In the first year of the Measure S residential development competition, the City of Morgan Hill will allow developers to build 195 homes—a sharp reduction from the annual average of about 250 over the last decade.
The city council voted 4-1 April 19 to set the number of homes to be built in fiscal year 2019-20. The final approved total allotment of 195 followed a lengthy council discussion, and in fact lowered the planning commission’s recommendation of allowing 200 homes to be built that year.
Developers will compete for these home allotments through the Residential Development Control System in about six months.
The council’s vote was the first time the body had a chance to limit housing construction under Measure S, an update to the RDCS approved by the voters in November 2016. The growth of Morgan Hill was a hot topic among the public during the campaign season preceding that election, which also featured two council seats and the mayor’s office. Councilmember Rene Spring was one of the most vocal slow-growth candidates in the council race, in which he received the most votes out of five on the ballot.
Measure S sets an annual maximum number of housing allotments at 215, but allows the council to reduce that number as low as they want each year until the measure expires in 2035. Measure S also caps the city’s population at 58,200 for 2035.
One of the key improvements in the RDCS sought and touted by council members and city officials who placed Measure S on the ballot is that it has the provisions to prevent future “spikes” in population and housing construction—similar to what has occurred in Morgan Hill since about 2012.
During the April 19 discussion, council members tried to determine a housing allocation number for 2019-20 that would prevent such spikes, based on other units allocated in previous years but not yet built. The approval of 195 was a “compromise” among council members, according to some of the elected officials.
“Based on the data made available to us, there might be another spike of building coming toward us, and lowering this number will help ease that spike a little bit,” Spring said. “Also it will ensure we are not exceeding the population growth that is defined for measure S for 2035.”
How low to go?
Earlier this month, the Morgan Hill Planning Commission recommended the council allow up to 200 homes in 2019-20 under Measure S. But that recommendation was a narrow 4-3 vote, with some commissioners arguing for an even sharper reduction than 200, according to Morgan Hill Principal Planner John Baty.
Mayor Pro Tem Larry Carr noted there are two housing projects underway downtown—Sunsweet and Barley Place—as well as some new housing for seniors in the pipeline. All of these unbuilt yet approved—or soon to be approved—units could result in another flurry of growth when the first Measure S homes are built, Carr explained.
“We could see this sort of spike in our population figures,” Carr said. “We need to start doing something about that. If we start lowering the number now, we’ll lessen some of these peaks and valleys.”
Carr initially supported the planning commission’s recommendation of 200 homes for 2019-20. However, that motion failed and Spring proposed an allotment of 190 homes. Then Carr asked Spring to amend the number to 195, which passed.
Carr added that lowering the maximum number of homes in the first year of Measure S “sends the right message.”
“We told voters with Measure S that the council will have the ability to make changes like this if they see issues. I see an issue so I thought we should start to lower it,” Carr said.
Mayor Steve Tate also pointed to the new downtown and senior housing projects approaching as evidence that the city’s population could rise faster than planners prefer if the Measure S allocation is not reduced below 215. He added that the number can’t be lowered too much, because that would impact residential projects that might have started construction on their first RDCS allocations, but have many more phases and requests for more units remaining.
“I think it’s a good compromise,” Tate said of the 195 maximum for 2019-20. “We felt the population impacts that have been going on justify that.”
Residents have become increasingly weary of residential construction in Morgan Hill since builders and developers started to recover from the recession of 2010.
When that recession began, developers who had RDCS allocations couldn’t start building because they didn’t have the financing. When the money returned, the council extended the deadlines for developers to act on their old RDCS allocations, resulting in the non-stop construction of hundreds of homes throughout Morgan Hill since about 2012.
Lower number could affect affordable home supply
Councilman Rich Constantine cast the only dissenting vote against 195 homes on April 19. He said he wasn’t convinced of the threat of a coming housing construction spike. Lowering the annual housing allocation in the first year of Measure S is a “kneejerk reaction” when the measure has more than 15 years left to keep the city’s population manageable, he added.
Constantine also argued that lowering the annual housing allocations makes it difficult for developers of large projects—such as the 300-unit DivcoWest residential/industrial project proposed on Jarvis Drive—to get their construction started. In turn, that makes it unlikely that these developers will want to build more affordable housing, which the city also needs.
“We have to be able to accommodate those projects that we’ve already approved,” Constantine said.
Before the voters approved Measure S, the city’s RDCS allowed an average of 247 homes to be built annually from 2006 to 2016, as the council approached a population cutoff of 48,000 in 2020. Morgan Hill’s current population is just under 44,000.
