Dear Council Members (and copied to the Yountville Sun),

Please Stop Calling This Project “Work Force Housing” – Because it is Not! Perhaps The Project Should Be Scrapped.

I admit that I am late to the “party” as the first meeting I attended regarding this project was the Feb. 17 meeting. That is not because I was apathetic, rather it was because I believed the Town Council was focused on some serious problem and was crafting a cost-efficient actual solution. Based on the information provided at the Feb. 17 meeting, it appears that I was mistaken.

Let me be clear: I have no experience in complex real estate development nor the inner workings of town government. I appreciate that both are complicated and likely involve concerns and issues that I do not see. However, I have owned and run a business for over 40 years and looking at this project through that lens raises concerns about why it should move forward.

I have read the well thought out letters reflecting concern that the project’s proponents need to slow down and that further research should be taken to prevent moving forward with a project that may “miss the mark.” I am writing to suggest that the project should be scrapped. This is because it does not seem this project will make the slightest dent in providing affordable work force housing to the 3,100 Yountville workers the project proponents seem to see as a problem in need of a solution.

A.  The Project is Not a Solution to any “Work Force Housing” Problem.

The First Phase of 40 Units is Not Even a Drop in the Work Force Bucket.

At the Feb. 17 meeting the presenters referenced there being 3,100 “workers” in Yountville and that the vast majority of them, did not live in Yountville, nor could they afford to live in Yountville. If this is the “problem,” then building 40 units with no plan to be able to afford to build any more, is NOT a “solution”.

There is no realistic way to ensure the units will be occupied by Yountville “workers.”

The presenters conceded that California Fair Housing Laws will prevent the town from discriminating against potential tenants that are not Yountville workers. Even if the town could

limit new tenants to those who are employed in Yountville, they could not be evicted if they later changed jobs and worked in Napa or St. Helena. There is no way to prevent these 40 units from at some point being occupied by people who are not Yountville workers. As such the project is not really “Workforce Housing” and we should stop calling it that!

One presenter suggested that a tenant could be “incentivized” to remain a Yountville worker by providing a $500 per month rent subsidy, but only as long as they remain a Yountville worker. How does that make sense for a project that is already projected to operate at a $375,000 per year loss (and that is assuming a very optimistic projected 5% vacancy rate). That subsidy, if applied to all 40 units, would cost the town (the taxpayers) an additional $240,000 per year in operating losses.

If the current Yountville workers do not want to live in 300 square foot “boxes,” the project is not a solution.

Perhaps the Yountville workers live in Napa or Fairfield because they like a roomier residence with a yard or they live with family. Perhaps they enjoy the convenience of having local supermarkets, drug stores and affordable places to eat – none of which really exist in Yountville.

Apparently those 3,100 Yountville workers find the status quo workable. If so, the project is not a “solution.” If there is a problem getting workers to commute to work in Yountville, perhaps instead of the town building this project and then providing a $500 per month rent subsidy, as one presenter suggested, employers could provide a modest commuting subsidy.

People live outside of high-income employment areas because they want more residence for their money. Westbound Interstate 80 going into San Francisco is packed every workday morning because those people are willing to commute from where they want to live to a place where they can earn better incomes. Yountville is no exception to this truth.

B.  The cost of the First Phase 40 units seems nothing short of absurd.

As I understood from the presentation on Feb. 17, the cost of the maximum number of the First Phase 40 units is nearly $40 million dollars. That is $1 million dollars for each 300 square foot unit!

This amount is made up of the following:

Using existing cash on hand	$5,000,000
A Municipal Bond to raise $16,000,000 that will be repaid at $1,000,000 per year for 30 years	$30,000,000
Additional funding to complete the project that will have to be financed at an unknown cost:	$4,500,000
Total without cost of additional financing:	$39,500,000

Based on the information provided it appears the project would send the town (and the taxpayers) down the following financial road:

1. Deplete $5 million dollars of cash on hand. Presumably that is all the disposable cash the town has, or it would not need to finance the rest of the First Phase project cost.
   1. Issue a $16 million dollar bond that will presumably be a 30-year bond that will require annual debt service of $1 million dollars. Total cost – $30,000,000.
      1. The bond will not cover the cost of the project because apparently the town cannot afford debt service of more than $1 million dollars a year.
      1. The town will only be able to fully fund the annual $1 million dollar payments after the existing $700,000 a year bond payments are completed in 2027.
   1. Apparently, the town will have to find financing for an additional $4.5 million dollars to complete the First Phase of 40 units.
   1. The project is projected to have a net operating loss of $375,000 per year IF the project only has (the hoped for) 5% vacancy factor.

All this just to have 40 units, many of which may be only 300 square feet.

Just think where the town finances would be if this project does not go forward.

1. The town will have surplus cash on hand of $5,000,000.
2. There will be no $1,000,000 a year bond payment for 30 years and once the existing bond is paid off in 2027 the town will no longer have that $700,000 a year payment. That will reduce the town’s operating expenses by $700,000 per year starting in 2028.
3. The town will not have to borrow and debt service the additional $4,500,000 that would otherwise be needed to complete the First Phase 40 units.
4. The town will own the property outright. That property has apparently already been subdivided. Those parcels can be sold or leased for purposes that enhance the town. That may include sales or leasing for affordable housing to be developed by experienced nonprofits.

C. There Does Not Appear to be Any Funding Source for any Further Phases of This Project.

If, as presented, the town can only afford the $1,000,000 per year payments for 30 years required to service the proposed $16 million dollar bond, where will the funding come from to build the next phases? Will a lack of funding leave the town with a total of 40 units with projected operating losses of $375,000 per year?

If the answer is that the town does not have that funding for the other phases and the plan will have to morph into selling or leasing the other subdivided lots, then why not do the same with the lot(s) now planned for the First Phase. This would save $5 million dollars of existing town funds and well over $30 million dollars of future debt service payments.

D. Why Should the Town of Yountville Become a Property Developer and a Landlord?

If the town should (or is required to) have “Affordable Housing,” it should be done by those entities with the expertise and a track record of successfully developing and operating affordable housing projects. That is not the town of Yountville.

E.   Conclusion

I do not pretend to have the depth of knowledge of any of the professionals involved in the development of the proposals involved in this project. I assume there will be those concerned that substantial funds and considerable effort have been devoted to the planning for this project. While this is true and was no doubt done in good faith, perhaps on reflection the adage “do not throw good money after bad” may appropriately apply here.

Respectfully submitted for your consideration,

Robert Blevans
Yountville Resident

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