After years of negotiations, the city of Belmont is closer to getting one of its very first inclusionary housing developments with at least a quarter of the units planned for the historic Firehouse Square site slated to be offered as below market rates.

On Tuesday, June 28, the City Council will consider a non-binding term sheet outlining what it seeks from developer Sares Regis Group at the nearly 2-acre site near the heart of downtown.

The city may require at least 25 percent of the proposed 61 units to be offered below market rate and is expected to make a significant financial contribution to do so — possibilities could include offering the city-owned land at no charge or help with subsidizing the cost with money from its affordable housing fund.

With the housing crisis stretching on, Belmont officials were thrilled to be moving toward a project that could offer 15 new homes for those making lower incomes.

“I’m a firm believer that our society needs to be open to every socioeconomic level out there. That we need to make room for teachers as well as entrepreneurs, supermarket workers and gardeners as well as the VPs of big companies,” said Mayor Eric Reed. “I think this shows that this council really does care about the issue and puts its money where its mouth is.”

The city spent nearly three years exclusively negotiating with Sares Regis and the release of the proposed terms highlights what officials envision for the site purchased with former redevelopment agency funds and was once home to one of Belmont’s first fire stations.

The mixed-use project at the corner of El Camino Real and O’Neill Avenue could include 4,000 square feet of commercial space and up to 61 units spread between townhomes and single-story flats. Initially, the project will be managed as rentals but Sares Regis intends to eventually sell the units, according to a staff report.

At least 15 units will be sold or rented to moderate and lower income families with four set aside for very-low income earners, four units for low-income workers, and seven units for moderate-income earners, according to the terms.

Community Development Director Carlos de Melo emphasized negotiations with Sares Regis must continue before specifics related to the city’s contribution as well as the terms of the affordable units would be solidified. However, a requirement would be for the below-market-rate units to remain affordable for a period of time, possibly 40 to 55 years, he said.

“This is one of the first projects where we’ll be having inclusionary units within the project. … The term sheet describes at least 25 percent of the units are going to be affordable, that’s pretty significant,” de Melo said.

Neighboring San Mateo recently updated the maximum price landlords can charge for affordable units in the city with a range of $1,080 for a very low-income earner to rent a one-bedroom unit, and about $1,450 for a two-bedroom unit. The numbers are based on county income statistics. De Melo noted the city might also turn to county data to determine the rental and sale prices for the below-market rate portion.

Construction as well as planning costs in San Mateo County are the second highest in the state when it comes to housing, with a single unit averaging about $442,000 to build, according to the state. Negotiating with a for-profit developer to build below market rate units will likely require a significant financial contribution from the city.

“I do in principle believe it’s a good use of public funds to support low- and moderate-income housing,” Reed said.

If the non-binding terms are approved, it would require the developer to submit a planning application by Dec. 1 with public hearings and design review to follow.

Sares Regis opted not to comment on the term sheet Friday, but representatives have previously expressed a commitment to projects such as Firehouse Square that improve blighted areas, are close to transit as well as downtowns and are considered “infill redevelopments.”

The company has turned significant attention to Belmont recently, having received approval to redevelop another 2-acre site on El Camino Real near Davey Glen Drive into a 73-unit mixed-use residential apartment complex. For that project, Sares Regis agreed to contribute $1.6 million toward the city’s affordable housing goals in lieu of constructing inclusionary units.

But negotiations over the Firehouse Square project took much longer with two councilmembers at one point voting not to continue an exclusive contract to work only with Sares Regis. Ultimately, they proceeded and Reed noted the developer showed a commitment to the project.

As the city works to finalize the Belmont Village Specific Plan, a zoning document that seeks to promote a more centralized downtown, officials are hopeful the Firehouse Square project will jump-start other investments.

“It’s going to be the catalyst to get downtown Belmont going,” Reed said. “I’m very excited that we are making progress in getting our downtown and our El Camino Real corridor development in a sensible way. And I think it’s just really a positive thing for the people of Belmont and it will also have a positive impact on housing regionally.”

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