San Jose to Lease Units in Downtown High-rise for Affordable Housing

A San Jose pilot program uses city funds to subsidize resident rents in a newly redeveloped building, reports Devan Patel in The Mercury News.

“Under the Lower Income Voucher and Equity program approved Tuesday, the city will master-lease nearly 200 units — providing a subsidy that will lower rents and create more affordable housing for moderate-income households — and enter into an equity agreement that will see San Jose recoup all of its investment, plus interest,” Patel explains.

Like other cities, San Jose is looking to revitalize its downtown, whose occupancy rate has not fully recovered since the Covid-19 pandemic. The new The Fay apartment building, likewise, struggled to fill its market-rate units after it was completed. “According to data from the city, the tower only leased 31% of its one-bedroom units and 41% of its two-bedroom apartments.”

The new pilot program will invest $11.2 million over a five-year period to lease 197 units. “The city will fund the program with funds generated by Measure E — the voter-approved property transfer tax initiative dedicated to affordable housing, homelessness prevention, and support programs.”