Eden Updates, Policy Updates

Q&A With San Jose Mayor Matt Mahan

June 28, 2023

Mayor Mahan’s background growing up with working-class parents – one a school teacher, one a letter carrier – gives him a unique perspective on housing affordability. It’s no secret that service professionals are among many who have trouble paying the escalating housing prices that would allow them to live close to their workplace, and it’s just one of the reasons the mayor is such a staunch advocate of affordable housing.

After a successful business career leading a startup that enables people to raise awareness and funds for their favorite nonprofits, he turned his attention to a life of civic duty, where he has championed a number of crucial causes, including supporting the development of our project, Mesa Terrace, which offers housing to transition-aged youth who have exited the foster system, as well as low-income families, with a special focus on seniors.

Mayor Mahan delivered remarks at Mesa Terrace’s grand opening

We had the privilege to get Mayor Mahan’s thoughts on San Jose’s strong history of producing and supporting affordable housing, his goals and plans to address the current crisis, the impact of Measure E and balancing the need for providing emergency interim housing and offering enough permanent affordable housing to low-income residents, among other timely topics.

Q. San Jose has a strong history of producing and supporting affordable housing projects. Can you describe the scope of the City’s current housing challenge?

The State’s new RHNA targets require San Jose to plan for 23,775 new low-income and very-low-income homes over the next eight years. Meeting this goal will require roughly $7 billion in local subsidy at $300,000 per unit (our current level of city subsidy). With the current high construction costs, hitting our goal requires compiling roughly $23 billion dollars in total public investment and subsidies, such as tax credits. This is a daunting figure and one that we–and frankly, all other cities in the state–are not currently on track to meet. To come even close, we will need to dramatically reduce the cost of construction and secure greater financial support from state and federal sources. That said, San Jose will do everything in our power to secure the resources we need to fill the massive housing supply shortage facing our community.

Q. What are your goals/plans to address the current crisis?

We need an all-of-the-above approach. The truth is that our lack of affordable housing is largely driven by underproduction of market rate housing over many decades. Over 95% of all housing in the state today was created by market rate developers to meet growing demand and most of our affordable housing simply aged into affordability over time. Unfortunately, supply and demand started to significantly diverge as we constrained the market with layers of new regulations and fees, and we’ve seen the gap only grow larger over time. We will need to create conditions that enable private investment to flow back into the housing market in California to get production volume even close to where it should be.

However, relying solely on market rate approaches will not be enough. We want California to continue to be socio-economically diverse and offer upward mobility to all, which means we have to supplement the market with greater public investment in subsidized housing. We’ve invested significantly locally through Measure A and Measure E, and will need regional, state and federal sources to continue to scale this work.

As for homelessness, in particular, I’ve been an advocate for both short-term and long-term solutions. Short-term solutions like modular and manufactured homes can alleviate the immense human suffering we witness daily on our streets, while the long-term goal is to add enough affordable units that we have dignified long-term housing for all of our most vulnerable residents.

Finally, we need to better connect our towns and cities with transit, especially regional rail, to enable housing-rich communities to alleviate the pressure on jobs-rich communities. For that to work, we will need tax distribution reform to reward cities that continue to produce housing.

Q. Measure E was an important initiative passed by the voters to support housing. Can you discuss how it’s worked so far and what the future looks like for the measure as a funding source?

Measure E is a real property transfer tax passed by voters in 2020, which is imposed on property transfers of $2 million or more. The revenue can be used for any purpose, but we’ve committed to focusing it on affordable housing and other solutions to homelessness, including prevention and interim housing. Thus far, Measure E has played an important role in helping a number of new affordable housing developments and interim (or quick build) communities move forward. Over the last three years, 80% of Measure E dollars have gone to new affordable housing developments that require roughly $1 million in total public subsidy per unit and take over five years to build, while 15% has gone to quick-build apartments that can be built at about one-fifth the cost and in one-fifth the time.

Given our crisis of unsheltered homelessness, I’ve advocated for moving the Measure E allocations closer to 50-50 between short- and long-term solutions until we get closer to the low levels of unsheltered homelessness we see in big cities in the Northeast and Midwest. These units stabilize folks with a private room and bathroom, get them connected to services, give them time – sometimes two years or more – to find a pathway to something more permanent. This is a tough tradeoff to make, and certainly has sparked an intense debate, and it’s made all the more challenging as we’ve seen Measure E revenues decline with market conditions over the last year. My hope is that we can continue to engage in open and honest dialogue as we collectively come to the right balance between immediate and long-term solutions. I also hope that we can work together to expand the pie and secure more resources to address the two urgent and related needs (long-term affordability and short-term reduction in human suffering and impacts of encampments).

Q. In a shrinking resource environment, how do you balance between providing emergency interim housing and offering enough permanent affordable housing to low-income residents?

We undoubtedly need to continue to fund permanent affordable and supportive housing. However, I believe we need to rebalance our approach to put more emphasis on alleviating the immediate and urgent need on our streets. Our struggle to move the needle on unsheltered homelessness not only leaves people in inhumane conditions for far too long, but it erodes public trust in our ability to solve this crisis. We need both, but we need to focus more on getting people off the streets and stabilized at a faster rate. I worry that letting the perfect be the enemy of the good will harm our overall mission in the long run if voters don’t believe that government can move the needle on unsheltered homelessness, which is the more visible and acute crisis.

Q. What other plans/goals do you have for ending homelessness in San Jose?

We have a moral and ethical obligation to reduce human suffering on our streets by immediately and rapidly scaling low-rung, low-barrier solutions such as safe parking, safe sleeping, hotel/motel acquisitions and conversion, and interim housing. We should also continue to invest in homelessness prevention as the most humane, cost-effective, and successful solution to reducing the number of people who are falling into homelessness every year.

Beyond prevention and housing-now solutions, a huge aspect of ending homelessness is providing the programs and services that will get people back on their feet, like counseling, job training and addiction treatment. One program that I have argued we need to expand is San Jose Bridge. It provides the dignity of work and a stable paycheck to our homeless neighbors while they work to make San José a cleaner, safer city. SJ Bridge also connects participants to job training, permanent employment, and interim housing—keeping them on the path toward a better life.

I have personally talked to many members of this program, several of whom have already secured permanent employment and all of whom believe this program has given them a second chance.

Q. How do you view the role of the State in helping cities better meet the housing needs you face? Are there things the State could do on land use reform or funding that would be helpful?

Every eight years, the State asks us to produce a Housing Element that outlines how we will meet our regional housing needs. However, we don’t receive nearly the funding required to come even close to meeting the affordable or subsidized housing targets (not to mention the Federal Government’s retreat from investing in housing over the last 40 years). The bottom line is that we need 1) regulatory reform to attract greater private investment in housing and 2) greater dedicated revenue to facilitate the production of the new affordable units we’re expected to create. Concretely, the State can help by expanding the types of land eligible for home construction and incentivizing cost-effective construction types, such as modular housing.