Ante up for affordable

 – Fifteen out of every 100 homes in the city’s future
neighborhood districts will have to be priced at affordable rates
under a policy that has received preliminary approval from City
Council. The six Neighborhood Districts encompass 1,400 acres and
make up the vast majority of land earmarked fo
r new homes.
Gilroy – Fifteen out of every 100 homes in the city’s future neighborhood districts will have to be priced at affordable rates under a policy that has received preliminary approval from City Council. The six Neighborhood Districts encompass 1,400 acres and make up the vast majority of land earmarked for new homes.

The 15-percent baseline requirement approved Monday night represents an increase from the 10 percent figure developers, landowners, and other community representatives signed off on in recent months as part of a task force charged with drafting the Neighborhood District Policy.

The draft policy originally recommended by the task force at the beginning of the year, included only a recommendation that developers price 10-percent of homes within reach of low- and middle-income earners. At the request of City Council, planning staff tightened the 10 percent figure from a recommendation to a mandate.

But that has failed to satisfy some council members, especially Mayor Al Pinheiro, who has been the driving force behind an increase in the baseline percentage.

While admitting an increase of 5 percent would not solve the city’s affordable housing issues, he stressed that it could only increase the number of affordable homes.

Council members voted unanimously to prepare ordinances for final approval that incorporate the 15 percent minimum, but the debate surrounding the Neighborhood District Policy may be far from over.

During an hour-long study session prior to the regular council meeting Monday night, councilmen Bob Dillon and Roland Velasco questioned the value of increasing the baseline requirements as well as its fairness to developers and landowners.

“Let’s call a spade a spade. This is inclusionary zoning,” said Velasco, referring to the practice of forcing developers to offer some percentage of a housing project at affordable rates. “I’m not sure by adding 5 percent we’re not putting an essentially public problem on developers and builders.”

Dillon dubbed the 15 percent affordable housing requirement as a “misnomer” for a policy that “extracts money from developers.”

Pinheiro did not argue: “Maybe it means the percentage the developer makes is less than they’re used to.”

Councilmen Paul Correa, Charles Morales, and Russ Valiquette joined the mayor in supporting the increased percentage.

Correa, who works for a Bay Area development company, said his employer has “no problem” pricing 15 to 20 percent of units in a project at affordable rates.

“It’s not a question of feeling sorry for (the developers),” Dillon responded. “It’s whether it’s just.”

But for Pinheiro, who said he was willing to go as high as 20 percent on the baseline requirement, the new percentage represents a compromise.

He said that developers he has spoken with described the 15 percent baseline as “doable.”

Regardless of the percentage, councilmen and city staff agree that Gilroy’s current incentive-based approach has failed to promote affordable housing.

The current program gives developers extra points in the city’s annual building-permit competition for projects with some affordable units, while projects devoted primarily to affordable housing can skip the competition entirely. The numbers indicate, however, that incentives have failed to entice developers, who have snapped up all but 191 of the 2,550 building permits earmarked for market-rate homes, while more than 600 of the 700 affordable-housing exemptions remain.

While councilmen appear to have settled the mandatory minimum issue, serious questions remain about the viability of the policy in certain areas of the city.

Councilman Gartman pointed out that the policy requires landowners to come together and create a specific plan of development for an entire neighborhood district before anyone can begin building.

That approach has grown from the example set by the Glen Loma Ranch project, a roughly 1,700-unit project that represents a single neighborhood in the city’s southwest quadrant. That project, roughly five years in the making, is just now passing through the final approval process.

Officials have pointed to the Glen Loma project as a template for planning in other neighborhood districts, but Gartman and others have argued that such an approach will prove unwieldy if not impossible when dealing with north central Gilroy.

That neighborhood, located just south of Buena Vista Avenue, contains 277 acres of land split into 119 separate parcels.

Gartman argued that the policy’s requirement for a specific plan would create a “bottleneck” in north Gilroy, choking off all development for years while landowners try to agree on a single plan.

“If you have a small developer with a few acres, you’re going to be out of business for years until everyone else gets together,” he said. Even those looking to build affordable housing, he pointed out, would be barred from proceeding until a specific plan is put in place.

City Planning Manager Bill Faus said planning for the north central district will require the city taking the lead, as it has done for planning in the downtown area.

Faus acknowledged that the planning process “may hold (some developers) up to some degree,” but defended the city’s approach.

“We do not have 100 percent of property owners in agreement with the direction of the (Downtown) Specific Plan,” he said, “although we’ve put together a process by which we’re all acknowledging the process and working together.”

Developer James Suner, a member of the Downtown Specific Plan Task Force, said the 15 percent requirement “seems reasonable,” but echoed Gartman’s reservations about the overall Neighborhood District Policy.

“You have to allow for the individual property owners to develop within the plan,” he said.

He suggested Gilroy follow the example of cities in the Central Valley that limit themselves to planning street layouts and public utilities, without getting tangled in detail of housing types and mixes.

In other words, getting too specific with specific plans could spell major consequences for the city’s already limited and pricey housing market.

“If the north central area can’t develop because it’s bogged down in the planning process,” Suner reasoned, “it’s going to affect our housing availability.”

More than minimums

In addition to setting a minimum percentage for affordable housing, the city’s draft Neighborhood District Policy would:

• Provide bonuses in the city’s building permit competition to projects that exceed minimum affordable housing requirements

• Increase number of homes allowed per acre

• Mandate a mix of housing

• Establish architectural guidelines for homes

• Require traffic and sidewalk standards

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