San Jose Revisits Discussion on Commercial Linkage Fees

More than 40 cities and counties in California charge a fee on new commercial development to make up for the demand for affordable housing it induces. San Francisco, San Diego, Los Angeles and five Santa Clara County cities have adopted a version of the so-called commercial linkage fees to subsidize new below-market-rate homes. Dozens more jurisdictions have commissioned reports to at least study the policy.

San Jose, on the other hand, has repeatedly shot down proposals to even evaluate the need for a linkage fee. But a group of elected leaders are using a recent civil grand jury report about the housing crisis as a chance to revisit the issue.

The grand jury report, titled “Affordable Housing Crisis: Density is Our Destiny,” calls commercial linkage fees “long overdue” as a way to generate funding for desperately needed housing. City staff disagreed with the grand jury’s recommendation, explaining in its official response that imposing such a fee would stifle new development.

“Adding additional cost to the commercial development and construction process through the introduction of a commercial impact fee may further diminish the likelihood of new commercial development throughout San Jose,” city housing officials state in their rebuttal. “Without new commercial development, a commercial impact fee would not generate sufficient (if any) funds to subsidize [below-market-rate] housing.”

City staff also noted that the council on June 12 once again decided against moving forward with a commercial impact fee.

Council members Don Rocha, Raul Peralez, Sergio Jimenez and Vice Mayor Magdalena Carrasco beg to differ. In a shared memo, they clarify that the June vote was actually a 5-5 stalemate and recommend bringing the proposal back for discussion on Sept. 18.

The councilors commend the city for curbing some of the “slow bleeding of residential displacement” by limiting rent hikes to 5 percent a year and enacting stronger tenant protections. But more must be done, Rocha, Peralez, Carrasco and Jimenez say.

“When solving a crisis, we should use all the tools in the toolbox,” their memo reads before concluding, “a commercial linkage fee should be considered as recommended, as an additional tool.”

Rocha has been the council’s most vocal proponent of commercial linkage fees, but, so far, to little avail. On Dec. 15, 2015, the council declined a proposal to research the nexus between new commercial development and housing demand until it saw the results of studies in nearby jurisdictions. And in 2017, Rocha urged his colleagues to keep the fee proposal on the list of council priorities despite staff’s recommendation to scrap it.

More from the San Jose City Council agenda for September 11, 2018:

  • The city plans to team up with CalTrans to create several murals on the columns under I-680 at Capitol Expressway and nearby retaining walls. San Jose’s Office of Cultural Affairs will fund the project and ongoing maintenance with revenue from the city’s hotel tax.
  • In April, Mayor Sam Liccardo ripped into his council colleagues after realizing that nearly half of them signed up for a Sister City trip to Japan on the taxpayer’s dime. Even though he approved each absence request at previous meetings, it only dawned on him that the council lacked a quorum the week of the trip. But the mayor’s rebuke prompted heated debate about how to tighten up the city’s travel policy, which resulted a series of proposals up for review this week. One recommendation by city staff is to give the mayor more control over who to send on publicly funded delegations. Another is to require council members to give the city a six-week heads up about their planned travel, and to have all travel requests for the same trip come up for approval on the same agenda so it’s easier to keep track.
  • The city will place two measures on the Nov. 6 ballot. Measure T asks voters to approve $650 million to bolster the city’s emergency preparedness, public safety and infrastructure. Measure V asks voters to authorize $450 million in bonds to build 3,550 units of below-market-rate housing.
  • San Jose State plans to pull money from maintenance and materials costs from the MLK Library in downtown to install suicide-prevention and safety barriers. The city will foot the bill for about $1.2 million of the $3 million project.
  • The city will talk about renegotiating its waste-hauling contracts, which have to be dramatically overhauled in light of China’s crackdown on recycling imports. San Jose Inside wrote about the discussion last month, but the matter was deferred to this week’s council session.
  • Councilors will decide whether to rezone a 21-acre site in south San Jose to make way for a 248-bed convalescent home. The project at 2400 Dove Hill Road would use a fraction of the parcel—3 acres—for the medical facility and reserve the rest as open space. Neighbors raised concerns about the development worsening traffic congestion around the area just east of Highway 101 and south of the Capitol Expressway. Environmentalist groups and union laborers urged the city to consider how the project would impact burrowing owls and other native wildlife. The Planning Commission voted 5-0-2 to rezone the land, as requested by the applicant, Sal Caruso.

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.

6 Comments

  1. > The civil grand jury report, titled “Affordable Housing Crisis: Density is Our Destiny,” calls commercial linkage fees “long overdue” as a way to generate funding for desperately needed housing.

    What the hell is the civil grand jury doing issuing sophomoric reports with sophomoric titles like “Affordable Housing Crisis: Density is Our Destiny”?

    Is NOT BUILDING an “affordable” house now a crime?

    If a house is occupied, it is “affordable”; if a house is NOT occupied it is a bad business decision by the builder/landlord, and a clear thinking builder/landlord will learn his lesson and do whatever it takes to make it affordable.

    No need for politicians or civil grand juries to meddle in the housing market. They’ll just screw it up WORSE!

      • > It’s the CIVIL Grand Jury, Bubble Boy. It doesn’t deal with crimes.

        What does a civil grand jury deal with?

        I thought grand juries dealt with “wrong doing”. Where did grand juries get the idea that lack of affordable housing is “wrong doing”?

  2. Before the City decides to have a discussion on Commercial Linkage Fees, they need to decide where they can fit in more affordable housing in the City and a even distribution of the affordable housing throughout. They also need to discuss the issue of businesses who want to develop in the area and the responsibility they need to share for housing, schools, parks and the other things needed to have a quality of life for residents. Each time they approve housing they need information on the schools located there and their needs, how much park space and the maintenance of the parks if you are going to increase the population, traffic concerns and of course how many police officers are needed in the area to keep people safe,.

    Seems affordable housing is always built in areas that are already lacking parks, high crime rates and good schools. Whenever affordable housing is mention for other Districts their Council members find excuses not to build.

    • > Seems affordable housing is always built in areas that are already lacking parks, high crime rates and good schools. Whenever affordable housing is mention for other Districts their Council members find excuses not to build.

      Affordable housing is built where the expected residents will vote for Democrat candidates who will vote for more affordable housing.

  3. Require the mayor council members to pay half of the cost of junkets to sister cities out of their own pockets and watch how few sign up to go.

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