City of Department of Housing Jacky Morales-ferrand, Director Capital of Silicon Valley (endorsed) September 19, 2018*

R6

Cities with an in-lieu option should raise the fee to at least 30% higher than the inclusionary BMR equivalent where supported by fee studies The City has already implemented recommendation 6. The City of San José's Inclusionary Housing Ordinance, Chapter 5.08 of the San José Municipal Code, requires all residential developers who create new, additional, or modified For-Sale or Rental units to provide fifteen percent (15%) of housing on-site that is affordable to income qualified buyers/renters. Alternative compliance options are available including the payment of an in-lieu fee; all alternative compliance options are based off of a twenty percent (20%) obligation. According to the Grand Jury analysis (see bottom of ), an in-lieu fee option must be at least one-third higher than the build-on site option. The Grand Jury analysis identifies an equivalent example to San José's requirement in which the City of Santa Clara has a build on-site based on a fifteen percent (15%) requirement - the same requirement as San José. San José's 20% off-site/in-lieu fee requirement is one-third higher than its 15% on-site requirement; therefore, San José's Ordinance already fulfills this recommendation.

R7

A task force to communicate the value and importance of each city meeting its RHNA objectives for BMR housing should be created and funded by the County and all 15 cities by June 30, 2019. The City will not implement recommendation 7 because it is not warranted. The County has already created a housing-ready toolkit for cities and developers to use that provides key messages including defining the problem, solutions, tools, and action steps in support of Measure A. In addition, if a sub-region is created as recommended under 3a, the cities can include a communication plan under their workplan for the sub-region.

R8

All 15 cities and the County should annually publish the number of constructed BMR units starting in April 2019. The City has already implemented recommendation 8. The City of San José publishes periodically a Production and Preservation Report that includes the number of deed restricted affordable units constructed and those in the pipeline (predevelopment). The report is available on the City's website at http://www.sanjoseca.gov/index.aspx?nid=3293. Finally, the Report focuses on San José's actions as the key for Santa Clara County to improve its affordable housing supply. The following provides additional context. San José has made a firm commitment to producing a large amount of housing at significant densities while also growing its job base. Our General Plan 2040 provides for the creation of 120,000 new homes by 2040, the majority of which will be built in dense, mixed-use Urban Villages and growth areas. , a total residential development capacity of over 18,000 homes will be available in Urban Villages/growth areas, and Downtown. No other city in the County has such ambitious plans for denser development and a mix of uses at dozens of locations to encourage walkable, healthy and connected city development. It is important to understand that San José's RHNA goals always far surpass that of all of its neighboring jurisdictions in the County. Our current goal is the production of 35,080 homes over 8.8 years. However, in the current cycle, the rest of the County combined only has a production goal of 22,040 - more than 13,000 fewer homes than San José has assigned. That makes San José's goal 1.6 times the rest of the County's production goal combined. The Report focuses on the fact that San José's housing production is far below its RHNA goal on a percentage basis. But in using percentages of RHNA goals attained rather than absolute numbers, it is misleading given San José's very large housing goals as compared to the rest of the County. The production of affordable homes in recent years also should be taken in context of San José's history of leadership in affordable housing. The City has worked for the past three decades to produce a substantial stock of more than 19,000 affordable homes. As the largest jurisdiction in the County, it is San José's role and commitment to produce a signification amount of both affordable and market-rate housing, Mayor Liccardo and the City Council continue to take a leadership position in housing. The City's housing goal of 25,000 units in five years is the most aggressive in the County. Finally, the City Council's support for affordable housing production is clear, as it placed a bond issuance of $450 million on this fall's ballot. One of the largest affordable housing bond of any city in California. The City of San José appreciates the opportunity to provide written responses to the Report. If you have questions or would like additional information, please contact me at 408-535-3855 or jacky.morales-ferrand@sanjoseca.gov. Sincerely, Jacky Morales-Ferrand Director of Housing 9