SAN JOSE — As San Jose’s Japantown finally sees construction begin at the site of the city’s former Corporation Yard and its historic Chinatown, community members expressed hope as the long-delayed project is now pouring concrete. Part of the development, however, has been put on hold, with costs becoming too high to move forward on the Creative Center for the Arts.

The Nichi Bei Weekly reported last year that Shea Properties took over most of the Japantown Square site in 2017 to build a mixed-use project featuring 518 market-rate apartments and about 18,000 square-feet of street-level retail. The developers estimated the complex would be finished in 2021. Shea Properties did not respond to follow up inquiries at press time.

The site has stood empty since 2007 and has been passed around to different developers after multiple false-starts spanning more than a decade of planning.

While Shea’s development has broken ground, SVCreates, in partnership with creative organizations such as San Jose Taiko, also planned to build a Creative Center for the Arts on the site to help house arts organizations in the region, which were quickly finding themselves priced out by gentrification. The building would have housed a myriad of arts organizations, including San Jose Taiko, and offered studio space for organizations to practice and create their work.

The project, however, was put on pause according to Connie Martinez, chief executive officer of SVC, due to infeasible construction costs. Martinez said the major contributing factor to the decision was that the construction boom in the region had inflated what originally would have been a $30 million project into $45 million. In addition to a more expensive project, she cited the new market tax credits that are no longer available due to changes made by the Trump administration, making the project untenable in its original form.

“This was one of our big projects and … it’s all about addressing the dislocation issues that are in Silicon Valley,” Martinez told the Nichi Bei Weekly by phone. “So the very thing that we’re trying to solve is part of our challenge.”

Martinez said they are working with Shea, the city of San Jose and its own partner organizations to find a viable alternative to the original plan, but said they are still several months away from developing a more concrete proposal. All she is certain of at the moment, is that the revised project would be scaled back from the original plans and cost less than $45 million.

Wisa Uemura, executive director of San Jose Taiko, said she is “hopefully optimistic” about the project. While the organization’s offices are located in Japantown, its practices are held in what will soon be part of Google’s development by the Diridon Station.

“The financial or fundraising challenges are considerable, … but we remained committed,” she said over the phone. “San Jose Taiko specifically is committed to trying to figure out a solution that keeps us in Japantown.”

Uemura said she does not have enough information to confidently say what future plans will entail, but Martinez said San Jose Taiko remains “the centerpiece for the project.”

On Shea’s Japantown Square project itself, Uemura said she is happy the developers did their best to honor past conversations the community had with previous developers for the site. She said the tall apartments would inevitably change the neighborhood, but said the Corporation Yard project was not the only new development in the area.

In addition to Shea Properties, Hanover’s Cannery Park Village recently opened, while TriForge Capital Partners have also started work on 7EMPIRE, a 97-residence mixed use development at 7th and Empire streets.

Derek Allen, president of LandForge, Inc., told the Nichi Bei Weekly the development will also feature an art park and is working with a local studio to be an artist in residence at the development. Allen estimated the project will be completed in the spring of 2021.

“We’re very much aware that Japantown is becoming a very trendy or ideal place to live and work,” Uemura said. “There are a lot of new residents moving in and I think the approach that we’re trying to take is what can we do to … identify and articulate and hold close those living traditions that makes San Jose’s Japantown the special neighborhood that it is.”

Tamiko Rast, president of the Japantown Business Association, told the Nichi Bei Weekly that local businesses are looking forward to the project’s completion, adding the community has a good working dialogue with the developers. “I am reminded of the site’s remarkable history as one of San Jose’s first Chinatowns — known as Heinlenville — and look forward to seeing its new life,” she said in an e-mail.

In addition to more foot traffic from the new developments, most just expressed relief the open lot was finally getting redeveloped.

“Just glad that something is finally being done after all these years,” Mark Santo, owner of Santo Market said. “That’s the main thing, as long as something is being done instead of a vacant lot.”