San Jose offers tax incentives for large housing project

San Jose is starting a new multifamily housing project thanks to an incentive program. The Hanover Co. will save $4.9 million in taxes and fees to build a 345-unit development near Penitencia Creek. This project has been in the works for years and is set to begin construction soon. The City Council approved a waiver for fees and a tax reduction. Mayor Matt Mahan emphasized the importance of this project, highlighting that it will provide homes and help ease pressure on rents. Rising interest rates and the high costs of materials and labor have slowed down many developments in the city. Last year, San Jose did not see any new multifamily buildings start construction despite many plans being submitted. To address this, the City Council launched an incentive program in December that allows fee waivers for the first 1,500 units in growth areas. This program also offers a 25% tax reduction for eligible projects starting in 2026. San Jose is facing challenges in meeting its housing goals, needing to plan for over 62,000 units by 2031. In contrast, only about 2,666 units were permitted last year. The Hanover Co.'s project will include 328 market-rate and 17 moderate-income units, along with office space. It is expected to create around 498 construction jobs with good salaries. Some community members have expressed concerns about the size and impact of the development. Councilmember David Cohen noted the mixed feelings from residents but stressed the importance of moving forward with housing projects. He supported the incentive program, understanding that it would help get this development underway.