Council advances multifamily incentive program and commits loans for affordable projects

The San Jose City Council on May 13 approved multiple actions intended to accelerate housing production: tax and fee waivers for a large market‑rate development on West San Carlos, an amendment to the Multifamily Housing Incentive Program to add capacity and include a predecessor fund (AHIP), and a construction‑period loan commitment for a new 195‑unit all‑affordable development slated for the Berryessa transit‑oriented area.

Key approvals and project highlights - 498 West San Carlos (Urban Catalyst): Staff recommended, and council approved, fee waivers and partial construction‑related tax reductions under the council’s multifamily housing incentive program to support an eight‑story development that will deliver 292 units (278 market‑rate units and 14 lower‑income units as proposed). The incentive package includes an IHO fee waiver (approximate waiver value reported by staff at ~$3.4 million) and 50% reductions in certain construction taxes under a phase‑in schedule; staff said the total waiver request is about $4 million. - Multifamily Housing Incentive Program amendment (Federal Realty/Santana Row, Lot 12): Council approved an amendment to the city’s multifamily incentive framework to incorporate the predecessor Affordable Housing Impact Fund (AHIP) and to add Federal Realty’s Lot 12 project to the program. Staff also increased the program’s total unit capacity by 300 units to accommodate strong program uptake. - Ariasa/Berryessa affordable development (Affirm, VTA site): Council approved a construction‑period loan commitment of $9.9 million to support a deeply affordable, 195‑unit development on VTA‑owned land adjacent to the North San Jose BART station (project awarded state HCD ASIC funding and other county and regional funds; staff described a financing stack that includes significant HCD grants for infrastructure and other subsidy sources).

Why it matters: Council identified the incentive program as catalytic: staff said several projects that had been on hold moved forward after being added to the program. The amendments and approvals are intended to increase housing starts in locations with transit access and the potential for more dense development.

Council response and next steps: Councilmembers acknowledged the urgency of increasing housing production and praised staff’s efforts. Members also emphasized the need to preserve affordability goals and to avoid sending mixed signals that would slow project starts. Staff said it would return with additional program design options in September, including consideration of whether to extend program application deadlines for projects not yet ready to proceed.

Ending: Council approved the incentive waivers, program amendment and the loan commitment; staff and developers said they would move to finalize financing and permit steps so projects can proceed to construction.