Courtesy of Google Street View

This is the single-family house that stands at 19521 Douglass Lane, which is where Subarrao hopes to build affordable housing units.

The board is planning to decline entering into an MOU with real estate developer Narayan Subbarao on May 7 regarding his affordable housing development. 

According to the agenda, “staff determined that the rents proposed for the development are not substantially lower than rents in the surrounding area” and “the development has the potential to provide only a limited benefit to LGSUHSD employees.” Instead, a neutral stance will be recommended for the board to take, essentially shooting down the agreement.

Subbarao brought to the April 17 Los Gatos-Saratoga Union High School District (LGSUHSD) board meeting his plan for a new affordable housing development in Saratoga, with units reserved for district employees. However, no definitive result came from the district meeting, only plans for a future discussion between Subbarao and the board to determine a course of action.

The allotted housing would be eight units built on a nearly 1-acre lot near West Valley College. 19521 Douglass Lane has been a single-family home until now, but Subbarao has proposed dividing the lot into an apartment complex with 44 units, and reserving four one-bedroom and four two-bedroom homes for district employees. The district would be given a 60-day advance notice of availability for any of the eight units.

This affordable housing development will be Subbarao’s second development. Even on his first development, he was committed to affordable housing — especially for teachers.

“I am proud to say I have not raised rent for the past eight years,” Subbarao said.

The property will be an 80% Area Median Income (AMI) development. The 80% AMI for Santa Clara County is $111,700 for a single person, with around a $15,000 increase for each additional family member. 

According to Patrick Bernhardt, the district’s executive director of business services, only 11 district employees would be eligible to rent in such a development. As it stands right now, a one-bedroom unit would be priced at $3,146 a month and a two-bedroom unit at $3,843 a month, which is cheaper than the average rent of $4,200 a month in Saratoga.

According to the numbers Subbarao presented, the average teacher salary falls between $90,000 and $110,000, while the median house price in Saratoga is $4.2 million, meaning that it is difficult for teachers to afford housing in the area. Many teachers seek out housing in cheaper areas like Santa Cruz County, leading to commutes of 45 minutes or more. 

Subbarao’s proposal aims to provide close and affordable housing for LGSUHSD employees, fostering longer teacher retention and allowing staff members to have deeper interactions within the community. 

“Our primary focus is to give back to the community,” said Subbarao, who has had two children who graduated from SHS.

This proposal follows the pattern the Santa Clara Unified School District has done in the past. Its Teacher Housing Foundation constructed 70 units, 40 in 2001 and an additional 30 in 2008, on a school site that is primarily rented to K-12 employees at 80% of the market rate. It is aimed at helping the district employees save for homeownership after seven years. The most costly apartment to rent at this development is $2,500 a month with an annual household maximum income limit of $189,000.

However, one major concern for Subbarao’s development was whether the development would be useful to current employees. Since the project is an 80% AMI development, many district employees will be unable to rent due to having salaries above the maximum salary threshold to rent the development. 

AMI eligibility increases with the number of dependents or people living off the same income. According to Bernhardt, for a single parent with two children, 80% of AMI would be around $143,000.  

Consequently, the board fears the only people who would be able to rent at the complex would be young teachers with lower starting salaries or single-income families.

Also, there is a concern with whether the development is even necessary. While the location is closer to LGSUHSD campuses, board members expressed concerns about the small living space — 670 square feet for one-bedroom units and 870 square feet for two bedroom units. 

“I just don’t know if that’s something new Saratoga teachers would be willing to do. If they live in San Jose or Campbell, they could get a much bigger place for similar prices,” board member Katherine Tseng said.

Other concerns include potential pushback from neighboring homeowners. Adding 44 units would heavily increase traffic, population density and raise questions about parking. Creating affordable housing also drives down nearby property values, resulting in Not-In-My-Backyard (NIMBY) stances. 

A 2021 Housing Element Survey (the most recent) by the city reflects such attitudes — survey takers ranked priorities by importance from one (most important) to eight (least important). On average, users ranked “preserving the current character of single-family neighborhoods as much as possible” first and “requiring construction of affordable units as part of housing development projects” last.

At the board meeting, Narayan requested a Memorandum of Understanding (MOU) as well as public endorsement for this development at 19521 Douglass Lane. MOUs place no financial burden on the district, and instead are letters of support which can be procured during pitches to the city. MOUs are useful to combat NIMBY attitudes.

In this case specifically, the MOU would be especially useful as it would help counter the potential pushback of the development. Transitioning the traditionally single family home into a 44 unit development would add significantly more traffic and people to the neighborhood, and would drive property prices down, which would very likely lead to the neighbors fighting back against the development. 

The board also presented a variety of concerns, most of which were caused by an overall lack of information as well as legal implications.

Former board member Peter Hertan spoke up during a period of the meeting reserved for public comments, expressing concerns for the viability of the development: “It would be inappropriate for [the MOU] to be signed today,” he said. His concerns included potential violations of the Fair Housing Act, as well as lack of legal review. Board members assured Hertan no action would be taken at that particular meeting.