Affordable housing in Los Gatos faces uphill battle

Los Gatos has an ambitious plan to add thousands of homes in the next two decades, but some town officials and experts say it’s not doable as designed.

Los Gatos, with a population of 33,000, has barely grown in the past decade. In its drafted 2040 General Plan, officials recommend building 3,783  housing units in the next 20 years—by shifting away from single-family homes—to make the town more inclusive for a less-affluent population. A group of residents fiercely opposes the plan, calling it unrealistic.

A housing attorney and developers told Los Gatos officials at a Wednesday study session the long-term plan might not pan out. The town already faces a huge challenge to meet a state-mandated housing goal of constructing at least 1,993 homes—847 of which have to be affordable—before 2031.

The study session, featuring an attorney and three local housing developers, was put together by a group of residents and town officials.

“The message I got from this meeting was it’s going to be really difficult to meet our goal,” Los Gatos Mayor Rob Rennie told San José Spotlight. “There’s a lot of challenges.”

An elusive goal

Los Gatos is working on its housing element, which is the town’s plan for how to meet the goal of planning nearly 2,000 homes under the state-mandated 2023-31 Regional Housing Needs Assessment cycle. Los Gatos had to plan for 619 homes last cycle.

In the past, there was no penalty if cities failed to meet state-mandated housing goals, but housing attorney Barbara Kautz said things have changed. If municipalities fail to comply this cycle, the attorney general will get involved. For repeat offenders, the state will allow developments to bypass the public process, Kautz said.

“(The state) is scrutinizing whether or not the sites identified are actually developable much more carefully,” Kautz said at the meeting, noting the state’s housing goal in general is not realistic without aid from the federal government.

Housing developers said it’s especially true in Los Gatos, where options are even more limited.

Don Capobres of Harmonie Park Development, who’s building the town’s largest housing project called North 40, said increasing density is not the answer. With limited land, he said Los Gatos will have to do podium housing—developments that are five to six stories—if it wants to build denser.

“With traditional financing and with rents in West Silicon Valley at maybe $4 a square foot, we could not get this financed today,” he said. “Even if you gave us a blank check or the golden key to Los Gatos to develop 500 units on the North 40, we’d have a really hard time getting there.”

Andrea Osgood, a senior vice president of Eden Housing, said some of the biggest affordable housing constraints in Los Gatos are land and funding. Eden Housing is the affordable housing builder for the North 40 project.

Chris Neale, executive vice president of the CORE Companies, agreed, advocating for more collaboration with the town, streamlining the building process and waiving fees, especially for smaller projects. The CORE Companies are developers of both market rate and affordable housing projects.

Rennie, who helped facilitate the meeting, said the town will falter in achieving this goal, unless the economics of the situation change.

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

Push for fewer homes

Jak Vannada, an organizer with the Los Gatos Community Alliance, said the event helped town officials realize the challenges in planning for housing. Los Gatos Community Alliance opposes the current housing proposal.

“It felt like the town was putting the cart before the horse,” Vannada said of the town’s general plan. “It’s going to be a tough slog to get this thing done right and done on time.”

According to a town survey conducted late last year, roughly 62% of residents familiar with the general plan oppose the proposal. Nearly 60% of all participants oppose planning for 3,900 homes.

The group hopes the study session will prompt adjustments to the housing proposals in the general plan, Vannada added. The Planning Commission is scheduled to start working through the general plan proposals later this month. The Town Council will have the final vote.

Vannada said cost is another concern for the group, as the town is expecting a budget shortfall between $10 million to $25 million in the next five years.

“There’s so much that needs to be done in preparation for these new buildings,” he said. “But where’s the money going to come from?”