Los Gatos officials seek to make affordable housing achievable

As cities across the Bay Area are working to plan for state-mandated affordable housing units, municipalities like Los Gatos are struggling to make the plan work while navigating high land costs, lack of financing and strict state land use laws.

The state determined that Los Gatos has to plan for nearly 2,000 new housing units in the next eight years, 847 of which have to be for low or very low income housing. Failure to do so could make it possible for a developer to build on certain sites without any kind of public review.

Los Gatos Town Council and Planning Commission recently met for a special joint session panel on affordable housing development in town on April 13.

While Los Gatos has until the end of the year to send in its plan for housing growth, called the Housing Element, the town has been working for years to identify areas for development.

Still, housing attorneys and developers at the meeting said the chances of these units getting built is low.

“The state is hoping, we're all hoping, that the housing element will result in a lot more units, but actually reaching the totals would be very very difficult and unlikely,” Barbara Kautz, a housing attorney, said at the meeting.

The town's strategy for accomplishing the statemandated housing growth is to focus on higher-density housing near commercial areas rather than building more single family homes. But high land costs, new state laws and a lack of funding make planning these developments a challenge.

“Construction has to get cheaper somehow. The state or the feds have to provide a lot more financing,” Mayor Rob Rennie said. “Something's got to change in order for it really to be achievable.”

Kautz said the state is scrutinizing the Housing Element “much more strictly” this year.

Southern California's Association of Government's Housing Element updates were due Oct. 15, 2021. Of the 197 cities in that district, just seven Housing Elements were approved by the state, Kautz said.

“I don't mean to be pessimistic …. but the numbers that have been assigned… to cities are really not possible to meet,” Kautz said. “They amount to about 300,000 units a year, and though the state desperately needs them, since the great recession, the production has only rebounded to 120,000 per year.”

Lack of materials, construction labor and contractors contribute to this problem, she said.

The number of statemandated units Los Gatos was assigned this cycle was nearly triple the number of units it was assigned in the last cycle, when it had to add 619 homes, Kautz said.

The legal penalties for not meeting assigned housing unit goals were not as dramatic in previous cycles as they are now, Kautz said. New state laws can allow a developer to build on certain sites without any kind of public review under SB 35.

Cost of land in the Bay

Area has posed a challenge for building affordable housing.

Don Capobres of Harmonie Park Development, which is building the North 40 development, said an acre of land can cost an estimated $10 to $12 million, not including any building costs or materials — meaning affordable housing projects are not as financially viable for developers.

“Affordable housing is definitely tough to build, (and) some forms of other market rate housing are really tough to build,” Capobres said. “The laws are just changing quickly, and it's a complicated process.”

He said the West Valley's lack of public transportation adds to the overall costs of any project, especially higher density housing, which can cost around $30,000 per parking stall.

Still, some residents spoke up on the importance of adding affordable housing to the town.

Ali Miano, a longtime Los Gatos resident and member of the Anti-racism Coalition, said town leaders from the past few decades had treated Los Gatos like “Disneyland for the folks that made it big in Silicon Valley.”

“It seems like the Los Gatos of the last few decades has allowed the mega-rich to build indiscriminately, while ignoring the middle class and the poor,” Miano said. “There's got to be room for everybody in the plan, so I applaud the efforts to address the very unaffordable housing we have all over our state, but we have got to do all that we can locally to find places for people to live.”