Inclusionary zoning policy would require percentage of
‘affordable’ homes in large-scale projects
Gilroy – A majority of city councilmen favor a policy that would require developers of large-scale projects to make a percentage of their homes affordable to low-income residents.
Known in the housing industry as inclusionary zoning, such policies typically inspire shudders from developers and applause from affordable housing advocates.
The opening salvo in Gilroy’s inclusionary zoning debate came in recent weeks, when Mayor Al Pinheiro and Councilman Peter Arellano expressed support for such a policy during discussion of a 100-unit project put forth by developer James Suner, an architect of downtown renewal. While voting in favor of the project, both officials expressed frustration with Suner’s insistence that homes in his project, slated for construction just south of the Platinum Theater on Monterey Road, would be “affordable by design.” A few days later, Pinheiro proposed an inclusionary zoning policy for future projects of a similar scale. A prime candidate for such a policy, according to Pinheiro, is a proposal to convert the defunct Indian Motorcycle plant off 10th Street into 200 condominiums and townhomes.
During interviews Monday, just hours before meeting to study the Indian Motorcycle project, Councilmen Dion Bracco and Paul Correa said they would support inclusionary zoning for such large projects.
“It makes sense especially on the bigger ones,” said Correa, who has an urban planning degree and acquires land for Summerhill Homes, a Bay Area developer. “It’s much more financially possible for a bigger project to provide those affordable units.”
Gilroy is not the only community in the region that has had to take a stronger hand with developers. Communities such as Cupertino and Mountain View both require developers to pay a share of building costs into an affordable housing fund, and the former mandates affordable housing as a percentage of all large projects, according to Correa.
Last fall, the inclusionary zoning debate played out in Salinas. In its seven-year projection of housing needs, the Association of Bay Area Governments found that the city would need 64 percent of homes to fall within price ranges affordable to those earning very-low, low or moderate incomes. For four-person families, those categories range from $30,400 to $72,950 a year. But a December 2004 study by Bay Area Economics, a San Francisco real estate analysis firm, showed that less than 5 percent of homes sold in the city in recent years were affordable to such wage earners.
To fill the gap, the city created a task force that ultimately recommended increasing the existing inclusionary zoning policy from 12 percent per project to between 20 and 35 percent. On the high end, the policy requires a for-profit developer to designate land for affordable housing but allows the affordable component to be farmed out to a nonprofit builder.
Salinas Deputy City Manager Jorge Rifa said the city incorporated various incentives and flexibility into several categories. The new ordinance was approved in September and the city has already received an application in the 20 percent category.
“I think initially it was contentious,” Rifa said of the revised policy. “I think when it came right down to it, the council struck a balance between the needs of the private sector and the overall community needs for affordable housing. California is one of the most expensive places to live in the country. I think developers accept the fact that inclusionary zoning from a public policy standpoint is one of the requirements.”
In Gilroy, the debate is in its earliest phase but has already spilled onto the Dispatch Op-Ed page, with business and housing advocates lining up on opposing sides.
“(Affordable housing) might be a community need, but all Gilroyans aren’t being asked to pay,” wrote Gilroy Chamber of Commerce member Terry Feinberg in a recent letter. “The city isn’t offering to pick up the cost. Nor will the developers, as they will just add the costs to the other homes in the development. Inclusionary zoning puts the cost solely on the backs of the neighbors of those being subsidized, making housing even more expensive for those unable to qualify for the subsidized units.”
That argument rang hollow for Stephanie Schaaf, public education and advocacy coordinator for EHC Lifebuilders, the nonprofit agency building a homeless shelter in northern Gilroy.
“Under inclusionary zoning, those who can afford to will continue to pay the going rate – and not a penny more – for their homes. That is the definition of market rate,” she wrote. “And those Gilroyans who cannot afford market rate will have a chance to remain a part of the community.”
Last year, city leaders adopted a policy that requires 15 percent of all homes built in the residential neighborhoods surrounding Gilroy’s historic core to be priced at affordable rates. But some leaders such as Pinheiro are now suggesting that an even more stringent policy might be in order.
“You can only raise the unit prices so much because the market will only bear so much,” Correa said. “Sure you take a hit on the bottom line as a developer, but it’s better for the community as a whole. It’s going to provide much-needed housing.”
Councilman Roland Velasco, who has called on council to spend more time studying the city’s affordable housing policies, said he would “be open” to considering an inclusionary policy. But he had his reservations.
“I’m not going to jump on a bandwagon to do inclusionary zoning,” Velasco said. “It feels like we’re doing things piecemeal without stepping back and taking a look at an overall strategy.
Inclusionary zoning
– A policy that forces developers to price a percentage of homes in their projects at levels affordable to lower-income people. Some communities allow
developers to bypass the requirement by paying into an affordable housing development fund. Gilroy
currently has a policy that requires 15 percent of new homes in various neighborhoods to be priced at affordable rates, but does not impose that restriction on individual projects.egy.”
