Rules Committee to Consider Extension of High-Rise Developer Incentives

San Jose needs to grow up more than out, according to city leaders who want to extend high-rise developer incentives another few years.

The Rules and Open Government Committee on Wednesday will consider the new plan, which would continue a program adopted by the City Council last year that saves builders millions by giving them a half-off discount on park fees and construction taxes. The catch is developers must build at least 15 stories high. The tradeoff, according to city officials, would mean losing out on revenue that pays for roads and transportation in the short term, but big gains in the long run.

Downtown’s high water table, high costs and low-height limits due to flight traffic make it a tough market for developers to break ground, reads a memo authored by Mayor Chuck Reed and Councilmember Sam Liccardo, who represents the downtown district.

The memo adds that tower construction is too costly, too risky and won’t happen for another decade without incentives, which have already allowed a couple companies to begin plans to start building this year.

“All of our collective ambitions for the revitalization of the downtown hinge on our ability to bring thousands of more residents into the core,” the memo says.

A high-rise adds about $150 million to the assessed value of the land beneath it, a boon to the city’s tax rolls, the memo notes. Unlike other housing developments, apartment towers actually make money for the city. It’s also the most sustainable way to house future population growth, cutting commute hours and greenhouse gas emissions by accommodating housing close to downtown jobs.

Some developers tried to take advantage of the price breaks, but for reasons beyond their control couldn’t manage before the expiration date, Reed and Liccardo argue. Symphony Development tried to buy up property from the Redevelopment’s successor agency but bureaucratic fights between the city and state halted the project and prevented the site from getting rezoned to allow high-rise construction.

Liccardo and Reed say they hope news of new high-rise construction in San Jose will encourage investors and developers to flock to downtown.

Also on the Rules and Open Government Committee agenda for February 6, 2013:

• Earlier in the year, the city conducted a phone survey and held a priority-setting session to hear what residents want out of the city’s 2013-14 fiscal year budget. Council will meet from 1:30-5pm Monday to talk about the results and kick off the months-long budget planning process.

• About a year ago, the city temporarily lowered traffic impact fees for construction in North San Jose, dropping it from $12.69 to $5 a square foot. Similar to the high-rise incentive, the idea was to lure developers and existing companies looking to expand. Mayor Reed wants to update the program’s coverage area to include Samsung’s expansion, Ellis Partners 101/Tech construction and a new parking structure at the Cisco Systems campus.

Traffic impact fees rake in money for roads and other infrastructure affected by the uptick in traffic brought by new construction.

• The San Jose/Santa Clara Water Pollution Control Plant (WPCP), the largest treatment facility on the West Coast, needs a new name to better reflect “its wastewater role and regional service area,” says Kerrie Romanow, head of the city’s Environmental Services Department. The rules committee will add that assignment to the council’s Transportation and Environment Committee 2013 work plan.

Jennifer Wadsworth is the former news editor for San Jose Inside and Metro Silicon Valley. Follow her on Twitter at @jennwadsworth.


  1. What it disconcerting is that back in 2006 – the Parkland Dedication Ordinance was approved with the exception that once downtown units reached owner occupancy of 2500, park fees would return to 100% of raw land value (mind you not developed land value) This was supposed to be a temporary incentive.  It seems that we need to be looking at incentives to build out and complete our parks and trails – not take critical dollars away from them.

  2. Lobbying to have Bart and the high-speed rail go through San Jose, having VTA light rail go through downtown, and now more subsidies to get downtown built out.  Does anyone see a common thread?

    If you knew that something like what they’re proposing to do would work with downtown, it might be a good investment.  History has shown that downtown is a black hole.

    Getting back to the VTA.  VTA placed its tracks downtown, to support the rebirth of downtown.  Now in a desperate attempt to make the VTA line financially viable, they want to encroach on St. James Park.  Like that’s ever going to happen.

    That’s the problem with downtown.  It’s a money sink, and because it’s been soaking up government money for such a long time, the people there feel entitled.  Bart, high-speed rail and VTA will all have to go underground, because the wonderful ambiance of downtown can’t be disturbed.

  3. Fight those state officials who want the worst for San Jose with bureauracacies and red tapes.  Good job, city officials fight the state demons.  The city is everything right to bring more highrise developments downtown that’s sorely needed.

  4. I have been hearing talk about the city pouring money into downtown since the 1980’s and how it was going to pay off. The city has put BILLIONS into downtown and they are still singing the same song. This and other pet projects are the reason San Jose has no money, but lets make the current city workers the scapegoats. Lets destroy our police department so we can keep putting money into pet projects and developers pockets. Lets rob money from the current police officers to fund our pet projects causing a mass exodus of highly skilled and hard working officers that the city has paid millions of dollars to train. No doubt many cities are grateful for the gifts they are receiving from San Jose, but we will have our half filled high rise building downtown which will bear fruit sometime around the year 2050, maybe. Thank God for measure B which will cause police officers to have 46% of their gross salary deducted off the top…we will make them pay for the poor decisions of pouring billions into a downtown and airport that can’t support themselves, just so we can throw more money into this black hole. Yea sure, we will be able to hire some new officers, but they will flee here just as soon as they get training and the other cities will just sit back and wait for these officers, just as is happening now.

    • This city has been subsidizing “The Airport”  to the tune of Millions of Dollars per year .  all this talk of Public safety pensions killing this city , What a joke ! Whats killing this city is Absolute mismanagement , Monies spent on pet projects ( for the Mayors developer buddies) , Low income housing .  This Mayor , City Manager and Council will go down in history as the worst ever

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