TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Erik L. Soliván
SUBJECT: See Below DATE: November 24, 2025
Approved
Date:
12/3/25
COUNCIL DISTRICT: 3
SUBJECT: Actions Related to the Reallocation of Acquisition Funding to the Construction-Permanent Loan for the Gateway Tower Affordable Housing Development
RECOMMENDATION
(a) Accept the staff report on reallocation of the Gateway Tower loan commitment. (b) Adopt a resolution authorizing the reallocation of acquisition funding to the construction-permanent loan to $38,440,000.
SUMMARY AND OUTCOME
City Council approval of the staff recommendation would enable Core Affordable Housing, LLC, or an affiliated development entity to develop the Gateway Tower affordable housing development (Development) located at 445, 465, and 493 South First Street and 460, 470, 480 South Market Street, which would provide 218 affordable rent-restricted apartments and two unrestricted manager’s units.
BACKGROUND
On September 30, 2025, City Council approved funding commitments for the Development, including a $20,270,000 construction-permanent loan and $18,170,000 for site acquisition (land purchase). The total approval amount was for $38,440,000 of City funds for the site.
COUNCIL AGENDA: 12/16/25
FILE: 25-1314
ITEM: 2.16
HONORABLE MAYOR AND CITY COUNCIL
November 24, 2025
Subject: Actions Related to the Reallocation of Acquisition Funding to the Construction - Permanent Loan for the Gateway Tower Affordable Housing Development
ANALYSIS
Updates to City Funding Commitment
After further discussions with the County of Santa Clara, the City and the County of Santa Clara have determined that due to an existing County of Santa Clara option to purchase the Development site, the County of Santa Clara will move forward with the acquisition and ground lease of the site without incurring the administrative burden of transferring the purchase option to the City. As a result, staff recommends reallocating the previously approved City funds by City Council from acquisition to the construction- permanent loan, resulting in the City receiving a higher loan repayment in residual receipts from the project. This staff recommendation does not change the total City funding commitment of these already approved funds.
The Housing Department recommends the following changes in the use of City funds, shown in Table 1 (previously approved) and Table 2 (proposed reallocation) below. If the staff recommendation is approved, the total City funding commitment to the Development would remain at $38,440,000
Table 1 – City Funding Commitments Approved on September 30, 2025
Low- and
Moderate-
Income
Housing
Asset Fund
Real
Property
Transfer Tax
(Measure E)
Fund
Inclusionary
Fee Fund Total
Construction-
Permanent Loan $17,970,000 $- $2,300,000 $20,270,000
Land Purchase $2,170,000 $14,000,000 $2,000,000 $18,170,000 Total $20,140,000 $14,000,000 $4,300,000 $38,440,000
Table 2 – Proposed City Funding Commitment Updates
Low- and
Moderate-
Income
Housing
Asset Fund
Real
Property
Transfer Tax
(Measure E)
Fund
Inclusionary
Fee Fund Total
Construction-
Permanent Loan $20,140,000 $14,000,000 $4,300,000 $38,440,000 Land Purchase $- $- $- $-
Total $20,140,000 $14,000,000 $4,300,000 $38,440,000
HONORABLE MAYOR AND CITY COUNCIL
November 24, 2025
Subject: Actions Related to the Reallocation of Acquisition Funding to the Construction - Permanent Loan for the Gateway Tower Affordable Housing Development
Next Steps
The City would facilitate a construction financing closing by February 2026.
Construction on the Development is estimated to begin in March 2026 and conclude approximately 24 months later.
EVALUATION AND FOLLOW-UP
The Housing Department posts a dashboard on the status of its affordable properties undergoing rehabilitation or construction on its website. 1 When the Development
successfully closes construction financing, it will be included in the dashboard.
COST SUMMARY/IMPLICATIONS
The recommendations in this memorandum would reallocate previously approved acquisition funding to provide a construction-permanent loan commitment of $38,440,000 to Core Affordable Housing, LLC, or an affiliated development entity, for the Development. The loan would be supported by the Low- and Moderate-Income Housing Asset Fund, Real Property Transfer Tax Fund, and Inclusionary Fee Fund.
COORDINATION
This memorandum has been coordinated with the City Attorney's Office and the City Manager’s Budget Office.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the December 16, 2025 City Council meeting.
COMMISSION RECOMMENDATION AND INPUT
No commission recommendation or input is associated with this action.
1 Housing Department affordable properties webpage, Web Link: https://www.sanjoseca.gov/your- government/departments-offices/housing/homelessness-program-dashboard
HONORABLE MAYOR AND CITY COUNCIL
November 24, 2025
Subject: Actions Related to the Reallocation of Acquisition Funding to the Construction - Permanent Loan for the Gateway Tower Affordable Housing Development
CEQA
Supplemental Environmental Impact Report for the Gateway Tower Mixed-Use Development Project (Resolution No. 78005), and Addenda, thereto.
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/
Erik L. Soliván
Director, Housing Department
For questions, please contact Banu San, Deputy Director, Housing Department, at [email protected]
.