We Pay Twice for Affordable Housing

In past blogs I have expressed my concern about the cost to our city of too much housing. Specifically, housing that does not pay its own share of revenue. One example I have pointed out—and constantly been the lone vote against—is affordable housing.

We run the daily operations of our city with tax revenue. The city does not write paychecks signed “goodwill” or “number-one provider of affordable housing,” but rather with dollars backed by tax revenues. So when we add to the housing stock by approving, for example, an affordable housing project that does not pay property tax, road-paving fees and only 50 percent of park fees, it is a net loss for our city. Therefore existing residents subsidize city services for the new residents.

Annual property taxes in San Jose are needed to pay ongoing salaries and benefits of employees. Road-paving fees go towards paving streets in San Jose. If you ride a bicycle or drive a car you know that we need every dollar. Park fees allow for new parks or increasing the size of current parks so we do not wear out the existing park infrastructure in established neighborhoods.  For years developers were exempted from paying park fees for affordable housing projects which created more residents but not enough open space. However last year with the support of the city council I managed to get it changed to where developers must now pay half the park fees that market-rate housing pays. 

The other item of interest is that affordable housing generates extraordinary calls for service from our police.  Attached is a snapshot of data for eight affordable housing developments in San Jose and the calls for police service. Since there are more calls for service around these affordable housing projects, over time our police department may schedule more police in this area to manage those calls. This may translate to less police coverage in other areas of San Jose, perhaps where you live.  In addition, our fire department receives more medical-related calls, and again there’s no tax revenue to pay for the employees.

So we pay twice. Once, by exempting taxes and fees. Twice, by higher use of city services than existing residents. (Also, most of these projects were financed with RDA funds, and the State of California mandates that 20 percent of that money be spent on affordable housing. And many of these projects were put in places zoned for jobs and not housing.)

Out of the many suggestions I have made on this topic I believe affordable housing developments that have too many calls for service should hire an off-duty officer and/or ambulance to be there on site.

Here is a link to 730 police calls on eight housing developments, among some 11,000 units built. 

On another topic, one of my favorite Downtown events starts Tuesday night, The Cinequest Film Festival. Check it out at Cinequest.org.

Related to cinema I obtained a documentary film about urban parks directly from the filmmaker called The Olmstead Legacy.  Monday, March 7 at 6:30PM will be the premiere showing in San Jose at City Hall. Find out more about The Olmstead Legacy here. The film will be followed by a discussion on urban parks. The event is near capacity; please email me if you want to reserve one of the remaining seats at [email protected]

Finally, the bipartisan Little Hoover Commission, an independent state oversight agency, made its recommendation to Governor Brown about pensions last week:

Read the Feb. 24, 2011 Little Hoover Commission Report here.

25 Comments

  1. Heaven forbid Mayor Reed and the council treat their “big developer” friends the way they treat City Employees – employees who invest 20-30 years of their lives in this city and expect decent working conditions, a decent wage and the retirements they negotiated with the City for. 

    No I’ll do your dirty work Chuck/Peirluigi….

    THESE DEVELOPERS HAVE BEEN ON THE GRAVY TRAIN FOR TOO LONG!!! ITS TIME TO CUT OUT THESE CANCERS! THEY NEED TO PAY THEIR FAIR SHARE…

    Of course we wouldn’t need so much “affordable housing” if we weren’t a defacto “sanctuary city ” for illegals…

    Hey how about the three officers injured last thrusday night when the drunk/coked-out mexican national crashed his suv into a crime scene where a homeless man was shot??? How many times should that “driver” have had a car towed for being unlicensed? How many times did he have his car released the next day – because it was an economic burden to him and his family???

    How much will the city be on the hook for because that drive never had, doesn’t have and never will have insurance???

    • It shold come as no surprise to anyone that a councilmember who will sell out to one special interest group- public employees for instance, will also sell out to the affordable housing lobby, the developer lobby, the big business lobby, the illegal alien lobby, etc. etc. You city employees who have faithfully voted for politicians because they promised to give you the biggest benefit packages can thank yourselves for inflicting a long parade of fiscally irresponsible elected officials who have relentlessly ground this city into the dust.

      That said. YES, Pierluigi. Enough with the affordable housing already!

  2. Don’t some taxpayers pay thrice in that the lowered cost of affordable housing is, in part, offset by a higher purchase price for those interested in/eligible for a ‘market rate’ home? My understanding is that the city subsidizes some of the cost and purchases of non0-BMR homes pick up the rest. Lastly, with the cutbacks of public safety, and the excess of new construction inventory (i.e. the downtown high-rises which weren’t selling) why is the city approving any new construction at all? Doesn’t excess inventory deflate purchase prices and, therefore, property tax revenues?

  3. Pier, with Gov. Brown’s initiative, let’s hope that the RDA “rides off into the sunset” this year. In addition to all of the obvious financial benefits, that will also have the effect of killing future affordable housing projects, which we can ill afford.

    By the way, some folks here on SJI have discussed the fact that the General Fund is only 25% of the overall budget.  In examining the Capital and Special Funds, it appears that about 3/4 of a billion dollars goes directly to the airport.  My gosh, were it up to me, I’d close the damn thing down entirely!  What possible financial goodness comes from the airport?

    Likewise, in those two funds (which I’m sure cannot be used for anything else… yeah right… change the charter so it can be!) there are a number of multi-million dollar expenses that we could easily do without.  I truly think the Mayor and Council need to get more creative in unlocking the vast source of riches fenced into those two funds.

      • Oh how responsible of you to strickly enforce the laws!  Funny how your not that concerned of enforcing federal laws like Marijuana laws, Illegal imigration laws and theft laws! Since when do you get to pick and choose which laws you want to enforce! Since you and Chuck love to bring things to the voters, why don’t you draft a new prop to bring to the voters so that more money can go into the general fund. That would be a sure victory! But Im sure you will come up with some excuse and say its not possible.

      • That’s what I thought you’d say.  Then I say this, “immediately stop dumping 75% of our City budget into funds other than the general fund!”  How complicated is that?!?! 

        Get rid of damn airport that sucks up a full 25% of our budget.  What financial purpose does it serve?  It appears to me that our Mayor and Councilmembers are too short-sighted and intransigent to move off the dime and make something happen.

        • What’s this?!  Greg and I are actually in complete agreement?  What the hell is this world coming to!  This would solve our city and airport woes in a heartbeat (well, a twenty year long heartbeat that is):

          http://www.thesanjoseblog.com/2010/03/sjc-hypothetical-question.html

          Talk about increasing the city’s tax base, land-bank coffers and heights of downtown high-rises in a single swoop!  I know; this has nothing to do with affordable housing in the city.  Sorry for going off topic all.

        • I argued that when The City had to pay the State the SERAF payment for RDA,  that instead of borrowing money from other city funds that we instead pay with affordable housing funds as allowed by Governor Arnold. I was the lone voice.

  4. Good point, I can tell you that each time I go to the grocery store in East San Jose, I see all the people in front of me give the cash register a “food stamp” card and they pay nothing. Then I see them getting into their $40,000 SUV with custom wheels and paint jobs. I don’t think these people pay taxes because they are “undocumented workers.” The last time i went to the store, a lady bought her groceries with this “magic card” then went directly to the Lottery vending machine and began to pump $20 bills into it. It must be nice to gamble on the taxpayers dime!

  5. PLO,
    Property taxes aren’t a huge source of revenue to the City, only about 12% of what we pay in our property tax bill actually goes to the City, and we can barely take care of the existing parks, so missing park fees just keep us from building more facilities then we can afford to maintain.  The real problem in San Jose is all types of housing.  None of it pays its own way, and building any more while we have so few jobs is criminal.  Every new house you and the Council approve, typically the vote is unanimous, takes services away from me and my neighbors.  We arent hiring any more cops, firefighters, or librarians, so that means existing residents have to share what few there are with all of the new residents.  Why don’t you do something bold and tie new housing to new jobs?  If your Developer buddies want to build more houses in San Jose, then have them help you bring more jobs to San Jose.

    • Property taxes are by far the number one revenue for the City of San Jose. That 12% adds up.

      I voted for less housing and more jobs on the General Plan 2040 Task Force. Unfortunately, there were not enough votes.

      • The General Plan is a farce.  If all you ever do is approve housing projects on any given Tuesday, does it really matter how many jobs are proposed in the General Plan?  Don’t approve any more housing until we have more jobs in this city!!!  You are just ‘kicking the can’ with every new housing development and diluting our services.

        • You are preaching to the choir. Pierluigi as been the lone responsible voice advocating NOT rezoning from industrial to residential. Unfortunately, his cohorts outvote him every time.
          But that doesn’t matter to our city employees. To them, The ONLY issue on which councilmembers should be judged is whether or not they will keep approving lottery jackpot-sized payouts to retired employees.

  6. PO,
    As per my conversations with you, I too believe the City allows too many special interest groups to get a way with getting a profit while sticking we tax payers with the bill. You can do as many surveys as you wish, and tout studies, and post reports on your blogs, but the real truth is, NO ONE has ever done a complete study or audit on how you electeds wastefully spend our tax dollars! If said study or audit were done, you’d be standing there with mud on your face. (You can start with a 50 thousand dollar gym built in the basement of City Hall done with money from concessions by employees!)

    The truth is that you ELECTEDS, not employees make spending decisions for we tax payers. Even when we tell you what we want done and what our priorities should be, you ignore us. All of your and the City’s surveys are controlled and are muddied by media reports long before they are conducted.

    Our Governor has finally pulled up your skirt and exposed the legal ways you have gotten a way with robbing our public servant’s pockets, and you and others don’t like it one bit. Hopefully, the truth will come out and voters will start holding you accountable for it.

    • > The truth is that you ELECTEDS, not employees make spending decisions for we tax payers.

      Well, . . . um . . . isn’t that the way it’s SUPPOSED to work in a representative constitutional system?

      You would rather have NON-ELECTED city employees making spending decisions for tax payers?

      Include me out.

  7. As I understand it, property that the City of San Jose owns is not taxed – parks, libraries, fire stations, both City Halls, Convention Center, the Arena, etc. 

    So are the other City-held properties also exempt from paying property taxes?  Many are City/private partnerships where the City owns the land and private developers have built buildings atop of them.  Specifically, I’m thinking about the hotels, downtown Retail Pavilion, City-owned parking lots, land-banked Stadium properties, and all other City/RDA-owned properties.  And if these properties are not fully taxed, what sort of loss has this caused for the City, County, schools, and General Fund?

    PO, Is there a list of City-owned properties that we can view?  Perhaps more can be done to get them contributing to our dwindling tax base as well!
    Thanks.

  8. Thank god our city council is realizing this! We cannot afford it anymore….PLO, please promise us you will fight for a change and open Mayor Reed’s eyes on this issue. Thanks

    Mickey Tyrone

    North San Jose Resident

  9. Pierluigi has finally identified the main problem with affordable housing: it attracts crime. Too often low income housing not only supports those with low incomes, it supports their crack addled family members, gang bangers, drug fiends and a host of other low lifes. Whenever government gets involved in social engineering, it typically fails. How much money was spent in an attempt to integrate neighborhoods? Low income housing was such an attempt. Instead people will continue to self-segregate and move into neighborhoods that they feel comfortable in. This includes neighborhoods that share a common income class, language or even culture. How else to explain the large Hispanic groups in East SJ, Chinese in Cupertino, East Indians in Sunnyvale and Fremont, Afghans in Fremont, Filipinos in Milpitas, etc.

    Besides ending the funding of low income housing and forcing developers to include them in their developments, it is time to end the public feeding troughs funded by grants. San Jose does not need to fund race based special interest groups. It needs to end the practice of each community center run by special interest groups that turn them into little fiefdoms. San Jose needs to quit wasting grant money to satisfy small segments of the community that wield a disproportionate amount of influence. Time to stand back and evaluate each and every dollar spent by the city and determine if it satisfies the core services required by the city to provide. If not, then eliminate that funding and lay off the employees that were employed to cater to those groups.

  10. “Our Governor has finally pulled up your skirt and exposed the legal ways you have gotten a way with robbing our public servant’s pockets, and you and others don’t like it one bit. Hopefully, the truth will come out and voters will start holding you accountable for it.”

    Tell it like it is!

  11. Pierluigi,

    The amount of police calls at these projects is shocking. Thanks for sharing and covering different topics on this site.

    • Carol,

      Multiple police officers have told me that there are higher calls for service so I thought sharing some of the actual call for service would be informative.

  12. Keep up good work PO getting Council and City Hall management to be open and honest or at least stiop lying about where our taxes are going and how City Council politics, paybacks, sweetheart deals, polices and votes – not city employees – got San Jose into this budget mess

    It is awful to blame most city employees for budget mess when they did a good jobs and followed City Council and management’s bad direction

  13. The Commission acknowledges the significant challenges to modifying pension benefits
    for current workers. Nonetheless, the Governor and Legislature should set uniform
    standards for the 85 defined-benefit pension plans in California, including:

    - A cap in the $80,000 – $90,000 range of the maximum salary that could be
    used to calculate pension benefits.
    – Eligibility ages for pension benefits that do not encourage early retirement.
    – A requirement that employees and employers share the normal costs of
    funding their pension plans.
    – Clear definitions of final compensation to prevent “spiking.”
    – A prohibition against contribution “holidays” when employers do not pay into
    the funds.
    – A ban on retroactive pension increases.
    – Steps to improve accountability and transparency

    The Little Hoover Commission is a bipartisan and independent state agency charged with recommending ways to increase the efficiency and effectiveness of state programs.

    Wow – finally a bipartisan and independent California State Commission that makes some great common sense pension recommendations

    Now will Gov Brown and Legislature enact pension reforms

    If not, time for California Pension Proposition