Sand Hill Property has struck a deal to buy down its obligation for affordable units at the proposed redevelopment of the El Paseo de Saratoga Shopping Center in San Jose.
The Palo Alto-based developer got an approval from the San Jose Planning Commission to cut several hundred residential units — including nearly all of those set aside as affordable — for a one-time payment of $13.9 million, the San Jose Mercury News reported.
Its representative told city officials that the previously approved plan for 994 units, with 150 deemed affordable, was no longer in line with market conditions.
The project is now expected to include 772 units, with 39 considered affordable and an assisted living facility for seniors.
“I was really excited about the initial project and the current land use at El Paseo is very old-fashioned and very much not making full use of the land,” Planning Commissioner Justin Lardinois told the Mercury News. “I’m really excited to see mixed-use development there. I’m disappointed that the project really has across-the-board reductions … but at the same time, I recognize that when these things go through a many-year planning process, the economic conditions do change.”
Sand Hill Property bought the 30-acre shopping center for $147 million in 2019, and planned to redevelop a portion of the property, leaving about two-thirds intact for retail. The original plan for 150 affordable units was based on a 15 percent requirement by the city. Backing away from the 15 percent level brought up the $13.9 million payment as a fee-in-lieu of the requirement.
The plans originally had four buildings of up to 12 stories with both residential and commercial space. It has changed several times during the retrenchment of the office segment as well as changes in interest rates and recent bouts of inflation
Now plans call for one building with 12 floors and a total of 398 units with 14,139 square feet of commercial space; a 10-story building with 374 units and 17,447 square feet of commercial space; and the senior facility of seven stories.