"Under the Lower Income Voucher and Equity program approved Tuesday, the city will master-lease nearly 200 units providing a subsidy that will lower rents and create more affordable housing for moderate-income households and enter into an equity agreement that will see San Jose recoup all of its investment, plus interest."
"Both the staff memo and today's presentation highlight the risk of allowing this distressed asset to have its debt be written off at below market values (and how it) could have a broader destabilizing impact to our residential market downtown, lead to decreased valuations, decreased tax revenue down the line and higher construction costs as new investment into the downtown becomes more difficult."
"This council has made clear many times that any future vision for downtown has to include a lot of new housing. Built by Suffolk Construction, the Fay was the first high-rise housing tower constructed in downtown since Miro was completed across from City Hall a few years earlier."
The Fay, a 23-story, 336-unit high-rise that opened in 2024 in San Jose's SoFA District, faced high vacancy rates and bankruptcy despite expectations of transforming downtown. The city approved the Lower Income Voucher and Equity program to master-lease nearly 200 units, providing rent subsidies for moderate-income households while securing an equity agreement ensuring the city recoups its investment plus interest. This intervention aims to stabilize the distressed asset and restore investor confidence in downtown projects. Officials emphasized that allowing the property's debt to be written off at below-market values could destabilize the residential market, decrease property valuations, reduce tax revenue, and increase construction costs for future downtown development. The Fay was the first high-rise housing tower built downtown in years, reflecting the city's broader strategy to revitalize downtown through mixed live, work, and play dynamics.
Read at www.mercurynews.com
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