Leaseback Enables Danco’s Affordable Complex in San Jose

Danco Communities has cut a deal with Santa Clara County to enable the development of a 154-unit affordable housing complex in San Jose.

The Arcata-based affordable housing developer sold the 1.2-acre site at 266 and 270 Sunol Street and 777 West San Carlos Street to the county for $11.2 million, then leased it back, SiliconValley.com reported. Terms of the lease deal were not disclosed.

Danco bought the property in March 2020 for the same price — $11.2 million. In April, the county approved the purchase at that price. A lease-back deal is common for affordable housing projects in California, according to the news site.

A rendering of 266 and 270 Sunol Street in San Jose (Danco Group)

Plans for the 42,400-square-foot project, dubbed Madrone Place, call for a six-story complex with 154 apartments at Sunol and San Carlos streets, west of Highway 87 near Downtown.

All but a manager’s unit would be affordable. Four buildings of unknown type, containing nearly 13,600 square feet, would be demolished.

The T-shaped building, designed by San Diego-based SGPA Architecture and Planning, would have a parking garage on the ground floor, topped by five stories of apartments. It would come with a courtyard, daycare center, play area, gym, bicycle parking and meeting room.

The T-shaped complex, in green, white and gray, would feature vertical windows and balconies. It would have 50 studios, 25 one-bedroom, 39 two-bedroom and 39 three-bedroom apartments, plus the manager’s unit, according to the county. Apartments would range from 400 to 1,100 square feet.

The $136 million project, fast-tracked by Senate Bill 35, was funded by state tax-exempt bonds, county Measure A funds, City of San Jose funding and equity funds from private investors eligible for tax credits.

The complex would include 102 apartments for households making 30 percent or less of the area median income, 16 units for tenants earning 50 percent or less, and 35 units for residents earning 60 percent or less. The county median income last year was $168,500.

In April, Danco Communities, a unit of Danco Group, bought an 18-acre site in Moorpark, northwest of Los Angeles, for a 200-unit apartment project. The Humboldt County developer has multifamily and commercial projects in San Jose, Oakland and Sacramento.In January, Danco bought an approved site for a 131-unit affordable housing complex in Petaluma for $10.6 million.

— Dana Bartholomew