PAHC Press Corner

Palo Alto Dreaming

Housing Corp. Out to Prove That Affordable Housing is Possible

PALO ALTO WEEKLY - Publication Date: Wednesday, April 25, 2001
by Geoff S. Fein

Greg Brown's mural on the wall of the Palo Alto Housing Corporation's conference room says it all: "Pipe Dreams."

Finding property to meet Palo Alto's overwhelming need for affordable housing may indeed be a pipe dream. But for 30 years, the Palo Alto Housing Corp. has chipped away at the demand. For the 1,200 residents who have found affordable homes through the organization's efforts, the dream is a reality.
The housing corporation began in the late 1960s. Then as now, Palo Altans recognized the need for a diverse community, said Marlene Prendergast, executive director of the housing corporation.

"There were people in the community pushing the City Council. They wanted Palo Alto to be diverse, to have housing for people of different economic means," said Betsy Bechtel, the organization's special projects consultant. "You have to say Palo Alto is way ahead of its time when you compare it with surrounding cities."

The council put together a group to look at affordable housing. One thing the council didn't want, however, was a government housing agency, Prendergast said. Then-mayor Ed Arnold appointed 10 people to the board. Among those appointed were Lou Goldsmith, a retired engineer from Shell Oil, and real estate broker Bill Reller.

Goldsmith, who died four years ago, served as a volunteer for 25 years. He worked as construction project manager and dealt with the federal department of Housing and Urban Development, Prendergast said.

"He was the heart and soul in (the organization)," Prendergast said.

Goldsmith helped obtain funding for the housing corporation's first project: Colorado Park Apartments, a 60-unit family and senior housing site located at 1141 Colorado Ave. The complex was built in 1972, four years after the housing corp. was established.

" (Goldsmith) was on the roof making sure all the work was done right," Prendergast said.

Reller said the board met twice a month at the President Hotel Apartments at 6:45 a.m. Eventually the housing corporation moved into a one-room office at Cowper Street and Hamilton Avenue.

"In the beginning it was a struggle. We had no offices, nothing," Reller said.

The board also had no money. Because the corporation was the second such agency in the country (Montgomery County, Md., had the first housing corporation), federal funds were not yet forthcoming, even though the federal government was setting up programs to encourage housing corporations, Reller said.

"The housing corporation was an experiment, we were going into unchartered waters," Reller said. "We didn't know where we'd end up."
The Urban Coalition loaned the housing corporation $10,000 to use as a down payment on the Colorado Avenue site, according to Micki Zatz, current housing corp. board member.

Zatz has been on the board since 1978.

Since its opening, 10 families have remained at Colorado Park Apartments. The majority of tenants work for Stanford University and Stanford Hospital, according to Bechtel. The building's apartments range in size from one-bedroom to four-bedroom family units.

Building affordable units, however, did not necessarily ensure their long-term existence. In the 1970s, private developers built much of the affordable housing in Palo Alto. A developer could get up to 90 percent of a loan through HUD, if the site remained as affordable housing for 20 to 40 years, according to Reller.
Once 20 years passed, however, the once-affordable units reverted back to market value. "At the end of 20 years it was a disaster for the community," Reller said.

That forced the housing corporation to look at buying units outright to keep them affordable. But six years passed before the agency built another housing site.

Webster Wood Apartments -- 66 family and senior units located at 941 Webster St. -- was completed in 1978. However, the housing corp. had to clear a major political hurdle to build the site. Article 34 of the California Constitution required a public vote for government entities to build subsidized housing. Because the city helped the housing corporation acquire the Webster site, an Article 34 election was necessary, Prendergast said.

"Everyone voted for it," she said. "In general the people there were supportive because it was going to fix up their neighborhood."

Originally Webster Wood was to be a mixed-income complex, Zatz said. Twenty percent of the units would be rented at market rate. The remaining 80 percent would be subsidized.

"The state said, 'You won't get (regular income) people who want to live with low-income people, so all units should be rented under Section 8,'" Zatz said.
The housing authority went ahead and built the site so all the units would be affordable. Today 160 people live in Webster Wood.

Lynn Morin has lived at Webster Wood for 16 years. She waited two years for an opening. She never saw her two-bedroom apartment until she actually moved in. "It was worth the wait," she said. "You couldn't rent a place like this in San Francisco for under $3,000 a month." Morin, 79, moved from Arizona to California to be near her children. She took an apartment on Bayshore Road. A neighbor told Morin to sign up at Webster Wood. "I didn't know there was such a thing as subsidized apartments," Morin said. "I'm thankful to God for every bit of this." The complex is well landscaped, quiet and a wonderful location, she said. The housing corp. also rehabbed the 73-year-old Barker Hotel at 439 Emerson St. The hotel was built in 1928 and had 19 rooms. Over the years it became a residential hotel for very low-income people, Bechtel said. The organization acquired the property in 1994. In the late 1980s, word got out that a developer was eyeing the Barker, Craig and Palo Alto hotels to turn them into executive suites. The housing corporation, worried those housing units could be lost, began pursuing a single-room-occupancy ordinance to preserve the site. But in 1990, developer Jim Baer -- who was also a housing corporation board member -- bought the Barker Hotel, thus saving it for affordable housing, Bechtel said. "The whole mission was to create permanent housing and we achieved that," Bechtel said. "It serves an incredible community need." The Barker Hotel now has 25 single-residence units and a full-time onsite manager. There is also an onsite counselor and service coordinator assisting the 17 men and eight women who live in the building, according to Bechtel. "When we first started the Barker (Hotel) we realized you need to do more than provide the bed for people," Zatz said. "We got our feet wet there. We realized we had to bring in other sources, social services and community groups. "We realized we couldn't do it all ourselves."

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