LOCAL COLOR/City living made easier

San Jose, Calif., is not an easy city to live in. Because of the city’s median home price of more than $560,000, many who work there are priced out of actually living where they spend much of their time. With that issue in mind, in 1999 Mayor Ron Gonzalez committed to build 6,000 affordable homes within five years. The city surpassed that goal in July with a total of 6,099 units.

For years, housing has been a huge issue in the city. “There has been a long-time recognition of the need to increase affordable housing to help economic development and ensure we have a diverse and vibrant population,” says Mike Meyer, an assistant director in the Housing Department. From 1988 to 1998, only 4,000 affordable homes were built. With housing prices rapidly increasing as hordes of people moved to the area during the dot-com boom, the city realized not enough was being done to assist moderate-income families.

The next year, the city started a housing program that serves as a gap lender to area home developers — both nonprofit and for-profit — so they can finance affordable housing projects. The city finances land acquisition, construction, predevelopment costs and permanent financing. “Developers will identify properties they are interested in developing and will come to the Housing Department to see if [it] is interested in providing funding to buy the land,” Meyer says. The Housing Department also will directly buy surplus government land and later sell it to developers.

Since 1999, the city has spent more than $195 million in city funds, which has leveraged $740 million to build affordable homes. The city generated funds through redevelopment area tax increments, 20 percent of which are required by state law to go to affordable housing. San Jose also received a small amount of federal funds.

As San Jose marketed the program to builders, it found an apprehensive audience. “It’s one thing to put money into a project,” Meyer says. “It’s another to make developers understand that affordable housing can work.” Once developers saw the city’s commitment to the program, it was easier to convince companies to participate. The city also had procedures to fast-track affordable housing through the planning and entitlement process, which helped secure cooperation, as well.

The units built include multifamily apartment complexes, townhouses, senior citizen developments and single-room efficiencies. The city works closely with developers to identify the best design for each project. “When you see them, not only are they indistinguishable from private, unsubsidized development, but they appear as very attractive, high quality [homes],” Meyer says. Although the city does not get involved in the rental process, it refers potential renters to properties in the program.

As a result of the program, the historically suburban city has been able to further its land use plan. Because the city can control where affordable housing is built, commuter traffic has been reduced by placing new construction along mass transit corridors. “The city has made very conscientious efforts to encourage development that doesn’t contribute to sprawl but rather intensifies existing residential areas,” Meyer says.

The program’s most recent development, a 100-unit apartment complex, is targeted to teachers who work in the city. The developer marketed the housing by sending notices to teachers and visiting schools to answer questions. San Jose used similar means to market its Teacher Homebuyer Program, which gives teachers deferred-interest down-payment loans of up to $40,000 as long as they own their homes and work for San Jose public schools. The program, aimed at attracting and retaining the best staff possible, has helped 400 teachers buy houses since 1999 — and so far only one of those has left San Jose. “We’re aiming to be the most teacher-friendly city in California,” Gonzalez says.