HOUSING DEPARTMENT
January 27, 2026
City Council Meeting
Item: 8.5
Erik L. Soliván
Director
Soft Story Seismic
Retrofitting Pilot Program
Item 8.5
Slide 21/27/2026
Slide 3
The Pilot Overview
1/27/2026
1. Design: Determine eligibility, funding,
applicant prioritization, reporting,
documentation requirements, key
metrics, and technical assistance.
2. SOPs: Develop Standard Operating
Procedures (SOPs), policy manuals,
templates, and checklists.
3. Communication: Provide technical
assistance to applicants to educate
them on the process and the necessary
documentation required for
reimbursement and federal grant
compliance.
1. Application: Facilitate intake,
prioritization of applications, case
management, and payment
calculations.
2. Operations: Monitor the pilot for
compliance with Federal and City
regulations, program rules, financial,
closeout, and other compliance
activities.
3. Management: Conduct program
governance, coordination,
communication, oversight, and
reporting activities.
1. Evaluation: Analyze pilot outcomes
and gather feedback from stakeholders
2. Scalability: Refine and scale the
model, build Neighborly wireframes,
3. Planning: and other tasks to ready San
José for streamlined redevelopment of
a larger future program standup.
Phase 1: Pilot Design and Standup Phase 2: Pilot Administration Phase 3: Pilot Evaluation/ Scale Slide 4
Pilot Design Features 1
1/27/2026
Pilot Program Design
Funding: $1M via City of San José
General Funds
1. FEMA: Design the program to
enable future alignment of retrofit
compliance checks with FEMA
HMGP requirements (Note: pilot
phase will not include FEMA
reimbursement)
2. Impact: Finance low-volume
landlords with affordable units to
support otherwise unaffordable soft
story retrofits and promote a pre-
approved list of small M/WBE
contractors.
Types of Borrowers
1. Borrowers: Business entities and
working with property owners to
establish business entities and can not
be individuals.
2. Communications: with property owner
entities, landlord entities, and
contractors.
3. Partnership: City of San José Housing
Department and Guidehouse will work
with borrowers.
Primary Underwriting Criteria
1. No active bankruptcy proceedings,
outstanding debt, or taxes
2. Landlord is registered as an incorporated
entity (Working Solutions does not
facilitate consumer lending programs)
3. Project can maintain a 6-12 week retrofit
critical path construction timeline.
Slide 5
Pilot Design Features 2
1/26/2026
1. Capped at $100,000
2. Interest- only during construction, convert to repayment of principal and interest post construction
3. Up to a 10-year term (likely shorter)
4. Early repayment accepted at any time
5. Interest rates at or below 3%
6. Landlord pass through below 5% of the loan costs to the tenant per year, and capped at 50% of the total cost
1. Fund Flow: All funds flow through the CDFI to the borrower with simplified draws.
2. Reimbursements: While future-state FEMA reimbursement prospects remain uncertain, any rebates would be issued to the CDFI or CITY
3. Recording: The CDFI and/or City will record a mortgage alongside recorded notes.
1. Data warehousing: solutions held by the City of San José, providing access credentials to GH and Working Solutions
2. Tracking Development and maintenance of offline tracking systems, including pipeline management, underwriting process, monitoring construction expenditures, FEMA HMGP-aligned compliance checks
3. Leveraging Experience: lessons learned from offline trackers to iterate on wireframes for a long-term digital application solution in Neighborly Loan Product
Loan Processing
Data Warehousing
Overview of proposed roles for the City, Guidehouse, and Working Solutions.
Slide 6
Partnership Roles
1/26/2026
1. Capital
2. Oversight
3. program participants
4. Partner Coordination
5. Establish a tenant
coordination plans
1. Provide Guidehouse on structure and source of capital to ensure compliance outcomes
2. Project management office
3. Technology development/ management
4. Application processing
5. Due diligence and underwriting
6. Data collection and review
7. Technical assistance
8. Program compliance
9. (Future: rebate FEMA filing applicable)
10. Reporting and compliance
11. Work with the borrower to become business “on paper”
1. Loan and grant origination
2. Loan funding
3. Loan servicing
4. Loss mitigation
5. Loan satisfaction
6. Data Collection
7. Data Analysis
CSJ – Housing Dept. Working Solutions (CDFI) Guidehouse (GH) Federal Action:
• On January 6, 2026, the Senate unanimously passed legislation to reauthorize the National Earthquake Hazards Reduction Program (NEHRP) and annual funding from FY 2024-2028 across four federal agencies, including FEMA. Legislation is headed to the House.
• Staff anticipates movement on the $25M FEMA grant that the City submitted in August 2023 to offset the cost of retrofits for property owners/housing providers.
Soft Story Seismic Retrofit Ordinance Effective Date:
• Original effective date was April 1, 2025, when Council approved the Ordinance in September 2024. • On March 25, 2025, Council amended the Ordinance effective to April 1, 2026. • Staff will continue to monitor FEMA’s review of the $25M grant application and will likely recommend delaying Ordinance effective date again.
Slide 7
FEMA Grant Application & Ordinance Effective Date
1/27/2026
Loan and Grant Program Lifecycle
Slide 8
The Loan & Grant Program
1/27/2026
1. Development of
Application and
Eligibility Criteria
2. Identification of
Potential V oluntary
participants
3. Establish Key
Performance Indicators
(KPIs)
4. Underwriting and
establishment of loan
terms
1. Review and approval of
loan or grant
applications
2. Establish Financial and
Administrative Systems
3. Risk Assessment
4. Initiate Construction
5. Communication with
Landlord and tenants
1. Financial Management
and Compliance
2. Performance Monitoring
and Reporting (tracking
against KPIs)
3. Documentation
collection and review
(including procurement
and invoice
documentation)
4. Construction Monitoring
5. Loan Servicing
6. Technical Assistance
1. Complete all Program
Activities
2. Financial Reconciliation
3. Final inspection,
monitoring and
Compliance Review
4. Loan or Grant Closeout
Phase 1 Phase 2 Phase 3 Phase 4
This table presents preliminary costs associated with administering a $1M pilot program, spanning 10 months from setup to steady-state.
Slide 9
Pilot Preliminary Costs
1/27/2026
Expense Amount Notes
Funds for Project Loans $1,000,000 Up to 100K loans per building Program Administration
(Guidehouse)
$548,900 About 50% of this cost for set up, and 50% for steady state Loan Origination (Working Solutions) $20,000 Assuming fee at 2% of origination Loan Servicing (Working Solutions) $48,000 Assuming 10 loans serviced for 10 years at $40/month (assumes no early repayment)
TOTAL $1,616,900