San Jose City Council takes an important step towards eliminating onerous requirements that have hindered affordable housing production
Last week, the San Jose City Council unanimously approved a proposal to eliminate ground floor commercial space requirements for 100% affordable housing developments – removing a significant barrier to new affordable housing development in San Jose.
The action will provide a big boost to the City’s efforts to develop more affordable housing and underscores the huge impact that local land use and zoning rules have on addressing our growing housing and homelessness crisis.
How ground-floor commercial requirements impact affordable housing
Many cities, like San Jose, have required new housing developments located in certain areas to include ground-floor commercial space. While a well-intentioned concept, commercial space requirements create a huge barrier to new affordable housing development.
Integrating commercial space into affordable housing developments not only adds millions of dollars in additional development costs, it also reduces the number of affordable apartments that can be built on-site. In addition, because public affordable housing funds cannot be used to pay for commercial space and the market for commercial tenants is weak, these requirements create serious financial challenges for prospective affordable housing developments.
The impact of these commercial space requirements have been severe:
- Local affordable housing developers have shared countless examples of being forced to walk away from a prime development opportunity because it was financially infeasbile to include ground floor commercial space.
- And even when there was a way to include commercial space, the project would yield significantly fewer affordable apartments at a higher-overall cost per unit – a huge opportunity cost at a time when the need for affordable housing has never been greater (particularly when you consider that many of the developments have seen their commercial space sit vacant for years!).
Want to learn more about the real-world impacts of commercial space requirements? Read the memo from Charities Housing.
Eliminating these onerous requirements in San Jose
The recent City Council vote culminated a years-long advocacy effort. Since 2019, Destination: Home, SV@Home and several non-profit affordable housing providers have been advocating for the City to exempt 100% affordable housing developments from these requirements – given this is precisely the type of housing we most desperately need and which face the greatest development challenges. Read our case statement.
This issue will return to the City Council in early 2022 for some follow-up actions to implement this policy and to discuss whether to exclude certain locations in San Jose – and we will continue engaging with policymakers to ensure we are maximizing the opportunity to develop more deeply-affordable housing in our community.
Want to learn more?
You can also go to our website to learn more about Destination: Home’s affordable housing policy work.