San Jose City Council Debates Financing Plan for Urban Villages

UPDATE: The Council voted to have city staff come back in April with a draft financing plan for urban village amenities, which will exempt signature projects. In the meantime, the city will host several more community meetings to elicit feedback. 

Six years ago, San Jose decided to focus future development in dense clusters of mixed-used, transit-linked neighborhoods called urban villages. Though city officials have finalized planning for 10 such developments, their inability to approve a financing plan for public amenities has held up construction for all but a few signature projects.

The City Council on Tuesday will hear a progress report on the urban village blueprint, which officials call San Jose’s best hope for building thousands more homes in market-ready pockets of San Jose.

In a memo signed by several other council members, Mayor Sam Liccardo calls on his colleagues to treat the urban village plan with urgency.

“Simply,” he wrote, “we’ve been lost in ‘analysis paralysis’ over this for too many years, and it’s time to stop making the perfect the enemy of the good.”

Liccardo said he wants to have additional community meetings to hear feedback from residents, advisory groups and developers before returning to the council with a financing plan by next spring. But until that financing framework gets approved, the mayor proposes having applicants pay a contribution or provide amenities by way of a flat fee based on square footage. He also recommends exempting signature projects from the financing plan.

“As a city, we must acknowledge the cost of inaction,” Liccardo wrote in a memo co-signed by Vice Mayor Magdalena Carrasco and council members Dev Davis, Chappie Jones and Raul Peralez. “We see and appreciate the impacts of imperfect or suboptimal decisions, but the unseen price of doing nothing is often far greater.”

Council members Don Rocha and Sergio Jimenez teamed up to propose that the city should consider capturing more value from commercial and industrial development in its urban village financing plan. Because of San Jose’s jobs-housing imbalance, the city has been hesitant to demand too much from commercial development, which generates more local tax revenue. Rocha suggests that the city should rethink that mindset, however, and consider charging a fee for commercial development to offset some of its impacts.

“Economic growth has many benefits—more jobs, more tax revenue, more profits—but it also has negative consequences,” the joint memo states. “The strength of our economy is a primary cause of high housing prices, which lead to homelessness, overcrowding and financial instability. It’s also connected to our transportation problems: our residents sit in traffic jams as we struggle to fit public transportation solutions into a mostly suburban context. Gleaming new office buildings and corporate campuses bring many benefits, but they also bring serious challenges. It makes sense that we would ask them to help contribute to solving those challenges.”

There are several ways the city could ask jobs developers to chip in, Rocha says. He notes that the city already prioritized his idea for a commercial linkage fee, even though the mayor has resisted even studying the idea in the past.

“The challenges of growth are so enormous that it’s unlikely we will succeed in addressing them unless all parts of our community bear responsibility for the solution,” Jimenez and Rocha’s memo continues. “As a council we have put a great deal of responsibility on housing development: it pays parks fees, affordable housing fees and now will be subject to value capture in urban villages. As our economy surges forward year after year and major corporate development is proposed in our city, it becomes increasingly hard to justify why we would exclude all commercial development in urban villages from value capture. Even value capture at levels below those proposed for residential could provide benefits to our residents.”

Rocha, who terms out in 2018, has been pressing the city to demand more from commercial development for years. He and Jimenez compared the matter to the debate in Congress over tax reform.

“Should the burden be shifted from corporations onto the middle and working classes,” their memo reads, “or should it be distributed equitably across society? On a much smaller scale (and hopefully in a much saner fashion) our deliberation on the issues of fees, taxation and value capture revolve around many of the same questions. In our experience, San Jose residents understand the dual nature of economic growth: it has both benefits and challenges. Voters have stepped up again and again to tax themselves and help meet those challenges. It’s up to us to ensure that the burden continues to be distributed equitably.”

More from the San Jose City Council agenda for December 5, 2017:

  • In the past fiscal year, city employees were reimbursed $157,000 for 141 trips—most of them in California and most of them by police officers. An audit of city travel up for review this week recommends upgrading reimbursements to an electronic system to improve efficiency and oversight. It also suggests keeping better track of gas cards, which the city gave to employees with no checkout logs and no verification to determine whether the expenditures were appropriate. Unlike the city’s procurement cards, the gas cards had no spending limits on daily purchases. When auditors brought up those issues to the attention of various departments, some got rid of the gas cards altogether and others reduced the number in circulation and created a tracking system.

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

Jennifer Wadsworth is a staff writer for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

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