These towers will reshape block near San Jose City Hall

Two major high-rise towers are slated to go up kitty corner from San Jose City Hall, reshaping a low-slung block with hundreds of apartments and more than half a million square feet of office space.

The Icon and Echo towers from San Jose real estate firm Urban Catalyst gained unanimous approval from the San Jose City Council this week with some policymakers heaping praise on the developers.

The structures will be among the tallest buildings in the city when complete, and will add to a growing number of high-rises planned to be built in the coming years, all part of a city effort to revamp downtown San Jose by offering lucrative incentives to builders.

The 27-story Echo tower will contain 415 apartments, and stand 267 feet tall, while the 282-foot high Icon will be a 24-story commercial tower with about 525,000 square feet of office space and up to 8,500 square feet of ground floor retail space, according to city reports and the developer.

The two buildings will be constructed on a block of North 4th Street between East Santa Clara and East St. John Street. To make way for the project, a gas station, a church, and three commercial and industrial buildings will be leveled.

“I’m excited. Thank you for bringing this to our city, it looks fantastic,” Mayor Sam Liccardo told the developers Tuesday.

In an effort to tackle the city’s affordability crisis, San Jose requires housing developers to reserve 15% of their units for below market-rate housing, or pay substantial fees into a city fund to build affordable housing elsewhere. Urban Catalyst will do neither.

That’s because the developer plans to take advantage of a recently extended city council policy that waives affordable housing fees for high-rise residential buildings of at least 150-feet tall in downtown. The incentive also grants the developer a 50% reduction in construction taxes.

While the council and some business groups hailed the dense transit-oriented project as manna from heaven, some residents were rankled by the lack of below market-rate housing and the fee cuts for the developer.

“I’m just disgusted that everybody thinks this is fantastic,” said Kathryn Hedges, a downtown resident.

Another resident, Elizabeth Agramont-Justiniano, with the Sacred Heart Housing Action Committee, said she’s fed up by the lack of deeply affordable housing in this project and others like it.

“Are any of the folks who live in St. James Park going to be able to live there?” she said. “This is just continuing to contribute to our homelessness crisis because people aren’t able to afford to live in such a nice area having access to transit, having access to jobs.”

But Urban Catalyst COO Josh Burroughs said more dense market-rate housing is needed to house the high-paid army of tech workers in the city and the region, to prevent them from buying up older, less expensive housing.

“Building market-rate housing is an anti-displacement solution,” Burroughs told San José Spotlight.

Burroughs said he expects blowback for not building affordable housing in his project and for taking city subsidies. The incentives are critical to make these kinds of developments financially possible, he added.

“Part of our responsibility is to slog through the system, and take the hits verbally on the affordable housing conversation, Burroughs said. “But we do feel like we’re part of the solution whether it’s actually talked about in the media or not.”

Burroughs noted his firm is investing $10 million to help improve the neighboring senior affordable housing complex, Town Park Towers, with upgraded utilities, securing the building’s parking area and building a new outdoor courtyard.

The Echo and Icon development will still pay millions in property taxes over the next decade and other one-time fees to San Jose to help offset the need for affordable housing created by the large office space. It will pay into the city’s tax coffers again when the project is resold.

Downtown Councilmember Raul Peralez said he understands concerns from some residents about affordable housing, but defended the incentives for developers.

“​​Without these projects coming in, we get zero housing. If we were to impose the fees that we are waiving through the high-rise incentive program, the likelihood is that these projects would not break ground,” Peralez told San José Spotlight. “They can’t get financing, (and) they don’t cost out as far as making them financially feasible.”

Peralez said he’s championed many low-income and homeless housing projects in his district, including recently announced funding from the state to convert a motel into temporary housing for homeless people in the SoFa district.

“We do need to be able to house all the different income levels in our city,” he said.

Alex Shoor, executive director of Catalyze SV, a housing advocacy organization, said San Jose is exceeding its goals for building market-rate housing. The city, like most in the region, is falling far short on affordable housing targets.

Shoor said it’s a loss for the city when a developer skirts on building affordable housing.

“All housing is good, but some housing is better than others,” he told San José Spotlight. “And the housing that is better than others is affordable housing.”

Contact Joseph Geha at [email protected] or @josephgeha16 on Twitter.