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San Jose is Considering Housing Impact Fee to Support Affordable Homes: A Student’s Perspective

Author: Shannon McDonald 

Cathy is a busy San José State University graduate student with a blossoming career in the environmental service field. Ten years ago, as a newbie to the professional world, she lived in one of the many affordable modern apartments in San José complete with a pool and gym. However, in 2014 even an established career does not help much to afford the sky rocketing rents. Cathy now finds herself struggling to find a decent, comfortable apartment to rent. “High rents are definitely proving to be a burden to my living and day to day life,” Cathy explained, “I have had to sacrifice many important personal needs in order to afford a decent apartment.”

Upon closer look at Craigslist, a popular site to find housing rentals, the options affordable to students are few and far between. A recent search of rental listings revealed that a one-bedroom apartment in downtown San José ranges between $1,950 and $2,500 per month while a two-bedroom apartment ranges between $2,100 and $3,000 per month.

According to the 2014 Out of Reach report released by the National Low-Income Housing Coalition, a resident must make an hourly wage of $31.71 to afford a $1,649 rent for a two-bedroom rental in San José. However, given this sobering statistic, an hourly wage of $37.50 is needed to afford the minimum monthly rent of $1,950. This wage is far beyond the means of what many college students may be making. Compare the $37.50 hourly wage to San José’s $10 minimum wage, and you can see the disparity between the income many students receive and the rent they pay each month.

San José, as well as the Bay Area as a whole, is experiencing a crisis of home affordability. This crisis is felt amongst people earning a vast range of income levels, from very low-income to the middle income. Prior to the dissolution of San José’s Redevelopment Agency (RDA) in 2012, the City had upwards of $40 million annually to spend on affordable homes. However, the dissolution of RDA combined with the reduction of federal grant funding such as Community Development Block Grant and HOME has greatly reduced the City’s capacity for supplying affordable homes to its residents.

In addition, the City of San José used to have an inclusionary housing ordinance for their redevelopment areas, which required developers to set-aside 20% of new rental housing units for very-low and low-income households. In 2010 the City expanded the ordinance to cover all areas within the City boundary with a 15% set-aside requirement for moderate-income households. However, before the new ordinance could take effect, a lawsuit resulted in a court hearing declaring the ordinance invalid.

To address the lack of affordable homes the City of San José is now looking at a Residential Impact Fee. As of October 3, 2014 the City is considering a $17 per square foot fee assessed on new market-rate rental home development. According to Kevin Zwick the CEO of Housing Trust Silicon Valley, a non-profit that finances affordable housing and assists First-Time Homebuyers, “at $17 per square foot the fee would raise a little over $25 million per year.” The Residential Impact Fee would be paid by developers and collected into an affordable housing fund. Zwick explains that “this fee looks at problems created by new market-rate rental homes, asking developers to pay their portion of impact.”

However, the affordable housing advocacy community is asking the City to implement the fee at the highest justified amount of $28 per square foot, which they explain has the potential to create 16,800 affordable rental homes. If the City Council approves the Residential Impact Fee then students would have more affordable options, decreasing situations of overcrowding and the burden of paying more than 30% of income towards rent.

I encourage you to have your voice heard and advocate for the City Council to approve the Residential Impact Fee at the upcoming City Council meeting. Come and give your testimony of what it is like trying to afford rent as a student or a resident in San José.

What: City Council Meeting

Where: City Hall Council Chambers

When: Tuesday, November 18th at 3:30pm

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