Project needs all remaining housing permits slotted for the
city’s December housing competition
Gilroy – A pair of local developers could bring 236 new homes to South Gilroy if they’re able to corner the market this winter on housing permits.
To make the Oak Grove project a reality, Michael McDermott and Vince Giacalone need all 191 housing allocations city leaders will dole out in a December competition. Plus, they’re hoping council members will choose to grant them so-called “density bonuses”, or permission to exceed the cap on homes, for including affordable housing in the project at the corner of Luchessa Avenue and Monterey Road.
The developers are looking to sweeten the deal by offering to build one of two downtown plazas on the city’s wish-list of public infrastructure projects. But a bigger enticement for city officials may be the prospect of getting free road improvements along a roughly quarter-mile stretch of Luchessa Avenue. Development of the 27-acre site will trigger requirements to expand the road from two to four lanes, increasing its use as a connection to U.S. Highway 101 for future residential neighborhoods in west Gilroy.
“It’s something the city would like to get built, but then you run into the 191 issue, so we’ll see,” McDermott said. “We have the application in. We’ll cross that bridge when we get there.”
Development guidelines require 15 out of every 100 homes to be priced at affordable rates. The application shows plans to meet the 15 percent baseline and to provide additional units that are “affordable by design” – an increasingly common catchphrase among developers. It refers to the naturally lower prices associated with projects that include a large number of small units.
For the moment, it remains unclear if city leaders will agree to a density bonus for a project that does not exceed the 15 percent minimum.
“Until I see exactly what it is that they’re proposing and what their justification is for the additional units, I can’t really comment,” Councilman Russ Valiquette said.
The developers could also run into obstacles as they seek to monopolize the last remaining permits in Gilroy’s 10-year home construction cycle. Officials have grafted exemptions – some anti-growth advocates call them loopholes – onto the city’s growth limit for numerous housing projects, allowing construction of hundreds of homes never contemplated during the last major competition for permits in 2003.
Barring a new exemption for this project – McDermott and Giacalone have not asked for one – this winter’s competition for permits, which are left over from the 2003 competition and other housing projects, will be the last chance McDermott and Giacalone have to build before 2013, when the next major housing competition is held.
It remains unclear how many other developers may seek a share of the 191 units, but city leaders and McDermott are confident they will fare well.
Officials are eager to see the Luchessa Avenue widening take place in hopes of relieving future traffic pressure on the Tenth Street corridor. Once a new Tenth Street bridge is complete in 2011, the street will serve as the main connector for 1,700 homes sprouting in southwest Gilroy over the next decade.
McDermott and Giacalone have not purchased the land for the Oak Grove project, but have a contract to buy the property if they succeed in obtaining the housing permits, said Richard Barberi, a Hollister farmer who owns the land and has let it lie fallow for the last few years.
McDermott would not disclose any details about the financial arrangements or the sale price of the land, which is surrounded by homes to the north, car dealerships and hotels to the east, and a new sports complex under construction to the south. But he said he and his partner have spent two years on designs for the project.
The Oak Grove project will house more than 800 new residents. Plans call for a strip of four storefronts at the corner of Luchessa Avenue and Monterey Road, with 24
above-ground apartments or condominiums. A park with barbecue pits and two play areas will connect the project to the Little League ball fields and playgrounds at the city’s sports complex to the south.
“I think development of that property will give us the needed improvements on Luchessa for traffic control and to provide a safe avenue for people to travel to and from the sports complex,” said Councilman Craig Gartman.
McDermott said the project has other selling points as well.
“I think some of the key points are its proximity to downtown, easy access to 101 for commuters, the improvements of Luchessa Road, and not having a dirt field next to a new sports park,” he said.
A newly formed task force will review the proposal to ensure it jibes with the city’s Neighborhood District Policy, a set of guidelines that call for neighborhoods of mixed housing types and income levels. The task force plans to meet for the first time Wednesday night.
Valiquette predicted the task force would have an easier time with its work since McDermott and Giacalone have already submitted a plan.
“One of the things that tie down task forces is that they come in with a completely clean slate,” Valiquette said.
“At least this way from their end, they’re coming in with something and saying this is the way we envision it. It makes it a little easier on the task force. Now they have something to work with. It’ll speed up the process.”
