Downtown San Jose hotel turning into mixed-income apartments

Downtown San Jose’s Pacific Motor Inn is transforming from a hotel that once used to shelter people from COVID into a massive mixed-income apartment complex.

Mayor Matt Mahan announced the final plans for the project last week alongside other city and nonprofit leaders. Once completed, the development will bring nearly 500 apartments into the downtown area, consisting of permanent supportive, affordable and market-rate homes. During development, the original 72-rooms of the hotel will act as temporary housing for homeless residents living on the streets.

“This is the first time that supportive housing for families, affordable housing and market-rate housing will be built on one lot in California — but it won’t be the last,” Mahan said at a news conference. “This project shows that innovation is possible when the public, private and nonprofit sectors come together to solve our homelessness crisis.”

The Pacific Motor Inn, located at 455 S. Second St., was recently acquired by PMI Partners LLC, a joint venture between PATH Ventures and Westbank. The hotel, which housed homeless residents during the height of the COVID-19 pandemic, has long been eyed as a site that can be transformed into housing.

In 2021, San Jose requested dollars from California’s Project Homekey — a $2.75 billion grant program to transform hotels and motels into housing. San Jose secured $19 million in state funds and is providing $25 million in city funds to support the project.

Over the next five years, the site will be redeveloped to include affordable housing, including 140 affordable apartments, 72 of which would be permanent supportive housing, owned and operated by PATH Ventures. A high-rise building on the same lot will have 360 market-rate apartments, owned and operated by Westbank.

Westbank will also develop the lot next to the Pacific Motor Inn to house approximately 500 market-rate apartments, for a total of 1,000 mixed-income homes between the two lots.

“San Jose is setting an example by creating collaborative and innovative solutions that can be replicated by other communities throughout the state,” Gov. Gavin Newsom said in a statement.

This is not the first time San Jose has used state dollars to transform hotels into housing. The 61-room Pavilion Inn, a former hotel on North Fourth Street in San Jose, is currently under construction to create affordable, supportive housing for foster youth. The newly renovated Arena Hotel was filled with residents on the first day it opened last September.

San Jose also used to own SureStay — the city’s first repurposed hotel project purchased with nearly $12 million of Project Homekey dollars. The site changed ownership, however, after several residents complained about deplorable conditions — dirty water pouring out of faucets, mold and holes in the ceiling, and in some instances people who died were discovered because of the smell coming from their rooms.

The city also requested state dollars to transform South San Jose’s Residence Inn into a 150-room apartment complex.

Anthony Bahamondes, chief housing officer for PATH Ventures, said he’s proud and excited to soon open yet another affordable housing site in San Jose. PATH Ventures also operates PATH Villas on 4th Street, which just opened and offers supportive housing to 93 formerly homeless seniors, and Villas on the Park at 280 N. Second St. near St. James Park, which opened in 2020. The apartment complex is dedicated entirely to more than 80 formerly homeless individuals. Both are located in downtown San Jose.

“The communities we’ve built are not just units, they are homes,” Bahamondes said. “We look forward to welcoming people home as soon as we can.

Contact Jana Kadah at [email protected] or @Jana_Kadah on X, formerly known as Twitter.