California Construction News staff writer
San Jose officials have approved more than $10 million in construction tax and fee waivers for two new housing developments as the city pushes to revive market-rate construction amid economic headwinds.
The City Council voted to grant financial incentives to The Hanover Co., SummerHill Homes, and The Pacific Cos. for their proposed Coyote Creek Urban Village project on Seely Avenue, as well as to Federal Realty for its long-planned 258-unit development at 358 Hatton St. near Santana Row.
The move is part of San Jose’s multifamily housing incentive program, launched after the city saw no new construction starts last year for market-rate multifamily buildings over 20 units. Rising construction costs and high interest rates have stalled development throughout the region.
The incentive program offers in-lieu fee waivers and a 50% reduction in construction taxes for up to 1,800 units in designated growth areas. Eligible projects must have submitted complete applications by June 2022.
Patrick McMahon, senior vice-president at Federal Realty, said the city’s support is crucial to reviving long-delayed projects
“We’ve been working on this project – 258 units on Hatton Street at Santana Row – for a very long time,” McMahon said. “This package of economic incentives is the tool, is the lever that will enable this project to move forward now, versus continuing to remain on hold for the indefinite future.”
City officials say these incentives are designed to counteract broader economic conditions that have chilled new housing starts, particularly in high-cost cities like San Jose.
The city has prioritized development in specific growth zones, such as the Coyote Creek Urban Village, as part of its strategy to meet regional housing goals while building more dense, transit-accessible communities.
