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).”
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.
The university believes the potential tower conversion to student housing presents a great opportunity for SJSU
“We have a struggling hotel,” Faas said. “Filling it up with 800 students makes for a more vibrant downtown.”