1 Affordable Multifamily Housing Loan Portfolio:
Clearer Goals and Stronger Oversight Would Improve Monitoring A Report from the City Auditor
Issued June 2026
http://www.sanjoseca.gov/auditor
Presenters: Joe Rois, City Auditor
Alison Pauly, Supervising Auditor
Adrian Perez, Program Performance Auditor II
Maria Valle, Program Performance Auditor II
Community and Economic Development Committee (CED)
June 15, 2026
Agenda Item (d)-1 Housing Department Loan Portfolio Audit Report Background
2 • Loans support the construction
and preservation of affordable
housing
• Housing monitors loan
repayment, physical
maintenance, and compliance
with affordability restrictions.
$745 million
Multifamily portfolio
loan balance as of
January 2026
$18.1 million
Payments for principal,
interest, and monitoring
fees in FY 2024-25
25,000 units
across roughly
220 properties
Active loans, affordability
restrictions, or in the
pipeline
Asset Management Team
3 Financial reviews
Financial reviews are conducted to determine
whether borrowers are repaying loans correctly
and expenditures are appropriate.
Affordability restriction
monitoring
Affordability restriction monitoring involves
checking whether properties are complying with
rent restrictions for affordable units.
Property inspections Property inspections to review the physical condition of properties.
4 Finding I: Housing Should Assess the Asset
Management Team’s Goals and Resources
• Housing did not complete all the annual
property reviews or inspections in recent
years.
• Per Housing, staff have historically not been
able to complete all reviews annually of the
more than 200 properties.
• Vacancies and unclear expectations have
hindered the team from completing their work.
5 Finding I: Housing Should Assess the Asset Management Team’s Goals and Resources (Continued)
• Per Housing, current software is not
sufficient to meet the program goals.
• Replacing or re-tooling software would
help the team complete their work.
• Housing is working on documenting
standard procedures.
Recommendation: Housing
should:
→Develop a program-level strategic
plan to identify program goals and
resource needs.
→Reconfigure the current software
or acquire an asset management
software platform.
→Update and standardize operating
procedures and training.
6 • 13% of sampled tenant incomes were above
the allowed cap for their unit type (110
units).
• 5% of sample made 140% or more of the
allowed income (48 units).
• No documented escalation process to
address compliance or property violations.
• Financial and affordability monitoring is not
based on the risk of the property.
Finding 2: Housing Should Strengthen Oversight of Affordability Restrictions and Higher-Risk Properties
Recommendation: Housing
should:
→Develop policies to address
over-income tenants and
resolve significant or repeated
property concerns.
→Establish a risk rating system to
prioritize compliance
monitoring.
Conclusion
The report has nine recommendations to improve the management of the affordable housing loan portfolio.
We would like to thank the Housing Department for their time and insight during the audit process.
The audit report is available at www.sanjoseca.gov/auditor Audit staff: Alison Pauly, Adrian Perez, Maria Valle
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