101 W. Santa Clara St., San Jose, CA 95113 | sjchamber.com | 408-291-5250 | [email protected]
January 21, 2026
City of San Jose City Council
200 E. Santa Clara St.
San José, CA 95113
RE: Items 8.2: Downtown Residential Incentive Program Expansion, 8.3: Multifamily Housing Incentive Program Extension, & 8.4: Amendments to the Inclusionary Housing Ordinance.
Dear Mayor Mahan and Honorable Councilmembers,
On behalf of the San Jose Chamber of Commerce, I write in strong support of staff’s proposed updates to the City’s housing policies intended to accelerate housing production, including extensions of the Downtown Residential Incentive Program and the Multifamily Housing Incentive Program, as well as amendments to the Inclusionary Housing Ordinance.
Housing—particularly affordable and workforce housing—is the top concern of our members.
To sustain San Jose’s economic vitality, we must advance policies that meaningfully increase housing production. Meeting the state-mandated goal of 62,000 new homes by 2031 will require decisive action now.
San Jose’s competitiveness depends on its ability to house the workforce that powers our economy. Employers consistently cite housing costs and availability as major barriers to growth, talent recruitment, and long-term investment. Streamlining policies that make it easier, faster, and more cost-effective to build housing is essential to the city’s future.
For these reasons, the Chamber believes the following policy actions will make a measurable difference in supporting San Jose’s short- and long-term growth, vitality, and economic success:
Downtown Residential Incentive Program
The proposed updates appropriately refine the Inclusionary Housing requirements to better support workforce housing, streamline program implementation, and expand eligibility to include commercial-to-residential conversions for mid- and high-rise buildings within the Downtown Planned Growth Area, consistent with City criteria. These changes better align the program with current market conditions and improve long-term feasibility.
Multifamily Housing Incentive Program
The Chamber advocated for the creation of this program in 2024 and remains strongly supportive of its extension. The program has already enabled several multifamily developments to move forward and continues to hold meaningful potential to unlock additional housing production.
101 W. Santa Clara St., San Jose, CA 95113 | sjchamber.com | 408-291-5250 | [email protected]
January 21, 2026
City of San Jose City Council
200 E. Santa Clara St.
San José, CA 95113
RE: Items 8.2: Downtown Residential Incentive Program Expansion, 8.3: Multifamily Housing Incentive Program Extension, & 8.4: Amendments to the Inclusionary Housing Ordinance.
Dear Mayor Mahan and Honorable Councilmembers,
On behalf of the San Jose Chamber of Commerce, I write in strong support of staff’s proposed updates to the City’s housing policies intended to accelerate housing production, including extensions of the Downtown Residential Incentive Program and the Multifamily Housing Incentive Program, as well as amendments to the Inclusionary Housing Ordinance.
Housing—particularly affordable and workforce housing—is the top concern of our members.
To sustain San Jose’s economic vitality, we must advance policies that meaningfully increase housing production. Meeting the state-mandated goal of 62,000 new homes by 2031 will require decisive action now.
San Jose’s competitiveness depends on its ability to house the workforce that powers our economy. Employers consistently cite housing costs and availability as major barriers to growth, talent recruitment, and long-term investment. Streamlining policies that make it easier, faster, and more cost-effective to build housing is essential to the city’s future.
For these reasons, the Chamber believes the following policy actions will make a measurable difference in supporting San Jose’s short- and long-term growth, vitality, and economic success:
Downtown Residential Incentive Program
The proposed updates appropriately refine the Inclusionary Housing requirements to better support workforce housing, streamline program implementation, and expand eligibility to include commercial-to-residential conversions for mid- and high-rise buildings within the Downtown Planned Growth Area, consistent with City criteria. These changes better align the program with current market conditions and improve long-term feasibility.
Multifamily Housing Incentive Program
The Chamber advocated for the creation of this program in 2024 and remains strongly supportive of its extension. The program has already enabled several multifamily developments to move forward and continues to hold meaningful potential to unlock additional housing production.
January 23, 2026
City of San Jose City Council
200 E. Santa Clara St.
San José, CA 95113
Subject: Support for Housing Incentive Programs (Items 8.2 and 8.3) and Inclusionary Housing Ordinance Updates (8.4)
Dear Mayor Mahan and Honorable Councilmembers,
SPUR writes in support of the proposed housing incentive programs, including the expansion of Downtown Residential Incentive Program and the Multifamily Housing Incentive Program extension. We believe that these actions will unlock stalled housing developments, support housing production in Downtown San José, and deliver naturally occurring affordability for middle-income households without deep subsidies, relieving displacement pressures elsewhere in the city.
We are particularly supportive of the expansion of the Downtown Residential Incentive Program because its focus on office-to-residential conversions aligns with SPUR’s Revitalizing San José’s Downtown: Five Strategies. By targeting conversion projects for mid- and high-rise buildings in the Downtown and phasing reductions to key development taxes, the program prioritizes housing that can realistically be delivered in the near term. Simultaneously, we encourage the City to identify complementary and reliable funding strategies for parks, notably Guadalupe River Park and St. James Park, so that housing production and investments in park amenities, maintenance, and public space can advance together.
In supporting the extension of the Multifamily Housing Incentive Program (MHIP), we recognize its demonstrated success over the past year. After a period in which no multifamily projects advanced to construction, MHIP has helped unlock multiple projects now under construction or actively pursuing permits, representing approximately 1,400 units.1 Together, the program’s combination of tax reductions, expanded eligibility, and a readiness-based prioritization could deliver even more housing projects. Although the potential loss of transportation revenue is not assumed in the 2026-2030 Adopted Traffic Capital Program, we want to emphasize the importance of identifying additional, sustainable transportation funding sources to continue supporting the critical link between housing and transportation in the Bay Area’s largest city. 1 City of San José, Staff Memorandum: Multifamily Housing Incentive Program Extension, Agenda Item 8.3. Staff analysis summarizes project status and unit counts.
1098 Lincoln Avenue ∙ SUITE 200 ∙ SAN JOSE, CALIFORNIA 95125 ∙ PHONE (408) 292-1601
January 26, 2026
Honorable Mayor and Members of the San José City Council City of San José
200 East Santa Clara Street
San José, CA 95113
Re: Support for Item 8.3 – Multifamily Housing Incentive Program Phase I Extension and Skyline Phase II
Mayor Mahan and Members of San Jose City Council:
On behalf of Republic Urban Properties (“Republic”), we respectfully submit this letter in strong support of Item 8.3 and urge adoption of the staff recommendation to extend and expand the Multifamily Housing Incentive Program (MHIP). Republic supports this action as a focused and fiscally responsible mechanism to advance housing production during a period when new multifamily construction remains broadly infeasible without targeted relief.
Republic, in joint venture with Swenson Companies, is developing Skyline Phase II, a 65-unit Build-for-Rent townhome community at Tamien LRT/Caltrain Station. Despite being entitled and strategically located near transit and employment, the project has remained stalled for several years due to market conditions that have materially undermined financial feasibility.
Market Conditions and Feasibility Constraints
As documented in the City’s Cost of Residential Development Study, multifamily rental development in San José continues to face a structural feasibility gap. While construction cost escalation has moderated, absolute costs remain elevated, and higher interest rates have significantly increased debt service requirements. These factors have compressed achievable project returns and, in many cases, resulted in negative residual land values for higher-density and urban infill housing types. In addition, achievable rents in San José have not increased at a pace sufficient to offset these cost pressures. As a result, many otherwise well-located and fully entitled projects have been unable to secure construction financing absent fees and tax relief.
Skyline Phase II – Project Costs and Financial Feasibility
Skyline Phase II is designed to respond to these market realities through a lower-density, family-oriented Build-for-Rent product that efficiently leverages existing infrastructure and amenities from the adjacent Skyline Phase I development. The total development cost for Skyline Phase II is approximately $50 million, inclusive of land, hard and soft construction costs, financing, and contingencies—equating to roughly $770,000 per unit. Even with cost efficiencies achieved through shared parking, utilities, and amenities, the project’s baseline economics remain constrained by the broader construction and financing environment.
Under current underwriting, Skyline Phase II is projected to achieve a stabilized return that is near the minimum threshold required to restore financial feasibility, consistent with the City’s MHIP Incentive Program- City of San Jose Item 8.3
City Council Agenda 1-27-26
2 Cost of Residential Development Study findings. Without MHIP incentives, the project would experience a material feasibility shortfall, resulting in a minimum project return insufficient to support new construction and preventing the project from securing necessary financing.
Participation in MHIP is expected to generate over $4.5 million in City fee and construction tax savings to Skyline, representing approximately 5% of total project cost. These savings do not create excess profitability; rather, they directly reduce the feasibility gap by improving project cash flow and restoring residual land value to a level that allows the project to proceed to construction. In practical terms, MHIP incentives are the determining factor between Skyline Phase II remaining stalled or advancing building permits and delivery.
Public Benefits and Alignment with City Objectives
In exchange for MHIP participation, Skyline Phase II will provide on-site affordable units in accordance with program requirements, including homes affordable to households earning up to 100% of Area Median Income. The project delivers family-sized rental housing in a transit- oriented location, addresses an underserved segment of the rental market, and advances the City’s housing, climate, and infill development goals. Once constructed, the project will generate construction employment, long-term property tax revenue, and ongoing economic activity—benefits that would not be realized absent MHIP intervention.
Support for Staff Recommendation
Republic strongly concurs with staff’s conclusion that extending and expanding MHIP is necessary to sustain housing production momentum during continued economic uncertainty.
Item 8.3 reflects a disciplined, data-driven policy response that aligns public incentives with demonstrable feasibility constraints and construction readiness.
For Skyline Phase II, MHIP incentives are essential to restoring financial feasibility and enabling the project to move forward. Approval of Item 8.3 will directly support the delivery of new housing at Tamien Station and ensure that years of planning and private investment translate into real homes for San José residents.
Conclusion
For the reasons outlined above, Republic Urban Properties respectfully urges the Mayor and City Council to approve Item 8.3 and adopt the staff recommendation. Doing so will enable Skyline Phase II and similarly situated projects to proceed to securing equity and debt which will allow for a construction start in the coming months to deliver housing and community benefits at a time when such progress is both challenging and critically needed.
San Jose Downtown Association
28 N. First Street, Suite 1000
San Jose, CA 95113
sjdowntown.com
408.279.1775
January 26, 2026
City Clerk
City of San Jose
200 E. Santa Clara Street
San Jose, CA 95113
Email: [email protected]
Re: Support for Agenda Items 8.2 and 8.3 — Downtown Residential Incentive Program Expansion and Multifamily Housing Incentive Program Phase I Extension
Dear Mayor Mahan and Members of the San Jose City Council:
On behalf of the San José Downtown Association (SJDA), I respectfully submit this letter in strong support of Item 8.2 (Downtown Residential Incentive Program Expansion to Include Commercial- to-Residential Conversion Projects) and Item 8.3 (Multifamily Housing Incentive Program Phase I Extension) on the January 27, 2026, City Council agenda.
Increasing Downtown’s residential population density is paramount to revitalizing San José’s urban core. A vibrant, 18- to 24-hour downtown strengthens the local economy and supports small businesses that continue to struggle amid lasting changes to the daytime economy following the pandemic. A stronger residential presence throughout the day and evening directly increases the pedestrian activity essential to the success of current and future retail, restaurants, cultural destinations, and local services.
Items 8.2 and 8.3 advance this goal by incentivizing housing production while supporting a broad mix of housing types – including affordable, workforce, market-rate, and luxury units – to ensure inclusive growth. By encouraging additional housing in our most walkable areas, these policies also maximize the use of existing public infrastructure, including transit, fire and safety services, and utilities, to support more sustainable growth at a lower per-capita cost.
The commercial office market has experienced fundamental structural shifts since 2020. Item 8.2 responds directly to these conditions by facilitating the conversion of underutilized office space into much-needed housing. Cities across the nation from New York, Cleveland, Detroit, and San Francisco have demonstrated that removing regulatory and financial barriers to commercial-to- residential conversions can accelerate housing production while reactivating downtowns. San Francisco’s recent implementation of SPUR’s office-to-residential conversion recommendations provides a relevant and successful example.
Furthermore, SJDA recommends removing all proposed timeline and unit cap restrictions from
8.2 and 8.3 to extend the effectiveness of these programs and increase likelihood that Downtown achieves its goal of 20,000 residents. There is no point at which Downtown San Jose will be “done,” and development of this magnitude requires long-term clarity and certainty.