.A New Recipe For Housing

Developer Sibley Simon flips the housing script

We’re number one. The California per capita homeless population is the largest in the country and last June a grand jury report found that Santa Cruz has the most homeless people per capita in the state.

Fully employed Santa Cruzans and UCSC students live in their cars. You can’t afford to live here even if your job is being an elected member of the Santa Cruz City Council.

I’m checking out of Grocery Outlet Bargain Market on Morrissey Boulevard. I recognize the cashier.

“Hi, Asita. You used to work at Staff of Life, right?”

“I still do.”

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She gestures to the other cashiers, “They all do.”

After the cashiers at Staff of Life Natural Food Market do their eight-hour shift, they cross Soquel Avenue to do a second eight-hour shift at Grocery Outlet.

Asita came from the Dominican Republic to Santa Cruz when she was 21, to learn English and get an education. She got pregnant.

I ask Asita how long she’s working today. “14 hours today. 16 tomorrow.”

“Do you live close by?”

“I cannot afford to live here. I’m raising my daughter in Seaside.”

I speak to one of the other cashiers who also works as a substitute teacher. She can’t afford to live in Santa Cruz either. After teaching all day, she goes to Grocery Outlet and works into the night. She says, “It’s hard to keep my eyes open.”

When did it become OK to ask exhausted people to count our money and teach our children? You know you’re from Santa Cruz if you have a child who built a house out of Legos and the Planning Department gave it a red tag.

To many of us, Santa Cruz is irresistible. We see the beauty of a community that takes responsibility for its own happiness, a people who believe in their own magic.

For 50 16> years the Santa Cruz housing crisis has been left to those local decision makers who are trying to protect the status quo. It worked for the few, and now it’s destroying Santa Cruz for everyone.

As housing costs rise nationwide, homes and apartments have become big tools for investors. Santa Cruz home prices have risen 4% year after year, while remaining stagnant in other parts of the country, according to the website, Fast Expert. They jumped fiercely during the pandemic when Silicon Valley workers were allowed to work from home, with the average price jumping 16 percent.

Although they dropped some, prices today are still 30 percent higher than they were in 2020, with the average single-family home price at $1,301,294, and the median is $1,175,000. How much do you have to earn to afford a house worth $1 million?

Between $269,000 and $366,000, according to the website, Pacaso. It’s an Everest of a climb for a couple with each making what Zip Recruiter lists as the county’s average annual salary of $61,894, or $29.76 an hour or $5,157 a month.

And, lest you think at least you can comfortably rent, the average rent here is $3,319 for a 717-squarefoot apartment, not much bigger than your Lego home.

A SANTA CRUZ ENTREPRENEUR TRIES A NEW IDEA

I’m talking to Sibley Simon, founder and president of New Way Homes, a nonprofit social enterprise that creates new, affordable housing while providing investors with a fair return. And create affordable housing he does, all over the Bay Area, a frontline warrior against NIMBYism.

“I grew up on the Canadian border in eastern Washington State, a very rural area, in an entrepreneurial family of apple farmers and teachers,” says Simon. “After college I got into tech, doing inventive things with software. I founded two startups, but they were value neutral, and weren’t making the world a better place.


“I just started volunteering more in my own community of Santa Cruz. At Housing Matters I worked on chronic homelessness in San Cruz County. I had conversations on a weekly basis with people who were experiencing homelessness and realized that didn’t define who they were and that their paths were as varied as everyone else’s path.

But lack of housing became the bottleneck. I knew we needed more permanent supportive housing. I want to figure out how I can help create that.”

He founded the nonprofit New Way Homes in 2015 and partnered with developer Workbench. Their goal: to build housing that’s more affordable with less or no public funding. Foundations, businesses, individuals can invest money by loaning to New Way Homes and get a modest return while funding affordable housing development.

“I wanted the money to be anchored at a nonprofit so that projects say, ‘affordability is our core mission, and the returns to investors are set,” he says. In 2019, California passed Senate Bill 330, the Housing Crisis Act SB 330 prohibits local jurisdictions from enacting new laws that would have the effect of reducing the legal limit on new housing within their borders or delay new housing via regulatory barriers.

“SB 330 really changed the speed and risk in most multi-family housing developments in California, as long as you’re following the city’s general plan,” he says. “That’s a huge game changer. It’s part of what gives us hope that we can show that our type of development has a level of risk that’s appropriate for a lower financial return.”

RIDING TO THE FUTURE Sibley Simon, who is married to author and museum director Nina Simon, is changing how we see housing. Photo: Josh Bootz

JESUS SAVES…COMMUNITIES!

Like many of my Santa Cruz heathen brethren, churches have always pissed me off for owning the best land, the biggest acreage, and somehow usurped separation of church and state to be able to pay no taxes on this incredibly valuable property.

But in the most ironic turnaround since Chinese alchemists invented gunpowder to seek an elixir of immortality, churches, with their cache of largely debt-free property, are coming to our rescue by using their land for affordable housing. It saves their struggling community and consequently saves their church. The irony is perfected to salvation.

Using their ownership of huge properties and their willingness to use it for the good of the community, churches are providing the land that is the keystone for most of Sibley Simon’s affordable housing developments.

YES IN GOD’S BACKYARD LANDS ON CALIFORNIA

Governor Gavin Newsom signed California Senate Bill 4 on Oct. 11, 2023, and many call it Yes In God’s Backyard.

Officially, it’s the Affordable Housing on Faith Lands Act. It says church land and nonprofit colleges don’t have to be zoned for housing to build affordable housing on their land.

Many faith-based groups and nonprofit colleges are currently located on lands where multifamily housing is expressly prohibited by local zoning rules. SB4 allows them to bypass most local permitting and environmental review standards that can take years to complete.

State Senator Scott Wiener (D-San Francisco) authored the bill. Wiener says, “Neither CEQA [California Environmental Quality Act] nor local political processes can be misused to stop these affordable housing projects.”

And so, it is written… The Lord doth smite the NIMBYs! Behold, all ye who sue to delay the development of affordable housing. Jesus hath entered the temple, made a whip out of Senate Bill 4 and chased ye NIMBYs out. Our Lord Jesus hath opened a can of whoop-ass!

“Churches say, ‘We want to keep our assets. We don’t have the cash, the large amount of cash, it takes just to even design and permit housing, let alone build it. We don’t want to risk our other assets.’ And these are most churches. They don’t want to take on a lot of debt where they could lose some other asset. But they’re patient and they’re willing to make use of their land for a project that is very mission driven. They may want a long-term income stream. It could be to pay for services they want to provide, even to those living in the housing. Or all over the country, you know, there’s hundreds of thousands of churches where the buildings have a lot of deferred maintenance. It’s been estimated that in the next decade, 100,000 church buildings across the United States are going to sell. I’d like to see those properties used to help the community.”

“We need housing development that generates a modest return. Our society will not succeed if we only have a choice between charitable housing or very high investment return. We’re not going to make it that way.” –Sibley Simon

“There are billions and billions of dollars out there that want a 4% to 6% return with relatively low risk. We’ll keep growing our track record, offer investors safe investments, and if we bring down the risk and get close to market rate investment, that’s how we can scale this model.

“I started working with churches and met a pastor, Raymond Langford, who’s worked for decades trying to bring resources to church communities in Oakland. I was like, ‘I am not going to be the white guy from Santa Cruz who is a developer in East Oakland.’ That’s not a story that ends well or seems appropriate. “But Raymond, he was adamant. ‘No, you’re working with churches. We have churches who want to do this.’

He said, ‘Follow me. We’re going to do it together. We’re going to build trust.’

So, five years later, he’s still involved with connecting New Way Homes in Oakland.

“It’s not us going in, buying property and developing what we want in the neighborhood. It’s with partnerships. We’re providing a service to that neighborhood and that organization that’s embedded in that neighborhood. We have expertise about development and capital. They have expertise about their own community and neighborhood.”

NEW WAY FLIPS THE SCRIPT

New Way Homes flips the typical construction model by only taking money from investors and lenders who will take a set, capped, modest return. Putting the brakes on profits and risk creates housing that is affordable, he explains. “We did one project in partnership with Housing Matters where we did just take on that earlier role of permitting and design. That’s the big Harvey West Studios project that’s going to go into construction this year, 121 units of permanent supportive housing. Super exciting. Permanent supported housing: that’s housing for chronically homeless individuals who need supportive services. That was my motivation for starting to be a housing developer; can we in Santa Cruz create significant permanent supportive housing?” His great accomplishment has been in finding investors and lenders who are taking a below-market-rate return and believe in this mission to the point where they’re providing the capital for the mission more than for profit. They still get a return, but not the jacked-up one many for-profit developers want. A lot of churches have bought into the promise. They have land and a mission of helping.

WE NEED BOTH MARKET RATE AND AFFORDABLE HOMES

Simon doesn’t believe in mandatory percentages for affordable housing, saying it makes housing harder to build.

“What we need to do is roll up our sleeves and get more mixed-income projects actually done,” he says. “Most people, including lower-income households, are continuing to live in market-rate housing. We need enough market-rate housing to keep prices from going up, and we need to find other ways to make affordable housing using less or no public dollars.

“That’s the goal. St. Stephen’s was completed several years ago, as a publicly funded senior affordable housing, publicly funded tax credit type project. And then right downtown, the Red Church, or Calvary Episcopal Church, that’s just finishing construction now. Great projects, all affordable housing. We need more of them.”

His plans for the future include growing the project across the country. He’s launched a crowdfunding offering on the Equityvest platform where anyone can invest in an Affordable Housing Impact Investment Fund that has paid investors of all levels of wealth over the past seven years.

Talking with Sibley Simon gives me hope for Santa Cruz, hope for our youth. There’s a lot of smart people, Mayor Fred Keeley, former mayor Don Lane and many dozens more, who tirelessly work with the new mandates from the state of California to stop our NIMBY-culture ways. State legislation, like Senate Bill 4, gives churches the power to bypass local NIMBYism and provides developers like Sibley Simon new paths to affordable housing.

For a devout atheist like me, it’s awesome to have God on our side.

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