San Jose lawmaker’s bills critical to federal housing package

The largest federal housing bill in decades has the potential to increase the home supply in Silicon Valley, one of the most expensive regions in the U.S.

The bipartisan 21st Century ROAD to Housing Act, passed earlier this month, contains more than 40 provisions that include fast-tracking housing development by cutting red tape, increasing the limit banks can fund affordable housing, enabling investments in housing pilot programs, streamlining environmental regulations and more.

Congressmember Sam Liccardo, who represents San Jose, Palo Alto, Mountain View and San Mateo County, said while these changes are necessary, more work is needed to alleviate the housing crisis. He’s helped author four bills that were included in the federal housing legislation.

“What we see are modest incremental steps to something that is better, and given the current state of our country under this administration, better is a very rare thing,” Liccardo told San José Spotlight. “This is the largest package I know in several decades. On the other hand, there’s nothing in this package that is going to have an impact on tens of millions of American families that are struggling with rent this year.”

One of the bills spearheaded by Liccardo, H.R. 5591, creates a pilot program to convert vacant or blighted office buildings into affordable housing. It appropriates about $100 million a year through 2031 for the Blighted Building to Housing Conversion Program, contingent on the availability of funds.

This pilot program could put underutilized buildings into good use in places like Silicon Valley where vacancy rates are high, Liccardo said. Downtown San Jose has a commercial vacancy rate of nearly 31%, Campbell has a vacancy rate of nearly 33% and Mountain View has a rate of 31%.

“The advantage you have is that the buildings are already there,” Liccardo said. “Even at $100 million, you got to spread the peanut butter pretty thin over a country our size. What I’m hoping to do is to get the camel’s nose under the tent, and particularly to persuade Republican colleagues that this is a good investment of taxpayer money, recognizing we want to do far more.”

Another key bill co-authored by Liccardo involves expanding loan options for manufactured homes and accessory dwelling units (ADUs), which would allow individuals with moderate incomes to finance construction of a backyard home.

One of the challenges with building ADUs is that it’s limited to cash or taking out an additional mortgage, leaving few options for middle- and low-income homeowners.

David Garcia, deputy director of policy at University of California, Berkeley’s Terner Center for Housing Innovation, said this loan expansion could create an ADU construction boom in San Jose, especially when paired with the city’s policies that lower barriers to build and streamline permits. In California, one-fifth of new homes built in 2023 were ADUs.

“(San Jose) is pretty forward thinking in terms of policies there,” Garcia told San José Spotlight. “In cities that have pretty permissive ADU policies, this can make those policies even more effective.”

Louis Liss, director of real estate and development at Eden Housing, a Bay Area nonprofit affordable housing developer, said the provisions in the legislation will help make it cheaper and easier to build.

In particular, the legislation increases how much banks are allowed to invest in tax credits for affordable housing projects — from 15% to 20%. The Low Income Housing Tax Credit program is the primary source of federal funding for affordable housing. The program gives investors, typically banks, a federal income tax credit in exchange for making investments in affordable housing developments.

“Some of the banks who were buying the credits were butting up against that limit on how much they were allowed to invest, and so we’re really excited to see an increase in that,” Liss told San José Spotlight.

Garcia said these federal reforms will work hand in hand with California’s new state agency aimed at streamlining funding for affordable housing.

The state created the California Housing and Homelessness Agency (CHHA) on July 1 to house various departments overseeing state and federal housing funding programs under one umbrella. Instead of developers filing multiple applications, the agency creates a one-stop shop for developers to receive state and federal funds through one application.

“To the extent that the state is getting more funds from the federal government in future years, ideally CHHA will be in a good position to distribute them in a more efficient way,” Garcia said. “I’ve been struck by how aligned Democratic and Republican staff have been on moving housing supply ideas forward.”

Contact Joyce Chu at [email protected] or @joyce_speaks on X.