San Jose lawmakers to address ‘missing middle’ housing, prevailing wages

    In the last meeting before a month-long summer recess, San Jose lawmakers on Tuesday will consider strategies to help house the city’s “missing middle,” such as creating a loan program for the construction of backyard units, developing housing in North San Jose and rehabilitating older apartments.

    In Santa Clara County, a four-person household is in the moderate-income category if it earns between $103,900 and $157,700 a year, according to the California Department of Housing and Community Development. The City Council in April committed to housing San Jose’s middle class when councilors dedicated $10 million as part of the Affordable Housing Investment Plan.

    Moderate Income in Santa Clara County
    Household Size 1 2 3 4 5 6
    Income Limit $110,400 $126,150 $141,950 $157,700 $170,300 $182,950

    Housing officials had originally deferred the missing middle housing debate earlier this month. Since that time, they pulled together more information about a recent homebuyer downpayment assistance proposal from Councilmember Pam Foley, as well as a backyard unit proposal from Mayor Sam Liccardo and Councilmember Magdalena Carrasco, Sylvia Arenas and Foley.

    Foley’s homebuyer assistance program proposal, which she outlined in a June 7 memo, seeks to help first-time homebuyers secure the 20 percent down payment required to purchase a house. San Jose has managed a number of down payment assistance programs in the past, helping more than 1,200 families buy their first home.

    “Homeownership is commonly referred to as one of the primary ingredients of the American Dream,” Foley wrote. “Owning a home is an asset that allows a household to build equity, take advantage of helpful tax breaks, stabilize their housing costs and to live more sustainably.”

    Between funds from previous loan programs and housing impact fees, officials estimate the city has about $6.6 million in the bank to help first time homebuyers. However, that may not be enough.

    “The current for-sale housing market in San Jose creates challenges for creating a homeownership program benefiting moderate income households,” Housing Director Jacky Morales-Ferrand wrote in a memo. “Typically, a homeownership program is designed to provide the ‘gap’ financing needed to allow a moderate-income household to commit 35 percent of their income to a mortgage for a home.”

    Morales-Ferrand estimates that the gap ranges between $100,000 and $550,000, and to bridge it, she recommends combining subsidy programs. Santa Clara County has invested $25 million from the affordable housing bond, Measure A, to an Empower Homebuyers program that’s managed by the Housing Trust of Silicon Valley. The program offers a maximum loan of 17 percent of the purchase price on a home valued at $800,000 or less.

    Morales-Ferrand also provided updates on a proposal from Liccardo, Carrasco, Arenas and Foley that sought to fast-track the development of backyard housing units, often dubbed “granny units.” Housing officials are currently in talks with the Housing Trust of Silicon Valley to develop a forgivable loan program that would provide loans to help construct the units. In exchange, the new landlords of the units would rent them out at a low to moderate income level. The program is set to return to council after the recess in August.

    The councilors’ request to incentivize garage conversions to livable spaces and to search for financing sources for backyard units, however, has been put off by housing officials due to a staffing shortage.

    Private workforce development

    It’s been more than a year in the making, but city officials on Tuesday will present a new law that will add certain wage requirements for private construction projects that are subsidized by the city.

    If approved by the council, San Jose will require construction companies to pay a prevailing wage to ensure workers are being paid fairly. The new law would supersede the existing one which follows California’s wage requirements.

    The change comes at the push of labor groups, who last year were locked in negotiations with elected leaders over a potential ballot measure that would enact a gross-receipt tax on large corporations. The labor groups – which included the South Bay Labor Council, Working Partnerships USA and the Santa Clara-San Benito Counties Building Trades Council – agreed to drop the measure in exchange for the city adopting new rules so that local construction workers would be paid a prevailing wage.

    One labor group demanded the city enact a local hire provision that would discourage construction companies from using out-of-state workers. City officials estimate that provision of the new law will be ready by Aug. 6.

    “The proposed ordinance does not yet incorporate requirements for targeted hire, apprenticeships and local hire since more study is required surrounding the implications of these policies,” Economic Development Director Kim Walesh and Public Works Director Matt Cano wrote. “Unlike the proposed ordinance, developing an ordinance that imposes local hire, targeted hire and apprenticeship requirements on private construction projects – even those receiving a City subsidy – raises numerous challenges.”

    Walesh and Cano listed legal, administrative, enforcement and resources all as roadblocks to formulating a new law around a local hire provision.

    The City Council meets 11 a.m. Tuesday inside the council chambers at City Hall, 200 East Santa Clara Street in San Jose.

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

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