Presentation — San Jose City Council, March 8, 2022

BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Background
3/8/2022 2
In 2014, City Council
directed staff to
research a non-
residential linkage fee
consistent with the
Mitigation Fee Act
In 2018, City Council
directed staff to return
with a nexus study and
feasibility study for a
Commercial Linkage Fee
In 2020, City Council
approved an ordinance
and adopted a
resolution establishing
the Commercial Linkage
Fee program

BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Proposed Amendments
3/8/2022 3
Credit against fees for construction of new affordable housing Increase the threshold for exemption for office developments under 100,000 sq. ft to exempt the first 50,000 sq. ft.

Adopt a deferred secured payment option for office and
industrial research & development projects of 100,000 sq. ft. or more
Reduce Fee for all commercial developments when fees are paid prior to issuance of building permits

BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Credit for New Affordable Housing
3/8/2022 4
For each new unit of affordable housing provided, CLF is satisfied for a specified amount of commercial floor area. The amount of credit depends on the income level of the affordable unit.

Area Median Income for
Affordable Units
Office Space >100,000 sq. ft. in
Downtown
All Other CLF Projects
Extremely Low Income 20,323 sq. ft. 60,971 sq. ft.

Very Low Income 15,605 46,817
Low Income 12,097 36,292
Moderate Income 2,903 8,710

BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL 203,230
Example of Affordable Housing Credit
53/8/2022
10 New Residential
Units for Extremely
Low-Income tenants
20,323 SF
For each Residential Unit
the CLF on 796,770 square feet.

Square feet credit
203,2301,000,000 796,770
Square Footage for CLFCredit

BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Support for Small Developments
3/8/2022 6
$0 CLF
(previous threshold was 40,000 sq. ft.)
For the first 50,000
sq. ft.

BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Modified Payment Options
3/8/2022 7
Option 1: Pay 80% of CLF at issuance of building permit Option 2: Pay 100% of CLF by final building inspection
Option 3: Deferred Secured payment option
• Developments have the option to pay at Building
permit issuance or Scheduling of final building
inspection
• Office and Industrial Research & Development
projects of 100,000 sq. ft. or more have all three
options
Deferred Secured Payment Option
3/8/2022 8

ENTITLEMENT CONSTRUCTION

DESIGN PERMITTING CONSTRUCTION BUILDING
SHELL
TENANT

IMPROVEMENTS
Issuance of
Building Permit
Scheduling of Final
Building Inspection
Payment 2
Security: The deferred payments must be secured by a bond or letter of credit Payment 1 On-going Payments

BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Expected Outcomes
3/8/2022 9
Create a more sustainable CLF program that doesn’t inhibit commercial development
Produce more affordable housing
Improve efficiency of CLF program administration

Commercial Linkage Fee
Proposed Amendments
Jacky Morales-Ferrand
Director
Rachel VanderVeen
Deputy Director
March 8, 2022
Item 8.3
Chris Burton
Director
Nanci Klein
Director
Jerad Ferguson
Jerad Ferguson
Fee Resolution for Downtown and Nearby
Non-Residential Use Fee Per Square Foot (sq.ft)
Office (>100,000 sq.ft.) $15.00 Deferred Secured Payment option available Office (<100,000 sq.ft.)
$0 Under 50,000 sq.ft.
$3.00 Over 50,000 sq.ft.

Retail $0
Hotel $5.00 Excludes Common Area
Industrial/Research and Development
(>100,000 sq.ft.) $3.00 Deferred Secured Payment option available Industrial/Research and Development
(<100,000 sq.ft.) $0
Warehouse $5.00
Residential Care $6.00 Excludes Common Area
11 Fee Resolution for North San José and Nearby
& West San José Urban Villages
Non-Residential Use Fee Per Square Foot (sq.ft)
Office (>100,000 sq.ft.) $5.00 Deferred Secured Payment option available Office (<100,000 sq.ft.)
$0 Under 50,000 sq.ft.
$3.00 Over 50,000 sq.ft.

Retail $0
Hotel $5.00 Excludes Common Area
Industrial/Research and Development
(>100,000 sq.ft.) $3.00 Deferred Secured Payment option available Industrial/Research and Development
(<100,000 sq.ft.) $0
Warehouse $5.00
Residential Care $6.00 Excludes Common Area
12 Fee Resolution for Edenvale & Monterey Corridor
Non-Residential Use Fee Per Square Foot (sq.ft)
Office (>100,000 sq.ft.) $5.00 Deferred Secured Payment option available Office (<100,000 sq.ft.)
$0 Under 50,000 sq.ft.
$3.00 Over 50,000 sq.ft.

Retail $0
Hotel $5.00 Excludes Common Area
Industrial/Research and Development
(>100,000 sq.ft.) $0
Warehouse $5.00
Residential Care $6.00 Excludes Common Area
13 Fee Resolution for South & East San José Growth
Areas
Non-Residential Use Fee Per Square Foot (sq.ft)
Office (>100,000 sq.ft.) $0
Retail $0
Hotel $5.00 Excludes Common Area
Industrial/Research and Development
(<100,000 sq.ft.) $3.00
Industrial/Research and Development
(>100,000 sq.ft.) $3.00 Deferred Secured Payment option available Warehouse $5.00
Residential Care $6.00 Excludes Common Area
14

San Jose City CouncilMarch 8, 2022

San Jose City Council
March 8, 2022