San Jose Inclusionary Housing Ordinance

Introduction

The Supreme Court mandate that developers include affordable units in their projects or pay a fine has set a new standard for equality in housing with positive implications for the future. Affordable housing is in notoriously short supply nationwide, complicating many aspects of culture such as rates of homelessness, debt, stress, and the constant pressure of moving. Rates of inflation keep most properties unaffordable whatever rates they start out at, keeping the renting population in a constant state of flux, unease, and overly complicating community issues through the consistent lack of community.

Affordable What?

Housing insecurity is a major issue, not just for poor Americans, but for most all Americans. Enterprise Community Partners, a non-profit with the goal of ending housing insecurity published a report in 2014 which points out how this undermines culture. Titled, “Impact of Affordable Housing on Families and Communities: A Review of the Evidence Base” this report shows the many links between housing instability to poorer job performance, increased debt, less education opportunities, and poorer health (Garrison). The vice president of Enterprise for knowledge, impact and strategy, Tiffany Manuel emphasized, 

Enterprise believes stable and affordable housing is one of the most important determinants of a healthy life filled with opportunity…The research is increasingly clear that a place to call home is vital to national progress across sectors, from health and education to our economy and neighborhoods. It’s essential to increase investment in innovations, products, and programs that tackle critical housing issues. (Garrison)

Understanding this need from the wrong point of view many developers and property managers subtly or overtly increase this feeling of insecurity as a power play and as a way to extort more money from already expensive properties. This most drastically affects the nearly 19 million low-income U.S. households, who are forced to pay over half of their income on housing. This large portion of America may be one illness, job loss, car repair, or accident away from losing their home and becoming homeless, and this reality puts an incredible amount of stress on anyone, especially those with children (Garrison).

California Leading the Way…Again

In many social justice areas California continues to be a leader, and the San Jose inclusionary housing ordinance is simply the latest advance raising the standards for the entire nation. After heated debate, “In a victory for affordable housing advocates and the city of San Jose, the court said it would not hear the appeal of a California Supreme Court ruling last year brought by the Building Industry Association” (Donato-Weinstein). Advocates who had been working toward this initiative for some time already have a plan for appropriate zoning. Jacky Morales-Ferrand, San Jose’s director of housing emphasizes, It puts to rest any challenges on inclusionary housing based on our ability to use our zoning powers to implement these programs. We’ve been working to prepare ourselves to implement the ordinance, and with this we can move forward confidently. (Donato-Weinstein)

This initiative took a great deal of effort due to the power of the housing lobby and the high potential costs for California real estate. The ordinance had been lingering in limbo since 2010 after its primary approval it was immediately challenged in local court. In the usual circuitous route which for-people legislation is wound through, “After a series of legal twists and turns, the law was upheld in a unanimous decision last year, but BIA, with legal assistance from the nonprofit property rights group Pacific Legal Foundation, sought a review by the U.S. high court” (Donato-Weinstein). This ordinance was hard and has great potential to ease the life of . 

Those who do not care about struggling families, abiding by the exorbitant inflation of unlimited expansion capitalism as the only right cried unfair (Gallas). The lawyer who sought to break the ordinance said, “The rights of all property owners were dealt a blow today, as San Jose's punitive treatment of homebuilders was allowed to stand” (Donato-Weinstein). Thankfully the Supreme Court could see the bigger picture how undermining a significant portion of their population decreased the productivity of the whole. After all, in Santa Clara County, where San Jose is located, there's an affordable housing deficit of 68,000 units, adds Kevin Zwick, CEO of Housing Trust Silicon Valley. That’s the difference between affordable homes needed for lower-income families and what we’ve built over the last generation of housing…On top of that, we’re going to need 35,000 homes in the next seven years (Kimura).

However, the Supreme Court did not support an alternative proposal in this same arena. This proposal desires a fee on all development, commercial and industrial, to support affordable housing efforts. In this case, “I thought that did not pass constitutional muster…I thought that’s a tax, and those taxes should be approved by voters” (Kimura). California had a strong precedent in this area already, with over 170 municipalities with similar requirements. The outcome of the Supreme Court affected them and was closely monitored. Specifically, the ordinance; San Jose’s ordinance requires developers to set aside 15 percent of for-sale units as “affordable” — defined as being priced in reach of households making up to 110 percent of a neighborhood’s average median income — for projects larger than 20 units. Alternatively, developers can pay an in-lieu fee or build affordable units off-site. (Donato-Weinstein)

This makes a big difference for low-income families, and those who opposed the ordinance may have done so for just that reason. Classism is a dark bedfellow of unlimited expansion capitalism, and developers see areas of progress in dollar signs. Those who cannot afford the changes will have to go. This business model has become so widespread in America that the majority of those who need affordable housing cannot get it, or must live in dilapidated squalor. Affordable housing is not charity, as some developers believe, it is simply affordable. Neighborhoods profit from having all types of people included in them, and those who are looking for a single demographic neighborhood will have many others to choose from in the heavily stratified U.S. (Hauswald).

One of the reasons this is so heating is the ordinance is for sale properties, which sets a strong president that rental property ordinances will be next in line (Frank). Rental properties make up a much more substantial portion of the market, and regulations are in the pipeline. San Jose has approved a similar program for rentals, and “Both of the regulations are in response to the region's skyrocketing costs for housing. Cities are under tremendous pressure to find ways to increase opportunities for lower-income residents” (Donato-Weinstein). This issue has also brought up changes which would benefit from revising the rent-control ordinance in San Jose (Donato-Weinstein).

This is a problem around the nation, and the Supreme Court decision may motivate a string of other cities to take action. Former San Jose mayor Chuck Reed emphasizes that this decision, “opens the way for cities across the state, and probably across the country, using the same legal theories to require developers to build affordable housing and sell it below market rate as part of any development project” (Kimura). Development is not just about profit, but about supporting sustainable community growth, and to that effect diversity is key. This ordinance still gives developers options, and although the California Building Industry Association is upset over the choice, University of San Francisco law professor Tim Iglesias points out, most inclusionary ordinances give developers a number of different ways to comply with the requirement. So what the opponents have done is to seize on those alternative options and say, ‘Hey look: This is an exaction,’ which is kind of a term of art in law that makes the city have to justify that requirement in a different, stricter way. (Myrow)

9 Ways Lack of Affordable Housing Hurts America

Researchers have identified nine strong indicators of how the lack of affordable housing cripples communities:

1. Household Stability

2. Economic Security

3. Education

4. Health

5. Asthma

6. Energy

7. Transportation

8. Neighborhood Quality

9. Seniors (Garrison)

Each one of these elements presents an opportunity to support the growth of more sustainable communities, increase local purchasing power, as well as diminish crime through a sense of local solidarity (Myrow). Community unity which comes from embracing diversity strengthens the networks of support in a community, while high housing costs continually undermine it through pricing people out of the community and fostering insecurity. All over the nation people are sinking much of their income into housing “with little left over for other important expenses, leading to difficult budget trade-offs. Affordable housing increases the amount that families can put toward other important household needs and savings” (Garrison). Making a change in this area is one way of sending a strong message to those pushing unlimited expansion capitalism that profits need not exclude the sense of community which all people thrive upon, and ultimately greater sense of community and secure should boost profits in the long run. 

Conclusion

San Jose’s inclusionary housing ordinance has been a long time in the making, and strengthens the affordable housing movement across the nation. This is a key element to creating more stable communities in which relationships and local culture can begin to grow. One may only hope this is just the beginning.

Works Cited

Donato-Weinstein, Nathan. “U.S. Supreme Court lets San Jose's 'inclusionary' affordable housing law stand.” Silicon Valley Business Journal, 29 Feb 2016. Retrieved from: http://www.bizjournals.com/sanjose/news/2016/02/29/san-joses-inclusionary-affordable-housing-law.html

Frank, Richard. “San Jose’s Inclusionary Housing Ordinance Dodges Supreme Court Bullet.” Legal-planet.org, 1 Mar. 2016. Retrieved from: http://legal-planet.org/2016/03/01/san-joses-inclusionary-housing-ordinance-dodges-supreme-court-bullet/

Gallas, Gary M. “How affordable housing mandates make housing more expensive.” LA Times, 4 Jan. 2016. Retrieved from: http://www.latimes.com/opinion/op-ed/la-oe-0104-galles-affordable-housing-court-case-20160104-story.html

Garrison, Trey. “9 ways the lack of affordable housing is hurting America.” Housingwire.com, 17 July 2014. Retrieved from: http://www.housingwire.com/articles/30691-9-ways-the-lack-of-affordable-housing-is-hurting-america

Hauswald, Sasha. “What Now? Understanding What CBIA vs. City of San Jose Means for Inclusionary Housing in California’s Cities.” Affordableownership.org, 24 Jun. 2015. Retrieved from: http://www.affordableownership.org/what-now-understanding-what-cbia-vs-city-of-san-jose-means-for-inclusionary-housing-in-californias-cities/

Kimura, Donna. “More Cities May Begin to Adopt Inclusionary Housing Laws.” Affordable Housing Finance, 7 Mar. 2016. Retrieved from: http://www.housingfinance.com/policy-legislation/more-cities-may-begin-to-adopt-inclusionary-housing-laws_o

Myrow, Rachel. “California Supreme Court Upholds San Jose’s Affordable Housing Rules.” KQED, 15 Jun. 2015. Retrieved from: http://ww2.kqed.org/news/2015/06/15/california-supreme-court-upholds-san-joses-affordable-housing-rules