San Jose policy gives housing developer millions in tax breaks

The San Jose City Council has taken a bold step by approving a $4. 9 million tax incentive for the Hanover Company, facilitating the construction of a seven-story, 345-apartment complex at 905 North Capitol Ave. This decision allows Hanover to meet only 5% of the affordable housing requirement, bypassing the standard 15% mandated by city policy. The incentive is part of the Multifamily Housing Incentive Program, launched in December 2024, designed to stimulate housing development in response to a previous year with no new multifamily housing projects. Mayor Matt Mahan highlighted the need for flexibility in city regulations to attract investment, stating that the city must adapt to market conditions.

However, this decision has sparked disappointment among affordable housing advocates who argue that the city is allowing developers to evade crucial housing commitments. The Hanover Company plans to break ground on the project on March 24, 2025, and aims to add 742 new apartments to the local housing market. In addition to residential units, the project will also include office space and underground parking. Councilmember David Cohen expressed mixed feelings about the project, noting its potential impact on transit-oriented development in East San Jose.