On January 26th the City of San Jose released the results of its 2023 affordable housing funding cycle.  Due to limited funding availability, stemming partially from redirecting housing production funds to Emergency Interim Shelters, only four of the 17 applications received in response to last year’s Notice of Funding Availability (NOFA) will receive city funding. The awards will support 338 new homes in San José. The unfunded projects, which proposed over 1,500 additional units, will be “waitlisted” for future funding rounds.  

The City’s NOFA, released on October 10, 2023, emphasized the need for housing to address the needs of those most likely to face displacement and homelessness. Forty percent of the funding was set aside for extremely low-income (ELI) individuals and families. The majority of the funding came from the receipts of the Measure E real estate transfer tax supported by voters in 2020, but the NOFA leveraged additional pools including the Low and Moderate Income Housing Asset Fund, Affordable Housing Impact Fees, Inclusionary Housing Ordinance In-Lieu Fees, and federal HOME funds, for a total of $50 million. The 2022 NOFA committed over $145 million to 11 developments.

Project Specifics:

The following projects and developers were chosen for funding under the New Construction NOFA in San José:

The average city award was $148,000 per unit, with each city dollar leveraging an additional four dollars from Federal, State, and private sources.  Across the four funded projects, the average total cost per unit will be $861,000, significantly below the $1 million per unit often held up by opponents of affordable housing.  The new homes will be offered in a mix of sizes – from studios to three-bedroom family units – and will provide opportunities for formerly unhoused people, struggling families, and seniors, among others.

The awarded projects include Vista Montana, which began with a proactive land purchase directly by the Housing Department and will be the first affordable project built in North San Jose in over a decade.  The list also includes Santa Teresa, one of the few affordable projects that have made it through in South San Jose’s council District 10.

Acknowledging the Need for Further Support:

The city awards will allow the project developers to submit applications for Federal and State tax credits and bonds and to apply for several additional targeted state funding sources.  While the city commitment is only the first step in this process, in 2023 we saw the groundbreaking for the first projects funded through Measure E in 2021. 

The 14 “waitlisted” projects requested an additional $207,500,000 to develop over 1,527 homes. As a city and a county, we must confront this shortfall head-on. The disparity between awarded and unawarded projects underscores the urgency of advocating for increased funding and resources at the city and regional levels. This process begins with Budget negotiations, which began last week in San Jose.  Without a clear commitment by the city to continue to fund affordable housing many of these “waitlisted” projects will necessarily be abandoned – it is tremendously difficult to build housing affordable to lower-income people without a local commitment of funds.  

We will have an additional opportunity to fill this gap in November when the Bay Area Housing Finance Authority is expected to put a regional bond measure on the ballot in all nine Bay Area counties with the potential to raise $10-20 billion in total with San Jose receiving $1-2.2 billion directly. By mobilizing support and leveraging partnerships, we can bridge the gap and ensure all residents can access safe, stable, affordable housing options.