Maracor Development, Pacific West Communities and the Central Valley Coalition for Affordable Housing have landed $66 million in financing to build a 166-unit affordable complex in Downtown San Jose.
The Bay Area-based developers, and the Merced-based nonprofit, scored the loans to build a six-story building at 802 South First Street, near the SoFa District, the San Jose Mercury News reported, citing public documents.
PNC National Bank, based in Pittsburgh, provided the financing, which includes a construction loan of $29 million and a $37 million bridge loan.
The developers are planning 166 apartments on site, including 164 affordable units and two units for onsite managers, plus 1,500 square feet for ground-floor shops.
The development would be built on the former site of D’Amico Tires. The D’Amico family, which owns the property, agreed to provide a ground lease to the development alliance.
The $95.9 million project would be paid for with the loans, plus state-backed funding and California tax credits.
The state-backed financing will come in the form of tax-exempt funding, tax credits, fee deferrals and other money vehicles to help cover the gap in overall cost.
The affordable housing development could be completed by the end of 2026 near South First Street and Virginia Street on the southern edge of Downtown.
“This housing can move downtown activity further south,” Brad Dickason, a principal with Maracor, told the Mercury News. “The project will help to activate this part of San Jose.”
He said the development alliance can save money through the ground lease, allowing it to save on project costs by renting the land rather than paying extra to own it..
“The ground lease makes it easier for us to get the capital stack we need for the project to be feasible,” Dickason said.
In April, Maracor filed preliminary plans to build 240 affordable apartments near the Warm Springs BART station in Fremont.
In February, Pacific West Builders, a contracting unit of Pacific West Communities, secured $125.6 million in construction financing to build 173 affordable apartments at 4300 Stevens Creek Boulevard in west San Jose, after buying the approved site for $3.5 million.
In December 2022, both developers teamed up to propose replacing a strip mall in south San Jose with a 260-unit apartment building at 2628 and 2638 Union Avenue.
— Dana Bartholomew
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