City zeroes in on developer for prime downtown lots

Acknowledging the sites’ prime downtown location near the city’s transit center, Deputy City Manager Kathy Kleinbaum said city officials considered many uses for the sites when they began imagining what goals to prioritize in developing the properties. Though ideas like relocating City Hall there were among those initially brought up, Kleinbaum said boosting the city’s affordable housing and downtown parking stock quickly rose to the top.

“They are really critical catalyst sites in the downtown,” she said. “They’re really underutilized right now [and] they’re really prime sites near the train station.”

Kleinbaum noted the projects could also help maintain downtown’s night-time population by providing a housing option for those working downtown as well as public employees across the county. She added the development can also set the tone for the aesthetics of the neighborhood, where several older, industrial buildings currently stand.

Of the nine developers to throw their hats in the ring for the project at 480 E. Fourth Ave. and 400 E. Fifth Ave., Foster City-based nonprofit MidPen Housing and Southern California-based Raintree Partners are being given top consideration as they offer city officials two different financing models when they review them next month at a City Council meeting, said Kleinbaum.

Providing at least 35 percent of the total residential units at rents affordable to income levels of 120 percent of area median income, or AMI, and below and complying with existing height and density limitations are among the many considerations developers weighed in drawing plans for the site, which is expected to offer 164 residential units, the maximum number of housing units allowed for the sites, and a minimum of 535 public parking spaces in addition to those required for the housing units, according to a staff report.

By proposing to designate half the units for households at 60 percent of AMI and allocate the other half for households at 80 percent to 120 percent of AMI, MidPen is putting forward a fully affordable project and is requesting a $9.5 million subsidy from the city, according to the report. Because an additional $12.3 million would be requested from outside sources, including state and county grants, Kleinbaum noted a potential concern about the proposal is that some of the funding sources currently identified in the MidPen project aren’t guaranteed.

But she also noted the susceptibility of Raintree’s privately financed proposal to market conditions, which could be affected by drops in rent or other factors. By designating 35 percent of the housing units for households between 80 percent and 100 percent of AMI and allowing the remainder to be offered at market-rate levels, the Raintree proposal requires a $10 million subsidy from the city but is otherwise privately financed, according to the report.

Kleinbaum said some $5 million collected in parking in-lieu fees and at least $4.5 million expected to be collected in funds earmarked for affordable housing will contribute to the city’s subsidy of the project.

The two proposals suggest different setups for the lots. Offering 164 residential and 535 public parking spaces, the MidPen plans situate the housing units on the 480 E. Fourth Avenue lot and the parking spaces in a garage at the 400 E. Fifth Ave. property, with a pedestrian overpass connecting the two. The Raintree proposal offers 205 residential and 535 public parking spots with all of the housing units and 151 of the residential spaces at the 480 E. Fourth Ave. lot. Though the remaining 54 residential and public parking spots are expected to be located in the garage on the 400 E. Fifth Ave. lot, the proposal includes an option to share a portion of the residential parking with those available for the public, reducing the city’s subsidy to $9.5 million, according to the report.

The council’s April 16 decision to work with one of the developers will launch a process to draw the terms for an exclusive negotiation agreement that will remain in effect as the project goes through the city’s standard entitlement process, said Kleinbaum, adding that the final terms of the project are expected to be approved at the same time as its entitlements.

Noting the long process ahead for the sites, Kleinbaum commended the councilmembers for weighing a range of interests as they scoped the future for the last few city-owned properties and prioritizing much-needed resources.

“It’s really just trying to balance those interests within our financial means,” she said.

anna@smdailyjournal.com

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