Vista Pointe Apartments, a 68-unit residential complex at 3455 Homestead Road in Santa Clara. (Google Maps)
SANTA CLARA — The Sobrato Organization aims to use its real estate expertise to help tackle one of Silicon Valley’s most daunting challenges: the region’s affordable housing woes.
The recent purchase by Sobrato of an older apartment complex in Santa Clara is poised to be the springboard for the affordable housing strategy being crafted by the legendary real estate firm.
In May, Sobrato Family Foundation paid $26.1 million for Santa Clara’s 68-unit Vista Pointe Apartments, located at 3455 Homestead Road.
The Sobrato firm is one of Silicon Valley’s iconic real estate companies and the foundation is the charitable and giving arm of the Sobrato Organization.
Now, the apartment building purchase has become the foundation of a pilot project to determine whether the Sobrato firm can craft a fresh solution to the housing dilemma in Silicon Valley, according to John M. Sobrato, chairman of The Sobrato Organization.
“We call it the housing security initiative,” Sobrato said.
“The key to economic mobility is stable affordable housing for people at low- and moderate-income levels,” Sobrato said. “That is the key to building self-sufficiency and moving up the economic ladder.”
The Bay Area’s cost of living has surged in recent years, fueled by runaway inflation. The jump in consumer prices has outstripped wage increases for many of the region’s residents. The jump in costs has extended to brutally high housing prices.
“Rents have far outpaced the growth in median income,” Sobrato said. “As families spend more on rent they have less money left over for necessities such as food and transportation and so forth.”
Executives with the Sobrato firm hope to use the three primary branches of the organization — real estate, capital investments and the charity-focused family foundation — in a coordinated fashion to tackle affordable housing issues.
“Affordable housing seems to be a natural area where we could use the entirety of the organization to achieve an impact,” Sobrato said.
Among the primary approaches to address the affordable housing woes in Silicon Valley: construct more residences, preserve affordable housing and undertake effective advocacy for the development of housing.
“We need all types of housing in Silicon Valley, because if there’s not enough of that, including market-rate housing, then that shortage puts pressure on affordable housing,” Sobrato said. “We can help with housing production, including building affordable homes.”
The Sobrato Organization also tries to assist in cases when an affordable housing development receives government approval but remains short of the requisite construction financing.
“There are many projects that get close to the finish line where they get the funding from the city, the county, the state, but sometimes they don’t have quite enough capital to construct and finish the project,” Sobrato said. “We want to be sure the developer has enough capital to complete the housing.”
The next steps for the just-bought apartment complex in Santa Clara fall into the preservation category.
“We think we can make the biggest difference through preservation,” Sobrato said. “For us, the Vista Pointe Apartments in Santa Clara are really our pilot project to see if preservation can work as a concept.”
The game plan with Vista Pointe Apartments, a complex that was built in 1969, is to navigate a different course than what normally occurs when an older rental facility such as this is purchased, especially after years of being under the same ownership.
Typically, older apartment complexes, following a purchase, undergo major upgrades through the facility — primarily to justify a hefty increase in rents.
“The upgrades mean higher rents, and then these kinds of projects at moderate rents are gone forever,” Sobrato said. ”
Sobrato will undertake improvements that are essential at Vista Pointe, he added.
“We will address maintenance issues,” Sobrato said. “We will replace the roofs. The carports need some wood and roof maintenance. There is some deferred maintenance that is needed. The objective is to keep the price as affordable as possible.”
Sobrato Family Foundation’s strategy focuses on assuring that current tenants in the Vista Pointe complex won’t be priced out of their homes.
“People can rest assured that none of the families at Vista Pointe are going to be displaced,” Sobrato said.
Originally published at George Avalos