The Pallesen apartment building is located on East Reed Street near Interstate 280. Developer KT Urban plans to build a high-rise in its place.
KT Urban will move the Pallesen building to city-owned land a few blocks away.
Habitat for Humanity East Bay/Silicon Valley will renovate the building and turn it into affordable housing. On Tuesday, the Preservation Action Council of San Jose presented a $10,000 check to the nonprofit, to provide initial funding.
"It's preserving a piece of our history of San Jose, rather than just demolishing it," said San Jose City Councilmember Raul Peralez.
The city will lease its land to Habitat for Humanity for $1 per year.