UPDATE: San Jose approves purchase of affordable Curtner Studio Apartments

The San Jose City Council on Tuesday unanimously approved the purchase of an apartment complex to convert it to a 100 percent supportive housing development at its last meeting of the year, securing nearly $15 million in funds for the project from Santa Clara County.

Mayor Sam Liccardo was absent from Tuesday’s meeting.

The councilmembers approved selling a 179-unit affordable housing project to the county, called the Curtner Studio Apartments, which allows the county to invest Measure A funds to convert the building into permanent supportive housing and construct a new common area, offices for property management and beef up services for residents.

The investment will also provide 111 additional housing vouchers for formerly homeless individuals and preserve its affordability for the next 55 years.

“The county is… going to be converting the entire project into a supportive housing project, ” San Jose housing deputy director Rachel VanderVeen said. “The levels of affordability are deepening and every one of the people who will be living at Curtner Studios will have a voucher and will also be provided with the services.”

Housing officials said the city has made massive investments in funding affordable housing projects this year, totaling close to $84 million, which is funding 14 developments throughout the city and will produce nearly 1,600 affordable apartments with 700 of those being supportive units.

The apartment complex, which was completed in 1994, was originally built as a mixed-income development where Silicon Valley workers could live in studios during the week, then spend weekends with their families elsewhere. But the plan didn’t work out, which put the site back on the market. The original site included 36 market-rate apartments, 108 low-income, and 36 very low-income units.

But the site has had its fair share of challenges, especially as complaints have surfaced alleging that some of the project’s residents have loitered and trespassed on neighboring properties.

The building’s original design did not include community rooms — a common characteristic of affordable housing developments. But in 2014, neighbors started complaining that residents were loitering outside on street corners and storefronts throughout the neighborhood. In response to those complaints, the new plans will include the construction of 800 square feet of community space for the residents, which includes an outdoor patio.

The city began financing the project in 2007 after First Community Housing acquired the property, which helped transform an additional 36 units for affordable housing and revamp the site with environmentally-friendly building features to “increase energy efficiency, water conservation and indoor air quality.”

That same year, the county granted the project funds for mental health services, which required that at least 27 units be reserved for mentally ill tenants and provide them with onsite case management. But now, the new funds will secure 71 vouchers for rapid rehousing and 40 vouchers for veterans, bringing the total of affordable housing units up to 178. One apartment unit is reserved for the manager of the building.

“Setting aside 111 new vouchers will provide additional operating revenue for the development and services for the residents,” Morales-Ferrand said. “These changes will provide ongoing stability to the Curtner Studios development.”

The new management offices will be placed at the lobby entrance along with a security station and new upgrades, such as private social service office space, improvements to the community kitchen, computer lab and outdoor tables and planters.

At Tuesday’s meeting, Councilmember Johnny Khamis raised concern about the new upgrades potentially displacing existing residents, but housing officials quickly confirmed that would not be the case. He also said he’s interested in the city buying market-rate units from developers to convert into affordable housing instead of having them sit around vacant.

“There’s a lot of housing that is being developed that is just sitting around vacant — for profit housing,” Khamis added. “Clearly as we’ve seen over and over again, it takes a lot longer and it takes a lot more money to build affordable housing than it does to buy affordable housing.”

While city officials say they’re eager to partner with the county on addressing homelessness, some want assurance that the project will remain affordable for years to come. When the city and county invest money into a housing project, both entities gain property rights. As part of the deal, the city is agreeing to hand over the rights to the county, as part of a “limited partnership,” because First Community Housing is seeking county funds through Measure A to pay for the new upgrades.

But now, some city leaders are calling for a new policy to ensure the city maintains the property rights of a housing project when it has invested more money than the county. That way, the city can ensure the site will be used for affordable housing.

Last August, San Jose lawmakers updated the city’s ground lease policies to guarantee that housing on city-owned land remains affordable — even after a lease expires with the developer. But if the city doesn’t own the property rights to those plots of land, it can’t prevent the county or a future developer from converting the housing into a market rate development. That’s why the city wants to develop a policy to secure property rights to future affordable housing developments, according to Liccardo and Councilmember Dev Davis.

“I’m very excited that this is finally getting off the ground,” Davis said at Tuesday’s meeting. “But the mayor and I have a memo, which… asked staff to come back to council, with a new policy for us in February with underwriting guidelines that requires city ownership of a parcel if city investment exceeds a specified threshold. The county is already doing this with Measure A and it’s not something that we’re doing.

“When we invest in a project we’re not necessarily looking at whether we should own it so that we can continue to preserve our affordable housing stock,” she added.

A new policy is expected to be drafted in Feb. 2020.

Contact Nadia Lopez at [email protected] or follow @n_llopez on Twitter.