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Thursday, April 25, 2024

San José apartment complex converted into affordable housing

San José apartment complex converted into affordable housing
The San Jose City Council unanimously approved a financing package allowing the nonprofit arm of Catalyst Housing Group to purchase a complex, giving the green light to a developer initiative that includes converting a market-rate apartment complex into The Alameda.

By José Geha. San Jose Spotlight.

San Jose leaders are giving the green light to a developer initiative that includes converting a market-rate apartment complex in La Alameda into affordable apartments.

The San Jose City Council on Tuesday unanimously approved a financing package allowing the nonprofit arm of Larkspur-based Catalyst Housing Group to purchase the complex. Councilman Dev Davis was absent.

The council approved Catalyst getting $100 million in bond funds from a joint powers group in California to buy the building and convert it into affordable or below-market-rate apartments.

The California Municipal Finance Authority, made up of a number of the state's public agencies, works to promote economic development, employment and housing development, among other missions, and will issue the bonds. The city is not directly involved in the transaction or contributing funds to support the change.

The building, called Modera The Alameda in San Jose, is located at 787 The Alameda and features 168 apartments, a “resort-inspired” pool, a rooftop terrace and other amenities.

City officials said the plans are a victory because San Jose will not need to contribute any funds directly to the project. The result will be 167 affordable apartments with a manager unit soon to be operational, to help address a serious housing crisis plaguing the city.

From 2014 to 2021, San Jose only met about a quarter of its overall housing need for below-market-rate housing under regional housing goals, city data shows. Like other Bay Area cities, San Jose has continued to miss affordable housing production targets.

Once the property is converted into an affordable housing complex, the approximately $1 million its owners currently pay in annual property taxes will no longer be necessary. The city receives 14 percent of the property taxes and would lose about $140,000 a year on this property, a city finance official said.

However, some residents questioned the actual levels of affordability that will be offered to future residents.

“It seemed to be very similar to the current rentals on the property,” resident Ryan Christoper told council members. “So if you could shed a little light on why this is a public benefit and why we would be giving up significant tax revenue to support a project that doesn't actually support affordable housing.”

On the apartment complex's website, the current rate for one-bedroom homes is listed as starting at monthly rents of $2,818 and going up to $3,583. Two-bedroom apartments start at $4,181.

Plans for the transition call for 34 apartments to be priced affordable to people earning up to 50% of the area median income each year. In Santa Clara County, that's $62,450 for a single person and $89,200 for a household of four.

The other 134 apartments will be priced higher, with the goal of being affordable for people earning up to 80 percent of the median income: about $96,000 for a single person and $137,000 for a household of four.

The lowest-priced apartments would have rents capped at about $1,561 for a studio, up to $2,230 for a three-bedroom. The highest-priced homes would rent for $2,400 for a studio and would steadily increase to $3,428 for a three-bedroom under current market conditions, according to city reports.

“Those higher levels of AMI are not what I would call the true definition of affordable housing,” Alex Shoor, a council candidate in District 6 where the apartment complex is located, told San José Spotlight.

He said people making $96,000 might struggle to pay rent in a hot market like the South Bay, but by many American standards they would be considered part of the middle class.

“The legal definition of affordable housing does not match the actual definition of affordable housing in Santa Clara County because the area median income is so high,” Shoor said.

Overall, Shoor said he supports the transition of the apartments because they will provide a pleasant living environment and amenities for future tenants in an upscale area, along with good resources and nearby transit.

He told city council he would like to see more information to residents about these one-off transactions to boost affordable housing supply, and whether there will be more in the future.

Kemit Mawakana, division manager of the city's housing department, told San José Spotlight that there is no perfect model to address the housing crisis, or that it would be solved by now, but the city sees value in supporting these affordable apartments.

He added that the city's involvement ensures there will be a 75-year affordability restriction on the apartment complex, thereby protecting future tenants from steep rent increases.

“We need to provide affordable housing at different income levels and also for the long term,” Mawakana said.


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