SJ City Council approves measure to make housing more affordable in city

SAN JOSE, Calif. (KGO) -- The San Jose City Council Tuesday approved a Housing Impact Fee of $17/square foot on new market-rate rental housing, which would make housing more affordable in the city. The vote was 7-3, with Mayor Reed voting no.

The economic recovery has boosted hiring, but it's also put a squeeze on housing. Rents are rising and that's creating a hardship for low-income families.

The San Jose City Council addressed that with a new fee to create affordable housing.

Non-profit groups and housing advocates rallied outside city hall Tuesday to show their support for a plan many have been working on for two years. It's a plan to generate millions of dollars for affordable housing by charging a fee to builders of rental units.

Demand is estimated to be 30,000 in a city where two-bedroom apartments can rent for $2,500.

Mayor-Elect Sam Liccardo says that's a stretch, even for some professionals. "We have a crisis with teachers and nurses who are working very hard who have nowhere to live in our city, so it has a lot of different dimensions and we're going to need a lot of tools," he said.

And one of those tools before city council is a $17 per square foot fee for builders of rental units. That would generate $24 million a year, replacing what the now-defunct redevelopment agency used to channel into affordable housing projects.

Other Bay Area cities with similar plans charge much more. The fees are anywhere from $23 to $25 per square foot.

The beneficiaries are people like Anthony King who lives in an affordable unit in San Jose's Midtown. "With having my housing needs secure, I'm able to look toward trying to find you know gainful employment. I'm also in the process of trying to get custody of my son back, trying to go to school," he said.

Advocates say the plan will ease overcrowding. "There's a lot of doubling up and couch surfing and not just individuals but families as well and that's below the surface that isn't immediately obvious, but it contributing to our homelessness issue. It's contributing to our housing crunch," Housing Trust Silicon Valley CEO Kevin Zwick said.

However, council member Rose Herrera worries this could hurt smaller projects and could lead to higher rent to cover the fee.

The new fee would not be imposed until mid-2016 to grandfather construction underway. It could also face a legal challenge. The council began to hear public testimony late Tuesday afternoon and voted in favor of that fee early evening.