San Jose continues to face a severe and worsening housing affordability crisis. In this environment, we need every tool at our disposal to support housing affordability. The IHO has been one of the City’s most effective tools for producing affordable homes, generating $47 million in in-lieu fees since its inception and supporting an average of 288 new affordable units each year. The IHO is at risk, but some courageous San Jose councilmembers slowed the process to demand more analysis.
The San Jose City Council was slated to consider harmful changes to an important policy producing an average of nearly 300 affordable homes each year without taxpayer money on November 18th, but thanks to a unanimous vote from the councilmembers on the Open Government and Rules Committee on November 12th, consideration is delayed until January pending more analysis from staff.
The Open Government and Rules Committee, commonly known as “Rules,” is a Council committee that meets briefly on Wednesday afternoons to set the agenda for future Council Meetings. SV@Home, as well as advocates from our partner organizations, provided public comments recommending deferral. This followed many hours of meetings with council members and their staff, sharing insights and advocating for the preservation of the IHO as a powerful tool for housing affordability. Councilmember Kamei made the motion to defer consideration of amendments to the IHO, and Councilmember Doan seconded the motion. Vice Mayor Foley and Councilmembers Cohen and Candelas joined for a unanimous decision.
This reprieve is temporary. We will use it to continue to uplift the insights and voices of those with lived experience of housing instability and those who serve them, including housing developers, and to continue to inform and support the decisionmaking of San Jose’s City Council.
Right now, the Inclusionary Housing Ordinance (IHO) requires developers of market rate housing to include a proportion of homes affordable for San Jose residents earning between 50% and 100% of the county’s median income. Two thirds of these income-restricted homes fall below San Jose’s average apartment rent.
The current IHO is an important component of the City’s direct response to its legal obligation to “assist in the development of adequate housing to meet the needs of extremely low, very low, low-, and moderate-income households.” (Government Code Section 65583(c)(2)) The affordable homes built by market-rate developers under San Jose’s current IHO effectively double the City’s average annual share of affordable housing production. In addition to the affordable homes developers of market-rate housing build, the fees they pay when they do not build the housing help fund the roughly 300 affordable homes the city subsidizes directly each year.
The Proposal: Even Less Affordability. The proposed changes would flip the current policy on its head: two thirds of units under the proposal would rent for more than San Jose’s average rents for apartments the same size.
The Problem. San Jose’s renter households, nearly half the families and individuals in San Jose, cannot afford this proposal. Renters are the primary target of the IHO. In San Jose, more than two-thirds of renter households have incomes below the median. “Affordable” homes that are income-restricted for people earning 110% of the area median- that’s $150,260 for an individual or $214,720 for a family of 4- don’t need help in a market where the average apartment rents at a price affordable to someone earning 70% of the area median.
Every year for the last three years, San Jose residents have consistently ranked ”Providing More Affordable Housing” as one of their top 3 priorities in the City’s survey. The proposed IHO changes would undermine an important tool for affordability, and do not address the housing needs of residents most at risk of displacement.
In the past, San Jose has been a trailblazer & visionary on IHO. San Jose has historically been at the forefront of Inclusionary Housing on both the state and national stage, fighting for its ability to implement the ordinance through the Superior, Appellate, and California Supreme Courts (California Building Industry Association (CBIA) v. City of San Jose). The current IHO was implemented in 2019 with broad support from a coalition ranging from housing advocates to business groups, and championed by former Mayor (now Congressman) Sam Liccardo and former Councilmember (now State Senator) Dave Cortese. It was crafted with extensive stakeholder outreach, rooted in robust analysis from both consultants and the City itself, and created in partnership with developers of market rate housing to provide flexibility to help them achieve feasibility. We call on the Council to preserve this legacy of leadership on inclusionary housing.