July 20, 2024
San Jose remains the last of the Bay Area's three largest cities without a final housing plan.

California regulators say San Jose’s proposal to add more than 60,000 new homes over the next decade isn’t up to snuff, leaving the city as still the last of the Bay Area’s three largest metropolises without a finalized state-mandated housing plan.

Until San Jose can persuade state officials to sign off on the plan, it risks missing out on valuable affordable housing and transportation funds as well as losing control over the approval process for many new housing projects.

In June, when the City Council, in a split vote, agreed to send the plan to the state for approval, a host of pro-housing advocates, tenant activists and construction labor backers voiced concerns. Many were skeptical that city officials had done enough to convince regulators to approve the city’s 239-page “housing element” planning document, meant as a roadmap for the city’s future housing growth.

In a letter to the city on Monday, the state housing department wrote that it had received “several third-party comments expressing concerns” that city officials had not allowed “adequate time or opportunity to provide public input and comment” on earlier drafts of the plan.

“During the housing element revision process, the City must continue to engage the community, including organizations that represent lower-income and special needs households, by making information regularly available while considering and incorporating comments where appropriate,” state officials said in their letter.

The state has made it clear it has high expectations for city housing plans, requiring officials to detail strategies to help developers ramp up homebuilding and meet the housing needs of all residents. Cities and counties across the state are required to submit plans to ease California’s housing crunch. In the Bay Area, San Francisco and Oakland already have received approval for their plans.

Under state law, San Jose must specify where and how it can help spur the development of at least 62,200 more homes — over half of them affordable — by 2031. That represents a roughly 20% increase in the city’s housing stock and a 77% jump from its previous eight-year housing goal.

In its letter, the state housing department asked the city to do more work to prove the sites the plan identifies for new housing have a realistic chance of development. It also asked city officials to provide more specifics on programs to streamline the local permitting process and prevent housing discrimination and displacement.

San Jose Mayor Matt Mahan said he didn’t anticipate the state would certify the council’s adopted plan.

“We expected to have additional technical revision requests come back from the state,” Mahan said in a text.

Mathew Reed, director of policy with the South Bay affordable housing advocacy group SV@Home, also wasn’t surprised the state didn’t accept the plan. He said while the state’s letter asks for technical updates, it’s also an “explicit request for more specificity.”

“There’s a real sense of urgency,” Reed said. “And we feel that while it may not be simple, there are clear paths forward.”

In the current version of its plan, the city identified around 600 potential development sites. Many are concentrated downtown and in the Diridon Station neighborhood, where Google announced plans to build its Downtown West mega-project.

Officials have also zeroed in on suburban areas, particularly along major transit arteries such as Stevens Creek and Winchester boulevards. North San Jose, which the city has for years targeted for development, could also see many more homes.

Additionally, the plan calls for more affordable housing in wealthier neighborhoods that have historically locked out lower-income residents. That includes parts of southwestern San Jose, notably along De Anza Boulevard bordering Cupertino.

For the last eight-year cycle, San Jose, like many Bay Area cities, fell far short of hitting its affordable housing goals while meeting its market-rate target. The city approved only about 25% of its combined low- and middle-income goal of more than 20,800 units.

Local officials blame the slow progress in part on a severe lack of state and federal affordable housing subsidies. But housing advocates contend the city must loosen development regulations and restrictions that drive up costs.

Bay Area cities were supposed to have their housing plans finalized by Jan. 31. But San Jose, along with nearly every other city in the region, blew the deadline. And while San Francisco and Oakland quickly won approval not long after that, only about a third of the Bay Area’s 109 cities and counties have gotten the OK from regulators.

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Without approval, cities risk missing out on state funding and could be forced to accept proposals for housing projects much larger than local zoning rules typically allow. That’s thanks to an until-recently, little-used penalty in state housing law known as the “builder’s remedy.” By June, developers had invoked the provision in attempts to push through at least 15 projects across San Jose.

When the City Council adopted its plan, officials asserted they had the right to deny any future “builder’s remedy” proposals by arguing the plan was in “substantial compliance.” Developers and housing advocates have maintained cities must continue accepting the proposals until they get final state approval.

The issue has already begun working its way through the courts, and judges appear to be siding with developers, Reed said, adding he’s seen a surge of South Bay “builder’s remedy” submissions in recent months.

“When push comes to shove,” he said, “we’re seeing more cooperation than obstinance.”

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