SAW:JGH:CEG
8/11/2026
T-52751 /2336928 1
Council Agenda: 9-01-2026
Item No.: 8.1
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
RESOLUTION NO. ______________
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN
JOSE AUTHORIZING THE HOUSING DIRECTOR, OR HIS
DESIGNEE, TO IMPLEMENT THE FOLLOWING MIXED -
FINANCING FRAMEWORKS, SUBJECT TO THE
REQUIREMENTS OF THE APPLICABLE FUNDING
SOURCES AND ALL APPLICABLE LAWS, FOR THE
PURPOSE OF PRODUCING AND PRESERVING HOUSING
AT ALL AFFORDABILITY LEVELS IN THE CITY OF SAN
JOSE: (A) GAP FINANCING PROGRAM AND
INCLUSIONARY HOUSING ORDINANCE; (B) PRIVATE
ACTIVITY BONDS AND MASTER-LEASE FINANCING; (C)
PRODUCTION INCENTIVE PROGRAMS AND MASTER-
LEASE FINANCING; AND (D) MASTER- LEASE
FINANCING AND INCLUSIONARY HOUSING ORDINANCE
WHEREAS, the City of San José (“City”) is committed to developing innovative strategies using existing tools to more quickly and effectively produce and preserve housing affordable to a variety of levels across San José; and
WHEREAS, the City Council’s Focus Area of Building More Housing calls for the development and implementation of alternative financing programs to support housing at all income levels, and the City Council has directed staff to evaluate and present alternative financing models to expand housing opportunities and address housing cost burdens; and
WHEREAS, historically, the City’s primary funding and financing models have included five key tools: Gap Financing Program (“GFP”), Private Activity Bonds (“PAB”), Master- Lease Financing (“MLF”), Inclusionary Housing Ordinance (“IHO”), and Production Incentive Programs (“PIP”); and
SAW:JGH:CEG
8/11/2026
T-52751 /2336928 2
Council Agenda: 9-01-2026
Item No.: 8.1
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
WHEREAS, to further progress toward production goals and in response to the City Council direction, staff developed and utilized data-driven analyses of San José’s housing affordability landscape to develop new alternative financing models; and
WHEREAS, the proposed alternative financing models offer new uses for existing tools by mixing and matching programs in innovative ways to leverage a broader array of public-private partnerships to achieve housing abundance for all income levels, as articulated in the City Council Focus Area of Building More Housing, and were developed to address four primary objectives: (1) attract capital; (2) link capital to land; (3) foster public-private partnerships; and 4) produce housing units across Aare Median Income (“AMI”) levels from 40% AMI to market-rate; and
WHEREAS, given the vast and growing limitations on federal, state, and local resources, no single model will have sufficient resources to address the needs of housing cost-burdened families across the AMI scale, and the City will need new and innovative funding models to achieve the principal goal of the City’s Housing Element to create an abundant housing stock across the full range of household incomes; and
WHEREAS, crossing the financing streams in innovative ways to spur housing production can create new opportunities to build abundant and affordable housing stock while sustaining property tax yields and further, pairing the City’s incentive programs with specific, measurable production outputs can spur production efforts more quickly and cost-effectively than any single, standalone program; and
WHEREAS, the first proposed financing model combines GFP and IHO to provide financing that will secure deeper affordability levels, while also sustaining property tax yields, and it is anticipated to increase production for units down to 50% AMI, fostering mixed-income developments; and
SAW:JGH:CEG
8/11/2026
T-52751 /2336928 3
Council Agenda: 9-01-2026
Item No.: 8.1
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
WHEREAS, the second proposed financing model combines PAB and MLF to create affordable housing developments combining deep affordable at 50% to 60% AMI, moderate-income units at 80%-110% AMI, and market-rate units, while the market-rate units and MLF rent revenues allow such properties to remain on the tax roll, sustaining property tax yields to the City, and the MLF revenue stream reduces the development risk profile in the capital markets, potentially lowering the interest rate on the bond financing; and
WHEREAS, the third proposed financing model combines PIP and MLF to achieve both unit production and affordability while keeping the property on the tax roll, generating revenue for the City and reducing the risk profile of the development in the capital markets, with MLF creating a form of guaranteed revenue that could potentially reduce the interest rates applied to debt financing and increase housing production for households earning 80% to 110% of AMI, thereby fostering mixed-income developments; and
WHEREAS, the fourth proposed financing model combines MLF and IHO to achieve both unit production and affordability of units, the property will remain on the tax roll, generating income for the City and increasing production for 80% to 110% AMI and foster mixed-income development; and
WHEREAS, implementation of these alternative financing models will remain subject to the requirements of the applicable funding sources, all applicable laws, and any required City Council approvals; and
WHEREAS, with City Council approval, the Housing Director, or his designee, will be authorized to utilize these alternative financing models;
SAW:JGH:CEG
8/11/2026
T-52751 /2336928 4
Council Agenda: 9-01-2026
Item No.: 8.1
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SAN JOSE THAT:
The Housing Director, or his designee, is hereby authorized to implement the following mixed-financing frameworks below, subject to the requirements of the applicable funding source and all applicable laws, for the purpose of producing and preserving housing at all affordability levels in the City of San José:
(a) Gap Financing Program and Inclusionary Housing Ordinance;
(b) Private Activity Bonds and Master-Lease Financing;
(c) Production Incentive Programs and Master-Lease Financing; and
(d) Master-Lease Financing and Inclusionary Housing Ordinance.
SAW:JGH:CEG
8/11/2026
T-52751 /2336928 5
Council Agenda: 9-01-2026
Item No.: 8.1
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
ADOPTED this _____ day of ___________, 2026, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
MATT MAHAN
Mayor
ATTEST:
TONI J. TABER, MMC
City Clerk