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City to review proposed affordable housing standards

May 15, 2008
By Natalie Everett

City officials directed staff to create a report detailing the possible effects of a ballot initiative that would greatly decrease the number of affordable housing units at their Wednesday meeting.

The ballot measure, sought by a group of mostly developers, would change Measure C, the city's growth control initiative. Measure C all but requires developers to build 13 percent of new homes as affordable housing.

If the initiative passed, developers wouldn't be required to build any of the affordable housing, or Below-Market-Rate homes, in Morgan Hill. Instead, developers would build 5 percent of new homes as affordable to moderate-income earners.

The initiative would also reduce the amount of BMR homes built in Morgan Hill from 33 to 20 percent. All 20 percent would be built by affordable housing specialists, like South County Housing.

Currently, developers are responsible for building 13 of the 33 percent of homes as BMR.

The report, which the council requested in a unanimous 4-0 vote with Councilman Mark Grzan not present for voting, will look at these potential changes and determine what the financial, legal and economic impacts would be if the initiative passed.

City Attorney Janet Kern said the report would take a neutral look at the initiative, and provide more information about the potential changes and its effects to the community and allow for an analysis and debate that isn't provided through initiatives alone.

Staff must report its findings to city council no later than 30 days after the city clerk certifies the signatures.

Developers have appealed the City Council for more than a year to amend the city's affordable housing requirements, but haven't been satisfied with the results, which included increasing the lower-income home price from 198,500 to $225,500 and the median-income home price from $263,500 to $297,000

The developers' group, which includes vocal realtors Chris Borello and John Telfer, say Morgan Hill's affordable housing requirements are greater than those of comparable cities in the county and that developers have a great burden because of this, especially considering the housing market today due to a sluggish economy. By January, they'd hired the San Diego-based political consulting firm Tom Shepard & Associates. In late January, Colorado-based Luce Research conducted a message-testing poll to help the group put together an initiative that was salable to the voting public. In a statement released May 8 - the day the group submitted their signatures to City Clerk Irma Torrez to qualify for the November ballot - the group said they collected almost double the 1,639 signatures required to be on the November ballot.

Councilman Greg Sellers commented he wanted to know whether the measure would help or hinder the city's ability to provide affordable housing to teachers and other public servants.

"One of the things that quite a few folks said was that, 'We're distributing this signature-gathering so we can have more teachers in our community,' when the reality is what we started talking about may be different in that the measure might make it much more difficult," he said.

Sellers also wanted to know if there was any validity in developers' claims that people who are approved for BMR housing can't afford the upkeep and other costs associated with homeownership, saying he wanted staff to look at a comparison between BMR homeowners and code violations versus market-rate homeowners and code violations.

Councilman Larry Carr echoed these concerns, and said he wanted to know what impact the initiative would have on school funding and busing concerns.

The fiscal impacts staff will consider include the city's ability to fund needed infrastructure, like transportation, schools, parks, open space and the impacts on the city's current plans for housing and downtown redevelopment.

Economic impacts will also be considered, like the city's ability to attract and retain businesses and a local workforce.

Legal issues the report will also address include the validity of the initiative provisions, the consistency of the percentage of affordable housing units with the city's general plan, compliance with housing statutes and other anti-discrimination laws.

The city clerk has until June 8 to verify the signatures turned in by the group through a sampling, or until July 8 if a complete verification must be done.

Kern said another option the council had would be a 'pre-election challenge,' which would allow a court to decide whether or not the initiatives were legal.

Natalie Everett
Natalie Everett covers education and city issues for The Times. Reach her at (408) 779-4106, ext. 201, or neverett@morganhilltimes.com.