On September 24th and November 5th, the City will take action on a number of important housing issues, many of which are interconnected. SV@Home believes that the package of related items provides an opportunity for serious thinking: What can we do now to respond to challenges we face, and If we need to make compromises or adjustments, how are we going to compensate to stay on track to meet affordable housing needs in the future? Included on the agenda for the November 5th meeting are a number of important issues:
Cost of Development Study Session: Market Rate and Affordable – The Council will hold a broad Cost of Development Study Session for both market rate and affordable development. With recent increases in land, materials, and labor costs, developers are facing significant challenges in getting their projects to pencil given the rents they can now achieve in today’s market. We know that taxes and impact fees are also a cost factor, and while we understand that inclusionary Housing requirements are included in this bucket of costs, they are a critical component of the City’s affordable housing toolkit. The Council will consider these two items as well (see below).
SV@Home believes that the Council should take a closer look at all costs related to development to see where adjustments can be made to reduce development costs. In no case should affordable housing be disproportionately impacted by any decisions to cut costs or requirements. We urge the council to consider actions that streamline the development process, allow residential development in more places, and allow development to move forward now without requirements for other development—commercial and retail space—to begin first. Other changes, including the timing of payment of fees should be considered. We also will urge the council to make it easier to build more affordable housing through by-right approval processes, waiving or lowering fees for affordable projects, and making more surplus and underutilized land available for affordable housing development. Prior to the meeting on the 24th, SV@Home will have a complete set of recommendations to reduce development costs while preserving affordable housing tools.
Development Fee Framework: In a follow-up to the Cost of Development study session, and as a run up to the later discussion on possible reforms to the Inclusionary Housing Ordinance for affordable housing, council is expected to discuss ways of streamline the existing framework for development fees. While the focus of these discussions will likely be on making the process of calculating and paying fees more transparent and efficient, this is also an opportunity to look at ways that fee waivers and reductions can be used to support affordable housing development specifically. Consolidating fees is a good idea that could spur development by increasing certainty, saving time and money.
Inclusionary Housing Framework – IHO policy reforms: The study sessions and broader fee discussions earlier in the day will come to a head as council considers major reforms to the Inclusionary Housing Ordinance (IHO)– a central component of how we build and fund affordable housing in the city. We expect proposals to overhaul the existing program to provide greater flexibility for developers, and create additional incentives to integrate affordable units into the new developments rather than pay fees. We also expect a difficult discussion about proposals to suspend or reduce the IHO in light of the current cost challenges facing market rate development. While we recognize that high cost of residential development is a major problem in San Jose, and if there is no construction there are no integrated affordable homes of fees for affordable development, we also know that new luxury market rate development will not address our lack of affordable housing as intended by the IHO. Council will need to find the right balance that optimizes the resources for affordable development, and looks at other cost savings that could offset the need to reduce the benefits of the IHO. This will be a difficult discussion.
SV@Home will be putting together a coalition of local organizations to make sure that affordable housing resources are maximized through these reforms.
Ellis Act : The Ellis Act is the part of the relatively new Tenant Protection Ordinance that creates the framework for what to do when property owners choose to redevelop apartments that are currently rent stabilized. After concerns were raised by some City Council members about the ordinance’s potential to unreasonably deter high-density, in-fill redevelopment, staff was directed to bring back potential reforms. The staff proposals under discussion are likely to propose a range of options that either incentivize development of affordable inclusionary units on-site, provide displaced households with a right to return at close to the original rents, or require much higher residential density with traditional inclusionary requirements. In return, property owners will be given more flexibility in how many of the new units will continue to have restrictions on allowable rent increases. SV@Home supports restrictions on rent increases as an important tool to protect tenants and preserve naturally affordable housing. We support strong Ellis Act policies that maximize the number of units affordable to low- and moderate-income households to enable families of all incomes to remain in our communities. When redevelopment happens, we believe the City should have a goal of replacing rent-stabilized units with income-restricted units, ideally on a one-for-one basis.
To see learn more visit our Top Topics “San Jose: Stand Up for Housing” page.