People earning $250,000-a-year should qualify for subsidized housing in Palo Alto, California, according to a new proposal. It comes after a plot of land (pictured) sold for almost $1 million in the well-heeled city.
People earning $250,000-a-year should qualify for subsidized housing in Palo Alto, according to a new proposal.
City officials have outlined an eight-year affordable housing plan - with 587 units for reserved for the area's uniquely wealthy middle class as real estate prices balloon.
The well-heeled California neighborhood, where a plot of land recently sold for $2.7 million, is home to some of America’s richest entrepreneurs who work a few miles away in Silicon Valley.
With house price averages an eye-watering $3 million, even those earning $250,000-a-year are spending two-thirds of their monthly salary (around $14,000) paying off their mortgage.
It means workers such as teachers, janitors, firefighters, social workers, police officers and more are not paid enough to afford the local rent, driving up congestion as they commute in.
Now the City Of Palo Alto has outlined a proposal to combat the issue - with price guidelines unlike any other in the country.
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$20 MILLION: This eight-bedroom home in Palo Alto has a tennis court and an attached guest house.
But in Palo Alto, this section of society - earning anything from $127,000 to $250,000 a year - is struggling.
The plan, tabled at a council meeting on Monday, suggests building apartments as small as 200 square feet with bathrooms and kitchens shared between neighbors.
Other options include co-housing communities that share kitchens and dining areas, and special exemptions for property developers who set aside at least 25 per cent of new-builds for low income families.
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The city's biggest problem is that low-income workers cannot afford to live nearby, 'indicating in a large unmet need for worker housing in the City,' the plan explains.
There are far more jobs in the city than there are employed residents.
And the impact is crippling.
'Since many of Palo Alto’s workers cannot afford to live in the City, the imbalance creates negative impacts such as long commutes for workers both inside and outside the region, increased traffic congestion during peak commute periods, and increased air pollution end energy consumption,' the proposal warns.
In total, the proposal suggests building 1,988 new units for anyone earning less than $250,000 a year.
The average area income is $106,300. The subsidized housing plan includes people earning 120 per cent of that ($127,000) and 'above' - which would include those earning $250,000.
But implementing the proposed measures will be tough, according to Professor Norm Miller, an expert in real estate at the University of San Diego's School of Business.
'The only solutions to make housing more affordable are to add density, more units per acre and generally you need to add a lot of density like you have in New York City or to make units smaller as proposed,' Miller explained to Daily Mail Online on Wednesday.
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$15 MILLION: The city has become a hot spot for Silicon Valley executives, pushing up demand for luxurious mansions like this one, which was listed for a cool $15 million.
'What is interesting in California is how hard it is to do either of these. People here oppose smaller units and density on grounds of adding traffic, the evils of all development foisted on neighbors who keep having babies that will have no place to live.
'Even a hospice center if proposed to be higher density than other housing nearby would probably be accused of driving up traffic to insanely high levels. Go figure.'
Miller, the Hahn Chairman of Real Estate Finance at San Diego's real estate center, last year published a paper that boldly declared Palo Alto was in the midst of a housing bubble that is set to burst.
There could be some reprieve for residents, he claims, will be 'when' (not 'if') the tech bubble bursts.
'This stick wealth has directly supported the housing market and let it escape the normal bounds of income only driven demand,' he told the Mail on Wednesday. 'These tech markets are thus more vulnerable to a setback.'
But ultimately, he says, 'the problem of historically low densities, large units and a NIMBY culture opposing all new development especially of any real density' will linger as long as Californians resist high-density housing plans.
House prices average $3m in Palo Alto, CA; a plot of land sold for $2.7m
Even those on $250,000-a-year drop two-thirds monthly wage on mortgage
It means low-income workers like teachers cannot afford to live in the city
In a bid to tackle the issue, the city has launched a new housing plan
The plan reserves 587 units for people earning more than $127,000-a-year
By MIA DE GRAAF FOR DAILYMAIL.COM
PUBLISHED: 20:44 EST, 23 March 2016 | UPDATED: 05:24 EST, 24 March 2016