Google withdraws from affordable housing fee exemption

As Google planned its downtown San Jose mega-campus, the tech giant promised it wouldn’t take tax breaks or subsidies from the city. Google’s real estate team held up their end of that bargain, according to a new letter obtained by San José Spotlight.

Google’s Delmas Park project, which could potentially include 1.04 million square feet of office space and 325 multi-family housing units, was previously in the pipeline to receive a $4.8 million exemption from paying affordable housing fees.

The city typically requires developers to pay $17.83 per rentable square foot to help finance its own affordable housing projects. But the Delmas Park Project, located at 402 W. Santa Clara St., was acquired from developer Trammell Crow Company who had been approved for an exemption of those fees.

On Tuesday, however, Google’s Real Estate Development Director Alexa Arena sent a letter to the city’s Housing Department requesting that the project be pulled out of the exemption pipeline.

“Based on our analysis and our shared goals to contribute to the city’s affordable housing priorities, we intend to move forward with a program that complies with the Inclusionary Housing Ordinance,” Arena wrote. “We are committed to fulfilling our inclusionary requirement through delivering affordable housing onsite.”

The letter came a week before the San Jose City Council is scheduled to review the slew of projects exempt from affordable housing impact fees – an initiative created in 2014 to reduce negative financial impacts on certain housing developments.

According to a memo from Housing Director Jacky Morales-Ferrand, a project must meet a series of criteria to be eligible for fee exemptions:

• The development has received approval for certain entitlements that have not expired.
• The developer submitted a pipeline exemption application with evidence of permits to the housing department by June 30, 2016.

Morales-Ferrand told San José Spotlight that nine new projects – including the Google development – have withdrawn from the fee exemption. That means they’ll pay their fair share of affordable housing fees or build a certain number of below-market units.

The list of additional projects was not available by Friday afternoon.

Jeffrey Buchanan, a spokesperson for Silicon Valley Rising, said he’s glad that Google decided to withdraw from the affordable fee exemption, but added that it was concerning that the tech-giant even considered it.

“We want to see if Google is really committed to affordable housing,” he said. “We need to see more than talk, we need to see action. We’re almost two years since the project was first announced and Google hasn’t put anything forward.”

Contact Grace Hase at [email protected] or follow @grace_hase on Twitter.