SAW:GAR:MMV
02-12-2026
T-51531/2284483
Council Agenda: 02-24-2026
Item No.: 8.5
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
RESOLUTION NO. ______________
ADOPT A RESOLUTION OF THE COUNCIL OF THE CITY
OF SAN JOSE (1) AUTHORIZING THE HOUSING
DIRECTOR, OR HIS DESIGNEE, TO NEGOTIATE AND
EXECUTE ONE OR MORE MASTER -LEASE
AGREEMENTS, OCCUPANCY AGREEMENTS, OR
SIMILAR INSTRUMENTS WITH ASJ DEVELOPMENT, LLC,
OR A RELATED OR AFFILIATED ENTITY, FOR THE
LEASE OF APPROXIMATELY 197 UNITS LOCATED AT
THE CORNER OF REED STREET AND MARKET STREET
FOR AN INITIAL TERM OF FIVE YEARS, WITH TWO FIVE-
YEAR OPTIONS, IN AN AGGREGATE AMOUNT UP TO
AND NOT TO EXCEED $11,209,804 , FOR THE PURPOSE
OF IMPLEMENTING THE LOWER INCOME VOUCHER
AND EQUITY PROGRAM; AND (2 ) AUTHORIZING THE
HOUSING DIRECTOR, OR HIS DESIGNEE, TO
NEGOTIATE AND EXECUTE ALL AGREEMENTS,
AMENDMENTS, MODIFICATIONS, INSTRUMENTS, AND
ALL OTHER DOCUMENTS NECESSARY TO
EFFECTUATE THE MASTER LEASING OR SIMILAR
ARRANGEMENT, LOWER INCOME VOUCHER AND
EQUITY P ROGRAM, AND ANY RELATED EQUITY
PARTICIPATION, FINANCING, OR OPERATIONAL
STRUCTURE FOR ASJ DEVELOPMENT, LLC
WHEREAS, the City of San José (“City”) City Council desires to adopt this resolution for the reasons set forth in the memorandum, dated February 11, 2026, from the Housing Director for the February 24, 2026 City Council meeting; and
WHEREAS, ASJ Development, LLC, a subsidiary holding company of Westbank, or a related or affiliated entity, has proposed a partnership with the City to stabilize the property located at Reed Street and Market Street, a 336-unit residential building in downtown San José experiencing high vacancy rates, through a master-leasing structure combined with an equity participation model; and
SAW:GAR:MMV
02-12-2026
T-51531/2284483
Council Agenda: 02-24-2026
Item No.: 8.5
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
WHEREAS, the Housing Department proposes implementation of the Lower Income and Voucher Equity Program (“LIVE”), a pilot program designed to provide income-restricted rental opportunities for households earning between 80% and 110% of Area Median Income, with a preference for public employees, while preserving existing housing stock; and
WHEREAS, under the proposed program, the City would enter into one or more master- lease agreements, or similar instrument or instruments, for approximately 197 one- and two-bedroom units for an initial term of five years, with two additional five- year options.
The first five -year extension will automatically take effect unless the parties mutually agree otherwise, a structure intended to support financing stability. The second five-year extension will be subject to mutual agreement of the parties and would provide an opportunity to align the term of the agreement with ass et valuation and the timing of the City’s potential exit, including repayment of the City’s investment plus interest; and
WHEREAS, under the proposed financial terms, the City will contribute an aggregate amount not to exceed $11,209,804 over the initial five -year period, representing the difference between rent paid by the City to the owner and the income- restricted rents collected from participating tenants. This funding would pay out monthly based on actual leased units and household subsidy lev els, limiting exposure to the City while ensuring revenue stability for the property during this pilot program. In return for provi ding the operating subsidy, the program anticipates that the City would receive an equity payout equaling the return of the City’s investment plus interest as consideration for piloting the program; and
WHEREAS, m onthly per unit contract rent would be calculated on a per -square-foot basis vouchered to buy -down to affordable rent levels for 80% AMI households up to 110% AMI households. Annual rent escalations would be limited to the lesser of 3% or Consumer Price Index after an initial flat period and will gradually scale up to market rate SAW:GAR:MMV
02-12-2026
T-51531/2284483
Council Agenda: 02-24-2026
Item No.: 8.5
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
rents over 10 years to eventually return the asset to a market -rate building and exit the asset ownership structure; and
WHEREAS, the master -lease and voucher structure would allow the City to buy down rents to affordable levels, stabilize a distressed downtown asset, and recover the City’s investment, plus interest, through equity participation upon exit from the ownership structure, while preserving much needed housing stock in the downtown area;
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SAN JOSE THAT:
1. The Housing Director, or his designee, is authorized to negotiate and execute one or more master-lease agreements, occupancy agreements, or similar instruments with ASJ Development, LLC , or a related or affiliated entity, for approximately 197 units located at the corner of Reed Street and Market Street, for an initial term of five years with two five-year options, in an aggregate amount not to exceed $11,209,804, to implement the Lower Income and Voucher Equity Program.
2. The Housing Director, or his designee, is further authorized to negotiate and execute all agreements, amendments, modifications, instruments, and documents necessary to effectuate the master -leasing arrangement, the Lower Income and Voucher Equity Program, and any related equity participation, financing, or operational structure for ASJ Development, LLC.
SAW:GAR:MMV
02-12-2026
T-51531/2284483
Council Agenda: 02-24-2026
Item No.: 8.5
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
ADOPTED this _____ day of ___________, 2026, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
MATT MAHAN
Mayor
ATTEST:
TONI J. TABER, MMC
City Clerk