Monterey - AMG (SB35-Affordable Housing Streamline Project)

MISC2021-0002: Monterey - AMG

This project is a 100 percent affordable housing development project. The project would include a 206,865 square foot development of a six-story residential building (includes a podium level), with approximately 290 studio units and 55 parking spaces to be developed on a 1.96-acre site. The existing auto shop will be demolished, and two residential buildings will be relocated. 

The City of Morgan Hill has independently calculated the distance from the project to the Caltrain station and it exceeds a half-mile. Therefore, the City has determined that the project is not eligible for the unlimited density bonus or the increase in height of the three additional stories or 33 feet.  As a 100 percent affordable development, the project would be eligible for Density Bonus and would be limited to 80 percent of the number of units for lower income households. Based on this calculation, the site would be permitted a maximum of 84 units.  


In early 2021, City received notice from AMG & Associates of their intent to build a 290-unit project in a 1.7-acre lot with only 55 parking spaces along Monterey Road, adjacent to the adult school. The project claimed unlimited density due to their 100% income-restricted project and their proximity to the train station. Staff has been arguing with the Developer that they are outside of the half mile proximity requirement from a major transit stop (train station).  We are using the main train station and platform as the definition of the exact location of the “major transit stop.” The Developer, however, has argued that the transit stop is any point within the parcel(s) associated with the train station. As you can imagine, these parcels can be odd shape, long and go well outside of what the City would consider the train station. City staff and Developer have asked the State Department of Housing and Community Development (HCD) to weigh in on this discussion as the proximity to the transit stop, coupled with the income restriction, can offer projects using Density Bonus Law to build at unlimited densities if they are considered located within half mile of a major transit stop.

A recent communication from HCD (attached) clarified that any point of the property, regardless of the irregular shape and inconsistent size of parcels associated with the train station, could be used to measure proximity to the transit stop. Therefore, the AMG project is found eligible for unlimited density bonus provided under Government Code 65915, subdivision (f)(3)(D)(ii) given that 100% of all units are for lower-income households and no more than 20 percent of these units being moderate income. This is unfortunate for the City as the site in question only allows densities of 7-24 dwelling units per acre or a maximum density of 41 units. On a positive note, AMG’s letter to HCD suggested the project was 200 units (90 units less than what they indicated in their notice to the City in Spring 2021).

Please note that this project has been listed on the City’s website since we received early notice from AMG. Staff has not received further communication from AMG. The HCD letter can be downloaded here.   

City staff continues to challenge the notion that Morgan Hill has a major transit stop and is constantly educating legislators and their staff that while Morgan Hill has a Caltrain Station, the service is limited to three trains each direction. This level of service should not be considered a ‘major transit stop’ and should not suggest that we have adequate public transit service to support development without parking. Staff is actively advocating for a change in the definition of “a major transit stop” in the Public Resources Code.


17910 and 17920 Monterey Road, Morgan Hill, CA
APN(s) 726-25-001 and 726-25-002

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Notice of Scoping Consultation

AMG and Associates, LLC has filed a Notice of Intent to file a residential development project utilizing the streamlined, ministerial approval process provided by Government Code §65913.4.