The San Jose City Council has approved a set of measures aimed at encouraging local housing development by adjusting requirements that homebuilders say have hindered new projects.
The council passed two measures expanding incentive programs that reduce construction taxes and ease affordable housing requirements for developers. A third measure revises San Jose’s inclusionary housing policy, which requires market-rate developers to invest in affordable homes for low-income residents. Both incentive program measures passed unanimously, while the inclusionary housing policy adjustment passed 9-2, with Councilmembers Domingo Candelas and Pamela Campos voting against it. According to San José Spotlight, supporters believe these changes will provide relief for the city’s struggling housing industry.
Some advocates have opposed the measures, arguing they place too much emphasis on market-rate development and could weaken support for affordable housing. Alison Cingolani, director at SV@Home, said, “Because of the city’s position financially, because of dwindling federal support, we’re running out of ways to assist the production of affordable housing.”
San Jose Mayor Matt Mahan supported the changes and said current fees and requirements have created barriers to new housing. “Affordable housing policies only work if housing actually gets built. With high construction costs, tighter financing, and higher interest rates, the rules are no longer aligned with market reality — and that means less housing gets built, rents rise, and displacement increases,” Mahan said in an email to constituents.
The revised inclusionary policy recalibrates how many affordable homes developers must provide and introduces a new option allowing developers to set aside 7% of apartments for people earning 50% of area median income. The median income for a family of four in Santa Clara County is $195,200. Some advocates worry this may result in fewer below-market rate homes being created.
Councilmembers also extended a development incentive program first passed in December 2024 that reduces taxes and fees for qualifying projects. Backers credit it with helping five projects totaling more than 1,400 homes begin construction last year. The extension pushes its end date back another year and raises participation limits. Another measure expands financial waivers for downtown office-to-housing conversions as part of efforts to encourage redevelopment of underused commercial buildings.
