City policy requires preserving one acre of farmland for every
acre developed
Gilroy – A major mall developer looking to build on 119 acres east of Gilroy will have to preserve an equal amount of farmland elsewhere under the city’s farmland preservation policy, though regional land use officials are working on a similar policy that could increase the up-front costs of development.
The farmland preservation policy in Gilroy and the version proposed by the Local Agency Formation Commission, an agency with veto power over annexation requests, require preservation of one acre of farmland for every acre developed. Both policies target thousands of acres east of Gilroy as suitable for preservation, and both give developers the option of paying “in lieu” fees rather than purchasing land or its development rights, a cheaper alternative. Both policies require in-lieu fees to be based on valuations of nearby farmland.
But a draft preservation policy released by LAFCO Tuesday could require developers such as Westfield Corporation to pay hundreds of thousands of dollars – perhaps millions – before they collect a cent on leases to restaurants or stores. Whether a land purchase or in-lieu fees, the LAFCO policy would require mitigation to occur within two years of annexation approval by LAFCO.
“These are the minimum standards that LAFCO would expect cities to meet,” said LAFCO Executive Director Neelima Palacherla. “In the case of any applications that come to LAFCO, they would have to meet LAFCO’s policies.”
Officials for Westfield could not be reached for comment, though they have said they look forward to working with local and regional land-use officials on the project. To make room for a 1.5-million-square-foot mall, Westfield submitted its annexation request to the city in July as part of its plans for the mall.
Though Westfield Corporation is among the nation’s leading mall developers, large up-front costs could prove an obstacle to the project. Local real estate broker Bill Reimal recently sold farmland off Frasier Lake Road, east of Gilroy, for $30,000 per acre. Reimal said a two year limit to finance preservation costs would be “unrealistic” for all developers, who must first pass through the city’s regulatory process and construct a project before they can start collecting rents.
“You’d like to have the cash register ready to ring before you write the big checks,” Reimal said of the preservation fees. “That’s a heavy carrying cost for anybody. Even five years might be short, but I think (developers) could probably live with that.”
The LAFCO two-year cap could mean an even greater hardship when combined with city requirements for a specific plan. City regulations require the entire area to be planned out before any development can occur. Such planning took five years for the Hecker Pass area, the city’s scenic western gateway, and nearly a decade for Glen Loma Ranch, a 1,700-unit housing project in southwest Gilroy.
The land Westfield is targeting is part of a 660-acre swath of farmland and open space that must be planned as a single piece, Faus explained.
“(P)olicy clearly directs the city to work with the applicant and the landowners and to look at not just their proposal, but to look at all of the land holdings in the 660 so we have a collective solution to developing that area, so that it serves all of the citizens, all of the city together, ” Faus said. “Not to look at how one parcel might need to be mitigated.”
Westfield Corporation has until the end of November to complete its annexation application, though the company is permitted to request additional time if necessary.
LAFCO plans to hold a public workshop on its farmland preservation policy Aug. 28. The meetings will take place on the 11th floor of the county government center at 70 West Hedding Street, San Jose. The Aug. 28th workshop begins at 10am. LAFCO will hold a public hearing on the policy Oct. 11.
