NewMon, Jun 15, 2026·San Jose, California·City Council

Community and Economic Development Committee - June 15, 2026

Discussion Breakdown

Economic Development29%
Affordable Housing26%
Procedural17%
Technology and Innovation9%
Land Use7%
Procurement Policy5%
Engineering And Infrastructure3%
Community Engagement3%
Municipal Finance1%

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.