The new Colibri Commons housing project in East Palo Alto is opening soon, and it's a reason to celebrate. 136 units will be providing housing for hundreds of people and this is a really big achievement. However, I have concerns about this project. City of East Palo Alto staff tells me that Colibri Commons cost $120 million for $136 units. This works out to over $880,000 per unit or $1029 per square foot of development. This is extremely expensive - probably 40% or more than a similar private development - and is not sustainable if we want to meet the needs of our growing community.

First, an overview: Colibri Commons will provide 136 subsidized apartments for households with an annual income between 30% and 60% of the San Mateo County Area Median Income (AMI), which is $186,000. For these residents, that means earning between $55,800 and $111,600 a year.

Providing subsidized housing is widely supported as a way to promote community tability, economic growth, and prevent displacement. It's a common practice for governments across the country and the world. However, questions remain about the cost of building this type of housing.

At over $120 million, the Colibri Commons project cost more than $882,000 per unit. This high price is part of a larger trend in California, where subsidized housing can cost up to 50% more to build than unsubsidized housing.

Here is a more detailed breakdown of the costs per unit type at Colibri:

• Studio: $394,402
• 1-Bedroom: $584,909
• 2-Bedroom: $865,007
• 3-Bedroom: $1,155,402
• 4-Bedroom: $1,379,891

The City of East Palo Alto contributed significantly to the building of Colibri Commons. City staff has our contribution tagged at $7.7M directly, which includes both cash and a land donation for the site. The City of East Palo Alto also directed a state grant to Colibri, making our total contribution $15.8M.

Nobody is arguing against subsidizing housing for low income people, but there is a lot of dialogue nationally about why subsidized housing costs so much.

The Rand Institute did a report on this issue which is worth a read:

https://www.rand.org/pubs/research_reports/RRA3743-1.html

Calmatters did an excellent story on the Rand Study here:

Why is it so expensive to build affordable homes in California? It takes too long | Opinion

One reason for the seemingly endless upward trajectory of rents is how expensive it is to build new apartments in California.

CalMattersGuest Commentary

The Washington Post also wrote about this in June, 2025:

https://wapo.st/3UqWnF3

You can read these reports yourself, but here is a quick summary: California's affordable housing cost about 50% more than private development and about 4 times more than the same unit built in Texas.

Factors Driving Up Costs

• Land and Construction Costs: California has a high cost of living, which drives up expenses for land acquisition, building materials, and labor. While high construction wages are a factor, some studies show they explain only a portion of the overall cost difference.
• Permitting and Regulatory Delays: The development process in California is notoriously slow. It can take years to get a project approved due to lengthy permitting timelines and environmental regulations. These delays result in a "time tax," where developers must pay for interest on loans, property taxes, and increasing construction costs while waiting for approvals.
• Complex Financing: Developers of affordable housing must navigate a fragmented system of public financing, which can take years to assemble. This process adds significant time and cost per unit.
• Prevailing Wage Requirements: Many affordable housing projects are required to pay prevailing wages to construction workers, which are often higher than what market-rate developers pay. While these wages have social benefits, they can increase development costs by more than 10%.
• Fees and Exactions: Local governments often impose high fees on new developments to help pay for public infrastructure. These fees in California can be a few times higher than the national average, adding tens of thousands of dollars to the cost of each unit.

Everyone (well, except some NIMBYs) agrees that we need more subsidized housing in California, but continuing to overpay for Affordable Housing Development is a losing strategy. Units that should be built by private developers for $600k are half the cost and and twice as nice as the same units built by an Affordable Housing developer.

There are many reforms that I will be bringing before council in the coming year that should expedite the production of all housing, including subsidized units. We need to have a much faster process to build housing, we can rezone the city to legalize apartments in more neighborhoods, increase FAR numbers, and look at our building codes with an eye to encouraging housing production. We must do better as a city to build more much needed housing, and we also need to recognize that we cannot continue to spend lavish sums on Affordable Housing projects that provide a relatively small number of units in proportion to the great needs of our growing community.