Battle over building incentives for developers in San Jose

SAN JOSE, Calif. (KTVU) - An upcoming vote by the San Jose City council has community leaders choosing sides. 

The issue is whether high rise developers should get a break on city fees. And if they don't, whether that will keep them from building new housing downtown. 

The sound of high rise construction is music to the ears of city leaders in housing starved San Jose.

But building in the city is expensive and margins apparently are slim. And so for years, San Jose has waived certain fees to encourage development.

Now labor leaders and some housing advocates say this needs to stop.

Sandy Perry with the Affordable Housing Network says, "Our housing policy should not be based on what benefits the profits of millionaires and billionaires."

And they say, this comes at the expense of those less fortunate, since some of the uncollected fees, potentially $57 million would go toward affordable housing. 

Ben Field with the South Bay Labor Council says, "The question is, do we really need to be subsidizing these developments to increase developer profits if the community is not getting anything in return."

But without the waiver, some fear new construction will come to a screeching halt.

Matt Mahood with the Silicon Valley Organization says, "If it's not extended we could potentially lose 3500 housing units."

A group of local business leaders, contractors, realtors and housing advocates held a news conference to speak in favor of extending the fee waiver.

They say there are nine projects that stand to be impacted if it's not. Only two of them are already under construction.

Scott Knies with the San Jose Downtown Association says, "The other seven might not get out of the ground."

Michael Lane with Silicon Valley@Home adds, "The math really matters in this case, and we've taken a look at the feasibility studies and we're convinced that without this fee reduction which has already been in place for a decade, these projects will not go forward at all and we'll miss out on the additional housing and many high-quality jobs."

The housing projects in question include some high rises geared toward students and others slated to be dorm-style co-living spaces. 

Mayor Sam Liccardo released a statement saying, "We face a straightforward choice: either reduce fees and get housing built, or we sit on our hands and hope for some miracle to solve this housing crisis for us."

If the city council decides to extend the fee waiver, it would be for a period of two more years.

They will take up the matter on Tuesday.