Google announces $5.3M investment in San Jose affordable housing project

Google is investing $5.3 million to help along a 115-unit residential project that will cater to people with developmental disabilities in San Jose’s Japantown, the tech giant announced Tuesday.

The loan to San Francisco-based developer, The Kelsey, will push forward the six-story, primarily affordable housing development planned to rise at 447 North First Street. The group is developing the project in partnership with San Mateo-based Sares Regis Group of Northern California.

When complete, the project known as The Kelsey Ayer Station is set to rise with 89 homes leased at rents below market rate, of which 26 apartments will be set aside for people with developmental disabilities. The remaining 26 residential units will be rented at market-rate prices, but two of those will be reserved for people with special needs. The project will include full-time support staff and a sensory garden.

“As we engage with the city and community, we continually hear that preserving affordability is vital to San Jose’s future,” Alexa Arena, Google’s San Jose real estate development director, said in a statement. “Google is very excited to be a part of The Kelsey and we’re looking forward to more opportunities to help with the creation and preservation of affordable housing.”

The company’s investment will go toward the “pre-development” stage for The Kelsey Ayer Station. That means it will help pay for things like land acquisition, securing city approvals for the project or early design work.

“Google’s financing will help us focus on securing permanent financing and philanthropic support to complete the project,” Micaela Connery, founder and CEO of The Kelsey, said in a blog post Tuesday. “Google’s investment allows us to stick to our ambitious pace: residents will move into the space in four years, a timeline rarely seen in the housing industry.”

Though the project is set to provide much-needed affordable housing in a region with a dire housing crunch, the development did draw some concerns related to parking and density during a community meeting earlier this year.

The newly-announced funding is one small part of Google’s $1 billion commitment to spur housing across the Bay Area, an initiative the Alphabet-owned company announced in June.

Through the broader housing program, Google is taking a three-pronged approach to help create 20,000 new residential units, primarily in the cities where the tech company is growing most, including San Jose, Mountain View, Sunnyvale and San Francisco.

One part of the housing commitment is a $250 million investment fund meant to help developers move their projects along. That is where the $5.3 million is coming from. The announcement Tuesday marks the second investment from the fund. The first was a $50 million investment into a revolving loan program run by the Housing Trust Silicon Valley, based in San Jose.

As part of the $1 billion commitment, Google has also said it will to secure approvals for 15,000 homes on land the company owns — property the company has said will be valued at $750 million.

Finally, Google plans to divvy out $50 million in grants to nonprofits addressing displacement and homelessness in the Bay Area. Already, Google has awarded $1.5 million to The Salvation Army as the nonprofit aims to expand its San Jose footprint and support veterans’ programs in San Francisco.

The announcement comes weeks after Google formally submitted plans for a more than 8 million-square-foot mixed-use development the company wants to build on the west side of downtown San Jose near the busy Diridon Station.

That sprawling project also comes with many skeptics, who worry the tech company’s expanded presence in the city will exacerbate the housing crisis and displace existing residents, particularly vulnerable and low-income communities.

But others have welcomed Google to San Jose with open arms, because the tech titan could bring high-paying jobs and revitalization of an area that is primarily parking lots and low-slung industrial buildings next to a major transit hub.

Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.