It could happen. Unlikely, but possible. A worst-case scenario
that city and school district officials need to keep on their
respective radars. That unlikely scenario would unfold if the dozen
or so developers who hold more than 800 housing allocations all
start building.
It could happen. Unlikely, but possible. A worst-case scenario that city and school district officials need to keep on their respective radars. That unlikely scenario would unfold if the dozen or so developers who hold more than 800 housing allocations all start building. Meaning the city could see hundreds of homes under construction at the same time – or orderly growth – something the city’s Residential Development Control System ordinance aims to achieve, out the window.
The RDCS was first passed by voters in 1977 in order to stem the mounting growth, which was the fastest in the state at the time. In 1976, Morgan Hill increased its population by 21.4 percent, while the next fastest in the county grew 6.1 percent (Gilroy) and 2.7 percent (San Jose). The growth put a strain on city services and forced the school district into double session for half its 8,000 students.
The benefit of the ordinance, that has been updated twice, is it avoids over-construction and provides for orderly growth to prevent the problems of the past.
There’s not a lot the city can do to speed up the construction of the more than 800 houses permitted since 2007, before the market crashed. And it is the crash that is the No. 1 reason why the homes remain unbuilt, a condition beyond the control of most developers.
But not all developers.
Many builders consider the city’s complex growth policy annoying and expensive, with lists of fees and mounds of paperwork required for permits. Historically, that has deterred public national companies from entering the Morgan Hill market, instead opting for less regulated markets in the Fresno and Sacramento areas, for example.
However, some of those builders have returned to Morgan Hill in recent months. With plenty of cash and local land for sale to which housing allocations are already attached, they don’t have to wait for bank loans, longtime real estate broker John Telfer told reporter Michael Moore.
D.R. Horton and KB Homes are two such companies that have recently purchased entire projects in Morgan Hill that are already approved under the growth competition but are only in the beginning stages of construction.
Those are examples of the projects that were not economically feasible under their previous owners, Telfer added.
“In the good old days, especially in Morgan Hill, we never had the larger publicly traded companies,” Telfer said. “Most of the time (the bigger companies) were looking for a huge number of units all at once. In Morgan Hill they couldn’t do that because of growth control. In the last few years, the larger companies have redone their model, to maybe locate in areas that have some barriers to entry” such as Morgan Hill.
So, developers are seeing some light at the end of the tunnel, and if larger companies can take advantage of the allotments, the worst-case scenario, however unlikely, is possible.
