An affordable housing development centered on homeless foster youth will break ground in San Jose next month.
The San Jose City Council approved nearly $40 million in state bonds on Tuesday to construct 81 affordable apartments—with half reserved for foster youth ages 15-24—on Parkmoor Avenue near San Jose City College. The remaining apartments will be for low-income residents, including 20 rooms for those who have been homeless for more than a year. Parkmoor will feature a community center, known as The HUB, to offer services such as case management, subsidies for transportation, food, clothes and utilities for foster youth living at the complex.
Santa Clara County pledged an additional $32.6 million to the project, and the city contributed $16.8 million. Rachel VanderVeen, assistant director of housing in San Jose, told San José Spotlight Parkmoor is a tremendous opportunity to create a place in the neighborhood specifically for foster youth.
“Not only are we housing youth, but we’re actually creating a space for them to build community,” VanderVeen said. “The bottom floor will be this youth center where you can take classes … hang out after school. And then upstairs is your apartment.”
Jon White, chief real estate officer of homeless services provider Abode Services—the developer of Parkmoor—told San José Spotlight all the funding is in place. The project will cost nearly $80 million, with construction set to begin in early November. White expects the project to be finished in June 2025.
Abode applied for the nearly $40 million in bonds from the California Debt Limit Allocation Committee to be issued through San Jose. The bonds serve as construction financing, VanderVeen said, and will be paid for with state tax credits upon completion of the project—a common funding structure for affordable housing projects.
One of the loan conditions is that the apartments remain affordable for 55 years. Half will be supported by housing vouchers from the Santa Clara County Housing Authority for 20 years. The apartments are divided by area median income: 40 will not exceed 30%, 24 will not exceed 50% and 15 will not exceed 60%. The median income for one person in Santa Clara County is $126,000 and for a family of four it’s $181,300.
Completing Parkmoor will be a win for San Jose. The city has seen 5,519 new affordable houses since 2014, just 26% of its goal over the last 10 years, while 16,379 market rate homes have been built, or 115% of the city’s goal.
Councilmember Dev Davis expressed concerns at the meeting about the city’s liability with the project. San Jose spent $13.5 million in April to buy a property from First Community Housing, according to city documents. This came after the affordable housing developer failed to secure enough funding to build the proposed McEvoy and Dupont towers in downtown San Jose. The city loaned First Community Housing $13 million last November to prevent it from defaulting on a bank loan for Second Street Studios.
“We have had an affordable housing developer falter in the last couple of years, and I just want to be clear on what we’re doing,” Davis said. “How certain are you that Abode is financially stable enough for that $16.8 (million) to get paid back to us, but also for the $39.8 (million in bonds)?”
Abode is ultimately responsible for the bonds, VanderVeen told San José Spotlight, and will repay the city’s $16.8 million loan through rent collected at Parkmoor. Where First Community Housing fell short was their inability to raise enough money in the predevelopment stage, the riskiest part of affordable housing development, VanderVeen said. That’s not the case with the Parkmoor project, she said, which is fully financed.
“The city has done due diligence,” VanderVeen said. “We’re confident (Parkmoor) is in a good position …. the city’s risk is actually quite low.”
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