The San Jose City Council recently passed a measure granting substantial tax breaks to housing developers to stimulate construction in the city. A new 345-apartment complex will receive nearly $5 million in tax cuts and be allowed to designate only 5% of units as affordable, bypassing typical requirements. This initiative is part of the city's broader Multifamily Housing Incentive Program, which aims to encourage development following a year with no new multifamily projects. While officials advocate for the program's flexibility, critics argue it undermines affordable housing goals.
"Last year we had zero new multifamily housing starts, zero, not one building permit," Mayor Matt Mahan said at the meeting. "We have to be able to rightsize our fees, processes and regulations to figure out how we're going to be flexible, meet the market and allow that investment to flow if we really want housing."
City housing department officials reported 336 multifamily homes were built in 2023 and 782 were constructed in 2022.
The current program does a 50% reduction in the building and structure construction tax, as well as the commercial, residential, mobile park building tax, and then the (affordable housing) in lieu fee reductions, with at least 5% affordable homes being built."
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