And the reason I say you're doing it strategically is because I always am very careful to make sure the district, especially when you're doing something like... workforce housing development, selling property, leasing property. Property brings out opinions. And you want to always keep your narrative in front of you. And the district will always want to be the ones controlling the narrative. This is why we're doing this. This is how this ties back to academic outcomes for our kids. Well, I am a nurse and I don't get subsidized and I can't afford my rent. Why should we
066fund that? Well... That's a really good question, but it's really about the children. We all can agree that public education is important, and we want to make sure our children have the best desired outcome, the best academic outcomes. And it's easier for them to have great outcomes when their teachers are actually in the classroom or at the games and able to do labs after school. And so there's a narrative that districts are able to kind of control that ties your effort back. And so the reason I say you want to talk strategically. is because, you know, every now and then you have folks that just are opposed to it for different reasons. And we don't want them to get their narrative before the district's narrative gets out. Because now you're having a fighting against all
067the stuff that may not even be true. Or it's just tension. And we want this to be something that the district can kind of move strategically and positively on. So getting those early stakeholder engagement conversations is just helpful because now from your... mouth to their ears, they understand why you're doing this, and they can be part of that team. Or if they have issues, you can address those early if they're mitigatable. Survey we talked about, and then determining if there is a site that works for you. So vacant land does not always mean it's feasible for development. Sometimes it is, sometimes it isn't. So if you do have a site or two. You want to make sure that the site is developable. What does that mean? Well, maybe it's flat. That's a good thing. Good
068access. And one of the very important things is the soil. Is the soil geologically able to support construction? Especially in California, we have all these faults and we have liquefaction. And if the site is kind of close to a fault, which it shouldn't because it's a school, unless it was old school. you want to make sure that the soil is going to hold up, that we don't have a lot of extra engineering costs. So those are, or environmental issues or some other issue. So making sure the site can physically support development and has good access is an important thing to know up front. So those are the top of mind ideas that we'd like district to contemplate as you're really weighing, do we want to do this as a district or not? It's almost as
069though you're kind of going through a litmus test, if you will. The box just talks about you wanna budget time. Certain districts are thinking, do we want people to turn over units over a certain period of time? So some districts have limited occupancy to seven years. Some districts have talked about, we'll set aside a portion of the rent for down payment, things like that. We use 750, 750,000 as a general number, but that number is going to fluctuate based on what's happening in the construction market at that particular time. We never recommend districts manage their properties. We don't want people coming to the board meetings complaining about tenancy, rent payments, plumbing. We always recommend that you outsource property management. We also recommend that the district set up. whether it's a nonprofit or some other entity
070that asset manage, the difference between asset managing and property management, asset manager is who's setting policy for the property. These are the rent levels. This is how many units we want. This is what tenancy looks like. What happens if we have a certain amount of units going to new employees, but then they get married and now they make too much money. What do we do with those people? This is the asset management group. And then the property management is the day-to-day pay the bills, fix the plumbing. We don't want the board doing that. We want the board setting those entities in place and letting those entities do the heavy lifting. And the board blesses them and make sure they're resourced and make sure the right team is. Like the board will do the hiring and
071approving of the contracts. The board will make sure it's funded. And then you're putting in place once these properties are built. You're kind of putting some distance between you and them so you can focus on education and not get bogged down with property issues. So those are just additional considerations. And then getting to the end of the presentation, this slide on page 35, I'm using the term litmus test twice. The first arrow says project conceptualization. We created this because we wanted districts to think like this. We call it a three-legged stool. And if in the three-leg stool consists of you're testing the site for capacity, how many units can the site hold? Because you want to have a certain threshold of units to make economic sense. Is there employee demand? Because you don't want to
072build something that nobody wants. And then lastly, how are we going to fund it? All three of those elements need to be in place before you commit resources and time and attention to developing a project. What I've just mentioned is I see districts start at number two and number three before they've even done these other, what I consider basic. Because usually funding does come last in the process because you're not funding construction right away. And so sometimes a lot of the traditional thinking, well, let's do the site feasibility first to make sure the site itself works. And let's do some pre-development work. So we're doing testing. because we're two years away from construction, so we don't need to think about money. Well, yes, you do, because you could be out $300,000 and have no means
073to pay for it. So I just like to do those things up front. Then you can get into site feasibility, which is planning and doing your study sessions. Then you can get into stages, and these are iterative. You go to step two only after step one is complete. And only after step two is complete, then you go to step three. Because we don't want to do these things simultaneously because you could waste resources. We're always really keen on districts not wasting resources. And so these are iterative. So after project step one, you move to site feasibility. That's high level testing of the site. Yes, this is a great site. And then step three is the technical aspects. We're drilling for environmental. We're drilling for soil. We're doing engineering studies. Step four is when you get
074to step four, when you're starting to apply for formal permits, you have a project. You know how to fund it. It meets all your tests. The site works. You know you're going to get a great project. You know you have great access. You know you have demand. Now it's just formality, getting into the formal development pipeline. Five is construction and six is lease up. The next two slides are really only to provide just an order of magnitude. These are the things that are happening behind the scenes that you're just getting updates on. You're really not managing them, but we just want to make you aware. So when you're doing site identification, you're kind of doing an inventory of, you know, what do we have available to potentially build? Your demand we talked about. Your financial
075analysis we talked about. Regulatory analysis. because there should be a theory regulatory speaking. How do we, what do we, if we're going to use legislation, which... bills are we going to actually use because you have to put that in your application because you have to apply to the state to say okay we're going to bypass local zoning so that's part of your planning process there's density bonuses and other things that are associated with different aspects of legislation so what does that framework look like your development scenarios that's where your team is kind of do we want to do duets do we want to do townhome style do we want to do a four or three story or four story walk-up apartment look so those are all part of what's happening in your feasibility. That was
076really just intended to just give you a little exposure to that. And then the last two pages is page 37 is just generic order of magnitude. One to three acres is typically something that we think is a good footprint. The community proximity is really talking about amenities and transit and services that tenants like. The current use, what's on the site now, are there demo considerations or any other sensitive issues? Geotechnical is a big one. We talked about why. And then the last is just a timeline. This is a three or four year process, generally speaking. So those are my slides. I think that's it. Yeah, so you just answered my two questions that I had, the time it takes from stage one all the way to stage five or six. Right. And this is just
077considering the fact that every district is different. Did you have a chance to look at the size of the district? The size of your district? Yes. No, I just looked at the 10-acre site that was in the news. Okay. Yeah, the only thing we have done, Trustee Esparza, President Esparza, is having a board study session, right? We want the board to learn about workforce housing. So we haven't done any work around looking at sites or any of that. That comes after the board makes some type of decision. One of the things that I do like is the page 37. Just give you an example of 48 units, and this is what we want. We wanted to see how feasible it is to have something to compare with. Let's say two years from now, we have
078X number of staff that they want affordable housing or workforce housing, and we'll be able to provide. either classified or certificated. So we want to make sure those folks are covered. So something like this, we do like to see because we wanted to compare. And I know, you know, two years from now, the numbers might change. You know, I'm pretty sure. But at least have an idea where we're looking at. It is important. And you can also use this and flex up or down because you may say, okay. This is how much footprint we have, but we don't need to take the entire site down at once. But you can take it through the process because it's the same dollar. So let's say you have a seven acre site and that seven acre site can
079have three or four hundred units. You don't need that much capacity unless you say, OK, we're going to do a regional project. But you can say, OK, right now we're comfortable with 50. But we do believe there's internal demand for an additional 50, but we don't want to take that on right now. But we can still take 100 units through initial planning and schedule them in phases. We'll build the first building, get that up and running. Everything's approved at the same time because it's the same. You pay the architect one fee where they're designing 50 units or 100 units, it's the same amount of time for the architect. So you theoretically could use this as a model and say, okay, well, let's plan for double, but we'll build the second building later. when we're ready,
080if we want. But that, yeah, that's exact, it's kind of give you a order of magnitude. Any other thoughts, questions? I'm happy to elaborate on anything. I don't have any questions per se, but I do like all the different comparisons. I appreciate the different comparisons and it's exciting. Thank you. You're welcome. So as I'm looking at different types of, hold on a second, let me get to the page. So we're looking at option A, B, C, and D. And I know you said you prefer option B. So we, I mean, I was just looking at option A. Based on the analysis that you had on page three where it says we serve, you have all the school districts, is there a number of districts that opted for option A? I don't have that here. I'll
081make sure the superintendent has it, but CSBA has cataloged every project in the state and it's on their website. So you will be able to see every single project that exists and how it was funded and which option it falls in. I prefer the Geobon route because it gives the districts the most control, but that's just a preference. But there are other successful, I keep hitting this, I need to move this. There are other successful models as well. I just like districts being in control of their own destiny. That's just me personally. But that's a bias I have. Anybody else have any questions? No, I think it was pretty thorough. Thank you. Glad to be here. Thank you for your time. Okay, thank you. All right. Trustee Esparza or President Esparza, I'll just kind of
082remind the board where we have been so far. Earlier this year, we established a work group that went to a CSBA training, where Landis also presented. And that work group, after learning more about, after going through that workshop and learning about workforce housing, made the decision to go to the next step of bringing a study session, a board study session. which we're having today. The purpose of the study session is really to inform all the board and anyone that is here about workforce housing. And we're still really in the learning phase. From here probably till next month, I'm sure as the board processes the information, I'm sure there'll be some questions that will come up. But from here up until next month, staff will make some type of decision around next steps. We have already
083done a survey for staff and when we did that survey, which was pretty early on, we received a very positive response. So there was a interest based on the survey of staff thinking this was a really good idea. Now, since the survey, and to Landis' point about narrative, in our district, we tend to create narratives very quickly. Sometimes our district isn't the one creating the narrative, but we tend to create narratives that tend to undermine projects, any projects that the district kind of takes on. We're probably going to look at doing another survey. You know, as I'm sitting here saying that, I remember some public comments in some of our board meetings where, you know, they intended to kind of undermine this project. I have learned about workforce housing all the way back to Jefferson.
084San Bruno, where I was a superintendent is actually right next door to Jefferson. And so I was able to learn a lot from being there. and kind of being next door to Jefferson. And so based on everything that I've learned, I think that workforce housing would be a very good project for our district. Again, the key, like Landis pointed out, is gonna be financing, right? How do we financially, how do we fund the project? And that's where we really need to take a lot of time and... and be really thoughtful about that. Always, the best scenario is that the school district maintain most of the control because to Trustee Likert's question, when we have the control, we can set the rents for for our staff. And if we're kind of looking at, if we were
085gonna say, hey, 30% of the salary is the housing, we could very easily do that across, if I'm a teacher and I'm making blank. And 30% of that, right, that would be it. If I'm a bus driver and I'm making blank 30% of that, and that would be it so we could easily set that. Now when, when we're not able to finance we might not be able to set that the same right because there'll be other. There will be other strings tied to, to how we're doing that. So, That kind of summarizes, we can answer any other questions the board has, if not, we'll continue to work on this and within the next couple of months, we hope to bring recommendation for next steps. Does anybody else have any comments? Go ahead. Thank you, Mr.
086President. Thank you, Superintendent, for sharing where we've been and where we're going. I do appreciate that. And I appreciate the recognition of our surveys that we did a couple of years ago. And I agree with you that we need an updated survey. But I really like the information that was provided to do a survey by class, classification, because we do have groups. And so that would be a strong suggestion for me is do it by classification by groups. 30% of somebody that makes $20 is only $500. So I think it's really imperative that we group classifications because they're doing almost the same kind of work and same kind of pay. Thank you, superintendent. So it is exciting. I'm really excited. I think the district is heading the right direction and I think the only obstacle
087that we have is just finding the resources to finance way, but I'm pretty sure we're going to find it. And the presentation was excellent. Thank you so much for coming in today. There isn't anything else. Okay. So this meeting is adjourned. Thank you.