San Jose Falls Far Short of State-Set Affordable Housing Goals

In San Jose, just as for California as a whole, population growth has far outpaced housing production, fueling a crippling affordability crisis. A new report coming before the City Council this week shows exactly how much the self-described Capital of Silicon Valley has fallen short of its state-set affordable housing goals.

In 2017, the city approved building permits for 475 below-market-rate units, just a fifth of its annual target. But it far exceeded its goals for market-rate units, authorizing construction for 2,622 homes that same year.

Though San Jose has produced a larger proportional share of housing than neighboring cities, it’s still way behind target. So are the vast majority (97.6 percent) of California cities and counties, according to data compiled by state housing officials.

Years of demand outpacing supply have turned the South Bay into the second-most expensive real estate market in the nation. From 2010 to 2015, Santa Clara County added 171,000 jobs and only 29,000 housing units, according to SPUR. The nine-county Bay Area added 546,000 jobs but only 62,600 new homes during that same time.

State lawmakers are pushing for a legislative fix to the shortfall with a package of bills, including one that would upzone land around public transit and another that would bring back redevelopment agencies.

California requires regions to assign housing production targets for cities. San Jose’s current benchmark requires it to permit 35,080 new homes from 2014 through 2022. That amounts to a yearly production rate of 3,986 units.

While San Jose issued 48 percent more in building permits last year than in 2016, the 3,097 it authorized still fell way below target. Meanwhile in 2017, the city met 162 percent of its goal for market-rate units.

In the first half of its 8.8-year projection period, the city has met 72 percent of its market-rate goals and just 7 percent for affordable housing. It should be noted that the city’s definition of affordable is a home within a manageable price range for individuals earning $95,150, considered a moderate income in the region.

Mayor Sam Liccardo wants the city to come up with a housing crisis response plan that includes a statue report of all housing-related priorities set by the council. In a memo on this week’s agenda, he suggests that San Jose should roll out a marketing campaign to promote secondary “granny unit” construction.

Liccardo also wants to team up with neighboring cities to create a regional commercial impact fee weighted to a specific jurisdiction’s jobs-housing ratio. Cities that add jobs without a commensurate share of housing would be pay into a multi-city fund for affordable housing and transportation improvements.

The mayor cautioned in his memo, however, that rising construction costs might make it harder for the city to achieve its goals.

“[T]he spigot is drying up: many housing developers inform us that they cannot obtain financing to build due to exceptionally high construction costs,” he wrote. “Largely for that reason, the council will engage in a study session this spring to assess whether the city must adjust its fees to enable more housing construction projects to ‘pencil out.’”

More from the San Jose City Council agenda for March 20, 2018:

  • The council will discuss the mayor’s proposed spending plan, which projects what Liccardo called manageable deficits in the coming years. Council members Sergio Jimenez and Johnny Khamis also recommend that the city allocate $1.5 million to move the city’s police academy and training outside of the south San Jose  police substation and another $1.5 million to use the facility for its intended purpose for the first time since it opened eight years ago.

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 the news editor for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

9 Comments

  1. There is no such thing as an “affordability crisis” with capitalism, and especially no such nonsense in the Bay Area.

    Menlo Park, Los Gatos, Atherton and many other affluent communities do not pitch in for anyone who desires to live in their area. San Jose residents should already be fed up with the beggars in most intersections and hobo tents everywhere… enough!

    You can afford to live in a given area, or move somewhere cheaper, plain and simple. There are plenty of folks who can afford $1,000,000.00 homes, which is the exact reason there’s less of them on the market.

    Current homeowners and community members have zero obligation to include people who have pocket lint and a mere desire to belong.

  2. > Like the rest of California, San Jose is struggling to build enough below-market-rate homes.

    I don’t think this is true.

    I haven’t heard that Menlo Park, Los Altos Hills, Aptos, Beverly Hills, Newport Beach, Sea Cliff, Tiburon or “the rest of California” are “struggling to build” market-rate homes.

    The only places that are building “below-market-rate homes” are those places worried about having a shortage of Democrat voters and office-holders.

    • >The only places that are building “below-market-rate homes” are those places worried about having a shortage of Democrat voters and office-holders.

      The only ones reporting it like this have no shortage of advertisement from local developers.

      • > The only ones reporting it like this have no shortage of advertisement from local developers.

        Not all capitalists are Republicans.

        Just as there are consumers who like “single payer” healthcare, there are capitalists who like “single payer” customers, where the single-payer customer is the government.

        Such capitalists are the notorious “crony capitalists”.

        Crony capitalists often like Democrats running things, especially if it’s good for their business.

        Maybe in recognition of Herb Waxman’s tireless promotion of all things Democrat, we could refer to the cronies as Herb Waxman Democrats.

        • >Maybe in recognition of Herb Waxman’s tireless promotion of all things Democrat, we could refer to the cronies as Herb Waxman Democrats.

          I haven’t seen Herb here in a few weeks. I think you beat him into hiding.

  3. San Jose, much like the rest of the Soviet Union, is stuck on the notion that someone else should pay for housing and or lose money for the benefit of the politicians in power. Yet they want to eke out every last RED cent from developers and taxpayers with endless regulations and fee and wonder why know one wants to play the game.
    It simple, no one wants to play the socialist game of “Looser”

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