School districts in Mountain View have acknowledged that the high cost of living is putting the squeeze on teachers, making it hard for them to keep up with monthly rent and nearly impossible to buy a home. A new venture kicked off by two Stanford grads is looking to change that, and turn long-term renters into first-time home buyers.
Co-founders of the startup Landed have been visiting local school districts, offering a new financing program that would create a special fund that teachers could tap into for a down payment on a home in the area.
Under the proposed framework, investors -- such as residents in the communities of Los Altos or Mountain View -- could pool money into a fund that district teachers can tap into for a 20 percent down payment on a home. Investors would have a stake of about 25 percent of the future profits, or losses, when the home is sold or refinanced.
Jonathan Asmis, co-founder of Landed, presented the plan to the Mountain View-Los Altos High School District board last month, noting that many teachers are facing a tough dilemma: They want to buy a home in the area, but rental costs are so high that it's nearly impossible to save anywhere close to a 20 percent down payment for a home. The cost of living in the area, Asmis said, is clearly outpacing salary increases.
"Housing prices are going up faster than your ability to pay the faculty who are coming here to teach the kids," he said.
Through what Asmis called a "partnership fund," a teacher could pay $80,000 for a down payment, while Landed could use the investment pool to contribute an additional $80,000. The extra money would bring down mortgage costs without the buyer having to take on more debt. Landed's contribution would be in exchange for a share of the future appreciation in the value of the property.
Asmis said such a plan would help bring teachers closer to the district and improve teacher retention.
Although the startup is appealing to school districts all over the Bay Area, the extent that teachers actually need the help could vary significantly. In the case of the Mountain View-Los Altos High School District, teachers made an average of $113,000 in 2015. The countywide median income was $106,000 during the same year. In the Los Altos School District, teachers made an average annual salary of $78,000, and the Mountain View Whisman School District wasn't far behind at $71,000, according to state payroll data.
Teacher turnover has been the most challenging for the Mountain View Whisman district, forcing administrators to go on a hiring spree and bring in 170 new teachers over the last four years. In an attempt to keep teachers from continuing the exodus, district officials are now considering building teacher housing on district-owned property, though specific details about the plan have yet to be revealed.
Constructing apartments for teachers isn't an option for the Mountain View-Los Altos district. Superintendent Jeff Harding told board members at the June 20 board meeting that the district doesn't have the available land to spare for a residential development.
At a recent Santa Clara County panel on teacher housing, Harding said Landed's strategy seems like an intriguing new venture that could help teachers settle down in the community as home buyers.
"We think there's some potential here," Harding said. "It's an interesting model."
Board member Susan Sweeley, who works at Alain Pinel Realtors, told the Voice in an email that Landed has a "brilliant" idea that could take advantage of rapid home appreciation in Silicon Valley, and could prove beneficial for both investors and buyers. As a real estate agent, she said, she would still like to go through all the safeguards to make sure teachers who buy properties in the area are protected. She said that she plans to meet with the founders of Landed to learn more, but for now, she is optimistic.
"I love the idea and the opportunity it presents to our teachers and staff," Sweeley said in the email.
Harding said that he talked with the district's attorney and has concluded there would be no legal obstacle to the district's supporting Landed if it creates a community fund, particularly because district funds are not involved.
Board president Phil Faillace pointed out that because the district is so uninvolved in the nuts and bolts of the financing plan, Landed could potentially start a community investment fund for teachers without any board or district support, and wondered what role the district would actually play in the housing program.
Although the company would manage money from community investors independently, Asmis said, prospective residents would have a lot more confidence putting money into a program to support teacher housing if it is backed by the school district. He said that the district does not expose itself to potential lawsuits down the road by supporting the program.
Housing support programs are not new in the Bay Area. San Jose began its Teacher Homebuyer Program in 1999, which grants teachers an interest-free loan if they buy a home within the city limits, to be paid off during the resale of the home or after 30 years. Asmis also pointed out that Stanford has a similar program for teachers coming to the Bay Area from areas where salaries and the cost of living are significantly lower, making it tough to break into the local housing market.
"People who are moving from the Midwest to become a professor at Stanford sell their $500,000 home and now have to buy a $2 million home -- where do they get the wealth to make that transition?" Asmis said. "One of the things Stanford does is invest alongside of them."