North San Jose: City could green light more housing

As the nation’s 10th largest city struggles to meet demand for housing, city leaders are considering a move that would add more homes at a quicker pace in North San Jose. But some people who already live in the area say the city needs to improve traffic and bring in more shops and amenities before it allows more homes to be built.

“We have concerns,” said Mike Bertram, a resident of the River Oaks neighborhood and a member of the local neighborhood association. “We have concerns about them opening up that housing without doing the traffic mitigation that they had committed to.”

Long eyed as a prime spot for all kinds of growth, the city in 2005 adopted a policy to add more than 25 million square feet of new office and industrial development, 32,000 housing units, almost 3 million square feet of retail and commercial space, and 1,000 hotel rooms to North San Jose in four phases. Long term, the city wants to transform the area — roughly from where Highways 101 and 880 intersect north to Highway 237 — into a walkable, denser mixed-use neighborhood where people can live, work and relax all in one spot.

To reach that goal without completely upending the neighborhood in the process, the city set a series of parameters spelling out what needed to be built or in the works before moving from one phase to the next. The policy said that developers could build 8,000 housing units during the first phase, but they would also need to build some 7 million square feet of industrial/office R&D space to move to the second phase, and so on. The policy also spelled out that both residential and employment developers would need to pay traffic impact fees that would be used to cover transportation improvements like widening Montague Expressway and improving interchanges with Highway 101 as density increased.

The housing units allowed in phase one are almost all built, but, for a variety of reasons, industrial development, which helps pay for those transportation projects, has stalled. There was a successful legal challenge from the county and surrounding cities — Santa Clara and Milpitas — over traffic concerns, which forced San Jose to increase funding for transportation improvements. The 2008 recession hampered development broadly. And in 2012, the San Jose City Council reduced the traffic impact fee — from more than $12 per square foot to $5 per square foot — for certain industrial projects to address a vacancy rate in industrial space that had soared above 20 percent and entice more development. While that attracted companies like Cisco and Samsung, it also brought in less money from fees than the city originally anticipated.

Additionally, some 1,600 of the housing units for the first phase were supposed to be affordable. But legal challenges to a state law around rent restrictions and the economic downturn contributed to the fact that the city didn’t have a housing program to generate affordable units in place when phase one launched, meaning there were a lack of funds to subsidize affordable housing. So just 390 affordable homes have been built in phase one.

Now, the city is considering amending its policy to go from a four phase plan to two phases, effectively allowing another 8,000 housing units to move forward before all the original phase one requirements are met. The City Council will hear a status report on those possible changes from city staffers on Tuesday and could take a vote on authorizing them as early as this summer.

Getting more housing built is one of the city’s main goals. In 2017, Mayor Sam Liccardo said he wanted to add 25,000 homes, including 10,000 affordable units, within five years.

“Staff anticipates that advancing the housing capacity in North San Jose is one of the most impactful work items that will move the city towards its goal of having 25,000 housing units built, under construction, or entitled by the year 2022,” reads a memo from several city staffers that is set to be discussed at the council meeting.

But the idea of green lighting more housing in the area now has some people frustrated.

Bertram chose North San Jose two decades ago for its proximity to his job at Lockheed Martin and, at the time, its relative affordability. Back when he and his wife moved into the area, it took Bertram only about 10 minutes to cruise to work. Now, it takes almost half an hour.

And while he likes that the plan calls for new retail, not much has materialized around his home. Instead, he takes his money — and tax dollars — to nearby Santa Clara to buy groceries and go out to eat.

Bertram acknowledges that development in North San Jose is largely inevitable, but he’s worried the city is “changing the rules” while hurting the community.

Councilman Lan Diep, who represents the area, doesn’t see it that way.

“There’s no change in total outcome,” he said. “We’re just changing the phasing.”

Bringing in more housing, Diep said, will help bring in more amenities like grocery stores and gyms and bowling alleys.

While Diep would like to see more affordable housing get built in the area, he said, “we need to make sure we get housing” in general, meaning the city could consider reducing the affordability requirement to encourage developers.

Erik Schoennauer is a land use consultant who worked on projects involving roughly a third of the first 8,000 housing units, including the River View Apartments project.

And while he thinks that building more housing of all types is “the only solution to the housing crisis,” he thinks that if the city allows housing without figuring out a way to require the other development, it will just get housing.

For instance, Schoennauer said, the city could boost other projects by requiring housing developments to be mixed use and include office or commercial space, too.

But, he cautioned, the city also needs to be careful not to impose so many requirements that it drives away developers. The fees are high in San Jose, he said, and rents are lower than in nearby cities like Mountain View or Palo Alto. Yet, the city can’t reduce fees too much because then there won’t be enough money for the transportation projects San Jose is legally required to deliver.

“It’s a catch 22,” Schoennauer said.

While the path forward still needs to be fleshed out, both residents and city officials say they want to see a North San Jose — or “Uptown,” as Diep has been trying to brand the area —  that is welcoming and offers enough amenities that people don’t need to get into their cars and clog up neighborhood streets and expressways to find places to work and live, shop and play.

“I’m really looking to build a sense of community in Uptown,” Diep said, “and trying to focus on the quality of life up there.”