Institute of Urban and Regional Development

This report describes a fiscal impact study done for the City of San Jose, California, in 2003-2004, a time when the city was reeling from fiscal and economic pressures caused by the dot-com bust. With residential land prices rising due to low interest rates and industrial land declining in value, the city experienced a flood of applications for residential conversions. City staff were concerned that wholesale changes in land use to housing, particularly in the city’s high-tech campus area that forms a major part of the Silicon Valley Golden Triangle, would have negative impacts on local employment and city finances. The case study describes the institutional, political and economic context in California and San Jose before going on to outline the study methods and results. The case evaluates how the fiscal impact analysis was used by the city to set Council policy for conversion applications and how it impacted the thinking of staff, the council and the local real estate community. The case study illustrates how fiscal impact analysis can be used as a planning tool by a city or county to enable the jurisdiction to take a proactive role in preserving high value employment lands while providing for affordable housing and the fiscal health of the city. This case study can be used in a land use planning class, an economic development class, a housing or a municipal finance class.