San Jose lawmaker asks: What does it cost to build affordable housing?

Just a week after the San Jose City Council approved spending millions of dollars on five affordable housing projects, Councilmember Johnny Khamis wants to know: “Are we really getting the biggest bang for our buck?”

Khamis on Wednesday proposed studying the costs of building affordable housing in San Jose at a council committee meeting, saying the city is forking over hundreds of thousands of dollars more for low-income housing than private development.

“The whole point is to produce more housing so we can house more people,” Khamis told San José Spotlight. “I want people to understand that I just want to house more people per dollar.”

In a memo to the committee, Khamis said the city is contributing a minimum of $117,000 per unit for the three affordable housing projects approved at last week’s council meeting. The total costs for each unit, which includes other revenue sources, ranged from $600,000 to more than $800,000. By comparison, he said, private, for-profit developers’ cost is about $400,000 to $500,000 per unit.

So why does affordable housing cost so much to build?

Ray Bramson, the chief impact officer at the housing and homeless nonprofit Destination: Home, alluded to the red tape that comes with building affordable housing.

“There’s everything from subsidizing rents over time to complex regulations that come from taking public money,” he said.

Bramson also added that when the city builds affordable housing, it should be considered an “investment” — when people can’t afford housing, they end up on the streets, amassing other costs.

“I think the smart move is for San Jose to keep doing what they have for some time now and support affordable housing developments as they come to council,” Bramson said.

On Wednesday, Councilmember Sylvia Arenas reflected on a recent memorial in honor of the 158 homeless individuals who had died in San Jose last year. She said the city needs to think about other repercussions stemming from a lack of affordable housing.

“There is a high cost of housing, there is also a high human cost,” Arenas said. “I want to make sure we take that into account when we’re talking about affordable housing.”

Mayor Sam Liccardo pushed for an “apples to apples” comparison so that city staff studies equitable developments. Vice Mayor Chappie Jones agreed, using an example from his district: A private market-rate housing project that cost just $300,000 per unit.

The catch? The developer owned the land.

“This could really become a rabbit hole,” Jones said. “There are so many different variables that impact the cost of construction.”

To avoid comparing apples to oranges, Liccardo suggested that staff focus on a few specific affordable housing projects to provide answers to Khamis and the rest of the council.

“Without understanding the problems,” Khamis said, “we can’t get the solutions done.”

The council’s Rules and Open Government Committee voted unanimously to send the issue to a future council meeting.

Contact Grace Hase at [email protected] or follow @grace_hase on Twitter.