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