In 2014, the San Jose city council adopted an Affordable Housing Impact Fee program to help create and preserve affordability within the city. The new policy requires developers of market rate rental property with three or more units to pay a one-time fee of $17 per finished, livable square foot. Beginning in July of 2017, the fee will increase by 2.4 percent each year, and when the program is fully operational, it is expected to generate between $20 and $30 million per year. The Affordable Housing Impact Fee excludes for-sale property developments, because the city’s inclusionary housing program is already in place to generate revenue from those projects.

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