The Hollister City Council voted 4-0, with Mayor Ignacio Velazquez recusing himself, to pass two resolutions designed to help alleviate the shortage of affordable housing in the area. The first measure would approve an annexation agreement between the city and the Community Housing Improvement Systems and Planning Association (CHISPA), and would authorize the mayor to sign it on behalf of the city. The second resolution would request Local Agency Formation Commission of San Benito County (LAFCO) to initiate proceedings for the annexation of territory.
City Attorney Brad Sullivan explained that the resolutions that some of the public financing to build an affordable housing development and some affordable-by-design market rate homes (on Buena Vista Road next to I.O.O.F. Cemetery) depended on construction beginning this summer. He said rather than lose momentum, the county was willing to interpret the tax-sharing agreement in such a way that a 40-unit apartment building would not be levied with 40 annexation fees, which would amount to approximately $10,000 per unit. He said the builder is willing to pay annexation fees on 13 market-rate homes, plus a manager’s unit. He said the agreement with those changes would be taken to the board of supervisors for approval.
“If we agree to that same discount, CHISPA can go ahead with building the affordable housing, which is something both the city and county feel is much needed,” Sullivan said. “Construction has begun and this would allow the project to get the financing and move forward with completion.”
Councilman Raymond Friend asked what the annexation fee was for affordable housing. Sullivan said it was zero. Friend asked about the market-rate units. Sullivan said they would fall under the existing rate and the builder would rather pay now than after July 1 in order to save approximately $1,000 per unit. Friend asked for clarification, asking if the rate Sullivan was talking about was the one where the city would receive 25 percent. Sullivan said it was, and added that the project will satisfy a need for quality affordable housing that will stay affordable for years to come.
Hollister resident Marty Richman said he had no problem with the county foregoing its $10,000 impact fee that, “so far, has been declared illegal,” but he wondered if all the units would be annexed into a Community Facilities District (CFD). Sullivan said he believed they would.
“I don’t think we have an exception for when we do a CFD for affordable housing, so the point is I want you to remember you raise the rates on CFDs, you raise the rates on people who live in affordable housing,” Richman said. “All these issues just snowball. I know you realize that, but a lot of times we lose sight of that. It’s an affordable unit, but then all of a sudden somebody moves in and there’s an $84 sewer fee, and their $422 a year police and fire bill, their water bill from the state for blue valve, and the hole in the mountain where the state is shipping water to Los Angeles, and suddenly they found they’ve bought themselves a bullet train because they’re property owners. Then they say, ‘I own the house, but I can’t pay the mortgage on it because I’ve got to pay my taxes first or they take it away from me.’”
Councilman Karson Klauer commented that he favored the resolution.
“Moving forward, I don’t see a lot of opportunities where the city is not going to have to do something a little goofy to get multi-family units, so I think this is probably the lightest thing we’ll have to do in terms of getting units built and it’s a good thing the heavy lifting has been done by other people and agencies,” he said. “Mr. Richman brings up a good point about CFDs, and I’m not even sure who ends up paying for that an affordable unit that is for rent because that’s probably the government, one way or the other, who’s going to end up doing that.”
Sullivan said the money comes out of rents and subsidies, which Klauer took as confirmation that it is the government that pays the fees. Avera said in the future it could be possible, if the council decided to go in that direction, to exempt affordable rental housing, with a 55-year restriction, from the CFD. Klauer said it philosophically it did not make any sense.
“I like the fact that the county is willing to work with a project that set up its own annexation agreement,” Klauer said. “I’m hoping this isn’t the only one and just because of the circumstances, which are really good, that nobody else gets the light of day on this. It’s going to take some time for us to work out the tax sharing part, and I know there’s probably a line out the door of people waiting to have a talk with whoever at county staff signed on this deal, so I’m hoping other people get a chance to have that conversation, as well.”
Councilwoman Mickie Luna said that the city and county are in dire need of affordable housing. Even with the 40 units, she said, “We are not there,” when it comes to the need.
“I support to move forward and I know that there is a lot of other work that we’re going to have to consider,” she said. “What matters is what happens if we stop the work, stop the housing?”
Friend said he thinks it’s important to have projects that combine affordable housing and market-rate units.
“I would not want to see that stop, but I agree with what Marty (Richman) was saying is that maybe we need to look at these ‘special circumstances’ affordable housing projects like this in a little different way,” Friend said. “It’s difficult to do because the services are the same. The costs are the same. How are we going to fit that in there in financing? That’s going to be difficult to do. I think they should be applauded for what they’ve done with this project. I wouldn’t want to see us stop this because it’s already in the process (of building).”
Sullivan said some cities wave fees or have subsidies to encourage similar projects.
“When the price of a permit becomes $45,000 to $50,000, and some cities are double or triple that, it’s hard to be affordable when those impact fees are there,” he said.
“When it gets to be more expensive to build the affordable than it does to build market-rate housing then we’re really in trouble,” Friend said. “And that’s not far down the road if we don’t look at some of these a little differently.”
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