Gilroy
– The city’s affordable housing debate no longer centers on
whether or not officials should turn to the stick when dealing with
developers, but how big that stick should be.
Gilroy – The city’s affordable housing debate no longer centers on whether or not officials should turn to the stick when dealing with developers, but how big that stick should be.
After a six month back-and-forth over baseline mandates for affordable housing, Mayor Al Pinheiro and affordable-housing advocates still feel the city’s proposed affordable-housing policy does too little to force the creation of homes within reach of low- and middle-income families.
The draft document, known as the Neighborhood District Policy, would require 10 percent of homes in each of six districts to be priced at affordable rates. Once approved, the policy will govern the vast majority of land still available for residential development in Gilroy, as well as adjoining properties annexed in the future.
“It’s one thing for us to be talking about housing when we’re trying to get elected,” Mayor Al Pinheiro said at a city council meeting Monday night. “But when it comes down to reality, it’s one of the toughest things to do.
“It’s like putting oil and water together,” he said, contrasting the city’s affordable housing needs with the profit-driven motives of developers and landowners.
Pinheiro convinced councilmen to postpone final approval of the Neighborhood District Policy to June 6. Pinheiro is urging fellow councilmen to consider requiring 15 percent of homes in each of the six neighborhood districts be priced at affordable levels. Originally, the draft policy formulated by a task force of developers, residents and other stakeholders included no mandatory minimums, but encouraged a 10 percent goal. At the request of City Council, planning staff tightened the 10 percent figure from a recommendation to a mandate, a significant policy shift recently approved by all task force members.
South County Housing director Dennis Lalor, who served as the affordable housing representative on the task force, urged councilmen Monday night to consider increasing the 10 percent figure.
“What I wanted to do was to try and present facts to council to help them understand who’s being served by the exemption and who needs housing here,” Lalor said. “There’s an awful lot of people in Gilroy, including teachers and firefighters, for whom the (housing) market is going to be pegged at a higher price than they can afford.”
The median home price in March stood at $665,000 in Gilroy, meaning half the homes sold went for above that price. Lalor calculated that only a family earning $137,150 could afford a home at that price – $30,000 more than half the families in the county earn each year.
The county’s median income, used to determine affordable housing prices, now stands at $105,500.
“Well over 50 percent of Gilroy’s population is in the affordable range,” Lalor pointed out. “If we’re setting aside 15 percent of the housing for that range, I don’t think that’s excessive.”
Developer Skip Spiering disagreed.
“The task force recommended the 10 percent because we thought it was a fair number,” he said. “From my perspective, that’s where we still are.”
Any increase in the baseline policy would force changes to the 1,700-unit Glen Loma project slated for construction in southwest Gilroy. The development group, headed by Tim Filice, has spent more than five years planning the project, which will be the single largest development in the history of the city. Under its current design, the project would meet the 10 percent affordable housing threshold.
Filice served on the task force that developed the neighborhood district policy. He could not be reached for comment, but a representative has said in the past they would oppose increasing the 10 percent mandate.
Regardless of the percentage, officials agree the city’s current incentive-based approach has failed to promote affordable housing.
The current program gives developers extra points in the city’s annual building-permit competition for projects with some affordable units. Projects devoted primarily to affordable housing can skip the competition entirely.
The numbers indicate, however, that incentives have failed to work. Developers have snapped up all but 191 of the 2,550 building permits earmarked for market-rate homes, while more than 600 of the 700 affordable-housing exemptions remain.
Ben Powell, an economics professor at San Jose State University, said that “inclusionary zoning” policies amount to a tax on homes that further stifle the housing market and drive up prices.
“What we have in California is a supply problem, so we’re looking for ways to increase supply,” he said. “It’s not land that’s scarce. The real scarcity in California is government’s permission to build.”
In order to promote affordability, he said, city leaders should increase the number of homes allowed per acre, increase the number of building permits issued, speed up the permit process, and lower development fees.
“I’m not talking about subsidizing developers,” he said, “but lifting the barriers to them.”
Richard Castro, a consultant with Neighborworks America, a national nonprofit group that has collaborated on local affordable projects with South County Housing, disagreed with Powell’s approach.
“I think that many of the people opposed to it are looking at it from the free-market perspective,” Castro said. “But you have many people who can’t afford a market-priced home.”
While the city plans to continue with the incentive-based approach – it has already incorporated density bonuses and the incentives into the neighborhood district policy – it appears officials have little faith in a market-based approach.
“You’ve got increase it to 15 percent,” Pinheiro said of the affordable housing requirement. “There’s no question about it. … You’re not going to get the for-profit developers to be good Samaritans doing this. It’s not the business they’re in. We have to be the champions of that.”
