SJ Mayor Sam Liccardo Calls for More Tax Cuts for Developers

To help the city meet its lofty affordable housing goals, San Jose Mayor Sam Liccardo wants to slash construction taxes on new development.

The recommendation, which goes before the City Council on Tuesday, comes in response to complaints from developers about financing being harder to come by. In a memo calling for the lower taxes, the mayor also proposes deferring payment on fees and other costs until a project is fully occupied.

Liccardo also expressed anxiety about the 2021 sunset of an exemption from inclusionary housing fees, which require developers to either set aside 15 percent of a project’s units as below-market-rate or pay an in-lieu fee to build subsidized units elsewhere. Unless the city extends the exemption, the mayor suggested in his memo, “the probability of high-rise residential development becomes far-fetched.”

The mayor cited a Keyser Marsten analysis from last fall, which showed that a 300-unit high-rise project would owe about $6.4 million in taxes under a partial discount and $7.3 million if the tax break expired. According to that study, the project would not have penciled out without the tax break, the mayor noted. And if the inclusionary zoning exemption timed out, the same project would have to pay another $7.5 million, bringing the total in fees to the city to $14.8 million, Liccardo said.

“We all would like nothing more than for downtown development to also help us build more affordable housing, where we currently have four separate 100 percent affordable projects under construction,” the mayor wrote in his memo. “However, getting 15 percent of nothing—the impact of our current inclusionary rules—does not move the needle on that objective. An alternative approach—perhaps one that shifts construction tax revenue into affordable housing funding—may do far more.”

The tax-slashing proposal is part of a broader discussion about the city’s housing crisis work plan, a multi-year blueprint for how to address the intractable shortage of affordable homes. The council on Tuesday will hear a progress report on the work plan, which calls for 15,000 new market-rate units and 10,000 affordable by 2023.

Source: City of San Jose

San Jose has a lot of ground to cover to accomplish those lofty targets. In 2018, some 14,255 were made available through policy changes, but only 464 received planning approvals, according to a presentation by the Housing Department. That same year, 2,827 market-rate and 563 below-market-rate units received building permits while 797 market-rate and 31 affordable units received certificates of occupancy.

More from the San Jose City Council agenda for March 19, 2019:

  • The council will accept Mayor Liccardo’s March spending plan. In his budget message, he highlighted the city’s “modest” $3.5 million surplus and highlighted a multi-year, multi-million dollar plan for the city’s infrastructure and environmental projects. The mayor has proposed up to $300 million in pothole repair and street upgrades.
  • Also on Tuesday’s docket, the council will amend city code to allow San Jose Clean Energy, the city’s provider of wind, solar and other clean-energy sources, to adjust rates in accordance with PG&E without having to send paper notices to residents. City officials proposed the measure as a way to reduce paper waste.
  • The city will present the winners of the Climate Smart San Jose, a energy-related planning contest.
  • Tyler Gordon, an 11-year-old painter who appeared on the show Little Big Shots will receive a commendation for the feat.
  • The council will hear a report about an audit of its 911 and 311 emergency systems. They will address issues such as slow response times and underutilization of its non-emergency number, 311.
  • The city is poised to settle with Benjamin Cooper, a resident who in 2016 was shot in the eye with a non-lethal projectile by an SJPD officer, causing him to go blind. Cooper was outside a convenience store on South Jackson Avenue holding a knife to his throat and threatening suicide when police intervened. The settlement will cost the city $215,000.
  • The city will consider accepting a $1 million grant for its Internet Crimes Against Children Task Force, which hunts down predators and distributors of child pornography.
  • Railroad maintenance plans for the crossing at West Virginia Street and Auzerais Avenue are up for consideration. Proposed improvements include new median islands, pavement striping and updated signage to keep up with federal railroad standards.
  • The council will weigh a resolution denouncing President Donald Trump’s attempted deportation of Vietnamese immigrants. City Attorney Rick Doyle indicated that his office is prepared to fight any legal action taken by the federal government against local Vietnamese immigrants.

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

37 Comments

  1. HOAPRES, You’re absolutely correct! While our electorate can vote on developing 25,000 new residential units, they sure as Hell can’t vote on supplying more water. Water is the key, just because we got lucky this year and avoided a drought, doesn’t mean that the next five years will be wet. I think you’ll see people with larger lots, sitting on high water tables drilling wells in their backyards without the knowledge of our politicians and the water company. Can you blame them?

    • It’s not just San Jose but the whole country and indeed the whole planet.

      We have too many people.

      That isn’t going to be a pleasant thing to say but that’s the way it is.

  2. I think a fundamental part of the problem is that the city is run by hunter-gatherers and they have no real understanding or appreciation for the practice of capitalism.

    Hunter-gatherers think food and shelter is something that is found by hunting around. Primitive hunter-gatherers hunt with a stick or a spear. Modern hunter-gatherers hunt with the government’s tax system backed up government revenue agents armed with sticks and spears.

    “Rich people” are just like woolly mammoths to these primitives. When you find one, swarm them and club them into submission. When you’ve stripped the carcass of all the good stuff, look around for another woolly mammoth.

    Woolly mammoths eventually go extinct.

    • We could start a sink or swim policy.

      Get rid of housing subsidys,etc. along with a homeless roundup. If you can’t afford to live here then you move. You also deport h1bs and illegal aliens.

      I just solved the problem.

  3. The simple recipe for San Jose being broke: Give tax breaks to wealthy real estate developers + give very generous pay + pensions+ retirement health care to city employees. Little comes in while lots go out. Rinse and repeat year after year.

  4. Laccardo, are you a Republicant? TAX CUTS FOR THE RICH DEVELOPERS! What you have to do is stop facilitating the expansion of google in the City. Google brings its employees few of them my close relatives who then pay $3000 per month for small apartment in San Francisco and other Bay Area cities. This problem to which you are a contributor is creating the relocation of low middle class and low income families. WE ARE READY FOR A NEW MAYOR IN San Jose. I am a democrat but will vote for a Republicant for San Jose Mayor. Enough with these San Jose and Santa Clara County elite officials. YOU ARE NOT AT ALL IN TOUCH WITH THE STRUGGLES OF PEOPLE LIVING IN THIS CITY! Liccardo has to go! We already have enough traffic in this city.

    • Get rid of h1bs. Wages go up for the American software engineers. Google won’t pay for it and move.

      If that sounds simplistic then well it is.

      To be fair, It isn’t just Google but the entire tech industry.

      • I agree on the entire tech industry. I mentioned google because I know at least few of our local public officials have invested in google including county supervisors.

      • THE problem of the homeless situation is precisely that. My relative recently graduated from Stanford and working for google commented that a colleague with the same school and employment is always worried about paying for his rent in San Francisco. He is affording a high class life style and struggling to maintain it. For our low to middle income families with no other financial resources, savings, 401k, so on, homelessness in one step away pay check by pay check. Pay attention to this mayor and the Santa Clara County Supervisors. All they do has a benefit for the rich and their friends. While they try to present it as something good for the people, there is a rich person that will really benefit of the deal. The Santa Clara County Family court system is a corruption web. They make cases extremely long, so middle class families spent hundreds of thousands paying attorneys $350 per hour. SANTA CLARA COUNTY HAS THE MOST CORRUPTED PUBLIC OFFICIALS IN CALIFORNIA IF NOT IN THE COUTRY! Liccardo has to go!

    • It’s simple supply & demand. There is not enough supply (housing) for the current demand (hence the $3k a month). Build more supply (houses) and that will satisfy the demand (less rent). If there were more houses than people, the price of houses would plummet, but right now there is more people (a lot more people) than houses. Part of this is as HOAPRES is saying, part of this is because of the “greenbelt”, part of this is due to rent control (as a builder, if you can’t get a return on your investment, you invest your money in other things or other places) which also applies to taxes and regulations. If you want it to be cheaper to live here then build more place to live, PERIOD. If you like it the way its is then keep adding more rules, regulations and taxes and you will get more and more of what we already have.

      • Building affordable homes for low income and middle class families should be the focus. However, they are building for the high tech people paying 3K+ Per month for a one bedroom apartment. Also, it is not so simple as supply and demand. More homes means more cars in the already congested rodes. I do not see a transportation system such as in NY. It is quite congested there but the transportation system is far superior. What Bay Area politicians are basically doing is creating a space for the rich and pushing the poor out. Then those would have to travel long distances to their day jobs to serve the Mayor and his high class elites. LICCARDO HAS TO GO!

      • That’s the point.

        We don’t want it cheaper being We are those that believe in the old American way which is single family homes instead of 50 story apartment buildings.

        • The Bay Area Governments have limited the places homes can be built (i.e. homes cannot be built in the “greenbelt”, this is for environmental reasons) so there will be No More large single family home neighborhoods built because there is nowhere currently available to build them. So if we want more single family homes we need to open lands to construction that are currently not open due to government regulation. You can’t have your cake and eat it too (you can’t have a “greenbelt” and build more neighborhoods too). Until then we will have more 50 story apartments and condos.

          If you rather not have people here, then let the prices continue to skyrocket and those that can’t afford it will leave on their own volition, no need to force them out. If you end up being one of the ones who can no longer afford to live here, well then watch out what you wish for.

          • > The Bay Area Governments have limited the places homes can be built (i.e. homes cannot be built in the “greenbelt”, this is for environmental reasons) so there will be No More large single family home neighborhoods built because there is nowhere currently available to build them.

            Oh wow! Very interesting.

            This certainly is government manipulation of demographics — AND voter rolls.

            Fewer “nuclear families”, more stack and pack “affordable housing”.

            Hmmmm. Where do Democrats live?

          • If you can’t afford to live here. You don’t have a right to make America of which Silicon Valley is a part of, with 20+ story apartment buildings all over the place.

  5. Does the Mayor know how the City will make up loss for these tax cuts? These taxes involve taxes for our parks that are in terrible shape, traffic improvements, taxes to improve neighborhoods where all this building will take place. I wish the Mayor and Council would give each and every resident of this City tax cuts but unfortunately we have a Council that will not stand up for the residents they represent unless you live in Willow Glen that does not need a council member because they just have to call and the City kneels down before them.

    • You do realize that if no builder builds anything then we get $0.00 in taxes right? Unless and Until they actually build something we get ZERO. So if you offer them a discount on the tax they pay IF THEY BUILD, then you are not sacrificing money we already have, you are increasing tax revenue (giving us more money) but not by as much as you had hoped.

      Think of at selling an old dresser at a garage sale. If it you list it for $20.00 and it doesn’t sell that doesn’t mean you gave up/lost $20.00. It means you made $0.00 and still have the dresser to sell. So the following week you know it wont sell for $20.00 so you cut the price to $15.00. This time it sells. That does not mean you lost $5.00, it means you made $15.00 instead of $20.00. When the City (or any agency) cuts taxes to attract bussinesses they are simply restting the cost of whatever it is to a price that will sell.

      • WORK 90, you do not realize the greedy people we have as San Jose Mayor and County Supervisors. There are their FOR the money, power, and PR. By the way, KOHL’ S is hiring!

        • Unfortunately you seem to be your own worst enemy.

          May I suggest the book “Economic Facts and Fallacies” by Thomas Sowell (PhD). It’s an easy read and not nearly as boring as it sounds. He also has a few other great books, but “Basic Economics” is probably one of the best. You might also try the “Freakonomics” series of books, I guarantee you will find them fascinating and very enlightening.

          • May I suggest reading the Bible; psalm 37: 37-38. It is not the economic or law knowledge that may be at fault, but the corrupted individuals using their power to ensure rich people get richer and poor people become more and more excluded from a piece of the economic pie.

  6. Rather than drive the moderators crazy with individual responses, I’ll just group them all here.

    @Hoapres: Absolutely correct. It is way too crowded.

    @Greg: Water is but one resource to be concerned with. We have other resource shortages. Air quality is in the crapper. Police rarely show up (Unless you’re a retail store)

    @SJOTB: I like your analogy to a degree, but I don’t see the rich going extinct anytime soon. We’re handing them free citizenship and Visa’s now. It would be like the mammoth went extinct, but now we’re importing Indian elephants.

    @Richard: What is wrong with Hoapres’s comment? It’s a sentiment shared by many others, myself included. Watch what happens in the next economic downturn, we’ll see people scrambling to get out of here like in 2000, when the 101 was littered with office parks and “FOR LEASE” signs adorned across them. These folks just want to get rich and go home, none of them want to stay.

    @Anthony: Just like Laurie Laughlin and the pay to play school scandal, so is our city government. Where else can someone get their useless cousin a lifetime job with benefits?

    @FEXXNIST: Take a look at nearby anti-development republican strongholds like Monterey/Carmel. Sounds odd doesn’t it? I’ve worked here everyday since last september, and I am constantly amazed at how well maintained and quaint these cities are. I’m amazed at the lack of homeless, urine, and feces on the streets. I’m amazed at the dedication to preserving history and nature. These towns are STILL cooler than SJ.

    • That verse is about the woman who engaged in adultery. Men as always wanted to stone the woman as per law since Moses’ times. However, great Jesus knowing those wanting to stone the Woman had done worst things including killing stated what you cited for John’s 8:7. His teaching summarizes to three concepts: Faith, Hope, and Love! Do not oppressed the already oppressed!

      • > That verse is about the woman who engaged in adultery. Men as always wanted to stone the woman as per law since Moses’ times.

        So, Jesus was pro-adultery? And men were anti-adultery? Who knew?

        > His teaching summarizes to three concepts: Faith, Hope, and Love! Do not oppressed the already oppressed!

        I’m still confused about the “Love” part. Did He mean for people to love Donald Trump, too? Or, was there some exception?

        It seems to me that the un-Christian news media certainly has been oppressing Trump.

  7. I know I am sinful. In fact, I know his word so well that if Jesus will come today you and me will go to the same place and is not heaven. That does not take the fact that people like you are always thinking on your own good taking opportunities from those that do not have any! If something I have learned well from my only lord Jesus is to be on the side of the regular people and the oppressed not the elites. LICCARDO HAS TO GO!

    • FEXXY:

      You are showing signs of extreme moral confusion;

      > He created all. If this is the description of a socialist; I AM PROUDLY A SOCIALIST!

      . . . .

      > I have learned well from my only lord Jesus

      My conscience requires me to perform an intervention.

      The Biblical tradition encompasses two very different and inconsistent ethical perspectives:

      The Old Testament and the New Testament.

      I have yet to see anyone else make this association but the two Biblical perspectives seem to map to the two stages of the Neolithic Revolution.

      The context of the Old Testament is largely about tribalism and tribal warfare, and prominent personalities were described as hunters. And the Hebrews exhibited classic foraging behavior by gathering “manna” while wandering in the desert. The Old Testament pretty much seems to be an account of humans in the Paleolithic Era of tribalism and hunting and gathering.

      The context of the New Testament is largely about “modern” civilization. It seems to be an account of humans in the Neolithic Era of herding and agriculture and complex civilizations with governments, taxes, and division of labor.

      “Socialism” is very much “tribalism” and very much Old Testament.

      Jesus Christ, of course, is very much New Testament.

      The New Testament is a rejection of tribalism and, therefore, a rejection of “socialism”. The New Testament substitutes an INDIVIDUAL (or a “personal”) relationship with the Deity in place of a “collective” or “social” or “tribal” relationship.

      In the ethical regime of Jesus Christ, one has to get to heaven by INDIVIDUAL probity and righteousness. Just belonging to the right “collective” and signalling the right virtue signals is not enough to get to heaven.

      So, I suspect that your exuberant declaration of your “socialist pride” may not be the type of morality of “body of work” that Saint Peter will be looking for on Judgement day.

      And another interesting exhibition of your moral confusion is your vicious denigration of a Christian man, Donald Trump, as contrasted with your endorsement of the ethical perspectives of “socialism”, widely embraced and beloved by atheists such as Bernie Sanders.

      If you’re trying to stay on the good side of Jesus, maybe you should pay closer attention to what his message was. I don’t think it was hate and name calling, and waging tribal warfare.

  8. IIRC, the inclusionary housing fee exemption through 2021 was ONLY for downtown high rises? Also, in addition to all the local fees, etc. The state building requirements also add significant costs to development. Starting next year, ALL new residential development is required to have solar panels installed, adding another $20-30k/unit in upfront costs.

    The entitlement costs, fees, energy requirements, etc add over $100k/unit to the cost of development in SJ. Now, look at what is also going on in Sacramento: Statewide rent control, statewide just cause eviction, statewide mandatory Section 8 acceptance, relocation benefits, and a slew of other ‘anti-housing’ bills.

    The few developers who brave the new regulatory landscape will have to underwrite their projects at much higher rents to justify the risk. Meaning projects will not get built until the rents move higher and justify the risk. This will lead to perpetual shortages.

    Also, Essex and Avalon Bay had contingency plans in place if Prop 10 passed. Many of their properties are already condo mapped and they can relatively easily exit the rental market – furthering the gap between supply of rental housing and the demand for rental housing.

    Gonna be fun to watch how all of this unfolds, but easy to predict that all the additional regulations will just make the supply/demand imbalance greater and drive rents higher.

  9. Agreed 100%. Great if you already own a home, sucks if you rent or are trying to buy a home.

    I guess you could say in a nut shell that the Less financially privileged you are, the more Government Intervention hurts you.

Leave a Reply