Are Californians ready to give up their cars? A San Jose apartment tower put that to the test

The Fay apartment tower in downtown San Jose opened two years ago with fewer than one parking spot for every three units, and the building now sits 60% vacant — a sign that California's 2022 law eliminating parking requirements near transit stops is colliding with the state's car-dependent culture. The building has entered foreclosure and changed hands, and city officials now plan to lease empty units as discounted housing for public employees, many of whom may have to park seven blocks away at City Hall. The project's struggles highlight growing tensions across the Bay Area as cities like San Jose, Oakland and Berkeley ease parking rules to lower housing costs and reduce pollution, while tenants report mounting parking fines, vandalism and frustration.

Getting your Trinity Audio //trinityaudio.ai player ready...The Fay apartment tower in downtown San Jose was built to draw residents back to the city, a sleek high-rise with rooftop views and luxury amenities. But two years later, the building is 60% vacant, and city officials say one key reason stands out: not enough parking. Two years after it opened with fewer than one parking spot for every three apartments, The Fay has plunged into foreclosure, changed hands and become part of a city plan to lease its empty units as discounted housing for public employees. The catch: Many of those workers may have to leave their cars at City Hall, seven blocks away. The Fay’s parking problems provide an early test of a 2022 statewide law that erased parking requirements on housing developments within a half mile of a major public transit stop. Some Bay Area cities went a step further: San Jose is eliminating parking requirements https://www.mercurynews.com/2022/12/07/bye-bye-parking-requirements-san-jose-becomes-largest-city-to-abolish-minimum-parking/ throughout the city regardless of transit stops. Oakland and Berkeley are easing their rules, too, as are numerous other cities across the U.S., including Austin, Minneapolis and Kansas City. Housing, environment and transportation advocates have been cheerleaders for the parking reforms as a way to ease the housing crisis by lowering developers’ construction costs — underground garages can cost roughly $100,000 per stall — as well as reach ambitious goals to reduce pollution and encourage more use of public transit. But those policies are colliding with California’s deep-rooted car culture — and in pockets around the Bay Area, the signs of pushback are starting to show. “Government officials sometimes think, okay, we want less driving in California, so we won’t give people parking spaces, and therefore they won’t be able to have cars — and it just doesn’t work,” said Paul Zeger, president of Polaris Pacific real estate company with projects around the Bay Area. “It’s difficult to legislate personal behavior, especially things that are important to people. And if you grew up in California, having a car is one of them.” Across the Bay Area, tenants living in housing projects with limited parking are finding themselves running up parking fines and doing battle with neighbors over street parking. At some affordable housing projects, where parking requirements were eased as early as 2015, the frustration is mounting. “I have 20 parking violations,” said Candy Sandoval, a custodian and single mother of four who lives at Quetzal Gardens low-income housing in East San Jose, “plus my car was vandalized because of parking on the street.” Her fellow tenants are so exasperated without enough parking — there are 42 spots to accommodate 70 apartments — some of them park in silent protest directly in front of the building, smack in the middle of a designated bus stop. But in the heart of downtown San Jose, the same developers who purchased The Fay last month are doubling down: at the landmark Bank of Italy building on Santa Clara Street being converted to apartments, they’re offering zero onsite parking. “We have some of the best weather in the U.S. Walking a few blocks is healthy and connects you to the city and community,” said Gary Dillabough of Urban Community in San Jose, a partner in both projects. “Look at European cities — they show minimal parking can be very successful and enjoyable.” Because the statewide law was passed during the COVID-19 pandemic and housing construction has been slow and more expensive ever since, data is scarce about whether the reforms are making headway on their lofty housing, transit and pollution goals. UCLA’s Center for Parking Policy, which has pioneered research on the subject and published a report in February about the parking laws, called the impacts on the housing supply so far “modest rather than dramatic.” But an interesting pattern is emerging: developers are building less parking, but mostly for affordable and low-income housing projects, the study found. When it comes to the luxury market, parking continues to abound. In the Los Angeles and Seattle markets, for instance, the UCLA report found that “higher-end apartments frequently included two parking spaces, while more affordable housing options were created with no on-site parking.” In San Francisco, housing developers told researchers that stripping away parking requirements enabled them to increase the unit count in their buildings, and make them cheaper to build. The study did not mention how limited parking affected tenants and their neighbors. When The Fay celebrated its grand opening in 2024 on the outer edge of downtown, San Jose Mayor Matt Mahan called it an “exceptional building” that would have a huge impact on the community. The city had lured the London-based developer and its affiliate Morro real estate with nearly $10 million in tax and fee waivers — all in pursuit of attracting more people to live and work downtown and to justify more investment in public transportation, a strategy touted by Mahan and taken advantage of by several developers https://www.mercurynews.com/2025/06/18/san-jose-approves-more-than-10-million-in-tax-and-fee-waivers-to-spur-housing-construction/ over the past several years. The incentives weren’t enough to forestall foreclosure at The Fay, however. By January of this year, with rising interest rates and a 40% drop in the property’s value, the developer defaulted on a $182.5 million construction loan, and lender Madison Realty foreclosed on the property. By then, some 197 of the 336 units remained vacant. The new owners purchased it for $175 million, with the same lender providing $133.5 million in financing. San Jose’s housing director Erik Soliván said that “the property was certainly hampered by limited parking.” While acknowledging the headwinds limited parking can create for projects, he nonetheless said the tradeoff is still worthwhile. “Anytime you are advancing a number of goals … the first one through the door always takes the first couple punches,” Soliván said. “Some of those who are willing to move an initiative forward maybe get a little ahead of their time and they learn their lessons — and we can still continue to advance our work around populating the downtown area.” Dillabough, the partner in both The Fay and the Bank of Italy, brushes off parking issues at both buildings and is confident that the ubiquity of ride-sharing services and Waymo will quickly usher in more urban pioneers — and make parking garages “stranded assets.” “My belief is that ‘mobility’ is going to fundamentally change in downtown San Jose much faster than we think,” Dillabough said in a message. “We need to be leaders on this topic — the costs and timing to build parking factor in as to why we barely build housing.” Some 93% of California households own cars, and in Santa Clara, Alameda and Contra Costa counties, most households own an average of two. In San Francisco, an urban city that’s home to the ubiquitous Muni bus system and the birthplace of Uber and Lyft, about 30% of households are car-free. That leaves sprawling cities like San Jose with the special burden of convincing downtown dwellers they can survive without a vehicle. Even housing projects built around BART stations in Oakland and Fremont, for instance, are facing the same concerns: just because people may take transit doesn’t mean they are giving up their cars. City officials in Fremont established a parking patrol to respond to complaints around new housing developments in the Warm Springs area near a BART station, where some three-bedroom apartments have as few as 1.25 parking spaces each. In West Oakland, an old Greyhound terminal on Market Street converted to 102 apartments nearly a mile from a BART station relinquished the building back to the lender last year. While numerous market challenges contributed to its failure, limited parking forced the developer to dramatically lower rents. Just because developers are no longer required to build parking, however, doesn’t mean they won’t. Lenders — fearful of losing their investment if the project doesn’t attract tenants — often require at least some parking. But advocates who showed up to San Jose City Council meetings to support the repeal of parking requirements, groups including the Greenbelt Alliance, Silicon Valley Bike Coalition and Save the Bay, say they would rather build more spaces for people than cars. And recent local studies evaluating parking policies that date back to the 1940s show there are too many unused parking spaces already. A “Bay Area Parking Census” study conducted by SPUR, a regional think tank, found that the 15 million parking spaces it counted across the Bay Area amounted to 2.4 spaces for every car and approximately 1.9 parking spaces for every person living here. With easy access to parking, it found, residents are more likely to drive, worsening climate impacts and traffic congestion. Another parking survey, conducted by environmental group Transform, found that 28% of parking spaces at 80 multifamily residential buildings around the Bay Area were unused. “It’s a significant cost in housing development and many sit empty,” said Lori Droste, SPUR’s housing and planning policy director who, as a former Berkeley city councilwoman, drafted an ordinance in the 2010s getting rid of minimum parking requirements there. “We have a housing shortage crisis. We have a climate crisis and legislators are trying to address it in the best way that they can. If that means that we are creating spaces for people and not cars, then that’s the direction I believe that California should be moving in.” In some cases, the issue isn’t supply, but cost. Even when developers build enough parking, some tenants are balking at an “unbundling” trend that charges extra for parking spaces. At Alameda’s old Del Monte canning plant converted to Star Harbor apartments, spaces in the garage and surface lot are often empty, while neighboring streets are full. “They’re parking in front of people’s houses, on the side streets, anything not to pay to park here,” said Wendy Travis, who pays $4,000 a month for her one-bedroom apartment, plus $300 for two parking spaces in the garage. Neighbors on city streets “put up cones in front of their houses, but these people are brazen. They’ll just move them.” At Quetzal Gardens in East San Jose, where Sandoval racked up 20 parking tickets, Danny Garza, the head of the Plata Arroyo neighborhood across the street, says his neighborhood is overrun with tenants’ cars. “We have people parking on the sidewalks because there’s no parking in front of their house,” Garza said. One of his neighbors, who uses a walker and whose driveway is already full with the cars of family members, resorted to parking across the base of his driveway — and had his truck towed as a result. He paid $800 to get it back. At The Fay in San Jose, Emily Berry and her partner waited three months before they got off the waiting list to snag a coveted parking space in the garage. She barely considered taking the bus to her marketing job at Intel in Santa Clara, preferring instead the 15-minute drive in her own car. Until a parking spot opened up at The Fay, however, she parked in a lot under the adjacent Interstate 280 overpass. “It was kind of creepy and scary,” Berry said. “We definitely wanted a space in the building to make us feel more safe when we’re coming back from work, especially at night.” After The Fay’s foreclosure, the city of San Jose swooped in to master lease https://www.mercurynews.com/2026/02/25/san-jose-pilot-program-will-convert-nearly-200-units-at-downtown-high-rise-into-housing-for-middle-income-earners/ all the empty apartments — 197 of them — rescuing the distressed building and earning an equity stake to recoup its $11.2 million investment plus interest in return. The subsidy will come from voter-approved Measure E funds earmarked for affordable housing. It’s a financial model city officials are considering using at other distressed projects. To lure new tenants to The Fay, however, the city plans to dramatically reduce the rent and market the units to public employees who work downtown and “walking is a reasonable means of transportation,” Soliván, San Jose’s housing director, said. Some of those with cars will be encouraged to park their cars overnight at City Hall seven blocks away, where they already pay discounted monthly rates for a spot in a city garage, a solution that he and city planners said will “substantially mitigate the challenge of parking at the building.” Soliván is betting that cheaper rent will be worth it. It doesn’t appear they are rushing for the opportunity. Over the past three months, two dozen city workers have expressed an interest in renting one of the nearly 200 empty units there. Dillabough, meanwhile, is hoping the city invests in better streetscapes, so that the residents of his downtown buildings — like New Yorkers — will enjoy walking even 10 or 20 blocks. “The whole goal is that there’s going to be activation within downtown,” Solivan said. Whether more Californians are ready to trade parking spaces for lower rents and walkable neighborhoods remains uncertain. At least one commenter on a Reddit renters forum made it clear when he decided against The Fay: “I’d feel so confident to go ahead if it weren’t for the parking situation,” he wrote, “honestly feel like they didn’t plan this very well.” In the end, Zeger from Polaris Pacific said, “the consumers’ demand is really what governs what works and what doesn’t.”