San Jose could add financial perks to help speed up housing development
Big Picture
San Jose is weighing a significant expansion of its housing incentive programs in response to stalled construction and rising development costs. City leaders are proposing deeper tax and fee reductions for multifamily projects, extending caps on existing incentive programs, and introducing new perks to encourage commercial-to-residential conversions downtown. The goal is to revive market-rate housing production that has slowed sharply, despite the city being far behind its state-mandated housing targets. Mayor Matt Mahan argues the city needs to focus less on maximizing one-time fees and more on making projects financially feasible so housing actually gets built.
Why It Matters
San Jose’s experience reflects a broader Bay Area reality: housing plans on paper mean little if projects cannot pencil out. Construction costs in the city have surged more than 34% in four years, and only a small fraction of approved projects have been completed, especially for affordable units. By reducing fees, adjusting inclusionary requirements, and targeting office-to-housing conversions, the city is signaling a shift from regulatory ambition to economic pragmatism. Whether these incentives succeed will shape not only how quickly San Jose adds housing, but also the balance between accelerating production and preserving long-term affordability in one of the nation’s most expensive housing markets.