San Jose Expands Housing Incentives to Drive More Homes and Vibrant Communities

The San Jose City Council took decisive steps on January 27 to expand two incentive programs designed to accelerate housing production across the city. These changes come at a critical time when developers face tough financial hurdles, making it harder to launch new residential projects. By offering tax breaks and fee waivers, the city aims to make these developments more feasible and bring thousands of new units online.

The Downtown Residential Incentive Program, previously focused on high-rise projects, now encompasses commercial-to-residential conversions in Downtown San Jose. This expansion allows eligible developments to skip certain fees and taxes, such as the structure construction tax, with even greater reductions available for those meeting elevated labor and workforce standards. Converting unused office spaces into homes presents a cost-effective way to revitalize underused properties and boost tax revenues. Projects like The Graduate, Miro, and The Fay have already advanced thanks to the original program, and the Bank of Italy redevelopment, set to deliver over 100 units, stands to gain from these updates.

In a parallel effort, the Multifamily Housing Incentive Program saw its capacity doubled from 1,800 to 3,600 eligible units for developments securing building permits by February 2027. Targeting high-density builds in strategic growth areas, this program provides similar financial relief to spur construction. Seven projects are now vying for inclusion under the expanded phase one, while five others totaling 1,444 units are already underway, representing over $20 million in waived fees and taxes. Notable examples include Hanover Company's 345-unit complex at 905 Capitol Avenue and Urban Catalyst's Aquino in Downtown San Jose.

These expansions signal a proactive approach to overcoming market stalls and delivering the housing San Jose needs. By easing financial pressures, hopefully stalled plans will turn into completed communities, enhancing both livability and economic vitality.

Source: SVBJ