San Jose Picks a New Developer to Turn the Arena Hotel Shelter Into Mixed-Income Housing

San Jose is changing course on the Arena Hotel, the 90-room interim homeless shelter on The Alameda. On Oct. 6 the City Council voted unanimously to open negotiations with Episcopal Community Services of San Francisco to turn the site into mixed-income housing, Hoodline reported.

What the vote does

The resolution, City Council file 26-1035, lets the city's housing director sign a three-year exclusive negotiating agreement with Episcopal Community Services, with two possible six-month extensions at the city's discretion. It also allows a right-of-entry agreement so the nonprofit can do due diligence on the property.

The deal has two pieces. The existing motel rooms would be converted into units with incomes and rents consistent with the project's state Homekey agreement. The site's surface parking lot could later hold new mixed-income housing for households earning up to 120% of area median income. According to the state housing department figures Hoodline cited, that cap is $246,600 for a family of four in Santa Clara County.

The vote does not approve construction or a final project. PropertyWorx LLC, the second-highest-scoring bidder, was named as a backup if Episcopal Community Services cannot reach an agreement or misses its obligations.

Why the switch

Episcopal Community Services replaces the original team of developer Urban Housing Communities and operator HomeFirst Services of Santa Clara County, whose proposals the city found were not financially feasible, Hoodline reported, citing The Mercury News. San Jose is also asking the state to amend its Homekey agreement so the city becomes the sole grantee, and wants permission to move the required extremely low-income units somewhere else.

The project was described as a $45.2 million effort, funded by a $25.2 million Homekey Round 2 grant and $20.8 million from the city's Measure E property transfer tax. The council first took up the item on Sept. 1, then delayed the vote to hold community meetings after neighbors and merchants complained about conditions at the site.

Still unanswered

City officials have not said where current Arena Hotel residents will go once renovation starts, and the plan still depends on the state signing off on the restructured Homekey deal.