With the collapse of public housing nationwide due to its intentionally segregationist past and woeful underfunding by both federal and municipal governments, cities across the country are facing severe shortages in stable, affordable housing.
As we’ve been reminded constantly by everything from the tent city under the freeway to the steady drumbeat of slimy politicians making cynical promises, San Jose is one of the most unaffordable cities in the country.
But the promises made have not been kept.
San Jose is still a long ways away from achieving Mayor Sam Liccardo’s goal to build 10,000 affordable housing units by 2022. Rents and home prices were still climbing steadily before the pandemic, and even the pandemic has not been enough to provide meaningful relief to lower income renters.
Why is that?
The answer lies in how the city funds affordable housing.
One of San Jose’s most important tools in addressing this crisis is its Inclusionary Housing Ordinance (IHO). The ordinance requires all new developments to either set aside 15 percent of their new housing units as below market-rate or pay into a fund which the city then uses to fund affordable housing.
But the IHO is largely useless in preventing displacement.
For example, the IHO requires developers who choose to build their affordable housing on site do so with affordability levels ranging from 80 percent of the Area Median Income (AMI), to 50 percent of the AMI. On the low end, these units would be affordable to households making roughly $50,000 per year.
However, 22 percent of San Joseans make less than $50,000, effectively shutting the most vulnerable people that the IHO was supposed to protect out of its potential benefits.
In addition, inclusionary housing policies across the country are essentially reliant on real estate speculation and high-end development.
As numerous studies have shown, market-rate developments in working class neighborhoods can actually cause rent hikes in nearby low-income apartment buildings—particularly when they lack strong tenant protections and rent control. This is due to the fact that new construction and its associated infrastructure investments inflate property values and demand near the new housing.
The only conceivable way to limit this would be through stronger rent control (which is banned under the Costa-Hawkins Act), or a strengthening of the Ellis Act, which the City Council voted to gut just last year.
Perhaps most egregiously, City Council has given grotesque tax breaks to market-rate housing developers; waiving over a hundred million dollars of in-lieu IHO fees and cutting some fees down to zero for all downtown high-rise housing during the pandemic.
Lusting after “investment” and “revitalization,” City Hall constantly prostrates itself before the power of the real estate industry; throwing workers under the bulldozer to ensure that glassy condo towers keep rising.
If we want to truly create an affordable city, we must first reject the naive notion that developers and real estate speculators want affordability. They don’t. In fact, it is in their material interests to see land values, and therefore rents, climb as high as possible.
This isn’t to say that private development should be completely shunned. There are valuable benefits that come from a healthy amount of private development. Encouraging homeowners to build denser homes on single family lots is also an important way to create walkable communities and build affordable housing.
But if we truly want to make San Jose affordable for all, then we need to invest heavily in non-market-based alternatives such as community land trusts and social housing.
The money is all here. We just need to make sure that we the people reap its benefits.