City Wants More

Developers will have to provide extra amenities for the city in
exchange for
right to build
Gilroy – City council members call it “extraction” while some developers call it “extortion,” at least behind closed doors. Whatever name it goes by, there’s no question that city leaders are trying to make the people who build homes pay for the right to cash in on Gilroy’s real estate market.

Officials are looking to overhaul a grading system used to judge housing projects to favor developers who ante up with items on Gilroy’s wish-list of public infrastructure projects. Meanwhile, they have formed a task force to create a system for extracting similar “value-added” items from smaller projects.

You won’t hear the word “extortion” from John Donahoe, a local engineer who has shepherded numerous housing projects through the permitting process, but he said he knows that other developers have used the phrase to describe the city’s pay-to-play attitude.

Donahoe is chair of the task force devising a system to extract so-called “amenities” – whether in the form of a small park or fees for use on other city projects – from developers of small projects. In exchange, the city will grant them permission to deviate from city standards on road widths, the distance homes must lie from property lines and other development constraints. He doesn’t necessarily object to having developers give something back in exchange for a loosening of restrictions; but for Donahoe, the city’s initial proposals left much to be desired.

“I have a problem with a one-size-fits-all option, or saying ‘We want anything we can get,’ ” Donahoe said, adding the city already charges high fees for every unit of housing in a project. “If you’re burdening projects with higher impact fees and additional extractions beyond the impact fees, it’s going to make it harder for developers to provide affordable housing.”

Sal Akhter, another task force member and a small developer with two projects that will go before city council in coming months, also questioned the policy changes. If the city is to ask developers to cough up “value-added” items, he said they should be based on the size of the project and the extent it deviates from city standards.

“So long as it’s an equitable trade, it’s fine. But I don’t think it’s there yet,” Akhter said. “I think the city’s reaching around trying to get as many things as it can from everybody. Right now, there is no formula in place.”

Developers and landowners with harsher views refused to go on the record for fear that it could harm their chances of getting projects approved. But those views are hardly a secret among city planners such as Melissa Durkin, advisor to Donahoe and others on the task force crafting the Planned Unit Development Amenity Policy.

“Obviously, a lot of the developers were not pleased because it’s going to cost them more money,” Durkin said of the policy’s first draft. “Either they’ll have to construct different housing types or reduce the number of lots to conform to this policy. That’s why council formed this task force – to give the developers more of a voice.”

While the city is willing to work with developers to shape the new “extraction” policies, it appears unlikely that outward or behind-the-scenes grumbling by developers will diminish the city’s resolve to push forward with the proposals.

The inability to significantly raise property taxes combined with state takeaways of local tax money means the city will look more and more to developers to help pay for Gilroy’s $100 million in unfunded liabilities, according to Community Development Director Wendie Rooney. The laundry list of projects with no immediate source of funding range from cracked sidewalks and rundown alleys to wish-list items such as downtown plazas.

“If somebody is going to get some kind of benefit … then there should be something given back to the community,” Rooney said, summing up the attitude expressed by council. “I think what’s going on in Gilroy is pretty typical of any community that’s growing and has needs to be met.”