SAN JOSE — A deal to convert a downtown San Jose hotel tower into university housing for SJSU students has moved closer to reality — although a local union raised the specter of tax and job losses due to the plan.
The deal involves the sale of the 264-room southern tower of the 805-room Signia by Hilton San Jose hotel whereby a real estate developer would purchase the south tower and then lease the rooms in the highrise to San Jose State University students.
Under this plan, the 541-room north tower would remain a hotel owned by an affiliate controlled by Bay Area business executive Sam Hirbod and operated by Hilton officials. The hotel is located at 170 South Market Street in San Jose.
The San Jose City Council voted on Tuesday to agree to the sale of the south tower from the Hirbod group to an affiliate of Mill Valley-based developer Throckmorton Partners as well as to separate the current hotel property into two lots, one for the north tower and one for the south tower.
Due to brutally weak demand for hotel rooms in the Bay Area, the south tower is empty and hotel guests are being booked only into the northern tower. The empty tower means it’s generating no transient occupancy taxes, also known as TOT.
San Jose Mayor Matt Mahan acknowledged that city officials had to confront tough choices in their decision to accommodate the sale of the hotel’s south tower annex.
“We have to be responsive to market conditions,” Mayor Mahan said in comments prior to the council’s vote. “That south tower sits empty and generates no TOT (transient occupancy taxes). A failure to act here would forgo a significant opportunity.”
But officials with UNITE Here Local 19, whose members provide an array of services at the hotel, raised concerns about potential job and tax revenue losses if one of the two towers is closed and converted to housing.
“This deal is bad for San Jose,” said Enrique Fernandez, business manager with UNITE Here Local 19. “We are losing hotel rooms, union jobs, and there is potentially a loss of tax revenue.”
If San Jose State winds up leasing the south tower, several hundred SJSU students could be living in the highrise, Charlie Faas, the university’s vice president for administration and finance, estimated during a brief presentation to the City Council.
“This is a really unique opportunity,” Faas said.
Only two events would ever lead to the huge hotel selling out every one of its rooms, according to Faas, who in addition to his SJSU duties also is the chair of the San Jose Sports Authority. Those events: the Super Bowl and the World Cup.
“Other than that, we’re not going to fill the place up,” Faas said. “We have a struggling hotel.”
For these reasons, San Jose State University students could make a huge difference if they are housed at the hotel’s southern tower.
“Filling it up with 800 students on a daily basis and then internships during the summer make a vibrant downtown,” Faas said. “All of these empty storefronts that we have get filled. People feel safer. People feel activated. And our students are going to enjoy a cheaper, more affordable place to live.”
Faas noted that the walk from the southern tower to the university’s Dr. Martin Luther King Jr. library on East San Fernando Street is shorter than the walk from the current university housing to that same library.
“Some people are afraid of students coming into the downtown,” Faas said. “But students have money, students have activation, they have eyeballs that can provide safety for everyone.”
Councilmember Omar Torres raised the question about potential job losses
