Santa Clara County has committed local bond dollars to 600 affordable apartments and homes that still can't break ground — and the reason isn't a shortage of tax credits. It's a shortage of investors willing to buy them.

A decade into the $950 million Measure A housing bond, the money the county controls is no longer the scarce ingredient — the missing piece is the private equity that turns local dollars into finished buildings. Congress just enlarged the federal Low-Income Housing Tax Credit and California added its own money, yet that surge of new credits pulled a surge of new projects into the same limited pool of bank investors. The county's own oversight report lays out the fallout: seven stranded developments, some pushed to 2030, and a three-year clock that can claw funding back before a single unit is built.

Those stalled homes are catalogued in the Measure A oversight committee's fiscal third-quarter report (external source, opens in a new tab), the quarterly accounting covering the period that ended in March and first surfaced by San José Spotlight. It counts 600 apartments and homes with local money committed that still can't break ground, and seven developments hunting the outside financing that would let them start. Some won't open until 2030. Rising insurance and construction costs have widened the gap.

The county's affordable-housing math rests on a simple sequence: local dollars go in first, and state and federal money finishes the job. SV@Home, the housing coalition that tracks the bond, has documented the leverage (external source, opens in a new tab) at its center — every Measure A dollar has historically pulled in an average of $2.77 from outside sources. That multiplier is the program's strength, and, right now, its trap.

The vulnerability was baked into the design. SV@Home Executive Director Regina Williams, quoted in San José Spotlight's account of the oversight committee's findings, framed it bluntly: leveraging state and federal resources was always the plan, and dependence on those outside resources is the price. When the outside money runs late, locally funded projects simply wait.

The bond has delivered at scale. Voters passed it with 67.88% support, and the county has built more than 3,300 homes with nearly 1,750 more under construction — enough, the oversight report (external source, opens in a new tab) projects, to beat its original 4,800-unit goal for the lowest-income residents. The current stall is less a failure than a program running into a wall its design never anticipated.

The counterintuitive part: more federal help deepened the jam.

The federal Low-Income Housing Tax Credit is the backbone of affordable-housing finance. Developers sell the credits to banks and corporations, converting a tax break into upfront construction cash. Last year's federal spending law, H.R.1, enlarged the program — raising state credit allocations and lowering the bond-financing threshold (external source, opens in a new tab) — which opened the door to more deals.

More credits should mean more homes. So far it has mostly meant more competition. Eden Housing CEO Linda Mandolini, in remarks San José Spotlight reported, described the paradox: the added credits are genuinely helpful, but the number of developments now chasing equity has outrun the number of investors available to fund them. A credit is worthless without a buyer, and the buyers — mostly banks — did not multiply just because the credits did.

Washington's newest law aims straight at that constraint. The 21st Century ROAD to Housing Act lets banks invest up to 20% of assets in affordable-housing tax credits, up from 15%, according to the Bipartisan Policy Center (external source, opens in a new tab). It cleared the Senate 85-5 and the House 358-32 and became law in July. In practice, it lets existing investors write bigger checks. Whether the pool grows fast enough to clear the backlog is the question the statute leaves open.

And the clock is running. Under the county program, developers of permanent supportive housing get up to three years (external source, opens in a new tab) to secure financing before the county can redirect their Measure A allocation elsewhere — a deadline that turns each stalled deal into a candidate for loss and each delay into higher costs.

A second threat sits beneath the financing squeeze. The oversight report (external source, opens in a new tab) also flags mounting uncertainty over Section 8 vouchers, which let a tenant pay 30% of income while the federal government covers the rest. The county has applied 2,666 of them to make Measure A units affordable to homeless and very-low-income families. If vouchers tighten, the county may be forced to aim future units at somewhat higher incomes — housing that pencils out financially, but not for the residents still sleeping outside.

Sacramento is moving too: $500 million for California's tax-credit program this fiscal year, a new state Housing and Homelessness Agency to speed funding, and an $11.25 billion housing bond going to voters in November.

The report's larger lesson, in the words of Ray Bramson, chief operating officer of the nonprofit Destination: Home, is that even a well-run local program cannot finish the job without more state and federal subsidy behind it.

County staff say they're reworking stalled projects' designs and financing to make them competitive for the next funding round. For 600 homes and the families waiting on them, competitive is not the same as built.