Developers of a proposed San Mateo downtown mixed-use development at the current Draeger’s Market site are in talks to bring the upscale grocer back to the development, with the Planning Commission interested in more housing to decrease the jobs-housing imbalance.

“I don’t want to necessarily say no to office development per se, but again the jobs-housing imbalance is the elephant in the room when we are looking at this proposal,” Commissioner Adam Nugent said at a Sept. 14 meeting to discuss the proposed development.

The project from applicant Lane Partners at 222 E. Fourth Ave. is called B Street South. It proposes demolishing Draeger’s and constructing a 153,047-square-foot, five-story mixed-use building. The new site would include a ground-floor grocery store, offices on the second, third, and fourth floors and 10 units of below-market-rate residential housing on the fifth floor.

Marcus Gilmore with Lane Partners said at the Planning Commission meeting that the goal is to bring a grocer back into the space, with hopes it will be Draeger’s, pending agreement.

“We are talking to a few grocers about coming back into the space, and we are very close to an agreement with Draeger’s to move back into the building,” Gilmore said.

A staff report said 239 parking spaces would be on the ground floor and in two levels below. It proposes two outdoor terraces on the third floor, two terraces on the fourth floor, and a roof deck for the residences. The building would be 72 feet tall. A height increase over 55 feet is allowed because state law allows a height increase for projects with 100% low-income housing and within a half-mile of a major transit stop, according to a staff report. The site is also a quarter of a mile away from the San Mateo downtown station, a key transit corridor. Draeger’s, currently 36,000 square feet, would be replaced by a 17,658-square-foot grocery store. The site envisions a community plaza, cafe, office lobby, terrace and roof deck.

The project site is at East Fourth Avenue to the north, South B Street to the east, East Fifth Avenue to the south, and South Ellsworth Avenue to the west. It consists of four parcels totaling approximately 1.135 acres. The building design calls for red brick and aluminum panels. Levels one through four calls for red brick, with level five featuring aluminum panels.

The project would result in the loss of 14 publicly available metered parking spaces along the street, and there would be no provided parking spaces for the residential units. There would be 15 short-term bicycle parking spots and 21 long term.

The Planning Commission discussed project site plan and building design, with several concerns around design proposals and if there was enough housing on the site.

Commissioner Seema Patel suggested asking Draeger’s to consider offering discounted products for people living in below-market housing. She expressed concerns about the imbalance in office and residential space and building lots of office space but no plans for housing. She wanted to maximize housing at the site given its proximity to downtown and transit.

“We did not get into this housing crisis from one developer building 10 million square feet of office space. We got into this crisis by a thousand paper cuts. Repeated decisions to approve office projects without a plan for how we were going to provide the full amount of accompanied residential space that would be needed to serve those workers,” Patel said.

Commissioner John Ebneter suggested more units in the proposal to address growing housing needs in San Mateo and to meet the city’s downtown plan calling for higher density.

“I’d like to see some thought or process to get some more housing on this site, and if it’s a cost issue, maybe it could be beared by a developer,” Ebneter said.

Nugent agreed with Ebneter and suggested adding more housing to benefit the project and the city.

“It seems like a waste to not do another story or two of housing,” Nugent said.

Vice Chair Margaret Williams appreciated Draeger’s filling the needs for San Mateo residents and wanted to see it stay. She also was concerned about the job to housing imbalance and wanted to see about another floor of housing.

I’d hate to lose a grocery store that fills a niche for various kinds of things, so I hope that works out,” Williams said.

Lane Partners also requested a 150-foot long loading zone on South B Street next to a proposed separated bicycle lane. Gilmore said if the loading zone had to move, the project would risk losing a grocery store. The proposal calls for a 3-foot-wide protected area with a raised divider in-between the bike lane and loading zone.

“We feel like we are in a really good spot to come up with something that allows us to keep a grocer and develop a safe bike facility for the community. It can exist together. They do exist together in other downtowns,” Gilmore said.

Ebneter said there was a possibility of accidents in the bike lane, such as a bicyclist being hit by a pallet due to the proximity.

“I’d hate to expose the public and the workers to hazards which we can avoid, or we’ve got ways to avoid them,” Ebneter said.

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