CalHFA board approves financing for 220-unit Gateway Tower in San Jose

The California Housing Finance Agency on Tuesday approved final financing for Gateway Tower, a 15-story, 220-unit, 100% affordable mixed-use development in downtown San Jose.

Katherine McFadden, CalHFA's director of multifamily programs, told the board the agency would issue a CalHFA permanent loan of $43.95 million plus a Multifamily Infill Program (MIP) subsidy loan of $4 million to the project developed by CORE Affordable Housing. The board approved Resolution 26-16 by unanimous roll call.

The project will preserve part of the 1918 Harold College facade and create a small exhibit honoring local radio pioneer Charles Harold, McFadden said. Gateway Tower will include 218 affordable units (plus two manager units) targeted between 30% and 70% of area median income; the average affordability is roughly 43% AMI. One hundred twenty of the units will serve extremely low-income households (30% AMI or below), McFadden said.

The developer, CORE, is partnering with the city and county; McFadden said San Jose has committed over $338 million in support and Santa Clara County has already purchased the property and plans to convey the site back under a 55-year $1 ground lease. The county is also providing a gap loan of more than $7 million, and the financing stack includes federal and state tax credits, tax-exempt and taxable bonds, and local predevelopment funding.

The project reserves 55 units (25%) for people exiting homelessness through the county's rapid rehousing program and will provide on-site case management and resident services through Abode Services. McFadden noted the housing authority committed 65 project-based vouchers to support deeply affordable rents.

When a board member asked how long the county would provide rapid-rehousing subsidies and services, staff initially said PBVs are committed for 20 years and they would confirm the duration of the county's service funding. Later in the meeting Aaron Barcher, a CORE representative, clarified that the county MOU for the subsidy is a 55-year commitment and explained that the rapid-rehousing subsidy applies to households for the program's two-year term; after that, residents remain rent-restricted at 30% AMI and the subsidy is available to future eligible households as long as the MOU remains in place.

The board also discussed project costs and lease-up risks related to limited on-site parking. Director John Russell and others urged careful attention to parking allocation and tenant retention, noting transit proximity does not always meet residents' needs for certain job commutes. CORE said downtown parking structures and off-site rental arrangements are part of the plan and highlighted nearby light-rail connections.

Environmental work identified petroleum hydrocarbons in soil gas; McFadden said a county-approved site management plan requires a vapor intrusion mitigation system and ongoing testing and oversight. That remediation and the preservation work contributed to staff's characterization of Gateway Tower as a high-cost project (CalHFA staff noted an approximate $899,000-per-unit cost).

"This is a deeply affordable, service-rich project that preserves cultural assets and strengthens downtown arts and infrastructure," Chair Francesca Cervantes said after the vote.

Next steps: CalHFA staff said they expect to close construction financing by early September and will follow up with the board on outstanding service-duration details and any remaining permitting steps.