Council believes loan program will attract developers
In yet another move to encourage developers to consider downtown Morgan Hill for future projects, the city will offer loans to cover the application costs for Measure C, the city’s residential building allocation competition.
The City Council approved the loan program Wednesday night upon the recommendation of the council’s Community and Economic Development Committee.
Measure C is a growth control measure that places limits for building residential developments in Morgan Hill. Under Measure C, developers compete for points that decide which developers are awarded a portion of the 250 residential units allowed each year.
The committee believes steep design and application fees inhibit developers applying for residential development projects for downtown. The fees can reach about $30,000, according to Business Assistance and Housing Services Director Garrett Toy. He said the application fee alone is $11,000 with no guarantee the developer will even be able to build their project. Toy said this fee covers staff time to review the builders’ plans. The balance includes architectural fees for site plans, consultants and engineering fees builders incur when they develop the plans for their projects.
“(A loan program) may serve as an incentive for developers. Our goal is to attract folks,” said City Councilman Greg Sellers, who chairs the council’s Community and Economic Development Committee.
Only residential developers applying for permits for the downtown area can apply for a loan in the maximum amount of $30,000 with a 3 percent interest charge. Loans will be given on a first-come, first-serve basis. The real estate property will be used as collateral, and the loans will be deferred upon the sale of the property, once the developer is granted the opportunity to build, or after three years, whichever is earliest.
Toy said the Redevelopment Agency budget has enough money this fiscal year to fund at least six applicants for the loan program, although Toy noted, this would mean there would be less funding available for other economic development activities.
The loans are available for this year’s application process.
Developer Charles Weston and Manou Mobedshani, owner of the Downtown Mall, asked the council if they could each be reimbursed their $9,000 dollar application fee from last year. They had applied for the Measure C downtown category last year, but their projects did not receive enough points for approval. They claim requirements for downtown were similar to requirements for developments in other sections of town, and therefore, were not truly applicable for a downtown category. This year, the requirements for the downtown category have changed. The council referred their requests back to the Community and Economic Development Committee for the committee’s consideration.
