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Three San Jose affordable housing developments secure funds, land from the city

In its latest stab at relieving the city’s housing shortage, San Jose leaders have committed millions of dollars to build housing for its poorest residents.

The San Jose City Council on Tuesday voted to contribute $19.2 million in loans to build two new affordable apartment complexes and to enter a 65-year ground lease with a developer to move a third affordable housing project forward.

The three new developments — one in Alum Rock, another in downtown and a third along West San Carlos Street — will add 251 new affordable units to the city’s housing stock for homeless individuals, those at risk of homelessness and some of the lowest wage-earners in the city. All of the developments are expected to begin construction this summer and estimated to be completed by the fall or winter of 2021.

But, as Mayor Sam Liccardo pointed out, the developments are planned in the same three districts that have carried the city’s weight when it comes to affordable housing.

“I know we spend a lot of time talking about the historic segregation in this city and across the country,” Liccardo said. “And it’s going to be really important to see these kinds of projects happen throughout the city — not just these three districts — moving forward.”

Two of the projects — dubbed Alum Rock Family Housing and West San Carlos Permanent Supportive Housing — were the first San Jose projects accepted under new state laws that streamline the construction of affordable housing developments throughout the state and allow qualifying developers to bypass certain requirements, such as an analysis of the project’s environmental impacts.

“This is a landmark moment for our city,” Rachel VanderVeen, deputy director of housing, told the council during the meeting.

Developer Affirmed Housing is planning to build an 85-unit affordable housing development for San Jose families at 2350 Alum Rock Avenue. 

Under the Alum Rock Family Housing project plans, developer Affirmed Housing will build 85 affordable units — with 29 supportive housing units for formerly homeless individuals — on a .76-acre site at the corner of Alum Rock Avenue and Foss Street in East San Jose. The county will provide a case manager on the site to offer residents a variety of services, including mental health support, financial literacy and emergency management.

The project will cost a total of $55.4 million. In addition to the city’s nearly $9.4 million investment, the county is contributing $15.7 million of funds from Measure A — a $950 million county-wide affordable housing bond measure.

Separately, the city committed about $9.9 million toward an 80-unit permanent supportive housing development at 750 West San Carlos Street. Under plans submitted by the developer Danco Communities, at least half of the units will be set aside for formerly homeless individuals who will receive supportive services from the county.

The project is expected to cost a total of $62.8 million, with $9.3 million of the costs coming from the county’s Measure A funds.

The city council on Tuesday also agreed to enter a 65-year ground lease with developer Satellite Affordable Housing Associates to allow for the construction of 86 affordable housing units at 500 Almaden Ave. in downtown San Jose. The council earlier this year agreed to invest about $10.9 million in the construction of the project.

“I’m excited about all three of these projects moving forward, and I think it’s a testament to the incentives that we give for projects like these,” Councilmember Raul Peralez said during the meeting. “I hope that we have more to come.”

The three affordable housing projects were made feasible, in part, by a promise the city council made in February 2019 to devote nearly $100 million to 11 affordable housing projects across the city over the next several years.  As of Tuesday, half of the $100 million has been allocated to five projects — totaling 416 affordable units.

Using loan repayments, affordable housing impact fees and inclusionary housing fees, the $100 million investment is expected to provide 1,144 apartments for formerly homeless San Jose residents, low-income seniors and other low-wage earners.

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But even with the construction of the projects, San Jose is expected to build less than 20 percent of its goal to add 10,000 new affordable apartments to the city’s housing stock by 2022.

“There’s no question that we need to significantly accelerate our work,” Liccardo said Tuesday. “But we need two important ingredients to build more affordable housing — one is money and the other is land.”

San Jose has struggled to find a local cash flow for affordable housing ever since the state in 2011 ceased operation of redevelopment agencies — the largest ongoing source of revenue for affordable housing in California.

In March, Liccardo and his supporters are attempting to garner enough support to secure a new, local and reoccurring funding source for affordable housing. If passed by a simple majority of San Jose voters, Measure E — a new real estate property transfer tax on properties worth $2 million or more — is estimated to raise up to $73 million annually for affordable housing and homeless initiatives.

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