Welcome to SV@Home’s Policy Rundown, your need-to-know overview of important housing policy actions and developments from the past two weeks.

San José General Plan Four-Year Review Task Force – Big win for housing at Diridon ahead of SJ Council study session next week

At last week’s meeting of the San Jose General Plan Four-Year Review Task Force, members voted nearly unanimously to endorse the City’s proposal to rezone Coyote Valley agricultural land to preserve it as open space. This vote was a critical step in a years-long campaign led by environmental groups and supported by community and housing organizations. We are proud to have endorsed this campaign early, and believe that the city should grow by filling-in rather than sprawling out.

SV@Home’s main focus for this meeting was to ensure that the Diridon Station Area and Google’s Downtown West development had enough official capacity to build the remaining homes necessary to meet our goal of 15,000. This has been a long effort on our part, to expand the vision of the city to incorporate lots of housing, 25% of which are affordable, into the Station Area as it emerges as the major transit and jobs center in the City.  As recently as 18 months ago our initial call for 10,000 additional homes was considered audacious and received by many with skepticism. As it became clear that major residential development plans were already in the works for the area, we elevated our target to 15,000 units, including the nearly 2,400 homes recently built or entitled. We commend city staff for embracing the vision and the planning work required to make that vision possible.  Staff’s recommendation to add an additional 12,619 units of residential capacity downtown was approved unanimously by the Task Force.

This is not the end of our campaign. Some of the neighborhood groups on the task force are calling for significant reductions in allowable heights at the southern end of the Station Area. The current plan for the area already includes significant height reductions adjacent to residential neighborhoods. Building enough new homes to balance the potential 40-50,000 new jobs in the area, and ensure a dynamic urban center that is active 18 hours a day rather than 9-5, will require optimizing the use of the available land.  City staff estimated that the height reductions would reduce potential residential development by as many as 600 units. See below for more information about this week’s Diridon Station Area Advisory Group (SAAG) meeting.

The next step for Diridon Station Area planning will be a Study Session for the City Council next Monday, November 16, at 1:00. (Meeting material have not yet been posted, but the meeting should use the standard video access channel for Council meetings.)  We urge supporters of affordable housing, dynamic mixed-use neighborhoods, and densities that rise to the full potential of a major transit center, to tune in and support the vision.  Details of Google’s current plans for Downtown West in the station areas can be found here, and the city’s draft plan for the remainder of the Station Area can be found here.

Housing Day at SJ City Council – November 10th, 2020

It was a really full day of housing activity in San José. Although many of the items were updates or status reports, coming all together they addressed many of the central policy issues in the works.  Here’s our take on the highlights.

REGIONAL HOUSING NEEDS ALLOCATION – SAN JOSÉ IS READY TO LEAN IN AND DO THE WORK

The council session housing items began with a report on the status of the upcoming Regional Housing Needs Allocation (RHNA) process.  The staff presentation confirmed that that in the next RHNA cycle (2023-31), San Jose and neighboring cities will need to plan for significant increases in the number of affordable and market-rate homes as they draft their Housing Elements. San Jose is expecting an allocation of well over 66,000 new homes, compared to 35,000 in the last cycle, with nearly 26,000 of them affordable to lower income households. (For more on this process check out the RHNA rundown on our website.)

While the staff report focused on the proposed regional process and methodology for distributing the obligation for needed housing to local jurisdictions, the looming question was how the city would plan for these much needed units, and the challenges of meeting the targets for affordable homes given the city’s history of falling far short. San José staff clearly believe they are up to the challenge.

Importantly, the planning staff discussed its ongoing conversations with the County to absorb a portion of the potential 4,100-unit allocation for unincorporated County land.  San José has been the leader in the County to protect open space on county lands, and is committing to accommodating as many as 2,240 units of the County’s growth allocation within the current development footprint in the valley. It isn’t clear that other cities are eager to play their part, as many North and West County jurisdictions have chosen to push back against their own allocations, and there may be little political will to absorb their share of the County’s allocation.

HOUSING CRISIS WORKPLAN: PROGRESS AND CHALENGES

San Jose’s City Council revisited the Housing Crisis Workplan on Tuesday to get an update on progress to date. In the fall of 2017, Mayor Liccardo issued a call for the construction of 15,000 new market rate housing units and an additional 10,000 affordable homes by 2023, and new commitment to adopt a range of policies to spur development in response to the growing crisis in the city. In response, the Council approved the Housing Crisis Workplan in June of 2018– an interdepartmental plan of over 30 proposed policy changes and work item. (The workplan has now grown to 36 items broken out by completed projects, those that remain in process, and others where work has yet to be initiated.)

Over the last two years, significant progress has been made on many of the workplan items including: work to support production of Accessory Dwelling Units, adoption of a Commercial Linkage Fee for affordable housing, developing an anti-displacement strategy, identifying and building out interim housing sites, and efforts to open up Urban Villages for residential development. Nonetheless, there is much left to do.

SV@Home submitted comments raising concerns about a number of key policy areas where we felt the original goals were being lost in the process. We were pleased that our top concern– ensuring that housing and affordable requirements continued to be a priority in North San Jose — was supported in a memo from the Mayor, and received staff support during the discussion. Other items we raised, including eliminating the tremendous challenges affordable housing developers face when required to integrate ground floor retail, will return to council in the summer as part of the recommendations from the General Plan Four-Year Review Task Force.

AFFORDABLE HOUSING INVESTMENT PLAN – SOME MOMENTUM, BUT A LONG WAY FROM OUR GOALS

Progress on the annual Affordable Housing Investment Plan (AHIP) has been sobering over the last few years. San José’s goal of building or entitling at least 10,000 new affordable homes has been limited mostly by a lack of resources, a shortfall consistently estimated at about $500 million. This year, new resources from both Measure E and fees generated by the City’s recently approved Commercial Impact/Linkage Fee are expected to help address the need. As a result, the AHIP showed higher projections of future projects than in past updates. Other good news for the evening was that the dramatic increase in ADU construction, forecasted at over 1,000 new units by 2023, has made unsubsidized residential construction a significant part of the progress towards the 10,000 home goal by 2023, though these new homes are not income restricted.

MEASURE E EXPENDITURE PLAN  – CRITICAL RESOURCES AT A CHALLENGING TIME

The Measure E Expenditure Plan went through its first formal approval of actual funds. This was an exciting moment for SV@Home, and the many supporters who worked to pass Measure E in March. Despite the pandemic-related economic downturn, the new Measure E transfer tax, in effect since July, is on track to generate $30 million for affordable housing this fiscal year.

Perhaps the most important discussion of the evening centered around the anticipated impact of the health and economic effects of the pandemic, which have yet to be fully felt, particularly with the expiration of foreclosure moratoria at the end of 2020.  Citing the potential social and economic impact and likely displacement, the Council discussed the need to make this issue front and center moving forward. With concerns that the divided government in Washington won’t move quickly to pass a massive rent-relief stimulus, the Council agreed that Measure E funds may need to be redirected in the future as the scope of the challenge becomes more clear.  Staff assured council that they were tracking these issues extremely closely and would return to the Council before the first of the year with an update. Mayor Liccardo acknowledged that even a major infusion of city funds would fall short of meeting the need, and voiced support for more creative solutions that would help tenants and landlords come to reasonable agreements given the potential for other outcomes that would cause greater hardship to both sides.  This will be an active discussion over the coming months and SV@Home has committed to working throughout the county to best mitigate the impact.

CHANGES TO HOW AND WHERE AFFORDABLE HOUSING GETS BUILT IN SAN JOSÉ

• San José Housing Department staff brought forward new Multifamily Underwriting Guidelines, which provide clarity to affordable housing developers who are applying for funding from the city. Approval of these new guidelines has been a high priority for staff as they prepare to issue the first call for new projects (called a Notice of Funding Available or NOFA) in more than two years. SV@Home has concerns that the new guidelines may constrain some project operations and refinancing for rehabilitation. Staff committed to coming back with an assessment within the next year and that they could address the challenges of individual projects if developers could demonstrate the need for additional flexibility.
• Staff provided the Council with an update on the Affordable Housing Siting Policy, which will determine the criteria for placement of new affordable homes throughout the city. The Housing Department has contracted with a research team from the California Housing Partnership Corporation and Berkeley’s Othering and Belonging Institute, which presented an initial analysis of where affordable housing has historically been built in San Jose. The intent of this effort, expected to be a multi-stage process, is to develop a better understanding of how affordable housing development can support the stability of some communities, and what policies might be needed to ensure that affordable developments are also located in areas throughout the city where economic and educational resources can create additional advantages to the residents.  SV@Home is strongly supportive of this effort and the goals of expanding opportunity. The challenges we see ahead are that neighborhood resistance often increases where resources are the greatest, and it will take both community will and political courage to ensure that this new policy doesn’t result in significant additional hurdles to developing the affordable homes San Jose so desperately needs.  See SV@Home’s joint letter with our partner Destination: Home here.

MORE SILICON VALLEY HOUSING NEWS

Diridon Station Area Advisory Group (SAAG) Update

On Monday, the City of San José convened the latest meeting of the Station Area Advisory Group (SAAG), which is charged with providing community input on planning and development in the Diridon Station Area. In recent weeks, the city has released a number of important documents related to the Station Area, including the draft Diridon Station Area Plan Amendments and, as of this week, the draft Affordable Housing Implementation Plan. SV@Home is just beginning to analyze the City’s approach to affordable housing in the Area, and we’re pleased to see a comprehensive 3Ps (production, preservation, protection) approach that aims to achieve the City Council’s overall 25% affordability requirement.

While we believe that the city is generally on track to achieve its vision of a vibrant, walkable mixed-use neighborhood with significant housing and jobs, all connected to the most important transit hub in the region, there are still several outstanding issues that could undermine this goal. Most importantly, some groups are challenging proposed building heights in the Station Area that threaten to chip away at total residential capacity.

SV@Home estimates that in order to reach the city’s housing goals for Diridon (being studied at around 13,000 new homes, which, alongside the nearly 2,400 homes recently built or entitled in the Area, puts the City at our goal of 15,000 new homes throughout the DSAP), roughly 75% of these new homes will need to be achieved through high rise construction. Given the economic feasibility challenges inherent to this type of construction, any premature reductions of allowable building heights in the key residential districts, namely the southern portion of the Station Area, would have the effect of constraining housing potential. With the major job growth anticipated at Diridon, any further cuts to housing in the Station Area will only shift housing affordability pressure to other parts of the city. Given the major investments San José has already made in the Station Area and intends to continue making, the City must take full advantage of providing access to this key neighborhood of Downtown San José for people of all incomes and abilities. Reductions in potential housing capacity in the Station Area wouldn’t just signal a loss of market-rate homes, they would also severely undercut potential for more affordable housing in a vibrant, well-resourced district.

SV@Home urges the city to avoid any further height reductions, especially in the parts of the Station Area that are targeted for significant residential development. We cannot reach our housing goals and provide the connected affordable housing opportunities if we constrain ourselves. San José must continue to think big and plan inclusively if it wants to build a future for residents of all incomes, backgrounds, and abilities.

Milpitas Project Home Key update

We previously reported that the Milpitas City Council had voted unanimously to bring suit against Santa Clara County and the State of California following public backlash over a State Project Homekey award to convert a local hotel into 132 units of permanent supportive housing.  We are pleased to report that on Wednesday, November 4th, the Council reversed course, acting on a split vote in closed session, voting to drop the threat of litigation and reach out to the County about ways of reopening communication. The action came after Governor Newsom condemned the action and the Law Foundation of Silicon Valley submitted a stern letter outlining the potential violations of fair housing laws stemming from the council’s rationale behind the project’s rejection.

This was not a shining moment for Milpitas. The project, sponsored by the affordable developer Jamboree and the County’s Office of Supportive Housing, will create permanent resources to address the needs of unhoused residents and bring tens of millions of State and County funds into the city. The good news is that the Council is now looking to reengage with the County and Destination: Home to join the Community Plan to End Homelessness effort as an active partner to improve outreach to unhoused residents of the City and access additional supportive resources. Milpitas has historically not been well integrated into the County system and this should be a good opportunity for better coordination. Unfortunately, a local citizens’ effort to launch a suit to stop the project may still be moving forward.  While we are pleased the much needed supportive housing will move forward, the events of the last few weeks in Milpitas show how far we have to go to overcome the stigma and community resistance to housing solutions throughout Santa Clara County.

VTA Service Reductions Impact Affordable Housing Residents and Developments

This month, the Valley Transportation Authority (VTA) Advisory and Standing Committees are holding a series of meetings on proposed service reductions in response to the economic impact of COVID-19. The VTA Board will hold its final vote on any service reductions at its December 3rd meeting.

SV@Home has assembled a coalition of 19 affordable housing developers and organizations to share our concerns that proposed VTA service reductions will have serious negative impacts on residents of affordable housing and our ability to produce more affordable housing opportunities County-wide. We have submitted a letter calling on the Board to do its utmost to mitigate the reduction impacts (by aiming for the 90% service level) and including explicit language indicating that these are temporary cuts in response to COVID-19 that will be restored in the future.

Reductions to public transit services will disproportionately impact lower income workers across Santa Clara County. It is crucial that the VTA Board do everything within its power — including redirecting Measure A Caltrain subsidies, utilizing remaining Federal CARES Act funds, and front loading Measure B funds dedicated to the transit network — in order to mitigate the worst levels of service reduction and maintain service levels at the 90% option, at a minimum.

Sustained service reductions will have long-term effects on policies to incentivize affordable housing development that is accessible to transit. Proximity to high frequency bus and rail transit has become a key factor in competitive State affordable housing finance programs, density bonus programs, and affordable housing tax credits. Regionally, MTC planning grants tied to high frequency transit are essential to local planning processes that allow jurisdictions to prioritize affordable housing as part of their efforts to promote equitable and sustainable development.

Even if the VTA Board approves the 90% service level option, affordable housing development proposals that are making use of transit-oriented development incentives will be in jeopardy. While there is some indication that the State of California will permit some flexibility in these areas to account for COVID-specific service disruptions, it is imperative that the Board explicitly clarify that the proposed service reductions are temporary and will be restored after the end of the pandemic. This will provide assurances to the state and assist affordable housing developers working to ensure critical affordable housing projects continue to move forward.

The Turnout4Transit campaign has more information about the proposed service reductions and how to take action on its website.