TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Erik L. Soliván
Jim Shannon
SUBJECT: See Below DATE: September 14, 2026
Approved
Date:
9/25/2026
COUNCIL DISTRICT: 6
SUBJECT: Actions Related to the Affordable Housing Development Located at 1510 North 1st Street
RECOMMENDATION
(a) Adopt a resolution:
(1) Approving a construction-permanent loan commitment of up to $5,700,000 in the Low and Moderate Income Housing Asset Fund, or such other special funds as the City may designate, to the Santa Clara County Housing Authority or an affiliated development entity for the rehabilitation of 1510 North First, formerly known as Comfort Suites Hotel, located at 1510 North 1 st Street; and
(2) Authorizing the Director of Housing, or his designee, to negotiate and execute loan documents and all other documents, including any amendments thereto, related to City financing for the rehabilitation of 1510 North First, formerly known as Comfort Suites Hotel, located at 1510 North 1
st Street.
(b) Adopt the following 2026-2027 Appropriation Ordinance amendments in the Low and Moderate Income Housing Asset Fund:
(1) Decrease the Housing Project Reserve by $5,700,000; and (2) Increase the Housing Loans and Grants appropriation to the Housing Department by $5,700,000.
SUMMARY AND OUTCOME
Approval of the staff recommendation will enable the Santa Clara County Housing Authority (SCCHA), or an affiliated development entity, to rehabilitate the former Comfort Suites at 1510 North 1
st Street (Development) into extremely low-income
COUNCIL AGENDA: 10/6/26
FILE: 26-1034
ITEM: 8.1
HONORABLE MAYOR AND CITY COUNCIL
September 14, 2026
Subject: Actions Related to the Affordable Housing Development Located at 1510 North 1st Street
affordable housing consisting of 57 rent-restricted homes and one manager's unit on a
0.44-acre site.
SCCHA submitted its proposal in response to the Housing Department's June 2025 Round 1 Notice of Funding Availability Addendum to its rolling Request for Proposals issued April 14, 2025. The Development is the third project to receive an award under the Notice of Funding Availability Addendum.
BACKGROUND
The Development is a conversion of a former three-story Comfort Suites hotel into housing designed to serve residents with social service needs, converting 58 motel units into 57 affordable units and one manager’s unit. Planned renovations include the installation of kitchenettes in each unit, accessible restroom upgrades, modifications to the entry ramp, installation of a new parking garage gate, flooring upgrades, and other minor repairs. No extension of the existing footprint will occur.
The City will place an affordability covenant on the site for a term no shorter than 55 years as part of the requirements of the City’s funding. The affordability restriction will not be subordinated to any deeds of trust or instruments with the power of sale.
Table 1 provides a detailed summary of the City’s proposed funding commitment to the Development and its overall cost. The total development cost of $31,254,006 includes the property acquisition cost of $10,250,200.
Table 1 – Summary of City Funding and Total Cost for the 1510 North First Development
Development
Name City Loan
City
Subsidy
Per Unit
Total
Units
Project-
Based
Vouchers
Total
Development
Cost
Total
Development
Cost/Unit
1510 North
1st Street $5,700,000 $98,276 58 57 $31,254,006 $538,862
HONORABLE MAYOR AND CITY COUNCIL
September 14, 2026
Subject: Actions Related to the Affordable Housing Development Located at 1510 North 1st Street
ANALYSIS
Development Description
All 57 units will be studios reserved for households at or below 30% of area median income, and all will be supported by project-based vouchers serving a combination of extremely low-income housing and special needs households requiring supportive services.
SCCHA has committed 57 Housing Choice Vouchers to the site and will enter into a Housing Assistance Payments Contract for these units with an initial term of 20 years and an option to extend for up to an additional 20 years.
Table 2 – Summary of the Development’s Maximum Income, Rent Limit, and Unit Mix
30% Area Median Income
UNIT SIZE Units Max Income* Rent
Limits
MANAGER
UNIT TOTAL
0-BD 57 $46,275 $1,156 0 57
2-BD 0 N/A N/A 1 1
Total 57 1 58
* Maximum rent and income limits are based on California Tax Credit Allocation Committee occupancy guidelines of 1.5 persons per bedroom.
Financing
The total development cost, including property acquisition costs, is $31.25 million. If approved, the City will commit up to $5,700,000, or $98,276 per unit, as a construction- to-permanent loan funded by the Low and Moderate Income Housing Asset Fund.
The City's commitment will leverage additional sources, including SCCHA Housing Choice Voucher funds, federal tax credit equity, and private construction financing, as shown in Tables 3 and 4 below.
HONORABLE MAYOR AND CITY COUNCIL
September 14, 2026
Subject: Actions Related to the Affordable Housing Development Located at 1510 North 1st Street
Table 3 – Summary of Construction Funding Sources
Construction Period
Sources Entity Construction Period
Amount
% of Total
Development
Cost
Taxable Construction
Loan Private $10,564,963 36.11%
SCCHA Public $9,544,571 32.63%
City of San José Public $5,700,000 19.48%
Accrued/Deferred Interest Public $552,335 1.89%
Federal Tax Credit Equity
(9%) Private $2,889,528 9.88%
Total $29,251,397 100%
Table 4 – Summary of Permanent Funding Sources
Permanent Sources Entity Permanent
Amount
% of Total
Development Cost
SCCHA Public $10,666,571 34.13%
City of San José Public $5,700,000 18.24%
Accrued/Deferred Interest Public $552,335 1.77%
Federal Tax Credit Equity (9%) Private $14,335,100 45.87% Total $31,254,006 100%
Next Steps
The California Tax Credit Allocation Committee awarded the Development an allocation of Low-Income Housing Tax Credits on June 22, 2026. Construction financing is expected to close by November 2026, with construction beginning in December 2026 and completing approximately 14 months later.
If the staff recommendation is approved, the Housing Director, or his designee, will negotiate final terms and execute the loan documents consistent with the City Council's approval, under the authority delegated in San José Municipal Code Section 5.06.335. 1 1 Section 5.06.335 of the San José Municipal Code is the authority to negotiate and execute council- approved loans, grants, and programs.
HONORABLE MAYOR AND CITY COUNCIL
September 14, 2026
Subject: Actions Related to the Affordable Housing Development Located at 1510 North 1st Street
EVALUATION AND FOLLOW-UP
The Housing Department maintains a dashboard on its website tracking the status of affordable properties under rehabilitation or construction. 2 If the recommended actions
are approved and construction financing closes, the Development will be added to the dashboard.
FISCAL IMPACTS
The recommendations in this memorandum will provide a construction-permanent loan commitment of $5,700,000 to SCCHA or an affiliated development entity for the Development. The City loan will be funded through the Low and Moderate Income Housing Asset Fund (Fund 346). The actions involve allocating $5,700,000 from the Housing Project Reserve to the Housing Loans and Grants appropriation for disbursement.
BUDGET REFERENCE
The table below identifies the fund and appropriations to fund the loan recommended as part of this memorandum:
Fund
#
Appn.
#
Appropriation
Name
Total
Appropriation
Recommended
Budget Action
Amount
for
Contract
2026-2027
Proposed
Operating
Budget
Page*
Last
Budget
Action
(Date, Ord.
No)
346 8437
Housing
Project
Reserve
$30,630,196 ($5,700,000) NA 917 6/16/2026
31336
346 0070 Housing Loans
and Grants $59,600,000 $5,700,000 $5,700,000 916 6/16/2026 31336
* The 2026-2027 Proposed Operating Budget was approved on June 9, 2026, and adopted on June 16, 2026, by the City Council.
COORDINATION
The preparation of this memorandum was coordinated with the City Attorney's Office.
2 Housing Department affordable properties webpage, Web Link: https://www.sanjoseca.gov/your- government/departments-offices/housing/homelessness-program-dashboard
HONORABLE MAYOR AND CITY COUNCIL
September 14, 2026
Subject: Actions Related to the Affordable Housing Development Located at 1510 North 1st Street
PUBLIC OUTREACH
This memorandum will be posted on the City Council Agenda website for the October 6, 2026 City Council meeting.
BOARD, COMMISSION, COMMITTEE RECOMMENDATION AND INPUT
No board, commission, or committee recommendation or input is associated with this action.
CEQA
Categorically Exempt, File No. ER24-246 (Exemption for Housing Rehabilitation Projects), CEQA Guidelines Section 15301, Existing Facilities. (The change in use to permanent supportive housing is ministerially approved under the Housing Accountability Act Section 65589.5 and San José Municipal Code Section 20.200.1265 and exempt from CEQA review.)
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 JIM SHANNON
Director, Housing Department Budget Director
For questions, please contact Banu San, Deputy Director, Housing Department, at [email protected].