TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Erik L. Soliván
Chris Burton
John Ristow
SUBJECT: See Below DATE: August 11, 2026
Approved
Date:
8/18/26
COUNCIL DISTRICT: 1
SUBJECT:
Multifamily Housing Incentive Program Residential Tax and Fee Waiver for the Development Project Located at 3896 Stevens Creek Blvd
RECOMMENDATION
(a) Conduct a public hearing to consider for approval an economic development tax and fee waiver of the Inclusionary Housing Ordinance in-lieu fee and a reduction in construction taxes in an amount of up to $6,934,618 for Phase 1 of the residential development located at 3896 Stevens Creek Blvd, which meets the requirements of the Multifamily Housing Incentive Program, pursuant to California Government Code Section 53083 and Open Government Resolution No. RES2024-99 Section
2.3.2.6.C.
(b) Adopt a resolution approving the tax and fee waiver in an amount up to $6,934,618 for Phase 1 of the 3896 Stevens Creek Blvd residential development and authorizing the Housing Director, or their designee, to negotiate and execute documents and document amendments related to implementing the Multifamily Housing Incentive Program, such as construction progress agreements.
COUNCIL AGENDA: 9/15/26
FILE: 26-949
ITEM: 8.1
HONORABLE MAYOR AND CITY COUNCIL
August 11, 2026
Subject: Multifamily Housing Incentive Program Residential Tax and Fee Waiver for the Development Project Located at 3896 Stevens Creek Blvd
SUMMARY AND OUTCOME
In compliance with the Multifamily Housing Incentive Program (MHIP), the City Council’s approval of the staff recommendation will provide a total tax and fee reduction in the amount of $6,934,618 for the 3896 Stevens Creek Blvd development.
BACKGROUND
On December 10, 2024, the City Council adopted the MHIP, 1 which allows a reduction
of the Inclusionary Housing Ordinance (IHO) in-lieu fee and certain construction taxes.
Specifically, MHIP allows a 50% reduction to the Building and Structure Construction Tax (B&S) and the Commercial, Residential, Mobile Home Park (CRMP) tax for the first 1,500 units that obtain a building permit by December 31, 2025, and a 25% reduction in the B&S to subsequent projects that obtain a City building permit after the first 1,500 units, or on or after January 1, 2026. MHIP also extends the duration of the $0 IHO in- lieu fee reduction and expands eligibility to include mixed-compliance projects outside of downtown high-rise developments. Previously, this IHO in-lieu fee applied only to high- rise developments located downtown.
On May 13, 2025,
2 the MHIP ordinance was amended to increase the number of units that obtain a building permit by December 31, 2025, that are eligible for the 50% reduction to B&S and CRMP taxes from 1,500 to 1,800 units. The amended MHIP ordinance became effective on June 20, 2025.
The most recent amendment to the MHIP, approved by the City Council on January 27, 2026, included an increase in unit capacity to 3,600 units and extended the Phase I benefit application deadline to February 28, 2027. These changes became effective March 5, 2026.
1 File: 24-2305, Item #: 8.2, Meeting Date: December 10, 2024, Item Title: Multifamily Housing Incentive Program and North San José Park Fee Realignment, Web Link:
https://sanjose.legistar.com/View.ashx?M=F&ID=13583575&GUID=F101D3D4-D65C-407D-9B6C- 234BDE8EB26A
2 File: 25-503, Item #: 8.3, Meeting Date: May 13, 2025, Item Title: Public Hearing for Amendments to the Multifamily Housing Incentive Program, Web Link:
https://sanjose.legistar.com/View.ashx?M=F&ID=14145280&GUID=AA00F98A-07E5-4ACA-BC41- C3B11D307CB4
HONORABLE MAYOR AND CITY COUNCIL
August 11, 2026
Subject: Multifamily Housing Incentive Program Residential Tax and Fee Waiver for the Development Project Located at 3896 Stevens Creek Blvd
ANALYSIS
3896 Stevens Creek Blvd Description
The 3896 Stevens Creek Blvd development is a 4.72-acre site that, upon completion, will be improved with two eight-story buildings containing 575 residential units, 13,627 square feet of ground-floor retail space, and 778 parking spaces. Holland Partner Group and its affiliates (collectively, the “Developer”) will deliver the project in two phases as shown in Table 1 and Figure 1 below. The Developer is currently seeking MHIP consideration only for the first phase (“Phase 1” or “Building 2”) to account for its phasing plan. The Developer anticipates starting grading in September 2026, followed by laying foundations for Phase 1 in November 2026. Building 2 includes five stories of residential space over three floors of parking with ground-floor retail and amenity space.
Construction of Phase 2 will start approximately 12 months after Phase 1. The unit mix contains 28 studios (9%), 221 one-bedroom units (71%), and 62 two-bedroom units (20%). The 50% Area Median Income affordable units include one studio unit, 12 one- bedroom units, and three two-bedroom units, totaling 16 units.
Table 1 – Development Phasing
Project Phase Building
Building Area
(Square Feet)
Residential
Units
Retail Space
(Square Feet)
Phase 1* 2 469,763 311 6,033
Phase 2 1 441,614 264 7,594
Total 911,377 575 13,627
*Only Phase 1 is currently considered for incentives
HONORABLE MAYOR AND CITY COUNCIL
August 11, 2026
Subject: Multifamily Housing Incentive Program Residential Tax and Fee Waiver for the Development Project Located at 3896 Stevens Creek Blvd
Figure 1- 3896 Stevens Creek Blvd
Inclusionary Housing Ordinance
In 2010, the City Council adopted the IHO, which requires all residential developers constructing new or modified rental or for-sale residential units to comply with a base requirement of 15% on-site affordable housing units within the development. Other compliance options are also allowed under the IHO, at the developer’s election. The existing IHO Mixed Compliance option allows developers to pay a reduced in-lieu fee and provide 5% of their total units as new restricted affordable housing.
The IHO in-lieu fee methodology is based on a development’s net residential square footage calculation. The current fiscal year fee for Mixed Compliance properties providing 5% of units with restricted rents affordable to households at or below 110% area median income is $21.64 per net residential square foot for developments located in strong market areas.
3 Table 2 provides a summary of the projected total IHO in-lieu fee waived for Phase 1 of the 3896 Stevens Creek Blvd development.
3 "Strong market area" means a market area or other geographical area designated by or pursuant to a City Council resolution or policy based on findings, including findings regarding residential building activity levels for market-rate housing.
HONORABLE MAYOR AND CITY COUNCIL
August 11, 2026
Subject: Multifamily Housing Incentive Program Residential Tax and Fee Waiver for the Development Project Located at 3896 Stevens Creek Blvd
Table 2 – Estimated IHO In-Lieu Fees
Development Market Area
2026-2027 IHO
In-Lieu Fee Rate for
Mixed Compliance
Net
Residential
Square
Footage
IHO In-Lieu
Fee Estimate
3896 Stevens Creek
Blvd Phase 1 Strong $21.64 253,173 $5,478,664
Construction Taxes
The City construction taxes include the B&S and the CRMP, both of which are based on the construction valuation derived from the most current building valuation data table published by the International Code Council for the residential portion of developments.
The B&S tax rate on residential building construction valuation is 1.54%, and the CRMP tax rate on residential building construction valuation is 2.42%, for a combined tax of
3.96%. Proceeds from these taxes are used to fund transportation capital improvement projects, which may include repairs and redevelopment of existing transportation-related projects and improvements, such as pavement maintenance, complete streets, pedestrian safety, and traffic calming projects. Table 3 provides an overview of the construction taxes for the subject development.
Table 3 – Construction Tax Overview
Development
Standard B&S
and CRMP
Construction
Taxes
50% Tax
Reduction4
B&S and CRMP
Taxes to be
Received
3896 Stevens Creek Blvd $2,911,909 $1,455,954 $1,455,954
Table 4 provides a summary of the total proposed tax and fee waiver for Phase 1 of the 3896 Stevens Creek Blvd development.
Table 4 – Proposed Tax and Fee Waiver
IHO In-Lieu Fee Waiver $5,478,664
50% Reduction of B&S and CRMP Construction Taxes on
Development’s Residential Portion $1,455,954
Total Tax Reduction and Fee Waiver $6,934,618
4 Under the MHIP, the 50% reduction to the B&S construction tax and the 50% reduction to the CRMP construction tax is only applicable to the residential portion of B&S and CRMP c onstruction taxes.
HONORABLE MAYOR AND CITY COUNCIL
August 11, 2026
Subject: Multifamily Housing Incentive Program Residential Tax and Fee Waiver for the Development Project Located at 3896 Stevens Creek Blvd
Multifamily Housing Incentive Program Implementation Progress
Since the program’s inception, nine projects have qualified for MHIP, totaling 3,016 units, and approval of 3896 Stevens Creek Blvd will bring the total to 3,327 units (see Table 5).
Beyond the direct housing production, this project is generating substantial community benefits for San José. The construction phase alone is creating over 500 full-time construction jobs, providing critical employment opportunities in the building trades.
Once completed, these projects will generate increased annual property tax revenue, supporting essential City services. Additionally, by focusing development on urban infill locations near transit and existing infrastructure, these projects advance the City’s Climate Smart San José goals by reducing vehicle miles traveled and minimizing sprawl.
Table 5 – MHIP Implementation Progress
Development Market-Rate Affordable Total
905 North Capitol Avenue 328 17 345
The Aquino at 498 West San Carlos Street 264 14 278
Santana Row Lot 12 at 358 Hatton Street 245 13 258
0 Seely Building A 377 20 397
Martha Gardens* 2 164 166
El Paseo de Saratoga 733 39 772
0 Seely Avenue Building B 353 19 372
0 Seely Affordable Building* 1 135 136
210 Baypointe Parkway 277 15 292
3896 Stevens Creek Blvd** 295 16 311
Total Units*** 2,875 452 3,327
* These units will not count toward the IHO MHIP allocation, as the project is 100% affordable. ** Development discussed in this memorandum.
*** Phase I benefits under MHIP set capacity at 3,600 units with building permits by 2/28/2027.
EVALUATION AND FOLLOW-UP
Staff will monitor project construction to ensure the MHIP requirements are fulfilled. The development must still comply with IHO requirements, including its Affordable Housing
HONORABLE MAYOR AND CITY COUNCIL
August 11, 2026
Subject: Multifamily Housing Incentive Program Residential Tax and Fee Waiver for the Development Project Located at 3896 Stevens Creek Blvd
Compliance Plans and recordation of an Inclusionary Housing Agreement against the site prior to building permit issuance.
FISCAL IMPACTS
The project aligns with the City’s Economic Development Strategy to spur the development of multifamily residential in identified growth areas within the City. It is important to note that the 2026-2027 Adopted Operating Budget does not assume the receipt of any IHO in-lieu fees and the lower construction tax level has already been incorporated into the 2027-2031 Adopted Capital Improvement Program; there are no budgetary impacts resulting from these incentives. Further, without these incentives, it is unlikely that the project would move forward at this time.
Table 6 addresses the requirements set forth in the City’s Resolution No. RES2024-99 for the publication of information related to an economic development waiver of more than $1,000,000.
Table 6 – City of San José Cost/Benefit Evaluation
a) Accountability
The MHIP suspends 50% of construction taxes for eligible developments and allows for payment of taxes to be
delayed until the issuance of the first Certificate of
Occupancy, and an IHO in-lieu fee reduction to $0 for
projects meeting certain conditions.
b) Net fiscal impact
The IHO in-lieu fee waived is $5,478,664 for the 3896
Stevens Creek Blvd development. However, the project is estimated to generate one-time revenue of $1,455,954 in construction taxes. The construction tax forgone revenue is $1,455,954.
c) Net job impact
The 3896 Stevens Creek Blvd development will create
500 full-time jobs. 40% of these construction jobs will generate an annual salary above $80,000 and 60% will
generate an annual salary between $60,000 and $80,000.
The recipient will provide health insurance to all
employees.
HONORABLE MAYOR AND CITY COUNCIL
August 11, 2026
Subject: Multifamily Housing Incentive Program Residential Tax and Fee Waiver for the Development Project Located at 3896 Stevens Creek Blvd
d) Housing impact
The 3896 Stevens Creek Blvd development will deliver
295 new market-rate housing units, and 5% or 16 very
low-income units with a maximum price at or below 50%
area median income. Based on the reported net job
impact above, zero extremely low-income housing units
may be required for employees hired to implement the
project.
e) Source of funds
The program does not provide funds directly to the
development. It is a suspension of 50% construction
taxes. The development is estimated to generate
$1,455,954 in one-time construction tax revenue.
f) Neighborhood
impacts
No significant impacts are anticipated on traffic or public infrastructure.
Table 7 addresses the requirements set forth in the State of California Assembly Bill 562 (Government Code 53083) for the publication of information related to an economic development subsidy and a public hearing. As the state only requires the evaluation of tax revenue, the IHO fee is not discussed below.
Table 7 – State of California Cost/Benefit Evaluation
a) Name/address of
benefiting business entity
Holland Partner Group
1970 Broadway, Suite 300
Oakland, CA 94612
b) Start and end dates for
the subsidy
Projects are eligible for the MHIP subsidy after the
issuance of building permits prior to February 28,
2027. The subsidy will become finalized upon
payment of taxes prior to the issuance of the first
Certificate of Occupancy, subject to conditions
therein.
c) Description of the
subsidy, estimated total
amount of expenditure of
public funds or revenue
lost
The City shall suspend 50% of construction taxes on
the development constructed and shall allow
payment of the taxes to be delayed until the issuance
of the Certificate of Occupancy. The estimated
economic development subsidy is $1,455,954.
HONORABLE MAYOR AND CITY COUNCIL
August 11, 2026
Subject: Multifamily Housing Incentive Program Residential Tax and Fee Waiver for the Development Project Located at 3896 Stevens Creek Blvd
d) Statement of public
purpose
To encourage the development of multifamily
residential developments, spurring increased retail
amenities, attracting more employers, increasing
transit use, and improving public life in San José. The aggregation of these factors will increase the
economic vitality of the City and will translate to
increased property tax and sales tax revenue for the
City.
e) Projected tax revenue The development is estimated to generate one-time revenue of $1,455,954 in construction taxes.
f) Estimated number of jobs
created, broken down by
full-time, part-time, and
temporary positions
Based on estimates from the developer, the 3896
Stevens Creek Blvd development will create
approximately 500 full-time jobs.
COORDINATION
This memorandum has been coordinated with the City Attorney’s Office and the City Manager’s Budget Office.
PUBLIC OUTREACH
The memorandum will be posted on the City Council Agenda website for the September 15, 2026 City Council meeting.
BOARD, COMMISSION, COMMITTEE RECOMMENDATION AND INPUT
No board, commission, or committee recommendation or input is associated with this action.
CEQA
Addendum to the 3896 Stevens Creek Boulevard project Environmental Impact Report (Resolution No. 79922), File Nos. MP25-003 and ER25-024.
HONORABLE MAYOR AND CITY COUNCIL
August 11, 2026
Subject: Multifamily Housing Incentive Program Residential Tax and Fee Waiver for the Development Project Located at 3896 Stevens Creek Blvd
PUBLIC SUBSIDY REPORTING
This item includes a public subsidy as defined in the City’s Open Government Resolution section 2.2.10 and is in the amount of $1,000,000 or more. An informational memorandum, as described in Open Government Resolution section 2.3.2.6.C, will be released at least 28 calendar days prior to the City Council meeting at which the subsidy will be considered. The Director of the City Manager’s Office of Economic Development and Cultural Affairs has been informed of this subsidy to ensure that it is tracked appropriately.
/s/ /s/
Erik L. Soliván Chris Burton
Director, Housing Department Director, Planning, Building and Code Enforcement Department
/s/
John Ristow
Director, Transportation Department
For questions, please contact Banu San, Deputy Director, Housing Department, at [email protected].