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Morgan Hill
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May 11, 2021

Council grants higher density for two affordable housing projects

State laws leave city with no choice, staff say

The Morgan Hill City Council approved requests for density bonuses and other concessions from local design and planning ordinances for two proposed affordable housing projects. But officials expressed some hesitation at the April 21 meeting to give in to state laws that take precedence over the city’s growth control policies and strategies in their effort to address California’s housing crisis. 

The proposals are both apartment rental projects in north Morgan Hill. The proposed 249-unit complex on a 7.5-acre property at Monterey and Madrone is proposed by Jemcor Development Partners. Another project, a 66-unit complex known as The Magnolias, is proposed on a 1.5-acre property at 17965 Monterey Road. An architectural rendering of The Magnolias, which is proposed by First Community Housing, shows the building would be five stories or 68 feet tall—making it the tallest building in Morgan Hill.

Both projects were on the April 21 council consent agenda for approval of the developers’ requests for an 80 percent density bonus, as well as four exemptions from the city’s development and design standards. These requests were made under the state’s “density bonus law,” which allows developers of affordable projects to increase their density beyond local regulations. The state law—which has been on the books for more than 40 years—also allows affordable housing developers to receive exemptions from local zoning codes that would facilitate the construction of more homes than otherwise permitted.

With projects that are 100 percent affordable—like the proposed Magnolias and Monterey/Madrone—the state law allows the developer to increase density on the property by 80 percent above the maximum density allowed in the city’s zoning code.

City staff cautioned the council on April 21 that approval of the projects’ density bonuses and other exemptions are mandated by the state law, and the local elected officials have no discretion to deny the requests. City Attorney Don Larkin warned numerous times that the city could face certain defeat in a lawsuit if the council rejected the requests for The Magnolias and Monterey/Madrone.

“If the council says ‘no,’ we’ll be sued. There is no defense to that lawsuit,” Larkin said. “The case law is overwhelming, and it is not ambiguous. We will get sued and we will lose, and it will cost us more money than we have.”

Larkin added that both projects still have to undergo some degree of environmental impact analysis and planning commission review before the developers can start building. That analysis would include impacts on traffic, parking, public services and other factors—as well as any options to mitigate those impacts—according to city staff.

Still, Council members Gino Borgioli and Rene Spring voted against a motion by Council member Yvonne Martinez Beltran to approve the density bonus law requests for The Magnolias project. The request was granted on a 3-2 vote. Borgioli was the sole council member who also voted against the requests for the Monterey/Madrone project.

Borgioli argued that the council did not yet have enough information to grant the required bonuses and exemptions. He asked city staff if the council could legally reject the requests based on assumptions or hypothetical possibilities of potential impacts associated with the projects. He even asked if city staff could “guarantee”—before conducting an impact analysis—that the layout of the Monterey/Madrone project would not slow police or fire department response times.

Larkin said they could not do so, but staff does not foresee any major public safety impacts from either project. He said the ensuing environmental studies will provide details and data on likely impacts before construction starts.

The state density bonus law does allow a city to reject developers’ requests if the city can demonstrate the project would “have a specific, adverse impact, upon public health and safety or the physical environment or on any historic property that cannot be mitigated,” says a city staff report. Morgan Hill Development Services Director Jennifer Carman said an assumed likelihood of extra traffic does not qualify as an adverse impact under the state’s definition.

On The Magnolias project, Spring asked city staff if they could require the developer to build only studio apartments in order to reduce the proposed 68-foot height of the building. The developer has proposed a combination of studios as well as one- to three-bedroom apartments.

Carman said the city does not have the authority to direct the developer to build specific apartment sizes.

In addition to the 80 percent density bonus, Jemcor requested and received exemptions from the council for reduced parking requirements, pavement design standards, building height (38 feet proposed), floor area ratios and property line setbacks.

For The Magnolias, First Community Housing on April 21 gained exemptions to the city’s standards for exterior treatment and materials, building colors, window design, tree replacement, building height and floor area ratio.

Geoffrey Morgan, President and CEO of First Community Housing, addressed the council at the April 21 meeting. He said The Magnolias project will be built with modular construction, allowing a more efficient process.

“We have never sold a building in 30 years,” said Morgan, who introduced himself as a Live Oak High School alumnus. “We try to be good neighbors. We will run this building well and do our best to contribute to the city.”

Jemcor and FCH submitted their applications under the 2019 state law known as SB 330, known as the Housing Crisis Act. This law—like the density bonus law and other predecessors—has significantly restricted local cities’ and counties’ authority to reject or limit affordable housing developments. 

Morgan Hill Housing Director Rebecca Garcia told the council that the last 142 new single-family homes that sold in Morgan Hill averaged more than 3,000 square feet in size and went for an average sale price of $1.5 million.

“For far too long, development has overwhelmingly catered to higher incomes and certain types of housing for only some people,” Garcia said. 

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