City lags on affordable housing
San Jose hits only 20% of goal as market prices for single-family homes soar beyond $1 million
Like most cities across the state, San Jose lags far behind on its goals to add badly needed affordable housing.
Last year, the nation’s 10th largest city issued building permits for just 475 affordable units — 20 percent of its target number for the year. During the same time, the city allowed 2,622 homes to be built at the market rate — now north of $1 million for a singlefamily home — reaching 162 percent of its goal for the year.
The numbers are part of the city’s latest annual housing report, which comes as calls for affordable housing in San Jose reach a crescendo amid ever-rising housing costs and the news that Google — the tech giant that some local residents have blamed for driving up the cost of living — is planning to build a massive development near Diridon Station.
“We’ve got a lot of work to do,” said San Jose Mayor Sam Liccardo.
The city considers homes affordable if they are within reach for households with moderate incomes, or $95,150 for an individual. Just 38 percent of workers in the San Jose-Sunnyvale-Santa Clara metro areas have what would be considered more than moderate incomes.
The report is set to come before the City Council on Tuesday on its way to the state, which requires cities to file such information. And San Jose is not alone in falling short.
Statewide, 97.6 percent of cities and counties haven’t greenlighted enough housing to keep up with population growth, with Santa Clara, Mountain View and other nearby cities joining San Jose in failing to add enough affordable housing.
“I would challenge other mayors and cities to step up and present their own plans because we are not going to build our way out of this housing crisis by confining our efforts to the city of San Jose,” Liccardo said. “This is a regional problem.”
While a number of cities have struggled to add housing at all, San Jose issued 3,097 permits for new residential units in 2017, up 48 percent since the previous year.
That number, however, is still shy of the city’s 3,986 unit overall annual target for housing, which is part of a broader plan to add 35,080 homes between January 2014 and October 2022.
San Jose is a third of the way toward that goal, in large part because it has met 72 percent of its market-rate housing target. But the city is far behind on affordable housing, having achieved just seven percent of its goal to date.
Right now, the San Jose metro area — Santa Clara and San Benito counties — is the nation’s sec-
ond-most costly rental and homeownership market.
Just 14 percent of homes for sale are affordable for families with a median income — $113,300 for a family of four in Santa Clara County. Rents have increased by nearly a third in the last five years, meaning teachers, retail workers and other people who keep the city running are being priced out of the area.
“If we don’t address this head on, we’re just going to see more of our working class pushed into the Central Valley,” said Jeffrey Buchanan, a spokesman for the labor-backed group Silicon Valley Rising, which has pushed for more affordable housing.
Workers, Buchanan said, are forced to squeeze two or more families in a home or sleep in their cars. Silicon
Valley Rising would like to see stricter rent control measures and fees on new commercial development that could go toward building more affordable homes. The City Council has pushed back at that idea in the past, pointing out that San Jose has more housing than jobs, but Liccardo said he’s open to a regional fee that could be weighted depending on the housing-jobs ratio of a given area.
The median price of a single-family home in San Jose skyrocketed to $1,140,000 in December, meaning a family would need to pull together a down payment of some $228,000 and have an annual income of $220,611.
To rent a one-bedroom apartment in San Jose, which goes for around $2,450, a family would need to make at least $82,000.
“We’re looking at all types of solutions” to address the city’s housing shortage, said Rosalynn
Hughey, acting director of the city’s Department of Planning, Building and Code Enforcement.
The city has said the loss of its redevelopment agency, which provided around $40 million a year for affordable housing that hasn’t been replaced, and a decrease in federal funding for housing have hurt efforts to add affordable homes.
“I still think the city and cities across the Bay are suffering from a redevelopment hangover,” said Bob Staedler, a former real estate manager with the agency. “When you take away a major tool …of course you’re going to sputter.”
Sacramento has passed several bills that could speed those efforts up, however, and there is a new proposal
to bring back redevelopment agencies.
One bill will put a $4 billion housing bond measure on the November ballot that would pay for affordable housing programs previously covered by the redevelopment agency. Santa Clara County has already approved a measure expected to raise $950 million for affordable housing.
According to the new housing report, 800 affordable units in San Jose have received a funding commitment but developers haven’t pulled building permits yet. The city also plans to put out a notice this spring that it will give up to $100 million in grants and loans to developers willing to create more affordable homes. (Developers have balked at building more affordable homes in recent years because of rising construction costs.)
And last year, Mayor Sam Liccardo put forward a plan to build 25,000 new apartments, 10,000 of them affordable, in the next five years.
Staedler thinks it’s an admirable goal, but that the city needs to be flexible to achieve it.
“How does the rubber hit the road to implement such policies is the challenge,” he said.
According to Hughey, the city is considering relaxing regulations around secondary dwelling units, sometimes known as granny flats, which allow people to add small backyard, garage, or basement units to their properties.
The number of permits issued for such units in San Jose is already increasing, from 38 in 2016 to 92 last year.
“I think it’s very important that in this city, we recognize the issue,” Hughey said, “and have a plan in place to help provide solutions.”