Morgan Hill City Council
August 17, 2022

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-2 The Regional Housing Needs Allocation
(RHNA) projection period is January 31, 2023,
to January 31, 2031 (see Chapter 3 for more
details).

Equity, inclusion, and diversity are themes that
are woven throughout the document and
reflected in a number of policies and actions.

The City aims to ensure that Morgan Hill is an
equitable and inclusive city by protecting and
providing opportunities to those residents who
are most vulnerable.

State Requirements
State law recognizes the vital role local
governments play in the supply and
affordability of housing. Each local
government in California is required to adopt
a housing element, which is one of the eight
mandatedelements of the General Plan. The
City is required to prepare an annual progress
report on the status and progress of
implementing its housing element.

The purpose of this Housing Element is to:
 Identify the City’s housing needs;
 State the community’s goals and
objectives with regard to housing
production, rehabilitation, and
conservation to meet those needs; and
 Define the policies and programs that
will be implemented to achieve goals
and objectives.

State law (Government Code Section 65583)
requires the City to adopt a Housing Element
that addresses the needs of everyone in the
community, at all incomelevels.

HOUSING ELEMENT REQUIREMENTS
 An analysis of existing and projected
housing needs
 An inventory of land suitable for
housing
 An analysis of potential constraints on
housing
 A fair housing analysis
 An analysis of any special housing
needs
 Identification of zone(s) where
emergency shelters are allowed byright
 An evaluation of the previous element
 An analysis of opportunities for
residential energy conservation
 An analysis of assisted housing
developments that are “at-risk” and
eligible to change from low-income
housing uses
 Goals, policies, and implementation
programs
In order for the private market to adequately
address the housing needs and demand of
Californians, local governments must adopt
plans and regulatory systems that provide
opportunities for (and do not unduly
constrain), housing development. As a
result, housing policy in California rests
largely on the effective implementation of
local general plans and, in particular, local
housing elements.
- California Department of Housing
and Community Development
(HCD)
This Housing Element presents an important opportunity for the City to address housing issues in a comprehensive manner and develop a bold and implementable housing strategy.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-3 Housing Element Organization
This Housing Element and associated
appendices satisfy the requirements of State
law (Government Code Section 65583(a))
and are organized as follows:

Housing Element Contents
The Housing Element is divided into the
following chapters:

1. Introduction provides an overview of the
HousingElement, State requirements, and a
summary of the organization of the Housing
Element.

2. Community Engagement describes the
City’s efforts to engage all segments of the
community during the preparation of the
Housing Element, including the numerous
individuals, organizations, andagencies with
which the City consulted, and the methods of
community outreach.

3. Summary of Land Available for
Housing presents a summary of the City’s
Regional Housing Needs Allocation and the
inventory of sites within Morgan Hill City
Limits that are suitable for residential
development during the planning period.

4. Goals and Policies contains the City’s
housing goals and policies that provide
direction to help the City meet its housing
goals. The Housing Element includes seven
goals that create the framework for how the
City will address housing needs.

5. Implementation contains the
implementation programs (actions) that the
City and its partner agencies are committed
to implementing over the planning period. A
summary of the City’s quantified objectives
for housing development, rehabilitation, and
conservation is also included.

HOUSING ELEMENT GOALS
Goal 1. Provide a diversified housing stock to meet
the full range of future community housing
needs.

Goal 2. Encourage Extremely Low-Income (ELI)
housing production, increasing availability
of affordable and workforce housing.

Goal 3. Advance equity and inclusion throughout
the City.

Goal 4. Preserve and rehabilitate existing housing
supply.

Goal 5. Promote housing for people experiencing
homelessness.

Goal 6. Provide adequate housing for groups with
special needs.

Goal 7. Increase community outreach and
promote education of affordable housing.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-4 Appendices
The following appendices contain important
information and analysis to inform and
support the Housing Element. They provide
the foundation for the goals, policies, and
actions.

H-1 Housing Needs Assessment
describes the characteristics of Morgan Hill’s
population and housing that are essential to
understanding the City’s housing needs
including population and household
characteristics, income and employment,
housing costs and affordability, special
housing needs, and at-risk housing.

H-2 Site Inventory presents the detailed
results ofthe inventory of sites within the
City that are suitable for residential
development during the eight-year
planning period. It includes a description of
the City’s RHNA, number of residential
units in the pipeline of planned and entitled
projects, and a summary of
capacity/potential to accommodate the
City’s RHNA.

H-3 Opportunities for Energy
Conservation summarizes the ways the
City is currently addressing the conservation
of energy resources as part of largerclimate
action and adaptation planning processes.

H-4 Constraints Analysis identifies
nongovernmental and governmental
constraints that inhibit the development,
maintenance, or improvement of housing.

H-5 Assessment of Fair Housing provides
an assessment of fair housing practices in
Morgan Hill and a summary of strategies to
affirmatively further fair housing within
Morgan Hill.

H-6 Evaluation of Past Housing Element
summarizes the City’s achievements in
implementing programs under the previous
(2015-2023) Housing Element.

H-7 Public Participation includes the
compilation of community input and
feedback received during the various
meetings and engagement events.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-5 General Plan Consistency
The City of Morgan Hill is a General Law City
and is subject to the requirements of State
law. One of the State’s planning law
requirements is that all of the goals and
policies of the City’s General Plan elements
must be internally consistent. Internal
consistency of Morgan Hill's General Plan
has been achieved by ensuring that all
elements are mutually supportive. Further,
consistency is provided by assuring that all
elements of the General Plan meet State law
requirements. The Housing Element
addresses all State requirements, including
relevant legislation enacted subsequent to
adoption of the previous Element. It contains
information on housing constraints and
actions to deal with constraints; and reflects
recent population, housing, land use,
environmental, and employment data.

The Housing Element includes information on
the number of units required to meet Morgan
Hill’s housing needs, and its share of the
regional housing need (RHNA). Sites with
development potential that align with the
City’s housing needs are evaluated,
consistent with the land use designations
contained in the General Plan. The entire
General Plan, including this revised Housing
Element, reaffirms City goals by: (1) acting as
a guide for municipal decisions which affect
the quality and quantity of housing; and, (2)
maintaining Morgan Hill’s present quality of
life by balancing the availability of housing
with other considerations.

The Housing Element is also consistent with
Morgan Hill’s Downtown Specific Plan, which
was adopted in November 2009.

Figure 1-1 Morgan Hill General Plan Land Use Map

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-6

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-7 CHAPTER 2 |
Community
Engagement
This Housing Element has been
prepared with extensive
community input and a robust
public participationplan to ensure a
wide range of input and feedback
was received on key components
of the plan.

This chapter describes the
City’s efforts to engage all
segments of the community
during the preparation of the
Housing Element, including the
numerous individuals,
organizations, and agencies
with which the City consulted,
and the methods of community
outreach.

The 2022 update of the Housing Element involved an
extensive community engagement process. The initial efforts began in May and June of 2021, with a series of workshops that were held to provide a roadmap of the past, present, and future housing in Morgan Hill, to communicate how we got here, and to discuss the housing needs for current and future residents. The opportunity was taken to share the State mandates for housing production that are in response to the housing crisis and geared towards increasing the supply. The initial workshops served as a springboard to leap into a deeper community engagement process. City staff used a variety of methods to solicit public input on the Housing Element update, including distributing three survey’s (two pertaining to Assessment of Fair Housing (AFH)), hosting public
workshops, providing information at community events,
conducting focus groups, giving presentations to the
Community, and holding several workshops with the
community and the Planning Commission. Staff prioritized involvement and engagement of residents and community
State law (Section
65583[c][7]) of the
CaliforniaGovernment
Code) requires cities and
counties to make a
diligent effort to achieve
public participation that
includes all economic
segments of the
community.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-8 members that are most directly impacted by the plan and development, especially Latinx, homeless, and other underrepresented or underserved groups. Key themes of feedback received from community members were consistent with the findings of Appendix H-1 Housing Needs Assessment and were used to guide new policies and programs in this Housing Element.

Community outreach and engagement opportunities were designed to provide a safe engagement process that followed safe public health protocols around COVID-19, and to implement a meaningful engagement process that promoted a sense of ownership and real participation among community members. Staff involved a diverse range of participants, seeking input from the business community, community-based organizations, and other stakeholders.

Summary of Outreach Activities
The City of Morgan Hill started the
engagement process for the Housing Element
in May 2021. Summary notes from the various
community engagement efforts are compiledin
Appendix H-7.

Analysis of Impediments to Fair Housing
The outreach activities elicited broad
community participation during the
development of the AFH. The City conducted
numerous outreach activities to reach all
segments of the community and purposely
focused on reaching Latinx residents,
individuals and families currently housed in
affordable housing, homeless, and other
underrepresented or underserved groups. The
City prioritized outreach by conducting small
interactive focus groups with service
providers/CBO’s via Zoom. The City also
reached out purposefully to the Latinx
community by translating all surveys to
Spanish and conducting in person meetings as
well as Zoom workshops in Spanish. City staff
also conducted outreach during the Spanish
mass at St. Catherine’s.

In addition, two AFH surveys were provided
(both in English and Spanish), one for
Community Based Organizations (in which the
City received 25 responses) and another survey
geared towards underrepresented or
underserved individuals and families (in which
the City received 651 responses). The surveys
were provided electronically and in hard-copy
format.

Stakeholder Focus Group Meetings
The City held 25 virtual stakeholder focus group
meetings from January 2022 through March
2022 to gather input from various stakeholders,
including developers, home builders, non-profit
organizations, advocacy groups, and public
agencies on key housing issues. The City also
issued a follow-up survey to the stakeholders to
address barriers to accessing decent, safe,
affordable housing and which housing priorities
are most important for Morgan Hill.

Key themes of feedback received from the
focus group meetings were incorporated into
the Housing Element Update and used to guide
new policies and programs. Appendix H- 7
contains summaries of the Stakeholder survey
results.

Provide a range of housing
opportunities and preventing
homelessness were emerging themes
amongst resident and stakeholder
concerns and feedback.

PUBLIC ENGAGEMENT SUMMARY
9 2021 Housing Conversation
Workshops
7 Workshops with the
Planning Commission
25 Stakeholder Focus Group
Meetings
977 Responses to Housing
Surveys
2 Town Hall Meetings
2 Regional Meetings

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-9 List of Attendees and Organizations
Represented
Throughout the process of updating the
Housing Element, many different
organizations and groups have provided input.

This list includes some of those organizations
and residents of affordable housing
apartments but is not exhaustive and does not
include the many individual citizens who also
participated.
• Affordable Rental Housing locations
• Cochrane Village
• Crest Avenue Apartments
• The Crossings at Morgan Hill
• The Crossings Monterey
• Depot-Commons
• Jasmine Square
• Murphy Ranch Family Townhomes
• Royal Court Apartments
• San Pedro Gardens
• The Skeel Apartments
• Terracina at Morgan Hill
• The Willows Apartments
• Villa Ciolino
• Orchards Ranch Scattered Sites
• Park Place
• Building Back Better, Joint Venture Silicon
Valley
• Catholic Charities
• Christopher Ranch
• Destination Home Silicon Valley
• Digital Nest
• Employment Development Department
• Eden Housing
• Gavilan College
• Morgan Hill Unified School District
• Parents Helping Parents
• The Compassion Center
• Morgan Hill Library
• Saint Louise Hospital
• St. Vincent De Paul
• St. Catherine’s
• Saint Joseph’s Food Pantry
• Silicon Valley @Home
• Silicon Valley Independent Living Center
• Social Services Agency
• Valley Health Center
• Voices School
• Unhoused individuals

KEY THEMES OF COMMUNITY FEEDBACK
 Provide a range of housing opportunities
affordable to Morgan Hill workforce.
 Prevent homelessness and address the
housing needs of people experiencing
homelessness.
 Promote Extremely Low-Income
housing.
 Establish special needs housing for
seniors, persons with disabilities, and
veterans.
 Conduct community education/outreach to
inform residents about affordable housing
and how to seek assistance.
 Integrate affordable housing
throughout the community.
 Ensure that children who grew up in
Morgan Hill have housing options so
they can live in Morgan Hill as adults.
 Preserve, maintain, and rehabilitate
existing housing to ensure
neighborhood livability and promote
continued housing affordability.
 Create an affordable housing overlay
district.
 Zone more land and/or change
zoning regulations for multi-family to
increase affordable housing.
 Pass a commercial linkage fee
ordinance.
 Pass a rent stabilization ordinance.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-10 Citywide Town Hall Workshop on Draft
Housing Element
The City held a virtual Citywide Town Hall
in June 2022 to accompany release of the
Public Draft Housing Element. City staff
was available to take phone calls and emails for participants who lack internet access or who are visually impaired.

Workshops and Public Hearings
The City held workshops with the Planning
Commission on January 25th, February
22nd, March 8th, April 12th, April 26th, May
10th, and May 24th to share work progress
to date and obtain early direction and
feedback. A subsequent public hearing
was held with the Planning Commission on
July 12th 26th to recommend submittal of
the draft Housing Element to the City
Council and the California Department of
Housing and Community Development
(HCD). In August the City Council held a
public meeting on the Draft Housing
Element authorizing submittal of the Draft
Housing Element to HCD for their 90-day
review.

Planning Commission Workshops
 On January 25, 2022, the Planning
Commission held an Introduction to the
2023-2031 Housing Element Update
workshop.
 On February 22, 2022, staff presented and
gathered feedback on the preliminary draft
Site Inventory and methodology for the
Housing Element.
 On March 8, 2022, staff presented on the
Evaluation of Past Performance and
gathered feedback from the Planning
Commission.
 On April 12, 2022, the Planning Commission
providedfeedback on preliminary draft Goals
& Policies.
 On April 26, 2022, staff presented on
Affirmatively Furthering Fair Housing
(AFFH) and gathered feedback from the
Planning Commission.
 On May 10, 2022, staff presented and
gathered feedback on the Constraints
Analysis for the Housing Element.
 On May 24, 2022, staff gave an overall
presentation on the 2023-2031 Housing
Element Update and discussed the Housing
Element Completeness Checklist.
 On July 1226, 2022 the Planning
Commission reviewed, provided feedback,
and recommended approval of the Draft
Housing Element.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-11 CHAPTER 3 | Summary
of Land Available for
Housing
A key component of the
Housing Element is
demonstrating how the City will
meet its fair share of the
regional housing need.

Regional Housing Needs Allocation
The Regional Housing Needs Assessment (RHNA) is the
California State- required process that seeks to ensure cities and counties are planning for enough housing to
accommodate all economic segments of the community. The State assigns each region in California a regionwide housing target that isdistributed to jurisdictions through a methodology prepared by the regional councils of Government. The City of Morgan Hill is within the region covered by the Association of Bay Area Governments (ABAG). For this 2023-2031 Housing Element, the State issued a target of 441,176 housing units for the entire ABAG Region. This is the total number of units that the cities and counties in the ABAG region must collectively plan to accommodate.

The City of Morgan Hill’s share of the regional housing need was determined through a methodology prepared by the
Association of Bay Area Governments (ABAG). The City must plan to accommodate a total of 1,037 housing units between January 31, 2023 and January 31, 2031. This is equal to a yearly average of 130 housing units. Table 3-1 below shows the City’s RHNA by income category.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-12 Of the 1,037 total units, the City must plan to accommodate 262 units for extremely low- and very low-income households, 151 units for low-income households, 174 units for moderate- income households, and 450 units for above moderate-income households.

Table 3-1 Regional Housing Needs Allocation, City of
Morgan Hill 2023-2031
Income Category Units Percent of Total
Extremely Low- and Very Low-Income 262 25.3%
Low-Income 151 14.6%
Moderate-Income 174 16.8%
Above Moderate-Income 450 43.4%
TOTAL 1,037 100.0%
Source: Association of Bay Area Governments, Regional Housing Needs Plan, 2023-2031.

Adopted December 2021.

INCOME LEVELS AND ABILITY TO PAY
State law defines affordability in terms of target household incomes and the relative percentage these households must pay to purchase or rent decent and safe housing. Affordability is therefore relative to both household income and housing unit cost. In most cases, affordable housing is defined as housing and related costs (e.g., utilities, insurance, property taxes for owner-occupied properties) that requires no more than 30 percent of a household’s gross income.

The income categories (e.g., extremely low-, very low-, low-, or moderate- income) and relative ability to pay for housing are determined in relation to the median household income for the City, adjusted by household size. Table 3-2 below shows the 2022 State and Federal income limits for Santa Clara County based on household size. The area median income (AMI) for a four-person household in Santa Clara County was $168,500 in 2022.

Table 3-2 HCD Income Limits based on Persons per Household, 20202022

Income Categories
Persons per Households
1 2 3 4 5
Extremely Low-Income
(<=30% AMI)
$35,400 $40,250 $45,500 $50,500 $54,600
Very Low-Income
(31-50% AMI)
$59,000 $67,400 $75,850 $84,250 $91,000
Low-Income
(51-80% AMI)
$92,250 $105,400 $118,600 $131,750 $142,300
Median-Income
(100% AMI)
$117,950 $134,800 $151,650 $168,500 $182,000
Moderate-Income
(81-120% AMI)
$141,550 $161,750 $182,000 $202,200 $218,400
Source: CA Department of Housing and Community Development (HCD), 2022.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-13 Inventory of Housing Capacity
State law requires the City to demonstrate
that sufficient land is zoned to provide
housing capacity that is adequate to meet
the RHNA for each income level. In addition,
Assembly Bill 686, Statutes 2018, requires
that a jurisdiction identify sites throughout the
community, in a manner that is consistent
with its duty to affirmatively further fair
housing (AFFH) pursuant to Government
Code Section 65583. In the context of AFFH,
the site identification requirement involves
not only an analysis of site capacity to
accommodate the RHNA, but also an
analysis and conclusion of whether the
identified sites improve or exacerbate
conditions for each of the fair housing areas
as outlined in Appendix H-5 Assessment of
Fair Housing. However, pursuant to
Government Code Section 65583 and HCD’s
Housing Element Site Inventory Guidebook,
the fair housing analysis does not apply to
pending, approved, or permitted
development.

As part of this Housing Element update, City
staff conducted a comprehensive inventory
of residential units in the pipeline (i.e.,
planned and entitledpending, approved or
permitted) and evaluated the capacity to
accommodate the RHNA for each income
level within the Housing Element planning
period, 2023-2031.

Planned and Entitled Projects
Morgan Hill has a significant pipeline of
development projects that are seeking
entitlements or are entitled and actively
pursuing construction. As of March 1, 2022,
there were an estimated 1,823 housing units
in the pipeline that are counted toward
meeting the RHNA. About 30 percent of the
units in the pipeline will provide affordable
housing for lower-income households. More
than 24 percent of the units in the pipeline will
provide affordable housing for moderateincome households, and the remaining 46 percent of the units consist of lower-density
single-unit above moderate-income units.

Based on affordability restrictions, the
projects are anticipated to provide 545
affordable lower-income units consisting of
158 extremely low-income units, 149 very lowincome units, and 238 low-income units. In addition to the affordable lower-income units,
there are 445 moderate-income units in the
pipeline and 833 above moderate-income
units. The inventory includes several
individual affordable housing developments in
the pipeline, including a 249-unit affordable
development at 18960 Monterey Road; a 66-
unit affordable development at 17965
Monterey Road; a 73-unit affordable
development at 15440 Monterey Road; and
an 82-unit affordable development at 16685
Church Street.

To estimate the number of proposed pipeline
development projects that are expected to
reach completion during the 6th cycle, the City
examined completion rates of pipeline
development projects during the 5th cycle
(2015 through 2022). For discretionary
entitlements, completion rates were found by
drawing upon all planning entitlement
applications and approvals and finding the
percentage of those projects which have
obtained a building permit and therefore
reached completion. This analysis found that
entitlement applications had a completion rate
of 88.7%, while approved entitlements had a
completion rate of 91.7%. For building permit
applications and approved permits,
completion rates were established based on
evaluating all residential building permits
issued for new residential units, as well as all
issued building permits that have been
finaled/received a certificate of occupancy,
from January 1, 2015, through December 31,
2020. The report found that building permits
have a 99.2% completion rate for issued
permits. Those completion rates were then
applied to the current pipeline to determine the
number that would be expected to be
completed within the next eight years.

Table 3-3 shows the expected breakdown of
this pipeline development potential, by
expected income category. The income
categories for individual development projects
are based on the actual proposed affordability
level requested or approved as part of the

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-14 entitlement request.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-15 Table 3-3 Total Pipeline Development Potential, by Income Category Above Mod.

Income
Units
Moderate
Income
Units
LowIncome
Units
Very LowIncome
Units
Extremely
Low-Income
Units
Total
Development
Potential
Active Planning
Entitlements
388 59 - - - 447
Approved Planning
Entitlements with No
Building Permit
79 18 36 20 78 231
Building Permit
Applications
308 356 197 126 73 1,060
Total Pipeline
Development
Projects
775 433 233 146 151 1,738
Source: City of Morgan Hill, 2022.

Figure 3-1 Morgan Hill Residential Entitled & Proposed Projects Source: City of Morgan Hill, 2022.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-16 Capacity to Accommodate the RHNA
Table 3-4 below provides a summary of total residential capacity included in the site inventory compared to the City’s 6th Cycle RHNA. As shown in the table, the City has a total capacity for 1,738 units within pipeline residential developments (a total success potential of over 95%), which is sufficient capacity to accommodate the RHNA of 1,037 units. The land inventory includes capacity for 530 lower-income units (i.e., extremely low-, very low-, and low-income units), 233 moderate income units, and 775 above moderate-income units. It is important to note that the City did not analyze accessory dwelling units (ADUs) within this Housing Element; therefore ADUs were not counted towards the identified residential capacity in Morgan Hill.

Table 3-4 Summary of Residential Capacity/Potential Compared to 6th Cycle RHNA by Income, City of Morgan Hill, January 31, 2023 to January 31, 2031 Extremely LowIncome UnitsVery LowIncome
Units
LowIncome
Units
ModerateIncome UnitsAbove ModerateIncome Units Total
Units
RHNA 131 131 151 174 450 1,037
Pipeline
Residential
Capacity
158 149 238 445 833 1,823
Pipeline
Residential
Potential
151 146 233 433 775 1,738
Surplus(+)/
Deficit(-)
+20 +15 +82 +259 +325 +701
Source: City of Morgan Hill 2022.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-17 CHAPTER 4 | Goals and
Policies
The goals and policies provide
direction to help the City reach
its housing goals.

The Housing Element includes seven goals that create the framework for how the City of Morgan Hill will address housing needs during the planning period.Within each goal section, the policies provide direction for how the City will achieve that goal.

The goals and policies were developed with extensive
community input and reflect the City’s ambition to create equitable and inclusive neighborhoods and to provide
opportunities for a variety of housing at all levels of affordability to meet the current and future needs of all residents.

HOUSING ELEMENT GOALS
Goal 1. Provide a diversified housing stock to meet
the full range of future community housing
needs.

Goal 2. Encourage Extremely Low-Income (ELI)
housing production, increasing availability
of affordable and workforce housing.

Goal 3. Advance equity and inclusion throughout
the City.

Goal 4. Preserve and rehabilitate existing housing
supply.

Goal 5. Promote housing for people experiencing
homelessness.

Goal 6. Provide adequate housing for groups with
special needs.

Goal 7. Increase community outreach and
promote education of affordable housing.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-18 Goal 1. Provide a diversified housing stock to meet the full range of future community housing needs
Facilitate the construction of 1,037 new housing units by 2031 by providing a range of housing types for all age groups, served by transit, recreational amenities, shopping, and health and personal services, that allow residents to age in place.

Housing demand continues to outpace supply.

This lack of supply drives up housing costs,
greatly impacting affordability. Through the
Housing Element update process, every city
and county in the state is given a target number
of housing units it must plan to accommodate,
called the Regional Housing Needs Allocation
(RHNA). The City’s target for this Housing
Element is 1,037 units over the next eight
years, an average of about 130 housing
units annually.

Policies
HE-1.1 Adequate Land for New
Development. Ensure that an
adequate amount of land is available
for new residential development,
zoned for a range of residential
densities and a variety of housing
types.

HE-1.2 Capital Improvement
Programming. Give high priority in
the annual Capital Improvement
Program to providing adequate
public facilities for residentially
zoned land needed to accommodate
the City’s ABAG projected regional
housing needs allocation (RHNA).

HE-1.3 Flexible Housing. Encourage and
design alternative housing solutions
that support affordable and
intergenerational housing, including
micro-unit housing, attached or
detached accessory dwelling units,
home sharing, and cohousing to help
meet the housing needs of aging
adults, students, and lower-income
individuals and growing families.

HE-1.4 Market Rate Developments.

Encourage income-diverse
neighborhoods and promote
extremely low-, very low-, low-,
median-, and moderate-income
households within new market rate
development.

HE-1.5 Accessory Dwelling Units.

Encourage development of
accessory dwelling units.

HE-1.6 Advocate with Local Legislators.

Advocate with local legislatures and
provide input to the State Legislature
to ensure that State programs and
legislation meet local housing needs,
support local housing programs, and
encourage capacity building
opportunities to implement the
Housing Element work program.

HE-1.7 Housing Assistance Funds.

Provide housing assistance funds in
the form of loans wherever possible
so that the funds will eventually
return to the City for future housing
use.

HE-1.8 Annual Monitoring. Monitor
housing development and RHNA
housing needs annually to ensure
that goals and quantified objectives
are being met.

HE-1.9 Review Potential Governmental
Constraints to Housing. Review
governmental constraints to ensure
that they do not pose an undue
impediment to the provision of new
housing or the rehabilitation of
Morgan Hill, like most communities in
California, is facing a housing crisis.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-19 existing housing.

HE-1.10 Sales Prices and Rental Rates.

Require developers to report initial
sales price and rents of new units
prior to occupancy approval.

HE-1.11 Downtown Specific Plan. Continue
to implement the Downtown Specific
Plan by encouraging a vibrant mix of
residential and commercial
development in the Mixed UseNeighborhood (MU-N) zoning district.

HE-1.12 Impact Fee Credits for Previous
Uses. Allow projects to receive a
credit of impact fees, based on the
previous uses.

HE-1.13 Land Acquisition for Affordable
Housing. Pursue opportunities for
land acquisition for future affordable
housing development in areas zoned
for multi-family or areas that permit
mixed projects, either through
acquisition by the City or by nonprofit
housing developers.

HE-1.14 Facilitate Land Assembly.

Facilitate assembling parcels to
develop residential projects to yield
multi-family and affordable units by
making the Available Land Inventory
available to developers.

HE-1.15 Variety of Single-family Homes.

Support the creation of smaller
single-family lot sizes to encourage
home ownership for a wider range of
income levels.

HE-1.16 Housing Coordinated with
Transportation. Seek to ensure
new housing developments are
connected to pedestrian and bicycle
routes and amenities.

HE-1.17 Relocation Assistance. Require
relocation assistance in the event of
displacement of extremely low, very
low-, low-, or moderate-income
residents.

HE-1.18 Rental Assistance Programs.

Educate and encourage landlords of
the requirement to accept rental
assistance programs, such as
housing vouchers and Section 8
vouchers administered by the
Housing Authority of Santa Clara
County and emergency rental
assistance.

HE-1.19 Neighborhood Character. Maintain
and enhance the quality of life within
residential neighborhoods, including
those identified as low resource
and/or disadvantaged, through
responsible development and
investment by providing adequate
maintenance to streets, sidewalks,
alleys, parks, and other community
facilities.

HE-1.20 Expand Housing Types
Throughout the City. Expand
multiple-family zoning areas
throughout the City, and revise
design standards, to allow for a
greater array of housing types
throughout the city to create more
inclusive and equitable
neighborhoods.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-20 Goal 2: Encourage Extremely Low-Income (ELI) housing
production, increasing availability of affordable and
workforce housing
Support the production of 413 new lower-income housing units by 2031 and increase other affordable housing opportunities within the existing housing stock.

The short supply of affordable and workforce
housing coupled with increasing costs of
housing not only have negative impacts on the
City’s lower-income households, but they also
have a destabilizing impact on the overall
economy as fewer household financial
resources are able to be spent on other sectors
of the economy. Many lower-income families
must choose between paying rent or paying for
other basic needs like healthcare, food, and
transportation. Others are forced into
overcrowded or substandard housing
conditions or join the increasingly large
population of people experiencing
homelessness.

Housing is considered “affordable” if no more
than 30 percent of a household’s gross monthly
income is spent on rent and utilities. Households
are considered “cost burdened” if they spend
more than 30 percent of their income on housing
costs, and “severely cost burdened” if they
spend more than 50 percent.

As shown below in Figures 4-1 and 4-2, 35.4
percent of all Morgan Hill households were
considered cost burdened in 2019, and 15.3
percent of households were considered
severely cost-burdened. Lower-income families
were more likely than others to overpay for
housing.

KEY FACTS
 As defined by the U.S. Department of Housing
and Urban Development (HUD), lowerincomehouseholds are those that earn less than 80%of area median income (AMI), or
$131,750 for a family of four within Santa Clara
County in 2022.
 The median home sale price in the
Morgan Hill has increased from about
$472,850 in 2001 to over $1,055,000 in 2021.
 Less than 65% of homes in Morgan Hill are
sold at prices affordable for a household
regardless of income in 2020.

Morgan Hill housing costs have skyrocketed
inrecent years, making it especially hard for
lower-income households to afford housing.

DEFINITIONS
 Affordable Housing: Under State and
federal statutes, housing which costs no
more than 30 percent of gross household
income. Housing costs include rent or
mortgage payments, utilities, taxes,
insurance, homeowner association fees,
and related costs.
 Workforce Housing: housing that is
affordable to households earning between 60
and 120 percent of area median income
(AMI). Workforce housing targets middleincome workers including teachers, health care workers, retail clerks, young
professionals, and more.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-21 Figure 4-1 Cost-Burdened by Tenure in Morgan Hill, 2019 Figure 4-2 Cost-Burdened by Income Level in Morgan Hill, 2019 The private market has largely been unable to produce homes affordable to lower-income households since affordable rents do not cover the cost to construct these housing units. Between 2015- 2019, the City constructed an average of 41 lower-income housing units per year, which represents less than 14 percent of all housing permitted within Morgan Hill.

There are several barriers to developing affordable housing in Morgan Hill and in California. A historical focus on building single family homes and neighborhoods has made it harder to build housing for lower-income households throughout the City. That, coupled with high construction and land costs and the severe disinvestment in affordable housing subsidies from the state and federal governments, has created major challenges to building new affordable housing. However, the City can play a part in supporting the production of more affordable housing units.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-22 As part of California’s 6th Cycle Housing
Element, the City of Morgan Hill must
adequately plan for and accommodate a total of
413 new lower-income housing units by 2031,
which represents 40 percent of the City’s overall
RHNA.
 Within that 413 figure, 262 units should
be affordable to very low-income
households making less than 50
percent AMI, and the remaining 151
units should be affordable to lowincome households making between 50-80 percent AMI.
 The allocation is equivalent to producing
52 lower-income units annually over the
next eight years.

Policies
HE-2.1 Affordable Housing Strategy
Implementation. Encourage the
production of rental housing,
including housing for extremely lowincome households, through available funds, banked land, and
community partnerships.

HE-2.2 Funds for Affordable Units.

Prioritize housing funds to finance
affordable projects for extremely
low-income households.

HE-2.3 Rental Housing Incentives. Assist
for-profit and nonprofit developers in
developing affordable rental
housing.

HE-2.4 Programs Providing Extremely
Low-, Very Low-, and Low-Income
Housing. Participate in programs
that assist extremely low-, very low-,
and low-income households to
secure adequate housing.

HE-2.5 Santa Clara County Housing
Programs. Collaborate with the
County of Santa Clara Office of
Supportive Housing, Destination
Home, Housing Trust of Silicon
Valley, and Housing providers to
promote housing programs.

HE-2.6 Leverage Funding. Leverage
housing assistance funds whenever
possible by combining them with
funds from State, Federal, County,
and other sources.

HE-2.7 Below Market Rate (BMR)
Occupancy. Require all BMR units
to be income-restricted to ensure
their use as affordable housing as
required by funding source or the
Inclusionary Housing Ordinance and
facilitate rehabilitation and resales of
the BMR ownership units to new
income-qualified first-time
homebuyers.

HE-2.8 BMR Deed Restrictions. Continue
to require the recordation of deed
restrictions for all affordable units
except accessory dwelling
HE-2.9 Assist in the Development of
Extremely Low and Very LowIncome Affordable Housing.

Assist affordable housing
developments through site
identification, direct funding,
supporting funding applications, land
donation, and other incentives.

HE-2.10 Create Additional Local Funding
for Affordable Housing. Strive to
create additional local funding for
affordable housing.

HE-2.11 Advocate for State and Federal
Legislative Changes. Advocate for
additional financial resources and
legislative changes from the State
and Federal government to support
the funding and production of
affordable housing.

HE-2.12 Commercial Linkage Fee.

Consider new commercial and
industrial development to meet the
housing demand they generate,
particularly the need for affordable
housing for lower-income workers,
through a Commercial Linkage Fee
Ordinance or similar mechanism
only when the City has met a
housing-job balance of 1:1 ratio.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-23 HE-2.13 Support Innovative Construction
Methods. Support and encourage
the development and construction
industries to implement new
technologies and opportunities to
build housing that is more affordable
by design.

HE-2.14 Support Farmworker Housing.

Establish farmworker housing as an
affordable housing need within the
City.

HE-2.15 Farm Worker Housing Advocacy.

Advocate for federal, State, and
County funding for
farmworker/agricultural employee
housing, including housing that
meets the needs of the County’s
agricultural industry and its workers.

HE-2.16 Partner with Developers.

Collaborate with developers and
employers to develop innovative
housing solutions for farmworkers
and agricultural employees and
identify and pursue all potential
funding sources and assist owners
and developers in applying for
funding.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-24 Goal 3: Advance equity and inclusion throughout the City Create more equitable and inclusive neighborhoods.

With a population of 44,686 as of the 2015-2019
American Community Survey 5-Year
Estimates, Morgan Hill has experienced
significant growth in recent decades as Santa
Clara County has emerged as the center of the
global technology industry. High and rising
housing costs have come with the incredible
growth of both Morgan Hill and the Region, and
the impact of those high housing costs have not
been felt equally by all. Hispanic households,
persons with disabilities, and large families all
face housing insecurity at higher rates and tend
to have less access to the highest resource
parts of the Region. Although the Region and
Morgan Hill have small Black populations,
which makes it difficult to draw some
conclusions about disparities, rates of
homelessness among the Region’s small Black
population are shockingly high.

Within Morgan Hill, income levels are similar to
those countywide, housing is slightly more
affordable, and access to opportunity is
moderate in most neighborhoods. With regard
to race and ethnicity, Morgan Hill is slightly
more heavily Hispanic and White than the
Region and less heavily Asian. Additionally,
within Morgan Hill, housing patterns are not
highly segregated. Although the eastern portion
of the city is slightly more heavily White and less
heavily Hispanic than the downtown area,
which is home to a large majority of the city’s
subsidized housing), those differences are
modest in comparison to most communities
within the Region. Due to its location in the
southern portion of Santa Clara County (often
called South County), Morgan Hill residents
have somewhat limited access to public
transportation, less proximity to job centers,
and, as a result, longer and more burdensome
commutes than many other residents of the
Region.

It is incumbent on the City of Morgan Hill to take
proactive steps, consistent with its AFFH
obligation, to address existing disparities in
housing and access to opportunity in regional
context and to take steps to prevent the
emergence of segregated patterns. The
policies identified below, which are discussed in
much greater detail Appendix H-5, are a
roadmap for doing so.

Policies
HE-3.1 Increase Affordable Housing
Opportunities. Increase
affordable housing opportunities
for protected class members in
eastern Morgan Hill.

HE-3.2 Displacement. Protect tenants
from displacement.

HE-3.3 Employment Opportunities.

Connect Morgan Hill Residents to
Employment Opportunities.

HE-3.4 Fair Housing Education.

Increase Fair Housing
enforcement, outreach, and
education in Morgan Hill.

Where we live directly impacts our health and
our ability to achieve our full potential.

Equitable housing must be more than
affordable; it must also connect residents to
the jobs, schools, services, and community
assets that will enable them to thrive and be
healthy.

The City is committed to creating more
opportunities for affordable housing dispersed
more equitably throughout the City; as
neighborhood investments increase, protecting
existing residents from displacement; connecting
Morgan Hill residents to employment
opportunities; and, expanding outreach and
education to better reach vulnerable and at-risk
households and to demystify affordable housing.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-25 Goal 4: Preserve and rehabilitate existing housing supply Preserve, maintain, and rehabilitate existing housing to ensure neighborhood livability and promote continued housing affordability.

The City of Morgan Hill is home to 1,160
deed- restricted affordable units, not including
privately owned deed-restricted affordable
units. In general, once the period of restricted
rent/occupancy expires, a property owner
may charge market rents for the previously
restricted units. State law requires that
housing elements include an inventory of all
publicly assisted multi-unit rental housing
projects within the local jurisdiction that are at
risk of conversion to uses other than lowincome residential during the next 10 years from the start of the housing element planning
period (i.e., January 31, 2023). No units are
at-risk of converting to market rate by 2031.

The preservation of affordable units is not
only more cost effective than building
replacement units, but it is a key element of
anti-displacement policy.

Beyond subsidized affordable housing, there
is a need to maintain and improve the quality
of existing marketrate housing. While the age
of housing, by itself, does not necessarily
equate with poor housing conditions, a
neighborhood with a large stock of older
housing (particularly older non-subsidized
rental housing) occupied by a high
percentage of lower-income households has
a much greater potential for housing
problems than an affluent neighborhood with
older housing.

If not properly maintained, housing can
exhibit obvious signs of “wear and tear” after
30 years (or even less, depending on the
quality of materials and construction). The
housing stock of Morgan Hill in 2020 was
made up of 59.0% single family detached
homes, 17.7% single family attached homes,

5.5% multifamily homes with 2 to 4 units,

9.8% multifamily homes with 5 or more units,
and 8.0% mobile homes. In Morgan Hill, the
housing type that experienced the most growth
between 2010 and 2020 was Single-Family
Home: Detached.

Production has not kept up with housing demand
for several decades in the Bay Area, as the total
number of units built and available has not yet
come close to meeting the population and job
growth experienced throughout the region. In
Morgan Hill, the largest proportion of the housing
stock was built from 1980 to 1999, with 5,632
units constructed during this period (see Table 4-
1). Since 2010, 11.6% of the current housing
stock was built, which is 1,761 units.

The City takes a proactive approach toward
housing conditions through housing rehabilitation
programs. The City has participated in the Urban
Counties Consortium Community Development
Block Grant (CDBG) funds to provide
rehabilitation assistance. Over the last housing
element period, from January 1, 2015 through
January 1, 2020, 159 units were rehabilitated
within the City of Morgan Hill.

Source: U.S. Census Bureau, 2019 American Community Survey 5-Year Estimates
Table 4-1 Housing Stock by Year Built
Year Built Number of Units % of Total
2010-or later 1,761 11.6%
2000-2009 2,252 14.8%
1980-1999 5,632 37.0%
1960-1979 4,803 31.5%
1940-1959 525 3.4%
1939 or earlier 260 1.7%
Total 15,233 100%
The policies in this section focus on
preserving the existing housing stock, with an
emphasis on preserving affordable housing.

KEY FACTS
 None of the 1,160 subsidized affordable
units are at risk of converting to market rate
by 2031.
 The housing stock of Morgan Hill comprises of

76.7% Single-Family homes.
 74% of Morgan Hill homes were built before
2000.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-26 Policies
HE-4.1 Preserve At-Risk Units.

Preserve as many below market
rate ownership and rental units as
possible.

HE-4.2 Affordability Controls. Continue
to extend the affordability
restrictions as part of the next sale
to eligible buyers and, if
necessary, exercise the City’s
right of first refusal to purchase
BMR units to ensure they remain
affordable.

HE-4.3 Assist Non-profits in
Acquisition of At-Risk Units.

Assist non-profit housing
organizations in acquiring and/or
rehabilitating existing affordable
rental housing through financial
assistance in exchange for
extending the affordability period
as required by the applicable
funding source.

HE-4.4 Preservation of Existing
Affordable Housing Stock.

Preserve and grow the existing
affordable housing stock through
the acquisition, conversion,
rehabilitation, and replacement of
affordable units. Monitor and
report progress of affordable
housing stock to the State
Housing and Community
Development Department.

HE-4.5 Code Enforcement. Support the
long-term maintenance and
improvement of existing housing
through code enforcement with
emphasis on rental units,
assistance in maintaining
affordability, and nondisplacement of existing tenants.

HE-4.6 Renovations under the
Downtown Specific Plan.

Encourage the renovation of
buildings consistent with the
Downtown Specific Plan.

HE-4.7 Rehabilitation Loan Programs.

Support Housing Rehabilitation
Loan Programs that provide home
improvements and rehabilitation
assistance using CDBG and City
housing funds.

HE-4.8 Capital Improvement Program.

Coordinate the planning and
funding of neighborhood
infrastructure improvements by
integrating the Capital
Improvement Program goals, the
Housing Element Polices and the
opportunities that are available
through the Urban County
Community Develop Block Grant
Program.

HE-4.9 Overcrowding. Support the
addition of bedrooms and other
expansions as an eligible
rehabilitation activity to alleviate
overcrowding.

HE-4.10 Preserve Existing Mobile Home
Parks. Support efforts by tenants
and nonprofits to preserve
existing mobile home parks.

HE-4.11 Rent Stabilization Ordinance.

Maintain the City's rent
stabilization ordinance for mobile
home parks.

HE-4.12 Rehabilitation and
Sustainability. Ensure that all
housing units rehabilitated with
City assistance are
environmentally friendly and
energy-efficient.

HE-4.13 Protection and Preservation of
Existing Affordable Housing.

Work with property owners,
tenants, and nonprofit purchasers
to preserve assisted rental and
ownership housing and
implement a strong affordable
housing monitoring program.

HE-4.14 No Net Loss of Housing Stock.

Ensure that affordable housing
sites identified in the Housing

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-27 Element Pipeline do not result in a
net reduction of affordable
housing units if they are
redeveloped.

HE-4.15 Conversions to Affordable
Housing. Explore new strategies
to convert abandoned and
blighted properties into affordable
housing.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-28 Goal 5: Promote Housing for people experiencing
homelessness
Prevent the occurrences of homelessness and address the housing needs of people experiencing homelessness.

The 2022 Santa Clara County Point-in-Time
(PIT) Homeless Count reinforce what we
already know: Homelessness remains a
severe crisis in our community. While the PIT
count is an imperfect way to measure
homelessness in our community, it can
provide key insight into year-over-year trends.

The preliminary data shows that from 2019-
2022:
• The overall number of homeless people
remain relatively steady countywide.

Santa Clara County saw a 3% increase
(to 10,028); while San Jose saw a 11%
increase (to 6,739) during that time.
• At the same time, the number of
unsheltered individuals decreased,
with a 3% decrease (down to 7,708) in
Santa Clara County; and a 2%
decrease (down to 5,031) in San Jose.

The homelessness population includes
veterans, women, children, persons with
disabilities, older adults, and other vulnerable
groups. These individuals lack adequate
sanitary facilities and are at risk from theft,
crime, and extreme weather conditions. These
conditions threaten the physical and mental
health and safety of those experiencing
homelessness and these conditions pose a
threat to the public health and well- being of the
entire community.

The crisis of unsheltered homelessness is one
that impacts the entire Morgan Hill community;
both those experiencing homelessness and
the broader communityof housed residents,
businesses, and neighborhoods. As
residential rents continue to climb, many
housed residents also face the threat of
homelessness due to lack of access to
affordable housing.

The Housing Element includes a variety of
policies to help the City address the
homelessness crisis. Policies range from
working with the County and partner agencies
on a regional approach, removing barriers to
emergency shelter access, and to improve
data quality and regularly report on metrics.

Policies
HE-5.1 Housing First Principles.

Encourage ongoing supportive
services as needed and prioritize
solutions that are consistent with the
notion that stable housing is the first,
critical step towards addressing
human needs.

HE-5.2 Support Homeless and Service
Agencies. Meet the needs of
residents who are homeless or at
risk of homelessness by
collaborating with agencies
providing emergency shelter for
homeless Morgan Hill residents.

When appropriate and possible,
provide funding.

HE-5.3 Work with Santa Clara County
Agencies. Collaborate with Santa
Similar to other regions in California with
double-digit increases in reported
homelessness, the Sacramento Santa
Clara County region is in themiddle of a
homelessness crisis.

KEY FACTS
 From 2019 to 2022, Santa Clara County
saw a 3% increase of people experiencing
homelessness on any given night.
 About 77% of people experiencing
homelessness on any given night are
unsheltered.
 11.5% of people experiencing
homelessness are youth.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-29 Clara County agencies and
nonprofits to address homelessness
and other housing or community
service-related issues, such as the
ongoing implementation of the
Countywide Community Plan to End
Homelessness.

HE-5.4 Religious Institutions Shelters.

Allow religious institutions to operate
small emergency shelters and
transitional facilities as an ancillary
part of their regular operations with
no additional local permitting
requirements.

HE-5.5 Youth Experiencing
Homelessness. Coordinate and
create partnerships to increase
accessibility of safety net services
through outreach and
communication, to effectively link
youth experiencing homelessness
to housing and service solutions.

HE-5.6 Regional Coordination.

Coordinate with the region and work
with the Continuum of Care, Santa
Clara County, and partner agencies
to develop strategies that address
homelessness through a shared
vision, coordinated programs, and
joint funding opportunities.

HE-5.7 Innovative Solutions. Employ
innovative solutions that further
collaboration and coordination of the
homeless continuum of care. This
will include effective responses and
best practices for prevention
services, emergency shelters,
interim housing, permanent
housing, and ongoing housing
stability to address the
homelessness crisis.

HE-5.8 Permanent Supportive Housing.

Partner with other agencies to
facilitate and provide permanent
supportive housing options that offer
appropriate services and case
managers so that people
experiencing chronic homelessness
can maintain permanent housing.

HE-5.9 Prevention Resources. Use data to
focus on impactful solutions, longterm outcomes, and strategies that target those most at risk of
homelessness by connecting them
to affordable housing, prevention
resources, workforce training, and
supportive services that will help
prevent them from losing their
homes (e.g., rental assistance
programs, tenant protections, and
job assistance).

HE-5.10 Rental Housing Assistance.

Prioritize and facilitate programs and
strategies that work to help those
experiencing homelessness, or who
are at risk of homelessness, find
appropriate rental housing and
prevention services.

HE-5.11 Diversion Approach. Work with and
provide resources to partner
organizations to prevent people from
seeking shelter by helping them
identify immediate alternate housing
arrangements and connecting them
with services and financial
assistance to help them return to
permanent housing.

HE-5.12 Improve Connections Between
Shelters and Housing. Expand and
improve the collaboration and
connection between emergency
shelters, temporary housing, and
permanent housing in order to
decrease the duration of
homelessness and rehouse
individuals quickly.

HE-5.13 Regular Reporting. Use metrics
and improve data quality to track and
improve the efficacy of homeless
services, programs, and
investments.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-30 Goal 6: Provide adequate housing for groups with special needs
Promote greater universal access in housing and support efforts that provide older adults and people with disabilities the option to stay in their homes and neighborhoods.

Individuals with disabilities have special
needs related to relatively low incomes,
housing accessibility, self-care, access to
transit, and proximity to health care and
supportive services. Disabilities can be both
visible and invisible. It is important that there
is just and fair inclusion throughout the city
and that conditions create an environment
where everyone can participate, prosper, and
reach his or her full potential.

In 2019, over 4,000 Morgan Hill residents over
age five had one or more disability. This
number represents about 9 percent of the
City’s population over age five. In Morgan Hill,
of the population with a developmental
disability, children under the age of 18 make
up 39.831.8%, while adults account for

60.268.7%.

Because disabilities include a wide range and
severity of sensory, physical, mental, and
developmental conditions, the special needs
of persons with disabilities are wide ranging,
as well. In addition to affordable and
accessible housing opportunities in proximity
of transportation and other services, persons
with disabilities may also need on-site support
or even full-time care in a group home
environment.

Persons living with disabilities, especially with
severe living or self-care difficulties, generally
live with low to extremely low incomes. Of the
total population of people with disabilities, 106
individuals or approximately 2.6 percent of
people with disabilities in Morgan Hill between
the age of 20 to 64 have incomes below the
poverty line, by contrast, 852 individuals below
the poverty line do not have a disability. Median
earnings for people without disabilities in
Morgan Hill is $58,721, while it is only $34,700
for people with disabilities. This disparity in
income between individuals with or without a
disability means that individuals without a
disability have median earnings that are
$20,000 dollars more than those with a
disability. The economic gap for people with
disabilities is likely even greater in reality, as the
data does not include institutionalized
individuals. There is not census data
categorized by disability type for individuals
living below the poverty line in Morgan Hill, so it
is difficult to ascertain how many residents are
in need of accessible and affordable units.

Furthermore, the data does not indicate how
much overlap there is between these
categories, nor does the data say how many of
those individuals need accessible units.

Older adults (persons age 65 or more) are a
special needsgroup because a high percentage
of them have relatively low incomes and
decreasing mobility, which limit their housing
options. Many older adults own homes that no
longer meet their needs; their homes are too
large, not located near health and social
services, and/or need repairs or accessibility
modifications. In Morgan Hill, the older adult
population is rising rapidly. As of 2019, there
were about 6,240 older adults living in the City,
up nearly 150 percent since 2000. Older adults
also represent an increasing proportion of the
total population, from 7.5 percent in 2010 to 14
percent in 2019.

The goals of the Housing Element reflect
empowerment and inclusion for the broad
range of human ability represented in
Morgan Hill.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-31 Older adults, as a group, have lower incomes
than thepopulation at large. Older adults who
rent may be at even greater risk for housing
challenges than those who own, due to income
differences between these groups. The largest
proportion of older adult households who rent
make 0%-30% of AMI, while the largest
proportion of older adult households who are
homeowners falls in the income group Greater
than 100% of AMI.

Although most older adults own their homes,
often unencumbered by debt, many may be in
a situation characterized as “house rich and
cash poor.” In other words, a person may have
large equity in a home, but still be forced to live
on a minimal fixed income. Selling the home
may not be an available option, because the
cost to rent a housing unit may override the
income made available by the home sale.

The vast majority of older adults and persons
with disabilities desire to live an independent
lifestyle as long as possible. The independent
living movement supports the idea that
individuals with disabilities can make their own
decisions about living, working, and interacting
with the surrounding community. Housing and
assistance programs for older adults and those
with disabilities should put priority on
independent living, attempting first to maintain
these persons in their own homes and to age in
place. Other housing options are accessory
dwelling units and duplexes that allow older
adults to live near extended families while
maintaining privacy.

As Morgan Hill’s population continues to age,
there will be increasing demand for age-friendly
housing built with universal design principles. A
few universal design elements include: zerostep entrances, single- floor living, wide hallways and doorways, and electronic controls
reachable from a wheelchair. Housing design
features that increase accessibility and safety
can allow those with mobility disabilities much
more independent in their home.

The Housing Element contains policies to
support the independent living movement by
helping older adults and people with disabilities
stay in their homes and promoting universal
design and accessibility in housing throughout
the city.

Policies
HE-6.1 Housing for Seniors and Persons
with Disabilities. Promote housing
that is appropriate for seniors and
accessible to persons living with
disabilities where appropriate, such
as areas near amenities, shopping,
and transit.

HE-6.2 State and Federal Accessibility
Requirements. Continue to enforce
State and federal requirements for
accessibility to the disabled in new
multi-family units.

HE-6.3 Work with Other Agencies.

Continue to work with outside
agencies and organizations to
maximize housing opportunities for
the full spectrum of housing needs.

HE-6.4 Use CDBG and Other Funding. Use
CDBG and other available funds to
support the provision of housing

KEY FACTS
 Approximately 4,000 Morgan Hill
residents have a disability (about 9.1% of
the population).
 Of the total population of people with
disabilities, over 100 Morgan Hill
residents between the age of 20 to 64
have incomes below the poverty line
(about $34,700); in contrast 852
individuals below the poverty line do not
have a disability.
 In 2019, seniors accounted for 14% of
the population in Morgan Hill.
 The senior population has increased nearly
150% between 2000 and 2019.
 In 2019, 80% of older adults were
homeowners.

DEFINITIONS
 Universal Design. The design of
buildings, products, and environments
that make them accessible and safe to
all people regardless ofage, size, ability,
or disability.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-32 related services for groups with
special needs such as the elderly,
single parents with children, and
survivors of gender-based violence.

HE-6.5 Preferential Handling of Special
Needs Populations. Provide
preferential handling of special needs
populations, such as survivors of
gender-based violence cases, youth
aging out of foster care, the
developmentally disabled, single
parents, farmworkers, the unhoused,
veterans, etc., in the management
plans and regulatory agreements of
funded projects.

HE-6.6 Universal Design in New Housing.

Strive to achieve universal design in
new residential housing units to
maximize visitability and provide
housing for people with disabilities
and allow older adults to age in place
(for example, have a bedroom and
bathroom on the ground floor, or have
the entire unit contained within a
single floor).

HE-6.7 Reasonable Accommodation
Ordinance. Ensure people with
disabilities have equal opportunity to
use and enjoy their housing by
providing a process to request
modification to a land use or zoning
standard, regulation, policy, or
procedure.

HE-6.8 Encourage Accessible Housing
Near Transit and Amenities.

Encourage the development,
rehabilitation, and preservation of
accessible housing, particularly in
neighborhoods that are accessible to
public transit, commercial services,
and health and community facilities.

HE-6.9 Financial Assistance for
Accessible Affordable Housing.

Seek opportunities to provide
financial assistance and other
incentives for affordable housing and
permanent supportive housing
projects that exceed the minimum
accessibility provisions of State and
Federal law.

HE-6.10 Partner with Community Based
Non-profit Organizations. Support
and partner with community-based
organizations that develop affordable
housing, retrofit existing housing, and
provide supportive services for older
adults and people with disabilities.

HE-6.11 Emergency Home Repairs and
Accessibility Retrofits. Continue to
provide low- and very low-income
residents, seniors, and persons with
disabilities with loans for emergency
repairs and/or accessibility
modifications to their homes.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-33 Goal 7: Increase community outreach and promote
education of affordable housing
Implement a community engagement and awareness campaign around affordable housing with the intent to raise awareness of Housing Programs, Housing Search, and to demystify Affordable Housing.

During the public outreach component of the
Housing Element Update it became apparent
that there is not enough education or outreach
about affordable housing within Morgan Hill
and the South County as a whole. Nearly all of
the stakeholder focus group meetings that City
staff held, all groups indicated that there is not
enough information available to families and
individuals about affordable housing
assistance; in particular, more outreach is
needed for people experiencing homelessness
or at-risk of homelessness.

Stakeholders indicated that many forms of
education are needed; as their clients seek
information for financial education, digital
education, availability of affordable housing
programs, accessory dwelling units. Another
common theme that was brought up by
stakeholders is the need for a Single Source
Database to streamline affordable housing
searches and to apply for affordable housing
at multiple locations.

There are multiple fair housing organizations
serving Morgan Hill. The organization most
directly focused on fair housing is Project
Sentinel, a non-profit based in Santa Clara (but
serving the entire county) which aims to
promote fair housing through fair housing
testing, the filing of administrative complaints,
and landlord-tenant mediation. Santa Clara
County provides CDBG funds to Project
Sentinel to serve a geographic area that
includes Morgan Hill. However, this private fair
housing outreach and enforcement may not be
sufficient.

Through the multiple survey processes the City
conducted, 24 percent of stakeholders
indicated that the City needs to increase
funding for fair housing education, outreach,
and enforcement; and 36 percent of
stakeholders indicated that the City needs to
conduct additional community education and
outreach to inform residents about affordable
housing and how to seek assistance. In
contrast, 29 percent of individuals who
responded to the survey indicated the City
needs to increase affordable housing
education and outreach.

Policies
HE-7.1 Local Needs. Educate and market
Housing programs to local residents
and local employees on how to
access housing programs, services
and affordable housing opportunities
throughout the City.

HE-7.2 Publicity for City Programs.

Publicize and broaden understanding
of City housing programs, including
the discrimination complaints
procedure, making special outreach
efforts to the non-English speaking
community and
underserved/underrepresented
populations.

HE-7.3 Single Source Database. Explore
opportunities to streamline housing
search, consider supporting a single
source affordable housing
database/portal that allows residents
to submit a single application for
multiple affordable housing
developments.

The City is committed to expanding
outreach and education to better reach
vulnerable and at-risk households and to
demystify affordable housing.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-34 HE-7.4 Unhoused and Homelessness
Prevention Program Outreach.

Create opportunities to increase
community knowledge of the existing
range of service for the unhoused
and homelessness prevention
resources, including direct outreach
and engagement with the unhoused
community.

HE-7.5 Awareness and Support. Work to
increase community knowledge of
the shortage of housing statewide,
the need for awareness, and work to
harness support for affordable
housing citywide.

HE-7.6 Community Education. Create
opportunities for community
discussions and education about
homelessness, housing insecurity,
and affordable housing, to achieve
an atmosphere of acceptance and
understanding.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-35 CHAPTER 5 |
Implementation
This Housing Element
addresses the City’s housing
issues with a comprehensive
and bold strategy.

The City is committed to implementing the programs outlined in this chapter over the eight-year planning period. These implementation programs/actions have been developed with extensive community input and with thoughtful consideration for what the City could feasibly accomplish during the planning period with current staff resources.

The result is a set of implementation programs/actions that prioritize what will be the most effective in terms of moving the needle and getting more housing, particularly affordable housing, built in Morgan Hill. Identification of actions is the first step towards implementing the City’s housing strategy;
successful implementation will require ongoing management, oversite, and collaboration.The City will continually monitor progress and report on these programs annually to the City Council and to the California Department of Housing and Community Development (HCD).

The implementation programs are first organized below by the overarching Goal. Each program then describes the proposed action, the policy(ies) it implements, the timeframe for accomplishing the action, and the City departments primarily responsible for implementing the program.

The Quantified objectives lay out the number of housing units that the City expects to be constructed, maintained, and preserved within the planning period. These numbers are based largely on the implementation actions, particularly the ones with measurable outcomes.

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-36 Implementation Programs/Actions
Action HE-1.A Evaluate Land Availability Annually
Evaluate annually the amount of land available for development and the projected eight-year need, and update the General Plan and zoning as necessary to accommodate the City’s regional housing allocation.  Implements which Policy(ies): HE-1.1
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: General Plan Update Fee
Action HE-1.B Coordination with Capital Improvement Plan Evaluate annually submitted development projects and coordination with the Capital Improvement Program to assure adequate public facilities are provided for each development.
 Implements which Policy(ies): HE-1.2
 Timeframe: Ongoing
 Responsible Department or Agency: Engineering and Utilities Department
 Source of Funding: Capital Projects Funds
Action HE-1.C Smaller Lot Sizes
Evaluate the creation of smaller lot sizes through the Zoning Code to reduce the cost of single-family housing units obtainable to lower income households.  Implements which Policy(ies): HE-1.3; HE-1.15
 Timeframe: 2023-2025
 Responsible Department or Agency: Development Services Department
 Source of Funding: Long Range Planning Fund
Action HE-1.D Update Funding Information
Annually identify State, federal, and local funding programs that are most applicable to Morgan Hill and have the greatest potential for funding affordable housing and housing programs in the city.
 Implements which Policy(ies): HE-1.6
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-37 Action HE-1.E Housing Rehabilitation
Examine opportunities to modify existing loan terms to support substantial housing rehabilitation to property owners with extremely low-, very low-, or low-income tenants in exchange for longer term affordability.  Implements which Policy(ies): HE-1.7
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Community Development Block Grant
Action HE-1.F First-Time Homebuyer Program
Partner with agencies that provide a first-time homebuyer down payment assistance program targeted to below market rate income qualified applicants that are residents and employees of Morgan Hill.
 Implements which Policy(ies): HE-1.7
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-1.G Promote Extremely Low-Income Housing
Provide priority funding consideration from the Affordable Housing Funds for extremely low-income housing developments.
 Implements which Policy(ies): HE-1.7
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-1.H Update City’s Affordable Housing Strategy Continue to update the City’s Affordable Housing Strategy with the most current Census data. Identify methods to create housing affordable to extremely low-income households.
 Implements which Policy(ies): HE-1.8
 Timeframe: 2028-2031
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-38 Action HE-1.I Review Housing Objectives Annually
Review housing objectives annually and recommend program modifications if annual housing objectives are not being met.
 Implements which Policy(ies): HE-1.8
 Timeframe: Each Spring as part of annual report to City Council  Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-1.J Downtown Specific Plan
Update the Downtown Specific Plan to accommodate the expanded Priority Development Area.
 Implements which Policy(ies): HE-1.11
 Timeframe: 2025
 Responsible Department or Agency: Development Services Department
 Source of Funding: Long Range Planning Fund.

Action HE-1.K Review Affordable Housing Funds
Review annual Low to Moderate Housing Fund and Housing In-lieu Fund balance and prioritize a portion of existing and expected funds for land acquisition.
 Implements which Policy(ies): HE-1.13
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-39 Action HE-1.L Rental Assistance Programs
Undertake the following: (1) Refer rental property owners to the Santa Clara County’s Housing Authority’s waiting list; (2) When in contact with rental property owners, inform them of the Housing Authority’s vouchers program; and, (3) Promote the availability of vouchers for use in the rental rehabilitation program.
 Implements which Policy(ies): HE-1.18
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-40 Action HE-2.A Review Height Limits
Review and update the Zoning Ordinance and other Objective Standards to ensure that height limits allow for a desirable design at the intended density.  Implements which Policy(ies): HE-2.1
 Timeframe: 2028-2031
 Responsible Department or Agency: Development Services Department
 Source of Funding: Development Services Fund; Long Range Planning Fund
Action HE-2.B Partnership for Tax Credits
Continue to support applications for Low-Income Housing Tax Credits.  Implements which Policy(ies): HE-2.2
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-2.C Promote Funding Opportunities
Promote affordable development funding opportunities, such as the Joe Serna Farmworker Housing Grant Program, and aid in the commission of a necessary market study for application purposes.
 Implements which Policy(ies): HE-2.3
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-2.D Support Measure A Applications
Continue to support applications for the Measure A Affordable Housing Bond, Community Development Block Grant Funds, HOME funds, and Project HomeKey.
 Implements which Policy(ies): HE-2.3
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-41 Action HE-2.E Strategically Urban Housing Development
Incentives
Provide incentives for residential and mixed-use development at major transit nodes, along transit corridors, and in other locations suitable for high-density housing development, as appropriate.
 Implements which Policy(ies): HE-2.3
 Timeframe: 2028-2031
 Responsible Department or Agency: Development Services Department
 Source of Funding: Development Services Fund
Action HE-2.F Community Plan to End Homelessness
Implement the Countywide Community Plan to End Homelessness adopted by the Santa Clara County Continuum of Care (CoC); review annual progress and report to the County and other community stakeholders.  Implements which Policy(ies): HE-2.5; HE-5.1; 5.3
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund, Housing In-lieu Fund, and Destination Home Grant
Action HE-2.G Continuum of Care
Participate in the Continuum of Care (CoC), stakeholders dedicated to ending and preventing homelessness in Santa Clara County. The key CoC responsibilities are ensuring community-wide implementation of efforts to end homelessness, as well as ensuring programmatic and systemic effectiveness.  Implements which Policy(ies): HE-2.5
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-2.H Direct Service to Unhoused Residents
Provide direct service and outreach to unhoused residents consistent with the community-wide intake process to match people experiencing homelessness to existing community resources that are best fit for their situation.  Implements which Policy(ies): HE-2.5
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-42  Source of Funding: Destination Home Grant
Action HE-2.I Host Empower Homebuyers SCC Workshops
Continue to organize and host workshops for Empower Homebuyers SCC, a program of the County of Santa Clara administered by Housing Trust Silicon Valley.
 Implements which Policy(ies): HE-2.5
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-2.J Advocate for State and Federal Legislative Changes
Advocate for the availability of capacity building grants for jurisdictions charged with administering housing programs and assets.  Implements which Policy(ies): HE-2.11
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-2.K Commercial Linkage Fee
Develop and consider a Commercial Linkage Fee Ordinance or similar mechanism when the City has met a housing-job balance of 1:1 ratio.  Implements which Policy(ies): HE-2.12
 Timeframe: 2028-2031
 Responsible Department or Agency: Development Services Department
 Source of Funding: Long Range Planning Fund
Action HE-2.L Agricultural Labor Accommodations
Amend the Zoning Code by 2024 to facilitate by-right Agricultural Labor Accommodations within the OS (Open Space) zoning district consistent with Section 17021.6 of the California Health and Safety Code.  Implements which Policy(ies): HE-2.14
 Timeframe: 2024
 Responsible Department or Agency: Development Services Department
 Source of Funding: Long Range Planning Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-43 Action HE-2.M Farmworker Housing
Produce a Farmworker Housing Development Program with the County of Santa Clara through a Memorandum of Understanding.
 Implements which Policy(ies): HE-2.14; HE-2.15; HE-2.16  Timeframe: 2024
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-44 Action HE-3.A Affordable Housing in Eastern Morgan Hill Identify opportunities and sites for affordable housing development in eastern Morgan Hill.
 Implements which Policy(ies): HE-3.1
 Timeframe: 2028-2031
 Responsible Department or Agency: Development Services Department
 Source of Funding: Development Services Fund, Low to Moderate Housing Fund, and Housing In-lieu Fund
Action HE-3.B Affordable Housing Overlay Districts
Study the creation of affordable housing overlay districts in advance of the next Housing Element cycle.
 Implements which Policy(ies): HE-3.1
 Timeframe: 2028-2031
 Responsible Department or Agency: Development Services Department
 Source of Funding: Long Range Planning Fund.

Action HE-3.C Rent Increase Mediation
Consider adoption of a mediation requirement for rent increases of 5% or more.
 Implements which Policy(ies): HE-3.2
 Timeframe: 2025-2027
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-3.D Tenant Relocation Assistance Ordinance
Study the possibility of a tenant relocation assistance ordinance.  Implements which Policy(ies): HE-3.2
 Timeframe: 2025-2027
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-45 Action HE-3.E Eviction Counsel
Seek funding or develop paths of support for access to counsel in possessory eviction cases.
 Implements which Policy(ies): HE-3.2
 Timeframe: 2025-2027
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-3.F Shared-equity Homeownership Models
Study the possibility of shared-equity homeownership models.  Implements which Policy(ies): HE-3.2
 Timeframe: 2025-2027
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-3.G Review Inclusionary Housing Ordinance
Review the Inclusionary Housing Ordinance to provide deeper for-sale affordability beyond the updated 2021 Inclusionary Housing Ordinance.  Implements which Policy(ies): HE-3.2
 Timeframe: 2028-2031
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-3.H Preferences for Displaced Tenants
Adopt preferences for tenants who have been displaced from rental housing in Morgan Hill.
 Implements which Policy(ies): HE-3.2
 Timeframe: 2025-2027
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-46 Action HE-3.I Create Jobs within Downtown Morgan Hill Priority Development Area
Prioritize the creation of jobs that are accessible to low- and very low-income workers who reside within the Downtown Morgan Hill Priority Development Area (PDA).
 Implements which Policy(ies): HE-3.3
 Timeframe: 2023-2024
 Responsible Department or Agency: Development Services Department
 Source of Funding: General Fund
Action HE-3.J Incentives to Hire Morgan Hill Residents
Create incentives for local businesses to hire Morgan Hill residents.  Implements which Policy(ies): HE-3.3
 Timeframe: 2023-2024
 Responsible Department or Agency: Development Services Department
 Source of Funding: General Fund
Action HE-3.K Expand Bus Service
Advocate for VTA to expand bus service in Morgan Hill.
 Implements which Policy(ies): HE-3.3
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: General Fund
Action HE-3.L Local First Mile/Last Mile Transit Service Study local first mile/last mile transit service solutions in Morgan Hill building on lessons learned from the first on-call shuttle service established within the City.
 Implements which Policy(ies): HE-3.3
 Timeframe: 2028-2031
 Responsible Department or Agency: Development Services Department
 Source of Funding: Capital Projects Fund and General Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-47 Action HE-4.A Annual Monitoring of Potential At-Risk BMR Units Annually monitor the status of at-risk BMR housing units. Contact current property owners of at-risk units to determine their financial objectives and appropriate financial assistance needed to meet those objectives.  Implements which Policy(ies): HE-4.1
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-4.B Preserve Affordable Housing
Prioritize the preservation of existing affordable housing at risk of loss of affordability covenants.
 Implements which Policy(ies): HE-4.1
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-4.C Rehabilitation
Promote grants to the disabled, seniors, and low-income homeowners to rehabilitate housing units through Rebuilding Together Silicon Valley.  Implements which Policy(ies): HE-4.1
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Community Development Block Grant

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-48 Action HE-5.A Low Barrier Navigation Centers
Amend the Zoning Code by 2024 to facilitate by-right processing procedures for Low Barrier Navigation Centers consistent with Assembly Bill 101.  Implements which Policy(ies): HE-5.1
 Timeframe: 2023-2024
 Responsible Department or Agency: Development Services Department
 Source of Funding: Long Range Planning Fund
Action HE-5.B Biannual Homeless Survey
Coordinate the City’s biannual Homeless Census and Survey in partnership with the County of Santa Clara every two years to conduct comprehensive counts of homeless residents to measure the prevalence of homelessness in the communities.
 Implements which Policy(ies): HE-5.1
 Timeframe: Ongoing; biannually
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-5.C Homeless Prevention Rental Assistance
Provide homeless prevention rental assistance through an ongoing County of Santa Clara Rapid Rehousing program, targeting families at risk of homelessness.
 Implements which Policy(ies): HE-5.1; HE-5.2; HE-5.5; HE-5.6  Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-5.D Safe Park Program
Operate a Safe Park Program with the faith-based community offering an eight space, pet friendly overnight respite at a local church for eight homeless families living in their cars.
 Implements which Policy(ies): HE-5.1; HE-5.2; HE-5.4
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-49 Action HE-5.E Inclement Cold Weather Shelter Program
Coordinate the Inclement Cold Weather Shelter operation with the faith-based community.
 Implements which Policy(ies): HE-5.1; HE-5.2; HE-5.4
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-5.F List of Available Services
Provide a comprehensive, user friendly, list of homeless and social services available.
 Implements which Policy(ies): HE-5.1; HE-5.2
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-5.G Provide Direct Services
Provide direct services, case management, and homeless outreach through the City’s Unhoused Specialist to engage and offer support and basic needs to our homeless residents. Work alongside the Psychiatric Emergency Response Team (PERT), a Mental Health Collaboration with the County Behavioral Health Department.
 Implements which Policy(ies): HE-5.1; HE-5.3; HE-5.5; HE-5.12  Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Destination Home Grant
Action HE-5.H Supportive, Transitional, and Emergency
Housing
Maintain provisions for supportive and transitional housing and emergency shelters in the City’s Zoning.
 Implements which Policy(ies): HE-5.1; HE-5.4; HE-5.7; HE-5.8; HE6.9; HE-6.10  Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-50  Source of Funding: Development Services Fund
Action HE-5.I By-right Transitional and Supportive Housing Amend the Zoning Code by 2024 to facilitate by-right transitional and supportive housing where multi-unit and mixed-use development is permitted consistent with Assembly Bill 2162.
 Implements which Policy(ies): HE-5.1; HE-5.4; HE-5.7; HE-5.8; HE6.9; HE-6.10  Timeframe: 2023-2024
 Responsible Department or Agency: Development Services Department
 Source of Funding: Long Range Planning Fund
Action HE-5.J Shelter Bed Hotline
Participate and promote the countywide coordinated shelter bed hotline.  Implements which Policy(ies): HE-5.12
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-51 Action HE-6.A Housing for Developmentally Disabled Adults Work with non-profit organizations to evaluate the need for additional units in Morgan Hill for developmentally disabled adults.
 Implements which Policy(ies): HE-6.2
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-6.B San Andreas Regional Center Coordination
Coordinate with San Andreas Regional Center to integrate adults with developmental disabilities into housing integrated with the rest of the community.
 Implements which Policy(ies): HE-6.2
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-6.C Emergency Voucher Program
Consider implementing a one-time emergency voucher program to assist residents displaced by criminal activity, natural disasters, or other emergencies. Coordinate with social service providers.
 Implements which Policy(ies): HE-6.5
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-6.D Increase Awareness of Universal Design
Principles
Educate the Planning Commission about universal design. Make information available at the Development Services Center.
 Implements which Policy(ies): HE-6.6
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Development Services Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-52 Action HE-6.E Universal Design Ordinance
Study, and if appropriate, adopt a universal design ordinance or policies or objective standards to encourage the inclusion of universal design features in new construction. Options include identifying minimum, cost-effective amenities for all new construction.
 Implements which Policy(ies): HE-6.6
 Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Development Services Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-53 Action HE-7.A Outreach and Education
Implement a community engagement and awareness campaign around affordable housing with the intent to raise awareness of Housing Programs, Housing Search, and to demystify Affordable Housing.
 Implements which Policy(ies): HE-3.4; HE-7.1; HE-7.2; HE-7.3; HE7.4; HE-7.5; HE-7.6  Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Low to Moderate Housing Fund and Housing Inlieu Fund Action HE-7.B Market Accessory Dwelling Unit (ADU) Programs Increase education and awareness of Accessory Dwelling Unit (ADU) programs to homeowners and partner with Community Development Financial Institutions (CDFIs) to market existing loan programs available for ADUs.
 Implements which Policy(ies): HE-1.3; HE-1.5; HE-7.1; HE-7.2; HE7.5; HE-7.6  Timeframe: Ongoing
 Responsible Department or Agency: Development Services Department
 Source of Funding: Development Services Fund, Low to Moderate Housing Fund, and Housing In-lieu Fund

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-54 Quantified Objectives
State law (California Government Code Section 65583[b]) requires that housing elements contain quantified objectives for the maintenance, preservation, and construction of housing.

The quantified objectives set a target goal for Morgan Hill to strive for based on needs, resources, and constraints.

Table 5-1 Quantified Objectives
Extremely
Low Income
Very Low
Income
Low
Income
Moderate
Income
Above
Moderate
Income
TOTAL
New
Construction1
131 131 151 174 450 1,037
Rehabilitation 23 34 43 N/A N/A 100
Conservation/
Preservation

N/A N/A N/A N/A N/A N/A
1 New construction objective is equal to the RHNA.

Page H-1-i City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Appendix H-1: Housing Needs Assessment H1
Appendix H1
Housing Needs Assessment
City of Morgan Hill Housing Element 2023-2031

Appendix H-1: Housing Needs Assessment
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-1-ii Table of Contents
City of Morgan Hill Housing Element
APPENDIX H-1 | Housing Needs Assessment ………………………...………………...……………………….H-1-i

1.1 Introduction….............................................................................................................................. H-1-1

1.2 Summary of Key Facts.......................................................................................................... H-1-1

1.3 Looking to the Future: Regional Housing Needs.......................................................................H-1-3

1.4 Population, Employment, and Housing Characteristics............................................................H-1-5

1.5 Housing Stock Characteristics....................................................................................................H-1-24

1.6 Special Housing Needs…...........................................................................................................H-1-41

1.7 Summary…..................................................................................................................................H-1-54 Figures
Figure H 1-1: Population Growth Trends........................................................................................... H-1-6 Figure H 1-2: Population by Age, 2000-2019....................................................................................... H-1-7 Figure H 1-3: Senior and Youth Population by Race....................................................................... H-1-8 Figure H 1-4: Population by Race, 2000-2019..................................................................................... H-1-9 Figure H 1-5: Jobs in a Jurisdicition...................................................................................................... H-1-10 Figure H 1-6: Workers by Earnings, by Jurisdiction as Place of Work and Place of Residence......H-1-11 Figure H 1-7: Jobs-Worker Ratios, By Wage Group......................................................................... H-1-12 Figure H 1-8: Jobs-Household Ratio............................................................................................... H-1-13 Figure H 1-9: Resident Employment by Industry.................................................................................. H-1-14 Figure H 1-10: Unemployment Rate....................................................................................................... H-1-15 Figure H 1-11: Households by Household Income Level................................................................... H-1-16 Figure H 1-12: Household Income Level by Tenure............................................................................ H-1-17 Figure H 1-13: Poverty Status by Race.................................................................................................. H-1-18 Figure H 1-14: Housing Tenure......................................................................................................... H-1-19 Figure H 1-15: Housing Tenure by Race of Household.........................................................................H-1-20 Figure H 1-16: Housing Tenure by Age.................................................................................................. H-1-21 Figure H 1-17: Housing Tenure by Housing Type..................................................................................H-1-22 Figure H 1-18: Households by Displacement Risk and Tenure .......................................................... H-1-23 Figure H 1-19: Housing Type Trends................................................................................................ H-1-24 Figure H 1-20: Housing Units by Year Structure Built............................................................................H-1-25 Figure H 1-21: Vacant Units by Type...................................................................................................... H-1-26 Figure H 1-22: Substandard Housing Issues..................................................................................... H-1-29 Figure H 1-23: Home Values of Owner-Occupied Units...................................................................... H-1-30 Figure H 1-24: Zillow Home Value Index (ZHVI).................................................................................... H-1-30 Figure H 1-25: Contract Rents for Renter-Occupied Units................................................................ H-1-31 Figure H 1-26: Median Contract Rent..................................................................................................... H-1-32 Figure H 1-27: Cost Burden by Tenure...................................................................................................H-1-33 Figure H 1-28: Cost Burden by Income Level.........................................................................................H-1-34 Figure H 1-29: Cost Burden by Race................................................................................................... H-1-35 Figure H 1-30: Cost Burden by Household Size................................................................................ H-1-36 Figure H 1-31: Cost-Burdened Senior Households by Income Level.................................................. H-1-37 Figure H 1-32: Overcrowding by Tenure and Severity...........................................................................H-1-38 Figure H 1-33: Overcrowding by Income Level and Severity............................................................. H-1-39 Figure H 1-34: Overcrowding by Race............................................................................................... H-1-40 Figure H 1-35: Household Size by Tenure.......................................................................................... H-1-41 Figure H 1-36: Housing Units by Number of Bedrooms ........................................................................ H-1-42 Figure H 1-37: Household Type......................................................................................................... H-1-43

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Figure H 1-38: Female-Headed Households by Poverty Status........................................................... H-1-44 Figure H 1-39: Senior Households by Income and Tenure................................................................... H-1-45 Figure H 1-40: Disability by Type............................................................................................................ H-1-46 Figure H 1-41: Homelessness by Household Type and Shelter Status, Santa Clara County.............H-1-48 Figure H 1-42: Racial Group Share of General and Homeless Populations, Santa Clara County.... H-1-49 Figure H 1-43: Latinx Share of General and Homeless Populations, Santa Clara County.................. H-1-50 Figure H 1-44: Characteristics for the Population Experiencing Homelessness, Santa Clara County.........................................................................................................H-1-51 Figure H 1-45: Farm Operations and Farm Labor by County, Santa Clara County............................H-1-53 Figure H 1-46: Population with Limited English Proficiency............................................................... H-1-54 Tables
Table H 1-1: Illustrative Regional Housing Needs Allocation from Data Methodology.......................H-1-4 Table H 1-2: Population Growth Trends ................................................................................................ H-1-5 Table H 1-3: Housing Permitting............................................................................................................. H-1-26 Table H 1-4: Assisted Units at Risk of Conversion………………..........................................................H-1-27 Table H 1-5: Population with Developmental Disabilities by Age………............................................. H-1-46 Table H 1-6: Adult Population with Developmental Disabilities by Residence.................................... H-1-47 Table H 1-7: Homeless Population within Morgan Hill........................................................................ H-1-50 Table H 1-8: Students in Local Public Schools Experiencing Homelessness .................................... H-1-51 Table H 1-9: Migrant Worker Student Population.............................................................................. H-1-52

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APPENDIX H-1 | Housing Needs Assessment

1.1 Introduction
The Bay Area continues to see growth in both population and jobs, which means more housing of various types and sizes is needed to ensure that residents across all income levels, ages, and abilities have a place to call home. While the number of people drawn to the region over the past 30 years has steadily increased, housing production has stalled, contributing to the housing shortage that communities are experiencing today. In many cities, this has resulted in residents being priced out, increased traffic congestion caused by longer commutes, and fewer people across incomes being able to purchase homes or meet surging rents.

The 2023-2031 Housing Element Update provides a roadmap for how to meet our growth and housing challenges. Required by the state, the Housing Element identifies the existing housing conditions and community needs, reiterates goals, and creates a plan for more housing. The Housing Element is an integral part of the General Plan, which guides the policies of Morgan Hill.

1.2 Summary of Key Facts
• Population – Generally, the population of the Bay Area continues to grow because of natural growth and because the strong economy draws new residents to the region. The population of Morgan Hill increased by 38.3% from 2000 to 2020, which is above the growth rate of the Bay Area.
• Age – In 2019, Morgan Hill’s youth population under the age of 18 was 11,606, and senior population 65 and older was 6,240. These age groups represent 26.0% and 14.0%, respectively, of Morgan Hill’s population.
• Race/Ethnicity – In 2020, 49.0% of Morgan Hill’s population was White while 1.7% was African American, 13.7% was Asian, and 31.3% was Latinx. People of color in Morgan Hill comprise a proportion below the overall proportion in the Bay Area as a whole.1 • Employment – Morgan Hill residents most commonly work in the Health & Educational Services industry. From January 2010 to January 2021, the unemployment rate in Morgan Hill decreased by 6.6 percentage points. Since 2010, the number of jobs located in the jurisdiction increased by 3,680 (28.0%). Additionally, the jobs-household ratio in Morgan Hill has increased from 1.18 in 2002 to 1.19 jobs per household in 2018. 1 The Census Bureau’s American Community Survey accounts for ethnic origin separate from racial identity. The numbers reported here use an accounting of both such that the racial categories are shown exclusive of Latinx status, to allow for an accounting of the Latinx population regardless of racial identity. The term Hispanic has historically been used to describe people from numerous Central American, South American, and Caribbean countries. In recent years, the term Latino or Latinx has become preferred. This report generally uses Latinx, but occasionally when discussing US Census data, we use Hispanic or Non-Hispanic, to clearly link to the data source.

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• Number of Homes – The number of new homes built in the Bay Area has not kept pace with the demand, resulting in longer commutes, increasing prices, and exacerbating issues of displacement and homelessness. The number of homes in Morgan Hill increased, 19.4% from 2010 to 2020, which is above the growth rate for Santa Clara County and above the growth rate of the region’s housing stock during this time period. • Home Prices – A diversity of homes at all income levels creates opportunities for all Morgan Hill residents to live and thrive in the community. – Ownership The largest proportion of homes had a value in the range of $750k- $1M in 2019. Home prices increased by 100.6% from 2010 to 2020. – Rental Prices – The typical contract rent for an apartment in Morgan Hill was $1,680 in 2019. Rental prices increased by 37.2% from 2009 to 2019. To rent a typical apartment without cost burden, a household would need to make $67,440 per year.2
• Housing Type – It is important to have a variety of housing types to meet the needs of a community today and in the future. In 2020, 59.0% of homes in Morgan Hill were single family detached, 17.7% were single family attached, 5.5% were small multifamily (2-4 units), and 9.8% were medium or large multifamily (5+ units). Between 2010 and 2020, the number of single-family units increased more than multi-family units. Generally, in Morgan Hill, the share of the housing stock that is detached single family homes is above that of other jurisdictions in the region.
• Cost Burden – The U.S. Department of Housing and Urban Development considers housing to be affordable for a household if the household spends less than 30% of its income on housing costs. A household is considered “cost-burdened” if it spends more than 30% of its monthly income on housing costs, while those who spend more than 50% of their income on housing costs are considered “severely cost-burdened.” In Morgan Hill,

20.1% of households spend 30%-50% of their income on housing, while 15.3% of households are severely cost burden and use the majority of their income for housing. • Displacement/Gentrification – According to research from The University of California, Berkeley, 0.0% of households in Morgan Hill live in neighborhoods that are susceptible to or experiencing displacement, and 0.0% live in areas at risk of or undergoing gentrification.

22.6% of households in Morgan Hill live in neighborhoods where low-income households are likely excluded due to prohibitive housing costs. There are various ways to address displacement including ensuring new housing at all income levels is built. • Neighborhood – 0.0% of residents in Morgan Hill live in neighborhoods identified as “Highest Resource” or “High Resource” areas by State-commissioned research, while

23.9% of residents live in areas identified by this research as “Low Resource” or “High 2 Note that contract rents may differ significantly from, and often being lower than, current listing prices.

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Segregation and Poverty” areas. These neighborhood designations are based on a range of indicators covering areas such as education, poverty, proximity to jobs and economic opportunities, low pollution levels, and other factors.3 • Special Housing Needs – Some population groups may have special housing needs that require specific program responses, and these groups may experience barriers to accessing stable housing due to their specific housing circumstances. In Morgan Hill, 9.1% of residents have a disability of any kind and may require accessible housing. Additionally,

13.3% of Morgan Hill households are larger households with five or more people, who likely need larger housing units with three bedrooms or more. 10.9% of households are female-headed families, which are often at greater risk of housing insecurity.

1.3 Looking to the Future: Regional Housing Needs

1.3.1 Regional Housing Needs Determination
The Plan Bay Area 20504 Final Blueprint forecasts that the nine-county Bay Area will add 1.4 million new households between 2015 and 2050. For the eight-year time frame covered by this Housing Element Update, the Department of Housing and Community Development (HCD) has identified the region’s housing need as 441,176 units. The total number of housing units assigned by HCD is separated into four income categories that cover housing types for all income levels, from very low-income households to market rate housing. 5 This calculation, known as the Regional Housing Needs Determination (RHND), is based on population projections produced by the California Department of Finance, as well as adjustments that incorporate the region’s existing housing need. The adjustments result from recent legislation requiring HCD to apply additional adjustment factors to the baseline growth projection from California Department of Finance, in order for the regions to get closer to healthy housing markets. To this end, adjustments focus on the region’s vacancy rate, level of overcrowding and the share of cost burdened households, and seek to bring the region more in line with comparable ones.6 These new laws governing the methodology for how HCD calculates the RHND resulted in a significantly higher number of housing units for which the Bay Area must plan compared to previous RHNA cycles. 3 For more information on the “opportunity area” categories developed by HCD and the California Tax Credit Allocation Committee, see this website: https://www.treasurer.ca.gov/ctcac/opportunity.asp. The degree to which different jurisdictions and neighborhoods have access to opportunity will likely need to be analyzed as part of new Housing Element requirements related to affirmatively furthering fair housing. ABAG/MTC will be providing jurisdictions with technical assistance on this topic this summer, following the release of additional guidance from HCD.
4 Plan Bay Area 2050 is a long-range plan charting the course for the future of the nine-county San Francisco Bay Area. It covers four key issues: the economy, the environment, housing and transportation 5 HCD divides the RHND into the following four income categories:

Very Low-income: 0-50% of Area Median Income
Low-income: 50-80% of Area Median Income
Moderate-income: 80-120% of Area Median Income
Above Moderate-income: 120% or more of Area Median Income 6 For more information on HCD’s RHND calculation for the Bay Area, see this letter sent to ABAG from HCD on June 9, 2020: https://www.hcd.ca.gov/community-development/housing-element/docs/abagrhna-final060920(r).pdf

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1.3.2 Regional Housing Needs Allocation
A starting point for the Housing Element Update process for every California jurisdiction is the Regional Housing Needs Allocation or RHNA – the share of the RHND assigned to each jurisdiction by the Association of Bay Area Governments (ABAG). State Housing Element Law requires ABAG to develop a methodology that calculates the number of housing units assigned to each city and county and distributes each jurisdiction’s housing unit allocation among four affordability levels. For this RHNA cycle, the RHND increased by 135%, from 187,990 to 441,776.

For more information on the RHNA process this cycle, see ABAG’s website:
https://abag.ca.gov/our-work/housing/rhna-regional-housing-needs-allocation Almost all jurisdictions in the Bay Area are likely to receive a larger RHNA this cycle compared to the last cycle, primarily due to changes in state law that led to a considerably higher RHND compared to previous cycles.

In January 2021, ABAG adopted the RHNA Methodology and adopted the Final RHNA Plan, issuing final RHNA allocations, on December 16, 2021. For Morgan Hill, the RHNA to be planned for this cycle is 1,037 units, a slated increase from the last cycle. The RHNA allocation that Morgan Hill received is broken down by income category as follows:

Table H 1-1 Illustrative Regional Housing Needs Allocation from Draft Methodology Income Groups Morgan Hill
Units
Santa Clara
County Units
Bay Area
Units
Morgan Hill
Percent
Santa Clara
County
Percent
Bay Area
Percent
Very Low Income
(<50% of AMI) 262 32316 114442 25.3% 24.9% 25.9%
Low Income (50%-
80% of AMI) 151 18607 65892 14.6% 14.4% 14.9%
Moderate Income
(80%-120% of
AMI)
174 21926 72712 16.8% 16.9% 16.5%
Above Moderate
Income (>120% of
AMI)
450 56728 188130 43.4% 43.8% 42.6%
Total 1,037 129,577 441,176 100% 100% 100%
Source: Association of Bay Area Governments Methodology and tentative numbers were approved by ABAG’s Executive board on January 21, 2021 (Resolution No. 02-2021). ABAG’s Executive board adopted the Final RHNA Plan on December 16, 2021.

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1.4 Population, Employment, and Household Characteristics

1.4.1 Population
The Bay Area is the fifth-largest metropolitan area in the nation and has seen a steady increase in population since 1990, except for a dip during the Great Recession. Many cities in the region have experienced significant growth in jobs and population. While these trends have led to a corresponding increase in demand for housing across the region, the regional production of housing has largely not kept pace with job and population growth. Since 2000, Morgan Hill’s population has increased by 38.3%; this rate is above that of the region as a whole, at 14.8%. In Morgan Hill, roughly 11.7% of its population moved during the past year, a number 1.7 percentage points smaller than the regional rate of 13.4%.

Table H 1-2 Population Growth Trends
Geography 1990 1995 2000 2005 2010 2015 2020
Morgan Hill 23,928 26,924 33,586 36,292 37,882 42,380 46,454 Santa Clara
County 1,497,577 1,594,818 1,682,585 1,752,696 1,781,642 1,912,180 1,961,969 Bay Area 6,020,147 6,381,961 6,784,348 7,073,912 7,150,739 7,595,694 7,790,537 Universe: Total population
Source: California Department of Finance, E-5 series
In 2020, the population of Morgan Hill was estimated to be 46,454 (see Table 2). From 1990 to 2000, the population increased by 40.4%, while it increased by 12.8% during the first decade of the 2000s. In the most recent decade, the population increased by 22.6%. The population of Morgan Hill makes up 2.4% of Santa Clara County.7
7 To compare the rate of growth across various geographic scales, Figure 1 shows population for the jurisdiction, county, and region indexed to the population in the year 1990. This means that the data points represent the population growth (i.e. percent change) in each of these geographies relative to their populations in 1990.

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Figure H 1-1: Population Growth Trends
Source: California Department of Finance, E-5 series Note: The data shown on the graph represents population for the jurisdiction, county, and region indexed to the population in the first year shown. The data points represent the relative population growth in each of these geographies relative to their populations in that year.

DOF uses the decennial census to benchmark subsequent population estimates.

1.4.2 Age
The distribution of age groups in a city shapes what types of housing the community may need in the near future. An increase in the older population may mean there is a developing need for more senior housing options, while higher numbers of children and young families can point to the need for more family housing options and related services. There has also been a move by many to age-in-place or downsize to stay within their communities, which can mean more multifamily and accessible units are also needed.

In Morgan Hill, the median age in 2000 was 32.9; by 2019, this figure had increased, landing at around 39 years. More specifically, the population of those under 14 has increased since 2010, while the 65-and-over population has increased (see Figure 2).

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Figure H 1-2: Population by Age, 2000-2019
Universe: Total population
Source: U.S. Census Bureau, Census 2000 SF1, Table P12; U.S. Census Bureau, Census 2010 SF1, Table P12; U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B01001 Looking at the senior and youth population by race can add an additional layer of understanding, as families and seniors of color are even more likely to experience challenges finding affordable housing. People of color8 make up 19.2% of seniors and 29.6% of youth under 18 (see Figure 3). 8 Here, we count all non-white racial groups

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Figure H 1-3: Senior and Youth Population by Race
Universe: Total population
Notes: In the sources for this table, the Census Bureau does not disaggregate racial groups by Hispanic/Latinx ethnicity, and an overlapping category of Hispanic / non-Hispanic groups has not been shown to avoid double counting in the stacked bar chart.

Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B01001(A-G)

1.4.3 Race and Ethnicity
Understanding the racial makeup of a city and region is important for designing and implementing effective housing policies and programs. These patterns are shaped by both market factors and government actions, such as exclusionary zoning, discriminatory lending practices and displacement that has occurred over time and continues to impact communities of color today9 .

Since 2000, the percentage of residents in Morgan Hill identifying as White has decreased – and by the same token the percentage of residents of all other races and ethnicities has increased – by 14.2 percentage points, with the 2019 population standing at 21,880 (see Figure 4). In absolute terms, the Hispanic or Latinx population increased the most while the American Indian or Alaska Native, Non-Hispanic population decreased the most.
9 See, for example, Rothstein, R. (2017). The color of law: a forgotten history of how our government segregated America. New York, NY & London, UK: Liveright Publishing.

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Figure H 1-4: Population by Race, 2000-2019
Universe: Total population
Notes: Data for 2019 represents 2015-2019 ACS estimates. The Census Bureau defines Hispanic/Latinx ethnicity separate from racial categories. For the purposes of this graph, the “Hispanic or Latinx” racial/ethnic group represents those who identify as having Hispanic/Latinx ethnicity and may also be members of any racial group. All other racial categories on this graph represent those who identify with that racial category and do not identify with Hispanic/Latinx ethnicity.

Source: U.S. Census Bureau, Census 2000, Table P004; U.S. Census Bureau, American Community Survey 5-Year Data (2015- 2019), Table B03002

1.4.4 Employment Trends

1.4.4.1 Balance of Jobs and Workers
A city houses employed residents who either work in the community where they live or work elsewhere in the region. Conversely, a city may have job sites that employ residents from the same city, but more often employ workers commuting from outside of it. Smaller cities typically will have more employed residents than jobs there and export workers, while larger cities tend to have a surplus of jobs and import workers. To some extent the regional transportation system is set up for this flow of workers to the region’s core job centers. At the same time, as the housing affordability crisis has illustrated, local imbalances may be severe, where local jobs and worker populations are out of sync at a sub-regional scale.

One measure of this is the relationship between workers and jobs. A city with a surplus of workers “exports” workers to other parts of the region, while a city with a surplus of jobs must conversely “import” them. Between 2002 and 2018, the number of jobs in Morgan Hill increased by 27.1% (see Figure 5).

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Figure H 1-5: Jobs in a Jurisdiction
Universe: Jobs from unemployment insurance-covered employment (private, state and local government) plus United States Office of Personnel Management-sourced Federal employment
Notes: The data is tabulated by place of work, regardless of where a worker lives. The source data is provided at the census block level.

Source: U.S. Census Bureau, Longitudinal Employer-Household Dynamics, Workplace Area Characteristics (WAC) files, 2002-2018 There are 21,775 employed residents, and 18,428 jobs10 in Morgan Hill - the ratio of jobs to resident workers is 0.85; Morgan Hill is a net exporter of workers.

Figure 6 shows the balance when comparing jobs to workers, broken down by different wage groups, offering additional insight into local dynamics. A community may offer employment for relatively low-income workers but have relatively few housing options for those workers.

Conversely, it may house residents who are low wage workers, but offer few employment opportunities for them. Such relationships may cast extra light on potentially pent-up demand for housing in particular price categories. A relative surplus of jobs relative to residents in a given wage category suggests the need to import those workers, while conversely, surpluses of workers in a wage group relative to jobs means the community will export those workers to other jurisdictions. Such flows are not inherently bad, though over time, sub-regional imbalances may appear. Morgan Hill has more low-wage jobs than low-wage residents (where low-wage refers to jobs paying less than $25,000). At the other end of the wage spectrum, the city has more high10 Employed residents in a jurisdiction is counted by place of residence (they may work elsewhere) while jobs in a jurisdiction are counted by place of work (they may live elsewhere). The jobs may differ from those reported in Figure 5 as the source for the time series is from administrative data, while the cross-sectional data is from a survey.

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wage residents than high-wage jobs (where high-wage refers to jobs paying more than $75,000) (see Figure 6).11
Figure H 1-6: Workers by Earnings, by Jurisdiction as Place of Work and Place of Residence
Universe: Workers 16 years and over with earnings
Source: U.S. Census Bureau, American Community Survey 5-Year Data 2015-2019, B08119, B08519 Figure 7 shows the balance of a jurisdiction’s resident workers to the jobs located there for different wage groups as a ratio instead - a value of 1 means that a city has the same number of jobs in a wage group as it has resident workers - in principle, a balance. Values above 1 indicate a jurisdiction will need to import workers for jobs in a given wage group. At the regional scale, this ratio is 1.04 jobs for each worker, implying a modest import of workers from outside the region (see Figure 7). 11 The source table is top-coded at $75,000, precluding more fine grained analysis at the higher end of the wage spectrum.

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Figure H 1-7: Jobs-Worker Ratios, By Wage Group
Universe: Jobs in a jurisdiction from unemployment insurance-covered employment (private, state and local government) plus United States Office of Personnel Management-sourced Federal employment Notes: The ratio compares job counts by wage group from two tabulations of LEHD data: Counts by place of work relative to counts by place of residence. See text for details.

Source: U.S. Census Bureau, Longitudinal Employer-Household Dynamics, Workplace Area Characteristics (WAC) files (Jobs); Residence Area Characteristics (RAC) files (Employed Residents), 2010-2018 Such balances between jobs and workers may directly influence the housing demand in a community. New jobs may draw new residents, and when there is high demand for housing relative to supply, many workers may be unable to afford to live where they work, particularly where job growth has been in relatively lower wage jobs. This dynamic not only means many workers will need to prepare for long commutes and time spent on the road, but in the aggregate it contributes to traffic congestion and time lost for all road users.

If there are more jobs than employed residents, it means a city is relatively jobs-rich, typically also with a high jobs to household ratio. Thus bringing housing into the measure, the jobs-household ratio in Morgan Hill has increased from 1.18 in 2002, to 1.19 jobs per household in 2018 (see Figure 8).

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Figure H 1-8: Jobs-Household Ratio
Universe: Jobs in a jurisdiction from unemployment insurance-covered employment (private, state and local government) plus United States Office of Personnel Management-sourced Federal employment; households in a jurisdiction Notes: The data is tabulated by place of work, regardless of where a worker lives. The source data is provided at the census block level. These are crosswalked to jurisdictions and summarized. The ratio compares place of work wage and salary jobs with households, or occupied housing units. A similar measure is the ratio of jobs to housing units. However, this jobs-household ratio serves to compare the number of jobs in a jurisdiction to the number of housing units that are actually occupied. The difference between a jurisdiction’s jobs-housing ratio and jobs-household ratio will be most pronounced in jurisdictions with high vacancy rates, a high rate of units used for seasonal use, or a high rate of units used as short-term rentals.

Source: U.S. Census Bureau, Longitudinal Employer-Household Dynamics, Workplace Area Characteristics (WAC) files (Jobs), 2002- 2018; California Department of Finance, E-5 (Households)

1.4.4.2 Sector Composition
In terms of sectoral composition, the largest industry in which Morgan Hill residents work is Health & Educational Services, and the largest sector in which Santa Clara residents work is Health & Educational Services (see Figure 9). For the Bay Area as a whole, the Health & Educational Services industry employs the most workers.

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Figure H 1-9: Resident Employment by Industry
Universe: Civilian employed population age 16 years and over Notes: The data displayed shows the industries in which jurisdiction residents work, regardless of the location where those residents are employed (whether within the jurisdiction or not). Categories are derived from the following source tables: Agriculture & Natural Resources: C24030_003E, C24030_030E; Construction: C24030_006E, C24030_033E; Manufacturing, Wholesale & Transportation:

C24030_007E, C24030_034E, C24030_008E, C24030_035E, C24030_010E, C24030_037E; Retail: C24030_009E, C24030_036E; Information: C24030_013E, C24030_040E; Financial & Professional Services: C24030_014E, C24030_041E, C24030_017E, C24030_044E; Health & Educational Services: C24030_021E, C24030_024E, C24030_048E, C24030_051E; Other: C24030_027E, C24030_054E, C24030_028E, C24030_055E
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table C24030

1.4.4.3 Unemployment
In Morgan Hill, there was a 6.6 percentage point decrease in the unemployment rate between January 2010 and January 2021. Jurisdictions through the region experienced a sharp rise in unemployment in 2020 due to impacts related to the COVID-19 pandemic, though with a general improvement and recovery in the later months of 2020.

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Figure H 1-10: Unemployment Rate
Universe: Civilian noninstitutional population ages 16 and older Source: California Employment Development Department, Local Area Unemployment Statistics (LAUS), Sub-county areas monthly updates, 2010-2021.

1.4.5 Extremely Low-Income Households
Despite the economic and job growth experienced throughout the region since 1990, the income gap has continued to widen. California is one of the most economically unequal states in the nation, and the Bay Area has the highest income inequality between high- and low-income households in the state12.

In Morgan Hill, 55.2% of households make more than 100% of the Area Median Income (AMI)13, compared to 13.9% making less than 30% of AMI, which is considered extremely low-income (see Figure 11).

Regionally, more than half of all households make more than 100% AMI, while 15% make less than 30% AMI. In Santa Clara County, 30% AMI is the equivalent to the annual income of $39,900 for a family of four. Many households with multiple wage earners – including food service workers, 12 Bohn, S.et al. 2020. Income Inequality and Economic Opportunity in California. Public Policy Institute of California. 13 Income groups are based on HUD calculations for Area Median Income (AMI). HUD calculates the AMI for different metropolitan areas, and the nine county Bay Area includes the following metropolitan areas: Napa Metro Area (Napa County), Oakland-Fremont Metro Area (Alameda and Contra Costa Counties), San Francisco Metro Area (Marin, San Francisco, and San Mateo Counties), San Jose-Sunnyvale-Santa Clara Metro Area (Santa Clara County), Santa Rosa Metro Area (Sonoma County), and Vallejo-Fairfield Metro Area (Solano County). The AMI levels in this chart are based on the HUD metro area where this jurisdiction is located. Households making between 80 and 120 percent of the AMI are moderate-income, those making 50 to 80 percent are low-income, those making 30 to 50 percent are very lowincome, and those making less than 30 percent are extremely low-income. This is then adjusted for household size.

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full-time students, teachers, farmworkers and healthcare professionals – can fall into lower AMI categories due to relatively stagnant wages in many industries.

HCD’s guidance notes that instead of using U.S. Census data to calculate the percentage of very low-income RHNA that qualifies for extremely low-income households, local jurisdictions can presume that 50% of their RHNA for very low-income households qualifies for extremely lowincome households. Therefore, the City of Morgan Hill assumes that 50% of Morgan Hill’s very low-income RHNA is for extremely low-income households.

Figure H 1-11: Households by Household Income Level
Universe: Occupied housing units
Notes: Income groups are based on HUD calculations for Area Median Income (AMI). HUD calculates the AMI for different metropolitan areas, and the nine county Bay Area includes the following metropolitan areas: Napa Metro Area (Napa County), Oakland-Fremont Metro Area (Alameda and Contra Costa Counties), San Francisco Metro Area (Marin, San Francisco, and San Mateo Counties), San Jose-Sunnyvale-Santa Clara Metro Area (Santa Clara County), Santa Rosa Metro Area (Sonoma County), and Vallejo-Fairfield Metro Area (Solano County). The AMI levels in this chart are based on the HUD metro area where this jurisdiction is located. The data that is reported for the Bay Area is not based on a regional AMI but instead refers to the regional total of households in an income group relative to the AMI for the county where that household is located. Local jurisdictions are required to provide an estimate for their projected extremely low-income households (0-30% AMI) in their Housing Elements. HCD’s official Housing Element guidance notes that jurisdictions can use their RHNA for very low-income households (those making 0-50% AMI) to calculate their projected extremely low-income households.

Source: U.S. Department of Housing and Urban Development (HUD), Comprehensive Housing Affordability Strategy (CHAS) ACS tabulation, 2013-2017 release
Throughout the region, there are disparities between the incomes of homeowners and renters.

Typically, the number of low-income renters greatly outpaces the amount of housing available that is affordable for these households.

In Morgan Hill, the largest proportion of renters falls in the Greater than 100% of AMI income group, while the largest proportion of homeowners are found in the Greater than 100% of AMI group (see Figure 12).

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Figure H 1-12: Household Income Level by Tenure
Universe: Occupied housing units
Notes: Income groups are based on HUD calculations for Area Median Income (AMI). HUD calculates the AMI for different metropolitan areas, and the nine county Bay Area includes the following metropolitan areas: Napa Metro Area (Napa County), Oakland-Fremont Metro Area (Alameda and Contra Costa Counties), San Francisco Metro Area (Marin, San Francisco, and San Mateo Counties), San Jose-Sunnyvale-Santa Clara Metro Area (Santa Clara County), Santa Rosa Metro Area (Sonoma County), and Vallejo-Fairfield Metro Area (Solano County). The AMI levels in this chart are based on the HUD metro area where this jurisdiction is located.

Source: U.S. Department of Housing and Urban Development (HUD), Comprehensive Housing Affordability Strategy (CHAS) ACS tabulation, 2013-2017 release
For the data table behind this figure, please refer to the Data Packet Workbook, Table POPEMP-21.

Currently, people of color are more likely to experience poverty and financial instability as a result of federal and local housing policies that have historically excluded them from the same opportunities extended to white residents.14 These economic disparities also leave communities of color at higher risk for housing insecurity, displacement or homelessness. In Morgan Hill, Other Race or Multiple Races (Hispanic and Non-Hispanic) residents experience the highest rates of poverty, followed by American Indian or Alaska Native (Hispanic and Non-Hispanic) residents (see Figure 13).
14 Moore, E., Montojo, N. and Mauri, N., 2019. Roots, Race & Place: A History of Racially Exclusionary Housing the San Francisco Bay Area. Hass Institute.

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Figure H 1-13: Poverty Status by Race
Universe: Population for whom poverty status is determined Notes: The Census Bureau uses a federally defined poverty threshold that remains constant throughout the country and does not correspond to Area Median Income. For this table, the Census Bureau does not disaggregate racial groups by Hispanic/Latinx ethnicity. However, data for the white racial group is also reported for white householders who are not Hispanic/Latinx. Since residents who identify as white and Hispanic/Latinx may have very different experiences within the housing market and the economy from those who identify as white and non-Hispanic/Latinx, data for multiple white sub-groups are reported here. The racial/ethnic groups reported in this table are not all mutually exclusive. Therefore, the data should not be summed as the sum exceeds the population for whom poverty status is determined for this jurisdiction. However, all groups labelled “Hispanic and Non-Hispanic” are mutually exclusive, and the sum of the data for these groups is equivalent to the population for whom poverty status is determined.

Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B17001(A-I)

1.4.6 Tenure
The number of residents who own their homes compared to those who rent their homes can help identify the level of housing insecurity – ability for individuals to stay in their homes – in a city and region. Generally, renters may be displaced more quickly if prices increase. In Morgan Hill there are a total of 14,854 housing units, and fewer residents rent than own their homes: 26.1% versus

73.9% (see Figure 14). By comparison, 43.6% of households in Santa Clara County are renters, while 44% of Bay Area households rent their homes.

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Figure H 1-14: Housing Tenure
Universe: Occupied housing units
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25003 Homeownership rates often vary considerably across race/ethnicity in the Bay Area and throughout the country. These disparities not only reflect differences in income and wealth but also stem from federal, state, and local policies that limited access to homeownership for communities of color while facilitating homebuying for white residents. While many of these policies, such as redlining, have been formally disbanded, the impacts of race-based policy are still evident across Bay Area communities.15 In Morgan Hill, 46.3% of Black households owned their homes, while homeownership rates were 83.9% for Asian households, 53.3% for Latinx households, and 73.4% for White households. Notably, recent changes to state law require local jurisdictions to examine these dynamics and other fair housing issues when updating their Housing Elements.
15 See, for example, Rothstein, R. (2017). The color of law : a forgotten history of how our government segregated America. New York, NY & London, UK: Liveright Publishing.

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Figure H 1-15: Housing Tenure by Race of Householder
Universe: Occupied housing units
Notes: For this table, the Census Bureau does not disaggregate racial groups by Hispanic/Latinx ethnicity. However, data for the white racial group is also reported for white householders who are not Hispanic/Latinx. Since residents who identify as white and Hispanic/Latinx may have very different experiences within the housing market and the economy from those who identify as white and non-Hispanic/Latinx, data for multiple white sub-groups are reported here. The racial/ethnic groups reported in this table are not all mutually exclusive. Therefore, the data should not be summed as the sum exceeds the total number of occupied housing units for this jurisdiction. However, all groups labelled “Hispanic and Non-Hispanic” are mutually exclusive, and the sum of the data for these groups is equivalent to the total number of occupied housing units.

Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25003(A-I) The age of residents who rent or own their home can also signal the housing challenges a community is experiencing. Younger households tend to rent and may struggle to buy a first home in the Bay Area due to high housing costs. At the same time, senior homeowners seeking to downsize may have limited options in an expensive housing market.

In Morgan Hill, 41.2% of householders between the ages of 25 and 44 are renters, while 19.8% of householders over 65 are (see Figure 16).

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Figure H 1-16: Housing Tenure by Age
Universe: Occupied housing units
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25007 In many cities, homeownership rates for households in single-family homes are substantially higher than the rates for households in multi-family housing. In Morgan Hill, 90.1% of households in detached single-family homes are homeowners, while 5.3% of households in multi-family housing are homeowners (see Figure 17).

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Figure H 1-17: Housing Tenure by Housing Type
Universe: Occupied housing units
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25032

1.4.7 Displacement
Because of increasing housing prices, displacement is a major concern in the Bay Area.

Displacement has the most severe impacts on low- and moderate-income residents. When individuals or families are forced to leave their homes and communities, they also lose their support network.

The University of California, Berkeley has mapped all neighborhoods in the Bay area, identifying their risk for gentrification. They find that in Morgan Hill, 0.0% of households live in neighborhoods that are susceptible to or experiencing displacement and 0.0% live in neighborhoods at risk of or undergoing gentrification.

Equally important, some neighborhoods in the Bay Area do not have housing appropriate for a broad section of the workforce. UC Berkeley estimates that 22.6% of households in Morgan Hill live in neighborhoods where low-income households are likely to be excluded due to prohibitive housing costs.16
16 More information about this gentrification and displacement data is available at the Urban Displacement Project’s webpage: https://www.urbandisplacement.org/. Specifically, one can learn more about the different gentrification/displacement typologies shown in Figure 18 at this link:
https://www.urbandisplacement.org/sites/default/files/typology_sheet_2018_0.png. Additionally, one can view maps that show which typologies correspond to which parts of a jurisdiction here: https://www.urbandisplacement.org/sanfrancisco/sf-bay-area-gentrification-and-displacement

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Figure H 1-18: Households by Displacement Risk and Tenure Universe: Households
Notes: Displacement data is available at the census tract level. Staff aggregated tracts up to jurisdiction level using census 2010 population weights, assigning a tract to jurisdiction in proportion to block level population weights. Total household count may differ slightly from counts in other tables sourced from jurisdiction level sources. Categories are combined as follows for simplicity: At risk of or Experiencing Exclusion: At Risk of Becoming Exclusive; Becoming Exclusive; Stable/Advanced Exclusive At risk of or Experiencing Gentrification: At Risk of Gentrification; Early/Ongoing Gentrification; Advanced Gentrification Stable Moderate/Mixed Income: Stable Moderate/Mixed Income Susceptible to or Experiencing Displacement: Low-Income/Susceptible to Displacement; Ongoing Displacement Other: High Student Population; Unavailable or Unreliable Data Source: Urban Displacement Project for classification, American Community Survey 5-Year Data (2015-2019), Table B25003 for tenure.

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1.5 Housing Stock Characteristics

1.5.1 Housing Types, Year Built, Vacancy, and Permits
In recent years, most housing produced in the region and across the state consisted of singlefamily homes and larger multi-unit buildings. However, some households are increasingly interested in “missing middle housing” – including duplexes, triplexes, townhomes, cottage clusters and accessory dwelling units (ADUs). These housing types may open up more options across incomes and tenure, from young households seeking homeownership options to seniors looking to downsize and age-in-place.

The housing stock of Morgan Hill in 2020 was made up of 59.0% single family detached homes,

17.7% single family attached homes, 5.5% multifamily homes with 2 to 4 units, 9.8% multifamily homes with 5 or more units, and 8.0% mobile homes (see Figure 19). In Morgan Hill, the housing type that experienced the most growth between 2010 and 2020 was Single-Family Home:

Detached.

Figure H 1-19: Housing Type Trends
Universe: Housing units
Source: California Department of Finance, E-5 series
Production has not kept up with housing demand for several decades in the Bay Area, as the total number of units built and available has not yet come close to meeting the population and job growth experienced throughout the region. In Morgan Hill, the largest proportion of the housing stock was built 1980 to 1999, with 5,632 units constructed during this period (see Figure 20).

Since 2010, 11.6% of the current housing stock was built, which is 1,761 units.

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Figure H 1-20: Housing Units by Year Structure Built
Universe: Housing units
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25034 Vacant units make up 2.5% of the overall housing stock in Morgan Hill. The rental vacancy stands at 4.3%, while the ownership vacancy rate is 0.7%. Of the vacant units, the most common type of vacancy is For Rent (see Figure 21).17
Throughout the Bay Area, vacancies make up 2.6% of the total housing units, with homes listed for rent; units used for recreational or occasional use, and units not otherwise classified (other vacant) making up the majority of vacancies. The Census Bureau classifies a unit as vacant if no one is occupying it when census interviewers are conducting the American Community Survey or Decennial Census. Vacant units classified as “for recreational or occasional use” are those that are held for short-term periods of use throughout the year. Accordingly, vacation rentals and shortterm rentals like AirBnB are likely to fall in this category. The Census Bureau classifies units as “other vacant” if they are vacant due to foreclosure, personal/family reasons, legal proceedings, repairs/renovations, abandonment, preparation for being rented or sold, or vacant for an extended absence for reasons such as a work assignment, military duty, or incarceration.18 In a region with a thriving economy and housing market like the Bay Area, units being renovated/repaired and prepared for rental or sale are likely to represent a large portion of the “other vacant” category. 17 The vacancy rates by tenure is for a smaller universe than the total vacancy rate first reported, which in principle includes the full stock (2.5%). The vacancy by tenure counts are rates relative to the rental stock (occupied and vacant) and ownership stock (occupied and vacant) - but exclude a a significant number of vacancy categories, including the numerically significant other vacant. 18 For more information, see pages 3 through 6 of this list of definitions prepared by the Census Bureau:
https://www.census.gov/housing/hvs/definitions.pdf.

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Additionally, the need for seismic retrofitting in older housing stock could also influence the proportion of “other vacant” units in some jurisdictions.19 Figure H 1-21: Vacant Units by Type
Universe: Vacant housing units
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25004 Between 2015 and 2019, 1,542 housing units were issued permits in Morgan Hill. 77.8% of permits issued in Morgan Hill were for above moderate-income housing, 8.8% were for moderateincome housing, and 13.4% were for low- or very low-income housing (see Table 3).

Table H 1-3 Housing Permitting
Income Group Value
Above Moderate Income Permits 1,200
Low Income Permits 165
Moderate Income Permits 136
Very Low Income Permits 41
Universe: Housing permits issued between 2015 and 2019
Notes: HCD uses the following definitions for the four income categories: Very Low Income: units affordable to households making less than 50% of the Area Median Income for the county in which the jurisdiction is located. Low Income: units affordable to households making between 50% and 80% of the Area Median Income for the county in which the jurisdiction is located. Moderate Income: units affordable to households making between 80% and 120% of the Area Median Income for the county in which the jurisdiction is located. 19 See Dow, P. (2018). Unpacking the Growth in San Francisco’s Vacant Housing Stock: Client Report for the San Francisco Planning Department. University of California, Berkeley.

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Above Moderate Income: units affordable to households making above 120% of the Area Median Income for the county in which the jurisdiction is located.

Source: California Department of Housing and Community Development (HCD), 5th Cycle Annual Progress Report Permit Summary (2020)

1.5.2 Assisted Housing Developments At-Risk of Conversion While there is an immense need to produce new affordable housing units, ensuring that the existing affordable housing stock remains affordable is equally important. Additionally, it is typically faster and less expensive to preserve currently affordable units that are at risk of converting to market-rate than it is to build new affordable housing.

The data in the table below comes from the California Housing Partnership’s Preservation Database, the state’s most comprehensive source of information on subsidized affordable housing at risk of losing its affordable status and converting to market-rate housing. However, this database does not include all deed-restricted affordable units in the state, so there may be at-risk assisted units in a jurisdiction that are not captured in this data table. There are 1,160 assisted units in Morgan Hill in the Preservation Database. Of these units, 0.0% are at High Risk or Very High Risk of conversion.20
Table H 1-4 Assisted Units at Risk of Conversion
Income Morgan Hill Santa Clara
County
Bay Area
Low 1,160 28,001 110,177
Moderate 0 1,471 3,375
High 0 422 1,854
Very High 0 270 1,053
Total Assisted Units in Database 1,160 30,164 116,459
Universe: HUD, Low-Income Housing Tax Credit (LIHTC), USDA, and CalHFA projects. Subsidized or assisted developments that do not have one of the aforementioned financing sources may not be included.

Notes: While California Housing Partnership’s Preservation Database is the state’s most comprehensive source of information on subsidized affordable housing at risk of losing its affordable status and converting to market-rate housing, this database does not include all deed-restricted affordable units in the state. Consequently, there may be at-risk assisted units in a jurisdiction that are not captured in this data table. California Housing Partnership uses the following categories for assisted housing developments in its database: Very-High Risk: affordable homes that are at-risk of converting to market rate within the next year that do not have a known overlapping subsidy that would extend affordability and are not owned by a large/stable non-profit, mission-driven developer. High 20 California Housing Partnership uses the following categories for assisted housing developments in its database:

Very-High Risk: affordable homes that are at-risk of converting to market rate within the next year that do not have a known overlapping subsidy that would extend affordability and are not owned by a large/stable non-profit, missiondriven developer.

High Risk: affordable homes that are at-risk of converting to market rate in the next 1-5 years that do not have a known overlapping subsidy that would extend affordability and are not owned by a large/stable non-profit, mission-driven developer.

Moderate Risk: affordable homes that are at-risk of converting to market rate in the next 5-10 years that do not have a known overlapping subsidy that would extend affordability and are not owned by a large/stable non-profit, missiondriven developer.

Low Risk: affordable homes that are at-risk of converting to market rate in 10+ years and/or are owned by a large/stable non-profit, mission-driven developer.

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Risk: affordable homes that are at-risk of converting to market rate in the next 1-5 years that do not have a known overlapping subsidy that would extend affordability and are not owned by a large/stable non-profit, mission-driven developer. Moderate Risk: affordable homes that are at-risk of converting to market rate in the next 5-10 years that do not have a known overlapping subsidy that would extend affordability and are not owned by a large/stable non-profit, mission-driven developer. Low Risk: affordable homes that are atrisk of converting to market rate in 10+ years and/or are owned by a large/stable non-profit, mission-driven developer.

Source: California Housing Partnership, Preservation Database (2020)

1.5.3 Substandard Housing
Housing costs in the region are among the highest in the country, which could result in households, particularly renters, needing to live in substandard conditions in order to afford housing. Generally, there is limited data on the extent of substandard housing issues in a community. The City’s Building Division was surveyed to determine the number of housing units that are in need of rehabilitation (repair) or those in need of replacement (demolition) in calendar year 2021. The Building Division serves the residents and developers within the City by providing plan review services, issuing grading and building permits, and much more. In addition, the Building Division is responsible for code compliance and enforcement of the Morgan Hill Municipal Code. The Building Division indicated that there were zero units in dire need of rehabilitation or replacement that have been made aware to the City in 2021. Although the City’s housing stock is in good condition, more than a third (37%) of the City’s housing stock is more than 40 years old and may also be in need of rehabilitation. Programs which assist lower-income and/or elderly homeowners with home maintenance and repair should continue to be an important part of the City’s housing program.

The City takes a proactive approach toward housing conditions through housing rehabilitation programs. The City has participated in the Urban Counties Consortium Community Development Block Grant (CDBG) funds to provide rehabilitation assistance. Over the last housing element period, from January 1, 2015 through January 1, 2020, 159 units were rehabilitated within the City of Morgan Hill.

Although the City’s housing stock is in good condition, the Census Bureau data included in the graph below gives a sense of some of the substandard conditions that may be present in Morgan Hill. For example, 2.7% of renters in Morgan Hill reported lacking a kitchen and 1.0% of renters lack plumbing, compared to 0.1% of owners who lack a kitchen and 0.0% of owners who lack plumbing.

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Figure H 1-22: Substandard Housing Issues
Universe: Occupied housing units
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25053, Table B25043, Table B25049

1.5.4 Home and Rent Values
Home prices reflect a complex mix of supply and demand factors, including an area’s demographic profile, labor market, prevailing wages and job outlook, coupled with land and construction costs. In the Bay Area, the costs of housing have long been among the highest in the nation. The typical home value in Morgan Hill was estimated at $1,055,130 by December of 2020, per data from Zillow. The largest proportion of homes were valued between $750k-$1M (see Figure 23). By comparison, the typical home value is $1,290,970 in Santa Clara County and $1,077,230 in the Bay Area, with the largest share of units valued $1m-$1.5m (county) and $500k- $750k (region).

The region’s home values have increased steadily since 2000, besides a decrease during the Great Recession. The rise in home prices has been especially steep since 2012, with the median home value in the Bay Area nearly doubling during this time. Since 2001, the typical home value has increased 123.1% in Morgan Hill from $472,850 to $1,055,130. This change is below the change in Santa Clara County, and below the change for the region (see Figure 24).

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Figure H 1-23: Home Values of Owner-Occupied Units
Universe: Owner-occupied units
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25075 Figure H 1-24: Zillow Home Value Index (ZHVI)
Universe: Owner-occupied housing units
Notes: Zillow describes the ZHVI as a smoothed, seasonally adjusted measure of the typical home value and market changes across a given region and housing type. The ZHVI reflects the typical value for homes in the 35th to 65th percentile range. The ZHVI includes all owner-occupied housing units, including both single-family homes and condominiums. More information on the ZHVI is available

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from Zillow. The regional estimate is a household-weighted average of county-level ZHVI files, where household counts are yearly estimates from DOF’s E-5 series For unincorporated areas, the value is a population weighted average of unincorporated communities in the county matched to census-designated population counts.

Source: Zillow, Zillow Home Value Index (ZHVI)
Similar to home values, rents have also increased dramatically across the Bay Area in recent years. Many renters have been priced out, evicted or displaced, particularly communities of color.

Residents finding themselves in one of these situations may have had to choose between commuting long distances to their jobs and schools or moving out of the region, and sometimes, out of the state.

In Morgan Hill, the largest proportion of rental units rented in the Rent $1500-$2000 category, totaling 26.9%, followed by 24.2% of units renting in the Rent $1000-$1500 category (see Figure 25). Looking beyond the city, the largest share of units is in the $2000-$2500 category (county) compared to the $1500-$2000 category for the region as a whole.

Figure H 1-25: Contract Rents for Renter-Occupied Units Universe: Renter-occupied housing units paying cash rent Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25056 Since 2009, the median rent has increased by 36.6% in Morgan Hill, from $1,230 to $1,680 per month (see Figure 26). In Santa Clara County, the median rent has increased 67.7%, from $1,285 to $2,150. The median rent in the region has increased significantly during this time from $1,200 to $1,850, a 54% increase.21
21 While the data on home values shown in Figure 24 comes from Zillow, Zillow does not have data on rent prices available for most Bay Area jurisdictions. To have a more comprehensive dataset on rental data for the region, the rent data in this document comes from the U.S. Census Bureau’s American Community Survey, which may not fully reflect

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Figure H 1-26: Median Contract Rent
Universe: Renter-occupied housing units paying cash rent Notes: For unincorporated areas, median is calculated using distribution in B25056.

Source: U.S. Census Bureau, American Community Survey 5-Year Data releases, starting with 2005-2009 through 2015-2019, B25058, B25056 (for unincorporated areas). County and regional counts are weighted averages of jurisdiction median using B25003 rental unit counts from the relevant year.

1.5.5 Overpayment and Overcrowding
A household is considered “cost-burdened” if it spends more than 30% of its monthly income on housing costs, while those who spend more than 50% of their income on housing costs are considered “severely cost-burdened.” Low-income residents are the most impacted by high housing costs and experience the highest rates of cost burden. Spending such large portions of their income on housing puts low-income households at higher risk of displacement, eviction, or homelessness.
current rents. Local jurisdiction staff may want to supplement the data on rents with local realtor data or other sources for rent data that are more current than Census Bureau data.

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Figure H 1-27: Cost Burden by Tenure
Universe: Occupied housing units
Notes: Cost burden is the ratio of housing costs to household income. For renters, housing cost is gross rent (contract rent plus utilities). For owners, housing cost is “select monthly owner costs”, which includes mortgage payment, utilities, association fees, insurance, and real estate taxes. HUD defines cost-burdened households as those whose monthly housing costs exceed 30% of monthly income, while severely cost-burdened households are those whose monthly housing costs exceed 50% of monthly income.

Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25070, B25091 Renters are often more cost-burdened than owners. While the housing market has resulted in home prices increasing dramatically, homeowners often have mortgages with fixed rates, whereas renters are more likely to be impacted by market increases. When looking at the cost burden across tenure in Morgan Hill, 23.7% of renters spend 30% to 50% of their income on housing compared to 21.4% of those that own (see Figure 27). Additionally, 25.8% of renters spend 50% or more of their income on housing, while 10.9% of owners are severely costburdened.

In Morgan Hill, 15.3% of households spend 50% or more of their income on housing, while 20.1% spend 30% to 50%. However, these rates vary greatly across income categories (see Figure 28).

For example, 64.2% of Morgan Hill households making less than 30% of AMI spend the majority of their income on housing. For Morgan Hill residents making more than 100% of AMI, just 0.4% are severely cost-burdened, and 85.8% of those making more than 100% of AMI spend less than 30% of their income on housing.

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Figure H 1-28: Cost Burden by Income Level
Universe: Occupied housing units
Notes: Cost burden is the ratio of housing costs to household income. For renters, housing cost is gross rent (contract rent plus utilities). For owners, housing cost is “select monthly owner costs”, which includes mortgage payment, utilities, association fees, insurance, and real estate taxes. HUD defines cost-burdened households as those whose monthly housing costs exceed 30% of monthly income, while severely cost-burdened households are those whose monthly housing costs exceed 50% of monthly income.

Income groups are based on HUD calculations for Area Median Income (AMI). HUD calculates the AMI for different metropolitan areas, and the nine county Bay Area includes the following metropolitan areas: Napa Metro Area (Napa County), Oakland-Fremont Metro Area (Alameda and Contra Costa Counties), San Francisco Metro Area (Marin, San Francisco, and San Mateo Counties), San Jose-Sunnyvale-Santa Clara Metro Area (Santa Clara County), Santa Rosa Metro Area (Sonoma County), and Vallejo-Fairfield Metro Area (Solano County). The AMI levels in this chart are based on the HUD metro area where this jurisdiction is located.

Source: U.S. Department of Housing and Urban Development (HUD), Comprehensive Housing Affordability Strategy (CHAS) ACS tabulation, 2013-2017 release
Currently, people of color are more likely to experience poverty and financial instability as a result of federal and local housing policies that have historically excluded them from the same opportunities extended to white residents. As a result, they often pay a greater percentage of their income on housing, and in turn, are at a greater risk of housing insecurity.

Black or African American, Non-Hispanic residents are the most cost burdened with 31.4% spending 30% to 50% of their income on housing, and Hispanic or Latinx residents are the most severely cost burdened with 21.5% spending more than 50% of their income on housing (see Figure 29).

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Figure H 1-29: Cost Burden by Race
Universe: Occupied housing units
Notes: Cost burden is the ratio of housing costs to household income. For renters, housing cost is gross rent (contract rent plus utilities). For owners, housing cost is “select monthly owner costs”, which includes mortgage payment, utilities, association fees, insurance, and real estate taxes. HUD defines cost-burdened households as those whose monthly housing costs exceed 30% of monthly income, while severely cost-burdened households are those whose monthly housing costs exceed 50% of monthly income.

For the purposes of this graph, the “Hispanic or Latinx” racial/ethnic group represents those who identify as having Hispanic/Latinx ethnicity and may also be members of any racial group. All other racial categories on this graph represent those who identify with that racial category and do not identify with Hispanic/Latinx ethnicity.

Source: U.S. Department of Housing and Urban Development (HUD), Comprehensive Housing Affordability Strategy (CHAS) ACS tabulation, 2013-2017 release
Large family households often have special housing needs due to a lack of adequately sized affordable housing available. The higher costs required for homes with multiple bedrooms can result in larger families experiencing a disproportionate cost burden than the rest of the population and can increase the risk of housing insecurity.

In Morgan Hill, 17.9% of large family households experience a cost burden of 30%-50%, while

17.3% of households spend more than half of their income on housing. Some 20.4% of all other households have a cost burden of 30%-50%, with 15.0% of households spending more than 50% of their income on housing (see Figure 30).

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Figure H 1-30: Cost Burden by Household Size
Universe: Occupied housing units
Notes: Cost burden is the ratio of housing costs to household income. For renters, housing cost is gross rent (contract rent plus utilities). For owners, housing cost is “select monthly owner costs”, which includes mortgage payment, utilities, association fees, insurance, and real estate taxes. HUD defines cost-burdened households as those whose monthly housing costs exceed 30% of monthly income, while severely cost-burdened households are those whose monthly housing costs exceed 50% of monthly income.

Source: U.S. Department of Housing and Urban Development (HUD), Comprehensive Housing Affordability Strategy (CHAS) ACS tabulation, 2013-2017 release
When cost-burdened seniors are no longer able to make house payments or pay rents, displacement from their homes can occur, putting further stress on the local rental market or forcing residents out of the community they call home. Understanding how seniors might be costburdened is of particular importance due to their special housing needs, particularly for lowincome seniors. 51.9% of seniors making less than 30% of AMI are spending the majority of their income on housing. For seniors making more than 100% of AMI, 85.0% are not cost-burdened and spend less than 30% of their income on housing (see Figure 31).

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Figure 1-31: Cost-Burdened Senior Households by Income Level Universe: Senior households
Notes: For the purposes of this graph, senior households are those with a householder who is aged 62 or older. Cost burden is the ratio of housing costs to household income. For renters, housing cost is gross rent (contract rent plus utilities). For owners, housing cost is “select monthly owner costs”, which includes mortgage payment, utilities, association fees, insurance, and real estate taxes.

HUD defines cost-burdened households as those whose monthly housing costs exceed 30% of monthly income, while severely costburdened households are those whose monthly housing costs exceed 50% of monthly income. Income groups are based on HUD calculations for Area Median Income (AMI). HUD calculates the AMI for different metropolitan areas, and the nine county Bay Area includes the following metropolitan areas: Napa Metro Area (Napa County), Oakland-Fremont Metro Area (Alameda and Contra Costa Counties), San Francisco Metro Area (Marin, San Francisco, and San Mateo Counties), San Jose-Sunnyvale-Santa Clara Metro Area (Santa Clara County), Santa Rosa Metro Area (Sonoma County), and Vallejo-Fairfield Metro Area (Solano County). The AMI levels in this chart are based on the HUD metro area where this jurisdiction is located.

Source: U.S. Department of Housing and Urban Development (HUD), Comprehensive Housing Affordability Strategy (CHAS) ACS tabulation, 2013-2017 release
Overcrowding occurs when the number of people living in a household is greater than the home was designed to hold. There are several different standards for defining overcrowding, but this report uses the Census Bureau definition, which is more than one occupant per room (not including bathrooms or kitchens). Additionally, the Census Bureau considers units with more than

1.5 occupants per room to be severely overcrowded.

Overcrowding is often related to the cost of housing and can occur when demand in a city or region is high. In many cities, overcrowding is seen more amongst those that are renting, with multiple households sharing a unit to make it possible to stay in their communities. In Morgan Hill,

4.6% of households that rent are severely overcrowded (more than 1.5 occupants per room), compared to 0.2% of households that own (see Figure 32). In Morgan Hill, 9.2% of renters experience moderate overcrowding (1 to 1.5 occupants per room), compared to 1.6% for those own.

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Figure H 1-32: Overcrowding by Tenure and Severity
Universe: Occupied housing units
Notes: The Census Bureau defines an overcrowded unit as one occupied by 1.01 persons or more per room (excluding bathrooms and kitchens), and units with more than 1.5 persons per room are considered severely overcrowded.

Source: U.S. Department of Housing and Urban Development (HUD), Comprehensive Housing Affordability Strategy (CHAS) ACS tabulation, 2013-2017 release
Overcrowding often disproportionately impacts low-income households. 2.3% of very low-income households (below 50% AMI) experience severe overcrowding, while 0.0% of households above 100% experience this level of overcrowding (see Figure 33).

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Figure H 1-33: Overcrowding by Income Level and Severity Universe: Occupied housing units
Notes: The Census Bureau defines an overcrowded unit as one occupied by 1.01 persons or more per room (excluding bathrooms and kitchens), and units with more than 1.5 persons per room are considered severely overcrowded. Income groups are based on HUD calculations for Area Median Income (AMI). HUD calculates the AMI for different metropolitan areas, and the nine county Bay Area includes the following metropolitan areas: Napa Metro Area (Napa County), Oakland-Fremont Metro Area (Alameda and Contra Costa Counties), San Francisco Metro Area (Marin, San Francisco, and San Mateo Counties), San Jose-Sunnyvale-Santa Clara Metro Area (Santa Clara County), Santa Rosa Metro Area (Sonoma County), and Vallejo-Fairfield Metro Area (Solano County). The AMI levels in this chart are based on the HUD metro area where this jurisdiction is located.

Source: U.S. Department of Housing and Urban Development (HUD), Comprehensive Housing Affordability Strategy (CHAS) ACS tabulation, 2013-2017 release
Communities of color are more likely to experience overcrowding similar to how they are more likely to experience poverty, financial instability, and housing insecurity. People of color tend to experience overcrowding at higher rates than White residents. In Morgan Hill, the racial group with the largest overcrowding rate is Hispanic or Latinx (see Figure 34)

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Figure H 1-34: Overcrowding by Race
Universe: Occupied housing units
Notes: The Census Bureau defines an overcrowded unit as one occupied by 1.01 persons or more per room (excluding bathrooms and kitchens), and units with more than 1.5 persons per room are considered severely overcrowded. For this table, the Census Bureau does not disaggregate racial groups by Hispanic/Latinx ethnicity. However, data for the white racial group is also reported for white householders who are not Hispanic/Latinx. Since residents who identify as white and Hispanic/Latinx may have very different experiences within the housing market and the economy from those who identify as white and non-Hispanic/Latinx, data for multiple white sub-groups are reported here. The racial/ethnic groups reported in this table are not all mutually exclusive. Therefore, the data should not be summed as the sum exceeds the total number of occupied housing units for this jurisdiction. However, all groups labelled “Hispanic and Non-Hispanic” are mutually exclusive, and the sum of the data for these groups is equivalent to the total number of occupied housing units.

Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25014

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1.6 Special Housing Needs

1.6.1 Large Households
Large households often have different housing needs than smaller households. If a city’s rental housing stock does not include larger apartments, large households who rent could end up living in overcrowded conditions. In Morgan Hill, for large households with 5 or more persons, most units (73.2%) are owner occupied (see Figure 35). In 2017, 23.3% of large households were very low-income, earning less than 50% of the area median income (AMI).

Figure H 1-35: Household Size by Tenure
Universe: Occupied housing units
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25009 The unit sizes available in a community affect the household sizes that can access that community. Large families are generally served by housing units with 3 or more bedrooms, of which there are 10,992 units in Morgan Hill. Among these large units with 3 or more bedrooms,

12.9% are renter-occupied and 87.1% are owner-occupied (see Figure 36).

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Figure H 1-36: Housing Units by Number of Bedrooms
Universe: Housing units
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B25042

1.6.2 Female-Headed Households
Households headed by one person are often at greater risk of housing insecurity, particularly female-headed households, who may be supporting children or a family with only one income. In Morgan Hill, the largest proportion of households is Married-couple Family Households at 63.6% of total, while Female-Headed Households make up 10.9% of all households.

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Figure H 1-37: Household Type
Universe: Households
Notes: For data from the Census Bureau, a “family household” is a household where two or more people are related by birth, marriage, or adoption. “Non-family households” are households of one person living alone, as well as households where none of the people are related to each other.

Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B11001 Female-headed households with children may face particular housing challenges, with pervasive gender inequality resulting in lower wages for women. Moreover, the added need for childcare can make finding a home that is affordable more challenging.

In Morgan Hill, 20.2% of female-headed households with children fall below the Federal Poverty Line, while 1.5% of female-headed households without children live in poverty (see Figure 38).

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Figure H 1-38: Female-Headed Households by Poverty Status Universe: Female Households
Notes: The Census Bureau uses a federally defined poverty threshold that remains constant throughout the country and does not correspond to Area Median Income.

Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B17012

1.6.3 Seniors
Senior households often experience a combination of factors that can make accessing or keeping affordable housing a challenge. They often live on fixed incomes and are more likely to have disabilities, chronic health conditions and/or reduced mobility.

Seniors who rent may be at even greater risk for housing challenges than those who own, due to income differences between these groups. The largest proportion of senior households who rent make 0%-30% of AMI, while the largest proportion of senior households who are homeowners falls in the income group Greater than 100% of AMI (see Figure 39).

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Figure H 1-39: Senior Households by Income and Tenure
Universe: Senior households
Notes: For the purposes of this graph, senior households are those with a householder who is aged 62 or older. Income groups are based on HUD calculations for Area Median Income (AMI). HUD calculates the AMI for different metropolitan areas, and the nine county Bay Area includes the following metropolitan areas: Napa Metro Area (Napa County), Oakland-Fremont Metro Area (Alameda and Contra Costa Counties), San Francisco Metro Area (Marin, San Francisco, and San Mateo Counties), San Jose-Sunnyvale-Santa Clara Metro Area (Santa Clara County), Santa Rosa Metro Area (Sonoma County), and Vallejo-Fairfield Metro Area (Solano County).

The AMI levels in this chart are based on the HUD metro area where this jurisdiction is located.

Source: U.S. Department of Housing and Urban Development (HUD), Comprehensive Housing Affordability Strategy (CHAS) ACS tabulation, 2013-2017 release

1.6.4 People with Disabilities
People with disabilities face additional housing challenges. Encompassing a broad group of individuals living with a variety of physical, cognitive and sensory impairments, many people with disabilities live on fixed incomes and are in need of specialized care, yet often rely on family members for assistance due to the high cost of care.

When it comes to housing, people with disabilities are not only in need of affordable housing but accessibly designed housing, which offers greater mobility and opportunity for independence.

Unfortunately, the need typically outweighs what is available, particularly in a housing market with such high demand. People with disabilities are at a high risk for housing insecurity, homelessness and institutionalization, particularly when they lose aging caregivers. Figure 40 shows the rates at which different disabilities are present among residents of Morgan Hill. Overall, 9.1% of people in Morgan Hill have a disability of any kind.22
22 These disabilities are counted separately and are not mutually exclusive, as an individual may report more than one disability. These counts should not be summed.

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Figure H 1-40: Disability by Type
Universe: Civilian noninstitutionalized population 18 years and over Notes: These disabilities are counted separately and are not mutually exclusive, as an individual may report more than one disability.

These counts should not be summed. The Census Bureau provides the following definitions for these disability types: Hearing difficulty:
deaf or has serious difficulty hearing. Vision difficulty: blind or has serious difficulty seeing even with glasses. Cognitive difficulty: has serious difficulty concentrating, remembering, or making decisions. Ambulatory difficulty: has serious difficulty walking or climbing stairs. Self-care difficulty: has difficulty dressing or bathing. Independent living difficulty: has difficulty doing errands alone such as visiting a doctor’s office or shopping.

Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B18102, Table B18103, Table B18104, Table B18105, Table B18106, Table B18107.

State law also requires Housing Elements to examine the housing needs of people with developmental disabilities. Developmental disabilities are defined as severe, chronic, and attributed to a mental or physical impairment thatdisability means a disability that originates begins before an person individual attains turns 18 years oldof age; continues, or can be expected to continue, indefinitely; and constitutes a substantial disability for that individual. This canDevelopmental disability includes intellectual disability Down’s Syndrome, autism, epilepsy, cerebral palsy, and mild to severe mental retardationrelated conditions. Developmental disabilities do not include handicapping conditions that are solely physical in nature. Some people with developmental disabilities are unable to work, rely on Supplemental Security Income, and live with family members. In addition to their specific housing needs, they are at increased risk of housing insecurity after an aging parent or family member is no longer able to care for them.

In Morgan Hill, of the population with a developmental disability, children under the age of 18 make up 39.831.3%, while adults account for 60.268.7%.

Table H 1-5 Population with Developmental
Disabilities by Age
Age Group Value

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Age 18+ 171222
Age Under 18 113101
Universe: Population with developmental disabilities
Notes: The California Department of Developmental Services is responsible for overseeing the coordination and delivery of services to more than 330,000 Californians with developmental disabilities including cerebral palsy, intellectual disability, Down syndrome, autism, epilepsy, and related conditions. The California Department of Developmental Services provides ZIP code level counts. To get jurisdiction-level estimates, ZIP code counts were crosswalked to jurisdictions using census block population counts from Census 2010 SF1 to determine the share of a ZIP code to assign to a given jurisdiction.

Source: California Department of Developmental ServicesSan Andreas Regional Center, November 2021 data provided via direct communication (April 15, 2022), Consumer Count by California ZIP Code and Age Group (2020) The most common living arrangement for adult individuals with developmental disabilities in Morgan Hill is the home of parent /family /guardian.

Table H 1-6 Adult Population with
Developmental Disabilities by
Residence
Residence Type Value
Home of Parent / Family / Guardian 235158
Community CareLicensed Facility 3043
Independent / Supported LivingOwn
Apartment with Supportive Services 1621
Other 40
Foster / Family Home 0
Intermediate Care Facility 0
Universe: Population with developmental disabilities
Notes: The California Department of Developmental Services is responsible for overseeing the coordination and delivery of services to more than 330,000 Californians with developmental disabilities including cerebral palsy, intellectual disability, Down syndrome, autism, epilepsy, and related conditions. The California Department of Developmental Services provides ZIP code level counts. To get jurisdiction-level estimates, ZIP code counts were crosswalked to jurisdictions using census block population counts from Census 2010 SF1 to determine the share of a ZIP code to assign to a given jurisdiction.

Source: San Andreas Regional Center, November 2021 data provided via direct communication (April 15, 2022)California Department of Developmental Services, Consumer Count by California ZIP Code and Residence Type (2020)

1.6.5 Homelessness
Homelessness remains an urgent challenge in many communities across the state, reflecting a range of social, economic, and psychological factors. Rising housing costs result in increased risks of community members experiencing homelessness. Far too many residents who have found themselves housing insecure have ended up unhoused or homeless in recent years, either temporarily or longer term. Addressing the specific housing needs for the unhoused population remains a priority throughout the region, particularly since homelessness is disproportionately experienced by people of color, people with disabilities, those struggling with addiction and those dealing with traumatic life circumstances. In Santa Clara County, the most common type of household experiencing homelessness is those without children in their care. Among households experiencing homelessness that do not have children, 76.4% are unsheltered. Of homeless households with children, most are sheltered in emergency shelter (see Figure 41).

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Figure H 1-41: Homelessness by Household Type and Shelter Status, Santa Clara County Universe: Population experiencing homelessness
Notes: This data is based on Point-in-Time (PIT) information provided to HUD by CoCs in the application for CoC Homeless Assistance Programs. The PIT Count provides a count of sheltered and unsheltered homeless persons on a single night during the last ten days in January. Each Bay Area county is its own CoC, and so the data for this table is provided at the county-level. Per HCD’s requirements, jurisdictions will need to supplement this county-level data with local estimates of people experiencing homelessness.

Source: U.S. Department of Housing and Urban Development (HUD), Continuum of Care (CoC) Homeless Populations and Subpopulations Reports (2019)
People of color are more likely to experience poverty and financial instability as a result of federal and local housing policies that have historically excluded them from the same opportunities extended to white residents. Consequently, people of color are often disproportionately impacted by homelessness, particularly Black residents of the Bay Area. In Santa Clara County, White (Hispanic and Non-Hispanic) residents represent the largest proportion of residents experiencing homelessness and account for 43.9% of the homeless population, while making up 44.5% of the overall population (see Figure 42).

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Figure H 1-42: Racial Group Share of General and Homeless Populations, Santa Clara County Universe: Population experiencing homelessness
Notes: This data is based on Point-in-Time (PIT) information provided to HUD by CoCs in the application for CoC Homeless Assistance Programs. The PIT Count provides a count of sheltered and unsheltered homeless persons on a single night during the last ten days in January. Each Bay Area county is its own CoC, and so the data for this table is provided at the county-level. Per HCD’s requirements, jurisdictions will need to supplement this county-level data with local estimates of people experiencing homelessness. HUD does not disaggregate racial demographic data by Hispanic/Latinx ethnicity for people experiencing homelessness. Instead, HUD reports data on Hispanic/Latinx ethnicity for people experiencing homelessness in a separate table. Accordingly, the racial group data listed here includes both Hispanic/Latinx and non-Hispanic/Latinx individuals.

Source: U.S. Department of Housing and Urban Development (HUD), Continuum of Care (CoC) Homeless Populations and Subpopulations Reports (2019); U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B01001(A-I) In Santa Clara, Latinx residents represent 42.7% of the population experiencing homelessness, while Latinx residents comprise 25.8% of the general population (see Figure 43).

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Figure H 1-43: Latinx Share of General and Homeless Populations, Santa Clara County Universe: Population experiencing homelessness
Notes: This data is based on Point-in-Time (PIT) information provided to HUD by CoCs in the application for CoC Homeless Assistance Programs. The PIT Count provides a count of sheltered and unsheltered homeless persons on a single night during the last ten days in January. Each Bay Area county is its own CoC, and so the data for this table is provided at the county-level. Per HCD’s requirements, jurisdictions will need to supplement this county-level data with local estimates of people experiencing homelessness. The data from HUD on Hispanic/Latinx ethnicity for individuals experiencing homelessness does not specify racial group identity. Accordingly, individuals in either ethnic group identity category (Hispanic/Latinx or non-Hispanic/Latinx) could be of any racial background.

Source: U.S. Department of Housing and Urban Development (HUD), Continuum of Care (CoC) Homeless Populations and Subpopulations Reports (2019); U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B01001(A-I) Many of those experiencing homelessness are dealing with severe issues – including mental illness, substance abuse and domestic violence – that are potentially life threatening and require additional assistance. In Santa Clara County, homeless individuals are commonly challenged by severe mental illness, with 2,659 reporting this condition (see Figure 12). Of those, some 87.6% are unsheltered, further adding to the challenge of handling the issue. According to the Santa Clara County Homeless Census and Survey, within Morgan Hill there were 114 persons experiencing homelessness, a 71% decrease from 2017 (388 persons experiencing homelessness). However, the number of persons experiencing homelessness has increased since 2013; in which the Santa Clara County Homeless Census and Survey identified 61 people experiencing homelessness in 2013 and 81 people experiencing homelessness in 2015.

Table H 1-7 Homeless Population within Morgan Hill
2013 2015 2017 2019
61 81 388 114

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Figure H 1-44: Characteristics for the Population Experiencing Homelessness, Santa Clara County Universe: Population experiencing homelessness
Notes: This data is based on Point-in-Time (PIT) information provided to HUD by CoCs in the application for CoC Homeless Assistance Programs. The PIT Count provides a count of sheltered and unsheltered homeless persons on a single night during the last ten days in January. Each Bay Area county is its own CoC, and so the data for this table is provided at the county-level. Per HCD’s requirements, jurisdictions will need to supplement this county-level data with local estimates of people experiencing homelessness. These challenges/characteristics are counted separately and are not mutually exclusive, as an individual may report more than one challenge/characteristic. These counts should not be summed.

Source: U.S. Department of Housing and Urban Development (HUD), Continuum of Care (CoC) Homeless Populations and Subpopulations Reports (2019)
In Morgan Hill, the student population experiencing homelessness totaled 280 during the 2019- 20 school year and increased by 23.3% since the 2016-17 school year. By comparison, Santa Clara County has seen a 3.5% increase in the population of students experiencing homelessness since the 2016-17 school year, and the Bay Area population of students experiencing homelessness decreased by 8.5%. During the 2019-2020 school year, there were still some 13,718 students experiencing homelessness throughout the region, adding undue burdens on learning and thriving, with the potential for longer term negative effects.

The number of students in Morgan Hill experiencing homelessness in 2019 represents 12.2% of the Santa Clara County total and 2.0% of the Bay Area total.

Table H 1-8 Students in Local Public Schools Experiencing Homelessness
Academic Year Morgan Hill Santa Clara County Bay Area
2016-17 227 2,219 14,990
2017-18 320 2,189 15,142
2018-19 292 2,405 15,427
2019-20 280 2,297 13,718

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Universe: Total number of unduplicated primary and short-term enrollments within the academic year (July 1 to June 30), public schools
Notes: The California Department of Education considers students to be homeless if they are unsheltered, living in temporary shelters for people experiencing homelessness, living in hotels/motels, or temporarily doubled up and sharing the housing of other persons due to the loss of housing or economic hardship. The data used for this table was obtained at the school site level, matched to a file containing school locations, geocoded and assigned to jurisdiction, and finally summarized by geography.

Source: California Department of Education, California Longitudinal Pupil Achievement Data System (CALPADS), Cumulative Enrollment Data (Academic Years 2016-2017, 2017-2018, 2018-2019, 2019-2020)

1.6.6 Farmworkers
Across the state, housing for farmworkers has been recognized as an important and unique concern. Farmworkers generally receive wages that are considerably lower than other jobs and may have temporary housing needs. Finding decent and affordable housing can be challenging, particularly in the current housing market.

In Morgan Hill, the migrant worker student population totaled 120 during the 2019-20 school year and has decreased by 34.9% since the 2016-17 school year. The trend for the region for the past few years has been a decline of 2.4% in the number of migrant worker students since the 2016- 17 school year. The change at the county level is a 49.7% decrease in the number of migrant worker students since the 2016-17 school year.

Table H 1-9 Migrant Worker Student Population
Academic Year Morgan Hill Santa Clara County Bay Area
2016-17 149 978 4,630
2017-18 151 732 4,607
2018-19 120 645 4,075
2019-20 97 492 3,976
Universe: Total number of unduplicated primary and short-term enrollments within the academic year (July 1 to June 30), public schools
Notes: The data used for this table was obtained at the school site level, matched to a file containing school locations, geocoded and assigned to jurisdiction, and finally summarized by geography.

Source: California Department of Education, California Longitudinal Pupil Achievement Data System (CALPADS), Cumulative Enrollment Data (Academic Years 2016-2017, 2017-2018, 2018-2019, 2019-2020) According to the U.S. Department of Agriculture Census of Farmworkers, the number of permanent farm workers in Santa Clara County has increased since 2002, totaling 2,418 in 2017, while the number of seasonal farm workers has decreased, totaling 1,757 in 2017 (see Figure 45).

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-1-53 Appendix H-1: Housing Needs Assessment H1
Figure H 1-45: Farm Operations and Farm Labor by County, Santa Clara County Universe: Hired farm workers (including direct hires and agricultural service workers who are often hired through labor contractors) Notes: Farm workers are considered seasonal if they work on a farm less than 150 days in a year, while farm workers who work on a farm more than 150 days are considered to be permanent workers for that farm.

Source: U.S. Department of Agriculture, Census of Farmworkers (2002, 2007, 2012, 2017), Table 7: Hired Farm Labor

1.6.7 Non-English Speakers
California has long been an immigration gateway to the United States, which means that many languages are spoken throughout the Bay Area. Since learning a new language is universally challenging, it is not uncommon for residents who have immigrated to the United States to have limited English proficiency. This limit can lead to additional disparities if there is a disruption in housing, such as an eviction, because residents might not be aware of their rights or they might be wary to engage due to immigration status concerns. In Morgan Hill, 3.8% of residents 5 years and older identify as speaking English not well or not at all, which is below the proportion for Santa Clara County. Throughout the region the proportion of residents 5 years and older with limited English proficiency is 8%.

Page H-1-54 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Appendix H-1: Housing Needs Assessment
Figure H 1-46: Population with Limited English Proficiency Universe: Population 5 years and over
Source: U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B16005

1.7 Summary
Although data in this appendix is derived from a variety of sources (the most prominent data source used is the U.S. Census data, in varying forms), and complied to show relationships, major trends, and to respond to known issues and concerns, as well as to inform the Housing Element as well as the community of the trends of Morgan Hill, the data is consistent with local knowledge gathered through the City’s outreach process. City staff used a variety of methods to solicit public input on the Housing Element update, including distributing three survey’s (two pertaining to Assessment of Fair Housing (AFH)), hosting public workshops, providing information at community events, conducting focus groups, giving presentations to the Community, and holding several workshops with the community and the Planning Commission. Staff prioritized involvement and engagement of residents and community members that are most directly impacted by the plan and development, especially Latinx, homeless, and other underrepresented or underserved groups.

The key themes gathered from community feedback, which reflects the findings of this appendix, included: provide a range of housing opportunities affordable to Morgan Hill workforce; prevent homelessness and address the housing needs of people experiencing homelessness; promote extremely low-income housing; establish special needs housing for seniors, persons with disabilities, and veterans; conduct community education/outreach to inform residents about affordable housing and how to seek assistance; integrate affordable housing throughout the

City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-1-55 Appendix H-1: Housing Needs Assessment H1
community; ensure children who grew up in Morgan Hill have housing options so they can live in Morgan Hill as adults; preserve, maintain, and rehabilitate existing housing to ensure neighborhood livability and promote continued housing affordability; create an affordable housing overlay district; zone more land and/or change zoning regulations for multi-family to increase affordable housing; pass a commercial linkage fee ordinance; and pass a rent stabilization ordinance. These key themes, coupled with the findings of this appendix, were incorporated into goals, policies, and implementation programs/actions of the 2023-2031 City of Morgan Hill Housing Element.

Appendix H-2: Site Inventory H2
Page H-2-i City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Appendix H2
Site Inventory
City of Morgan Hill Housing Element 2023-2031
ATTACHMENT 4

Appendix H-2: Site Inventory
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-2-ii Table of Contents
City of Morgan Hill Housing Element
APPENDIX H-2 |Site Inventory................................................................................................................................ H-2-i

2.1 Introduction….............................................................................................................................. H-2-1

2.2 Regional Housing Needs Allocation......................................................................................H-2-1

2.3 Planned and Entitled Projects……………………...................................................................... H-2-2

2.4 Summary of Capacity/Potential to Accommodate the RHNA…............................................... H-2-6

2.5 Infrastructure Availability.…….................................................................................................... H-2-8 Figures
Figure H 2-1: Morgan Hill Residential Entitled & Proposed Projects.................................................H-2-7 Tables
Table H 2-1: City of Morgan Hill Regional Housing Needs Allocation, 2023-2031…...................... H-2-2 Table H 2-2: Pipeline Residential Projects..........................................................................................H-2-3 Table H 2-3: Summary of Expected Pipeline Residential Projects................................................... H-2-5 Table H 2-4: Total Pipeline Development Potential, By Income Category.......................................H-2-5 Table H 2-5: Summary of Residential Capacity/Potential Compared to 6th Cycle RHNA by Income, City of Morgan Hill, January 31, 2023 to January 31, 2031.......................... H-2-6

H2 Appendix H-2: Site Inventory
Page H-2-1 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 APPENDIX H-2 | Site Inventory

2.1 Introduction
California law (Government Code Sections 65583 (a)(3)) requires that the Housing Element contain an inventory of land suitable for residential development, that can be developed for housing within the planning period and nonvacant (i.e., underutilized) sites having potential for redevelopment. State law also requires an analysis of the relationship of zoning and public facilities and services to these sites. In addition, Assembly Bill 686, Statutes 2018, requires that a jurisdiction identify sites throughout the community, in a manner that is consistent with its duty to affirmatively further fair housing (AFFH) pursuant to Government Code Section 65583. In the context of AFFH, the site identification requirement involves not only an analysis of site capacity to accommodate the RHNA, but also an analysis and conclusion of whether the identified sites improve or exacerbate conditions for each of the fair housing areas as outlined in Appendix H5 Assessment of Fair Housing.

Pursuant to the California Department of Housing and Community Development (HCD) Housing Element Inventory Guidebook, projects that have been approved, permitted, or received a certificate of occupancy since the beginning of the Regional Housing Needs Allocation (RHNA) project period may be credited toward meeting the RHNA allocation based on the affordability and unit count of the development. In addition, Government Code Section 65583 identifies a city’s or county’s inventory of land suitable for residential development, or a “site”, as: (1) Vacant sites zoned for residential use; (2) Vacant sites zoned for nonresidential use that allows residential development; (3) Residentially zoned sites that are capable of being developed at a higher density; or (4) Sites zoned for nonresidential use that can be redeveloped for residential use. Therefore, the fair housing analysis requirement does not apply to residential units in the pipeline (i.e. pending, approved, or permitted development).

This appendix presents an inventory of sitesresidential projects within Morgan Hill city limits that are suitable for residential developmentexpected to be developed and occupied during the planning period of this Housing Element, January 31, 2023 to January 31, 2031. The analysis presented in this appendix chapter demonstrates there is an adequate supply of residential projects in the “Pipeline” to accommodate the City’s housing allocation of 1,037 units, including housing at all income levels. The analysis also demonstrates that a limited number of residential projects in the “Pipeline” allowing for higher density development are located within existing communities considered “low resource”. There are 1,183 acres of low resource area within the City boundary, which is approximately 14 percent of the City. Consequently, there are no areas within the City of Morgan Hill which are classified as “high resource”.

The appendix starts with a description of the City’s housing target for the 2023-2031 planning period, called the Regional Housing Needs Allocation (RHNA). It then describes the number of residential units in the “Pipeline”, consisting of both planned and entitled projects. The appendix then provides information on the availability of infrastructure to support development of housing.

2.2 Regional Housing Needs Allocation
RHNA is the California State-required process that seeks to ensure cities and counties are planning for enough housing to accommodate all economic segments of the community. The process is split into the following three steps:

1. Regional Determination: The California Department of Housing and Community Development (HCD) provides each region a Regional Determination of housing need, which

Appendix H-2: Site Inventory
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-2-2 includes a total number of units split into four income categories. The City of Morgan Hill is within the region covered by the Association of Bay Area Governments (ABAG). HCD provided ABAG a Regional Determination of 441,176 units for the 6 th Cycle RHNA (2023-
2031). This is the total number of units that the cities and counties in the ABAG region must collectively plan to accommodate.

2. RHNA Methodology: Councils of Governments (COG), including ABAG, are responsible for developing a RHNA Methodology for allocating the Regional Determination to each city and county in the COG’s region. This methodology must further specific state objectives, including but not limited to: promoting infill, equity, and environmental protection; ensuring jobs-housing balance; and affirmatively furthering fair housing.

3. Housing Element Updates: Each city and county must then adopt a housing element that demonstrates how the jurisdiction can accommodate its assigned RHNA through its zoning.

HCD reviews each jurisdiction’s housing element for compliance with state law.

The City of Morgan Hill’s share of the regional housing need was determined by a methodology prepared by ABAG as part of the Regional Housing Needs Plan, adopted in December 2021.

For the low- and very low-income allocations, the methodology used three adjustments: access to high opportunity areas, job proximity by automobile, and job proximity by transit. For the moderate and above moderate allocations, the methodology used two adjustments: access to high opportunity areas, and job proximity by automobile. Lastly, the methodology applied an equity adjustment that identified 49 jurisdictions that exhibited higher racial segregation and high median incomes than regional averages. As a result, Morgan Hill’s RHNA was reduced by 10 units due to the equity adjustment.

In accordance with ABAG’s Regional Housing Needs Plan, the City must plan to accommodate a total of 1,037 housing units between January 31, 2023, and January 31, 2031. This is equal to a yearly average of 130 housing units. Table H 2-1 below shows the City’s RHNA by income category. Of the 1,037 total units, the City must plan to accommodate 262 units for very lowincome households, 151 units for low-income households, 174 units for moderate-income households, and 450 units for above moderate-income households.

Table H 2-1 City of Morgan Hill Regional Housing Needs Allocation, 2023-2031 Income Category Units Percent of Total
Very Low-Income 262 25.3%
Low-Income 151 14.6%
Moderate-Income 174 16.8%
Above Moderate-Income 450 43.4%
TOTAL 1,037 100.0%
Source: Association of Bay Area Governments, Regional Housing Needs Plan, 2023-2031. Adopted December 2021.

State law also requires the City to identify the projected need for extremely low-income housing.

The City assumes that 50 percent of the very low-income housing need is equal to the extremely low-income housing need. As such, there is a projected need for 131 extremely low-income housing units.

2.3 Planned and Entitled Projects

2.3.1 Overview

H2 Appendix H-2: Site Inventory
Page H-2-3 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Morgan Hill has a significant pipeline of development projects that are seeking entitlements or are entitled and actively pursuing construction. Table H 2-2 summarizes the current inventory of residential and mixed-use projects with submitted or active entitlements. As of March 1, 2022, there were an estimated 1,823 housing units in the pipeline that are counted toward meeting the RHNA, which include single-family dwellings, deed-restricted affordable units, market rate condominiums and multi-unit development, and individual affordable housing developments.

These projects range in size from smaller infill projects with fewer than 100 units, to larger developments with hundreds of units.

There are 545 units in the pipeline that will provide affordable housing for lower-income households. The inventory includes several individual affordable housing developments in the pipeline, including a 249-unit affordable development at 18960 Monterey Road; a 66-unit affordable development at 17965 Monterey Road; a 73-unit affordable development at 15440 Monterey Road; and an 82-unit affordable development at 16685 Church Street.

Appendix H-2: Site Inventory
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-2-4

2.3.2 Summary of Pipeline Residential Development
In total, there are 1,823 units in planned and entitled projects that are counted toward meeting the RHNA. Based on affordability restrictions, the projects listed in Table H 2-2 are anticipated to provide 545 affordable lower-income units consisting of 158 extremely low-income units, 149 very low-income units, and 238 low-income units. In addition to the affordable lower-income units, there are 445 moderate-income units in the pipeline and 833 above moderate-income units.

Table H 2-2 Pipeline Residential Projects
Project Name Above
Mod.

Income
Units
Moderate
Income
Units
LowIncome
Units
Very LowIncome
Units
Extremely
Low-Income
Units
Total
Units
SR2020-0017 Monterey-Lucky
Shing Manzinita Park (APN
725-010-18)2
57 10 - - - 67
SR2018-0020 E. Dunne- Young
(Andalusia) (APNs 726-020-51
& 726-020-52)3
42 1 3 - - 46
SR2021-0003 Dakota-Dunne
(APN 726-090-24)2
3 3 - - - 6
SR2019-0003 Depot-Latala
(Hale Lumber) (APN 726-130-
49)3
49 - - - - 49
SR2019-0026 Monterey-City
Ventures (APN 726-250-06)3
86 15 - - - 101
SR2019-0015 Jarvis-MH
Apartments (Braddock &
Logan) (APN 726-250-95)3
- 311 - 78 - 389
SR2020-0027 Monterey-Minor
(Jemcor) (APN 726-360-59)3
- 3 196 25 25 249
SR2021-0014 Monterey-Kerley
(DeNova Homes) (APNs 726-
420-01 & 726-420-02)
1 79 14 - - - 93
SR2020-0010 Half-Dividend
(Crosswinds) (APNs 728-300-
01 through 728-300-04)1
229 40 - - - 269
SR2021-0011 Cochrane-Toll
Brothers (APNs 728-340-32 &
728-340-33)3
114 25 - - - 139
SR2018-0009 Tilton-Lee
Schmidt (APN 764-090-04)2
1 1 - - - 2
SR2021-0005 Monterey-First
Community Housing
(Magnolias) (APN 764-120-06)2
- 1 14 9 42 66
SD2021-0002 Campoli-Squires
(APN 764-240-05)2
1 - - - - 1

H2 Appendix H-2: Site Inventory
Page H-2-5 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Table H 2-2 Pipeline Residential Projects (cont.)
Project Name Above
Mod.

Income
Units
Moderate
Income
Units
LowIncome
Units
Very LowIncome
Units
Extremely
Low-Income
Units
Total
Units
SD2020-0001 Sanchez-Brewer
(APN 764-240-76)2
1 - - - - 1
AAE2021-0002 Old MontereyAppletree (Kelly Vo) (APN 764- 240-61)2
5 2 - - - 7
SR2020-0028 Spring-Ginacola
(APN 767-110-30)3
19 3 - - - 22
SR2022-0001 Edes-Alcini
(TTLC Morgan Hill) (APN 767-
180-46)1
18 3 - - - 21
SR2018-0025 Llagas-Strolata
Properties (Silvas) (APN 773-
320-13)2
4 - - - - 4
SR2020-0023 WatsonvilleHordness (Crossings at
Monterey/Royal Oaks Village)
(APN 779-040-75)3
- 1 - 24 48 73
SR2020-0005 MontereyMorgan Hill Senior Housing
(APN 817-020-67)2
- 1 25 13 43 82
SR2020-0014 Tennant-Osito
Holdings (APN 817-040-59)2
14 2 - - - 16
SR2022-0002 (Lillian
Commons/Rosewood) (APN
817-090-41)1
111 9 - - - 120
Subtotal 833 445 238 149 158 1,823
Source: City of Morgan Hill Development Services Department, May 1, 2022.

Notes: 1 Pending project based on the affordability and unit count within the proposed project expected to be built within the 2023-2031 planning period.
2 Entitled project based on the affordability and unit count of the approved development expected to be built within the 2023-2031 planning period.
3 Affordability and unit count of the approved development based on Building Permits submitted to City of Morgan Hill and expected to be built within the 2023-2031 planning period.

The City of Morgan Hill received Building Permit applications for several of the projects identified in Table H 2-2 totaling 1,068 units. These projects include: 1. SR2018-0020 E. Dunne-Young (Andalusia) (APNs 726-020-51 & 726-020-52); 2. SR2019-0003 Depot-Latala (Hale Lumber) (APN 726-130-49); 3. SR2019-0026 Monterey-City Ventures (APN 726-250-06); 4. SR2019-0015 Jarvis-MH Apartments (Braddock & Logan) (APN 726-250-95); 5. SR2020-0027 Monterey-Minor (Jemcor) (APN 726-360-59); 6. SR2021-0011 Cochrane-Toll Brothers (APNs 728-340-32 & 728- 340-33); 7. SR2020-0028 Spring-Ginacola (APN 767-110-30); and 8) SR2020-0023 WatsonvilleHordness (Crossings at Monterey/Royal Oaks Village) (APN 779-040-75).

To estimate the number of proposed pipeline development projects that are expected to reach completion during the 6th cycle, the City examined completion rates of pipeline development projects during the 5th cycle (2015 through 2022). For discretionary entitlements, completion rates were found by drawing upon all planning entitlement applications and approvals and finding the percentage of those projects which have obtained a building permit and therefore reached completion. This analysis found that entitlement applications had a completion rate of 88.7%, while approved entitlements had a completion rate of 91.7%. For building permit applications and

Appendix H-2: Site Inventory
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-2-6 approved permits, completion rates were established based on evaluating all residential building permits issued for new residential units, as well as all issued building permits that have been finaled/received a certificate of occupancy, from January 1, 2015, through December 31, 2020.

The report found that building permits have a 99.2% completion rate for issued permits. Those completion rates were then applied to the current pipeline to determine the number that would be expected to be completed within the next eight years.

Table H 2-3 Summary of Expected Pipeline Residential Projects Project Type by Income
Category
Proposed Units
Added
% Units Expected to be
Completed
Units Expected to be
Completed
Active Planning Entitlements
Lower Income - - -
Moderate Income 66 88.7% 59
Above Moderate Income 437 88.7% 388
Total Units 503 88.7% 447
Approved Planning Entitlements with No Building Permit
Lower Income 146 91.7% 134
Moderate Income 20 91.7% 18
Above Moderate Income 86 91.7% 79
Total Units 252 91.7% 231
Building Permit Applications
Lower Income 399 99.2% 396
Moderate Income 359 99.2% 356
Above Moderate Income 310 99.2% 308
Total Units 1,068 99.2% 1,060
Table H 2-4 shows the expected breakdown of this pipeline development potential, by expected income category. The income categories for individual development projects are based on the actual proposed affordability level requested or approved as part of the entitlement request.

Table H 2-4 Total Pipeline Development Potential, by Income Category Above Mod.

Income
Units
Moderate
Income
Units
LowIncome
Units
Very LowIncome
Units
Extremely
Low-Income
Units
Total
Development
Potential
Active Planning
Entitlements
388 59 - - - 447
Approved Planning
Entitlements with No
Building Permit
79 18 36 20 78 231
Building Permit
Applications
308 356 197 126 73 1,060
Total Pipeline
Development
Projects
775 433 233 146 151 1,738

H2 Appendix H-2: Site Inventory
Page H-2-7 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022

2.4 Summary of Capacity/Potential to Accommodate the RHNA State law requires each jurisdiction to demonstrate that sufficient land is zoned to provide housing capacity that is adequate to meet the RHNA for each income level. Table H 2-5 below provides a summary of total residential development capacity and potential included in the site inventory compared to the City’s 6
th Cycle RHNA. As shown in the table, the City has a total residential development pipeline capacity for 1,823 units. After incorporating the success criteria percentages identified in Table H 2-3 above, the City has a total residential development pipeline potential of 1,738 units, which is sufficient capacity to accommodate the RHNA of 1,037 units.

The site inventory includes capacity for 413 lower-income units (i.e., extremely low-, very low-, and low-income units), 174 moderate income units, and 450 above moderate-income units.

Table H 2-5 Summary of Residential Capacity/Potential Compared to 6th Cycle RHNA by Income, City of Morgan Hill, January 31, 2023 to January 31, 2031
Extremely LowIncome UnitsVery LowIncome
Units
LowIncome
Units
ModerateIncome UnitsAbove ModerateIncome Units Total
Units
RHNA 131 131 151 174 450 1,037
Pipeline
Residential
Capacity
158 149 238 445 833 1,823
Pipeline
Residential
Potential
151 146 233 433 775 1,738
Surplus(+)/
Deficit(-)
+20 +15 +82 +259 +325 +701

Appendix H-2: Site Inventory
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-2-8 Figure H 2-1: Morgan Hill Residential Entitled & Proposed Projects

Appendix H-2: Site Inventory
Page H-2-9 City of Morgan Hill
Housing Element 2023-2031 | Adopted XXXXX XX, 2022

2.5 Infrastructure Availability
This section addresses the availability of infrastructure to accommodate planned residential growth throughout the Housing Element planning period (2023-2031). The Housing Element includes programs to help support infrastructure improvements in areas targeted for development to ensure that there is enough water, sewer, and dry utility capacity to meet housing units projected in the RHNA.

As development occurs throughout the city, upgrades to water and wastewater conveyance facilities may be required. The precise location and connection would need to be determined at the time development is proposed. Any future line size modifications or connections would be designed in accordance with applicable provisions of the Morgan Hill Municipal Code and to the satisfaction of the City Engineer. Increased development density has the potential to impact the capacities of local utilities infrastructure, which may require the expansion or construction of new facilities. However, all new development is subject to its own CEQA process where projectspecific impacts associated with water supply and wastewater would be analyzed.

The availability of adequate public facilities and services in relation to the pending pipeline residential projects identified in Table H 2-2 has been evaluated, and the City has determined there are no public facilities or service constraints that would impede development of housing units to meet Morgan Hill’s allocation. Existing water delivery and wastewater collection infrastructure is available to all properties located in the City’s Urban Service Area, which includes all the pipeline residential projects identified in Table H 2-2, and the City has adequate water and wastewater capacity to accommodate the RHNA of 1,037 units. All of the pipeline residential projects are adjacent to existing public roadways and are serviceable by the City’s police and fire departments, as well as private companies that provide telephone, cable, gas, and electric service.

Senate Bill (SB) 1087, effective January 2006, requires water and sewer providers to grant priority for service allocations to proposed developments that include units affordable to lower income households. Pursuant to these statutes, upon adoption of its Housing Element, the City of Morgan Hill will immediately deliver the Housing Element to local water and sewer providers, along with a summary of its RHNA.

Appendix H-3: Opportunities for Energy Conservation H3
Page H-3-i City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Appendix H3
Opportunities for Energy
Conservation City of Morgan Hill Housing Element 2023-2031

Appendix H-3: Opportunities for Energy Conservation
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-3-ii Table of Contents
City of Morgan Hill Housing Element
APPENDIX H-3 |Opportunities for Energy Conservation..................................................................................H-3-i

3.1 Introduction….............................................................................................................................. H-3-1

3.2 Framework for Conserving Energy Resources......................................................................H-3-2

3.3 Energy Efficiency and Conservation Programs…..................................................................... H-3-4

Appendix H-3: Opportunities for Energy Conservation H3
Page H-3-1 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 APPENDIX H-3 | Opportunities for Energy
Conservation

3.1 Introduction
California law (Government Code Sections 65583(a)(8)) requires Housing Elements to contain an analysis of opportunities for residential energy conservation. According to the California Department of Housing and Community Development (HCD), the energy conservation section of a Housing Element must inventory and analyze the opportunities to encourage energy saving features, energy saving materials, and energy efficient systems and design for residential development.

The term “residential energy” refers to the total energy used in residential buildings, including heating, cooling, and “plug load” from appliances, lights, and electrical devices. “Energy conservation” refers to reducing energy use through using less of an energy service, such as lowering the thermostat in the winter or raising the thermostat in the summer.

Housing and energy efficient, resilient, and healthy buildings are key components for achieving community vitality and serving the needs of residents. Energy efficient buildings increase occupant health by reducing infiltration of moisture, pests, or air pollution. They increase comfort and decrease utility bills. In the case of existing buildings, this can help prevent residents from having utilities turned off due to inability to pay or resorting to unsafe practices for heating a home, such as relying on gas ovens. Energy efficient housing is also more resilient to climate change, preventing infiltration of wildfire smoke and keeping homes thermally comfortable during extreme heat events.

Residential energy efficiency can be improved by sealing the building envelope and HVAC ducts; insulating the attic or ceiling, walls, and floor; installing efficient heating and cooling systems; and energy efficient lighting and appliances. Passive heating, cooling, and lighting can also be employed when designing new buildings. Housing type also makes a difference in building energy consumption, with the average multi-unit housing unit using half the energy of an average singleunit detached home.1 Multi-unit homes tend to be more energy efficient because they tend to be smaller than single-unit detached homes and the shared walls amongst units have a selfinsulating effect that create further efficiencies.

In addition to reducing greenhouse gas (GHG) emissions and conserving limited energy resources, reducing residential energy consumption also has economic benefits. Energy conservation measures can result in lower monthly housing costs and contribute to greater longterm housing affordability.

The City of Morgan Hill has a central goal of reducing GHG emissions and reaching carbon neutrality by 2045 and is committed to reaching this goal through a number of goals, action items, and planning efforts identified in the Morgan Hill 2021 Climate Action Plan. Energy efficiency and conservation measures are key components of these efforts. Energy conservation can help achieve the City’s goal for carbon neutrality by both reducing use of natural gas, which will reduce emissions, and reducing use of electricity, which will reduce demand on the grid and increase 1 Location Efficiency and Housing Type: Boiling it Down to BTUs, U.S. EPA and Jonathan Rose Companies. 2011

Appendix H-3: Opportunities for Energy Conservation
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-3-2 reliability. In addition, energy conservation reduces residents’ energy costs and makes their homes more comfortable, healthy, and resilient. Using electricity instead of natural gas to fuel homes can also help to reduce climate impacts and improve health. Housing needs to be constructed expeditiously in order to address the housing crisis; however, if it is not built to also address the climate crisis, it will be challenging for jurisdictions and the State to meet aggressive climate goals. This Energy Conservation appendix describes the ways the City is currently addressing the conservation of energy resources as part of larger climate action and adaptation processes.

3.2 Framework for Conserving Energy Resources

3.2.1 2035 General Plan Update
The City of Morgan Hill adopted the 2035 General Plan on July 27, 2016, which includes a set of policies and actions within the Natural Resources and Environment Element, with an overall goal to conserve energy resources, that guides future development in an effort to reduce the City’s greenhouse gas (GHG) emissions. The following is a summary of residential conservation of energy resources policies and actions from the City’s 2035 General Plan:

Policy NRE-16.1 Energy Standards for New Development. New development, including public buildings, should be designed to exceed State standards for the use of energy.

Policy NRE-16.2 Energy Conservation. Promote energy conservation techniques and energy efficiency in building design, orientation, and construction.

Policy NRE-16.3 Energy Use Data and Analysis. Provide information to increase building owner, tenant, and operator knowledge about how, when, and where building energy is used.

Policy NRE-16.4 Retrofit Financing. Promote existing and support development of new private financing options for building retrofits and renewable energy development.

Policy NRE-16.5 Energy Efficiency. Encourage development project designs that protect and improve air quality and minimize direct and indirect air pollutant emissions by including components that promote energy efficiency.

Policy NRE-16.6 Landscaping for Energy Conservation. Encourage landscaping plans for new development to address the planting of trees and shrubs that will provide shade to reduce the need for cooling systems and allow for winter daylighting.

Policy NRE-16.7 Renewable Energy. Encourage new and existing development to incorporate renewable energy generating features, like solar panels and solar hot water heaters.

Policy NRE-16.9 Subdivision Design. In compliance with Section 66473.1 of the State Subdivision Map Act, promote subdivision design that

Appendix H-3: Opportunities for Energy Conservation H3
Page H-3-3 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 provides for passive solar heating and natural cooling through the Development Review Committee subdivision review procedures.

Action NRE-16.A Community Choice Aggregation. Partner with other Santa Clara County jurisdictions to determine the feasibility for development of a regional CCA program, including identification of the geographic scope, potential costs to participating jurisdictions and residents, and potential liabilities.

Action NRE-16.C Local Energy Ordinances. Develop local ordinances that promote energy conservation and efficiency. Examples of such ordinances include: energy audits, solar access, solar swimming pool heating, insulation and solar retrofit, and solar water heating.

3.2.2 Morgan Hill 2021 Climate Action Plan
The City of Morgan Hill is invested in preparing a resilient future for our community and the environment overall. The Morgan Hill 2021 Climate Action Plan (CAP) was developed out of the urgency that the City Council saw to address climate change and focus efforts toward the initiatives that will make the most significant positive impacts in the most timely manner. Thus, it was determined that a limited CAP be developed with a focus on reducing greenhouse gas emissions in the transportation and building sectors. The strategies in the CAP focus on areas of decarbonizing buildings and reducing emissions from on-road and off-road vehicles by increasing electric vehicles and electric equipment to reach net zero emissions.

The main goal of the CAP is to reduce Morgan Hill’s net CO2 emissions in the building and transportation sectors 35% below the 2020 baseline level by 2030 and 100% below the 2020 baseline level by 2045.

The residential sub-goals of the CAP include the following:

1. Expand electric vehicle charging station access for existing multi-family complexes by 30%, (i.e., the number of chargers in multi-family complexes will be equivalent to at least 30% of the number of units in multi-family complexes) by the year 2025 and 100% by 2035.

2. Require newly-constructed residential buildings to have the necessary capacity to facilitate electric vehicle charging.

3. Transition 95% of existing buildings in Morgan Hill to be all-electric by 2045, with additional targets every five years consisting of:
• 1% of existing buildings by 2025
• 10% of existing buildings by 2030
• 35% of existing buildings by 2035
• 70% of existing buildings by 2040

3.2.3 Energy Efficiency Building Requirements
Title 24, Part 6, of the California Code of Regulations (Building Energy Efficiency Standards for Residential and Nonresidential Buildings) contains California’s building standards for energy efficiency. These regulations respond to California's energy crisis and need to reduce energy bills, increase energy delivery system reliability, and contribute to an improved economic condition for

Appendix H-3: Opportunities for Energy Conservation
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-3-4 the state. Each city and county must enforce these standards as part of its review of building plans and issuance of building permits. The standards, prepared by the California Energy Commission, were established in 1978 in response to a State legislative mandate to reduce California’s energy consumption. The standards are updated periodically to consider and incorporate new energy efficiency technologies and methods.

The 2019 California Building Code (including Title 24, Part 6, described above) went into effect in the City on January 1, 2020, see Chapter 15.08 (Building Code) of the City’s Municipal Code. All new construction must comply with the standards in effect on the date a building-permit application is submitted.

The California Green Building Standards Code, within Title 24, Part 11, of the California Code of Regulations, includes green building regulations, also referred to as the CALGreen Code, to encourage more sustainable and environmentally friendly building practices, require low pollution emitting substances that can cause harm to the environment, conserve natural resources, and promote the use of energy efficient materials and equipment. There are mandatory measures, which apply statewide, and voluntary measures, which can be adopted locally. Voluntary measures are organized into 2 tiers with their own respective prerequisites and elective measures: Tier 1 prerequisites set a higher baseline than CALGreen mandatory measures; while Tier 2 prerequisites include all of Tier 1 prerequisites plus some enhanced or additional measures.

Prohibition of Natural Gas Infrastructure in New Buildings Ordinance Following the passage of Senate Bill (SB) 100, which mandates that California utilities provide carbon-neutral electricity by 2045, local governments began passing ordinances that are variations on the theme of prohibiting fossil fuel energy sources in new construction.

Decarbonization through electrification is one of the key strategies for reducing GHG emissions.

In order for Morgan Hill to reach carbon neutrality, the majority of the buildings in the City will need to be carbon neutral. All-electric buildings have been shown to be cost-effective for new construction and the electrification of new residential construction is expected to reduce the overall cost to build new housing. Avoiding the cost of gas infrastructure provides significant savings (approximately $7,000 per unit), and most electric appliances have similar or lower operating costs compared to natural gas appliances.

In November 2019, the City Council adopted Ordinance 2306 establishing Chapter 15.63 (Prohibition of Natural Gas Infrastructure in New Buildings) requiring all new buildings (residential, commercial, and industrial), after March 1, 2020, to be all-electric. Electrification allows buildings to use 100 percent carbon neutral electricity.

3.3 Energy Efficiency and Conservation Programs
This Section briefly describes some of the potential ways to achieve energy savings through the regulations and programs of the City, the State, and local utility providers.

3.3.1 Rehabilitation Program, Minor Home Repair
Morgan Hill has established a minor home repair rehabilitation program that was operational during the entire previous Housing Element cycle. This fund was initially established by a onetime developer contribution and was intended to be used for senior housing-related support services. The Housing Division in the past contracted with the non-profit, Rebuilding Together of

Appendix H-3: Opportunities for Energy Conservation H3
Page H-3-5 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Silicon Valley (Rebuilding Together) to administer and manage a rehabilitation program funded by the Senior Housing Trust. Rebuilding Together has been providing the South County with home repair service for thirty years and provides a “lifeline” Home Repair Rehab Program for fixed income seniors in Morgan Hill, as well as lower income tenants. The original fund has been exhausted and this program is now funded by the Community Development Block Grant for which Morgan Hill participates through a Joint Powers Agreement with the County of Santa Clara.

Through this Rehabilitation Program, the City of Morgan Hill rehabilitated 169 units from 2015 through 2021, administered by Rebuilding Together.

3.3.2 Local Utility Programs
Pacific Gas and Electric
PG&E offers the following financial and energy-related assistance programs for its low-income customers:
 Energy Savings Assistance Program. PG&E’s Energy Savings Assistance program offers free weatherization measures and energy-efficient appliances to qualified lowincome households. PG&E determines qualified households through the same sliding income scale used for CARE. The program includes measures such as attic insulation, weather stripping, caulking, and minor home repairs. Some customers qualify for replacement of appliances including refrigerators, air conditioners, and evaporative coolers.
 Energy Efficiency for Multifamily Properties. The Energy Efficiency for Multifamily Properties program is available to owners and managers of existing multi-family residential dwellings containing five or more units. The program encourages energy efficiency by providing rebates for the installation of certain energy-saving products.  California Alternate Rates for Energy (CARE). PG&E offers this rate reduction program for low-income households. PG&E determines qualified households by a sliding income scale based on the number of household members. The CARE program provides a discount of 20 percent or more on monthly energy bills. Approximately 16.8% of Morgan Hill customers/households are enrolled in the CARE program.  REACH (Relief for Energy Assistance through Community Help). The REACH program is sponsored by PG&E and administered through a non-profit organization.

PG&E customers can enroll to give monthly donations to the REACH program. Qualified low-income customers who have experienced uncontrollable or unforeseen hardships, that prohibit them from paying their utility bills may receive an energy credit. Eligibility is determined by a sliding income scale based on the number of household members. To qualify for the program, the applicant’s income cannot exceed 200 percent of the Federal poverty guidelines.
 Medical Baseline Allowance. The Medical Baseline Allowance program is available to households with certain disabilities or medical needs. The program allows customers to get additional quantities of energy at the lowest or baseline price for residential customers.

Appendix H-3: Opportunities for Energy Conservation
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-3-6 Santa Clara Valley Water District
The Santa Clara Valley Water District (Valley Water) offers the following financial and energyrelated assistance programs for residents:
 Landscape Rebate Program. This program is designed to encourage residents to convert approved high-water use landscape, such as lawns and pools, to low-water use landscape, as well as to retrofit existing irrigation equipment with approved high-efficiency irrigation equipment. Valley Water’s Landscape Rebate Program offers four rebate categories that can help save water:
• Landscape Conversion Rebate
• In-Line Drip Irrigation Conversion Rebate
• Irrigation Equipment Upgrade Rebate
• Rainwater Capture Rebate
 Graywater Rebate. Through Valley Water’s Graywater Rebate Program, rebates are offered to residents who install a Graywater Laundry-to-Landscape System.  Submeter & Private Well Rebates. Valley Water offers rebates for installing qualifying submeters and water meters.

3.3.3 Federal and State Energy Assistance Programs
California Department of Community Services and Development (CSD) In addition to the local programs described above, the California Department of Community Services and Development (CSD) administers the Federally funded Low-Income Home Energy Assistance Program (LIHEAP). This program provides two types of assistance: Home Energy Assistance and Energy Crisis Intervention. The first type of assistance is a direct payment to utility bills for qualified low-income households. The second type of assistance is available to lowincome households that are in a crisis. CSD also offers free weatherization assistance, such as attic insulation, caulking, water heater blankets, and heating and cooling system repairs to lowincome households.

The California Arrearage Payment Program (CAPP) is a state program to help pay customers’ eligible past due energy bills that increased during the COVID-19 pandemic. CAPP reduces qualified customers’ unpaid energy bills by directly applying a bill credit to their energy bill.

Customers do not need to apply for CAPP and assistance will be disbursed by state utility companies electing to participate in CAPP. CAPP bill credits are courtesy of the State of California and are targeted to help utility customers that fell behind on their energy bills because of the economic impacts of the COVID-19 pandemic. Customers may qualify for a CAPP credit if they had an unpaid energy utility bill over 60 days past due incurred between March 4, 2020 and June 15, 2021.

The new federal Low Income Household Water Assistance Program (LIHWAP) will provide financial assistance to low-income Californians to help manage their residential water utility costs.

Established by Congress in December 2020, this federally funded program will help low-income households pay down their outstanding water bills. California has been allocated $116 million in one-time funding to provide LIHWAP assistance. The Department of Community Services and Development (CSD) has been designated the administering agency for LIHWAP in California.

CSD, in consultation with stakeholders, is in the process of defining the scope of the LIHWAP

Appendix H-3: Opportunities for Energy Conservation H3
Page H-3-7 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 program and service delivery through the development of a LIHWAP State Plan. The U.S.

Department of Health and Human Services, Office of Community Services, has provided guidance that LIHWAP should be modeled on existing processes, procedures, policies, and systems in place to provide assistance, such as the CSD administered Low-Income Home Energy Assistance Program (LIHEAP).

Solar on Multifamily Affordable Housing (SOMAH)
The Solar on Multifamily Affordable Housing (SOMAH) Program provides financial incentives for installing photovoltaic (PV) energy systems on multi-family affordable housing in California. The program will deliver clean power and credits on energy bills to hundreds of thousands of the state’s affordable housing residents. SOMAH’s unique, community-based approach ensures long-term, direct financial benefits for low-income households, helps catalyze the market for solar on multi-family housing and creates jobs. The SOMAH Program is overseen by the California Public Utilities Commission.

Self-Generation Incentive Program (SGIP)
The Self-Generation Incentive Program (SGIP) is a California Public Utilities Commission (CPUC) program that offers rebates for installing energy storage technology in a home. These storage technologies include battery storage systems that can function in the event of a power outage.

Any PG&E customer can apply for this program to receive a rebate that is 15-20% of the average battery cost. Medical Baseline customers and customers who reside in affordable housing could receive a rebate that is 85-100% of the average battery cost.

Appendix H-4: Constraints Analysis H4
Page H-4-i City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Appendix H4
Constraints Analysis City of Morgan Hill Housing Element 2023-2031

Appendix H-4: Constraints Analysis
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-4-ii Table of Contents
City of Morgan Hill Housing Element
APPENDIX H-4 | Constraints Analysis...................................................................................................................H-4-i

4.1 Introduction….............................................................................................................................. H-4-1

4.2 Nongovernmental Constraints…………………......................................................................H-4-1

4.3 Governmental Constraints…...................................................................................................... H-4-10 Figures
Figure H 4-1: Total Development Costs: Single-Family.................................................................... H-4-5 Figure H 4-2: Total Development Costs: Multi-Family.......................................................................H-4-6 Figure H 4-3: Earthquake Faults........................................................................................................H-4-8 Figure H 4-4: Fire Hazard Severity Zones.........................................................................................H-4-9 Figure H 4-5: FEMA Flood Zones......................................................................................................H-4-10 Figure H 4-6: City of Morgan Hill Zoning Map................................................................................... H-4-12 Figure H 4-7: Draft Monterey Corridor Form-Based Code Regulating Plan......................................H-4-21 Tables
Table H 4-1: Status of Home Purchase, Refinance, and Home Improvement Loans 2020............H-4-2 Table H 4-2: Base Zoning Districts.................................................................................................... H-4-13 Table H 4-3: Residential Estate (RE) District Development Standards............................................H-4-15 Table H 4-4: Residential Detached Low and Medium Density District Development Standards....H-4-15 Table H 4-5: Residential Detached High Density District Development Standards.........................H-4-16 Table H 4-6: Residential Attached Low Density District Development Standards...........................H-4-17 Table H 4-7: Residential Attached Medium and High Density District Development Standards.... H-4-18 Table H 4-8: Mixed Use Zoning District Development Standards.....................................................H-4-18 Table H 4-9: Total Fees per Unit (By Jurisdiction)............................................................................. H-4-27 Table H 4-10: Permit Processing Times, in Months (By Jurisdiction).................................................H-4-28 Table H 4-11: Permitted Residential Land Uses by Zoning District.................................................... H-4-30

Appendix H-4: Constraints Analysis H4
Page H-4-1 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 APPENDIX H-4 | Constraints Analysis

4.1 Introduction
The purpose of this section, per Government Code Section 65583(a)(5-6), is to identify nongovernmental and governmental factors (constraints) that impact the feasibility, costs, and timelines of housing projects, which in turn affect the City’s ability to meet the housing needs of all its residents and to affirmatively further fair housing goals. Constraints affect a housing development’s location selection, density, design, and permitting process which impact whether housing can be developed, maintained, or improved. Examples of such constraints are land and construction costs, access to credit, permit fees, development standards, and compliance with Federal and State laws intended to facilitate housing for lower-income and special needs households. A thorough understanding of the constraints to development can help to create appropriate policy responses to mitigate constraints and make it easier and more affordable to develop housing.

4.2 Nongovernmental Constraints
State law (California Government Code, Section 65583[a][6]) requires Housing Elements to contain an analysis of nongovernmental constraints to the maintenance, improvement, or development of housing for all income levels, including the availability of financing, the price of land, and the cost of construction. Potential nongovernmental constraints are largely determined by market conditions over which local jurisdictions have little control. However, local governments can influence market conditions and their associated costs, even if only indirectly. Governmental interventions that affect nongovernmental constraints will be explored in more detail in Section

5.3. 4.2.1 Availability of Financing
The availability of financing is a critical factor that can influence the cost and supply of housing.

There are generally two types of financing used in the housing market: (1) capital used for initial site preparation and construction; and (2) capital used to finance the purchase of units by homeowners and investors. Interest rates substantially impact home construction, purchase, and improvement costs. A small fluctuation in rates can make a dramatic difference in the annual income needed to qualify for a loan. In general, financing for new residential development in the City is available at reasonable rates. While interest rates have been historically low in recent years, interest rates have increased within the past year, leading to credit tightening. The availability of financing in a community depends on a number of factors, including the type of lending institutions active in the community, lending practices, rates and fees charged, laws and regulations governing financial institutions, and equal access to those institutions. Through analysis of Home Mortgage Disclosure Act (HMDA) data on the disposition of residential loan applications, an assessment can be made of the availability of residential financing within a community.

Table H 4-1 summarizes HMDA data for both the City of Morgan Hill and Santa Clara County, providing information on the approval status of all home purchase, refinance, and home improvement loan applications during 2020.
 Of the total 1,045 completed applications for home purchase loans in Morgan Hill, 95

Appendix H-4: Constraints Analysis
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-4-2 percent were approved and five percent were denied, above the 90 percent approval rate County-wide. In 2018, the approval rate for home purchase loans in Morgan Hill was 88 percent, indicating access to mortgage financing has improved in the City. Review of loan denials in 2020 by Morgan Hill’s nine census tracts indicates three tracts (5123.05, 5123.08, 5123.14) with loan denial rates significantly above the five percent citywide average.
 The volume of applications for refinance loans in Morgan Hill was nearly three times that of home purchase loans due to historically low interest rates in 2020, with 89 percent of the total 3,432 applications receiving approval and 11 percent denied, similar to the regional average.
 The number of applications for home improvement loans in Morgan Hill was very limited at just 99, with 66 percent of applications receiving approval and 34 percent being denied, slightly better than the 38 percent denial rate County-wide. Home improvement loans typically have higher denial rates because homeowners may already have high debt-toincome ratios on their home mortgage or refinance loans.

4.2.2 Development Costs
The cost to develop housing, whether single-unit or multi-unit, includes the cost of land, construction, infrastructure, and “soft costs,” which refers to engineering and architectural fees, insurance, financing, administrative costs, and marketing costs.

Century Urban, LLC (Century | Urban) has performed research on the development costs of certain residential prototypes (2,600 square foot single-family dwelling, 5,000 square foot singlefamily dwelling, 10-unit multi-family building, and a 100-unit multi-family building) in Santa Clara County, including the City of Morgan Hill. The research findings are based on Century | Urban’s recent work on other assignments as well as on third-party data sources.1 1 Century Urban, LLC; April 2022. San Mateo and Santa Clara Counties Development Cost & San Mateo County Unit Mix Research.

Table H 4-1 Status of Home Purchase, Refinance, and Home Improvement Loans 2020 Loan Type Morgan Hill
Completed
Loan
Applications
Loans Approved Loans Denied
Morgan Hill Santa Clara
County
Morgan Hill Santa Clara
County
Conventional Home Purchase Loans
# of Applications 1,100 1,045 14,744 55 1,596
% Approval/Denial - 95% 90% 5% 10%
Refinancing Loans
# of Applications 3,432 3,041 65,758 391 7,658
% Approval/Denial - 89% 90% 11% 10%
Home Improvement Loans
# of Applications 151 99 2,724 52 1,639
% Approval/Denial - 66% 62% 34% 38%

Appendix H-4: Constraints Analysis H4
Page H-4-3 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Land Costs
The availability and price of land are potential constraints to the development of housing for all income levels. The scarcity of vacant land in the Silicon Valley, including the City of Morgan Hill, results in land cost being very expensive, especially in denser and more desirable areas.

Compared with other residential development cost components, land cost is the most prone to variations in price by location, school district, nearby amenities, and zoning.

To generate the single-family land values utilized in the development cost estimates, Century | Urban collected sales data for land lots totaling one acre or less which transacted over the past three years. The data does not include properties with existing homes or infrastructure that were redeveloped as new single-family homes. 11 data points were collected for the City of Morgan Hill. According to the Century | Urban report, land sales costs for single-family home land sites in Morgan Hill range from a low of $1 to a maximum of $495 per square foot; with the median rate at $15 per square foot and the average at $79 per square foot.

Century | Urban collected available multi-family land sales data from 2013 to the present in Santa Clara County. Of the 40 data points collected for Santa Clara County, one was located in Morgan Hill with a land cost of $86,000 per unit; whereas the county land cost per unit average is $60,000.

Hard Costs
The cost of labor and material, referred to as hard construction costs, represent the largest component of housing development costs. The greatest determinant of construction costs is the type of building. Single-story, wood-framed structures are the least costly to build, whereas multistory steel-reinforced, poured-in-place concrete structures are the most expensive.

According to a report released in March 2020 on multi-unit construction costs in California from the Terner Center, hard construction costs make up more than 60 percent of total development costs. The Terner Center study found that on average, construction costs were about $222 per square foot in 2018 compared to $177 in 2008-2009, representing a 25 percent increase. Costs have continued to increase since 2018. Several factors have caused the increased cost of materials, including global trade patterns and federal policy decisions, such as tariffs, as well as state and local regulations, such as building codes. The COVID-19 pandemic has also influenced the cost and availability of construction materials. Supply chain disruptions have resulted in project delays and increased costs due to a shortage of construction materials and equipment.

Labor costs have also increased in recent years, as the labor pool has not kept pace with the increase in demand. Since the recession, California has seen a severe tightening in the construction labor market, especially for workers trained in specific construction trades. The lack of an available labor force drives up the cost of labor and leads to project delays as workers are either unavailable or lost to more profitable projects.2 However, in the more recent, and focused, Century | Urban report, the hard costs for a 2,600 square foot single-family dwelling were found to be $420 per square foot in San Mateo and Santa Clara Counties; and the hard costs for a 5,000 square foot single-family dwelling were found to be $525 per square foot. Whereas the hard costs for a 10-unit multi-family building were found to be $522 per square foot; and the hard costs for a 100-unit multi-family building were found to be 2 Forscher,T; Kneebone, E.; Raetz, H.; and Reid, C. March 2020. The Hard Costs of Construction: Recent Trends in Labor and Material Costs for Apartment Buildings in California. Terner Center for Housing Innovation, UC Berkeley.

Appendix H-4: Constraints Analysis
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-4-4 $517 per square foot according to the Century | Urban report.

Soft Costs
Other costs, often called “soft costs,” include engineering and architectural fees, insurance, financing, administrative costs, and marketing costs. According to the Century | Urban report, soft costs are generally assumed to be around 30% of hard costs, with single-unit development prototypes studied ranging from about $133 to $147 per square foot, and the soft costs for the multi-unit development projects ranging from $159 to $165 per square foot.

Total Development Costs
Figures H 4-1 and H 4-2 summarizes total costs per site square footage, including construction and soft cost estimates for the four prototypes complied by Century | Urban. Based on the cost estimates for the residential prototypes shown in Figures H 4-1 and H 4-2, the cost to construct a single-unit home in Santa Clara County ranges from approximately $936 to $1,060 per square foot. The cost to construct an apartment project in Santa Clara County range from $748 to $755 per square foot. These estimates account for the cost of land.

Appendix H-4: Constraints Analysis H4
Page H-4-5 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Figure H 4-1: Total Development Costs: Single-Family
Source: Century Urban, LLC; April 2022. San Mateo and Santa Clara Counties Development Cost & San Mateo County Unit Mix Research.

Appendix H-4: Constraints Analysis
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-4-6 Figure H 4-2: Total Development Costs: Multi-Family
Source: Century Urban, LLC; April 2022. San Mateo and Santa Clara Counties Development Cost & San Mateo County Unit Mix Research.

4.2.3 Requests for Housing Developments at Reduced Densities New State Housing Element law now requires the non-governmental constraints analysis to evaluate developer requests to build at densities below the density identified in the Housing

Appendix H-4: Constraints Analysis H4
Page H-4-7 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Element sites inventory. In Morgan Hill, properties generally develop at or above the allowed density (such as with a density bonus).

4.2.4 Length of Time between Project Approval and Applications for Building Permits
New State Housing Element law now also requires an examination of the length of time between receiving approval for a housing development and submittal of an application for building permits.

The time between application approval and building permit issuance is influenced by a number of factors, none of which are directly impacted by the City. Factors that may impact the timing of building permit issuance include: required technical or engineering studies; completion of construction drawings and detailed site and landscape design; securing construction and permanent financing; and retention of a building contractor and subcontractors.

In Morgan Hill, most approved projects are constructed in a reasonable time period. Projects with entitlements nearly always move forward with construction, the one recent exception being an approved three-story mixed-use building and 15 residential units, consisting of twelve attached single-family homes and three condominium units in the mixed-use building (SR2016-0017 Monterey-Gunter) at 17620 Monterey Road (APN 726-23-008). As a small city, Morgan Hill staff have the advantage of working closely with applicants through the review and approval process, thereby helping to expedite the issuance of building and zoning permits. Furthermore, the City’s contract with its building plan check consultant includes a requirement that the first plan check for development projects be completed within two weeks, whereas the Building Division’s standard has been four weeks for a large residential master plan review and two weeks for an individual dwelling.

Building Permits are generally issued within two years of a project getting entitled. For example, Sunsweet (SR2017-0004 Depot-Sunsweet), a mixed-use building complex project consisting of 83 apartment units, was entitled in April of 2017 with building permits for the project’s 83-units issued in May of 2018.

4.2.5 Environmental Constraints
The environmental setting affects the feasibility and cost of residential development.

Environmental issues range from the suitability of land for development, the provision of adequate infrastructure and services, as well as the cost of energy. Morgan Hill currently encompasses about 8,256 acres of land. The majority of the parcels in the City’s boundary are developed. Most of the undeveloped parcels are in areas surrounding El Toro in the central-western boundary of the City and in the central-eastern portion of the City near the Jackson Oaks neighborhood. These areas contain environmental constraints on development, such as steep slopes, landslide hazards, fire hazards, or flood hazards, and therefore, much of the undeveloped land has been set aside as open space. The following are environmental constraints and hazards that affect, in varying degrees, existing and future residential developments.

Seismic Hazards
The Coyote Creek fault and Calaveras fault zone is located near the eastern boundary of the City.

Major problems could result from ground shaking, which is likely to be amplified in the areas underlain by relatively unconsolidated deposits, especially in the eastern part of the City.

Liquefaction is also a possibility in these areas. There is potential for landslides on all slopes; however, site-specific investigations can differentiate the degree of risk.

Appendix H-4: Constraints Analysis
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-4-8 Figure H 4-3: Earthquake Faults
Fire Hazards
Much of the open space, hillside area of Morgan Hill is located along the western and eastern borders of the city. There is higher potential for fire in these areas including grass or wildland fires as shown in Figure H 4-4. The risk in these areas is compounded by limited emergency access to open space areas and, in some cases, by insufficient fire hydrants/water flow to meet firefighting requirements. The Safety, Services, and Infrastructure Element of the General Plan sets forth approaches to reduce this risk in developed areas and in the design and location of new development in the hillsides.

Appendix H-4: Constraints Analysis H4
Page H-4-9 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Figure H 4-4: Fire Hazard Severity Zones
Flood Hazards
All of the creeks in the city have flooding potential. Federal Emergency Management Agency (FEMA) standards govern development in the 100-year floodplain (see Figure H 4-5) and floodways. A 100-year floodplain is the area next to a river or stream with a 1 percent or greater chance of being flooded in any year. A 500-year floodplain is the area next to a river or stream with a 0.2 percent chance of being flooded in any year. A floodway, a smaller area within the floodplain, is a river or stream and the area within immediate proximity of a river or stream that is capable of conveying the 100-year flood with no more than a 1-foot rise in water.

Development in the floodplain and floodway must be controlled because it can increase flooding hazards by raising water levels upstream and by adding flow, velocity, and debris downstream.

Figure H 4-5 shows both 100-year and 500-year FEMA flood zones.

Appendix H-4: Constraints Analysis
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-4-10 Figure H 4-5: FEMA Flood Zones

4.3 Governmental Constraints
Governmental policies and regulations can result in both positive and negative effects on the availability and affordability of housing. This section, as required by Government Code Section (a)(5), describes City policies and regulations that could potentially constrain the City’s ability to achieve its housing goals. Potential constraints to housing include land use controls (through General Plan policies and zoning regulations), development standards, infrastructure requirements, development impact fees, and the development approval processes. While government policies and regulations are intended to serve public objectives and further the public good, the City of Morgan Hill recognizes that its actions can potentially constrain the availability and affordability of housing to meet the community’s future needs.

4.3.1 Land Use Controls
Land Use General Plan Designations
A city’s Comprehensive General Plan is the constitution for development within the community.

The City and Neighborhood Form Element, one of the seven State mandated elements of the General Plan, sets forth the city’s goals, policies, and programs for guiding physical development within the city. The Transportation, Natural Resources and Environment, and Safety, Services,

Appendix H-4: Constraints Analysis H4
Page H-4-11 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 and Infrastructure Elements help determine land use areas within the community. The Housing Element has become a significant component in shaping the land use makeup within the community. State law also requires that the General Plan be internally consistent, and that zoning and development standards be consistent with the General Plan. While the General Plan is general in nature, its implementation, through zoning, subdivision, and other development codes are more specific.

The City’s Land Use Element provides for the following range of intensities for residential development:
 Residential Estate, up to 1 unit/acre
 Residential Detached Low, up to 4 units/acre
 Residential Detached Medium, up to 7 units/acre
 Residential Detached High, 6-12 units/acre
 Residential Attached Low, 6-16 units/acre
 Residential Attached Medium, 16-24 units/acre
 Residential Downtown, 24-46 units/acre
 Mixed Use, per adopted Downtown Specific Plan
 Mixed Use Flex, 7-24 units/acre
Morgan Hill is illustrative of how the availability of sufficient sites for multi-family development can outweigh zoning regulations as a determining factor of whether such development, including affordable housing, occurs. As the City’s zoning map below reflects, most of the City’s residentially zoned land is zoned for single-family homes. Nonetheless, multi-family zoned areas are sufficient to ensure that there are enough permitted developments in the pipeline for Morgan Hill to meet its RHNA targets at all income levels for the 6th Housing Element cycle. At the same time, as identified in the Affirmatively Furthering Fair Housing (AFFH) Appendix, the relative lack of land zoned for multi-family housing in the eastern portion of the City is a concern, and relatively stringent maximum heights and density limits for multi-family housing could curb multi-family housing development and affordable housing development in the future if developers’ cost constraints change.3 Regionally, exclusionary zoning is a much more significant issue as many high resource cities accommodate far less multi-family development than Morgan Hill has.

However, the City has implemented the following measures to create opportunities for affordable housing development in the eastern portions of the city and the need to consider changes to multifamily development standards in the future:

Action HE-3.A Identify opportunities and sites for affordable housing development in eastern Morgan Hill.

Action HE-3.B Study the creation of affordable housing overlay districts in advance of the next Housing Element cycle.
3 https://library.municode.com/ca/morgan_hill/codes/code_of_ordinances?nodeId=TIT18ZO_DIVIZOCO_CH18.1 8REATZODI_18.18.030DEST

Appendix H-4: Constraints Analysis
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-4-12 Figure H 4-6: City of Morgan Hill Zoning Map

4.3.2 Development Standards
The City’s Zoning Code implements the General Plan and contains development standards for each zoning district consistent with the land use designations of the General Plan. The City adopted a comprehensive update of the Zoning Code to provide consistency with the 2035 General Plan. Table H 4-2 illustrates Morgan Hill’s residential General Plan Designations and corresponding Zoning Districts.

Appendix H-4: Constraints Analysis H4
Page H-4-13 City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 The General Plan and Zoning Code provide for the following residential and mixed-use land use designation zones:
 Residential Estate. This designation is intended to promote and encourage a suitable environment for families living on relatively large parcels of land. Concentrated along the western and southern City borders, the Residential Estate designation allows single-family homes, accessory dwelling units, appropriate agricultural uses, and associated community services and facilities. The maximum allowable density is 1 unit per net acre.  Residential Detached Low. The Residential Detached Low designation is intended to accommodate families in suburban single-family homes, including manufactured homes on medium-sized parcels. Accessory dwelling units are allowed under this designation.

The highest concentrations of the Residential Detached Low designation are at the eastern City limit, especially in the hills near the Anderson Reservoir. This designation allows up to 4 units per net acre.
 Residential Detached Medium. Residential Detached Medium areas allow detached homes on smaller lots, including courtyard homes, manufactured homes, and small-lot single-family homes. Accessory dwelling units are allowed under this designation. Up to 25 percent of the total number of units in a project in the Residential Detached Medium designation may be duets. The Residential Detached Medium designation is dispersed throughout the City, often providing a transition from nonresidential areas to lower-density neighborhoods. The largest areas with this designation are centered around East Dunne Avenue and West Main Avenue between Highway 101 and the railroad. This designation allows up to 7 units per net acre.
 Residential Detached High. The Residential Detached High designation is intended to accommodate detached single-family homes on small lots at a density of 6 to 12 units per Table H 4-2 Base Zoning Districts
Zoning
District
Symbol
Name of Zoning District General Plan Designation
RE 10 Residential Estate (10 acre lots) Residential Estate RE 2.5 Residential Estate (2.5 acre lots)
RE 1 Residential Estate (1 acre lots)
RDL 20,000 Residential Detached Low Density (20,000 sq. ft. lots) Residential Detached Low RDL 12,000 Residential Detached Low Density (12,000 sq. ft. lots) RDM 9,000 Residential Detached Medium Density (9,000 sq. ft. lots) Residential Detached Medium RDM 7,000 Residential Detached Medium Density (7,000 sq. ft. lots) RDH 4,500 Residential Detached High Density (4,500 sq. ft. per lots) Residential Detached High RAL 3,500 Residential Attached Low Density (3,500 sq. ft. per unit) Residential Attached Low RAL 3,000 Residential Attached Low Density (3,000 sq. ft. per unit) RAM Residential Attached Medium Density (2,000 sq. ft. per unit) Residential Attached Medium RAH Residential Attached Hight Density (1,100 sq. ft. per unit) Residential Downtown MU-D Downtown Mixed Use Downtown Mixed Use
MU-N Neighborhood Mixed Use
MU-F Mixed Use Flex Mixed Use Flex

Appendix H-4: Constraints Analysis
City of Morgan Hill Housing Element 2023-2031 | Adopted XXXXX XX, 2022 Page H-4-14 net acre. This land use is meant to serve as a transition between single-family and multifamily land uses. Up to 25 percent of the total number of units in a project in the Residential Detached High designation may be duets.
 Residential Attached Low. The Residential Attached Low designation is primarily meant to accommodate attached homes including duplexes/duets, courtyard homes, townhomes, and garden apartments. Up to 25 percent of a Residential Attached Low site may include small-lot single family detached homes when those units are located adjacent to an existing single family detached neighborhood. Residential Attached Low areas generally are located in or next to existing residential neighborhoods and close to commercial corridors, including West Dunne Avenue and Monterey Road. This designation allows 6 to 16 units per net acre.
 Residential Attached Medium. This designation allows attached housing types including townhomes, garden apartments, and stacked flats. Pockets of Residential Attached Medium are primarily centered around the Downtown. Frequently found near commercial areas that in part serve the adjacent residents, this designation accommodates 16 to 24 units per net acre, most of which are townhomes, apartments, or condominiums.  Residential Downtown. Small pockets of Residential Downtown, the highest-density residential designation is centered around Downtown and the commuter rail station.

Development within this area must be supportive of transit oriented design. This designation allows 24 to 46 units per net acre, most of which are apartments or condominiums.
 Mixed Use. Applied in accordance with the Downtown Specific Plan, this designation applies to the majority of the parcels in and around the core of the Downtown area, especially parcels along Monterey Road and all the parcels between Monterey Road and Depot Street. It is intended to encourage a mixture of retail uses and residences.

Consistent with the adopted Downtown Specific Plan, the Mixed Use designation generally allows a density between 8 to 20 units per net acre, except for the Central Business District (CBD), where there is no maximum or minimum density.
 Mixed Use Flex. The Mixed Use Flex designation, which is primarily applied to properties along the Monterey Road corridor north and south of downtown, allows for a mix of residential, commercial, and office uses applied either vertically (i.e., one structure with multiple uses) or horizontally (i.e., structures with different land uses located adjacent to one another). Density should transition from higher to lower at the ends of Monterey corridor. The Mixed Use Flex designation allows 7 to 24 units per acre and a maximum FAR of 0.5. Prior to development of Residential or Mixed-Use projects within the Mixed Use Flex designation a block level master plan is required to identify how commercial uses will be incorporated within the development of the block and how individual development projects will connect with each other. Commercial development may proceed without preparation of a block level master plan consistent with the Commercial designation.

Morgan Hill’s residential development standards are summarized in Tables H 4-3 through H 4-8.