Labor and business leaders at odds over San Jose high-rise housing

SAN JOSE, Calif. (KGO) -- Despite Silicon Valley's booming economy, downtown San Jose hasn't seen a high-rise residential tower break ground in nearly two years. Multiple projects are being planned, but could be in jeopardy if the city council doesn't act on a proposal to continue waiving developer fees.

City councilmembers will vote next week on whether or not to extend the city's housing fee reduction program, which has been in place since 2014, but is set to expire in 2021. The fees were originally intended to help build affordable housing in the city.

Protesters gathered in front of city hall Thursday morning, urging the city council to cancel the program, saying the City stands to lose nearly $57 million in developer fees.

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"If you're subsidizing housing, and you're not producing affordable housing, and you're not getting affordable housing, or transportation infrastructure, and you're not producing good quality jobs, it's not a good deal," said Ben Field, a representative with the South Bay Labor Council.

Those who support the program's extension say the City runs the risk of losing out on 3,500 housing units that are currently in the works downtown. Out of the nine high-rise projects being planned, just two have broken ground, including a communal living property one block west of the SJSU campus. Another tower project is under construction across from San Jose city hall.

"San Jose has always been dealing with this jobs-housing imbalance, so this is the place to really intensify the housing production in the downtown," said San Jose Downtown Association Executive Director Scott Knies.

With low profit margins, developers say the high cost of doing business in Silicon Valley already makes it a challenging place to build.

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"You see a lot of big development going on all over, public, private, all kinds right... and because of the labor shortage, the productivities have gone down. That's part of why the costs have escalated," said Webcor Senior Vice President Jitendra Pahilajani.

The city council will meet on Tuesday to consider extending the program until the end of 2023.

"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," said Mayor Sam Liccardo.

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