Millbrae prepares for demolition of Best Western El Rancho Inn to make way for new housing development

Construction on the housing project is estimated to take two years, Williams said, and a 1.2-acre parcel of the land has been slated for a future hotel development. 

Anton Development Company originally submitted a planning application for the new apartments — which will feature 19 units of permanently affordable housing — in 2019, according to the city’s website. The developer then sued the city, alleging it was illegally failing to approve the proposal. In 2021, that lawsuit was settled and the project moved forward, though then-Councilmember Gina Papan said at the time that Millbrae would have liked to see more affordable units. 

Under Senate Bill 330, a state law limiting cities’ abilities to delay housing project approvals, developers are required to provide 5% affordable housing, less than the city’s 15% affordable housing requirement under its inclusionary housing ordinance, Williams said. 

“It actually hurt the production of affordable housing and our [Regional Housing Needs Allocation] goals,” he said. 

Also at issue in the lawsuit was the amount of impact fees that the developer would pay. Originally, the impact fees could have cost the developer $18 million or more, however, the result of the settlement found they would be required to pay less than $10 million. 

Williams said the city was comfortable with the $9.2 million in negotiated fees that would come from the project. The assessed valuation of the property will also significantly increase, he said, which will create an increase in property tax and help offset the loss of $500,000 to $700,000 the city made per year off the El Rancho’s transient occupancy tax. 

“We’re feeling, actually, very, very good about the fiscal benefit to the city, as well as the production of much-needed housing,” he said. 

Councilmember Anders Fung said Millbrae was committed to doing its part in alleviating the statewide housing crisis and the new development would help that effort. 

“We’ve all got to find a way to be supportive of the California housing crisis and provide as much housing as we can,” he said. 

Though he’s cognizant that the city will be losing hotel tax revenue from the El Rancho, Millbrae has been judicious in its finances and aware of the planned development for years, Fung said. The city has seen economic growth with new life sciences development, new downtown businesses and the Millbrae Gateway, and is now continuing its focus on increased housing production. 

“We’ve been focused for the last couple of years on our economic development,” Fung said. “We’re hopeful, our economics as far as the city goes, are on its way up. It also shows our economic policy is paying dividends.” 

While the specifics of a future hotel development at the site are not yet finalized, Fung said he was looking forward to a hotel returning to the location in the future.  

“We’re hopeful that Millbrae continues to be a place where hotel developers are eager to come in and invest,” he said.