Community and Economic Development Committee - June 15, 2026
I don't know what to do.
Okay, it's 1:30, and I'd like to call this meeting to order.
This is the community and economic development committee.
Would you take the roles of the role, please, Jasmine?
Casey?
Mulcahi?
Here.
Ortiz.
Vice Chair Coming here and cheerfully.
Here, you have a quorum.
Great.
Thank you.
We are not reviewing the work plan, no consent calendar, so we're just going to jump right into the reports.
Let's start with the housing department loan portfolio audit report.
Hi, Joe.
Hello.
Good afternoon, Joe Royce, City Auditor.
I'm here with Alice and Paulie, Adrian Perez, and Maria Valle from my office to present our audit report.
Affordable multifamily housing loan portfolio, clear goals, and stronger oversight would improve monitoring.
Also in the box is Eric Sullivan from the Housing Department.
Affordable housing serves a low to moderate income residence in the city of San Jose and to support the development of affordable multifamily housing.
The city's housing department provides a loans to developers for the construction of new properties and the preservation of existing properties.
Along with the loans come restrictions on tenant rents and income to ensure that units remain affordable over the life of the agreement and affordability period.
Housing staff verify that property owners repay loans, meet affordability restrictions, and maintain buildings.
The permanent loan portfolio totals over $745 million across roughly 220 properties.
There are nearly 25,000 units with active loans, affordability restrictions, or in the pipeline.
Many loans were recorded before 2012 and are also subject to regulations from lenders and government from other lenders and government agencies, including the state and federal government.
The objective of this audit was to assess housing's processes for managing the affordable housing loan portfolio, including loan servicing and compliance monitoring.
As described in the city's adopted operating budget, in addition to providing loans, housing manages and oversees the city's affordable housing loan portfolio, including loan servicing and monitoring and compliance of deed-restricted apartments.
Housing's role is to provide asset management, which involves monitoring the financial performance of properties and the overall portfolio, which differs from property management, which relates to the day-to-day operations of a property.
As part of their work, staff conduct financial reviews, which involves examining audited financial statements, operating budgets, and other documentation required to be submitted by property owners.
They also monitor affordability restrictions.
Property managers submit rent roles with rent levels and tenant income information to housing staff.
Staff are expected then to check whether the rents are within the allowed rent limits for the unit type, and they may also check tenant incomes.
Lastly, they conduct property inspections, which enable the city to monitor the buildings' condition and any problems that need to be addressed to maintain the long-term viability of the property.
The first finding is that housing should assess the asset management team's goals and resources.
As Joe just described, the asset management team's role is to monitor loan compliance for the city's affordable housing loan portfolio.
This involves verifying that borrowers repay city loans, that housing units comply with affordability restrictions, and that properties are appropriately maintained.
We found that the team has not completed all annual property reviews or inspections in recent years.
According to housing, the team has historically not been able to complete all reviews annually of the more than 200 properties in the portfolio.
Vacancies and unclear expectations have hindered the team's ability to complete its work.
In addition, the current software tools may not be sufficient to meet the goals of the program given the size and scope of the loan portfolio.
Replacing or retooling software would help the team complete their work.
At the time of the audit, housing was developing an automated rent role portal to assist with reviews and working on developing standard operating procedures that would support staff to complete their work consistently.
We recommend that housing should develop a program-level strategic plan to identify program goals and resource needs, reconfigure the current software, or acquire an asset management software platform, and update and standardize operating procedures and training.
Our second finding is that housing should strengthen oversight of affordability restrictions and higher risk properties.
Some properties in the affordable housing portfolio do not comply with affordability restrictions, have not submitted required documentation, or have repeated property violations.
We found in a limited sample of 878 units across 10 properties representing 4% of the total units managed.
110 units had tenants with incomes above the cap for their unit type, which was 13% of our sample.
Based on federal standards, incomes slightly over the limits generally aren't considered a problem because we don't want to penalize people for raising their incomes.
However, 48 units had tenants that earned 140% or more of the income cap.
That was 5% of our sample.
That income level meant that they exceeded the federal standard.
Another concern is the potential for tenants' incomes being below expectations, meaning they fall well below the target income level for their unit.
This can leave the tenant overly rent burdened and put the property's financial stability at risk if the tenant income revenues are very low.
We also noted the housing does not have a documented escalation process to address compliance or property violations.
Despite differences in property compliance, the asset management team's current approach does not differentiate financial and affordability restriction monitoring based on the risk of the property.
We recommend that housing develop policies to address over-income and underincome tenants and resolve significant or repeated property concerns, as well as to establish a risk rating system to prioritize compliance monitoring.
This report has nine recommendations to improve the management of the affordable housing loan portfolio.
We would like to thank the housing department for their time and insight during the audit process.
With that, we would ask that you accept the report and cross-reference it to the August 18th council meeting.
We will be available to answer questions, but before that, I will turn it over to housing for the administration's response.
Thank you.
So Eric Soliman, Director of Housing, I want to first thank working with the auditor.
This is my fourth audit in the last first two years here.
It's actually been incredibly helpful in situating the various management challenges that the department has faced in coming into this role.
So I appreciate the work of Joe and his team.
To provide some context, as we looked at this audit within the broader portfolio, there's sort of three unique situations the department deals with.
The first is we are not in force or in first position, meaning for those non-compliant units that are over income or under income, the state through the tax credit advisory committee, the federal government through the IRS, they're of first right as well as the equity investor to ensure compliance.
What our traditional role has been is adopting the fate and equity the federal, the state, and then the equity investors' requirements, and then we monitor for compliance going forward.
So we play and we sit, and I appreciate Joe and his team's understanding of the unique role that we are set in in this work because we're not the first to react when there's noncompliance because we don't, we're just an investor.
We're not the equity partner, we're not in the ownership structure, we're not the state uh tax credit regulating agency.
So we play a unique role of ensuring this.
And as we work to improve our monitoring, a big part of that would also be in communications with our other uh regulators.
And then, two, as we look at the size of the portfolio, one of the challenges in working with Joe and his team was that we are not properly staffed for this size.
This with just the next two loans that have just been approved by council will now exceed 800 million dollars uh across some twenty-one thousand units, uh, over 200 buildings.
So ongoing compliance and monitoring either needs robust staff or alternatively, as noted in the audit, robust software.
And right now, sort of with all the fine-tuning we've done to the existing CRM and Salesforce, it does not meet this types of needs, having come from managing tens of thousands of units in other uh jurisdictions.
You know, we certainly need a much more robust system.
So overall, with those three, you know, contextual analysis, we accept these findings.
It's been incredibly helpful to go through this process.
I'm happy to answer your questions.
Great.
Thank you so much for the presentation to Joe and your team and to Eric to your response.
I think this is an important audit that we understand the scope of first the amount of units that we have a financial interest in, and then the oversight and and management of them or oversight is uh really in incredible um and having the right software will help with the right amount of staff in place as well.
So with that, first I'll turn to any members of the public.
Do we have anybody wishing to comment?
I see no one out there.
Okay, thank you.
Uh and turning then to members of the committee, council member Kamei.
Thank you so much uh for the presentation and for the information.
So one of the things I noticed is that um the recommendation was to uh have your have your goals and objectives first and then go to uh you know, sort of updating the software, but given that it really takes a long long time to go through procurement.
Uh why couldn't that have been done a little bit sort of more either concurrently or you know, at least get some of the works going, because uh uh it's it seems to me that if you're not able to have the software in there, then uh I I I just thought that it you need all of the time necessary to be able to get it done uh because it's uh it's one of those critical tools.
So I think this question was to uh the audit uh itself, which was I don't know if necessarily we're uh sequencing it that way.
I think it's helpful to understand what the goals are of the program, so you write the RFP correctly for the uh for the software okay.
So, whether that's a complete strategic plan in place or it's far enough along that you know you can uh inform the scope of work you're looking for in the software system.
Does that make sense, Eric?
Yeah, yes, that makes sense.
The a lot of these though, they're partitioned out with various deliverables.
A lot of them are going to get started kind of coterminously as we look to schedule this forward.
Oh, okay.
So it's not wait until it's completed and then start it because okay.
That sounds that sounds reasonable.
Um I also know that um you did have some vacancy and understand you're in the process of of either hiring or recruiting to to help in that process.
Yes, the division is now fully staffed uh as of two weeks ago, so now it's fully staffed and ready to proceed forward.
Now it's a matter of just focusing around the audit work that we have to do while also addressing immediate exiting circumstances and three or four of the properties that were already been red flagged uh through our initial system that we have to address coming from the collapse of the first community housing portfolio.
Thank you so much.
Uh well, with that, I would like to move acceptance of the audit report and cross-reference it to our council meeting in August 18th.
Thank you, Councilmember Mulcahy.
Thank you, Vice Mayor.
Um, Joe and Alison, thank you for the staff briefing on this item.
Um I'm just curious, Eric, are we we're not in first position on any of the 800 million 21,000 units or 200 buildings?
Correct.
So, I guess the question would be if you were to implement recommendations put forward here.
What could you actually effectuate in the issues that were called out in the report?
So yeah, so there'll be two areas where we can actually effectuate.
One is for those properties whereby they have been funded through a tax credit investor, because there's some that are not, and I'll explain that in a minute, to a tax credit investor.
We can have a first review that then allows us to inform the TCACs and the SEDLACs about this property as well as the developer who consistently comes back to us for future funding, and we can consider that on future funding.
And we've actually done that with a few of our preservation deals that have been moved forward in the last six to eight months.
And then two, for those that are not local tax credit funded but are funded through bond issuances, whether through the city or through third-party issuances like CMFA, then we're able to have we have a little less sort of thumb on that, but as we're working to improve our joint powers agreements with those entities, we'll be able to provide that notification of non-compliance for future funding requests as well as reconciliation of current issues, which is what sort of the challenges around the first community housing portfolio has really brought to light, is that those entities did kind of fell down on it.
We stepped in to cure it, now we're notifying all of them.
And further, as we're going through the reconciliation process, learning what are ways in which we can improve our loan documents so that way they can empower us to put us in a higher position for compliance.
And that's part of the ongoing work that we're doing.
Okay, great.
Thank you.
Could I can add one thing really quick?
So the recommendations were around processes around how do we address issues as they come up or as we identify them.
And one of the things that the consultant that Eric's team had it hired back in 2025 noted that there's no real clear definition of what non-compliance means, and to really define that and have a process kind of step forward.
So our recommendations really are, again, how do we have processes to identify these issues?
What does noncompliance mean?
And then what are the what are the ways we can within this complicated regulatory environment step in to address those issues?
So I just want to kind of clarify that a little bit.
Thank you.
So I mean, in your case, Eric, it sort of serves as a pre-qualifier for these deals as they come forward, but how much can you influence if you're you know eighth on the list of the stack?
You know, how much can you influence decisions made by those in first position, second position on the deal that you're looking at?
So it our influence is likely limited to communication of noncompliance because we're considered for most of these deals to be quote boots on the ground, um, even though we're in to know third position of enforcement.
What we're learning as we're going through the untangling of the SCH portfolio is their expectations were, oh well, we thought you, the city were gonna do this.
We're like, well, that's not what the documents say, so let's talk about that going forward because we're gonna have to reposition if the expectation is that we become the actors of first response rather than second or third or fourth in some cases.
So we're gonna have to talk through some of that language, and since all LITEC properties end up in the same three upper tier investors, we've already begun some of those negotiations about what future loan agreements need to look like if that expectation is to meet reality regarding compliance.
Thank you.
Okay, I want to thank you.
I want to follow up a little bit on that.
So if a uh property owner is in non-compliance because their rents are too low or too high, let's say, or the tenants are earning too great of an income.
You mentioned that our role could be to notify some of the underlying lien holders of that.
But as a lender, my uh a red flag goes up, and I start getting concerned about the risk to our investment.
Should we raise a red flag to the underlying liens and the other underlying lien holders, then call the loan?
Are you concerned about that?
Yes, and this is as Joe had properly articulated, this is a web of compliance, and we sit in awkward spaces in some sense.
Again, going through the FCH unwind, we're learning where a lot of these limitations are and where expectations did not match legal language in the documents.
And so we end up with distressed assets, particularly severely distressed assets, that we, as the only entity that's here in San Jose, we have to resolve and step in, which then completely resituates the entire portfolio, and we get in from asset management to property management.
We're stepping down a level much closer to the Asset.
And so this is some of the work that is we're looking to improve our processes, we're at least able to provide more timely notification at the same time, ensure that the property owners know this is an issue with some of the more modern loan documents.
We have vast powers to step in, take buildings, you know, reposition property managers, all of that, but some of the older loans from the RDA days, very limited authority.
So uh thank you.
I I know that you're watching this from a risk management point of view, as we should in an asset management.
These are huge assets that we have tied up into all of these properties, and while uh we're focusing a little bit on the tenant and how much the tenant can make or or is making in relation to how uh the rent the requirements in the property that they're in, we're not talking about condition at all.
And when we're looking at some of these distressed properties, the condition may be something that is something very untenable for us to address.
And should we become the responsible party who then takes over the management of the property, we have to address that condition.
For example, the FAA and other properties that we've been dealing with.
So I know you're mindful of that.
I'm I'm I am as well.
I think this really shows the importance of the work you do and to make sure that we have number one software that is allowing us to track these properties more quick more easily, and then staffing to follow up on the tracking that we're doing.
With that, I don't see any further hands raised, so let's vote.
Thank you for that.
Uh motion carries.
And we will see this in council.
When did you say the 18th?
August 18th.
Ooh, after our long after our July break.
Isn't that nice?
Aren't we looking forward to it?
We did not receive a vote for Councilmember Ortiz in the system.
Or council member Ortiz, did you want to take a verbal vote?
Uh yeah, yes.
Sorry, I was talking.
Thank you.
Okay, moving on to the next item.
City council focus area status report, building more housing.
Jared and Eric Remains.
All right, thank you, Chair.
Jared Ferguson, uh, principal planner uh with planning building and code enforcement, uh, joined with uh Eric Sullivan, our director of housing.
Uh so we're here today to provide you a status report on our focus area of building more housing.
So for our agenda, we will start with a quick background on the focus area and then an update on the focus area goals, and then lastly, we'll discuss next steps.
So, as a reminder, the focus area creates visibility on the problems most impacting our community, putting those issues at the top of the pyramid here.
These continue to be our most complex initiatives requiring significant staff capacity and cross-departmental coordination to drive progress.
We manage these areas differently from the rest of the pyramid where our other core services and programs are delivered through day-to-day department work.
Our core value is that our work involves cultivating an organizational mindset of learning with the goal of driving results for our community.
This includes some of the principles shown here.
These are the types of conversations that we are excited to have through the focus area update today and beyond into next year as we continue our work.
So now to get into our third quarter portfolio update for the building more housing focus area.
This slide shows the overall structure of the focus area with our continuing long-term goal to meet the city's housing needs across all income levels by making San Jose a great place to build housing.
As a part of this work, we've identified three problem areas to focus on to make progress towards this long-term goal.
Number one is land use policy and regulation.
Number two is development services process, and number three is linking land and capital.
So this slide highlights trends in our indicators, which are housing units entitled, building permits issued, and certificates of occupancy issued on a per unit basis.
These represent the key three stages of development and those within the city's control, with building permit issuance being the key indicator for RENA progress and signaling the start of new construction.
Quarter three was lower in terms of housing units entitled, but was stronger, was a stronger quarter for building permits issued.
Since the city council approved the multifamily housing incentive program in December of 2024, 2,216 units have moved from entitlement to construction.
However, there are still not enough units being built to meet our goals.
So of the 10 goals for this fiscal year, seven are complete, two are on track, and one is off track.
So for our first goal 1.1 under problem one land use policy and regulation.
So we started the task force process in October and have held seven task force meetings since then, with about one meeting per month, and we're on track to complete this goal by the end of the fiscal year.
This has been a major undertaking from our team, and we are moving faster than any of our previous general plan four-year reviews.
In late April and early May, we held four open houses in addition to numerous stakeholder meetings and focus group meetings in coordination with the city manager's Office of Racial and Social Equity.
And then a final planning commission meeting next Wednesday, June 24th.
We'll be at City Council on August 18th with the conceptual framework of general plan changes with the recommendations from the planning commission and task force.
Goal 1.2.
This is to expand our city's ministerial approval process for residential development into downtown.
We completed additional analysis as part of our citywide planning report to this committee in October following the state CEQA reform contained in AB 130, which provides a new CEQA exemption for housing development.
Some of the benefit of the ministerial process is offset through this new CEQA exemption, but staff still believes there is value in moving this effort forward.
The added work related to the implementation and analysis of SB 79, along with the necessary capacity to keep the general plan four-year review process on track, contributed to this goal getting off track.
Additionally, the scope of this work has been expanded through the budget process to include a 90-day guaranteed approval.
Staff has made progress to initiate the environmental work necessary to complete this item.
Goal 2.1 was to analyze options and report on development services timeliness and report on those findings.
This goal is complete.
CED heard this item in December with an analysis of permit timelines for both affordable and market rate housing.
Affordable housing projects met targets through close coordination while market rate and other development timelines were lengthened.
PBCE and ITD are developing standardized permitting performance metrics.
Council's interest in the permitting process and process improvements led to the April study session with our optimization work ongoing.
Goal 2.2 was to bring forward the environmental standard permit conditions and the CEQA process guidelines to city council.
This was a major undertaking for the team to complete and was completed last month with council approval on May 19th.
Goal 2.3 is also complete and was to conduct analysis of AB 130 and SB 131 that contain new sequest streamlining.
AB 130 reduces timelines compared to the previous typical review processes.
SP 131 also provides other opportunities for streamlining through other exemptions or limiting the amount of additional review necessary during the environmental review process.
We've seen faster uh project processing using these new new routes, but tribal consultation remains a challenging aspect for timelines to these processes.
The new laws are also reducing department fee revenue and are shifting the CEQA analysis on to the city when we look to make policy changes.
We're evaluating staffing restructuring staffing restructures, historic resource impacts, and the implications to community engagement.
Goal 2.4 uh was to update the development fee estimator by adding uh multifamily construction by December of 2025.
This goal is also complete.
The fee estimator tool now includes multifamily construction.
Overall, the tool now supports residential ADUs, commercial industrial, and multifamily new construction.
Uh we're about continuing to evaluate the tool's performance and future expansion into other areas.
And with that, I'll pass it to Eric for the next set of goals.
Thank you, Jared.
So Eric Sullivan, director of housing, and I'll go through the three items or four items for the housing department.
For 3.1, the first we did is the cost of redevelopment study, which is complete.
We'll be returning with the updated cost of redevelopment study in 2027, which will also include the additional items as listed in the council memorandum from two months ago.
The studies show that with some fee reductions and waivers, it could improve the economics of some projects going forward, and that has certainly been the case as over 2,000 units have been put into production through the multifamily incentive program.
3.2 is also complete.
This refers to the work being done around an analysis of entitled housing projects with various uh financial feasibility.
So we took that analysis of all entitled projects, overlaid that to the cost of redevelopment analysis.
And the next step we're going to do is getting into more specifics regarding these projects to see if the types of financing tools that memorialize in the March 18th information memo on cost burden households and alternative financing structures can be utilized to catalyze those projects going forward, whether under our multifamily or downtown incentive program, as well as expanding affordability options through our master leasing tool.
For 3.3, this item is also completed.
We'll continue to do our analysis on the effectiveness of our market rate incentive programs.
But now we've been able to move that forward with a hopeful closing here in August.
And lastly, for 3.4, this item remains on track as we look at alternative financing programs, such as our master leasing tool that we've brought forward to create affordability at downtime distressed assets at the FAA, and looking to use this tool going further down the AMI scale in other potential projects, as this has opened up a strong amount of interest in public-private partnerships to apply this tool to other projects as well as looking at ways in which we can bring this affordability devil down for other office of residential conversions and we continue to explore those opportunities and provide a continuous update.
Then lastly here going forward, the next items here is the MBA 2026-2027 focus area worked, talked about the direction that's going to be incorporated into this from the from the March budget message.
The June budget message as well was also adopted as we continue to move that forward.
In the fall of this year, we will come back with the annual report to city council.
And then in December of 2026, the committee will receive a status update on progress and lessons learned throughout the various deliverables in the plan.
And that is the update for the building or housing focus area, and we look forward to your questions.
Great, thank you, Eric.
Thank you, Jared.
Do we have any members of the public who wish to speak?
No public comment.
Thank you.
I see no hands raised from my council.
Is there a motion to accept the report?
Motion accept the report.
Second.
It's been moved and seconded.
Let's vote.
Thank you.
Motion carries.
This is not cross-referenced.
We'll see it later in council, a different update.
Next item and the last item of the agenda is the city council focus area growing our economy.
Ladies.
All right.
Good afternoon, Vice Mayor Foley, Chair and Council members.
Jen Baker, Director of the Office of Economic Development and Cultural Affairs, happy to be here to deliver the growing our economy focus area goal updates.
And we have for you a summary slide.
We'll go ahead and advance forward through the focus area background and methodology, which we know you're well familiar with.
And provide for you a retrospective of our activities leading through Q3.
All right.
So you can see from our summary slide, we have made some good progress over the first three quarters of the year.
We have 11 of the goals in blue, so we've initiated and completed those goals.
You can see we've completed two of the goals, goal one and two, or one, two, and one-three, and have made considerable strides on the remaining four goals.
But just like to highlight a couple of the activities for you.
So in that the growing the economy focus area retrospective is intended to be a look into and reflection on how the quarter and our work progress is going and the longer term trajectory of where we would like to be.
For Q3, we would note as wins uh jobs attracted, expanded and retained.
So up through quarter three, we've registered 3,978 jobs where the business development team has lent a specific role in helping facilitate either the retention or the expansion and creation of jobs.
So we have worked on the metrics and how we how we take credit, if you will, for that job creation and our role as facilitators, and tracking to where we would like to be, despite the headwinds of some economy and policy changes that have made the business development environment a little bit erratic.
Some of the ways that we've been able to get San Jose out in front of communities through our business outreach team work.
We have been in the field at a number of trade activities in advanced manufacturing, photonics.
So really an opportunity to lean into outbound recruitment activity.
And I think that's a very important place for us to be as a city, but also as a state in the ways that California is leading the national economy through our investment and innovation and jobs creation.
One of the areas I know that this committee has been particularly interested in is our advancement in implementing expanded AI-focused workforce.
And so I have some great data and statistics to share with you on those initiatives.
So those are programs with a trajectory where an enrollee has decided like this is the arena that I want to excel in, and is specifically focused on AI skills growth.
And people are still finding their way to AI and deciding when and how to engage.
So you'll see that there is considerably more activation in workshops.
So we've seen over 300, 342 participants in AI workshops, and these are more condensed doses of introduction into AI workplace skills, AI project management, AI infrastructure of technology, and AI for QuickBooks.
So some doses where people think they can take a workshop, be able to increase their marketability either as they're re-entering the workforce or striving for workplace mobility.
And then likewise we've seen some good subscriptions so far to online learning classes.
So 289 AI course completions across a number of learning modules, everything from fundamentals to basic AI theory to AI and cybersecurity and information technology.
And I'll share with folks a shout out to our San Jose public libraries.
If you take your library card in, you can log into LinkedIn Learning and gain access to all of the LinkedIn AI training modules for free.
And so that's a great way for all community members without regard to being enrolled in our specific workforce programs to be able to study or learn about AI at your level of entry at your pace and during the hours of day that you have available to gain that enrichment.
What we're hearing from clients is that there is a strong interest in AI foundational skills and practical workplace applications.
And so it's not just folks who are looking to enter into an engineering or a computer-specific field, but it's really clients who see AI as integral in their capacity to be joining the workforce across a lot of different types of positions.
We've seen recent placements in engineering data analysis, software development roles, project management, product management, network and systems administration, manufacturing and semiconductor positions, as well as healthcare administration and business operations.
So, really the full gamut of good mobility creating jobs.
And some of the placements that have been achieved through our work to Future program have landed at some of the major name firms that you would recognize is Google, Apple, Amazon Web Services, Capital One, ServiceNow, Meta, Palo Alto Networks, Juniper Networks, Applied Materials, Super Micro, and other technology-focused employers.
So a nod to the focus of the Work to Future team and engagement with the community that tends to seek services and we encourage to seek services from Work to Future, who are most often the most removed from the workforce chain.
And this is really a program and an opportunity for people to regain regain the jobs pool and do so in a way that can create self-sustaining income and economic mobility.
And that trajectory is paying off well for us.
The intent is really to create workforce readiness, career mobility, and future workforce planning.
I have a lot more data, but I'll pause on that and just share lastly that the demonstrated interest is across applied AI learning for all workplace functions, and that is that is encouraging because we know that increasingly that's a skill that people are going to need to be able to remain competitive.
With that, I'll advance to my colleague Erica to speak more on infrastructure readiness.
Good afternoon, council members, committee members, and members of the public, Erica Graffo, assistant to the city manager in the Office of Economic Development.
So as a reminder, problem area two focuses on infrastructure readiness and ensuring that companies have the infrastructure that they need to meet their needs.
As of the end of March 2026, goals 2.2 and 2.5 are complete.
Goal 2.3 is on track to be completed by the end of June, and goals 2.1 and 2.4 are at risk of meeting their deadlines, and I'll go into that in a minute.
On goal 2.3, which we're on track for, since the previous reporting period, we received two additional planning applications, bringing our total to four.
We anticipate one additional planning submittal by the end of June, which would allow us to meet our goal of five for the fiscal year.
On goal 2.5, we are also excited to see that LS Powers permits were issued ahead of schedule, and we celebrated their groundbreaking last month.
Very exciting.
For the two goals that are at risk, so starting with goal 2.1, this relates to PGE energization.
So PG<unk>E successfully energized two out of the three projects earlier this year, but the final project, which is the Stack Data Center in North San Jose, will be energized in August.
So we'll be missing that deadline.
I actually toured the stack project on Friday to learn a little bit more about the delays.
Well, that's not what the tour was about, but I did learn about the delays.
And there were some issues with the materials, long lead item, but actually some really significant issues with the utility as built drawings.
So where telecommunications lines, where San Jose Storm lines or sewer mains, and other existing infrastructure.
The new transmission line that's serving that facility, it's an overhead line, but the transmission poll has a 40-foot foundation of, and so every time an unmarked utility was identified, the team had to redesign where the poll was located.
So PGE did offer to serve Stack through temporary power to meet the deadline, but stack declined in favor of pushing out the end-service date and waiting for permanent power.
One just interesting tidbit, I'm gonna nerd out on you guys for just a second.
So the substation that serves Stack data center is uh it's a gas insulated switch gear.
So, unlike air insulated, where you see all the transmission or the transformers, this one's all within a building.
Um, and the gas-insulated switch gear, it insulates the lines so that the space can be consolidated and it reduces the overall footprint.
So typically gas insulated switch gears are um they use gas like Arvon or other things, um, but this substation, the first in the entire country, is using oxygen, is using O2 as the insulating gas, making it the first clean air GIS substation in the entire entire United States.
Pretty neat.
Okay, thanks for letting me nerd out.
Um so switching to goal 2.4.
Um the city had hoped to execute our exclusive negotiating agreement with ProLodges by March of this year.
However, after pausing to allow the City of Santa Clara more time to determine whether and how they wanted to participate, the city has opted to move forward without Santa Clara's participation in order to avoid further delaying the project.
Staff are now negotiating a cost reimbursement agreement and the exclusive negotiating agreement directly with Prologis, and they aim to have both documents executed by July of this year.
I'll turn it over to Blogge.
Thank you, Erica.
Bloggy's a Lollege Deputy Director for the City Manager's Office of Economic Development and Cultural Affairs.
And I am here to cover the goals on number three, which are downtown and neighborhood business districts.
And so we have two tasks that are completed, two looking good and green, and two moving forward but yellow as of the end of Q3.
The two that we have completed, goals 3.2 and 3.3, as of Q3, for goal 3.2, we have facilitated the attraction of six new ground floor businesses.
Just a couple I'd like to mention.
Hopefully, you've all had the opportunity to dine at the casual but cheek Poppy and Claro at the base of 50 West San Fernando.
In addition, another positive ad to downtown that we'll be having a ribbon cutting here in the next month or so is West Coast Community Bank, and they decided to locate their first bank branch and offices in downtown San Jose, and they'll be at the base of 10 Almaden.
For goal 3.3 with respect to placemaking, it really is both the little things that matter and kind of the big, exciting, beautiful projects that are easily recognizable.
With respect to the little things, our downtown management team proactively worked with United States Postal Service to have them replace all 15 of their mailboxes in the downtown core within a month of the Super Bowl.
So getting a government agency to work that quickly on that sort of project, I think deserves some good kudos.
On the larger scale, honing into our power of partnerships, our downtown management team led the way in getting together the new owner of the former Greyhound bus building together with the mayor staff, and they really turned the opportunity for beautification there into a volunteer opportunity that was connected to the mayor's state of the city, which was part of our Super Bowl weekend festivities.
So some really, if you haven't been by that building, boy, does it look different nowadays?
So looking good and green as of Q3 for goal 3.1, we were 60% towards completion of our goal around commercial lease renewals.
We have three commitments, and the one that I can mention is that of Berlin or Cohen, who is going to keep their hundred or hundred or so employees in the downtown core.
So very happy about that.
And in goal 3.4, this is really an area where our small business team has been after it, and already by the end of Q3 far exceeded the stated goal of one new business improvement district.
And in fact, this year, currently, we've got the formation of three bids: Alum Rock, the Alameda and Story Road, and at the end of Q3, we're also in process of forming the East Village bid, which has since been formed.
And just lastly, we're making solid progress on a couple of our goals that were deemed yellow at the end of Q3.
For goal 3.5, we completed a lottery with 450 entrants, selected 30 small businesses that were going to be interviewed for a small business startup grant.
They have since been selected, and the small business advisory committee has subsequently given their approval for those for those awardees, and we're going to be distributing that funding in July.
And next up, we have our neighborhood and economic grants that were kickoff on July 1.
And then lastly, number 3.6.
There was a yellow light at the end of Q3, but we're moving ahead on streamlining actually two processes.
Interdepartmentally.
We are working on the outdoor sidewalk seating program and process.
And then also in conjunction with our colleagues in PBCE and County Health, we're working to streamline restaurant permitting.
So we've been busy on goal number three.
All right, and rounding the bend with goal number four, sports and entertainment district planning.
What a wild ride it's been since last spring when all of these focus areas and goals were identified.
For goal four or for focus area four, we have five completed or activated but mostly compete complete goals, and then one that is still in progress.
But I'm really want to focus in on goal 4.4 and 4.5.
The team has produced and or facilitated eight special events and seven public artwork specific to SJ 26 activities.
We're really excited that the entertainment zone policy that was called for and supported by council has been activated initially for Super Bowl, but SOFA district will debut its first entertainment zone now for World Cup through City Dance.
So we're seeing that policy in action and taking notes and prepared to refine that along the way.
As a team, we've facilitated 622 event days.
Again, this was up through quarter three, through 193 event permits.
That represents over 128% of the goal.
And attendance to date through quarter three is 1.95 million people.
What's really remarkable about this goal is the number of events and the type and complexity of the events.
So as we know, the scale of attendance of some of the events in and around the major sporting events has invited tens of thousands of people.
And then also even looking at this isolated year, 128% of the goal, this is after 24 or 25, where the special events team had almost doubled the number of events days that they permitted.
So I mean, the team has not grown, they're just really moving mountains to do great things for community to create these envelopes for civic engagement, and in collaboration with our colleague departments putting forth safe and accessible community activities.
And for folks who are interested tonight is also a city dance night.
So you can come to Disco in-house this evening, also in the SOFA district.
Goal 4.6 is one that we hear a lot of inquiry into, which is identifying uniform metrics and timelines with Team San Jose and the San Jose Sports Authority to commission a comprehensive economic impact report on 2026 major sports events.
So I think one of the retrospectives that we're keenly aware of right now is that data different types of data gets published on different timelines.
So foot traffic data comes out first, and then revenue per available room night comes out variably between a couple of weeks and a month or more afterwards.
And then the actual economic impact and dollar data that we would see directly as the city comes in with our business tax roles, which are reported quarterly, and there's some lag time in how that data comes to bear.
But we can anticipate through our contract with the San Jose Sports Authority a comprehensive SJ 26 report that has been commissioned with a firm, it's called Sports Economics, that is specifically adept at monitoring these types of impacts.
So we look forward to continuing to collaborate, report out with the bits of data that we have as we have them, and then having an amazing end-of-year wrap-up.
These are all repeats.
All right.
With that, and we're happy to field questions.
Thank you.
That was a lot of information and very exciting what's happening in 2026 and all the FIFA activities and watch parties.
And I know many of us have things to come in our districts.
It's exciting time to be in San Jose.
And uh looking at this last year and thinking how this was going to all play out, it's really, I think, exceeded our expectations of how smoothly every knock on wood, I shouldn't say that before it's over.
But how uh how well it's been received by our community and how and just the energy level of all the people who are attending is really exciting to uh participate and see that.
So with that, uh I'll turn to members of the public, but I don't see any public comment.
Thank you.
So I'll move on to our council.
Councilmember Ortiz.
Thank you, Vice Mayor, Madam Chair.
I also want to thank staff for this report.
Um exciting topic.
Great to hear about all the amazing things that are going on citywide and in downtown.
Just want to thank everybody who's put work into today from all the various departments, not just uh Office of Economic Um Development.
Glad to hear that business improvement districts continue to be a strategy for um the city.
You know, I think when I look at East San Jose, and kind of like our more under-resourced areas, whether it's like district seven or parts of district three, the best way to um bring in new resources is this new strategy of a bid.
And I don't think that um, you know, the Alumrock bid, the new one that was mentioned during your guys' presentation, um, we're not finished yet in East San Jose.
I'd like to see one on Story Road as well.
Um, and then hopefully in the Alumrock Village, but we'll see if they uh change their perspective on the on the bid.
Once once uh the corridor starts getting nice things, I'm sure there's gonna be some FOMO, which is fear of fear of missing out.
And so that'll allow us to push them to you know cross that cross that ledge.
Um also uh I think you know, I on the same conversation of the bid, you know, in one of my budget asks was the formation of the story road um East Business Association.
We're we're forming that as we speak.
Uh we have a an initial meeting with business leaders later this month, and so hopefully, and I know that was approved, and so I know that community strong solutions will be able to provide us that that support that I know they've done in so many of our our districts, and so hopefully that'll be um uh something that we could explore later on in the vein of bids because that would be a quite sizable one.
We're thinking from uh story and white all the way to to King and Story.
Um, also really happy to see streamlining.
Um, I know you guys hear this all the time, and I'm sure PBCE hears this all the time, but the permitting um really is a tax on our business, and especially in East San Jose, when you know a lot of our business owners don't really understand the the um intricacies of and the you know specifics of uh permitting.
I mean, I think I was just emailing Chris now about a guy who did all this construction, and then now it's like, oh, I have to have permits, and it's like, yeah, you gotta have permits, buddy.
Uh, and so you know it's I I want to make sure that permits are important.
We got to make sure we're doing everything to code, uh, but also want to make sure that we're doing everything we can to support our entrepreneurs and realizing their their vision because if more of our entrepreneurs realize our vision, that'll increase our our tax revenue.
And so really glad that the city and multi-department um a coalition is is leaning into that topic.
And I know it's not easy, and so thank thank you for uh that and then I and then also, of course, the the grants.
That's that's extremely important um to the city.
I think that I read somewhere that there's gonna be grants for um uh I guess organizations that are thinking about starting a business association.
I think I read something is is that is that accurate so the second grant program that we uh just took to the small business advisory committee is the neighborhood economic grant program okay so we have about a hundred and forty five thousand dollars that was allocated through the budget oh wow uh there are gonna be three or four grants they're they're larger grants so they'll go um the three or four grants somewhere between 20,000 forty five thousand kind of depending on what the project is proposed and depending on um kind of how the interviews go but that is uh a program that is geared more towards organizations looking to do something a little bit more comprehensive in neighborhoods rather than to a specific business for a startup need.
Yes well it's it's the form like a business association right or no is that not um not not necessarily that could be one of the things that is proposed but it could be other things it could be activations it could be you know a small kind of infrastructure project.
Thank thank you for that I'm sure that all my colleagues are probably interested where where can we find out like some of the like determining factors of what makes uh an applicant you know uh look you know effective when they apply or something like that.
What are you guys looking for from the groups?
Sure of course we uh so two things we can forward to the committee in the packet from the small business advisory committee last that met earlier this month there was a write up on kind of the criteria and what the program would be so we can forward that make sure everybody has it and then secondly we're going to launch the application in early July and right now we are formulating and working with some of the members of the small business advisory committee to to exactly kind of map out the the program and the parameters.
Yeah I want to apologize to Vic and my colleague I know I've missed the the last couple of ones it was a little bit of a busier reelection than my colleague here so thank you for holding down the um the fork.
And then finally I just want to uh I know I'm running up on time I just really wanted to uh thank all the thank the staff for the work underway uh to advance the outdoor seating improvements um in the memo brought forward by myself and our colleagues um activating our commercial corridors you know whether that's you know Winchester you know Stevens Creek Alum Rock um I think it's vital of vital importance for our our local economy and um you know we we when I drive through my district I just see a lot of of underutilized outdoor uh space you know and you see other cities uh whether it's in the United States or outside just being innovative with how they are doing outdoor dining outdoor you know performances and and and things like that and so I think any way in which we can allow entrepreneurs restaurateurs to maximize space is very exciting.
At the same time I think the amount of coordination that has been required to improve a single process highlights a broader challenge we continue to hear from our our small businesses which is small business owners don't think in terms of you know specific city departments and I'd be surprised if you know a small business knows the difference between OED or PBCE and so they they just want a process that allows them to improve and grow their their business without you know millions of steps.
And so I wanted to see if staff whether it's you here or or somebody up in the audience can speak to it what what the biggest barriers to creating a more seamless permitting experience for our small businesses could be whether it's you guys or Chris or whoever wants to speak yeah.
Yeah I I think um you know our interdepartmental communication is really the first step um and then also just being prepared to staff the types of um requests that come in and so I think there have been some good strides this year in um in the streamlined restaurant program and the STAR program where people know um and are continuing to learn that they can come to the city for certain expedited permitting opportunities.
And then just continuing to refine, if an inquiry comes into our small business team, or to really anyone at OEDCA, you know, we can communicate that to our colleagues in PBCE to have a sort of a more seamless approach so that folks feel like when they come to the city, they're coming to the city, and then we can help them navigate to the right subject matter expert to achieve their ultimate end.
Thank you, Chris.
I think Jen's sort of hit it straight on the head with that one.
It's really about sort of how do we get out in front of our customers to help build education and provide them the information so that they have a better insight coming into the process.
And so, you know, we have a really great partnership with OED in creating that sort of handoff when there's businesses that they're working directly with.
And then we're also working throughout PBC to make sure that we're providing that information clearly to applicants up front.
So we've just gone through a process to completely revamp our building web pages.
So you can now go in to the building site to start your permit, and rather than having a million different links in different directions and people trying to figure their way through that process, it's been really simplified.
You go up, there's four buttons up front, you know, and it's am I a small business?
And from there it's sort of what is the type of work you're doing.
So people can really understand those requirements up front, and it's much more accessible.
Um it's also allowed us to be uh much better prepared to provide better language access as well.
So, you know, to the extent that we can get the information out there, certainly we'll continue to work on our process to be a better partner with small businesses once they come in.
Um, but the the better prepared they are at the start of that process, um, generally the more successful they are.
Great.
Thank thank you both.
One follow-up, you may want to wait down here, Chris, but for each of each of your departments, as you guys have been working together, speaking with small businesses.
Is there a certain is there a certain uh section of the process or aspect of the permitting process that our businesses are struggling with or continue to face barriers?
Has there been you know engagement around figuring out what I guess that point is within the whole procedure?
Well, I would say um for different types of businesses, um, you know, there are some trends for the types of infrastructure that can be challenging for a certain business type.
Um, small business restaurants, for example, um, are usually getting ready to move in or retrofit spaces that are very unique to each building, and on a case-by-case basis, it's hard to create a process solution when the plans and the um the sort of infrastructure of the buildings that they're moving into are very different.
Um, but there are certain aspects of opening a restaurant in particular that we can educate small business owners on as they're getting ready to advance further into the process, or as they're looking at spaces to say, will this actually work for the thing that I would like to put in in this location?
Um, and sometimes that answer might be that it's it's suboptimal for one reason or another.
Awesome.
Yeah, and I think restaurants are a great example just because um, you know, all small businesses are cost-sensitive, but just given the startup costs, certainly if there are physical improvements to the space around a restaurant, they get particularly challenging.
Also, what I think we find is restaurateurs are fantastic at opening restaurants, they're not experts with permitting.
Um, they don't understand you know the process.
They may go out and find a great contractor who's great at focusing on improving the space, but again, may not be as well informed on the process.
There's not the same, you know, we see with some of the other types of uh businesses.
Um, there's consultants that work directly to get them through that process.
Restaurateurs are trying to pull the pieces together.
So, really what we think about in that instance is how do we design a process that makes it more accessible.
So when you look at something like a streamlined uh restaurant program, it's about having the whole team there so we can respond really quickly.
Um the coordination we're now doing with the county is to minimize that back and forth between hey, you couldn't go do this from the county now, go do this with the city, so they can hear it all at once, that they don't have to be an expert to know that they have to go and sort of get a county health permit before they get a building permit or what the implications may be if they make changes down the road.
So, really that's it, is how do we tailor our services to meet the need?
Um, you know, the other pinch point, you know, obviously I know we've discussed before, um, is use permits.
So things where as a city we have a we've made a decision that we want to regulate to an external certain extent, so whether it's off sale of alcohol, you know, things like that, um, we've created guardrails for the community in that sense, and obviously, again, that's a much more involved process that folks who are just trying to open a small business don't have the expertise and knowledge around.
So again, you know, we work closely with those people.
We try and give them the information up front to say this is what you're gonna need to get through it quickly and effectively uh to hopefully we can minimize that stress.
Thank you.
Thank you.
You did yourself, thank you.
Uh Michael, uh Councilmember Mulcahy.
Thank you, and thank you, Jen, Erica, Blogge, for the report.
Um, I'm gonna kind of go in order um and uh just have a few comments and a couple of questions.
I first want to just say to Councilmember Ortiz's questioning, I think the other piece is as soon as you go to a restaurant and one with liquor, you start bringing in other agencies, whether it be the health department or the state with the ABC.
So it it certainly adds a level of difficulty.
Um so, Erica, I don't have much for you, but that was a really cool day being able to open or do two groundbreakings for LS Power in the same day.
So uh glad that they're ahead of schedule.
Um Bloggy, a few things for you.
You pointed out the um uh Greyhound bus station beautification, which was great.
I was there painting that day, but I don't know if you've noticed, and maybe you guys had a hand in it, but the the vacant lot that's always looked like, you know, terrible, right?
You know, that sits behind 160 West Santa Clara Street has now been improved, and there's a big dome out there where they're doing watch parties, so it's a pretty cool sort of byproduct of um this work downtown.
So it's a big improvement just at that corner, and then with Myth, I think is got a new investment there.
So I want to get your recipe on the you the post office because we've got a bunch of mailboxes that need to be um improved all over the city, but certainly we do in D6.
Um, so I'll take that contact.
Um, and then on the staff support for um the bids and C bids.
I think you know, I'm a huge fan and a big proponent of them.
Um I just curious what is in your work plan for those that you birth.
What's your sort of responsibility for you know, sort of graduating them from birth to toddler to on on out.
Is that a third-party contract program?
Is that internally in-house that we're doing that?
Just want to make sure that once we sort of birth these, you know, programs that they've got support that they've been used to for at least a year or two in advance.
Yeah, um, in terms of our our work plan and how we'll continue to support bids, I think um, you know, each bid comes to fruition through a different arduous process and different levels of momentum.
And I did just want to pause, and I know there had been reference earlier to a story road bid coming online, um, but I do want to recognize the distinct efforts of a story road bid that was adopted and advanced advanced by council earlier this year through the hard work of the story road business association.
So um the prior mentioned uh additive bid um would be a different one than the existing one that was adopted.
So I just wanted to make sure for members of the public who weren't necessarily charting all of the improvement districts that one was advanced and adopted for Story Road through a lot of hard work, and then um always interested in seeing where there is momentum for a community to rally around other bid opportunities.
Um I think for for staff and in terms of budgeting, it's important for us to be um thinking also proactively into the next years for how we want to steward the bid program, and that will be part of the focus area um activities.
One of the I think one of the nuances of bid formation is that you have volunteer board members who then are responsible for sort of keeping the plate spinning or the ball in the air and keeping bid functions compliant.
And that's a really delicate balance.
If you have a chair roll off or end their service or retire or whatever it happens to be, I think we just need to be mindful of watching and continuing to build the capacity of bids and encourage them to build their outreach beyond just a person or two who may be a really influential leader in the community at this moment in time.
So helping them build the capacity so that they have longevity, which I think will require some consulting support and for which we've budgeted for this coming year.
Okay, great.
So short answer is yes, we're gonna stay with them and try to help them advance out of you know, from going through this hurried process to get all the votes and then you know implementation.
So I appreciate that.
Um let's see.
So on the on 4.6, I think is where we do the economic study.
Um I think this was you, Jen talking about it, and I know you were talking about the sports authority and a contract there.
So aside from the economic piece, which we all know is so important, and assume they're gonna be you know, sort of working with the likes of a team, San Jose, and and other groups that have been part of this work.
What are we doing internally as a city?
And it may not be fair to be asking just you this question, but you may know whether this is sort of a foot or not.
Uh you know, it seems to me like building a playbook, like when you think of the diversity of programming we've done this year from an NVIDIA takeover to you know, table tennis uh championships, you know, latter part of this year.
What are we doing internally to make sure that we're uh kind of documenting and understanding all of the challenges we faced and overcome and the implementation of the work we've been doing so that we aren't reinventing the next time?
Is there anything in that way that we're doing right now?
Uh well, we've certainly adopted uh some uh some cadence of data capture, and also understanding in the lead up to events where we we want to have antennas out into the community to understand um how events are being received and the extent to which businesses are are included in the process.
Um, and so that process has evolved nicely.
I think after the Super Bowl, you know, we had a lot of inquiries immediately following for all manner of data, and um and being able to acknowledge that that doesn't all come out all you know all at once, you don't push the data button and have an amazing report, and then being able to preempt what we knew would be some levels of inquiry around GTC and March Madness, it was a much more organized media and data data capture plan around the March activities, and um, and then to the extent that we're now into World Cup, that that plan and process is also evolved on the data capture side.
Our special events team holds retrospectives as after these events to understand where were we appropriately staffed, where were there challenges, how would we do things differently?
And so we're definitely on a pathway to continuous improvement.
Um is there a journal or log that captures all of this great institutional knowledge?
Not yet.
Well, I think the thing you just said at the very end is exactly what I was looking for.
So we, you know, our events team really is looking at that because they've been at the center of a lot of the different coordination between the departments, where you know, us really learning and remembering that for the next time, I think is important.
So if what you're saying is the events coordination team is sort of doing that already, um I think that's a good answer to the question.
All right.
So then just uh I skipped over one, and that was on the certificate, uh, the health certificate streamlining.
Um I don't know if any of you were involved.
Last year we did the small the restaurant round table, and you know, we invited the county and uh supervisor Abekoga was there.
Um, and it was like the health department didn't know why they were there when we were had that had that meeting.
I'm wondering what kind of progress we're making in this specific regard.
So whether or not we back to council member Ortiz's point about streamlining, you know, uh a streamlining program.
How are we doing now in making sure to make that connection to our health department and how they can help us move quicker?
Yeah, there's definitely an ongoing dialogue from a client and customer experience standpoint.
Uh we've received a lot of inquiries from vendors who are interested in the food space or in vending different products around these major sporting events, and um and we obviously lead them to the city of San Jose doing business um sort of rules of engagement website, but also forward them to the county so that um we can share with them some of the different county criteria and and make it a better experience for um for small business interests who are trying to find the right information and not necessarily knowing that they may need to talk to a couple of different people to have their business presence be legitimate.
Um just to add to all the things that Jen said, and then to add to that, we're specifically have started a cadence of meetings uh with our um our colleagues in the B part of PBCNE, uh, and then also with county health, and so we they now know why they're in the room and what we're trying to achieve, and and we're we're starting on that journey forward.
Okay, great.
Um I know the red lights on just are you gonna do an education piece on the library card LinkedIn um partnership that you talked about right at the beginning?
Um we'd be happy to create something or co-communication.
Yeah, I think it'd be fun to share that, you know, for people who are AI AI curious and um LinkedIn members, that would be good and our public library system.
Thank you.
Would you care to make a motion?
Oh, yes, I will move to approve the presentation.
Is this a referral?
Except, except for that.
Yeah, accept the report.
Thank you.
Is there a second?
Okay, thank you.
Moving to council member Kamei.
I'm sorry I jumped the gun on the motion.
That's what I was gonna do anyway.
Uh no, my colleagues have uh covered quite a bit already.
Um, but uh I uh I just want to say thank you because uh this was a big lift.
We didn't know how that would be in terms of using this new system of tracking things.
Uh but uh but I've seen a lot of good work come together and um the results speak for themselves.
So now that you've set the bar high, you know, it's uh gonna be uh sort of like expectations of high standards.
Uh but I I I just simply wanted to say thank you because I know it's a lot of work, a lot of coordination, a lot of, you know, like pushing the noodle and doing all kinds of things, and uh and uh and I recognize how much you've done.
So just thank you.
And thank you for your team, because uh, you know, it's we don't do this in isolation, right?
It's not just us, it's others, and it's cross department too.
I like that cross department thing.
Uh and uh, you know, I'm glad that you do have uh uh some way of communicating with the health department.
I think it'd be interesting in you know, sometime in the next year to even think about doing a forum with the health department and small businesses, uh food trucks, uh food vendors, whatever, because there's a whole gamut of stuff that has a lot to do with the health department, and they're sort of in isolation.
So something that you can think about for, you know, some time in the next coming year or so to be able to uh bring entities together to say we're going to talk about the city and public health or or health department in terms of the food industry, right?
Uh I think it'd be very interesting so people can have their questions answered.
Um, but thank you so much.
Thank you.
And uh just to follow up, thank you for the presentation.
Uh it was we're heading really in a great direction, and and it's exciting to see.
And I too would like to see the information about the LinkedIn uh AI workshop in connection with the library cards.
That's something would be good to push out to our community and especially in our upcoming newsletter, and uh the additional information about the grants that you talked about, Blog A, the criteria, what you're looking for, that we might be able to help some of our businesses look into what that might be mean for them.
With that, uh see no further hands, let's vote.
Thank you.
Motion carries.
Now we that that concludes our formal part of our meeting.
I don't see any members of the public with their hands raised, so we stand adjourned at 251.
Thank you.
Discussion Breakdown
Summary
Community and Economic Development Committee - June 15, 2026
The Community and Economic Development Committee met on June 15, 2026, to receive three major reports: an audit of the Housing Department's affordable housing loan portfolio, a status update on the 'Building More Housing' city council focus area, and a status update on the 'Growing Our Economy' focus area. No consent calendar or public comment were present. The committee accepted all reports by voice vote.
Housing Department Loan Portfolio Audit Report
- City Auditor Report: Joe Royce, City Auditor, presented findings that the Housing Department's asset management team has not completed all annual property reviews or inspections in recent years due to vacancies and unclear expectations. The audit found that in a sample of 878 units (4% of total), 110 units (13%) had tenants with incomes above the cap, and 48 units (5%) had tenants earning 140% or more of the income cap. The team lacks a documented escalation process and risk-based monitoring. Nine recommendations include developing a strategic plan, acquiring or retooling software, and updating procedures.
- Housing Department Response: Eric Sullivan, Director of Housing, acknowledged the utility of the audit and noted that the department is not in first position for compliance on most loans, but is working to improve communication and loan documents to enhance monitoring. The department is now fully staffed.
- Council Discussion: Members discussed sequencing of goals vs. software procurement, risk management, and the department's role in notifying other regulators. Councilmember Kamei moved to accept the report and refer it to the August 18 council meeting.
Building More Housing Focus Area Status Report
- Presentation: Jared Ferguson (Planning) and Eric Sullivan (Housing) reported on 10 goals for the fiscal year. Seven are complete, two on track, and one off track (goal 1.2 on expanding ministerial approval into downtown). Key accomplishments include progress on the general plan update (with final planning commission meeting June 24), completion of the multifamily housing incentive program (2,216 units moved to construction), and development fee estimator updates.
- Council Action: The report was accepted by unanimous voice vote without referral.
Growing Our Economy Focus Area Status Report
- Presentation: Jen Baker (OED), Erica Graffo (Assistant to City Manager), and others reported on the focus area. Highlights include 3,978 jobs attracted/retained (Q3), 342 AI workshop participants, 289 AI course completions, and progress on infrastructure readiness (LS Power groundbreaking, PGE energization delays at Stack Data Center). Downtown initiatives included 6 new ground-floor businesses, replacement of all downtown mailboxes, and formation of three new business improvement districts (Alum Rock, Alameda, Story Road). Special events totaled 1.95 million attendees through 193 event permits.
- Council Discussion: Members noted the value of business improvement districts and discussed streamlining permitting processes. Councilmember Mulcahy moved to accept the report.
Key Outcomes
- Housing Loan Portfolio Audit: Motion carried to accept the report and refer to the full City Council on August 18, 2026. (Verbal vote noted for Councilmember Ortiz.)
- Building More Housing: Motion carried to accept the report.
- Growing Our Economy: Motion carried to accept the report.
- No public comment was received on any item.
Meeting Transcript
I don't know what to do. Okay, it's 1:30, and I'd like to call this meeting to order. This is the community and economic development committee. Would you take the roles of the role, please, Jasmine? Casey? Mulcahi? Here. Ortiz. Vice Chair Coming here and cheerfully. Here, you have a quorum. Great. Thank you. We are not reviewing the work plan, no consent calendar, so we're just going to jump right into the reports. Let's start with the housing department loan portfolio audit report. Hi, Joe. Hello. Good afternoon, Joe Royce, City Auditor. I'm here with Alice and Paulie, Adrian Perez, and Maria Valle from my office to present our audit report. Affordable multifamily housing loan portfolio, clear goals, and stronger oversight would improve monitoring. Also in the box is Eric Sullivan from the Housing Department. Affordable housing serves a low to moderate income residence in the city of San Jose and to support the development of affordable multifamily housing. The city's housing department provides a loans to developers for the construction of new properties and the preservation of existing properties. Along with the loans come restrictions on tenant rents and income to ensure that units remain affordable over the life of the agreement and affordability period. Housing staff verify that property owners repay loans, meet affordability restrictions, and maintain buildings. The permanent loan portfolio totals over $745 million across roughly 220 properties. There are nearly 25,000 units with active loans, affordability restrictions, or in the pipeline. Many loans were recorded before 2012 and are also subject to regulations from lenders and government from other lenders and government agencies, including the state and federal government. The objective of this audit was to assess housing's processes for managing the affordable housing loan portfolio, including loan servicing and compliance monitoring. As described in the city's adopted operating budget, in addition to providing loans, housing manages and oversees the city's affordable housing loan portfolio, including loan servicing and monitoring and compliance of deed-restricted apartments. Housing's role is to provide asset management, which involves monitoring the financial performance of properties and the overall portfolio, which differs from property management, which relates to the day-to-day operations of a property. As part of their work, staff conduct financial reviews, which involves examining audited financial statements, operating budgets, and other documentation required to be submitted by property owners. They also monitor affordability restrictions. Property managers submit rent roles with rent levels and tenant income information to housing staff. Staff are expected then to check whether the rents are within the allowed rent limits for the unit type, and they may also check tenant incomes. Lastly, they conduct property inspections, which enable the city to monitor the buildings' condition and any problems that need to be addressed to maintain the long-term viability of the property. The first finding is that housing should assess the asset management team's goals and resources. As Joe just described, the asset management team's role is to monitor loan compliance for the city's affordable housing loan portfolio. This involves verifying that borrowers repay city loans, that housing units comply with affordability restrictions, and that properties are appropriately maintained. We found that the team has not completed all annual property reviews or inspections in recent years. According to housing, the team has historically not been able to complete all reviews annually of the more than 200 properties in the portfolio. Vacancies and unclear expectations have hindered the team's ability to complete its work. In addition, the current software tools may not be sufficient to meet the goals of the program given the size and scope of the loan portfolio. Replacing or retooling software would help the team complete their work. At the time of the audit, housing was developing an automated rent role portal to assist with reviews and working on developing standard operating procedures that would support staff to complete their work consistently. We recommend that housing should develop a program-level strategic plan to identify program goals and resource needs, reconfigure the current software, or acquire an asset management software platform, and update and standardize operating procedures and training. Our second finding is that housing should strengthen oversight of affordability restrictions and higher risk properties. Some properties in the affordable housing portfolio do not comply with affordability restrictions, have not submitted required documentation, or have repeated property violations. We found in a limited sample of 878 units across 10 properties representing 4% of the total units managed. 110 units had tenants with incomes above the cap for their unit type, which was 13% of our sample. Based on federal standards, incomes slightly over the limits generally aren't considered a problem because we don't want to penalize people for raising their incomes.