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Some owners see opportunity in apartments-to-condos
conversion
The limited rental space in Hollister could be about to get more
limited if some complex owners get their way.
This topic has been one of discussion lately as several owners
of apartment complexes in Hollister have approached the Hollister
Planning Commission with the desire to convert their apartment
complexes into condominiums.
Some owners see opportunity in apartments-to-condos conversion

The limited rental space in Hollister could be about to get more limited if some complex owners get their way.

This topic has been one of discussion lately as several owners of apartment complexes in Hollister have approached the Hollister Planning Commission with the desire to convert their apartment complexes into condominiums.

Initially the prospect of additional affordable housing within the city limits seemed like a great idea and most of the planning commissioners are on board with additional affordable housing. However, the problem stems from the fact that there is a limited amount of available rental space and taking that space away, during a building moratorium puts renters at a disadvantage.

According to Hollister Planning Director Bill Avera, rentable space within Hollister was estimated around 4 to 6 percent. If there were 100 rentable units within the city, only four to six of those units would be available.

The Village Green Apartments is the latest conversion project to come before the commission. The 36 units differ in size, but the owners of the development, Ray Malech and Tom Ruiz, could not be reached for comment.

The Village Green was originally built to be condominiums from the start, but the owner ended up renting the units instead.

The need for affordable properties for sale has become critical, especially due to the increases in sewer hookup fees for single-family housing, according to Planning Commissioner David Huboi.

The hook-up rates for single-family housing will increase from $3,800 per hookup to $26,199 when the moratorium is lifted.

So, when you do a conversion project since the space is already there, a family is able to purchase a new property without the additional hook-up fees, according to Huboi.

“When you convert, the project already has the necessary hook-ups, so this is a creative resource for first-time homebuyers,” Huboi said.

The last apartment complex built in Hollister was the Creekbridge Apartments completed in 2002. The complex has 40 units.

Council Member Pauline Valdivia is concerned with the conversion projects especially when the owners take away limited available rental space.

“As I see it, the thing we need more than anything else is more apartments,” Valdivia said. “We have already approved one project like this. It will be out of control if we don’t set a policy on how to control it. There has to be a balance.”

There are pros and cons to condo conversions, according to Planning Manager Mary Paxton. The upside is the opportunity to get people into a starter dwelling at a reduced rate, which is often beneficial for first-time buyers. The other upside is there are no obligations for yard work, since landscape maintenance is usually handled through the homeowners’ association. The downside is that the ratio of multi-family to single-family housing is not what the city would hope it would be, Paxton said.

The problem that arises is that if the rentals were market-rate apartments, they will sell as market-rate condos, which means that they will not be affordable to many buyers and thus the city is not increasing its supply of available affordable housing.

The losers in this situation are the people who are living in the apartments and will not be able to afford to purchase the units when they are converted to condos.

Geno Hopkins, 43, is one of the residents that will be displaced if Village Green is converted to condos. Hopkins moved to Village Green from the Creekbridge Apartments this week.

“If they raise the rent and turn them into condos it’ll be extremely unfair to those of us who are tenants, good tenants, and pay the rent on time,” Hopkins said. “Just to have someone else fill their pockets.”

In Gilroy, the city has a provision within the housing policy that clearly states that before conversion projects can be considered the vacancy rate must be examined. If the vacancy rate is unusually low, the planning commission takes the need for rental space into consideration.

“We don’t want to see a large number of conversions because they are shifting from one income type to another. Usually renters are at one income level and owners are at another,” Gilroy Planning Director Bill Faus said.

There is an upside. When the building moratorium is lifted in Hollister there are at least three new rental projects on the books that will add an additional 194 units of rental space to Hollister. One of those projects is specific to very low-income seniors, according to Avera.

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A staff member wrote, edited or posted this article, which may include information provided by one or more third parties.

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