San Jose staff: townhomes, stacked flats feasible now; podiums and towers need targeted incentives

Eric Sullivan, director of housing for the City of San Jose, told the Planning Commission on Jan. 14 that a city-led Cost of Development study found smaller product types—townhomes and stacked flats—are financially viable under current market conditions, while podiums, wraps and towers remain challenging without targeted intervention.

The study, prepared with consultants EPS and CSG Advisors and supplemented by JLL analysis, used a mix of a few market deals for market-rate modeling and roughly 190–200 low-income housing tax credit (LIHTC) applications for the affordable-housing analysis. Sullivan said the team modeled revenue and cost assumptions across four targeted growth areas—downtown, West, North and Southeast—and emphasized that many cost drivers are outside the city’s control, including materials-price volatility, tariffs and labor costs tied to prevailing wages.

"We need production today," Sullivan said, arguing that fee waivers and incentive underwriting have produced starts in recent periods. He pointed to the city’s multifamily housing incentive underwriting, noting "we underwrote a bunch of projects...and all…