WORKING PARTNERSHIPS USA
November 7,2A22
Honorable Mayor and City Council
City of San Josd
200 E. Santa Clara Street
San Jose, CA 951 13
RE: Nov. 9tr Rules Committee,Item A.1 - Review Final Agenda andNov.15,2022 City Council, item 8.1 - Downtown Residential High-Rise Program Dear Mayor Liccardo, Vice Mayor Jones, and Councilmembers Jimenez, Esparz4 Cohen, Davis, Foley, Peralez, Carrasco, Mahan, and fuenas:
In Itern 8.1 on the draft Nov. l5th City Council agend4 'oDowntoum Residential High- Rise Program," the City is considering oace again expanding and extending the Downtown High-Rise Incentive. This subsidy to a select group of developers was first introduced as a temporary measur e in 2007 . In the ensuing 1 5 years, the Council has repeatedly extended and expanded this subsidy.
Not once has there been any reckoning of the impacts that this policy has had since 2007 on the labor market and workplace standards in downtown San Jose residential construction. As a result, downtown San Josd housing development now has a reputation for low wages, health and safety issues, and worker exploitation. In 2018 City Council attempted to bend this curve by approving minimum workplace standards for projects receiving City subsidies, but a loophole in that legislation has meant that downtown high- rise projects receiving subsidies have continuously been exempted from those protections-
Nor has there been any accounting of the cumulative effects over the past 15 yems that this policy has had on the City's affordable housing production and preservation. As you are aware, in the last RHNA cycle San Jose met only l7o/o of its goal for producing affordable housing. The Downtown High-Rise Subsidy was in place for that entire RHNA cycle.
Thpre has not even been an evaluation of whether the subsidy has been effective in its primary goal of spurring development leading to a Downtown housing market where adequate housing is available to families at all income levels. On the contrary - the consultant report now claims that every type of dense housing development in San Josd is now infeasible.
If we've been trying this same approach for fifteen years, and this is where it's gotten us, isn't it time to step back, assess, and consider a different approach? 2102 ALMADEN ROAD, SUITE 1I2, SANJOSE, CA95I25
WWW.WPUSA.ORG
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For example, the Terner Center for Housing Innovation at UC Berkeley recently published a brief analyzittg six policy options to encourage new housing development, reflecting the six options outlined by the State's Prohousing Designation Frogram, and modeling their potential impacts if implemented in Los Angeles. Of the six policies tested, lowering development fees had the least projected impact, increasing total expected units by only 2.3o/o. The policy changes with the greatest impact were (1) increasing allowable density for multifamily rental projects, and (2) increasing allowable height and FAR while reduciug setbacks; both of these policies gave a projected increase in units of at least l6Yo. Other policies including (3) streamlining the entitlement process and (a) increasing density bonuses near transit had positive impacts of 9.8% more units and 8.1% more units respectively. Finally, (5) reducing parking minimums had a smaller impact at 6.90/o, but was still three times more impactful than lowering fees.
While the results for Los Angeles may well be different than for San Jos6, the approach of identiffing a wide range of potential actions and analyzing their long-term impacts, singly or in combination, is one that could greatly benefit our city.
Unfortuuately, the consultant study ('Conceptual Feasibility Analysis") underlying this item was not designed to surface or analyze solutions. As described on page 3 of the study under 'Legislative Background"o and in Exhibit F, the consultant study was prepared with the specific purpose of providing findings to support a continued fee and tax reduction for certain types of market-rate development.
Consequently, when numerous stakeholders suggested in public input meetings on the Cost of Residential Development that the study should analyze potential new strategies for improving the feasibility of dense residential development, those suggestions were dismissed. The consultant study does not provide analysis of the impacts of any potential strategies or approaches other than providing subsidies in the form of tax and fee reductions and exemption from affordable housing requirements.
Further, this study reaches conclusions that are contradicted by their own data For example, the study claims that direct construction costs are higher in San Jose than other comparable cities - a claim that was repeated in the Nov. 1 study session. Yet on p. 11 of the consultant's AfFordable Housiqg Development Cost Study (which uses real-world data from aetual projects via the California Tax Credit Allooation Committee database, unlike the pro forms in the study that rely on assumptions), it shows that direct construction costs for non-targeted projects in San Jose are the same as in other cities. For affordable senior housing projects, direct construction costs in San Jose are 7a/olower than in other cities. The only construction type for which direct conskuction costs are shorrm to be higher in San Jose is when we're building special needs housing. It is disappointing to see the data being ignored.
The consultant study also does not consider the future effects of recent and future changes affecting development conditions, such as the passage of new State laws (AB 2102 ALMADEN ROAD, SUITE ] 12, SAN JOSE, CA 95125
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F 408 269.0r 83
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2011 and others) intended to expedite dsnse housing development, as well as Googles planned Downtown West development, BART to downtown San Josd and High Speed Rail. While the impact of these combined trends may be hard to predict, we shquld not be locking in policy for the next 10 years that completely ignores them. Assuming that development conditions during the worst years of the COVID pandemic (which is the analysis period prirnarily covered by the consultant study) will be representative of conditions in San Josd for the next decade does not seem a solid foundation for policymaking,
The extended subsidy recommendations coming out of the consultant study are planned to come to City Council for approval on Nov. 15. r#e urge the Rules and Open Government Committee to defer that vote, and ask the City Council to instead take a step back to look more comprehensively at how the City can help support dense residential development, now and for the long termo to meet our needs for good jobs, a local workforce pipeline, and building enough housing for our neighborhoods and families at all income levels.
Sincerely, <..
Auerhahn
Director of Economic and Workforce Policy
21A2: ALMADEN ROAD, SUITE I 12, SAN JOSE, CA 95125
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P 408 8O9.2120
F 408 269.0r 83 @,.u
(408) 501-7864
2460 North First Street, Suite 260
San José, California 95131
svlg.org
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Mayor and City Council
City of San José
200 E. Santa Clara St.
San José, CA 95113
RE: Downtown Residential High-Rise Program
Dear Mayor and Council,
On behalf of the Silicon Valley Leadership Group, I am writing in support of the staff recommendations that would extend the fee reductions to encourage residential high-rise housing in the downtown planned growth area.
The Silicon Valley Leadership Group is driven by more than 350 member companies to proactively tackle issues to improve our communities and strengthen our economy, with a focus on education, energy, the environment, health care, housing, tax policy, tech & innovation policy, and transportat ion.
Among the top concerns of our members is a need for housing affordable for all incomes here in the Bay Area.
As you recently heard in the cost of development study session, creating longer term certainty in city policies will allow for housing developers to better plan their efforts to create new homes. Extending this program will do just that.
The economics of construction have had numerous challenges in the past few years from supply chain caused shortages to the shifting interest rate and lending environment. By once again committing to a policy that says San Jose is ready and willing to partner on bringing housing to downtown you can reduce at least one variable of uncertainty that will help projects move forward.
Encouraging housing in downtown will create more 24-hour vibrancy in an area that is benefiting from significant transit investments coming online from BART and high-speed rail as well as reducing displacement from new job creation. A housing policy that maximizes the creation of the most homes in the downtown footprint is good for the economy and the community.
Thank you for consideration of our comments.
Sincerely,
Vince Rocha
Vice President, Housing and Community Development
Silicon Valley Leadership Group
Ahmad Thomas, CEO
Silicon Valley Leadership Group
Jed York, Chair
San Francisco 49ers
Eric S. Yuan, Vice Chair
Zoom Video Communications
James Gutierrez, Vice Chair
Luva
Victoria Huff Eckert, Treasurer
PwC US
Greg Becker
Silicon Valley Bank
Aart de Geus
Synopsys
Vintage Foster
AMF Media Group
Raquel Gonzalez
Bank of America
Paul A. King
Stanford Children’s Health
Ibi Krukrubo
EY
Alan Lowe
Lumentum
Judy C. Miner
Foothill-De Anza Community
College District
Rao Mulpuri
View
Kim Polese
CrowdSmart
Sharon Ryan
Bay Area News Group
Siva Sivaram
Western Digital
Tom Werner
Mainspring Energy
November 15, 2022
DATE
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11/14/22, 9:03 AM Mail - Agendadesk - Outlook
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SVC Chamber: Support for High-Rise Program
Christian Malesic < >
Fri 11/11/2022 11:11 AM
1 attachments (74 KB)
San Jose Residential High-Rise Support Letter - 11.11.22.pdf; Some people who received this message don't often get email from . Learn why this is important
Mayor Liccardo and Council,
Please find the attached letter of support regarding item 8.1 at the 11/15 council meeting.
Christian D. Malesic, MBA, CAE, CMP, IOM
President / CEO
Silicon Valley Central Chamber of Commerce
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www.SVCentralChamber.com
11/14/22, 4:35 PM Mail - Agendadesk - Outlook
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Council item 8.1 11/15/22
Nate LeBlanc < >
Mon 11/14/2022 4:26 PM
To:City Clerk <[email protected]>
1 attachments (360 KB)
Residential Hi Rise Fee Extension 11_15_22 (signed).pdf; You don't often get email from . Learn why this is important
Please find attached the San Jose Downtown Association's letter of support for accepting the staff memo on San Jose City Council item 8.1 on 11/15/22, Downtown Residential High Rise Program. --
Thanks,
Nate LeBlanc
Business Development Manager
San Jose Downtown Association
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Item 8.1
Silicon Valley Biz PAC
Tue 11/15/2022 6:10 AM
To:City Clerk <[email protected]>
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Honorable Mayor Liccardo & City Council,
On behalf of the Silicon Valley Biz PAC, we would like to express our support of the Downtown High-Rise Incentive Program Extension.
As we make our way out of COVID, and our downtown businesses get back to some sense of normalcy, extending the downtown incentive program is critical to the future of downtown San Jose. The last 3 years under COVID, little was accomplished to inject more residents into our downtown core, so extending this program is an opportunity to close that gap that occurred under the pandemic, and refocuses our efforts back to this critical need.
We appreciate your desire to extend the program and hope we can count on your unanimous support.
Sincerely,
VICTOR GOMEZ
Executive Director
Silicon Valley Biz PAC
www.SVBIZPAC.com