San Jose Mayor Liccardo’s Housing Plan Takes Shape

San Jose, Shea Properties, Ivanhoe Cambridge, Creative Center for the Arts, SV Creates

By Michele Chandler

Building 25,000 homes—at least 10,000 of them priced in the affordable range—is at the top of an unprecedented plan proposed by San Jose Mayor Sam Liccardo to alleviate what he has called an intensifying housing crisis in the self-proclaimed capital of Silicon Valley.

Liccardo announced his five-year plan at a press conference last month. “How we respond to this crisis will define our generation,” Liccardo said at the announcement.

With the average San Jose rent standing at $2,500 as housing prices continue to rise, ways to bring more housing to the city that its middle-class can afford has been a hotly debated topic.

Employers tossed out thousands of Bay Area jobs in August, state labor officials reported last month, while economists warned that a spike in home prices could hamstring all employers’ abilities to hire new workers in the nine-county region going forward.

California Governor Jerry Brown recently signed 15 bills that aim to provide more funding for affordable housing and design a streamlined approval process for any housing that does get proposed. However, those measures still need approval from the state’s voters in November 2018.

Liccardo’s memo directed San Jose City Manager Dave Sykes to recruit partners for the housing response effort, in collaboration with the Mayor’s Office of Strategic Partnerships. Possible allies include San Jose State University’s Planning Department, the San Francisco Planning and Research Association (SPUR), Housing Trust Silicon Valley and the San Jose Downtown Association business group, Liccardo said.

Teresa Alvarado, director of SPUR for San Jose, said her organization is a partner to the city’s effort and earlier this year released its own report outlining antidotes for San Jose’s housing crunch. Several of the nonprofit’s strategies “align very well” with the Mayor’s housing plan, she said, including creating measures to encourage homeowners to build “in-law” units on their lots and constructing more housing close to existing public transit lines, she said. “We have to build smaller, more dense units that are closer to jobs, closer to transit, so that we don’t exacerbate the congestion problems that we’ve created,” Alvarado said.

Foundations that promote affordable housing development were also identified as potential allies that are able to provide “talent, professional skills and financial resources” for the city’s ambitious housing effort. Those groups include the Chan Zuckerberg Initiative—founded by Facebook CEO Mark Zuckerberg and his wife, physician Priscilla Chan—the Silicon Valley Community Foundation and the Ford Foundation.

Here are some of the recommendations contained in Liccardo’s plan:

  • Build more housing. Have 25,000 homes—at least 40 percent of them affordable—completed, under construction or approved by 2022. Thousands more affordable homes could be financed with public funds from impact and inclusionary fees, Measure A or money from SB2 or SB3, which provide new funding for affordable, subsidized housing.
  • Financing housing for the “missing middle class.” Craft a private-public financing mechanism for rent-restricted housing open to teachers, nurses, police officers and other modest- and middle-income workers who earn between 60 percent and 120 percent of the area median income. This group often struggles with the Bay Area’s high housing costs.
  • Develop new funding sources to support affordable housing: New options could include an “empty home fee,” similar to the strategy officials in Vancouver, British Columbia now use to incentivize the expansion of rental housing through a hefty tax on empty homes. “Increasingly, we hear of investors acquiring condos and other housing in the Valley for speculation and investment, but declining to rent those units,” Liccardo’s memo said, adding that it’s unclear how real the practice is currently in San Jose. Still, he said, fees should be considered for “undeveloped, in-fill parcels with residential land use designations to spur construction.”
  • Better identify potential housing sites. Create a “visually simple means” to enable developers of affordable and market-rate properties and investors to identify now-vacant, underutilized or blighted residentially-designated land that could potentially be used for 50,000 units of “infill” housing without the need for a General Plan Amendment.
  • Smooth the path. Cut constraints in the city’s development guidelines to pave the way for more housing that’s adjacent to upcoming and existing public transit options, therefore easing the traffic burdens on the region’s freeways.
  • Re-envision struggling business corridors: Encourage mixed-use developments that integrate housing that can create much-needed foot traffic in several declining neighborhood business districts. Examples of business districts where there could be opportunities to integrate residential uses include 13th Street/Luna Park, Story Road and Willow Street.
  • Help bring transit-oriented affordable housing to North San Jose: Eliminating longstanding legal hurdles could enable construction of 2,400 affordable homes adjacent to light rail and Bay Area Rapid Transit stations in North San Jose.

The Mayor’s plan lists several other items, including expanding housing for students, faculty and staff at San Jose State University, encouraging school districts to make district-owned land available for affordable construction of teacher housing and utilizing land owned by the California Department of Transportation (Caltrans) for housing for people who currently are homeless.

The plan also suggests encouraging homeowners to build secondary units on their lots, ensuring that new housing doesn’t push out current tenants, accelerating housing construction in areas close to light rail and bus transit stops and incentivizing nearby cities to build their share of housing.

Eliminate zoning barriers to enable the transformation of bars, liquor stores, massage parlors, bail bonds and other complaint-inducing uses to mixed-use housing was also suggested in the plan.

West Coast Commercial Real Estate News