Decision to continue fee breaks should encourage downtown
development
Gilroy – Developers, building owners and entrepreneurs hoping to cash in on the rebirth of downtown Gilroy will have a few more years to save tens of thousands of dollars in up-front development costs.
A milestone in the area’s revitalization is expected this Friday, when city officials re-open two blocks of Monterey Street to traffic after a nearly seven-month closure. Widened sidewalks dotted with trees and antique lamp-posts will be complete in November. Despite the allure of a new street and sidewalks, city officials are anxious about stifling budding investment in the downtown.
“If we even talk about $29,000 (in parking fees), we might as well close up shop and go home,” Mayor Al Pinheiro said during a Monday study session. “They can’t afford it. With our incentive program, we need to, number one, not curtail development.”
Pinheiro’s fellow councilmen agreed, voting to hold off on re-imposing fees normally levied on projects that provide too few on-site parking spots. The so-called fee waiver only applies to downtown projects. Officials also agreed on a two-year extension of a fee-waiver program that releases downtown developers from paying thousands of dollars in impact fees – funds that support firefighters, road maintenance and other public services.
“The biggest concern is getting (projects) to pencil out,” City Councilman Craig Gartman said. “Right now it’s important to just get downtown a facelift instead of piling on additional requirements that are going to kill these projects.”
More than two dozen development proposals have rolled into City Hall in the two years since officials lifted parking restrictions and suspended impact fees. So far, developers have saved more than $1.8 million, with three quarters of that money replenished by the city’s tax coffers.
David Sheedy and his development partners saved several hundred thousand dollars in impact fees in the course of constructing a new Spanish-mission theme building at the corner of Lewis and Monterey streets. He applauded the council decision to extend the savings programs and said a time will come when the fee waivers should expire. In the meantime, he warned against eliminating the programs too soon.
“If we see there’s a lot of action and things haven’t been produced as quickly as they like, then maybe we revisit it then,” he said. “Trying to redevelop these properties downtown doesn’t happen over night. Years go by before buildings go up.”
But officials made clear they don’t plan to pick up the tab forever. Parking will become more of a commodity as downtown transforms from a string of boarded up storefronts into new restaurants, book stores and above-ground apartments, and city leaders plan to charge development fees to finance parking improvements big and small. In-lieu fees for parking spaces will likely help the city install meters and, eventually, pay for a portion of the land and construction costs associated with parking structures.
On Monday, they considered reinstating a nominal fee of $5,000 to $7,500 for every mandated space that developers fail to build. Instead, they opted to reinstate the in-lieu fees sometime in the next year, once a parking management study for the area is complete.
Council also considered a more-limited version of the impact fee program that would only extend savings to developers who provide the city with public art work, paseos and other wish-list items spelled out in broad development plans for the downtown. They opted instead to continue with the current program through Dec. 2007, followed by 50 percent savings through 2008. Developers who fail to submit a complete building permit application by the end of that year are out of luck.
Gary Walton, who has developed several downtown buildings, said the downtown has not reached the point where increased rents will offset the costs of new construction or major renovations.
“I’m glad that they did what they did,” he said. “They need to see it through. We’re not there yet. We’re weaker than we were a year ago, but on the flip side we have a lot better looking downtown already. Now it’s really up to us to sell the downtown, to convince people to invest in buildings and businesses.”
