The city
’s Redevelopment Agency has taken another step to increase the
number of affordable homes in Morgan Hill.
The city’s Redevelopment Agency has taken another step to increase the number of affordable homes in Morgan Hill.
The RDA last week approved a loan of up to $1.1 million to EAH, Inc., which allows the company to purchase a third piece of property for the Casa Diana housing/commercial mixed-use project at E. Dunne and Diana Avenues.
Though the RDA board, which is comprised of Morgan Hill’s five city council members, ultimately approved the loan, board members were split on the decision before discussion began.
RDA chairperson and Mayor Dennis Kennedy said he wanted the project to include For Sale units in its first phase.
“I for one would not be comfortable with Phase I without For Sale units in that phase. Would there be adverse impact on the schedule if we address it?” Kennedy asked.
Business Assistance and Housing Services Director Garret Toy said about 70 percent of Phase 1 will include affordable housing rentals and 50 to 70 For Sale units will be included in the second phase of the project.
Toy indicated if RDA insists that For Sale housing be part of Phase I, the developer and the BAHS may have to come back with a Disposition Development Agreement that could delay the project.
EAH, Inc. has submitted a proposal for an 80-unit mixed-use affordable housing project. In April, the RDA approved a loan of $2,165,000 to the developer so the company could buy two parcels totaling 2.8 acres in that area. EAH, Inc. sought additional funding last week to acquire a third parcel, which is about 1.15 acres, adjacent to the other parcels on Diana Avenue. EAH, Inc. plans to buy the land for $950,000 and use $50,000 for a market study and pre-development expenses.
According to a report from the BAHS, the site is important to the city since it is beside the new courthouse, which is currently under construction, and close to the Caltrain station and downtown. There will be a number of For Sale and rental housing units, some commercial spaces and a plan to integrate Mamma Mia’s Restaurant into the development. The design will be compatible with the Downtown Plan.
The loan is due by June 30, 2008, or it could be converted to construction and permanent financing. Toy said approval of the loan will allow the developer to close escrow on the property this month and apply for the Measure C competition for building allocation in October.
Kennedy, however, was steadfast in his position that For Sale units be included in the first phase. Councilman Mark Grzan questioned if including For Sale units would jeopardize the project.
“We could try to accommodate it and make it work as best as could be, … ” Toy said.
But Councilman Larry Carr said the city will still be able to influence the project and will have to approve specific elements of the development plan.
“The action tonight will help them acquire the property, so they can meet escrow funding date (and does not speak) to the plans of the developer,” Carr said.
Carr urged the council to approve the loan, “rather than slow down the acquisition (of the property).”
City Manager Ed Tewes agreed with Carr. If the city and developer didn’t agree on the development plan or honor Kennedy’s request, the RDA could forgive the loan, gain the rights to the project and ultimately own the property.
The master plan for the project should be completed in September. At that time, Toy said, BAHS will return to the RDA to seek final funding and approval of the project. This way, the RDA would still have the ability to control the future development of the project.
Kennedy ultimately app-roved the loan, but reiterated his opinion on including For Sale units.
“I withdraw my objection with the strong expectation that there will be For Sale units in this property,” Kennedy stated.
Kennedy later told the Times that he believes having For Sale units would help maintain the upkeep of the development and provide a balance in housing.
“I believe with ownership there is also pride of ownership, which could help provide a greater upkeep in the development. Also, there are lots of For Rent units near downtown, like Murphy Ranch and others, but not very many privately-owned homes. I wanted For Sale units to balance it out.”
