Los Gatos Planning Commission approves cost-saving concessions on North 40

"The Los Gatos Planning Commission approved several cost-saving measures for the developers of the North 40 to help ensure that the number of affordable housing units in the second phase of the project doesn't decrease any further. The commission voted 5-2 on Oct. 29 to agree to conditions of approval that would enable developers Grosvenor Property Americas to complete regrading the site and building 127 for-sale townhomes before the nonprofit Eden Housing can construct a 67-unit affordable housing building."

"Representatives from Grosvenor and Eden said at the meeting that building the affordable units before or at the same time as the townhomes as per the town's requirement would put financial strain on both their projects. Grosvenor argued that if the townhomes were finished first, they could sell those homes and use the cash to fund the rest of the project infrastructure and reduce the need for financing and the associated interest payments."

"When asked why Eden Housing couldn't help provide the affordable housing first, director of real estate development Dixie Lira-Baus said the nonprofit "simply can't" finance its own projects. "We can't get the (net operating income) high enough to be able to afford carrying that kind of debt load on a project that will have restricted rents," Lira-Baus explained. According to the town staff report, the North 40 project is faltering in providing affordable units for those with very low or moderate incomes."

The Los Gatos Planning Commission approved cost-saving measures enabling Grosvenor Property Americas to regrade the North 40 site and build 127 for-sale townhomes before Eden Housing constructs a 67-unit affordable building. Developers said constructing and selling the townhomes first would generate cash to fund remaining infrastructure, reduce financing needs and lower interest costs. Eden Housing stated the nonprofit cannot finance its affordable project first because restricted rents prevent achieving sufficient net operating income to carry heavy debt. Original project allocations for very low-, low-, moderate- and above-moderate-income units have shifted dramatically, creating a deficit of units for very low- and moderate-income households.

Read at The Mercury News