The city plans to spend $640,000 to prevent its stock of
affordable homes from shrinking.
Gilroy – The city plans to spend $640,000 to prevent its stock of affordable homes from shrinking.
The “pass through” funds will be used to purchase two homes at Village Green Estates, a senior citizen community at First Street and Santa Teresa Boulevard. City housing officials were also expected to ask city council Monday night for an additional $175,000 for the purchase of a third affordable unit in Los Arroyos, another low-income community in north Gilroy.
The city is dipping into a $3 million Housing Trust Fund to prevent the Village Green homes from rising in price after changing hands. Current deed restrictions, placed on the units roughly five years ago when Village Green was approved, force the first round of homebuyers to sell their units at prices affordable to low-income seniors, aged 62 or older.
For Santa Clara County, that translates to a price tag of about $320,000 for an individual earning less than $60,000 a year.
That deed restriction is good for 30 years or until the home is sold to another person.
If the city does not step into the equation and once again cap the sale price of the home, the next buyer could “flip” the property for $500,000 or more, according to Gilroy Housing Coordinator Marilyn Roaf.
“We have first option to purchase,” Roaf said. “It’s not our desire at all to keep the property. We just want to make sure it stays affordable to another low-income buyer.”
There are currently about 200 similar deed-restricted units throughout Gilroy, a city that has seen home prices spiral in recent years.
Of the 151 units at Village Green, 37 are restricted for low-income people. The city also purchased two units last year to retain them in the housing stock.
The current homes are located at 1511 Bianca Way and 1554 Rosette Way. Once the purchase is complete, Roaf predicted the city would sell the units within 60 days. The proceeds will replenish the housing fund.
