San Jose incentive program spurs multifamily development despite the economic challenges

As economic uncertainty looms in the state and the rest of the country San Jose is looking to expand a multifamily housing incentive scheme that cuts fees and taxes an initiative that has proved profitable in getting more shovels in the ground this year Related Articles Big luxury apartment complex at Santana Row in San Jose is bought Buyer emerges for landmark San Jose housing towers facing foreclosure Privacy traffic concerns delay Fremont housing progress South Bay apartment complexes bought for more than million Dozens of homes proposed for San Jose site in Alviso district San Jose approved the activity in December after the city experienced a precipitous drop in market-rate multifamily housing rise last year due to high interest rates and construction costs The initiative waived in-lieu fees and of construction taxes for the first units of projects in designated progress areas that had submitted complete applications by June and received a building permit by the end of December However based on developer interest and several hundred units already developing ground due to the incentives the city will expand the number of units eligible to as it could kickstart a handful of more projects It s really exciting to see these projects really come forward and that was the intent of the incentives we provided Vice Mayor Pam Foley declared We have provided incentives before and nothing happened but this incentive seems to have really triggered chosen movement in the enhancement world San Jose has struggled to start new market-rate multifamily projects of more than units over the past scant years averaging about one per year But last year set a new definition for futility as growth crashed to a screeching halt despite a long list of projects waiting in the wings for economic conditions to improve The lack of housing rise has particularly set San Jose behind in meeting its Regional Housing Requirements Allocation which requires the city to plan for new units by which equates to adding an average of units per year Adding to the concerns of housing advocates and city administrators details proved that the city permitted about units last year Recognizing the need to adapt to sector conditions the city also extended its downtown high-rise venture which waived specific taxes and fees to help projects progress Earlier this year building leaders approved permits for the construction of the Gateway Tower project in the city s SoFA District which will bring units and thousands of feet of ground-floor commercial space When the city conceived the multifamily incentive plan it located projects that could be eligible for the discounts Along with providing financial incentives for projects that get their permits this year the campaign offered a reduction in those taxes for up to units of eligible projects starting in The Hanover Co s -unit enhancement at N Capitol Ave which received million in reductions was the first project to take advantage of the initiative a limited months ago and noted that it would not have been able to move forward with the incentives On Tuesday the City Council also approved waivers for The Aquino an eight-story -unit apartment building developed by Urban Catalyst at W San Carlos St That project will receive approximately million in fee and tax waivers This is an opportunity to add more stock and not do it in a way where we re saying yes to something we don t know that is going to happen stated District Councilmember Michael Mulcahy who represents the area Mike Walsh the project director at Urban Catalyst has assured the city that the developer was ready to move forward with construction estimating that it would break ground on the project in about - days The city also has decided to add Federal Realty s Santana Row Lot advance at Hatton St which has long been targeted for vital advancement to the list of projects eligible for the incentives The Santana Row project proposes up to market-rate units Senior Vice President Patrick McMahon disclosed the project hopes to progress within days McMahon also emphasized the efficacy of the incentive venture and how much of a game-changer it will be for developers This operation is the difference between the drawings sitting on a shelf in our office for the foreseeable future and moving forward this summer McMahon disclosed