Developer selected for prime downtown lots

The Foster City-based nonprofit’s proposal to replace publicly-available surface parking lots and a nonprofit-managed resource center for day laborers currently on the sites with 164 affordable units, half of which would be available at 60 percent of the area median income, or AMI, and the other half of which would be designated for households between 80 percent and 120 percent of AMI, stood out for the four councilmembers who voted for its plan. Mayor Rick Bonilla voted against the proposal.

For Councilman Eric Rodriguez, the project’s public benefit was the most important criteria in weighing the proposals, which differed in the number of affordable units provided and rates of affordability, among other factors. Rodriguez said city officials have been fortunate to consider proposals including affordable housing at Bay Meadows and other sites, but noted with fewer and fewer undeveloped sites available, the opportunity to build affordable units on prime downtown lots at Fifth Avenue and Claremont Street may not come before them again anytime soon.

“I’m trying to think of when we might get this opportunity again,” he said. “I really see this as one of the last chances.”

Competing against MidPen’s were proposals from Southern California-based Raintree Partners, and a partnership between EBL&S Property Management and EAH Housing, known as the Domicile I team.

The project Raintree Partners proposed would have provided at least 35 percent of the total residential units at rents affordable to households earning 80 percent to 100 percent AMI and the remaining units at market rate. Included in the Domicile project plans were 35 percent of the units offered at rates affordable to households between 80 percent and 120 percent AMI, with the remaining 65 percent of the units targeted for households at 140 percent AMI.

All of the proposals included the minimum 535 public parking spaces required with additional spaces for the residential units. The Domicile project included 777 parking spaces, including 662 publicly-available spots, while the Raintree Partners and MidPen projects provided 740 and 699 spaces, respectively.

Though each development’s provision of affordable units was a focus, officials also examined their financing models, which, in MidPen’s case, involves requesting $12.3 million from outside sources, including state and county grants, using a $9.5 million subsidy from the city and leveraging federal tax credits. With the exception of a $10 million subsidy from the city, Raintree Partners submitted a privately financed project and the Domicile I team offered to forgo taking a subsidy from the city and instead finance the public parking through a $12.8 million loan from the developer to the city that would be repaid through the public parking revenue over time.

Bonilla and several residents appreciated the Domicile team’s focus on providing housing for city employees, which Bonilla noted offered a new model for providing housing for public employees like police officers, whose incomes may fall outside of housing dedicated for low-income workers and be insufficient to support market-rate rents. Though he acknowledged MidPen’s track record for adding to the Peninsula’s affordable housing stock, Bonilla wondered if restrictions from the outside funding sources the developer included in the proposal could limit its effectiveness in housing local public employees.

“I don’t think they’re going to be able to qualify for MidPen’s project,” he said, of police officers. “They don’t earn enough to pay market-rate rent, so there’s still a missing middle there.”

MidPen Housing President Matt Franklin said some 50 to 81 units falling outside the federal tax credit calculations could be among those dedicated for public employees, and more specifically city employees, depending on the city’s policy and the funding sources for the project.

As board president of the Home Association of North Central San Mateo, Amourence Lee voiced the board’s majority support for the MidPen project for including a mix of unit types ranging from studios to three-bedroom apartments as well as property management and programs serving the diverse needs of the community that will live there. By providing affordable and workforce housing, the development offered a unique opportunity to house a wide array of community members in need of housing, said Lee.

“I would like to see this … as an opportunity to check two boxes that need to be checked,” she said.

The city will now enter into an exclusive negotiating agreement that will remain in effect throughout the entitlement process. The selected development team will be required to go through the standard entitlement process, which will include compliance with the California Environmental Quality Act, community meetings and Planning Commission review of the proposed design and layout.

In other business, the council directed staff to study the implications of possible ballot measures aimed at aligning voter-approved housing policies in San Mateo with a new state law.

First approved by voters in 1991 as Measure H, 2004’s Measure P established 55-foot height limits in most parts of the city and restricted how densely housing and commercial developers can build. By requiring residential developments to provide at least 10 percent of below market-rate units on site, the measure also been seen as establishing the city’s first inclusionary zoning policy.

Because measures H and P were approved by voters, any changes to them must be approved at the ballot box, so councilmembers are scoping possible amendments to the measure — including a requirement developers offer at least 15 percent of the residential units in a project at affordable rates and including in-lieu fees as an alternate to providing on-site affordable units — to resolve a potential conflict with a recently-passed state law aimed at empowering cities to adopt inclusionary zoning policies.

By outlining one exception to the on-site requirement for below market-rate units — allowing developers to provide affordable units off site when the provision of on-site units is “infeasible” — it could be argued Measure P conflicts with a new rule established by state legislators, one requiring inclusionary zoning ordinances for rental projects allow for alternative means of providing on-site units, explained City Attorney Shawn Mason previously.

After the citizens group San Mateans for Responsive Government began a signature-gathering campaign to extend the measure 10 years to 2030 in February, councilmembers are also considering how any ballot measures put forth by the city might relate to the citizen-driven measure, which has been updated to include the phrase “alternative means of compliance” after the need for adjustments to align with the state law was discovered.

anna@smdailyjournal.com

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