HOUSING DEPARTMENT
January 27, 2026
City Council Meeting
Item: 8.3
Erik L. Soliván
Director
Multifamily Housing
Incentive Program
Item 8.3
Slide 21/27/2026
• Higher-density housing (podium, wrap, tower) shows negative residual land values • Direct construction costs account for approximately 69% of total development costs.
While the rate of escalation has stabilized, the elevated cost baseline persists • San José rents 10-15% below comparable Peninsula markets Slide 31/27/2026
CONTEXT
Key Findings of 2025 Cost of Residential Development Study The Opportunity
• Catalyze projects into construction by offering targeted fee reductions Slide 41/27/2026
Community Engagement
Presented and discussed the Inclusionary Housing Ordinance and announced the Multifamily Housing and Downtown Office-To-Residential [OTR] Conversion Incentive Programs on the following dates:
• At virtual community meetings on October 9 and December 10, 2025 • An in-person meeting on January 14, 2026
• Additional virtual community meetings on January 8 and January 22, 2026 • Recordings of the virtual community meetings were published on the City’s website • Recommendation memorandum was posted on the City’s Council Agenda website for the January 27, 2026, City Council meeting
Slide 51/27/2026
Project Name Total
Units
Deed
Restricted
Fee Reductions
($, million)
Approval
Date
905 N Capitol Avenue 345 17 $4.91 March 2025
498 West San Carlos 278 14 $4.07 May 2025
Santana Row Lot 12 258 13 $4.47 June 2025
Seely Building A 397 20 $6.05 June 2025
Martha Gardens* 166 164 $0.52 N/A
Total 1,444 228 $20.03
(*) Martha Gardens is a 100% affordable development
2025 MHIP PHASE I PRODUCTION
MHIP Program Success Since Inception:
2025 Program Outcomes
• 228 units (over 16%) are deed-
restricted affordable
• Average subsidy: ~$13,872 per
unit
• Over 1,300 construction jobs
created
Slide 6
Current Phase 1 - First 1,800 units
• IHO Requirement: 5% of units up to 110% AMI
• IHO In-Lieu Fee: $0 for mixed compliance
• Construction Taxes: 50% reduction in B&S Tax
and CRMP Tax
• Eligibility: Projects pulling building permits by
December 31, 2025
MHIP CURRENT TO PROPOSED
Proposed Phase 1 Extension - First 3,600 units*
• IHO Requirement: 5% of units up to 110% AMI
• IHO In-Lieu Fee: $0 for mixed compliance
• Construction Taxes: 50% reduction in B&S Tax
and CRMP Tax
• Eligibility: Projects pulling building permits by
February 28, 2027
*Other eligibility criteria remain the same
1/27/2026
Slide 71/27/2027
Phase 2 Benefits - Additional units beyond 3,600
(Sustained Support)
• IHO Requirement: 5% of units up to 110% AMI
• IHO In-Lieu Fee: $0 for mixed compliance
• Construction Taxes: 25% reduction in B&S Tax
• Eligibility: Projects on the approved Eligible Projects list *Other eligibility criteria remains the same
MHIP CURRENT TO PROPOSED
Slide 81/27/2026
Project Name Address Total
Units Deed Restricted Developer
Gifford 313 Gifford Ave 276 14 Urban Catalyst
3896 Stevens Creek 3896 Stevens Creek Blvd 540 27 Holland Partners Echo 147 E Santa Clara 316 16 Urban Catalyst
Skyline at Tamien Phase II 1325 Lick Ave 65 3 Swenson/Republic Urban Icon 147 E Santa Clara 310 16 Urban Catalyst
WSC Apartments 1470 W. San Carlos St 213 11 WSC Development 211 River Oaks 211 River Oaks Pkwy 505 25 Valley Oak Partners Total 2,225 112
MHIP PHASE I EXTENSION
Underwritten Applications
Slide 91/27/2026
• Market-rate housing is serving
the middle-income bracket of
households
• Rent for underwritten projects
fall on the affordability scale
Underwritten Projects AMI Band
MHIP PHASE I EXTENSION
AMI Level 4 Person
80% $159,550
100% $195,200
110% $214,720
Area Median Income Thresholds
80%
AMI
110%
AMI