Council Takes on Annual Housing Report, Samsung Incentives

The dissolution of redevelopment agencies and state budget cuts to municipal housing funds have made it tougher for San Jose to meet its goal of building more affordable homes in recent years, according to an annual housing report going before the City Council on Tuesday.

Meanwhile, San Jose rents jumped nearly 8 percent last year, making it the second-most robust rental market in the nation, behind San Francisco, the city says.  The average rent here is somewhere in the neighborhood of $1,800, which means by the 30-percent income standard, a San Jose resident would have to make more than $65,000 to feasibly afford to live here.

All but affluent homeowners face the same challenges. To buy a home in San Jose, you’d have to make at least $140,000 a year to afford the median house price of $584,500, the city says. That’s 82 percent higher than the city’s median household income of $77,000, according to the U.S. Census Bureau’s 2011 American Community Survey. How depressing.

A regional oversight board called the Association of Bay Area Governments comes up with the number of housing units each jurisdiction in the nine-county Bay Area has to build in a given timeframe. The idea is to accommodate projected population growth—a huge priority for immigrant-rich communities like Silicon Valley.

The last count came out in 2007 and required San Jose to build nearly 35,000 homes by 2014. So far, the city’s built 35 percent of that target, leaving it a year-and-a-half to build the remaining 65 percent, or about 22,000 housing units. It’s the most ambitious growth target the city has ever been asked to sustain, the report states.

To prevent sprawl and make sure the massive number of new developments integrate well into the existing growth boundaries, city planners will focus on infill development.

“The strategy seeks to maximize housing opportunities on infill parcels already served by the city in order to utilize existing infrastructure, and at locations served by transit,” the report reads. “The housing strategy also seeks to provide sufficient housing opportunities for new workers in order to encourage and support continued economic development, as well as access to housing for lower-income workers in occupations that support driving industries. San Jose is also planning for demographic and market shifts that indicate greater future demand for more urban forms of housing and neighborhoods.”

That’s a long-winded way of saying the San Jose of the future will feel more like a Big City: dense, walkable and better connected by public transit.

Similar to other Bay Area cities, the bulk of the benchmark growth comes from state and regional regulators wanting cities to build more extremely low-, very low- and low-income homes. In one of the priciest parts of the country, that’s where the need lies, says the memo submitted by the city’s Housing, Finance and Planning departments and the Attorney’s Office.

The city approved building permits for 3,496 housing units in 2012: 3,097 market rate and 399 affordable homes. The city also acquired and rehabilitated 96 affordable units. That means the city met 19 percent of its annual affordable housing target and 150 percent of the market-rate benchmark.

The city’s recently OK’d general plan—Envision San Jose 2040, a blueprint for future land-use development—and it includes plans to build 120,000 new housing units by 2040. So far, 22,000 already have zoning of permit entitlements. Part of the plan to integrate cheap, subsidized housing into the growth plan is to concentrate them in apartments or concentrated “urban village” developments.

Affordable housing targets are tougher to meet since they’re subsidized. They require government funding—federal and state, mostly—and cooperation with a whole network of agencies. The city’s housing department works with developers to figure out how to fill the gap in financing to build, rehab or preserve housing cheap enough for low-income earners. There’s also a push to provide shelter for the 5,000 or more homeless residents of San Jose, which means more temporary shelter and extremely low-income units are needed.

San Jose trailed behind its affordable housing goals in recent years, mainly due to the economic recession, according to the city report.

“While the economic recovery has benefitted certain segments of the workforce, particularly in technology sectors, other segments of the workforce, particularly those in lower-skill, lower-wage jobs, continue to face a weak labor market at risk of job or wage reductions,” the report says. “This latter group continues to struggle with finding housing that is affordable, and is disproportionately impacted by foreclosure.”

If approved by the council, the report will get submitted to state decision-makers, giving them a sense of how much funding to allocate to San Jose for these housing goals.

Other notable items from the San Jose City Council agenda for March 26, 2013:

• After twice postponing a vote on the matter, the council will (finally) consider an incentives package for Samsung Corporation to expand its R&D headquarters in north San Jose into the company’s largest North American facility.

• You may have read in the news about the police officer who nabbed a suspected cell phone-snatcher en route to San Francisco on a BART train. San Jose Police Sgt. Fredrick Kotto was off duty last month, on his way across the bay with his bride-to-be when another passenger allegedly tried to steal a phone. Kotto busted the guy and detained him until help came. The council will take a moment Tuesday to publicly honor his heroics.

• Councilmembers will consider supporting a state Senate bill that would impose a new tax to generate money for affordable housing. SB 391 would form a California Homes and Jobs Trust Fund, a permanent funding source to pay for low- and moderate-income housing.

The bill proposes charging $75 for recordation of all real estate documents, according to the legislative text authored by senators Mark DeSaulnier (D-Concord), Toni Atkins (D-San Diego) and Darrell Steinberg (D-Sacramento). It’s a new tax, essentially, so it will need a two-thirds vote from the Legislature to pass.

A nearly identical bill died last year, opposed by groups like the California Taxpayers Association. If this current reincarnation goes through, the state could collect anywhere from $300 million to $600 million a year for affordable housing.

The bill “would provide much-needed funding to finance and build affordable housing units in San Jose,” says Leslye Corsiglia, the city’s director of Housing. Corsiglia’s department saw a 20-percent loss in low-income housing cash with the state-ordered demise of the Redevelopment Agency.

Though the bill lacks an allocation method for the money raised and doesn’t specify eligible uses, “it represents a critical first step in identifying a permanent source of funding for California’s dormant and empty Housing Trust fund that was created in 1985,” Corsiglia says in her memo suggesting the council vote in support of the measure.

Thirty-eight other states claim an active housing trust with permanent continuous revenues generated by document recording taxes, the city says.

The council heard the bill twice last year, when it was SB 1220 and riled up opposition from the California Association of Realtors. The real estate association has since changed its stance on the tax, but the 2012 bill lost on a party line vote—two votes away from passage.

• San Jose spends $18 million a year for workers comp benefits for hurt employees—half that cost goes to medical expenses. The city contracts with Mitchell Corporation to administrate the workers comp program, whose $975,000 contract for 2013-2014 is up for consideration by the council.

• As of mid-March, minimum wage earners now take home $10 an hour in San Jose. The city has to adjust its pay ranges, something that requires the council’s approval, to reflect the voter-mandated change. That means two part-time students interns can expect a bump up in their compensation next pay period. The raise will cost the city all of $225 through the end of 2013, and no annualized cost after that since the internships are temporary. The minimum wage will adjust annually to reflect any rise in the cost of living.

• Property owners in San Jose have to keep the sidewalks in front of their addresses clean and cared for. If it needs substantial repair, the city sends out the Department of Transportation to fix whatever it is that needs fixing. The city foots the bill and then passes the cost back to the property owner.

But not everyone pays the price. There’s a $155,000 backlog of money owed for sidewalk repairs, ranging from bills for $157 to more than $27,000. The city’s about to go after everyone who defaulted, but first the council will set a public hearing on the matter this Tuesday.

From there, the Department of Transportation will mail out warnings that the city could place liens on the property until they pay up. If they don’t pay by the end of the fiscal year this summer, the amount gets added to an owner’s annual property tax bills due in early 2014.

• The city will consider paying $3.2 million for a year of security services at Mineta San Jose International Airport and other city buildings.

• A north San Jose cemetery is running out of space to bury the dead. The Calvary Catholic Cemetery, off of North Capitol Avenue by Alum Rock, won Planning Commission approval to expand into a next-door residential neighborhood, but it didn’t get permission to build a new driveway to the new .38-acre lot space left empty from a couple demolished homes on Alexander Avenue. The cemetery owner appealed the permit, which now goes before the council for final approval.

WHAT: City Council meeting
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260

Jennifer Wadsworth is the news editor for San Jose Inside and Metro Silicon Valley. Email tips to [email protected]. Follow her on Twitter at @jennwadsworth.

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