City Council to Discuss Japantown Hub, Transportation Taxes

The Great Recession quashed plans to build a massive apartment and retail center in Japantown, as developers shied away from investing given the global credit crunch. But now the deal’s back and up for discussion at Tuesday’s City Council meeting.

Williams & Dame Development walked away from the redevelopment deal in 2009, leery of the odds of attracting enough investors. When the city reached out to the company again, it agreed to strike up another deal that would turn the vacant six-acre corporation yard bounded by Sixth, Seventh, Jackson and Taylor streets into a six-story, 600-unit apartment complex with attached storefronts and offices. The apartment units will be relatively small to fill the need for cheaper compact housing options, developers say.

Developers will also set aside 60,000 square feet for a creative arts center to house CreaTV, San Jose Taiko and the Arts Council of Silicon Valley. Blueprints show an outdoor amphitheater and a plaza, potential sites for live performances, farmers markets and other live events. Retail spaces range from 6,000 to 12,000 square feet.

The council will consider a term sheet that asks the Oregon-based developers to pay $24 million for the property and, upon completion, give back three-quarters of an acre back to the city as a public park. In total, the entire project is valued at $150-180 million once complete, and it would generate annual property tax revenue exceeding $170,000.

Only three Japantowns remain in California, making San Jose’s all the more valuable as a cultural and historic landmark. Building a capstone would enhance the neighborhood’s attraction and regional draw, says Kim Walesh, the city’s Office of Economic Development director.

More from the San Jose City Council agenda for February 26, 2013:

• A proposed state law would make it a lot easier to pass transportation taxes, dropping the approval threshold from a two-thirds supermajority to 55 percent. San Jose, with its 1,500 miles of roads in fair to terrible condition, is considering backing the measure to make it easier to secure future funding to fix the roads. Right now, the city only has enough money—$20 million—to maintain 20 percent of its roads, according to staff.

As city leaders consider whether to put a $295 million bond measure on the 2014 ballot—a debt that would cost the average homeowner about $100 a year—the transportation department recommends concurrently supporting the legislation to drop the approval threshold.

City leaders have also been mulling the idea of putting a half- or quarter-cent general purpose sales tax on the ballot. Sales taxes only need a simple majority to pass. A host of Bay Area cities successfully passed sales tax measures last election, and judging by recent poll results, San Jose residents—60 percent of those surveyed—seemed fine with the idea of shelling out a little more money for public services. A half-cent tax would raise $64 million a year for the city.

Another idea pitched in the memo: Have neighborhoods pay for their own street fixes. For example, a stretch of road in Willow Glen would cost $270,000 to resurface, or up to $4,500 per property owner.

The Alameda may get a Whole Foods store with an on-site brewery if the Council approves a development permit up for consideration. The organic grocery chain wants to build a 33,000-square-foot store at the corner of Stockton Avenue and The Alameda.

The store met with residents at nearby upscale loft apartments Plant 51 to see if they’d like a neighborhood Whole Foods. The residents unanimously agreed, saying their main concern was cosmetic. They want to see some brick and glass in the architecture to give it a unique look that complements the surrounding vicinity.

• When Samsung started shopping around for a place to build its main R&D center in North America, it considered Houston and other cities outside California. Eager to rake in $385 million in projected annual economic benefit the massive new center would bring, San Jose offered Samsung a bundle of tax breaks the semiconductor giant couldn’t refuse.

The council on Tuesday will consider the incentives package, which more than halves the traffic impact fee, offers a tax reimbursement and connects it with state tax credits for creating new jobs.

The city will lose out on some revenue at first—more than $3 million in traffic impact fees this year—but officials hope to make up for it through construction fees and increased taxes once the project gets finished.

The global corporation plans to expand its 300,000 square foot campus at 3655 N. First St. into a 680,000-sq.-foot headquarters split into two 10-story towers. The expansion is expected to create 2,000 new jobs.

• Since Congress has yet to pass a budget, it’s unclear how much public housing money San Jose will receive. Normally, it’s somewhere in the neighborhood of $12 million, but the amount keeps getting slashed year over year. The city’s public housing director wants the council to extend a bunch of contracts with housing nonprofits, despite that uncertainty, to continue programs that help homeless families and people with HIV/AIDS find homes as well as offer foreclosure prevention services to embattled homeowners, among other things.

• The council will consider granting a $4.9 million loan to a developer with plans to build a low-income apartment complex at East St. John and North Fourth streets. The 102-unit Donner Lofts would be available for people making $10,000 to $40,000 a year max. Fifteen units paid for with state mental health money will be reserved for homeless, mentally disabled or other tenants with special needs. MidPen Housing Corporation bought the half-acre lot in 2011. A fire destroyed the home on the property, which has sat empty next to City Hall for years. The project would cost $31.8 million total to build, with a mix of public and private money. The city posts reports of housing projects it subsidizes on http://www.sjhousing.org.

• San Jose encourages developers to go through the city as bond issuer if the plan is to finance a low-income housing project. The benefit to private developers: They get below-market interest rates and low-income housing tax credits, unlike a conventional mortgage. San Jose Third Street Associates is asking the city for $7 million to build a 37-unit, low-income apartment building for seniors who make between $25,000 and $63,000 a year.

• A deal to cut construction fees in half for developers who build high-rise towers in downtown may get extended another few years. The council will consider the move Tuesday, which Councilmember Sam Liccardo says has helped generate interest in building up in downtown. Two high-rise towers are expected to break ground this year, he says. The downside, though, is that the city loses out on revenues that normally fund city services.

• A nonprofit tree-planting organization wants to lease a 10,000-sq.-foot office space for a below-market rate of $12 a year. Our City Forest already relocated to the city-owned space at 1590 Las Plumas Ave., and seeks approval for a one-year lease with the option to extend it for four more years. The city has subsidized Our City Forest since 1991 to train AmeriCorps workers to plant and care for trees in San Jose.

• The city wants to grow its urban forestry by planting 100,000 trees in the coming few years, so it’s applying for a $150,000 CalFire grant to help count existing ones and figure out where to plant more. A 2009 count found that San Jose had 242,650 street trees and 87,580 vacant spots to plant more. If it gets the grant, the city would shell out $50,000 from its own coffers to fund the effort.

WHAT: San Jose City Council meeting
WHEN: 1:30pm; 7pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260

Jennifer Wadsworth is the news editor for San Jose Inside and Metro Silicon Valley. Email tips to [email protected]. Follow her on Twitter at @jennwadsworth.

5 Comments

  1. We’ve been over it countless times… low-income housing bring with it a host of “hidden” costs that must be supported for decades.  First, there are less taxes brought in than a comparable business, then there’s the increased demand upon police and fire services, not to mention other City services that low-income folks need.  Why, oh why do our leaders court these developments?  Because their friends are developers and construction companies!

    Not too long ago, the City was lamenting that they could not support the cost of the trees they planted- many of which now need service or removal- and now they want to spend money to count them and possibly plant more.  Brilliant!

    Hey! Hey guys… Council people… Mayor. Stop, just please stop.  Whatever it is that you think you’re doing. Just. Stop. Focus on what we already have and fully fund/fix our core services.  (Walks away shaking his head…)

    • Agreed.  I would much rather raise the minimum wage (I voted for it) than subsidize rents.

      People talk about how much it costs to live in San Jose, but how many people actually pay market-rate rents, water, pg&e and phone bills?  I would like to know, because it should be something that every citizen should have access to, but I never seem to be able to find.

  2. Regarding the nonprofit contracts the housing director wants doled out.

    http://sanjoseca.gov/DocumentCenter/View/12368

    In Appendix A, page 4, they’re poposing to give $50,000 to the “Department of Community Services and and Workforce Development of the County of San Benito” (sic) for Housing Opportunities for People with Aids.  Earlier in the memo it says, “The City administers the HOPWA Program in both Santa Clara and San Benito Counties.

    I will leave the decision to fund local nonprofits up to the Council, but why are we guaranteeing funds to San Benito County?  While I feel for the people affected, the agency in San Benito County should not get funded unless the Feds cough up the money.

  3. I know….let’s spend all this money on affordable housing and then when things are looking bleak we will blame the greedy police officers!! Heck, it worked this time so why not next?

  4. SPUR is the acronym. Headed up by Leah Toeniskoetter, daughter of Charles Toeniskoetter Developer and former Carl Swenson protege. Carl Swenson, as in grandfather of notorious San Jose developer Barry Swenson.
    These are all their development projects. Coincidentally, Reed,  as a land use attorney,counts all involved parties as prior(and future) clients.
    Salvador Liccardo, longtime attorney and father of Sam, also in the same circle.
    See a pattern here?