Incentives, focus have jump started building downtown
Gilroy – Where a vacant lot once stood, a new building is taking shape next to the historic Strand Theater. Century-old brick and mortar buildings are transforming into earthquake-safe structures. And a few blocks from Monterey Street, the old cannery has come down to make way for the biggest housing complex ever built in city’s downtown.
For months, officials have vaunted the changes as the stirrings of new life in Gilroy’s downtown. And while storefronts remain empty and skeptics linger, city leaders point to a single map of the area as evidence of their prophecies of downtown renewal.
The map, distributed last week during the final meeting of the Downtown Specific Plan Task Force, contains 32 shaded parcels suggesting early signs of success from two and a half years of planning.
The latest version of the map shows 24 lots shaded in orange to indicate the number of projects now in the planning process. Eight parcels are shaded in green to indicate projects under discussion. Many, like the building now going up on the corner of Lewis and Monterey streets, mix street-level retail with upper-story apartments. The mixed-use concept is a central component in the vision to transform the city’s dilapidated main street into a cultural and social hub.
“It’s been an incredible success,” Councilman Craig Gartman said of the city’s downtown task force. “The amount of activity not only in construction today but in terms of the plans under discussion at city hall. Everything seems to be going in the right direction. There is synergy that has started.”
And while the plan embodying that vision is now complete after 30 months, the policy changes credited for downtown revitalization have been at work for more than a year.
The key to jump-starting the downtown?
“Time and money,” according to City Planning Manager Bill Faus.
“The task force started in 2003 and spent the first 12 months looking at development impediments,” he said. “The question they asked was why aren’t we seeing development?…There was a high degree of bureaucratic red tape associated with it and the committee decided we really needed to cut through that. They came up with a proposal to drop fees to zero until the spec plan was approved, and to radically look at how we evaluate parking.”
Based on the task force’s advice, the city freed developers from baseline requirements for parking associated with new projects, and waived hundreds of thousands in fees typically associated with new development.
“That opened the floodgates,” said Gregg Polubinsky, a city planner and task force advisor. “To my memory, there were no active applications downtown two years ago. It started within six months of the council doing this. That’s about the time a property owner could get an architect and put together plans.”
Since then, the city has seen a steady stream of new project proposals. James Suner, a local developer and task force member, credited the fee waivers as the main catalyst for new development.
He said the standard commercial project normally costs $38 per square foot in fees to compensate the city for future use of services, and $53,000 per apartment. For the mixed-use project on Lewis Street, that would have meant at least $700,000 in fees, according to Suner.
“It’s not easy to get financing from banks on these mixed use buildings,” he added. “You have to prove the financial model, that you can rent the units for high enough to pay off the debt. It’s a complicated process fraught with risk.”
Everyone seems to agree that the waivers have done their job, but they differ on the future of the program, which expires in December. Suner plans to push councilmen for a permanent fee exemption in the downtown’s historic core, from Third to Sixth streets along Monterey and Eigleberry streets.
He believes the end of fee waivers will “kill the momentum downtown.”
But most councilmen say that letting the program expire is the best move. They also have resisted freeing the area from the city’s growth control measure – another idea some believe would help maintain downtown redevelopment.
At the beginning of the year, Mayor Al Pinheiro and other councilmen approved 100 additional downtown building permits to meet booming demand, but few officials seem to support freeing the area permanently from the city’s competitive bidding process for building permits.
“I think you’re going to see a different kind of incentive to keep the ball rolling,” Pinheiro said. “You’ll see us come back and ask for things that will add value to the project itself. If you’re going to do a particular building and you provide us with an amenity that downtown needs, we’ll give you credit for it” in the city’s building permit competition.
Such amenities include public art, fountains, paseos, and other desirable features identified in the downtown specific plan.
Gartman noted the importance of fee waivers and additional building permits, but he too felt the incentives should not go on forever.
“A lot of the projects would not have penciled out if it wasn’t for the fee waiver,” Gartman acknowledged. “This fee waiver has generated a massive amount of activity. It might be best for the city to back off a little bit. In economics, you want to make sure you don’t superheat the market. You want a constant. You want the growth, you want the changes, but you want them to happen over time. We don’t want the whole downtown torn down and rebuilt all at once.”
6000 block Monterey St. – Amending designation
6991 Monterey – Commercial and gas station
7031 Monterey – 6 single family units w/apts.
7433 Monterey – 16 units w/retail
7463 Monterey – Commercial
7526 Monterey – Garlic Festival Store tenant improvements
7579 Monterey – Conditional use
7597 Monterey – Commercial
7598 Monterey – Mixed use building
7600 Monterey – Reserved 24 residential units
7601 Monterey – Commercial
7660 Monterey – Commercial
7680 Monterey – 24 residential and commercial
7777 Monterey – Building improvements
7840 Monterey – Mixed use retail/residential
7845 Monterey – Dental office
7888 Monterey – Mixed use
30 Third St. – Office use
200 W. 10th St. – Change property use
111 Lewis St. – Cannery office/residential
157 Old Gilroy St. – Zoning change
7588 Eigleberry – Mixed use
