Old Race Street Poultry site eyed for affordable housing units

SAN JOSE » Hundreds of affordable housing units are being planned in central San Jose at the now-shuttered Race Street Fish & Poultry site, though current tax laws could make financing and construction of the project challenging.

About 260 affordable units would be built on land at 253 Race St., according to documents on file with city planners. The Santa Clara County Housing Authority, which bought the property in June, is preparing to demolish the 2.3acre site and is seeking final city approvals to develop the parcel.

“These would be affordable rentals,” Katherine Harasz, executive director of the Housing Authority. said Monday. “The rents would be determined by whatever financing we can find to build the project.”

The site’s main drawback is that it is located mid-block and isn’t on a street corner, but overall, its prospects look good once development is complete, said Bob Staedler, principal executive with Silicon Valley Synergy, a land use planning and consultancy.

“You always want that corner presence, but for an affordable project, it’s a great location and a great site,” Staedler said. “It’s pretty close to services and amenities, grocery stores. Affordable housing is a badly needed type of development.”

With housing prices soaring and modestly priced rentals tough to find, these kinds of projects could be successful. And along with the macro economics of the housing market, nearby development plans may bolster the need for affordable housing in this area.

Among the plans for nearby downtown San Jose: a Google transit village that could bring 15,000 to 20,000 tech workers to the city’s central business district, and a major expansion of the Adobe Systems downtown headquarters campus.

“With the amount of affordable housing that’s been built in recent years, a project like this will fill a significant need for Silicon Valley,” Staedler said.

The Housing Authority doesn’t yet have a timeline for demolition and isn’t certain when actual construction of the rental residences might begin.

“We are probably a couple of years away from the start of construction,” Harasz said.

One key area of uncertainty for the project has emerged with changes in federal tax laws in recent years. Affordable housing projects that feature below-market units often depend on a blend of lowincome tax credits that public agencies like The Housing Authority can offer to entice mortgage lenders, according to Harasz. Prior to recent tax reforms, lenders were willing to provide more financing for projects because they were more anxious to obtain tax credits, she indicated. But with tax reform on the books, lenders aren’t necessarily as enamored of government tax credits.

“Tax credits aren’t as valuable today as they were in 2017, prior to the new tax laws,” Harasz said. “Corporations don’t need tax credits as much as they used to.”

That means public agencies have to tweak the old model for getting affordable housing projects financed.