Burlingame's wellness hub and senior housing heading back to the drawing board

The health care district, founded in 1947, previously operated Peninsula Hospital in the space where Sutter-owned Mills-Peninsula Medical Center now stands. Since then, the district used its tax money to purchase nearby property and had plans to develop an ambitious medley of affordable and market-rate senior housing, health care resources, and medical offices, dubbed the Peninsula Wellness Center.

Those plans, formally initiated in 2018, were scrapped in October by the district, that cited mounting construction costs and various financial challenges with developers as insurmountable.

Project future

Now, some advocates are expressing concern around the district’s ability to fulfill its promise to build the planned development at all.

“It’s a complete shock that they shut it all down,” Evelyn Stivers, San Mateo County Housing Leadership Council executive director, said. “What is not a complete shock, and what is frustrating from the very beginning, is that it doesn’t seem like they have the basic competency to take on what they are required to do.”

Instead, the health care district should voluntarily allow another municipal entity with planning experience, like San Mateo County or the city of Burlingame, to help work on planning a new development, Stivers said.

“I don’t think they know what to do. I don’t think they have a clue,” she said. “I don’t think there’s ill will. I think they’re just not up to it, and they need to work with the city or the county or somebody that has experience with development.”

For its part, PHCD is maintaining that lessons learned from the failed venture can inform future plans. While the affordable housing element of the project was ready to move forward, other concerns, like market-rate rents and lack of funding for the wellness hub, made development untenable, representatives said.

“One of the constraints in this project was that the developers insisted on ... three components — the residential piece, the medical office piece and the affordable housing piece — all be negotiated as one, and we could not separate one from the other, which, if we could, we would have done,” Cappel said. “But that would have violated the agreement that the developers and the district had in place.”

As the district moves forward with new plans — likely to be discussed at an upcoming retreat in March, Cappel said — it will need to redesign the project, a task that couldn’t start until the old project was formally scrapped.

It will, however, be likely filing separate requests for proposals for the different aspects of the project.

“As we look at the different project opportunities for the future, we would treat them independently versus clustering them all into one project and not allowing any piece of the project to not move forward without the whole project being ready to move forward,” Pulido said. “I would say that’s probably the biggest lesson and takeaway.”

Financial hurdles

Aside from nationwide rising construction costs and funding difficulties for a planned wellness services hub, Cappel also cited the proposed rates for an independent senior living facility — to be developed by Generations LLC — as uncomfortably high. A press release issued by the district said they were priced higher than regional average.

“We felt that the rents were excessive, to put it bluntly, and we asked for some changes,” Cappel said. “There were some changes made by the developers, but not to the degree which we think was going to be critical for the success of the organization or the project.”

Max Gabriel, Generations director of Business Development and Analytics, said the blended rent average of $10,000 a month was cheaper than other independent senior living facilities in the area and didn’t include any large-scale buy-in. The firm, which learned of the announcement through PHCD’s press release, was still committed to the vision and believed it had a role in it.

“While we are a for-profit business, that is not our underlying mission, to make money,” Gabriel said. “That was obviously disappointing, and just something where we flat-out disagreed with their assumption.”

They had also already invested over half a million dollars into the project, not including staff time or labor, Gabriel said. That follows a similar sentiment from MidPen Housing President and CEO Matt Franklin, who was heading the affordable housing component of the development.

MidPen Housing put in almost $400,000 in out-of-pocket costs on this plan, not including staff labor, for a five-year period, Franklin said. The county had also allocated $400,000 in financial resources and 38 project-based vouchers, which have since been returned but were unavailable for other projects for years.

District representatives were unable to speak to the possibility of reimbursement for those developers.

Affordable housing

After years of negotiation and struggle to ensure the project included affordable housing, the decision to kill it was received with anger and frustration from advocates, some of whom attended a recent board meeting to voice their frustrations.

Many of those supporters had once proposed that the health care district devote the entire site to affordable housing, and some see the cancellation of the project as an opportunity to do just that.

“We all feel very dejected. We had worked so hard. We were very, very satisfied with the final project proposal,” housing advocate Karyl Eldridge said. “I will say, though, that if this results in their deciding to devote the entire site to affordable housing, then that would be an outcome that would offset the fact that this feels like a complete debacle.”

One notable advocate for the affordable housing effort, San Mateo County Supervisor Jackie Speier — who had actively pursued that objective during her tenure in Congress — floated the idea of building workforce housing at the site, potentially for health care professionals.

“I think it’s a valuable piece of property. I think we all have an obligation to find the highest and best use for that,” she said. “I look forward to working with the health care district to achieve that goal.”

Cappel maintained that while the health care district had previously looked at that option, it had other responsibilities to provide health and wellness services to the community. He agreed, though, that some amount of affordable housing would be valuable on the land.

“We looked at that a number of years ago, and we felt that using this entire piece of land for affordable housing might not be the best use, especially as we’re trying to integrate a number of services,” he said.

Regardless, conversations around the development’s future will undoubtedly continue.

“We’ll make it happen,” Speier said. “We have to make it happen.”