Welcome to the January 14th meeting of the Planning Commission.

Please remember to turn off your cell phones.

The parking validation for the garage under City Hall is located near the rear of the chambers.

If you're able at this time, we will start with a salute to the flag.

I pledge allegiance to the flag of the United States of America,

and to the republic for its name, one nation under God, indivisible, with liberty and justice for all.

all right tonight we have a special meeting a study session but first we'll start with roll call

so let's see vice chair bigford commissioner borosio commissioner bondall commissioner

Cantrell, Commissioner Cow, here, Commissioner Casey, Commissioner Escobar,

here, Commissioner Nguyen, here, Commissioner Oliverio, Commissioner Young, here, and myself here.

We can move forward. Okay, we'll move forward with a report on the cost of residential development

in San Jose. Staff, do we have a presentation?

Yes. Good evening, Commissioner Manir Sandhir, Deputy Director of Planning with Planning,

Building, and Code Enforcement. I'd like to welcome Eric Sullivan, the Director of our

Housing Department with the city here to present on the cost of development study. Just to tee

it up for the commission, the cost of development study is something that the city does every few

years to evaluate how the development industry is acting and that can help inform policy decisions

that are made by city council and perhaps sometimes recommended by the planning commission.

This study was led by the housing department but was also in partnership with planning building

and code enforcement as well as the office of economic development. So with that I'll turn it

over to Eric Sullivan who is also joined by Jared Ferguson our principal planner. Thank you.

So, Eric Sullivan, Director of Housing for the City of San Jose.

And as Minira had mentioned, we've worked with Jared and the team at PBC and OED and

a number of other departments comprising this study to look at the cost for the development

of residential on both market rate and affordable housing.

So this presentation was part of an overall study session that we gave to Council that

was a three-hour session.

So I'm going to move through the slides a bit quickly today so we can have time for questions and answers at the end of it.

And I'll go through the first part, which is the market rate development, then I'll get into the affordable housing side afterwards.

And I'll try to get through it in about 20 minutes so we can really even get enough time for questions and discussions.

So first off just a quick background we hired a consultant EPS and CSG

Advisors to put together this analysis for us along with city staff from many departments

So I'm just

So some quick history here so we went through a number of outreach hearing from in addition to the

expertise staff that put together the modeling for this. We also work with a number of constituency

groups and stakeholder groups, including from labor, business, developers, as well as policy

advocacy organizations. And some quite important takeaways for the context of this, this is based

on hypotheticals. So we had some underpinnings of actual deals that we had on the market rate side.

We had a few deals and then built models based on that to show this increase in cost.

And then on the affordable side, we looked at a much larger data set of about 200, but primarily at the application stage for low-income housing tax credits.

And so I just wanted to place that as contextual considerations.

As we brought forth to council, we looked at the factors that the city can control and the factors that are city outside of control.

You know, with any development initiatives, city governments, you know, have little bit of tools, but where do we apply those tools to best incentivize for bringing projects forward and addressing some of the headwinds within the current market?

And so this is just a quick recap of just purpose and scope of VPS and how we utilize this study for our incentive programs.

So just a quick overview on the analytical framework.

You know, the overall for the market rate approach is looking at revenue cost expenditures.

So in addition to the few hard data sets that we had, we also looked at aggregate data sets,

COSTARS and Redfin, that contributed to the modeling out of the analysis.

And so here's the quick takeaway.

It's just some quick rounding.

As we looked at these performas, what this slide is quickly communicating to you,

that the aggregate data sets and the overall assumptions built into the model when compared to

the actual real deal data numbers because we had a small data set for this we were within a margin

of variance and so we feel confident that this assessment is true to form within current market

conditions and so I'm going to place that you quickly in sort of the five different building

types that we looked at first is our townhomes and our stat flats and then we looked at podiums

wraps and towers and you'll see a theme throughout this presentation as we move through it that our

townhomes and our stat flats generally feasible based on the analysis when you start getting into

your wraps your podiums and your towers it becomes much more challenged particularly your tower

development building type. And so what this chart quickly shows to you is the