Developers and high school students are hardly ever in the same
room together, much less for the same purpose.
MORGAN HILL
Developers and high school students are hardly ever in the same room together, much less for the same purpose.
On Tuesday night at the Cultural and Community Center, however, about two dozen students were on hand to listen to developers and elected public officials discuss something that just may affect them in a few years should they choose to live in Morgan Hill: affordable housing.
Just about every seat was taken in the audience as the Morgan Hill City Council and Planning Commission gathered inside El Toro room for a workshop to revisit policy and criteria implemented through Measure C, the common name for the city’s Residential Development Control System.
Previous city administrations and voters imposed the system years ago to cap population growth and preserve open space and quality of life, and it is revisited periodically.
While no action was taken Tuesday, city officials heard from several developers who have built hundreds of houses in the community. They asked that the pricing guidelines and requirements for below market rate housing be increased. If staff recommendations are adopted, BMR prices would be set as low as $176,000 for a 2-bedroom home for a lower-income family and as high as $356,000 for a 4-bedroom home for a moderate-income family. The city uses Housing and Urban Development income limits to determine BMR prices on a scale that also factors in household size.
In October, the latest month for which Santa Clara County Association of Realtors has data, the median single-family home price in Morgan Hill was $885,000 and the average price was $951,029 in October. There were 299 homes on the market, 100 of which were new listings.
About 250 single-family homes are built and available for sale in the city every year. Under the current version of Measure C, the city requires that 20 percent are set aside as 100-percent affordable BMRs and an additional 13 percent are semi-affordable. The city uses household income guidelines adopted from Association of Bay Area Governments and the federal government when determining how much a given family actually pays for a house.
Over the years, the city has put in place a “very aggressive” plan to create affordable housing, said former Mayor Dennis Kennedy. According to developers and realtors, it is too aggressive, as some calculate that up to 45 percent of single-family homes developed in Morgan Hill were sold at below market rate.
For private developers such as Rocke Garcia, that wipes out profit and at a time when building costs have increased substantially, causes them to operate at a loss.
“There’s no question we are losing a considerable amount,” Garcia said.
David Sanson, of Pleasant Hill-based developer DeNova Homes, said he estimates about 43 percent of Morgan Hill housing is subsidized and that affect home prices throughout the city. There’s a disparity between BMR prices set for low- and median-income households, he said, that is “not equitable in today’s market.
“We’re getting hammered all around (and) it has become a disparaging situation,” he said, adding he’d like to see Morgan Hill adopt qualifying criteria similar to Gilroy’s that prices BMR homes in the $285,000-$300,000 range.
Sanson also proposed that the city create a subcommittee to monitor the issue. Councilman Greg Sellers agreed, saying “it makes sense,” but Larry Carr said, “I just don’t think we need to make this more difficult.”
Following the developers’ comments, planning commissioner Joseph Mueller spoke out in favor of revising the BMR guidelines and received applause from the audience. Council member Mark Grzan said he would like to hear testimony from people who bought BMR homes, “to validate the project is helping people.”
There were 519 families on the BMR interest list, which is divided into low, median and moderate-income households. According to Garrett Toy, director of the Business Assistance and Housing Services Department, 119 families on the list were considered low income, 390 were considered median and 10 had moderate income. The average wait time is 2-4 years, Toy said.
Realtor John Telfer told the officials something needed to be done to fill in the “huge gap between what it costs to build as opposed to what we are forced to sell as.
“Everybody wants a fair share but it seems the fair share has gotten out of hand,” he said.
