Incentives to build high

High-rise housing developers will continue to receive 50 percent reductions in construction taxes and parkland fees for downtown projects beginning construction before July 2018, the City Council unanimously decided Dec. 13.

“We’re trying to get development and dollars out into the community,” said Councilmember Raul Peralez, who led the effort along with Mayor Sam Liccardo.

Despite record development in Silicon Valley, the last high-rise residential project to start construction downtown was Silvery Towers in February 2015.

“It’s harder for developers to get money these days, and the fees we charge as a city are too high,” said Councilmember Johnny Khamis. “If no development is breaking ground, then 100 percent of nothing is nothing.”

The council did not put a cap on the number of units that could qualify for the discounts. Ten high-rise housing projects representing more than 3,600 units are currently in the city’s development pipeline.

Before the Council voted, developers including KT Urban’s Mark Tersini and CORE’s David Neale described difficulties associated with securing financing, such as rising construction costs. Tersini has plans to develop the former Greyhound Bus Station site, and CORE has a tower project in SoFA.

“Help us fulfill all of our dreams for downtown,” Neale said. “We are on the brink.”

Union workers requested new labor and wage requirements to be part of the proposal. The council included provisions to hire locally, encourage compliance with state apprenticeship program requirements and agreed to work with labor and businesses in 2017 on an agreement beneficial to both sides.

Also, a task force will form to study the parkland fees. City staff estimated that $20 million would be dedicated to parks if an additional 2,000 downtown high-rise units are built, even with the 50 percent discount. At 2,000 units, developers would receive an $18 million discount in park fees, but annual property taxes would increase $10 million in the first year after they are built, the city estimated. In addition, downtown businesses would feel positive economic impact of new residents.

The incentives will help take several of the 10 projects from the “sideline to skyline,” according to SJDA Executive Director Scott Knies. The high-rise incentives were first passed in 2007 for parks only and then again in 2012 for parks and construction taxes. Developers have used the incentives to build 1,522 finished units and another 1,043 units currently under construction.

Supergraphics approved: Also Dec. 13, the City Council reacted to the supergraphic sign posted by Oracle on its Almaden Boulevard building during the Super Bowl last February.

The Council approved such supergraphics on non-residential buildings and parking garages in downtown for a week before a large special event or convention and a week after the event. Such large signs require a permit and fees to be determined. The fees collected will be used to abate graffiti and for beautification and mural projects.