Story behind Gilroy’s biggest housing complex

Gilroyans say the Alexander Station Apartments, a $95 million project on the corner of 10th Street and Alexander, will be filled with residents bused in from Oakland and will lower the quality of the neighborhood. They say there aren’t enough classrooms for the kids and the future students will be bused to far away schools, rather than those they can walk to.
Yet, according to the builder and owner of the building, the Idaho-based Pacific Companies, the apartments will fill a gaping void of affordable housing in Gilroy as rents in Santa Clara County continue to soar and out-of-towners will not be favored.
Alexander Station Apartments, the twin five-story, 262-unit construction project, is one of the most visible sights in downtown Gilroy, towering above everything else in the city. It will have 18 one-bedroom apartments; 110 two-bedrooms; 100 three-bedrooms and 32 four-bedrooms at rents between $1,076 and $1,997 a month. Each unit will be allowed two people per bedroom plus another person, prompting Gilroyans to question whether there is enough parking and rooms in schools for the new people.
“Gilroy had a need for affordable housing,” said Denise Carter, the Chief Portfolio Officer with Pacific Companies, based in Eagle, Idaho. “We’re building in Hollister, Salinas and we’re trying to find rural properties and fill a need that those communities may have. We saw the growth that was happening outside of the San Francisco area, and we have done other projects in the Bay Area and we saw that the growth was shifting outside of the San Jose area.”
For housing to be considered affordable, the tenant must have an income four times the amount of rent. To be qualified to rent at Alexander Station an applicant’s monthly income must be two times the amount of rent. Section 8 vouchers, which allow those in need to get state funds, will be accepted but not issued by US Residential, a property management company based in Dallas, Texas. US Residential has said that they do not prioritize applicants with Section 8 vouchers.
“We are processing applicants in the order that they applied,” Sanders said.
Visions of a traffic-choked 10th Street filled with vehicles from a crime infested downtown project that mucks up the agricultural, small-town Gilroy aesthetic are prevalent. They also fear outsiders will have priority over Gilroy residents.
Pacific Companies, which owns 165 similar properties in the western United States, disputes the claims.
“We don’t need to bus people in because the need for affordable housing in Gilroy is so strong,” Carter said. “There could be people in San Jose or Oakland who work in the area who may apply to live there, but we purposefully wouldn’t seek out anyone outside of the immediate area.”
As the Silicon Valley and the Bay Area as a whole continues to boom, many residents have struggled to keep up rents. The median household income of Gilroy of $76,060 is about $13,000 less than the median for the county. The average rent for a one-bedroom apartment is $1,433 and $1,877 for a three-bedroom according to the city’s general plan of 2015. Since approximately 41 percent of Gilroy households fall within the lower income range, The Pacific Companies saw an opportunity for expansion.
Rents will be based on a household’s income compared to the average median income of the county. For a one-bedroom Alexander apartment, rents will range from $1,076 to $1,300 and a four-bedroom will range from $1,650 to $1,997.
US Residential will manage the apartments. The company will employ two full-time managers, an assistant manager along with a full-time maintenance supervisor, maintenance tech and either a full-time or part-time janitor.
Safety is also a concern.
“There will be a controlled fob access and security cameras built in,” said Amanda Sanders, District Manager with US Residential. “We are not sure if we will hire a security company.”
The project needed an array of building exemptions because of its size and location by the railroad tracks. The project was granted many because it fit in with local goals to build high density, affordable housing, along transit corridors. One exemption from city codes was that it allowed residences on the first floor, although businesses are preferred on the ground floor of downtown projects.
“They needed a conditional use permit because that project is within the Downtown Specific Plan, which doesn’t allow any residences on the first floor,” said Tom Fischer, the Chairperson for the Gilroy Planning Commission.
The land on 10th Street and Alexander, stood empty since the closure of an Indian Motorcycles factory in 2003. Once completed, it will be surrounded on the east by South Valley Plaza Shopping Center and Acosta Produce, south with International Paper and west by the railroad.
“There are always challenges when you do a project of this size in a community,” Carter said. “There are growing pains, but we have done this a number of times with other cities and we believe we can work successfully with most cities we work with. Working with the City of Gilroy hasn’t been anymore difficult than any other city we have worked with. In the end, we both have the same goals, which is to provide much needed affordable housing in the Gilroy community.”
“The construction itself will probably be in the $70 million range,” Carter said. “The whole development costs, including building permits, impact fees and everything else will cost about $95 million, including the land. This is a tax exempt bond project with tax credits that we sold to an investor, CREA LLC out of Indianapolis Indiana, which is about $41 million of the budget.”
The Pacific Companies plans to open the Alexander Station Apartments by the end of this year or at the beginning of January, barring any setbacks. The heavy rains that pounded the area throughout the winter set the project back at least three months.
“We had standing water everywhere and we needed to let it dry out,” Carter said.
The company has other plans already in the making in Gilroy. Due to the strength of the market and the need for affordable housing in Santa Clara County, the Pacific Companies is building Harvest Park Apartments on the north side of town.
“We are also building an additional 98 units in town,” Carter said, referring to Harvest Park. “We will have up to 360 units of affordable housing in Gilroy by the time we are done. I would expect that project to be finished about mid-2018.”
Kids living at Alexander Station Apartments will attend Las Animas Elementary School, Solorsano Middle School and Gilroy High School. With consideration to the proximity of the railroad tracks, the Gilroy Unified School District and the city of Gilroy are currently working on busing plans for the students.
With size comes several amenities for residents at Alexander Station Apartments. Each building brings courtyards, one with a large playground and park and the other with a full sized basketball court and a full sized pool. Each building contains workout areas, study rooms, community rooms and meeting space, designated for the city of Gilroy to use, next to the management office facing 10th Street. The buildings will be connected by sky bridges and dozens of architectural designs have been used for terraces, stairways and various accented exterior designs.
Throughout the day dozens of workers, some living as far as the Central Valley and Idaho work throughout the day as the complex inches towards completion. Noah Concrete of Gilroy was contracted to pour cement.
The community has been abuzz with rumors since the project was announced back in 2014. Examples are abundant on Facebook and the popular website Nextdoor.com, a social networking site designed to connect communities. The responses are a mix of suspicion, positivity and the ‘not in my backyard’ variety.
“I am grateful they are being built. It is likely I will be living in just such a place in my retirement years. There’s not a lot of traffic in that area so doesn’t seem like an eyesore to me. I expect it will improve the surrounding areas as service needs grow and a community builds,” said a resident on Upper Mantelli on Nextdoor.
“There are surely some decent and honest people who use the low-income housing system,” said another Gilroyan on Nextdoor. “From personal experience, everyone I know in the low-income housing system has abused it. I know someone who doesn’t work, gets a two-bedroom apartment and illegally rents one room out. She’s also in and out of prison. How she gets to keep the apartment every time she’s locked up is a mystery.”
“The problem is why should taxes pay for peoples’ ‘privilege’ to eat out and get nails done?” another Nextdoor user said. “Those luxuries should be able to cover employees that get paid enough to live close enough to the job. I am planning on moving out of this area because I don’t make enough to buy a house for $600,000 and I don’t plan on asking for money. If my services are in demand, the market should adjust itself. If the government pays the difference on rent, there is no incentive for property owners to ask realistic prices for rent.”
Around 120 days before the Alexander Station Apartments are expected to open, residents should expect to see advertisements pop up around the area.
“We are processing applicants in the order that the people called in to the interest list,” Sanders said. “The people we contacted this week were the first 500 people who called us. Then, we’ll move on to the next 500.”
“You cannot understate the need for affordable housing in California,” Carter said. “We’re providing unit sizes for families at an affordable rate that do not exist.”
There is skepticism, based on the size of the project and the scarcity of parking downtown, that there will be adequate parking available to satisfy what will be needed when the apartments open. There will be 372 conventional parking spaces, 78 covered and 88 tandem spaces.
“The parking the only other issue except for the height of the building when it went before the Planning Commission and city council,” Fischer said. “They met the requirements for the Downtown Specific Plan. In respect of parking I’m trusting them that they’re going to manage it like they said they want to manage it.”
“There one vehicle permitted for household at least and some form of assigned parking,” Sanders said. “The four-bedroom will have at least two spaces. A number of the parking spaces there are double deep. We will start with the larger units and work down.”
“Sometimes you need to take a risk if you need something and Gilroy needs affordable housing,” Fischer said. “Especially with the parking, there are risks involved. We don’t get to pick and choose when and where it goes, we zone the land and developers need to come in with a proposal. At the time we didn’t have any of these other affordable projects going on at all. To me the city needed that project and still needs that project and the developer and owner is telling us they can manage the parking. The risk for me is to believe them.”