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  • Madelyn Reese - San Jose Spotlight

Santa Clara County sets affordable housing requirement on new developments

by Madelyn Reese - OCTOBER 6, 2020

Developers must pay an in-lieu fee of $259,000 per unit if they fail to include affordable housing in unincorporated Santa Clara County. File photo.

Housing developers who want to build in unincorporated parts of Santa Clara County next year will, for the first time, have to set aside units for low-income residents or pay an in-lieu fee. The Board of Supervisors on Oct. 6 approved the requirement that low-income housing make up 16 percent of new developments containing three or more units. Otherwise, developers must pay an in-lieu fee of $259,000 per unit. The rules apply to developments with units intended both for sale and for rent. Supervisor Dave Cortese dissented in the 4-1 vote. An independent study presented to the county in July calculated and suggested the amount of the fee, which will be placed in a fund dedicated for affordable housing. That figure accounts for 100 percent of the cost to create a replacement unit, according to the county. The rule would apply to unincorprated areas of the county. Most of Santa Clara County’s 15 cities already have their own affordable housing ordinances in place. “Most residential development takes place within limits of those 15 cities and towns,” said District 5 Supervisor Joe Simitian. “So I don’t want you to think that it will involve significant numbers because it will not. But I also I think it has become increasingly clear that relying on the market isn’t going to get us the affordable housing stock we need.” San Jose adopted a similar rule in 2010, requiring residential developers who create new, additional or modified sale or rental units to dedicate 15 percent as affordable, based on the area’s average median income. Developers in San Jose have the option of paying an in-lieu fee of $157,858 per for-sale unit and $125,000 per rental unit. The county’s new rules take effect June 1. The in-lieu fee will be reviewed and adjusted annually to reflect current building costs. “We want to provide flexibility and we acknowledge that it won’t be practical in every instance to create the affordable housing as part of a particular development,” Simitian said. “But I want to make it clear that I’m not looking for fees, I’m looking for housing.” Contact Madelyn Reese at and follow her @MadelynGReese.

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