Last week, the planning commission split 3-3 on Lucky Day Partnership's application to add 193 homes to the city, with Commissioner Arthur Brad Bannister recusing. Although the council will have final say on the project Oct. 19, the commission's split decision jeopardizes the project. Senior Planner Stan Ketchum said the city should approve the development to avoid construction bottlenecks and ensure seamless development when the housing market begins to recover later this year.

In its same meeting, the commission also recommended the council consider applications from Shapell Industries to add nearly 1,600 homes north of Santa Teresa Boulevard and east of Thomas Road, and from Wren Investors to build up to 430 homes near Christopher High School.

Although Gilroy currently has enough empty land to develop 3,500 homes during the next 11 years - well above the 5-year threshold the city's general plan calls for - developers of the projects that the commission considered will not be ready to break ground until at least 2015 due to permits, planning and environmental reviews, Ketchum said. By that time, staff expects some developers to revive stalled developments, such as Glen Loma. This would bring the city back up to construction levels seen in the late 1990s and early to mid-2000s, when about 360 homes were going up each year.

Glen Loma officials did not return messages Monday, but since Jan. 1 the city has only approved nine home construction permits. Planning Commissioner Jim Gailey pointed to this as one reason he voted against the Lucky Day Ranch project along with Commissioners Arthur Barron and Joan Spencer.

"I did not share the optimism of staff or the applicants, and I do not like just willy-nilly grabbing land and going outward," Gailey said of the "premature" applications. "There's plenty of land already within the city limits."

Gailey, also a developer, added that he voted for the Wren and Shapell projects - which passed 7-0 and 5-1, respectively - because those potential projects abut current development much more than the Lucky Day application, which juts out into hills now populated by roving livestock. As more contiguous developments bound by the city's "Neighborhood District" policy, Shapell and Wren's projects must also sell at least 15 percent of their planned homes, if approved, at below-market rates under local law. Lucky Day Ranch would lie outside such affordable housing dictates.

The total of Lucky Day's 285-acre application north of Hecker Pass Highway and east of Burchell Road includes 244 acres of park and open space land, with the remaining 41 acres designated for hillside and low-density homes. The park land could also accommodate nine more holes at the Gilroy Golf Course.

In addition, "by allowing approximately 285 acres to be brought into the city," Lucky Day's application reads, "the client will be in a financial position to dedicate approximately 1,729 acres of property towards an environmental mitigation bank."

That land bank would give Gilroy an advantage when it comes to the evolving Santa Clara Valley Habitat Conservation Plan - a long-range blueprint county officials are creating that will hinge future development on the protection of more than 500,000 acres, mostly in South County. The city could later purchase some of Lucky Day's 1,729 acres to offset future development. However, city staff and officials have refused to say whether they would take the developer up on this deal.

Despite that carrot, and Shapell and Wren's proximity to current developments, Greenbelt Alliance Field Representative Michele Beasley wrote in a letter to Ketchum that all three applications amount to "sprawl" and "piecemeal annexations" that "threaten Gilroy's bucolic setting."

"It is premature for the City of Gilroy to annex these lands for a number of reasons, including the need to exhaust urban infill opportunities first," Beasley wrote in an Aug. 4 letter. "For Gilroy to think it is timely and necessary to annex more land for low density housing far from public transportation is poor land use planning."

Other commentators included the Local Agency Formation Commission - a regional agency with veto power over annexation requests that considers any potential Gilroy expansions after Council approval - vocal residents along Burchell Road, and Save Open Spaces member Connie Rogers. Rogers described staff's construction predictions of 100 to 300 homes rising each year beginning in 2010 as "anomalous, misleading and speculative."

Ketchum acknowledged the three developments "will be a continuing challenge for the city" when it comes to police and fire services. Providing emergency and other city services to an additional 7,800 people - a 15-percent population jump - will cost the city between $50,000 and $400,000 each year over a 10-year period. Expenditures would generally exceed new residents' property and sales tax revenues. Yet, thanks to a federal grant, Ketchum said the city will begin to design "climate control" fees on future developments for the carbon pollution their residents will produce.

Meanwhile, Santa Clara County officials have expressed concern over increased healthcare costs coming from more residents in the county. In addition, Gilroy Unified School District trustees opposed all three projects because they wanted the developers to voluntarily pay higher fees to help offset the construction of school facilities that would be needed to house the influx of new students.