The San Jose City Council rejected "commercial linkage" fees by a 5-5 vote June 12 when it was considering ways to meet Mayor Sam Liccardo’s stated goal of producing 25,000 new housing units by the time he leaves office in 2022.
June 30, 2018

Silicon Valley Business Journal: Grand jury—San Jose, surrounding cities should levy new commercial development fees to subsidize housing


SV@Home Executive Director Leslye Corsiglia expresses disappointment at San Jose’s failure to adopt a commercial linkage fee associated with housing development in a story by Silicon Valley Business Journal reporter Jody Meacham.

See the original story at Silicon Valley Business Journal.

Grand jury: San Jose, surrounding cities should levy new commercial development fees to subsidize housing 

By Jody Meacham

A new report from the Santa Clara County civil grand jury calls for numerous steps to address the county’s affordable housing crisis, including the enactment of “commercial linkage fees” to help fund it.

The grand jury says the use of such fees, which are charged to new commercial developments to subsidize below market-rate (BMR) housing, “is overdue and could be expected to substantially increase BMR units” in San Jose, Campbell, Milpitas, Los Gatos and Los Altos. It recommends those cities enact fees by June 2019.

The San Jose City Council rejected fees by a 5-5 vote June 12 when it was considering ways to meet Mayor Sam Liccardo’s stated goal of producing 25,000 new housing units by the time he leaves office in 2022.

Liccardo was among the “no” votes on the fees, saying they would discourage the kind of business development the city is trying to encourage to add jobs at an even faster rate than it wants to increase housing.

“We’re not a city overrun by job expansion,” he said at the time.

Liccardo is on vacation in Mexico and could not be reached for comment on the grand jury report. However, city spokeswoman Rosario Neaves said the City Council is aware of the report and its obligation is to respond within 90 days.

“We’re thankful to the Civil Grand Jury of Santa Clara County for studying this pressing issue in our region — it certainly demonstrates how important affordable housing is to our community and the impact it’s having on San Jose residents,” she said in an emailed statement. “Many of the recommendations the grand jury has identified are solutions we are addressing in San Jose, including developing a plan to add more affordable homes.”

Only Cupertino, Mountain View, Palo Alto, Santa Clara and Sunnyvale charge commercial linkage fees among Santa Clara County municipalities, according to SV@Home, the San Jose-based affordable housing advocacy nonprofit.

“We’ve been really pushing Sam hard … to adopt a commercial linkage fee for San Jose,” Leslye Corsiglia, SV@Home’s executive director, told the Business Journal in a recent interview.

“Clearly, the reason is he’s very concerned that he feels like they’re fragile as far as commercial development is concerned, that most of the development has really wanted to be in the Palo Alto, Mountain View, Sunnyvale area. … The reality is that commercial developers are now seeing San Jose as the place to develop, that it has moved down from Palo Alto.”

City Councilmember Sergio Jimenez, who voted for the fees, questioned the assumption that San Jose is viewed as an undesirable location for high-employment businesses, specifically citing last year’s announcement by Google that wants to develop a downtown San Jose urban campus of 6 million to 8 million square feet for as many as 20,000 workers.

“I haven’t seen any studies that directly depict a direct correlation between impact fees and businesses not coming to our city,” Jimenez said in an interview following the City Council vote. “I just think that we, as a city, need to value what we bring to these employers that are potentially going to relocate here.”

The issue of charging large tech companies fees or taxes to address issues such as housing and transportation has most recently been discussed in Mountain View, site of Google’s headquarters, and Cupertino, home to Apple. Their city councils are working on restructuring their business taxes on the largest corporations in town and some of the opposition has been based on the ease with which companies might move to San Jose, where commercial rents are lower. The Mountain View tax proposal, which would raise more than $3 million per year from Google alone, is headed to the November ballot.

For his part, Liccardo is advocating a regional solution, which would require enabling legislation at the state level, to enact fees across the nine-county Bay Area that would make it more difficult for cities to bid against one another for jobs and more equally share the costs of housing and transportation.