Highlights

Happy Holidays to All!

Happy Holidays from the SV@Home team! Thank you for your partnership with us throughout 2017! From getting 9,850 homes approved in Mountain View, to doubling our staff, to seeing the beginning of the implementation of the Measure A housing bond we worked hard to get passed by voters last November, we are excited and proud of what we accomplished this year with the support of our members and community partners. We hope you will continue to be a part of our collective voice for affordable housing as we transition into the New Year!

The SV@Home offices will be closed from December 25th through January 1st, and will reopen on Tuesday, January 2nd. We look forward to having time to recharge so that we can hit the ground running come January. See you in 2018!

Thank you and welcome to our newest 2018 and new members! 

Nathan Ho, Jennifer Van Every, Brian Francis, Cassandra Langer, Dixie Lira-Baus, Matt Huerta, Michael Fallon, Thomas Irpan, Jeremy Hoffman, Janice Rombeck, Kelly Snider, Tom Bondi, Mithun, Abode Services, Palo Alto Housing, US Bank, and Sobrato Family Foundation!

Policy Updates

Tax Reform Bill Retains Private Activity Bonds

Yesterday, Congress put the finishing touches on its tax bill, passing it with a razor-thin margin and sending it on to the President for signature.  There is good news for affordable housing– after weeks of worry and a significant effort by our friends in Washington and here at home– the bill retains both the 9% and 4% Low Income Housing Tax Credit (LIHTC) and preserves the tax-exemption for Private Activity Bonds (PABs), without which 4% credits would have been infeasible.  This is significant for Santa Clara County, as the vast majority of affordable housing built over the past 20 years has relied on the 4% credit and PABs.

So for the not so good news.  According to Novogradac and Co., the corporate tax rate cut from 35% to 21% could result in a loss of more than $2 billion in annual LIHTC investment, resulting in 16,000 fewer affordable homes built each year throughout the country.  Many developers have already experienced the drop in equity pricing as investors prepared for the anticipated drop in the corporate tax rate.

In addition, new policies reducing mortgage interest deductions, and capping State and local income, sales, and property tax deductions are likely to make homeownership a less attractive option for households in Silicon Valley.

San Jose Council Takes Action to Reinstate Rental Inclusionary Requirements

At its last meeting of the year Tuesday, the San Jose City Council voted 9-1-1 to begin enforcement of its Inclusionary Housing Ordinance (IHO) for market-rate rental housing.  (The City’s IHO for for-sale housing has been in effect since July of 2016.)  The rental housing portion of the City’s IHO has been suspended for years due to the Palmer v. Los Angeles court case, which ruled that inclusionary ordinances violated the Costa Hawkins rent control law because they did not include vacancy decontrol.  It took action from the State Legislature to resurrect inclusionary for rental development.  AB 1505 – the Palmer Fix — which goes into effect on January 1st, recognizes the zoning authority of local jurisdictions to require that market rate developments include a percentage of the units as affordable. 

The rental requirements in San Jose’s ordinance were set to automatically take effect in the event Palmer was overturned.  As a result, City staff brought forward action to turn on the ordinance, set the fee, and propose a transition period for implementation.  The Council extended the transition between the Affordable Housing Impact Fee and the IHO by “providing that new rental projects whose applications for first approval are completed after” June 30, 2018, will be subject to the IHO.

The City set the in-lieu fee at $125,000 per inclusionary unit, a figure tied to the actual costs if the City were to produce the affordable units, for those developers who choose the in-lieu option.   SV@Home agrees with City Housing Department staff that the best policy  is one that encourages market rate developments to integrate affordable homes into their design.  The City’s ordinance requires that developers include 15% of their units as affordable, but offers several alternative compliance options.  These include: building the units off-site, donating land, partnering with an affordable housing developer, purchasing credits, or payment of an in-lieu fee. In arriving at the right amount for the in-lieu fee option, it is important that the in-lieu fee not be set so low that all developers choose to “fee out” rather than consider any of the other alternatives, including the true inclusionary option. The City ordinance requires that the fee be revisited annually, but the Council voted to revisit the fee in 18 months.

San Jose City Leaders Call for Study Session on Housing Fees

During its discussion of the Inclusionary Housing Ordinance (IHO), the San Jose City Council also approved a recommendation to convene a Council study session before the end of June to discuss the aggregate impact of all of the fees the City levies on housing development.  According to the Mayor and other Council members who signed a memo requesting the review, the study session would look at the real world impact that fees are having on development decisions and project budgets, compare fees with peer jurisdictions, and consider the merits of assessing fees on a per square foot basis rather than a per unit basis.

After considerable discussion, the Council did not support a motion that would have required that the review include an honest assessment of the impact of the various incentives that have been used to promote housing production alongside the analysis of the hurdles posed by fees.

While we are in agreement that it is important for the City to study the impact of the totality of fees on residential development, we do not support a weakening of the IHO. The City fought hard for years to ensure that inclusionary rights of all cities were protected. San Jose needs all the tools it can find to address the severe housing crisis and to meet the affordable housing goals set forth in the Mayor’s 15-point housing plan.

Stay tuned for news on the June session and the role that the Affordable Housing advocacy community can play in defending the IHO.

San Jose City Leaders Take Action in Support of Bridge Communities

Last week, San Jose Housing Department staff were given the go ahead to identify up to three sites for Bridge Housing Communities (BHCs).  BHCs were authorized by AB 2176 of 2016, which authorizes the City of San Jose to develop housing communities for the homeless on City-owned or City-leased land for a five-year period.  BHCs are an important interim housing solution to bring people living on the City’s streets inside while housing funded by Measure A Bond funds is completed.

With this action, the City Council paved the way for the first pilot BHC to be up and running by the end of 2018.  As proposed, the pilot development of 40 sleeping structures will include restroom and shower facilities, as well as a community room for meetings and space for providing social and supportive services.  The City has partnered with the Gensler Architectural Firm to develop two design concepts for BHCs, including design for the emergency sleeping cabins.  As proposed, the homes would be available until 2022 when the pilot program sunsets.

SV@Home advocated for shortening the development timeline and looking to extend the legislative sunset– if the units come on line in 2019, they will only be available for three years.  We also requested that the City consider other funding sources for these interim options, so that funding for permanent housing is not reduced, and that the City continue to look at other solutions– including safe parking programs– to respond to the homeless crisis.

The Bridge Housing concept has been contentious in San Jose.  We know that identifying solutions for the homeless crisis our community faces presents many challenges, including siting, funding, and timing.  We also know that there isn’t just one solution, and that it is important to consider a number of alternatives in response.  However, we believe that moving forward to approve the BHC program was a critical and important step and congratulate the City on its efforts.

Cupertino City Council Moves Forward With Vallco Specific Plan

On Tuesday, the Cupertino City Council heard presentations from its consultants on the Vallco Specific Plan– Opticos Design Group, David J. Powers and Associates, and Economic and Planning Systems, Inc.– on a specific plan and the required environmental review documents. Vallco is envisioned as a vibrant mixed-use “town center” and a Priority Housing Element site in the City’s General Plan.

Consultants from Opticos outlined their robust public engagement process, stating “It’s about rolling up our sleeves and sitting down at the table with stakeholders to create a viable and creative solution.”  The first step is to engage local stakeholder groups beginning in February to collect input on a range of land use options for the Vallco Specific Plan through a combination of public meetings and website tools.

Following the presentations, Vice Mayor Rod Sinks expressed his excitement about the process and appreciation for the quality of the consultant team that will work on options for the 58-acre plan.  The plan schedule anticipates Council approval in Fall 2018.

Cupertino City Council Updates Accessory dwelling Unit Ordinance to Conform with State Law

The Cupertino City Council on Tuesday updated its accessory dwelling unit (ADU) ordinance to comply with new State regulations following the passage of AB 494 (Bloom) and SB 229 (Wieckowski) in 2016. SV@Home has been working with all cities in the County to adopt ordinances that not only meet, but exceed the new State laws.  Cities must now allow internal conversions of space inside existing single family homes (junior second units), and detached accessory structures in single family zones, as long as they provide independent exterior access from the existing residence and adequate setbacks for fire safety.

During Council discussion, Vice Mayor Rod Sinks referenced SV@Home’s comment letter and recommendations, and made an amendment to the motion to approve the staff recommendation to comply with State law, with the condition that the Housing Commission review a possible fee-waiver program to lessen the burden for homeowners who want to construct ADUs. In 2016, City staff approved permits for 9 ADUs City-wide.

The ordinance now will need a second reading at a subsequent hearing, and will be effective 30 days after approval.  

County Provides Guidance on Housing Authority Board Structure

At its December 12th meeting, the County Board of Supervisors heard a report from staff about potential changes to the governance structure of the Santa Clara County Housing Authority (SCCHA).  Although the SCCHA is a quasi-governmental nonprofit agency that is not a part of the County structure, its Board of Commissioners is appointed by the Board of Supervisors.  A little known fact is that the SCCHA administers two housing authorities– the Santa Clara County Housing Authority and the San Jose Housing Authority, the latter of which is administered through a one-year agreement.

The County has had recent conversations about changes to the SCHHA Board of Commissioners structure, with staff investigating four different options:

1. No change– the Board of Supervisors continues to appoint the members of the SCHHA Board and it functions independently.

2. Board oversight- the Board of Supervisors becomes the board of the SCHHA, and a separate Housing Commission is appointed with delegated responsibilities.

3. Merger of the two housing authorities– with two commissioners each appointed by the City of San Jose and County, and one tenant commissioner appointed jointly by the City and County.

4. Development of a joint powers authority– which would maintain the SCHHA and its Board of Commissioners and the San Jose City Council would continue to function as the Board for the San Jose Housing Authority.  A new JPA would be created to coordinate the programs of the two housing authorities.

While the Board of Supervisors did not make a final determination at the meeting and only took action to receive the report, the majority indicated that they were not interested in either the JPA or the merger option.  Staff was asked to continue conversations with the City of San Jose and the SCHHA and to return in February with a final recommendation.  The Board also requested that County staff conduct outreach with SCHHA tenants prior to returning, and asked for an analysis of the benefits of each alternative.

At the meeting, the City of San Jose indicated concern over the structure, and the possibility that, depending on the County’s action, of ending its relationship with the SCHHA.

Sunnyvale Initiates Housing Strategy

Last week, Sunnyvale City Council members approved a workplan and scope of work for a comprehensive review of housing strategies intended to identify improvements to City programs and policies, and to identify new options for increasing or improving the City’s affordable housing stock.

The review is expected to take a year to complete, and may include: adoption of a rental inclusionary ordinance, updates to the condominium conversion ordinance, new housing financing options (including land acquisition financing), and refinements to development review procedures. 

SV@Home will be following the work and will report back with any news.

SV@Home Events

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January Happy Housers

Friday, January 19th 5:30-7 PM
SV@Home
350 W Julian St, Building 5, San Jose 95110
RSVP here

The new year of housing events begins with our Happy Housers on January 19th! SV@Home’s Happy Housers events are a great opportunity for people from all corners of the housing world to connect, exchange ideas, and get to know fellow housers. Our special guest will be Santa Clara County Board of Supervisors President Dave Cortese. Let us know you’re coming by signing up on the Eventbrite page.