Santa Clara’s Affordable Housing Programs to Get Boost From New Rental Development Set-Asides and Fees

More than five years after the state shutdown of redevelopment agencies hobbled Santa Clara’s affordable housing programs, the Council approved affordable unit set-asides and in-lieu fees to fund affordable housing at their Tuesday meeting. The City’s current affordable housing requirement only applies to for-sale housing, not rental and commercial construction.

The proposed fees will require developers to set aside a minimum of 15 percent of new rental units as affordable or pay a $20 square foot impact fee. The proposal also includes fees of $2 to $20 per square foot on retail, office, hotel and industrial construction.

However, this wasn’t the recommendation that the ad hoc affordable housing working group had made–12.5 percent of units or $18.50 a square foot–and that led the working group’s chair, Vice Mayor Dominic Caserta, to vote against the motion.

The 24-member group–which included City officials, affordable housing advocates, builders and realtors–had worked since February to make a recommendation that was fair for all of these diverse interests parties, said Caserta. “Throughout our working group we fostered compromise. I thought the recommendation was the moderate position.”

Affordable housing took a hit when the state shut down its redevelopment program in 2011. While redevelopment agencies diverted property taxes from county agencies and schools, they also directed substantial amounts of money to affordable housing development.

“The dissolution of the RDAs, which was the main source of funding and what we used to leverage other sources of funding throughout the state …has made [affordable housing development] a lot more challenging,” said Dixie Baus, a member of the working group who managed the development of two Santa Clara affordable apartment buildings.

Some say that fees and set-asides for affordable housing can contribute to the problem they’re intended to solve.

“This is societal issue and funding this should be done by the society, and not [only] by first-time buyers,” said Don Jessup, president of real estate firm Silicon Valley Associates, at the Council meeting.

“In Silicon Valley, any time we put on a fee like this, we can imagine that the people who build the properties are not going to pass it on but that’s really not true. The builders are going to find a way to be profitable,” continued Jessup. “They’re going to find a way to build that fee into the property, thus making it less affordable for people who are here, cutting the middle-income person out of it. I think we ought to consider another way to fund this through sales tax, something that all of society could participate in.

Council mainstay Deborah Bress called the working group “a joke” and said that the planning department “should be ashamed of themselves for proposing such ridiculous numbers … they must be getting big payoffs from the developers.”

One topic raised during the sub-committee’s discussion, which did not surface at the Council discussion, was that of new or converted low-income developments displacing existing affordable housing and low-income tenants. One famous local example was the 92-year old San José resident who was evicted from his apartment when a new owner converted the property to a veterans-only building.

Legal Bills in Stadium Rent Reset Dispute Close In On $2 Million

Tuesday night the Council appropriated another $750,000 in legal fees to law firm Hanson Bridget to represent the City in litigation with the 49ers. That makes a total of $1.5 million the Council has appropriated to dispute the Levi’s Stadium facilities rent reset.

In motioning to approve, Council Member Debi Davis said, “He’s doing such a good job.” Gillmor said that she had “no comment on the legal stuff.”

The money will come from Stadium Authority revenues, reducing the money available for stadium expenses, most importantly paying down debt, which can percolate down to less surplus for the City’s general fund, regardless of the outcome of any litigation.

With the $250,000 bill for legal services from Burke, Williams & Sorensen last year for legal representation on the same dispute, this brings the total for legal bills in this 18-month dispute almost $2 million.

In other business:

The Council received updates on Silicon Valley Power’s current operations and future plans and challenges; the Tasman Area development plan and the Pruneridge Ave. bike lane improvements. John Roukema, Director of SVP, also stated that rates will not go up in the next 3 years.

Gave final approval for a new granny-unit–accessory dwelling units–ordinance based on new state laws that mandate simpler and state-wide standard permitting for these units.

Postponed actions to sell City-owned property in Loyalton, CA for $10 million. The City’s electrical utility has owned the land for 40 years.

The Mayor announced that Harvey M. Rose Associates’ Confidential Draft Audit review of the Santa Clara Stadium Authority’s Measure J compliance will be publically reviewed in August, after the Council’s summer break. The leaked draft in its entirety and the replies to it can be read at the Mercury News website.

The Council postponed action on the City’s minimum wage ordinance until the July 18 meeting.

Closed Sessions Matter

In its July 11 closed session the City Council continued ongoing negotiations with city unions, hiring a city manager and current litigation.

Litigation includes San Jose v. Santa Clara CEQA lawsuit about Related project (San Mateo Superior Court 16-CIV-02303), Santa Clara v. City of San Jose CEQA lawsuit about Santana Row expansion (San Mateo Superior Court 17-CIV-00547), 49ers Stadco v. Santa Clara Stadium Authority private arbitration proceeding about stadium facilities rent reset, 49ers ManCo v. Santa Clara breach of contract lawsuit and the City’s counter suit (Santa Clara Superior Court 17CV304903), and an anticipated new lawsuit.

Also this week in court, there was a hearing July 12 about the City’s attempt to evict David’s Restaurant last month.

Case information about superior court lawsuits can be found on the county courts’ websites. Federal cases can be found at www.PACER.com. There are no public records of private arbitration proceedings.

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