Council members Monday voted 3-1 to waive in-lieu fees for an upcoming senior housing development, opting instead to receive a one-time payment of $1 million.
According to city documents, the total in-lieu fee for the project as of June 2017 is $1,515,000.
Miller Homes, Inc., developer of the Silver Oaks senior community housing project, will pay a one-time fee of $1 million in exchange for the elimination of in-lieu fees. Housing construction is expected to begin in 2019, according to city documents.
A minimum of $500,000 will go to the City of Hollister Affordable Housing Program, the staff report states. The other $500,000 will be directed to the Community Housing Improvement Systems and Planning Association’s (CHISPA) tax credit application to the California Tax Credit Allocation Committee for the 48-unit senior apartment housing complex on Line Street.
On March 20, council members awarded $700,000 to CHISPA for a 48-unit affordable housing project on Line Street on the west side. The proposal identified Section 8 vouchers and tax credits as funding sources.
Then in May, council members approved a $300,000 loan for the CHISPA project, which is conditional upon receipt of the tax credits. At the time, City Manager Bill Avera said the money was in a fund set aside by the now defunct Redevelopment Agency.
Avera explained at Monday’s meeting that the council could decide to get $1 million now or $1.4 million five to six years down the road when the units are filled.
Developer Marty Miller explained the rationale behind the one-time payment.
“This money can go for a good purpose right now to help CHISPA achieve what (Director of Real Estate Development Dana Cleary) wants to achieve,” Miller said. “The city is getting what it wants: real affordable units. CHISPA gets to build them and I get a project I might be able to get funding for. I think it’s a win-win for everyone concerned.”
Miller talked about the importance of senior housing in the region.
“I would add also that when I looked at the statistics from the Census Bureau, it turns out that 21 percent of the population of Hollister and San Benito County is over the age of 55,” he said. “That population over the age of 55 is actually growing at 7 percent a year. This is an underserved market. There’s nothing of significance going on to address the housing needs of seniors and hopefully these two projects will be a start to that.”
Vice Mayor Karson Klauer said he had an issue with the decrease in expected city revenue, as well as the location.
“I have another issue with the fact that almost all, if not all of the low-income units end up on the west side,” Klauer said. “ I’d like to see affordable units spread out more evenly across all four districts.”
The council voted 3-1, with Klauer as the sole “No” vote.
Mayor Ignacio Velazquez recused himself at the beginning of the discussion because of his working relationship with CHISPA.
On Feb. 4, 2008, a previous city council approved a performance agreement for senior housing project known then as the Miller/Ferreira Senior Housing Development. It was approved with 170 senior units, 68 units of which were to be deemed affordable. The council waived the developer’s requirement to provide those 68 affordable units in exchange for paying an in-lieu fee of $50,000 per unit. For 68 units, that adds up to $3.4 million.
Then on May 3, 2010, an amendment was made to the agreement that changed the $50,000 unit structure so that the in-lieu fee for each home would’ve been a percentage of the Average Sales Price for each phase of the project. This was also when the project adopted the name Silver Oaks.
According to the staff report, the approved one-time payment of $1 million will help the CHISPA Line Street project be more competitive.