San Jose Considers Chipping Away at Affordable Housing Fee

Not six months since an affordable housing fee went into effect in San Jose, city officials are already talking about watering it down.

The housing impact fee requires developers of new market-rate apartments to pay $17 per square foot to pay for affordable housing. The City Council approved the fee in a 7-3 vote in 2014, but it wasn’t implemented until this past summer. High-rise developments get a deferral for another four years.

This week, the council will consider granting exemptions to the fee for rental projects with three to 20 units. Council members Chappie Jones and Johnny Khamis have additionally proposed lowering the fee for high-density projects along transit corridors. They also suggested allowing developers to split the fee into two payments or to build affordable housing in lieu of paying it at all.

“Finding sites to spend collected affordable housing impact fees is difficult,” Jones and Khamis wrote in a joint memo. “The most efficient way to provide housing for all income levels in transit corridors, and elsewhere, is to encourage on-site development of affordable units within proposed market rate projects. We must incentivize developers to provide housing options onsite, at all income levels, to maintain and increase income diversity within market rate developments that often provide better access to key services, amenities, and transit.”

Screen Shot 2016-12-05 at 10.29.50 AM

Sacred Heart Community Service, a nonprofit charity that has been a longtime supporter of the affordable housing fee, urged the city to protect the $17-a-square-foot threshold. A study prepared by an independent consultant in 2014 confirmed a link between new market-rate development and soaring housing costs that have made Silicon Valley one of the most expensive markets in the nation, the nonprofit wrote in an email to city officials.

“Let’s not reduce the fee primarily for developments that are not dependent on the lower fees—likely just a give-away to a handful of developers,” the email states. “We urge instead that the housing department work with the planning department to lift restrictions on mixed-use developments contained in the General Plan.”

US-rents-top-12-markets-1-bedroom-2016-08Silicon Valley at Home, a low-income housing nonprofit, asked the city to consider alternatives to the fee for developers who can offset the impact of new market-rate housing in some other way. Suggested alternatives include building new affordable units or dedicating land for new affordable housing.

“This would encourage mixed-income housing, which is a laudable policy goal,” the organization wrote in a letter.

Some neighboring cities—namely Mountain View and Sunnyvale—offer similar alternatives to housing impact fees.

While Santa Clara County voters recently approved Measure A, a parcel tax that will generate $950 million to house the homeless, affordable housing advocates say cities still need to do their part. Local governments in California lost tax-increment affordable housing funds when the state shuttered redevelopment agencies in 2011. Meanwhile, the cost of housing rose to record highs. Only in recent months has it started to wane slightly.

More from the San Jose City Council agenda for December 6, 2016:

  • The city will pay $525,000 to settle a lawsuit accusing San Jose police of excessive force. According to the complaint, Dawit Alemayehu was arrested on suspicion of public drunkenness in April of 2013 and got into a scuffle with two officers outside the Main Jail. One officer used a control hold and then a leg sweep to drop Alemayehu to the ground. But the arrestee fell “more suddenly than expected, striking his head on the ground,” according to the city’s narrative. He blacked out for several minutes and was sent to the hospital for treatment. Alemayehu said the fall left him with permanent cognitive deficits and a seizure disorder.
  • A two-year effort to rename a street section in the Evergreen hillsides after a Sikh house of worship comes to a vote Tuesday. Proponents of the name change hope to rechristen a 4,000-foot stretch of Murillo Avenue as Gurdwara Avenue. The proposed name—which has drawn the ire of some neighbors—is a tribute to the San Jose Gurdwara Sahib, the largest Sikh worship facility in the United States.

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 former news editor for San Jose Inside and Metro Silicon Valley. Follow her on Twitter at @jennwadsworth.


  1. Proponents of the name change hope to rechristen a 4,000-foot stretch of Murillo Avenue as Gurdwara Avenue. Jenn, “rechristen” is certainly an odd choice of word in this context.

  2. how about using the housing fee to subsidize rental housing for those below or at the local poverty level? or even subsidizing or creating additional housing for the “unhoused”

Leave a Reply

Your email address will not be published. Required fields are marked *