City of San Jose, CA City Council, 7 Sep 2023

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From YouTube: SEP 7, 2023 | City Council Study Session: Affordable Housing Strategies

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City of San José, California
City Council Study Session: Affordable Housing Strategies: Production, Preservation and Protection,
September 7, 2023

This public meeting will be held at San José City Hall and also accessible via Zoom Webinar. For information on public participation via Zoom, please refer to the linked meeting agenda below.

Agenda: https://sanjose.legistar.com/View.ashx?M=A&ID=1118643&GUID=0ABD1507-776A-4238-B310-57241E931E31

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B

And welcome to today's study session on affordable housing strategies, we're looking forward to the content and discussion today. Why don't we start with a roll call.

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Jimenez Taurus Cohen, Ortiz Davis.

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Here, batra Pleasant.

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Here in Mayhem here, thank you.

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Thank you, councilmember Foley I know you have a quick update to share. Yes,.

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Thank you, mayor I, just wanted to make an announcement that I have a concurrent meeting right next door with the Retirement Board for the police and fire and I'm the liaison to that board, so I'll be leaving as soon as they get out a closed session. That's.

B

Important stuff yeah, it is very important thanks thanks for that, heads up, okay, great well, thank you to my colleagues for who are here uh for the study session. I want to thank City staff for preparing what I know is going to be a very engaging and educational study session for us this morning. I also will get to this in a bit, but we have some experts here from outside of City Hall who will be providing.

B

You know their insight and experience to us later in a panel and I want to thank them for taking the time out of their busy schedules to be here today. So so, thank you all for being here. Why don't we jump into the staff presentation.

H

Good morning, mayor city, council, members of the public, I'm Rosalind, Huey, Deputy city manager and acting housing director, the housing department is very pleased to bring you the topic of housing strategies and the city's three-piece framework. This study section a session, was actually requested back in March of this year by councilman, mabatra and the city council. During your discussion and approval of an affordable housing project on Almaden Avenue and as staff contemplated the study session, we designed decided to design two parts.

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First, we wanted to provide a foundation on the city's housing strategies and then do a follow-up part. Two study session on the cost of both affordable and market rate residential development, which is currently scheduled for October 26th staffs work on Housing and Development, is centered in our community and economic development City service area, where, every week our partner departments come together to discuss and collaborate on our work plan items, we discuss pain, points and market trends.

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We believe that housing and housing affordability is, in fact, economic development, that housing is Workforce Development, that housing is community building and that housing is family stabilization and we know that providing housing options actually requires many partners, with various perspectives from our housing providers, to our developers, to service providers, community-based organizations and, most importantly, to our lenders and investors, and we believe that the collective we have actually common ground on the desired outcomes.

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First, achieving housing, stability and upward Mobility for our residents throughout the city, and we know in order to do this, we have to work to reduce costs and provide predictability for our developers and housing providers.

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um Next slide. So, looking at our agenda today, we will start with the staff presentation and, if Council desires, we will take your questions. Then we'll then feature our panel of Housing funders and practitioners, after which there'll be another opportunity for Council questions and discussion, and then we will end with public comment now. I will turn the presentation over to Kristin Clement's interim deputy director and our staff will be introducing themselves throughout the presentation.

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Thank you Rosalind and good morning, mayor and council members. This slide defines oh next slide.

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Please, our mission in the housing department is to strengthen Revitalize our community and make sure that they're Equitable communities by providing housing for all, supporting the creation and preservation of affordable housing by working with our partner departments, investing in people through the provision or the funding of services and helping with housing, affordability and building great places through Housing Development policies, helping the planning department with plans and facilitating significant development projects with our other partner departments, we focus on meeting housing needs for the moderate, low, very low and extremely low income residents whom the market does not serve.

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Naturally, of course, this also includes unhoused residents and we work with a variety of stakeholders in doing this work. We approach all of our work with the intention of promoting equity and increasing fair housing opportunities. Next slide.

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This slide defines the three PS Production preservation and protection. The image on the right shows that each of the three PS needs ingredients to succeed, a foundation of organizations with expertise, it needs funding and it needs supportive programs, policies and data. The three-piece framework is the industry standard for high performing housing agencies. The need to operate strong programs in all three p areas was the lesson that we learned after spending 14 months in a national learning cohort with other U.S large cities to learn about ways to fight displacement.

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In addition, both the regional Casa process in 2019, the plan, Bay Area 2050 plan and the state's current housing element requirements also reinforce this message. The city's must have strong programs in all three of these areas.

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Why do we need all three p's, because over time, despite San, Jose being one of the very top producers of affordable housing in both the Bay Area and the state, our residents housing problems continue to get worse.

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So, in addition to protect to production, we've been developing draft preservation programs to keep the affordability and habitability of existing homes, and we've been operating protection programs to help tenants remain stably housed.

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The next few slides will provide local data as a background on the housing challenges in our market and then we'll go into each of the three p's and describe what we're doing next slide.

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This is a bubble chart. This image from apartment list shows that San, Jose and large cities all over the country have been unable to produce enough housing to meet the needs of their local residents.

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The chart shows the ratio of jobs created per housing units that receive permits along the x-axis, and then it Compares it to the growth in rents in over the 10-year period along the y-axis, you can see that the higher the ratio of jobs to newly created housing, the farther to the right, the higher that rents also Rose. These two factors are positively correlated in cities throughout the country and the San Jose metro area is at the top right.

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That's the Red Dot, which is an outlier in both respects, both in not adding enough housing for job growth in our region and having the highest increase in rents relative to basically any other city in the country. During this time, it's clear that we need to build more housing in San Jose. Of course, this is pretty intuitive. We need to add Supply to help with demand.

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However, Urban economics research also indicates that the production of expensive new housing in high cost markets like ours may help with the waterfall effect that people call filtering that it lowers some rents near the top of the housing cost ladder as people move shift into new units, but even over 30 years, rents cannot come down enough to the levels needed to be affordable to extremely low income and very low income households to afford, and in the meantime, without intervention, longtime San Jose residents would be displaced while they were waiting for the affordability to filter down, but it does not come so relying on just market rate production alone does not work well to meet.

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Today's needs for our vulnerable residents. Next slide.

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In affordable housing, we are always talking about how many homes in a proposed development are for extremely low income, very low income and low-income residents. What does that mean? Well, it depends on the County's meet area, median income, which varies according to your household size and according to the year that you're asking this chart shows income levels for 2023 for a single person, who's living in Santa, Clara County. Let's see how real jobs translate onto this chart next slide.

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Extremely low income includes a full-time minimum wage worker earns about thirty four thousand a year and it and someone working at Target as a cashier.

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Next, if you're a retiree, and you only get SSI, you would make over forty three thousand a year, you'd be very low income.

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If you were a typical San, Jose teacher you'd be making a low income wage at around 74 000., and a registered nurse here would make about a hundred seventeen thousand qualifying as moderate income.

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Finally, the salary that you need to afford a weighted average one-bedroom apartment in San Jose is almost ninety seven thousand dollars a year. This assumes that the renter is spending. No more than 30 percent of their gross income on rent plus a reasonable utility allowance side.

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This chart is a look at the distribution of residents incomes by those area, median income categories that we just covered. Note that the right two bars mod income is split between those two bars. It includes some of the the green bar on the right here. You can see how many households we have that are working in lower paying jobs in our Market. You know because lower income households- often they have at least two ages, if not three or four in the household aggregating, all of those wages.

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You can see that we have a large number of households that are low income and Below. We've got 44 percent of all households, a hundred and forty three thousand households approximately. If you include the mod income households, it's over 55 percent of our households, the other thing you can see on this chart is how the number of households in the extremely low income group to the left is the highest, and then it comes down the farther you go to the right.

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The residents in the three bars on the right, sorry, on the left, so extremely low income, very low and low income. They all require lower housing. Prices than the market naturally provides next slide.

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And the large numbers of residents in those lower paying jobs have not been seeing real-time wage increases over the past 20 years. In fact, many have seen significant wage decreases when you look at real dollars during this time, you can see that for the lowest age wage earners in the 10th and 20th percentile with the sorry, the the bright blue bar and then the the dark blue bar on the left, the changes in their incomes over this 20-year period were negative. They actually made less in real in real dollars.

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Middle income workers were basically stagnant over 20 years. They only saw a two percent increase in real wage earnings.

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These decreasing and stagnant wages are in sharp contrast, as you know, more significant increases for the city's highest percentile workers to the right, the 80th and the 90th increased by 17 and 18 percent next slide.

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At the same time that the lowest wage earners and the middle wage earners saw negative or no increases in their salaries in the past two decades. This slide shows that rents have increased dramatically in our Market since 2010 and again, these are. These are in real dollars, adjusted for inflation when you adjust for inflation, the average effective rents for one and two bedroom units in San, Jose, increased close to 50 percent, since 2010.

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rents obviously have risen much more quickly than any income group's wages have over the past one to two decades.

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This chart shows the racial disparities in housing cost burden for renters in San Jose, when you have high rents relative to incomes falling hardest on certain races and ethnicities. This is a problem for the city, renbert and households who pay more than 30 percent of their gross income for housing costs, plus a reasonable utility allowance are represented by the dark purple bars. So purple is rent burdened and renters that have severe cost burden, paying more than 50 percent of their income through gross income on rent plus utilities are represented by the green bars.

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So when you add those two colors together, you can see that the bars that are highlighted in the yellow boxes are the outliers in line two 50 56 percent of Hispanic or latinx households pay too much for rent in line five. Fifty five percent of black and African-American households pay too much for rent and you'll note. The first line is other, which is always a fun fact of census.

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Data that often reflects mixed income mixed income, mixed race residents, who don't feel comfortable checking one box or the other box, their their housing costs, burden for renters. Also disproportionately High 54 percent, and then you can see the two bars that that do not come out as far to the right as the others. When you look at hispanic white households, only 43 percent of them have rent burdens and 41 percent of Asian households.

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Although note, of course, if we were able to disaggregate this racial data further, you would see some Asian groups such as as Vietnamese faring far worse than others.

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So our residents with certain races and ethnicities are disproportionately burdened by high rents in our Market when you compare it to the overall average, which is the bottom line. Disproportionate rent burdens are a reflection of our history and ongoing Legacy of racism and racially discriminatory practices both by private and public institutions.

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These include redlining, racially restrictive, covenants on homes and racist patterns of investment and disinvestment.

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It's the city's obligation under state and federal laws to affirmatively further fair housing and increase choices for all residents in protected class, protected class categories, including race and ethnicity.

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So this is one of the reasons that we must mitigate the negative effects of rents that are too high on our existing residents, and we must protect residents from issues related to our expensive housing market.

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Okay, you've made it to the end of the data slides. This last data slide with background is to show you that the comparison between the city's restricted, affordable housing portfolio in the plum colored bars and the numbers of households with incomes below the median income divided up by income category.

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Our portfolio has over 18 000, affordable homes that staff monitors for compliance every year. This is a large number at one time. San Jose had the second largest amount of affordable housing production of any City in the state in just behind la, but it has just not been enough to keep up with the need. You can see. Our supply of restricted, affordable homes is a very small proportion of the total housing need for households in that income.

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In that income band, for instance, when you look at extremely low income, we have 2 300 units approximately, but that's only four percent of the housing needed in that category. The rest of those Eli households are in private Market housing, perhaps doubled up or tripled up, and some may have fallen into homelessness.

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This is where we are, despite all of our best efforts over the last 30 years, to produce as many affordable homes as we could possibly do.

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We simply cannot produce our way out of this deep of an affordable housing deficit to haul, to house all the residents at the lowest incomes in our Market, and this is why we have to put in place tenant protection programs for renters who are in the private Market housing, and this is why we need to grow the stock of restricted, affordable housing in other ways as best we can like through acquisition and and Rehabilitation of existing housing supported by City subsidies.

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So that is our background. Now, I'll turn it over to Kemet malacana, who will walk us through the first P production.

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Good morning my name is Kenneth mahwakana I'm division manager in the residential Development Division in the housing department.

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There are three parts of production that the housing department works in policies for market rate housing together with planning administer administering the inclusionary housing ordinance program, which requires affordability within market rate developments and constructing new, affordable housing. We will focus on the third topic today: constructing new, affordable housing.

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There's a need for an affordable housing strategy, because market rate developers build where projects are feasible.

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We need new market rate developments to move forward as they generate inclusionary housing units. Yet it does not always produce the Deep affordability that is required for a healthy community. Also, we need a strategy to satisfy the arena goals and the housing element.

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Further traditional funding sources leave a gap and it's a role. It's the role of the cities to fill that fine, that financing Gap to successfully complete, affordable housing developments. Recent San Jose projects have required approximately six to eight total funding sources.

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In this next slide from the Turner, Center is an illustration of both the funding Gap and the number of sources that are required in California as compared to other states. You can see in other states may require three funding sources, whereas California requires, in this example, six.

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Also successful completion of affordable housing developments is a very complex process.

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There are many parties involved in ensuring that affordable housing developments move forward. The circle on the right shows internal departments and parties to the city and shows how many different departments are involved in a transaction.

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It's a complex process over many months to ensure a deal move forward moves forward. The circle on the left shows the external partners that the city works with the city's actions and decisions affect every other party next slide.

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This is a sample timeline of the affordable development approval process. The housing department releases, notices of funding availability in the top scoring projects are awarded those projects move forward to complete their entitlement process, and then we come before the city council to request a funding, a funding commitment.

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If we receive that commitment, then we move forward to apply to the California debt limit allocation committee, sidlack for tax credit allocation, sidlack next announces its Awards and then within 180 days. We must close on the the development must close on the financing.

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After the closing construction period begins, we can take, can take a year and a half or two years or more and then finally, there's lease up in a certificate issuance of a certificate of occupancy.

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This slide is an example of timing, Station apartments, one of the projects that we've worked on.

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From this slide, you can see in the first cut in the second column, the construction loan, which lasts only during the construction period, which is then taken out by permanent financing about 50 to 60 percent of both the construction financing and the permanent loan for this project were from private sources. The top two lavender rows, including the traditional bank loan and private Equity Investments, as Chris Neal, president of core companies, will discuss later. Affordable housing developers have to find Gap sources to allow for lower rents.

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In this example, some of the Gap financing was provided by the state hcd, the city of San Jose and the county of Santa Clara.

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There are multiple funding sources available to the city of San Jose, some of the common ones we use are measure e, the low and moderate housing income asset fund, our inclusionary housing ordinance, which generates in new fees the commercial linkage fee and the affordable housing impact fee. There are also Federal sources like home and cdbg.

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The city strives to issue notices of funding availabilities annually and for every dollar of City money put into an affordable housing development. Other sources put in approximately five dollars and fifty cents.

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There are many challenges to construction of new, affordable housing developments.

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There are local challenges like the exhaustion of the County's measure. A funds they're also challenges that are clearly Beyond to control. The city of San Jose, like economic conditions, with rise in interest rates and supply chain disruptions, all of which act to increase the cost of development, and then at this at the federal level and state level, there could be their bottlenecks with the federal, the federal and state tax credits.

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There are solutions as well, however. The regional and state Bond measures would be helpful and as a federal bill in process to increase tax credit, Bond allocation.

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This concludes my portion and I'm, going to turn it over to my colleague, Josh ishimatsu, to speak on the third p.

C

I second, thanks Kevin, my name is Joshi shimatsu and I'm; an acting division manager in.

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The house Josh I'm.

L

Sorry, can you make sure that you're speaking into the mic sure.

C

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Apologize for that, but myself and beltra can can't hear on this side. Okay,.

C

Great, is this better, am I good? No great! Thank you. So um the second p is Preservation, and so when people say preservation about housing, they usually mean one of three things. The first is um preservation of existing affordable housing. So that's that type of housing, Kemet was just talking about affordable housing, especially those buildings, developed 20 30 years ago, comes with finite terms for the length of affordability for the properties. So this type of preservation is about extending the the affordability of existing already subsidized, affordable housing.

C

The second type of preservation that people usually talk about is in the sense of ensuring that existing housing is maintained in good condition, so it's about preserving the physical asset, so this could be in the form of targeted targeted code enforcement or subsidized loans for low-cost housing that is privately owned, um and then there's the the type of preservation that I'm going to be focusing on today, which is acquisition and Rehabilitation of existing lower cost, unsubsidized housing and and maintaining that as affordable housing.

C

This third type of preservation, so it's acquisition, rehab used to create publicly supported, affordable housing like I said, is my focus. Today, next slide, please so um in the Bay Area as a region, the number of homes affordable to lower income, households has been decreasing, so this chart just shows the overall decrease and that between 2012 and 2017, about half of the unsubsidized affordable homes in Santa, Clara County are no longer affordable. These are homes that once were affordable to lower income households, but because of rising rents.

C

Now or not, this shows another reason why we can't solve our affordable housing crisis through production alone. Every year we produce new units of affordable housing and, at the same time, we produce hundreds of units of new, affordable housing and, at the same time, we're losing thousands of units of unsubsidized low-cost housing. So this is like trying to build to build a new building on a sinking. Foundation next slide, please.

C

So in San Jose, this loss of unsubsidized low-cost housing is despite having a rent stabilization program. We lose affordability in rent stabilized units when these units become vacant. When a current tenant moves out, annual rent increase, caps, no longer apply and an owner can raise rents as high as the market will bear. This is called vacancy decontrol.

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This chart is data from the city's rent registry and shows the difference between annual rent increases between apartments that kept the same tenant through the time period. That's the blue bars and those that, through vacancy to control where rents were raised when a tenant moves out- and that's that's represented by the orange bars so except for the blip during the height of the covert period at the center of the chart, rent increases where there was vacancy to control were substantially higher. That.

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Rent Creeks is in units that became vacant are approximately two to five times higher than in units that are that remained occupied. So in this way, despite having rent stabilization, we're constantly losing low-cost units as rent stabilized units turn over next slide. Please.

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So responding to this loss of units is why preservation is an essential, affordable, housing strategy. So we need to engage in preservation to increase the number of restricted, affordable homes, allowing tenants to stay in homes and their neighborhoods rather than having to move or disrupt their lives. Their ties to within a community acquiring and rehabilitating existing properties is cost effective and relatively fast. The rehabilitation involved can help fix condition of property problems and also in the in the as they're being real rehabilitated can help at the city to meet its climate. Smart goals.

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The way we do this work also can open doors to newer Community ownership models such as Community Land trusts and conversion from rental to ownership models as well. Next slide. Please.

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Big picture, so how does acquisition rehab work? Big picture? You have an affordable housing developer. This is most typically a non-profit organization like a Community, Development Corporation or a community land trust, but can also be a for-profit entity or a public agency that purchase is an existing apartment, building on the open market and then rehabilitates the property and owns and operates it as affordable housing or mixed income. Housing like with new construction, affordable housing.

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There is a mix of private funding and public subsidy, but the overall process and timeline can be simpler and shorter, and this process is the um a property owner on the private Market decides they want to sell a non-profit or public agency or purchaser must have the capacity to assemble financing on Market timelines and at Market competitive prices, and you know, they'll, be assembling this financing from private and public sources and for All Phases of the process, acquisition, Rehabilitation and permanent financing within a year, sometimes more all Rehabilitation can be completed and long-term existing residents can continue living in these buildings for as long as they want next slide.

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um There are several barriers to developing a more robust preservation programming, including limited amount of resources that are currently available as subsidies for acquisition rehab along these lines, one of the main sources of funding for affordable housing in general, which is tax credit Equity, doesn't currently work well well with acquisition, rehab, so act rehab requires proportionately more funding from public sources or local public sources.

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There's a high degree of expertise required to do acquisition, rehab work and in San Jose we have a limited number of qualified organizations that are currently doing this work and also in San Jose many lower income renters live in buildings that have under 15, 50 or so units most are substantially smaller. So this lack of economies of scale make it harder to finance and operate these buildings next slide. Please.

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um So what we're doing in the city of San Jose, um you know as far as fundings, finding solutions for these challenges. This is something that we're committed to working on, um and you know, including a number of commitments in the council, approved housing element.

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um One current opportunity for us is that other local public agencies are also interested in building out an acquisition, rehab sort of preservation, Community Development ecosystem. We have had conversations with the VTA, the county, Santa Clara County Housing Authority, and the Bay Area Housing, the Bay Area Housing Finance Authority, and we're exploring opportunities for collaboration and stronger joint approaches for funding and capacity building, we'll be reporting to the community. Economic Development Committee on our preservation program.

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Development work later this year, we'll be issuing a capacity building, nofa notice for funding available funding, availability in the context, Community Development, with acquisition rehab as a focus for emerging Community Development corporations, Community Land trusts to build their capacity to do this. Work in our city we'll be using we'll be issuing acquisition acquisition, rehab, nofa notice, the funding funding availability to make funding available directly for acquisition rehab, and we are analyzing local data to quantify preservation and anti-displacement needs.

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We have a lot of data already about the total need, but we want to be able to drill down more about the specific types of Housing and locations where preservation acquisition, rehab is, is needed most, and this will culminate in a report to Council next year so I'll now hand it over to Emily to walk us through the third P production.

M

Good morning, council, members and mayor, thank you for your time. So far hope you can take a breath. While we get into the third P protection, everyone can hear me: okay, okay, cool, um so what is protection? These are policies and programs that increase housing, stability for rent or families, particularly lower income, renter families, as we saw in slide seven, a large portion of our household population, is at the lower end of the income scale. These policies also aim to preserve communities next slide.

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So what are types of protection policies? They are policies that prevent large rent spikes in rents that can lead to displacement their policies that prevent unnecessary evictions.

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They are policies that can require relocation, assistance for necessary evictions where the tenant is not at fault. The owner wants to do something with their unit, their policies that can guarantee basic habitability and safety standards, and also policies that help support safety, net programs and a prime example of a safety net program. Is our county-wide homelessness prevention system next slide?

M

So why do we need protections, as we've seemed to go over in a lot in the in the beginning? With all the data there's high rent burdens in our population in this chart, all of these people represent San, Jose, renter households, the purple and blue portion are the portion of renter households in San Jose that are rent burdened.

M

What this means is, there are households that pay more than 30 percent of their income for housing and thus may have difficulty affording Necessities such as food, clothing, transportation and Medical Care, the blue section, uh the 22 percent represent renter households that are severely rent burden. These are households paying over half their income towards housing costs and just to call back to the earlier slide. uh When you disag, when you desegregate this data into racial and ethnic groups, it's it's a much larger portion for latinx and African-American populations slide.

M

So what are some challenges for protecting renters? In addition to balancing the needs of smaller housing providers? We have some some simple facts that are just constantly staring Us in the face. Well, while we do have San Jose does have some protection policies in place that we will cover on the next slide. These policies by themselves do not wholly address the underlying issues caused by high rents. Relative to incomes, evictions are increasing and over 90 percent are based on non-payment of rent.

M

What this chart is showing is the number of eviction lawsuits that are submitted to the housing department for units that are covered by the tenant protection ordinance. Housing providers for covered units are required to submit copies of these eviction lawsuits to the housing department within a certain amount of time.

M

So, on the right I mean on the left, you will see a pre-pandemic and on the right you will see post pandemic as slide 8 earlier in this presentation, demonstrated, inflation has been outpacing, wages for lower income workers and their purchasing power has decrees compounding the problem, as shown in slide, nine is that rental costs have outpaced inflation, lower income people were struggling before the pandemic to afford their housing and the pandemic exacerbated and already existing and growing problem.

M

Well, we all expected a spike in evictions based on non-payment of rent. After the last of the protections ended in June 30th of last year, uh one we would have expected the numbers to then kind of come back down to their pandemic levels on the left side of the chart. We are now over a year out, and the number of evictions is not ebbing. It still seems to be staying pretty high. This shows us that many households are still continuing to struggle.

M

um I just want to note that there's a Minor error in where the coveted protections ended it should line up with Q4 of 2122 and I. Didn't explain before the blue portion of this chart is evictions based on non-payment of rent. The lavender Parson is all other causes next slide.

M

So uh what are we doing here? In San, Jose protection policies and preserving communities have been important to the city going back decades. The apartment ordinance was originally enacted in 1979 as a policy to limit rent spikes during another period of high inflation and increased housing needs. A few years later, the city adopted a mobile home rent ordinance, which limits annual rent increases for Mobile Home Spaces, so a little less than 10 years ago, in response to the tightening rental market, Rising displacement and rents, the city council, the city council.

M

After an extensive study and City auditor report on the rental housing ordinance enacted a series of ordinances aimed at stabilizing low-income renters and preventing displacement in 2017, the council revised the apartment, rent ordinance, which is designed to simultaneously prevent unmanageable rent spikes in existing tenancies and also guarantee a fair rate of return for property owners, a right that is guaranteed under the California Constitution.

M

Shortly after the the city council enacted the tenant protection ordinance, which established what we call just cause for eviction protection, which means that for a housing provider to terminate a tenancy evict a tent, they needed to have one of 13 legal causes.

M

The city also enacted an Ellis act ordinance, and this refers to a state law which has certain time frames and requirements for tenants who are being displaced because a housing provider wants to withdraw the rental use units from the market. This can be for demolishing a building or repurposing the building for a purpose. That's not rental housing.

M

In addition to the suite of ordinances, the city also supports safety net policies. The homelessness prevention system is a county-wide partnership of local agencies, including the city and county private funders and non-profit service providers. Temporary financial assistance, legal support case management and other services are provided to help at risk. Families and individuals maintain their housing and avoid falling into homelessness.

M

The program launched in 2019, but despite its growth and helping thousands of households, it can't keep Pace with the overwhelming need that there is right now and finally, with the one-time federal funds that came through as a result of the pandemic. The city is also engaged in other eviction, prevention efforts um aimed which which Target households at the precipice of losing their housing.

M

However, these efforts can only provide you, the resources to the tenants or temporary relief in form of our eviction diversion program, and it really works best when it's uh when the household is also enrolled in the homelessness prevention system or has some other viable path towards housing, stability, rental assistance alone does not provide housing stability. You need a lot of other resources and services in connection with that next slide.

M

So what are the impacts of these policies? The top three reflects that we do have programs in place to protect residents from large rent increases and unjust evictions. So that's the 38 000 households that are covered by the apartment, rent, ordinance, the 10 000 Mobile, Home Spaces that are covered by the mobile home, rent ordinance and the 86 000 plus households that are covered by our local just cause protections.

M

um We contribute to continue to contribute to our County's homelessness prevention system, which is ongoing and so far 3 500 plus households in San Jose have been stabilized by that system. So the last two are impacts are really a result of the just influx of of federal funding. We've received and were able to deploy this allowed us to administer rent relief programs that paid over 160 million to housing providers and kept tenant renters stably housed.

M

The question remains: is: are these policies and programs enough to to deal with the rise of of eviction and displacement so with that? That's the final p and I will hand it back to Rosalind.

H

Thank you so much so mayor council. Thank you for your patience. I know that was a lot of information to share with you, but I wanted to get all of the information out on our three PS framework and at this time we're happy to take any questions you may have or if you want to transition to the panel, we'll leave it up to you mayor.

B

Thank you great. Thank you. That was a lot of great content and background on our history and what we're doing as a city and the great need that's out there in many ways unmet. Why don't we pause for a moment see if colleagues have questions if folks would prefer to hold off, then we'll go to the panel? Does anybody have a burning question based on anything you just saw I'm not seeing anyone? Okay, then, why don't we transition to our next panel and then we'll do questions? Thank you again.

N

No I know I'm on it demand.

N

What happened? There's a memo.

B

Oh yeah, more on it.

B

Are we ready, yes,.

O

B

Morning, good morning, let's jump in all.

O

Right so um hello, good morning, my name is Regina celestin Williams I'm, the executive director of SV at home and we're a public policy and advocacy organization with the vision of a diverse and Equitable Silicon Valley, where everyone has access to a safe, stable and affordable home. So that was a lot of information.

O

I am grateful to be here today as the moderator for this session, this portion of the study session, and so that means that I have the responsibility of grounding us a little bit as the information continues to flow help us to continue to move along, and it also means that I don't have any slides so I'm grateful for that today.

O

um One thing I wanted to to point out was with all of that sharing of information, so many numbers so much data, um all those all those numbers are are households all those every number you see those large numbers, those are people, and so I just want to take a moment to Center the folks that we we all are here to serve today. Those folks who are at risk of displacement um in the last portion of the session.

O

There was a mention of how housing is Community, Development, it's family stabilization, and we, we really saw our colleagues, our housing department, staff, Center the goal of serving residents and that housing is investing in people, so I want to ground Us in that and the need for all three p's production preservation and tenant protections, and the fact that this effort that we're here today to talk about is working against displacement pressures.

O

All those households that we saw, 57 000 households that are extremely low income, are at risk of no longer being able to live in our city and have stable housing and that there's racial disparities.

O

The majority of folks who are rent burdened um are are black and brown folks, folks, who have endured a legacy of discrimination and racism in our city and in our country, and so there really is a need to preserve what we have right: produce, more affordable housing and protect those folks who are who are vulnerable to the private market and vulnerable to these market dynamics that we see, we know as the real estate cycle.

O

But this is really um folks who are impacted, they're vulnerable to these ups and downs, increased inflation, increased interest rates, higher costs of construction, and so I'm so grateful to be here with you all today to talk about the city's role, the city's commitment, which was shown in its historical commitment to the folks who live here in the race of all of these. In the face of all of these challenges that were noted by the housing department staff and also to highlight the opportunity, through acquisition rehab to serve folks and preserve more housing.

O

So I appreciate the opportunity to to be here today as your moderator I personally I identify as a black woman.

O

I am a nine-year resident of the city of San Jose in District, three I'm, a homeowner I, also own property in my hometown, so I identify as a landlord I didn't I have had experience working as an affordable housing developer, both specializing only in preservation and working in production and new construction and I'm, proud to say that I grew up in public housing, so I really understand and I'm aligned with each of the panelists. We have today.

O

The depth of knowledge, the breadth of expertise and the diversity of perspective that that is before you in this portion of the panel is no coincidence, so I just want to acknowledge the housing department staff and their intention their how hard work their commitment to the people of this city and working to put together this session today, because we are going to learn a lot.

O

Affordable. Housing is an asset that sustains and strengthens our communities by ensuring that we all have a safe, stable home and affordable housing is the Public's answer to addressing the needs of people impacted by our exclusionary housing market.

O

It is a bridge between our current and Equitable system and a place where everyone in our community can thrive, and so, as we work today, to learn more about the roles of the many players who are involved in this affordable housing work I just want to continue to lift up the role of the public in creating this place that we can all live and Thrive and not be forced to leave our community our jobs, our neighbors, our our families and Our Roots.

O

Because of the displacement, that's caused by the housing pressures that we see- okay, so again great panel, so excited to introduce our first panelists, which is Khan Russo.

O

He is the vice president of policy and Innovation at the San Francisco foundation and he's going to come to us as a funder and a policy convener and talk to us a little bit about the three p's.

N

Thank you Regina good morning, mayor council and City staff. Thank you again for the opportunity to share with you some of our experience and insights of the San Francisco foundation. For the past 75 years. We have served as the bay area's Community Foundation I'm humbled to be I'm humbled to be before you today, both as a former public servant for the city of San Jose and currently, as vice president of policy and Innovation at the San Francisco Foundation I'm, proud to have worked side by side with many of you on the council.

N

Here on the 18th floor to make our city gray and I'm excited to continue partnering with you, you know, I'm a San, Jose resident. My family has been here for 40 years. uh I grew up in Section 8 housing I benefited from the rental assistance programs that San Jose, provided my now husband was able to purchase our condo because of a loan assistance program that San Jose provided, and that happened 14 years ago.

N

So I am indebted to the incredible leadership and the work that you all lead here in San, Jose and I'm, proud to be a San Jose resident. You know: we've been inspired by the at the San Francisco Foundation. We've really been inspired by the leadership and commitment that San Jose has towards housing, particularly affordable housing. San Jose was one of the first cities in the region to protect its residents during the pandemic.

N

By passing eviction moratorium, you produce hundreds of dwellings to house the most vulnerable through your emergency interim housing program, and you were creative and effective at leveraging state and federal resources like home, key to reimagine and preserve housing for our homeless Neighbors by converting hotels and motels in the city.

N

So for this reason the San Francisco Foundation has invested millions of dollars in San Jose and regularly holds you up as a model for equity-centered leadership and policies at the San Francisco Foundation we're working to build a bay area where people of all Races and backgrounds can thrive in affordable and vibrant communities. We help keep families in their neighborhoods, preserve, affordable housing and build community wealth at the state and Regional level. We advocate for policy and Innovation, provide Regional and state leadership and build political and public will for change.

N

We believe that you can't separate racial Justice from housing, Justice generations of exclusionary policies and institutional racism have created an unjust housing system which Falls hardest on communities of color.

N

Strengthening those communities is how we move the whole city forward and getting it right means being honest about how we got here, so we can take on the underlining problems it means taking on the way that bigotry, racism and inequity are baked into the structures of how housing is developed and delivered in our communities. We know that promoting Justice and Equity starts at home. A diverse, equal, thriving city starts at home, let's built those homes and strengthen our communities, so that residents don't face displacement.

N

Let's make sure all of us, especially those who have been locked out for Generations, have a decent place to come home to that's the future our community deserves. You know you've heard about the three p's. This is one of the organizing Frameworks for solving the housing crisis. This refers to protection of our residents to avoid displacement, preservation of existing housing and production of new housing.

N

This framework was reinforced in the casa compact, a 10-point plan that was co-chaired by San Jose's, former housing, director Leslie corsia and former Ed of SP at home, Fred, Blackwell, CEO of San Francisco foundation and other community leadership such as Michael Coral cavouribias.

N

Thank you and Steve heminger, former San Jose City leaders and elected officials were also involved in creating this plan. The three piece of housing is a framework that refers to the following principles: one protect protection focuses on safeguarding the rights and interests of tenants and vulnerable population. It includes measures such as rent stabilization, just cause eviction, protections, anti-discrimination laws and tenant advocacy to ensure that people have secure and stable housing to preserve preservation, emphasizes the conservation of existing, affordable housing units and the maintenance of housing quality.

N

This involves strategies to prevent the loss of affordable housing such as historic preservation, efforts, inclusionary zoning policies and initiatives to prevent the deterioration of existing housing stock and three production production involves the creation of new housing units to meet the growing demand for a housing in a community.

N

It encompasses efforts to streamline, permitting processes, encourage this construction of both affordable and market rate housing and promote sustainable and Equitable development, often with an emphasis on Transit oriented development and higher density housing near Transit near public transportation, as you have probably inferred that these three pillars are interconnected.

N

For example, protecting tenant rights can help prevent displacement which, in turn supports housing preservation efforts. In order to be effective, you need all three PS. For example, you can't just focus on only producing new units and think that you can build your way out of this crisis.

N

Additionally, a balanced approach to these three PS can contribute to housing, affordability, accessibility and sustainability in San, Jose, so aligned with these Regional efforts like the Bay, Area, Housing, Finance, Authority and other big cities in the Bay Area such as Oakland and San Francisco San Jose has been developing effective policies that serve really as a model for the region. You know that housing crisis can only be solved through Regional coordination. You know that most people do not limit their search for housing to a city.

N

Boundary San Jose's been working in partnership with regional entities to share and scale the solutions that you have developed, such as your accessory dwelling unit program. Your approach to working with modular and prefabricated Builders to pre-approved designs has streamlined the permitting process, reduced cost and time and quickly get folks housed. You are also one of the first cities to launch an online platform allowing residents to be alerted to and apply for, affordable housing opportunities in one place.

N

Instead of forcing your residents to physically stand in line at four o'clock in the morning, just to pick up an application, I was there with my dad at four o'clock, picking up applications. So you know the impact that it has to community is not insignificant. These efforts that inform pilot projects such as the Bay Area Housing Finance Authority throughout the region, building upon San Jose's housing portal. The Dory project is an online housing portal that centralizes housing listings housing listings for the nine County Bay Area streaming lining the process for renters to find affordable housing.

N

The Bay, Area, affordable housing pipeline project will track the inventory of affordable housing developments across the nine County Bay Area, allowing us to quickly learn and Achieve economies of scale. The preservation project mirrors San Jose's effort to build the capacity of community-based organizations to buy buildings, convert them to affordable housing and protect residents from displacement and the homeless. Prevention pilot provide sustained rental assistance for seniors and people with disabilities long term.

N

These types of Pilots can be funded and scaled throughout the Bay Area through Regional Bond efforts such as a 10 Billion Dollar General obligation, Bond, where San Jose would get a billion dollar allocation and, together with the county of Santa Clara, bring in almost 2 billion for housing in this County.

N

This can bring in the Bay Area 45 000 homes create 29, 000 jobs and spur over 31 billion dollars of Economic Development.

N

You know, as a member of the association of Bay, Area government or abec for short San Jose's housing policies have always been aligned with the key housing policies that ABAC has identified, adopting 34 of the 42 critical policies to housing our community compared to other cities in the county and large cities in the region.

N

San Jose is there with the top of the pack, your 2018-2022 housing policy elements has identified 172 housing policies to help residents stays housed and safe, as you continue to develop and Implement these housing policies, whether it is to Center and engage community educate, Community conduct research at capacity or fund Pilots, the San Francisco Foundation stands ready to partner and support you together. We know we can solve this housing crisis crisis. Thank you for your time.

O

Thank you great. So that was more information and we're so grateful to have you here with us Khan. Next we're going to go to Chris Neal.

O

He is the president of the core companies and he's here with us today as a housing developer, to talk a little bit more about the P of production.

P

Thanks Regina good morning, mayor Mayhem and council members, the core companies is a 40-year downtown, San, jose-based housing, developer and general contractor over our 40-year history, we've developed and built over 5 000 homes with over 3, 500, being tax credit, affordable homes over 1500 market rate homes and over 800 homes in mixed income communities, mostly in San Jose, Santa, Clara, county and San Mateo County.

P

We are currently working on six projects in San Jose, including one affordable apartment under construction at the tomian station, a market rate component to that project that has been delayed due to the impacts of covid and for affordable projects, including an affordable, homeownership project that hopefully, one day will be coming in front of you.

P

It is with this experience that I'm before you as we examine the issues around affordable housing production first slide. Please, second slide so I'm, not so good, with slides I set them into them in the wrong order. So thanks so in front of you is first. This is a capital stack for two projects that penciled you might hear the terms pencil do it doesn't penciled or so.

P

These are capital stacks for a market rate project and affordable project that pencils and it shows where does the money come to be able to build and move forward and build a project? The first is a market rate project. We started in 2017..

P

Typically, a market rate project will require about 45 percent of the project, cost or sources from equity and roughly 55 from debt, and if you could attract those sources through the financial components, it's deemed that the project pencils and it can move forward and prior to covid, there were several many projects were moving forward in San, Jose and through the rest of the region.

P

Unfortunately, generally due to cost inflation, Rising interest rates and stagnant rents. Today, a project cannot raise 55 percent of debt for a project, nor could it attract the 45 percent of equity. So these projects right now do not pencil and I think it's been supported by. There was an article in the Mercury News last week that mentioned in the first half of 2023. There were no new projects, started that included market rate units and I'm, not usually a good projector, but my guess is in by the end of the year.

P

Unfortunately, the stats will be very similar that the market condition is not very conducive right now to the start of market rate apartment projects.

P

What also is in front of you is the capital stack of an affordable project that recently closed.

P

As you can see, the equity amount is actually quite similar in an affordable project to a market rate project, the difference in an affordable project, it's a tax, credit, Equity investor and they get their economic return from tax credits, not really from the housing project.

P

What I think also stands out, as you can see, that the senior loan is significantly lower in an affordable project than a market rate project, and that's really a function of the goal of this project is to create lower rents.

P

And so, as you can see in this example in front of you, roughly 48 percent of the total project sources to cover the costs came from Gap funds, comprised of the city, the county of Santa Clara and two different states resources that we had to go and apply for and compete. For so I mean almost half of the sources for this project came from Gap lenders, Gap partners, one thing I want to call to your attention is I'd, say roughly 10 percent of that Gap, so it could be closer to 40 percent.

P

Were a function of what happened over the last year with Rising interest rates, so I'd say 10 of that. 48 percent is a function of rising interest rates. The senior loan is significantly lower because the cost of money is higher, as well as the the interest carried during the project went up dramatically. So that was really a big impact to the capital stack.

P

The Gap could be reduced if the average rents came down. In this example, this project was targeting over half of the units, are targeted to Eli households or, if you kind of go back to kemet's presentation right that that population that actually had the lowest amount of homes in San Jose. So there was a focus of this project, is to Target that population and the other half is 50 or 60 percent. So that there's you know, one tool to reduce the Gap is increase.

P

The average rent, but, what's confusing, is that is in stark contrast with the goal of the projects that we're trying to do so. That's one of the challenges with the projects. If we want deeper rents, the Gap gets bigger. We need a public subsidy, so I think in order to meet the Region's housing goals. We need policy that both supports the production of new market rate Apartments, which is effectively shut down right now, and policies and economic support to continue to produce long-term, affordable housing for psh, extremely low income and very low income households.

P

Next slide, please Regina.

P

So this slide was to help us kind of emphasize a point that Kemet made. If you remember in his slide, he had a slide that showed all the different city departments that were involved in creating housing and affordable housing and then all the outside partners that were involved in creating affordable housing, the affordable housing developer, is usually kind of the Ring Master of the circus. If you will- and they are coordinated with lots of different entities, lots of different parties and what I wanted to do is kind of highlight to you.

P

What is the role of an affordable housing developer in the process and I'd really highlight that really steps one through five are the creative process right. How do you create this? You have to find the land there's a whole process raise the capital once you have all the elements together in the project pencils. The second half of the cycle is really about executing building the project on time on schedule hitting the lease up targets.

P

The key really was Step. One is identifying the site and if we talked about you have to compete for resources, resources have targets and goals, so any old site is not sufficient for an affordable housing. You want to make sure it's in the right location. Has the right census tract near Transit near certain amenities can be developed for the purpose of what you're trying to develop.

P

um If we were having this conversation 10 to 15 years ago, we'd probably say that step four was the most complicated step in any development, let alone affordable, housing, development, I, would say right, narrowly steps. Three and five are the most difficult parts of affordable housing. Once a project has been identified and deemed feasible, so we've gone through steps. One and two.

P

The most important role now for the affordable developer is to start identifying and raising the Gap amount which, as I demonstrated, could be up to 45 percent of the total cost, and if a developer cannot identify those sources in that Community for that project, what they'll typically do is pass on that project and move on to another property within that Community or move to a different community that has the resources to help support, affordable housing development, because it really requires a lot of partnership and a lot of subsidies.

P

The First Source we go to is our local partner, and here that would be the city of San Jose and the county of Santa Clara compete for and win the state sources. Typically, a housing project needs a local commitment of funds, and it needs to be able to demonstrate readiness.

P

Affordable developer relies on a consistent and predictable source of Gap funds for projects, because without the Gap Source it's hard to compete for the state resources.

P

This is why San Jose has been such a leader in production during the Redevelopment period and, most recently with County measure. A these were predictable and known sources that you could rely on year over year.

P

It is imperative that a new Gap source is identified, whether it's the regional Bond measure that buff is mentioning or even a local measure. It is critical and imperative that a new Gap source is identified, otherwise production of affordable housing will drop off over the next few years, as I mentioned before, step four used to be the most difficult step, but now it has really benefited from much of the state legislation to accelerate housing production.

P

But despite that, it is still risky and time-consuming time consuming to get housing and affordable housing entitled and with time and risk comes cost, so the more risky and the more time it takes. The more cost it will, it will be once a project secures its approvals, um that the next really focus is to apply for the remaining Gap funds of the state level and tax credits. This can easily take two to three years and in in some cases much longer than that.

P

Once the project pencils, then the developer is focusing on execution so step. Six kind of demonstrates that that there's the closing process and I think Kevin identified. It could take six to eight sources of funding. So with that six to eight sources, you have six to eight groups of attorneys on the phone calls you have six to eight different objectives and legal documents, and so the closings become very complicated and very difficult. The more the Gap sources you have it's frequently discussed is the seven layered cake of affordable housing.

P

The challenge with that is once you've won the golden ticket of state tax credits and bonds you're on the clock to close within six months, so that six month, duration from when you've won the golden ticket to when it expires, is very time consuming and involves many phone calls and is very critical to the production of affordable housing.

P

um What is interesting, what makes affordable housing slightly unique? Is it's not just the creation of the housing to really deliver the credits to your investor? You also need to lease up the project with the tenants that had been targeted, and so usually six to nine months before a project is going to be completed. You're starting the lease up process, that's Outreach to the community to engage into the local community that have the need for the project and what is happening more on funding projects in San, Jose and Santa Clara County.

P

Our projects really now have three lease UPS. Most of our projects today have three components: we have a component of the Eli households which would be 30 Ami and that's generally oversubscribed.

P

We have psh households, we're usually working with one of the waitlists from the county or the city, and that's really the source of tenants for a project, and that is a very difficult and time consuming process and then, usually, you have a mix of of the higher average Amis 50 or 60 percent vli or low income households.

P

One of the key points about coming back to the risk. If an affordable housing project does not complete on time and Lease up the units to the targeted population on time, it faces significant penalties from the tax credit investor which could result in them putting less Equity into the project. So the risk is not just in building the homes. It's also making sure you get the targeted population leased up and moved into the project.

P

Then, once we get through the lease up, then really work, we've delivered the tax credits and we're operating the project indefinitely. I think what is unique and special about the tax credit, affordable housing program is the public-private partnership. Not only do we have annual compliance requirements from the Myriad of public agencies who come and inspect the sites and have reports to reports to the agencies, it also has annual inspections and oversight from the equity and the lenders.

P

So there are a lot of eyes visiting the project on an annual basis and a lot of tension is being paid.

P

um I'd like to close with, has been demonstrated by the presentation really affordable. Housing production is a team sport, and one of the most important Partnerships is the partnership between the city and the developer and the community. It takes them all working together to make these homes happen. Appreciate your time.

O

So um before I have the pleasure of introducing the next panelists I just want to highlight a couple of things that I heard as threads between the last two presentations and panelists, which is the role of this city as a leader in the region and I. Appreciate you all for that in the continued leadership and the role of this city as a partner in this work in making sure that the the units that we're looking to produce are actualized are realized and people can move in and that's such an important, important role.

O

And then the other thing I want to highlight is the opportunity that both Khan and Chris mentioned about the Regional Housing Bond and the need for new resources and the the opportunity for the city to continue to lead and play a very strong partnership role as we bring new resources to the table to push for the production of more affordable housing. So with that, I want to um pass it on to Cindy.

O

Wu Cindy is the executive director of local initiatives, support Corporation, Bay Area, also known as Lisk she's here today, with us as a funder and a technical assistance provider, and to talk a little bit more about preservation. So Cindy.

Q

Thank you Regina good morning, mayor and council members next slide. Please so Lisk is a non-profit lender and we provide capacity, building and TA in both formal and informal ways. We resource Community organizations to make sure they have the funds and capacity they need to achieve a vision where every person and family member can Thrive I. Think I've heard that theme quite a bit through the morning and appreciate being here with my my co-covision people in this journey.

Q

uh Lisk is a nationwide organization. We are one of 38 offices across the U.S and as an organization we have invested 30 billion dollars in Community Development. Since our founding we work to build abundant housing, vibrant small businesses and thriving neighborhoods. Our office is one of the oldest in the network and we have been around for 40 years next slide.

Q

Please we launched in 1981 and have invested in over 40 in homes for over 40 000 people, 1.4 million square feet of community commercial real estate and have trained over 400 Professionals in our signature program, Housing Development training institute and we've been happy to support staff from Alta from Charities many staff. Here. In San Jose so next slide, please, we use a three-piece framework for our housing work. This has been the backbone of our work in the partnership for the Bay's future, in partnership with czi and San Francisco Foundation.

Q

We are the fund manager for a family of loan funds. We have closed 400 million dollars of loans since 2019 and a third of the portfolio is Preservation.

Q

We are very excited to have deployed this money and really look forward to taking the lessons learned from this work into the next 5 10 15 20 years of this work.

Q

uh Here's an example from Berkeley eight units preserved in partnership with McGee Avenue, Baptist, Church right next door, love to see the church and a local community Land Trust partnering together, love to see also you'll notice, the individual metering on the front of the building, and really noting that preservation is also a green and conservation strategy in its foundational concept, which is that we are preserving existing buildings and not using new materials.

Q

Next slide, please! So here we'll come to a local example: 30 to 34 West Reed Street I, understand that the city council provided capacity building, support for South, Bay Community Land Trust. So thank you recently provided an acquisition loan for this four unit building which we were able to do due to the city of San Jose's commitment to take out the loan with a more permanent financing.

Q

The tenants are veterans and majority identify as people of color tree Lisk is investing in preservation. This is in order to stem the loss of unsubsidized, affordable housing units. We find this to be necessary and strategic strategy, especially in acquisition rehab, often of units that are or buildings that have lower number of units.

Q

In many ways it also prevents displacement. So you, without with an acquisition, rehab strategy, you get two of the three PS.

Q

It is faster than new construction and more cost effective list has seen incredible success in cities like Washington DC and also the Twin Cities, with its preservation strategies, and it's really great to be part of a network where we can share these Lessons Learned and also share our problem. Solving strategies.

Q

Next slide, there are significant resources that are coming down for preservation, that the city of San Jose is well positioned. To take advantage of one program is the Foreclosure intervention housing preservation program for buildings that are at risk of foreclosure, 500 million dollars has been allocated from the state of California through hcd.

Q

uh This is for buildings that are 1 to 25 units and um Lisk has been selected as the Statewide fund administrator, and so we look forward to working with you I believe that it can be up to six hundred thousand dollars per unit, so really significant money that is actually backed up by grant money from the state and so a very flexible pot that will allow us to be really Innovative in preservation.

Q

Next slide, please I I just wanted to emphasize a point that has been made before is that Community lenders like Lisk depend on cities to be the takeout on the back end of the loan to be our partner in order for us to successfully underwrite that's what our Underwriters look for, and that's how we're really able to do a lot of The Upfront catalytic financing that we do um more preservation resources in the pipeline. We've already talked about baffa, and so there will be dedicated buffers proposed, Bond 10 to 20 billion dollar Bond.

Q

There will be dedicated resources for preservation, production and protection within the bond and money coming directly to the city and to the county, so really excited for that opportunity.

Q

There's also proposed Statewide Bond, and we hope that that can make it through all right last slide, please or maybe two more. um It was mentioned in the staff presentation, the ecosystem that's needed for preservation; it is related to, but slightly different than the ecosystem needed for production.

Q

So the funding needs different different pots, acquisition funding and, as I said, either City, Regional or state funding for the takeout I think that building a pipeline is really important, so reliable, regular and also flexible funding, as as has already been provided, is important to continue the momentum of the pipeline that started to be built if the pipeline is in starts and stops, it's really hard to understand what might happen next in preservation, since opportunities come up in a more organic fashion, maybe than new construction and as city of San Jose has already been.

Q

Providing support for organizations is really important, and so we need organizations that are qualified and committed to acquisition and rehab. This will likely be Community Development corporations and Community Land trusts and that there need to be multiple and many venues for peer support and technical assistance, and one really good thing about the Foreclosure money is that there's a dedicated 15 million dollars set aside for ta and a separate ta contract that will not be with Lisk to provide technical assistance in order to access the capital.

Q

So I think there's really good resources out there right now to partner alongside your efforts.

Q

We're done, thank you so much for your invitation today.

O

So I think you all can see that there's so much Synergy on the panel right now that y'all, don't really need me to make these connections.

O

But one thing I do want to call out um is that opportunity, with funding coming down a recognition from the state level of the need to do more on the preservation side and those those funds being realized and coming down and providing a real opportunity for us here in San, Jose and then I think some of what Cindy talked about towards the end really highlights the opportunity to invest in people to invest in community to invest in folks who are on the ground willing to to get into this work of real estate acquisition and Rehab led by community, and that's really exciting for at least for me, but that's really exciting.

O

So next we have Anil Babar. He is the senior vice president of local public affairs for the California Apartment Association, he's here today with us as a housing provider and going to talk a little bit about protections from the view of an owner.

O

R

You uh thank you, mayor and Council for inviting us today and I want to thank the housing department and Roseland for inviting me to speak on this panel. I really appreciate it next slide. Please I I wanted to start by just giving a brief overview of what the California Department station is and who we are. Sixty percent of our members are uh have 10 or less units, and our Focus for our membership is falls into kind of four buckets compliance, education, advocacy and ethics.

R

We can we help our housing providers stay abreast of new impending legislation, help them understand how to comply with that legislation through our forms and so and other means uh with education. We provide education on Fair, Housing, legal compliance with state and local laws and maintenance and Property Management. Our focus is, you know, even if a legislation has been an act that we don't agree with, we still want to make sure our owners are in full compliance with it and understand how to process it.

R

I mean we have, in some cases, formed specifically for San Jose because of the uh complex nature of some of the local ordinances, obviously advocacy. We engage on legislation affecting the rental, Housing Industry, and our code of ethics sets forth values, ethic, ethical principles and standards which our members agree to abide by next slide.

R

Please I wanted to give you some context as to what the an owner in San Jose has to comply with, and what kind of protections exist already for uh tenants in the city of San Jose in the city, we have an existing set of very robust protections that cover Runner households and, as additional policies are proposed, it's a key to view them in the context of existing legislation to understand their full impact when you increase the Regulatory and operational burden on housing providers that increases the cost to operate rental housing, which in turn increases the cost to provide rental housing, um I'm going to start with uh ab142, and the reason it's in green is because this is state law.

R

This is not local, a local ordinance. The California tenant protection act, which was signed by the governor under a bipartisan basis, was created. Statewide, rent control, where a capped rents at five percent plus CPI buildings been built between the last 15 years, were Exempted from this law, because legislators understood that negative impact those requirements would have on new construction, and this law did not touch San, Jose's, local rent control law under local ordinances.

R

We have two different horses that cover rental housing, arrow and TPO: the apartment, rent, ordinance and attendant protection, ordinance, the apartment of red orange caps, rents at five percent. But, as you saw earlier, the average rent increase on uh on a in place. Renewal is actually around two and on uh new units that are getting a new tenant, which is 9.7 percent. That's essentially under ADB 1482's cap current caps, and then you have the tipio, which uh places just cause on buildings built after 1979.

R

and in the many of those buildings are subjected to also the California tenant protection act. Then you have the Alice act, which applies when an owner developer plants or demolish or remove an apartment from the market. This requires 50 of new Apartments built on that site to be included into the arrow.

R

You have the rental inspection ordinance, which requires owners to maintain their buildings and compliance with minimum housing standards and code enforcement inspects these buildings, the association worked with the city to reform this inspection program, to ensure that the resources were focused on those buildings that had a history of issues to ensure housing providers address those issues.

R

This provided additional protections to renters living buildings with code issues and finally, we have the rent registry, the rent registry mandates owners to provide data to the city on rent, stabilized Apartments, monitor changes in Tennessee and rent and track allowable rent increases next slide. Please so I I gave you all that as a context as we look forward now that detailed inventory of existing programs will help. You understand what has already been accomplished in the areas of protection and preservation.

R

The programs under these two areas have been exhaustively pursued and with the state's goal of for San Jose to construct 62 000 housing units and the supply issues we're currently facing We Believe, the full weight of the city should be focused on production.

R

It has been reported that the zero market rate projects, as Chris had mentioned, that haven't that have not been broken ground this year under the city's existing zoning rules. Yet we've seen a number of Builders remedy projects uh break ground in areas where they weren't zoned. For recently, the city of San Jose released a draft strategic plan for the rent stabilization program.

R

Although this document has not been reviewed by Council and Council has now given Direction on this document or discussed it, it provides a glimpse into What policies and programs might be discussed over the next three years. Not one of these programs will help achieve the city's requirement to build 60 000 to 62 000 new homes. I'll just give a quick overview of some of the programs we have uh seen in this document. The first one is the rental database or the rent registry.

R

uh This the work plan is suggesting an expansion of the existing registry to include non-rent controlled units. As you may recall, the fees on TPO units as they're known skyrocketed from when it's the program began at five dollars a unit to go up to all the way. To thirty four dollars in six years well, the city did reduce that in half. But uh what we see as a concern is any expansion would require higher fee levels and additional South so will raising the fees on new development, make it easier to build housing.

R

Then you have right to counsel the Workman calls for an exploration of a right to council program or an housing collaborative Court. A right to council program provides attorneys to tenants when an unlawful detainer is filed, typically for non-payment or rent, which is more than 90 of all cases.

R

Programs we've seen in other parts of the country where you have a right to counsel program, cite the average cost per tenant for legal service at five thousand dollars a case. These funds would be better served going directly to pay arrears instead of funding attorneys government mandated retrofits. So that's the pink and well red and green I, don't know what color it is on the screen.

R

Local or Regional governments are requiring retrofits for either health or safety or environmental reasons. These carry a significant expense when required, which will require financing to cover the cost which is difficult in this interest rate environment. We're currently in, for example, seismic retrofits for soft story. Buildings can carry a typical cost of forty eight to sixty thousand dollars for a four unit building.

R

We cannot the owners who own these types of buildings cannot refinance to pull Equity out because simply you're not going to refinance a three or four percent interest rate loan. You currently have into a seven percent that's currently available, and then we have these gas electric conversions. These require the replacement of gas appliances to be replaced with electric appliances in older buildings.

R

These may need wiring updates electrical panel upgrades and PG e will need to reassess the power being delivered to these buildings in order to determine if it's enough enough power being delivered to handle the increased load. This becomes an incredibly increased cost to the owners both of these types of projects, and then we have another objective that was listed in the uh uh in that work line, which is occupancy standards, a loosening of occupancy standards.

R

We have concerns about the mention of a rent cap adjustments and additional any additional regulation that may get proposed poses like these shouldn't, be the focus of the housing environment at the time we're in right now. These are not necessary and a rational for why they are, they are needed, hasn't been made and they will do nothing to add to the 62 000 units that we need to produce next slide.

R

Please so I'm I'm, not here just to talk about all the things you've done, I think there's a lot of things that City can do to help.

R

um One is more stability and Regulatory actions, and what I mean by that is. The constant introduction of new programs meant to protect. Tenants only regulates the rental market rental property owners further and has forced them to alter their business practices to guard against additional regulations. Housing costs go up because of the over regulation and when new regulations are adopted, little time passes when it gets revised impact on actions on housing. Today, the San Jose will consider San Jose will consider whether housing related issues by evaluating their impact on SQL.

R

But what does tells you also consider the impacts to development housing? Well, future actions discourage Housing Development. Will it increase the cost of housing or will it lead to less density.

R

The city's approach to rental housing isn't balanced and housing providers have been asked more and more to shoulder these additional regulations, more expense and more scrutiny in the guise of promoting housing, affordability and stability. Yet housing providers are not given an equal voice on matters impacting them as San Jose taxpayers and housing providers example. The skewed makeup of the ACDC For example, the Housing Commission, and the selection criteria, their commissioners and finally I- think the the best way of assisting tenants is to provide direct rental assistance.

R

This should be the focus of that that of the tenant assistance program. Property owners are drowning from the over-regulation imposed on them. They're, financially struggling from the restrictions placed on them and the city. Shifting of the burden of assisting tenants to the property owner isn't sustainable and it's not the responsibility of properties. It is the responsibility of the city I. Thank you for the time today and I'll turn it over back to Regina.

O

Thank you, Anil I, think you know one of the things that you really touched on, that the other members of the panel have touched on all along is the importance of partnership and I. I cannot stress enough.

O

um Some of your last comments around the need for increased communication and coordination, which we've heard quite a bit of a reference to today. I think that one of the things that was highlighted in this most recent presentation is the fact that there are so many partners involved in this work and folks who have different perspectives.

O

Different motivations and one of the voices that I want to lift up is that of the renter residence that we are looking to serve and the fact that um there are, um with some of our partners competing interests and over and ultimately, we are, as the a part of the folks serving the public, looking to make sure that those renter households, those all those families, those households that we saw earlier today as data points, are being protected and pres and allowed to stay in the city.

O

um While there are tremendous amount of pressures from every side to force those folks out so I just again want to highlight that there are is anxiety on all sides and that there's a way to improve that. Oh did I. Do that, there's a way to improve that through communication and and working together, because coordination is critical.

O

So next, um thank you. We have Stephen Lewis Stephen is.

O

Stephen is with us from the California rent stabilization Network.

O

He comes to us from the perspective of a tenant protection programs Council and he's going to talk to us a little bit about tenant protections as well um from a more broad perspective, Stephen.

S

Good morning, everyone, as has been discussed pretty extensively today, there is a real housing affordability crisis throughout California that also affects San Jose and affects San Jose, probably in some ways more than many other communities.

S

We've talked in connection with this about affordable housing, and that is a term that, in the context of providing housing for lower income through moderate income, people is is a defined term, but there's also the idea of affordability beyond that. That is what people can afford.

S

Personally, there are persons who are not um either specifically in those categories of very low through moderate income or who may be in them, but haven't done anything to qualify for any sort of housing subsidy, as as a result of being in that categorization, and then there are people who are simply think of themselves as middle class or may actually be middle class, uh for whom no particular category applies, and even for them there is the question of what is Affordable to them.

S

One thing that has been extensively covered in the news throughout the state and really throughout the country, but especially in California and especially in this area, is the increasing inability for younger people to afford homes. The number of people who can actually afford to enter the homeownership realm is is shrinking.

S

Studies have shown that the affordability crisis affects renters much more deeply than it affects homeowners, and that really stands to reason, because people who are able in this environment to be homeowners, especially new homeowners, can afford more just in general, they can afford to buy a home and therefore they can afford more so the affordability crisis, while it may affect them in terms of them paying more for their their new house that they're buying doesn't affect them in other areas of their life.

S

So much, moreover, people who already own their home are not affected by the increase in housing prices, in the way that their renters are um because of the housing afford housing. Affordability, crisis that has affected the state. Many jurisdictions have attacked this problem with respect to renters by limiting the degree to which rents can go up um and that's what this slide is about. The jurisdictions on the left in the darker blue are jurisdictions that have had rent stabilization programs of some sort in place for a long time.

S

These are sometimes referred to as Legacy programs San Jose is in is in that list, even though its current ordinance was in place only in 27. As of 2017. It's been in effect since 1979. the jurisdictions in the on the on the right are the newer jurisdictions, and it's really remarkable.

S

Looking at that list, how many of them have been enacted only in the last few years, which really highlights the degree to which city councils throughout the state have have felt the need to confront the affordability crisis, that's affecting their communities, and they do this really for um for for a variety of reasons. One reason in the case of Pasadena, for example, is that they were pressured by the people who live in the community to do so through about measure.

S

In many other cases, they do it because, because they, their their Community, is suffering the loss of, for example, workers who work in restaurants or hotels or other businesses who have to live farther and farther away if they're renters, because their rent has gone up to such an extent that it's priced them out of the community.

S

In order to prevent that, many jurisdictions have limited the degree to which rents can go up so that either people are not priced out of their Community or if it's going to happen, they can see it coming and plan for it.

S

um There are, as has been discussed in a few different presentations today, some limitations on what local jurisdictions can do through their programs that limit rent increases. Please go to the next slide and the most notice of the noticeable of these is I'm. Sorry notable of these is the Acosta Hawkins rental Housing Act. That.

F

Law does basically, yes, could you please get closer to the mic? Oh.

S

Yes, I'm sorry I suddenly lost I'm. Sorry, thank you. That was basically two things one is it exempts most single-family residences from local rent, stabilization ordinances and the other is that it provides um I, really three things I'm, sorry, the other is that it exempts new construction. That is anything that was built after February 1 of 1995.

S

um and the third thing that it does- and this is really the most noticeable thing to people who are in rentership stability. Stabilization jurisdictions is that it um prevents what used to be known as strict rent control.

S

That is, it ensures that, for uh that, when a tendency ends in most instances and a new tenant moves into a unit, the owner can set that that new tenant's rent at whatever the rent, whatever rate the market, will bear the unit can then be have its rent stabilized at that level and adjusted for inflation during the 10 during the the course of that tenancy, but that when that tenant moves out, the new tenants rent could be established at a new market rate.

S

Etc um next slide. Please.

S

And that uh affect that state law has on rent stabilization jurisdictions is important to really understand what we're talking about. When we talk about local ordinances, that limit rent increases, they're often talked about sort of as a blanket matter as rent control or rent stabilization. That terminology isn't really exactly accurate. There are really three kinds of bodies of ordinances that local jurisdictions can adopt to limit. Rent increases, one is rent control and that is as a result of Costa Hawkins, something that really doesn't exist in California anymore.

S

That is a process by which an ordinance fixes rents at a particular level, usually at a level that existed before the ordinance went into effect. Often rents will be rolled back to sometime prior to the ordinance's effective date. They do that, because, when Property Owners see the limitation coming, they often increase rents very quickly in order to get locked in at that higher rent level. So those jurisdictions have typically rolled back rents to what they were in an unregulated Market before there was the Specter of rent control.

S

The rents are then fixed at that level, more or less indefinitely, except for an inflationary adjustment. So as tenants move out and new tenants move in the rent doesn't change, it stays the same at that same level, except again for inflationary adjustments, rent control again no longer exist in California because of state law. The cost stock is rental, Housing Act, rent stabilization is a more moderate version of that.

S

That is uh what's what we've described as as existing here in in San Jose, and really in pretty much all the jury in all the jurisdictions throughout the state, and that is a system whereby owners can set a new tenant's rent at whatever the market will bear and then there's a limit on the degree to which the rent can go up while that person isn't while that tenant is in place, then there is really something that isn't isn't: rent stabilization, but rather an anti-gouging measure, and that is something that just prevents owners or tenants from being really rent gouged, and that is what the tenant protection act uh at the state level does.

S

It provides for a rent limitation of CPI that is adjusted for inflation, plus five percent, and so owners can achieve a return on their investment that is substantially above the rate of inflation.

S

So again, those are the three kinds of of ordinances that affect rent limitations and it's important to Bear those in mind when concerning where, where San Jose fits in with all of these, there are two ways that rent stabilization and anti-gouging measures work.

S

um Rent stabilization ordinance is typically limit rents to 100 of CPI or some percentage of CPI, like 80 percent of CPI or 60 of CPI or 75 of CPI.

S

They, those that do less than 100 of CPI, often do that, because state law allows for new rents to be set at Market rates, so owners overall throughout the court throughout the entirety of their building, are able to still make a substantial return on their investment and still make a profit other jurisdictions, rather than tying it to CPI.

S

Just set a fixed amount. As you can see from this Slide, the vast majority of jurisdictions apply a CPI formula for determining their annual rent increase. There are only a handful of jurisdictions that have picked a particular amount and even those that have picked a particular just flat percentage pick that percentage, because that was the percentage that will either provide um at or above CPI on a guaranteed basis over time of the of the ones that that exist here you can see it they're all across the top.

S

The percentage that they have picked is four percent or five percent uh San Jose's, of course, is five percent. As of June, the 12-month trailing the 12-month CPI for San Jose for the for this area was 2.9 percent uh going back over the last five years. It's been three point, something percent, so that five percent has has ensured that owners are getting a pretty substantial return on their investment.

S

If we can go to the next slide, we can see where, where San Jose fits within the universe of rent stabilization jurisdictions, really throughout the state, there are two axes. The left axis is the degree to which rent rents can go up. The percentage of rent increases that are permitted and along the axis that runs along the bottom.

S

These are the years as of which a building built is no longer subject to rent stabilization. So this is the the cutoff for what is what is counted as a new construction.

S

um As you can see, the farthest to the left is 1977., so it's it's not really what we normally think of as new construction, but if, but if there's a jurisdiction like um San Jose who's, whose cutoff date is 1979.

S

44 year old buildings are quote, unquote new construction and are therefore exempt from rent stabilization. Any new building- that's built, of course now also is exempt from rent stabilization um all of the jurisdictions and and now at the state level. That exempt and do construction do so in order not to discourage the building of new rental housing.

S

um As you see on this chart, there are, there are dots with the city's names next to them, and you can see where they fall along these two axes, so, for example, more or less in the middle of a little bit to the left, you can see Oakland um its rent increase this year is about two and a half percent and the date after which anything is considered. New construction. An exempt is around 1983.

S

um And if you uh go to the far right, you can see a whole bunch of them that are set at 19.95, because that's the state law cut off date. That's the that's the the last date, so anything in all of those jurisdictions built after 19, February 1 of 1995 is exempt as new construction.

S

um Then, if you go to the very far left at the very top, you'll see San Jose and the City of Hayward.

S

um These two jurisdictions have the highest annual rent increase and they have the oldest date as to which something can be new construction.

S

So you can see from this chart that in the state of California San Jose's, rent stabilization ordinance is really among the um I. Don't know if I'd say use the word weakest, but it's it's among the least restrictive in the state. It provides a for a rent increase that is substantially above inflation and it exempts any basically anything. That's 40, 44, four-year-old building or younger, or anything it's spelled new from Brand stabilization. It's also one of only two jurisdictions in the state that exempts duplexes from rent stabilization.

S

So it is a very, very moderate uh ordinance in comparison with the other ordinances that exist throughout the state. Nonetheless, coupled with the just cause ordinance that limits the grounds for evictions, it's still very likely does provide a substantial measure of neighborhood stability because it prevents the mass economic dislocation of tenants as a result of sudden and high rent increases.

S

Thank you very much.

O

Well, thank you. um I just want to say um in summary that we really do see a commitment from the city of San Jose, with this three-piece framework to protect, preserve and produce, and I also just want to say thank you to the city council for having us. Thank you to all the housing department staff for working with us and making this happen, and thank you to all the panelists and I'll turn it over to you. Mayor Mahan, thanks Regina. Thank.

B

You appreciate it thanks again to all of our panelists very informative presentations today. Why don't we turn to colleagues? Questions I will stop us in time for public comment at the end here, but colleagues who would like to jump in and councilor batra. You initiated this study session, so I'm going to give you the first crack at it.

F

Thank you very much Amir for giving me.

A

F

Thank you very much for that very informative presentation and extremely convincing data when we requested this study. I had no doubt in my mind that we in San Jose have enough number of people who cannot afford to pay the market rate rent. We have and you given the profile that those people you.

A

F

Eli people Li people, moderate income people, so there's no doubt that we have that you have Quantified. The numbers. You've also shown us some of the policies which we are trying to pursue to make sure that those people will be able to continue to rent the places here and will have a safe living place.

F

Purpose of the study is really not to really challenge any of that. The purpose of the study is to really understand comprehensively all the policies which are in place all the things which are moving forward in trying to address this problem. We have it's not likely that the Eli people are going to go away. Li people are going to go away over time, even though I'm going to ask you a profile of that later. So we want to really examine today all the policies we have in place.

F

Are they going to help us solve the problem, or do we need to do some modifications to these policies that which will allow us to get there or these policies cost effective? So my questions are not going to be that I don't want to do the stuff, but I want to challenge on the area of, or these policies effective or the cost effective. Are they going to produce the results we want over time? Are we going to be able to provide accommodation to all the people?

F

So please take my questions in the right spirit and I'll. Ask you some of those now uh you have very convincingly presented the profile today. How many people are in Eli category Ally category, how many homes we need?

F

Have you got any data about what our city will look like in terms of those profiles in three years, five years, ten years.

N

Councilmember, as I mentioned, my family grew up in affordable housing. Section 8, Housing and I can tell you, at least from my personal experience, right that my family was extremely low income, and it was only because of that that we were able to.

F

um Closer to the mic, please.

N

Councilmember I was saying that as I shared, my family grew up in Section, 8 Housing and received rent stabilization, and only because of those programs that we were able to get out of poverty. So, at least from that one data point I can tell you that these programs were effective for my family, who were immigrants here to San Jose.

O

And and I will add that you know the city of San Jose continues to be a leader with its housing crisis, work plan, the housing Catalyst team- that's in place. There are a tremendous amount of policies that the city has that over time will continue to help prevent displacement, but we do have data and I don't have it on hand. That shows the tremendous amount of displacement that continues to happen and one of the city staff slides showed that and that in 10 30 50 years the city will look much different than it does today.

O

If we allow displacement to happen at the rate that it's happening today, which is why there is a housing crisis work plan, there is a housing Palestine. There is a commitment to the three PS to prevent displacement and we're going to turn it over to City staff, and thank you.

I

Thank you, council, member for that question, we're not in the habit of forecasting what is ahead but I'll, say two things one. We can see at least in this in the three-year data that we have for evictions. Evictions have actually sped up since pre-pandemic to the needs. The the amount of people who are rent burdened are higher than it they have been before, and so you could see that the wages over the past over the recent past don't even begin to compete with the increase in rents.

I

There doesn't seem to be much of a trend to you know of reversing that effect, so we assume that that will continue to be the case. More and more people will be getting priced out. And finally, this city has a new Regional. Housing needs allocation goal.

I

It is 62 200 homes over the next eight years and our previous goal was that 70 percent higher 70 and change than our previous goal, and so the modeling from the region, a bag and MTC, indicates that our need is greater than than it was in the last cycle.

I

um And that includes an indication of people who are under housed now, where it didn't really include that in the last methodology. But we know that that problem is worsened considerably. You know in the in the current or the previous eight year cycle, so no no definite forecasts but trans going in the wrong way. As.

F

Far as we can see, we're going to continue to increase the need for the affordable homes or subsidized homes, if you wouldn't call it, okay and and with our population of San Jose declining which they didn't, will there be any projection on the type of people we are losing um because the people who are needing the subsidy versus the people who are going to provide the subsidy?

F

Are we getting a worse balance than what we have before, because the money source is only going to come from the people who are able to pay for their own rents or for their own property taxes? And they have to pay for these other people who need to be subsidized.

I

I'm, not an expert on the displacement data as to the demographics of the difference that we now have in the population.

I

I will offer, however, that we know that some lower the lowest income residents have been displaced and especially through covid, and we also know that people who could work from home. You know white-collar workers who presumably earn more did shift away to less expensive markets, um and so Josh did you have anything else. You look like you, wanna, add.

C

If we look at census, move-in move out data really we're seeing uh more lower income people moving out and more higher income. People moving in just just broadly so um I mean that's just what the data says.

B

Council member I'm going to interject just in the interest of time. I know you still have two minutes left on the 10 minute. Timer I do want to make sure we we get in council member Ortiz, vice mayor kame and leave time for public comment. So if there's time I'll come back to you for additional questions, but I want to go to council member Ortiz for at least okay.

F

B

Minutes or so just and then we can cycle back fine. Thank you. Thank you. Good councilmember.

B

T

T

um First I want to thank uh all of our participants um and uh speakers for a robust uh information session. I want to apologize for being late, had a conflict in the beginning of the meeting, but um I I believe I caught great information.

T

um There was a a statement that I very much agree with, um but I wanted to see if this individual I didn't get the name. But preservation has been an important topic for myself and my office and the residents that I serve um and I feel like personally that the city could do more in this area.

T

But there was a I think it was a gentleman that said we could not solve the housing crisis through production alone, that we need preservation given individuals who are they're doing the given the loss of affordable housing units I want to see if the individual wanted to elaborate more and hear more from this person. I can't remember who said that, though,.

I

I think Cindy Wu from Lisk spoke about the need for acquisition, rehab and then and she's. Taking a phone call.

E

I

Then Josh had also covered the preservation section. I, don't know if you wanted to reiterate any estimates on what we could do through preservation.

C

I mean I, just guess that was in the context of saying that you know as rent's rise in our in in our Market we're losing affordable housing or what some people call naturally occurring affordable housing.

C

So you know we as many housing units that we build we're losing more to the market. That is money of affordable housing units is that we build we're losing more to the market. So um you know we always need. We need to find a way through preservation through any other strategies, to be able to stop the slow loss of of units.

H

And council member Ortiz um just want to add, we agree. Yes and yes, we need to continue to produce more housing. We know we've never produced enough for our residents and at the same time, to preserve the existing affordable housing stock.

H

So you know in our eyes it's a yes and yes, we want to be sure that we are stabilizing our existing residents here right and at the same time producing enough uh units to support people who are ready uh to to take in those units and to accept new residents coming to the city as well.

T

No I, I, absolutely um Roseland, I, agree, I, mean I, think we're hitting our um for-profit market rate um goals every every year. I wanted to ask. Is there anything that we could be doing that we're not doing uh in regards to preservation.

I

So observation of existing affordable actually is dictated by state law, some things that we need to do and do proactively. So those items are in the housing element to make sure that we remember to give Public Notices to make sure there's a transparent process, four units that will be losing their restricted affordability. So that's one thing. The second thing is really to make funding available for acquisition and Rehab projects.

I

That is sizable enough to see the outcomes and then also regular, and, as we talked to many lenders and developers about, is it more? Is it what is the most important thing about the city's offerings? Because in this new newer area for us- and they said the predictability of what we will be offering when because, as Cindy noted, other lenders make commitments based on their belief and their analysis that a given deal would be eligible for the city's permanent financing.

I

So to make the system work, we need. We need something that is predictable in terms of funding available and hopefully sizable more than we have now and and then. Finally, we need the ingredients, we need developers who want to do this work and that that's both on smaller buildings, but also larger and different kinds of organizations, probably for each size.

T

Well, thank you and I agree that obviously, production is a part of the conversation, but I do not want us to lose sight of preservation um and hoping that when the Regional Housing measure comes through that we're able to utilize some of those funds for for existing, affordable housing, because looking at the numbers that was shown to us about half of the or close to half of the existing affordable housing units um we're losing that stock. That's that's a concern of mine, so thank you.

B

Thanks council member vice mayor before I'm, going to hand it over to the vice mayor in a moment to ask her questions and then take us to public comment and adjourn the meeting, because I have a speaking engagement, but I did want to ask just one question that has been on my mind: I've spoken with some of you about this actually over the last year or two, but under the pillar of production.

B

One of the the questions I have is that we've seen a number of examples where we've seen an affordable unit, a project and a market rate project with similar product types come online in a similar around the same time, and we have often seen the market rate come in at a lower cost per unit and I'm trying to figure out what levers we can pull to help the affordable projects and I I saw some of this I think was kind of indicated and some of the things Chris and others mentioned in their slide decks.

B

What can we do to bring down cost of construction on the affordable side so that we can get more units built and better deploy our public resources? I know, financing is a big part of that answer. I suspect, labor costs are I, think the price of other factors, but whether it's Chris or somebody else who has some experience with this I'd just be interested to know what else in that cost stack is leading to a similar unit.

B

I mean to take one example: we had Sparta 505 open, which was around 600 000 a unit as we were seeing. Projects come online at 900 000 a unit. That's a big Delta, that's a lot of additional affordable apartments. We could be building with our very limited public dollars, so I'm curious. What levers we have as policy makers to bring to improve the efficiency essentially of building affordable housing.

H

You know we're going to ask Chris Neal actually to come down and and share his thoughts mayor, and you know this is this- is the big question for us I, two quick things right. You know.

H

The one thing that the city wants to do is to deepen that level of affordability and just quite naturally that drives up the overall cost of the project and then the second item and meaning of our affordable housing projects, our permanent Supportive Housing projects right, we provide you, know those essential services for the residence living uh in those buildings, so whether it's Child Care, Social, Services job training and that also drives up costs. But Chris. Please share your continued Thoughts with us. Yeah.

P

Mr mayor council members, you know I think it's a fascinating conversation and it's permeating many many meetings and conversations I participate in what really struck me is I. Think what council member batra mentioned there are so many policy goals it'll be trying to achieve all at once and so coming from a biased point of view. I don't know if how, if you stack rank them I, don't think we stack rank them. We try to hit as many as we can and in our experience.

P

Rarely is housing alone enough of a policy outcome, that's sufficient, and so, if I look at the projects we build recently and were consensus, Builders and Community Builders and it's a team sports, you bring a lot of people on and so we're trying. Each project is meeting a lot of policy objectives, the highest density right to make sure we use the land the most efficiently, but that comes with a cost: recycle public lands.

P

You know in this region this reason land, hadn't been developed, it's complicated and difficult and expensive, and so some you know public land could be expensive to build. We really value mixed use. We want either retail on the ground floor or Child Care other uses. That requires a cost. We value labor requirements. These are all fabulous policy objectives, but I think they write all all these different policy objectives.

P

We tried to meet, there's a cost associated with it and so I think part of it is filtering and the very difficult decisions, because they're all great policy outcomes, but I do think as the affordable developer, trying to create consensus, consensus amongst all parties to get a project approved and minimize the risk and accelerate the time. Because cost comes with that. You know you take all those voices in and each project is probably trying to achieve five to ten policy outcomes at once.

P

So I say that was kind of the thought that really ran through my head as you as you asked the question, and it crossed my mind when you mentioned all these great policy objectives, maybe the tough choices Force ranking all these great policy outcomes that we want to achieve and we can't have 10. Maybe maybe we need to maybe a few more policy objectives, is the right answer.

P

B

Thanks for that perspective, I found that very helpful. Vice mayor I'm, going to turn things over to you to both ask your and once again I just want to thank everybody for coming together and taking your time, sharing your insights and experience with us a lot of great information and food for thought. So thank you to both staff and our expert panelists vice mayor is going to ask her questions. Take us to public comment and during the meeting. Thank you.

U

Thank you so much uh mayor Mahan, um you know it um I I'd like to thank the panelists, as well as a staff for a very uh insightful meeting and information Workshop.

U

um One of the things that's sort of like is is glaring to me is, is something that um I know we're here to talk about housing, but I want to say that income inequality is the reason why we are where we are, and as long as our service workers, those who are most vulnerable are not making sufficient income.

U

We will be here forever and so I think that that is something that to me is is is quite glaring and uh income inequality. It is, is uh certainly something that I think in other Arenas. Perhaps we can talk about.

U

My question is on preservation and I was just wondering in terms of. Is there an affordability level that we're going to Target and why, in terms of preservation, because I know you have limited dollars, and and all of that, so um that's one question: I have another question that goes after that.

I

Thank you vice mayor, that is, I must say an excellent question, because it's kind of at the heart of two different issues. One is: what does it take for a building to be acquired and to keep all residents who are there in place?

I

Some will be earning much less than others, and so we we, we don't want to cause displacement, and so what we expect in terms of of area meeting incomes for the current residents is not really able to be known until someone really buys the building and then starts certifying incomes so having a relatively higher cap for incomes is common for preservation just to accommodate the range of existing tenants.

I

That said, the other thought on that is well two other thoughts.

I

I'll say a second piece is how much rehab does the building need, and so, if the building needs a lot of rehab, um then it may not be able to afford also really really low rents right, because the loans can't be made because there's not enough value there when the rents are super low um and that's why non-profit lenders are so critical to this equation, because they're more flexible on their underwriting and then one other thought, which is if what we're trying to do is to work on smaller buildings, maybe in high displacement areas, we want to think about the local area, median incomes.

I

So not what the county says, but who are the residents living in that neighborhood and what do their incomes tend to be because we want to try to right size, rents for them. So I gave you qualitative answers, there's no one number it really. It depends, but our Focus would be on low-income residents and then, but allowing someone who's at 81 percent of area median, for instance, is who's mod to stay, and that's why the local funds are so important because we have more flexible. We have more control over those requirements.

U

You I guess: I guess you know, I would ask uh for you to consider uh those who are very low and extremely low. You know in terms of I know that it's going to take a lot more, but it seems to me that if there's a segment that we're not able to address that, you would prioritize, because the thing is that if you just sort of say oh well, you know we'll see uh Within These these areas, you're not being as targeted and so I.

U

Think that's something to think about, because I'm also trying to understand you know what is ideal for preservation right it. Normally it's older buildings, I think that I heard that anything that was developed at least 23 years ago, so I'm just thinking. Well, you know when you have really old buildings, there's so much that needs perhaps to be rehabilitated or whatever. So you know, I mean there may be areas where you know it's it's best to maybe acquire it and just think about creating higher density or and I. Don't know where those decision points are.

U

But you know I'm kind of like wondering in terms of how do you think about it in terms of okay, what's good for preservation versus what's good for new production.

I

Thanks and I'll just add, and thank you for your thoughts on that. We do want to know your priorities. I will add, there is a. um There is an example also out there that blends new construction with acquisition and Rehab for those properties that may have more surface parking and could actually fit another building on them.

I

That is getting to be a more popular model where someone will buy and Rehab the existing units and then build some more. That is I, think a really great sweet spot for us to try to facilitate given the types of buildings in San Jose. Thank you.

U

Thank you. We're going to go to council member Candelas.

L

Foreign. Thank you vice mayor. um You.

V

L

Want to thank staff for their uh presentation and also the panel and panelists uh for coming uh this wonderful Thursday morning and giving us an insightful um background onto um you, know the three p's um I I think my question: I, don't know if it's better suited for this or the the study session on the 27th, but uh it relates to um you know how land costs affects the economic feasibility of of you know both market and affordable housing developments in our city, I think um in particular, I'd like to know how much the economic feasibility of an affordable housing development is increased.

L

If the land would be provided at. You know, no, no Capital costs or you know, there'd be no land lease payments as part of the the operating cost of that development, and you know I'd love to hear staff's thoughts on that.

H

Councilmember I think you said it earlier: I mean when we get into the second part study session on the actual costs, we'll have those details for you for both affordable and market rate housing. So thank you for the heads up we'll be sure to provide.

L

You, okay, good question: I'm glad I'm glad this.

H

J

L

Little bit of foreshadowing of my thoughts of and and thinking into that study session, so we're going to be drilling down on that, but uh but regardless I I think there's a it was a lot of good information covered on on. You know where we are and where we need to go as a city to protect the residents and uh and make it more affordable in our region. I know I know, that's a huge issue we got so thank you.

U

We'll go now to council member Duan.

W

Thank you vice mayor, thank you, staff for the presentation and and many and other entity that that came and speak on behalf of Builder and so on this question for some of the builders. We we continue to build apartments with a particular size larger than you know, an average family sometime square footage.

W

Do we ever think about reducing the size to reduce the cost? Let's say one building right now you can put 500 units. If you reduce the square footage, you could put maybe 700 700 units that would help 700 family versus 500.. Does anyone have an answer.

P

Sorry, it's me again um a couple answers, I, think on the affordable side, the ultimate source that affordable development needs to earn to start construction is the tax credits, and this so and that's a federal program and they have a requirement. They prescribe the minimum square footage for a studio, so that program really governs unit sizes and amenity space, so that is kind of really conforming to rules.

P

We're going to have the market behaves to be honest with you, we're doing a lease up right now of an affordable project and the studio units. The smaller units that are affordable, the more affordable are the hardest to lease, even with an affordable housing project. So the good way everyone is a Discerning consumer, whether you 200 Ami or 30, Ami the consumers. Right now. What we're experiencing they'd prefer a one bedroom versus a studio on the market rate side of our projects.

P

We've actually pulled Studio units out of our projects so prior to covid, when the absolute rent value was the most concerning to the consumer. We followed your what what your your logic conclusion was: units were getting smaller, I think with covet. As rents came down, I think tenants valued both the lower rent but more space, so I would say the mix of units are actually skewing more to fewer Studios, more one bedrooms and more two bedrooms.

P

W

Hope that helped now just for staff, I I, know that we have a lot of non-profit organization who want to build housing and- and so we give tax credit, we you know, and so we we, as taxpayer, continue to burden the cost so as more needs arrive and more non-profit building that we're not getting the tax that we need in our city to run the 248 programs that we have.

W

How do we sustain this as to it's almost unsus I mean it's impossibility. It's it's unsustainable! That's how I perceive it as as.

I

I could take a stab at answering that council member and if anyone else wants to join in um just clarifying the low-income housing tax credit is a federal tax credit and the the credits are purchased by private companies and taken over 10 years. So it does not affect local finances. Local revenues at all um and state I mean there is property tax exemption for units that are at or below 80 percent of area median per state law.

I

So there's no option to change that, because what has been found is the costs of taxes in the operating budget is really critical to bring down in order to make affordability possible, and so the state decided that was a good objective all across the state and they put that that law in place.

X

um Hi council, member Reagan, Henninger I'm, the deputy director of the housing department, I just wanted to also um remind us of some of the larger contexts that we were talking about. I think one or two speakers said we. We can't build our way out of the crisis.

X

I think we all acknowledge that and that's why having the 3p framework is so important that we need to protect tenants, we need to preserve the units we have and we need to keep producing, but we also need to address some systemic issues, as the vice mayor had just said, for example, like Rising income, inequality.

I

And if I could just add to that, I mean what happens when somebody gets a rent that is Affordable for their income. They then spend the rest of their income in our local economy, and it's been Studies have found that low-income residents spend their money on food and basic necessities. They actually don't save enough, and so you know when you're looking at one side of the equation.

I

There are other sides of the equation that benefit the our community and our small businesses as well when affordable housing is created besides the jobs that it supports in the construction industry and the services that are provided so.

W

There's no dispute regarding the low income housing and then the needs for affordable housing.

W

The question I ask is: how do we sustain, even though we don't have enough businesses that create what you call well-paying jobs for people who live here in the Silicon Valley or right here in San Jose, in order to have high enough income to even afford what you call Affordable, housing or even a market rate housing so somewhere? The system? If we continue continue to use taxpayer money to.

W

Have what you call non-profit to build housing versus different company or different a market rate? Housing investor will continue to lose the taxes. There's no dispute about the citizen who spent money here in the city of San Jose. Is it how how do we create a sustainable system without continued to tax burden on all of our residents, but spread out the wealth so that way, both nonprofit and market rate housing can survive and and thrive.

W

U

Thank you, councilmember dwan I, don't see any other hands, so um oh I didn't see.

F

I had some time left door, yeah.

F

Thank you very much, so I want to ask a couple of questions which I intended to ask me for. In terms of we have inclusionary policy.

F

Do you have the numbers how many apartments or accommodations got built as a part of the inclusionary policy.

F

I know you get the payment if they don't, they pay a fee, but I want to know. If you have the data on how many units actually got billed as a part of the inclusionary policy affordable, how many buildings, how many apartments.

J

Hi, council, member Kevin malacano division manager, residential Development Division. Yes, we do have that information. uh I, don't have it with me today, but we can get that data for you and provide it to.

F

You would you please present that at one of the future meetings when it is irrelevant, because inclusionary policy is supposed to achieve at least couple of things, one it's supposed to give us the affordable units, the second one, which is a big concern to me- that by creating these affordable units, which are all by themselves, we are creating a segregated Society of low-income people and then the other people who are living in the luxury apartments, and we have lived through that segregated Society before and I would like us to prevent that happening again through this affordable units program.

F

I want to see more of the mixed income properties so that the people who are earning today low income have a role model to Aspire to that I want to be living in the same the 10th floor or the penthouse, where somebody else is living and I think the current. If inclusionary policy isn't yielding us too many apartments, it's again going in the direction of that and affordable buildings if they are by themselves, affordable, only low income. We are heading towards a segregated society, and that is not a very desired.

F

Terrible item to do okay, so so please report to us on that one. The other item which I would like to touch on is affordable homes. Whatever we call them, they become affordable by what it's not the cheaper cost of production. It's not the cheaper cost of management. What is making them affordable.

K

Okay, all right, thank you, council member batra. This is Rachel vanderveen assistant, director of the housing department, and so um there okay, so what is making them affordable? So first I want to start by like how we Define affordable so really what affordable? What that means when we say it is that the rents are affordable to the families, and so it's going to be a rent set at a rate, that's 30 of their income. So that's, first of all, what you have to think about. So we know that the rents are a function of income.

K

Okay, so the way that the rents are lower than um in others is really because of the financing stack. That's put together because there are. There are terms that are more favorable within the different um financings that's received, so instead of just paying a regular mortgage payment to the bank, there's a lot of different systems where they may be able to um have actually pay just um instead of a standard payment, they're going to pay how much money is available in residual receipts.

F

I want to be able to ask the question before the mayor says that my time is up. Okay, I just want to get this lost to me. It helped me understand if I'm wrong, the affordability is coming because it's the public money which helped it build correct. Okay.

F

So if public money is the one which is helping it build, have you Quantified if today, instead of trying to build the affordable home, which we will if we gave subsidy to the tenants, all the tenants who are in the low-income, Eli everywhere, okay and paid the market rate rent or whatever the current rents are? How much money would we need annually and be able to take care of our tenants which we want to help instead of spending whatever money, 100 million, we spend, we get 100 homes.

F

You know, that's not getting us fast enough, like made on the very first time, a comment that that we need more houses quickly at a lower cost. So help me understand: have you Quantified what the subsidy requirement would be, and that would be my last question for the day.

I

Remember I can take a stab at that. We we actually did quantify that during our Copa process, because so many people said we really like rental vouchers, and we said we do too it's just that you can get more bang for your local subsidy dollar through structuring the capital, the sources and uses of an of a building that is ongoing, going to pay for itself, and so I, don't remember the exact number, but we can get it to you.

I

It was something like um for the same amount of money that you would put out for at least 55 years of restricted affordability for a for a project it it was under. It was something like 18 it was. It was nowhere near as efficient. Let me just say it this way. The the 55 years was many times more efficient than paying that same Dollar in rental subsidies, but.

F

We can get you the actual calculation second study session. Could you bring that information up for consideration and also bring in if this requirement of retrying to meet our needs through these production process? The one we got right now? Are we really going to be?

F

Are we constraining our supply or we are going to really be able to solve our problem rather than allow the market rate to be all developed, and we provide the subsidy to the tenants and let the market take care of the supply production issues so bring that information in the next one before the vice mayor calls me out. Thank.

U

You you're at seven minutes so oh.

F

Is that an extra five.

U

It's okay, it's okay!

U

Thank you! So much seeing no other hands. We are going to go to public comment.

D

We have four public speaker cards. Can the following people? Please make their way down to the steps in front of the podium when it is your turn to speak, you will have two minutes and please state your name. Alex seem siwar, Renee, Albert and Sandy Perry. Thank you.

Y

If it's still morning good morning, vice mayor and council members I sent emails to you this morning to catch up what I'm speaking about as well as printing out a couple of things for you. Thank you. I was here over two months ago, I asked for some certain things. Those all happened once CP 5-1 was amended.

Y

Our traffic consultant has told us that, even though we were in a immediable VMT situation, with the mitigations made available with the April handbook, we are now able to mitigate below the magic 11.35. So, in fact, in terms of Transportation impact, we do not need an eir to get under that.

Y

um We do need your help with an eviction that we've received from planning a couple of weeks ago. The our entitlement applications that we've been working on almost seven years, threatened to be withdrawn by next Monday and we're hoping we can get a stay of about three months.

Y

Our environmental consultant believes that, within the next two months to three months, we'll have our initial study ready. If that finds, that we need to have a focused eir, we're happy to do that. So we'd request a postponement of the withdrawal for a number of months as well as not having to pay the I think it's around fifteen thousand dollars for an environmental impact report. We're happy to do that. If the initial study says that we need to thank you.

D

Thank you next speaker.

V

uh Good morning vice mayor, my city, council and staff I want to thank you for all your hard work. I know this is tough, um but looking at the statistics, my name is Renee. Baez um I am I, grew up in San Jose, but I too was priced out of the community and uh I wish that I could live back here um in San Jose and the community that I grew up in I too grew up in six section: 8 and rental assistance programs.

V

My mother raised three boys all on her own, but I feel like we moved every two years. Since the day I was two years old: um I lived in Las Casitas, Apartments off Jackson, Road I lived off, Winchester and Payne I lived off, Winchester maglioco, Blossom Hill and Snell Bud Avenue and Campbell I've lived many places in San Jose, but kept getting further and further out of the community.

V

I went to three elementary schools: three middle schools: three high schools constantly being uprooted to starting a new school in the middle of the school year already behind and never able to catch up the family that I grew up with is no more. My mom lives in Seaside, my older brother is homeless. My younger brother is homeless. My two sisters moved to Texas and North Carolina I.

V

Now, when I was able to afford a home, I was able to buy in Gilroy a condo in the east side of Gilroy after selling that I had to move to Hollister I work in San Jose, but I live in Hollister. The quality of life that I live is is non-existent, which is why I advocate for the workers who are building these affordable homes right the labor standards.

V

This is why I'm here at city council, all the time talking about labor standards, if we can provide a livable wage, health care and apprenticeship programs that will help our youth grow into some, so they can actually make a livable wage that they can afford these homes that they are actually building it'll uh it'll begin a better quality of life. You mentioned it as well. If we can't live here, we can't afford it. We can't pay the taxes here we are displaced. We are.

D

V

I am one of those persons.

D

Thank you next speaker, before the next speaker comes down. We have two more submitted for Jeff and Alex. Sure you guys can make your way down.

Z

Hi good almost afternoon, I just want to say. First of all, this has been shockingly helpful and the information is great. There was also a lot of it, but one of the things I did pull out of the presentations and I've heard it before is there's no way we can build ourselves out of uh our housing crisis, especially for affordable housing, and so that means I.

Z

Take that to mean we need to keep people in their homes as a key strategy for making sure we have enough housing for moderate, low-income people or residents and um I'm. Here as a member of um Shack, it's a Sacred, Heart housing action committee and we've talked to you before about a policy of right to counsel and greater council is basically in a really Innovative program.

Z

That's I think it in place now in 18 cities, counties and states, um and what it does basically is helps add the number of legal lawyers that are available to represent low-income people um and it's critical, because and for a couple reasons. One is as a lot of people and anybody who's gone through eviction process would know. The current eviction process is fundamentally unfair.

Z

It's stacked against the tenants for the landlords, and we know this because, for example, nationally um three percent of tenants go to eviction court with a lawyer, a legal representation and 85 percent of landlords do, and that fundamentally knows that the tenants already automatically on uh in an unfair situation.

Z

The second thing, though, is that um it's unfair and it perpetuates racial, gender and other types of discrimination in the housing market, because the majority of people are a huge proportion of people who get evicted, are people of color, African-Americans women, latinx and as well as people who are like disabled, and so what right? The council does is make it more equal right, so you're actually confronting this housing discrimination. That's been perpetuating over time, um and we know that because um thank.

D

You next speaker the.

Z

Number of um Ashley the number of tenants who were in a right to council program that have.

Z

Thank you. Thank you.

E

Good morning, I'm Sandy Perry I'm with the affordable housing, Network and South Bay Community Land Trust I want to thank the mayor who's, not here vice mayor council members, housing staff and all the presenters. This has been a great study session. I especially want to thank Regina Williams for focusing us on the fact that this is a humanitarian crisis and we're talking about people's lives.

E

There was a good emphasis today on communication partnership cooperation, and it's really important, because this is all taking place in the middle of what I can only describe as a Fierce and bitter National division around housing issues. Among other things, yesterday I pulled up a document.

E

The project from the project, the Heritage Foundation called the 2025 project and they're proposing to ban the use of most of the terms that we've used here today, like equity, racial equity income, equality, they're, proposing to ban the affirmative affirmatively furthering fair housing and ban housing first.

E

So we're we're in the middle of a really bitter National debate, so I feel it's really important for this Council and the city to unite against these kinds of proposals. In the National debate, there's a huge National debate about what the cause of homelessness is and I think. The statistics we saw here today make it pretty clear. 48 percent of renters in San Jose are rent burdened.

E

22 percent are severely rent burdened. They pay over half their income for rent um so to address these things, I think it's necessarily especially I want to especially emphasize the preservation part of thank.

D

You next speaker.

U

AA

Good morning, Jeff Zell I own and manage in San Jose. uh We in the business say the market sets the rent, it's a function of supply and demand and rents are Hydro the failure by San Jose to build sufficient housing. It's economics, 101 and, if you believe, preservation is a strategy to solve this crisis, you need to resign period.

AA

We can build our way out of this and that's the only solution we that there really is long term, less regulation, less cost or how housing gets built. Occupancy permanent on a recent project took me about six years, um and that was inspections and consistencies with inspectors pandemic rules negotiating with the building department, Etc City says it wants housing, but it doesn't act like it wants housing.

AA

There's a pervasive perception that the um we should be landlords to the poor. Housing providers provide housing for a living, we'll do what we need to protect our assets and our livelihoods. The preservation strategy worsens the shortage by limiting access to housing, to only well-qualified applicants, one person per bedroom per credit and perfect Behavior if you're on the bubble, you're in trouble more protections, more regulations like seismic retrofits, expensive, electric upgrades asking us how to do more with less is getting over the top. How about the city does the same?

AA

I, don't see that happening, how about subsidizing funds you're mandating with spend and can't recover due to capped income? Don't see that happening either we're having this meeting, because the the housing the city has failed to meet its housing goals. The three p's that solve the housing problem are production, production and production.

AA

D

Thank you next speaker.

AB

Hello, council, members and staff, my name is Alex, Shore and I know it gets complicated, but I am speaking only today on my own behalf in case, it's helpful I wanted to address a couple points that council members made council member batra.

AB

You had talked about the inclusionary housing requirement in San Jose and that you want integrated communities in San, Jose, absolutely Noble, wonderful goal, I work on some projects in Santa Clara and was talking with my colleague at SV at home, Matthew Reed, reminding me that in Santa Clara most developers choose to build all the inclusionary housing as part of the development, because the city policy is set up in a way that discourages to such an extent them to build, off-site and pay the in-lu fee.

AB

So there are ways to set that up as a policy I also really liked. Your point earlier about the the trends and how things have been going what's been.

AB

Sticking with me is that in our County, the median income from last year to this year for a single person went up from 117 000 to 126 000, which is just incredible growth from one year to the next, and, if you think about how much money, that is, for the average person they're eligible for affordable housing, which unfortunately includes a lot of our our city, employees and I think this speaks to the vice mayors. Point.

AB

Thank you so much for talking about that and income inequality, because for our residents, the number one driver of costs is their housing and the number one way you can address, that is by bringing down the cost of housing or the wages that they make. So thank you vice mayor for bringing that issue up.

D

Thank you and we will now go to zoom.

AC

AC

uh Yes, can you hear me? Yes, uh thank you. Paul Soto from the Horseshoe um we're at a very critical juncture in our Evolution as a city, and what I mean by that is. We are dealing with right now to accurately assess what our situation is as a city and as a species.

AC

Is that what we're dealing with is the generational impact of redlining policies and those were racially motivated. We were explicitly designated as not being desirable in this city in the documents State specifically stated Mexicans, so we need to account for that now the language of the City attorney I, don't care what the City attorney says: they're lying they are lying to accurately assess what we're doing with is the generational impacts of redlining. Now that needs to be the Cornerstone of this discussion or just give up your job because you're getting in the way.

AC

This is an existential crisis. Meanings that our existence, our very existence here in the city of San Jose, is being threatened in the way that it's being threatened. Is that we're allowing developers to circumvent the Democratic process and leverage power with the mayor's office, meaning mayor, licardo, Perales and Magdalena Carrasco were all three signatures of the non-disclosure agreement that was signed with Google in 2016.. It was from that point that the proliferation of this market rate housing versus uh affordable versus low-income housing started.

AC

Here's the solution. You cap, you cap market rate housing at 50. Until you bring up the low-income housing three years in a row up to 70 percent. Once that is maintained, then you can uh can reconsider market rate housing market rate housing needs to have a cap on it at least 50 percent.

L

Zoom caller private.

S

Film, caller private.

S

Okay, moving on to Blair Beekman.

AD

All right, Beekman, thanks for this study session today, thanks for the words of uh Sandy, Perry and uh Alex sure who very nicely mentioned uh ideas and information that the City of Santa Clara is doing at this time uh to address these issues. This of an interest to myself, thank you uh and what from Sandy Perry mentioned, there's a issues going on at the national level that uh we we are hopefully addressing here at the local level. It was very nicely mentioned by the mayor, asked the questions.

AD

The council were very good by the way today. Thank you. uh The mayor asked you know how do we address uh future construction costs?

AD

That's been a long time question of the mayor uh and how to address and and councilman prison batra and how to address the differences between market rate, housing and upcoming ideas of middle-income Housing, Development and so Council mayor Mayhem asked a very uh poignant question that I'm learning to better understand uh how are we going to address the future of construction costs themselves when construction costs are tend to are supposed to naturally go up when you build more affordable housing and middle-income housing? That's a dichotomy, uh Paradigm situation.

AD

That's really uh difficult and I hope that uh not just working at the local well but calling on State and national leaders to really address this, and- and we can make changes changes uh in in ways to address this better I. Think and really you know, as as how Sandy Perry really likes to work. uh You know, San Jose can be a leader in housing ideas in our future. About uh asking these sort of questions.

AD

I know: we've made a lot of good uh changes to uh in working with the state of California, and then working with the state of California is how we can really better address the feature of low and extremely low income housing. Maybe it's time to call on them again to address construction issues and bring costs down for.

S

I'm at Alvarado.

AE

Yeah good afternoon, uh thank you everyone. This has been a good study session. um A couple things I want to point out. um One is that um City staff will will um underscore this point that um the the fact is that your the data that you're relying on understates the level of displacement- that's happening in neighborhoods um across the city of San Jose. Well, sorry about that, the um um in fact displacement is happening um at a greater rate than what showed in the oh sorry and got a phone call. This Good.

AE

This show that's uh um showing in the maps that the city has provided and that's just a function of the the limitations of data. The other thing that is um in those same neighborhoods, the data that you rely on is primarily Census, Data, I, think um and typically that overstates the incomes in low-income neighborhoods.

AE

um In fact um it comes the the the the incomes are, are dreadfully low in our neighborhoods I mean that's not reflected in census data, so the data you're depending.

G

AE

um Is sorely lacking? The thing is that that means you don't have a full picture of. What's going on so low income, neighborhoods are undersold in San Jose, low-income neighborhoods are the ones who are rapidly be um displaced on a daily basis that color from or the guy who lived in, Los, Banos or Hollister, or whatever here's an example of what's going on and it's devastating um the character of our neighborhoods. Here.

AE

um As we continue along this path, San Jose will become like San Francisco, which is uh a city that is exclusively for high-income people, and low-income people will no longer be afraid to live there. I want to say the right to council is important, because the long-term impacts that evictions have on credit-worthiness and that will stay with renters for a long long time to come.

AC

Rocio Molina.

AF

Hello, thank you so much Rocio Molina here interim deputy director of catalyze uh saving I, want to thank the staff and the speakers today in particular Regina for their attention to how we can all collectively unify in our vision for how to create and support affordable housing in the region.

AF

um As some of you may be familiar catalyzed as the host collaborative constructive conversations with community members developers and local decision makers to create solutions to the housing crisis, to find avenues for creating vibrant places for our people, in our communities to live, and, of course, that comes down to affordable housing access.

AF

We have hosted conversations with residents of some of San Jose's, predominantly single family neighborhoods and some of the residents of affordable housing units um that already exists in San Jose, to identify pain, points on accessibility to affordable housing and housing creation, and one of the things that they've identified is the need for more Neighborhood Services and supportive services in the affordable housing developments to ensure that housing is stabilized for our more vulnerable populations. Those that have historically experienced homelessness, those that are underemployed under salaried.

AF

A great example is Page Street Studios, which has Community Solutions there every day in order to support the residents identifying opportunities for us to collaborate with developers and service providers to create a really holistic and vibrant place for people will address some of these pain points for all of our residents. Thank you so much for today's creative thinking.

S

Catherine, hedges.

AG

uh Good afternoon, thank you very much Council and all the presenters today and I want to add to the comments by Sandi, Perry, Alex, Shore, Rocio, Molino pulsetto and the um caller who commutes in from Hollister.

AG

um This is a crisis. It has taken a long time to get to this point and we need to use all the solutions.

AG

um Preservation is important right to council is important because getting people signed up for um the rental assistance to keep some in their homes takes a long time to process and people can be evicted while there's still on the waiting list for the rental assistance, and um we need to you know, perhaps be Pioneers with the state to change any Statewide restrictions. We need to support any um state or Regional funding measures.

AG

um And we were actually Pioneers in getting uh inclusionary housing. You know below Market, rentals included with rental housing and not just single-family homes and San. Jose can be a leader and work to get other Solutions, whether it's modular Construction, um we we can be creative. Thank you very much.

S

Michelle Williams.

AF

Hi, can everybody hear me.

L

AH

Okay, thanks hi, my name is Michelle Williams I'm, a development project manager with satellite, affordable housing, Associates um I have I'm working on a site in the market. Almaden neighborhood in San Jose I just wanted to. First of all thank the speakers and the panelists and the city council for uh this really great study session and just the the amount of data and and work and research that you put into uh working on this issue.

AH

I wanted to just ask about the city's plans to um the city's plans to invest in the housing that will be required. I think the I heard the arena goal is around 62 000 units and so I'm just wondering what um what amount of the construction costs that will go into those sixty thousand sixty two thousand units production.

AH

uh Do you expect to be affordable housing that the city will will invest in a part of, um and then related to that I'm also wondering um what the city's plans are in terms of rolling out uh the existing Investments that the city is able to make, including the city's nofa process.

AH

I think I remember from the last uh budget session that the city was trying to figure out how to prioritize funding temporary emergency housing versus funding the development of permanent housing and so I'm wondering what the current delineation of those priorities is and the timeline for rolling out City investments in those in those uh important policies. Thank you very much.

AC

AI

Hi uh good afternoon, vice mayor and Council, thank you for the opportunity uh to share some thoughts and for hosting uh this public forum. I think it's very important um uh everything that has been said today. I just want to add uh that given and the realities that real estate is a cyclical um cyclical uh Market that we need to be mindful of all of the things that do make development moves forward. We find ourselves in a challenging time, particularly right now, but that doesn't mean that it's going to be that way forever.

AI

The city is a leader as folks on both sides. uh The folks on the panel have said that they are a leader in the space of providing funding, they're a leader in the space of providing tenant protections uh and really you're a leader in thinking of the solutions to bridge that Gap. This isn't something that we could simply build ourselves out of. If that were the case, we would be building lot more than we currently are.

AI

We learn from Chris Neal that market rate really isn't penciling at this particular moment, but that doesn't mean it won't pencil in the future and that it won't happen. It just means that we have to focus on the current situation we find ourselves in which is making affordable, housing, more accessible, new construction, more possible and working with the limited resources that we have now, which means focusing on preservation. Solutions.

AI

We have the tools that many cities are wishing that they could deploy. Measuring is an incredible resource and so I think we need to look at this from the perspective of a well-resourced city that has the tools to make these priorities all possible and focus, as we have in this study session, uh on the three PS Production preservation and protections. Thank you very much.

U

Before we go to the next speaker, I'd like to know how many more are left, because I'm about to lose a quorum and I know that we had only planned on about 12 or so, how many do we have left.

S

There are currently Four.

W

U

Okay, I think we'll go ahead with the four hands and- and you know you know, try to conclude.

S

Next, caller Oscar Medrano.

AJ

Hey good afternoon, everyone um can you hear me. Yes,.

N

AJ

Yes, good afternoon, I just want to give a little bit of insight in terms of um preservation. The three p's and you know, I, do believe that preservation would be a stronger way to curve displacement in the city of San Jose, just because our community doesn't have five years six years to actually wait for the development of a new house and so majority.

AJ

You know and if I'm sure you all already know that displacement occurs when um folks are dis, evicted from their current living situations, and so, if we really do want to curve displacement and evictions in San Jose, we have to build uh an in-between almost like a limbo, and that would be the preservation of the Helms that tenants currently live in.

AJ

um So we you know just production production production will not work. We have to look at a multi-pronged approach that has the best interest of a community and does not have the best interests of you know: private investors that don't live in the community and also you know we we're not talking about percentages, we're talking about families and Community, we're talking about people and so having that in the Forefront.

AJ

When we're talking about stopping displacement and thinking about alternative ways to build, affordable housing and stop the houselessness, that's going on in the city of San Jose, we have to look at preservation as a strong um Ally for our community and those who live in the community. You know there is a lot of folks who do carpool, who do drive to San Jose, so an elder for us to keep them here. We have to have affordable and safe housing. In order for our economy to grow.

AJ

We have to have those resources to be able to house our folks in the city of San Jose. Thank you.

AE

S

Next, caller Olivia Ortiz.

AK

Good afternoon, um I, first of all, I want to thank the uh the team that um did amazing work in this presentation.

AK

Unfortunately, I think we knew that we'd be knowing that, since a lot of years that this is happening in San Jose, the prices that we're in unfortunately, impacts our low-income family, something that worries me and actually makes me a little bit sick- is that right now, I'm hearing some of the council members focusing more on the market house market rate housing um worrying about more of that, and that in that part, it really makes me really worry that this presentation is about this house.

AK

uh This house price that is affecting us impacting our low-income families here in San Jose I, really do hope that they um keep that in mind, not just in their mind but in their hearts that we need to find Solutions. We need to find solutions that are going to take us out of this crisis that is affecting human beings. Families they've been affected. Kids that has been affected about this.

AK

We need to find solutions that again that are going to help those families you know and and hopefully hopefully, that we find them soon, because there's a lot of things going on with our families on here, especially I'm here in my um East Side I'm, a Mayfair community, and um hopefully do you guys do find Solutions, and it's going to take all of us to do that. But if we keep, you know focusing on on something that is not. You know like it's not crisis, not much. You need to hit San Jose, it's it's!

AK

It worries me and again, you know this is about. You know about housing for our community for a low income Community, it's a crisis, it's not about the market rate housing out there, I'm pretty sure they're doing great. This is the reason why we're in this mess so fix it. Do your job and also people out there residents. Please keep an eye on these people. We have the power to have them there. We need people that is going to bring solutions to our city. Thank you.

AC

W

AL

Hi, my name is Deborah Townley.

AL

um uh Can you hear me? Okay,.

L

AL

um I am one of the numbers who is one of the people who has been displaced. um I was married to an engineer living in zip code. 95123 um I was a volunteer at my Children's Schools I was very involved in my community. My church um had lots of friends there. My kids had lots of friends there.

AL

um I had chronic illness. I was a stay-at-home mom. I did everything I could do to be a part of my community was very involved. Then I got divorced and shortly after I started a preschool program called the little tree play school at a church and then I got into a car accident. With my son and my son and I both became disabled I was almost out of State Savings after lots of medical treatment. Medical bills um tried to keep.

AL

My home went from uh my home to a hotel to an apartment that we could afford once we could find. It then went to uh living in an RV and then living into in our car, and then um we were almost on foot um when we uh and we had signed up for uh housing, wait lists lost. Our medical coverage um lost my IRA. My children's college funds um waiting for housing waiting for help um paying cash for medical.

S

No other public comment back to council.

U

Thank you so much for everyone's participation. We are adjourned.

U