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San Mateo officials voiced support for exploring whether plans to build 164 affordable apartments in downtown San Mateo could be revised to include up to some 70 more units and two more levels when the developer updated officials on the development slated to replace two city-owned surface parking lots.

Plans to provide a mix of studios and one-, two- and three-bedroom units in a five-story structure at 480 E. Fourth Ave. and nearly 700 parking spaces in a five-story parking garage just south of the housing at 400 E. Fifth Ave. have been in the works for the redevelopment sites since city officials selected the nonprofit MidPen Housing as the developer in April of 2018.

With the goal of breaking ground on the project in October of 2021, MidPen is in the midst of conducting a California Environmental Quality Act analysis and preparing for an entitlements review process expected to begin in March and extend into June with a City Council vote on the project’s approval projected for June, explained Mollie Naber, a project manager for MidPen.

After the recent passage of Assembly Bill 1763, a state housing bill allowing increased height and density for 100% affordable housing projects within a half mile of transit and given the available funding for the project, the development would be eligible for an additional 72 units, explained Assistant City Manager Kathy Kleinbaum. She said adding some 70 more units would require the building’s height to reach seven stories and a six- to nine-month delay in the plan’s progress.

In the current plans for the buildings, 164 parking spaces will be designated for residents of the project, while 535 spaces are slated to be open to the public, offering an additional 300 public spaces on the site than the two existing surface lots. To accommodate an extra two stories and dozens of additional housing units, Kleinbaum said the developer could consider reducing the number of public parking spaces available on the site and making the mix of units available at the site 100% tax-credit eligible.

Mayor Diane Papan was joined by her fellow councilmembers in backing an effort to explore the implications of additional units on the site. Though she acknowledged the high demand for housing in the near term, Papan also noted the unique opportunity the sites presented for officials to help boost the city’s affordable housing stock.

“I would support looking at it and I think I could live with the delay,” she said, according to a video of the meeting. “I’m struggling with the timing of it … but I obviously see the good in it.”

Naber explained the developer is currently facing an $8 million financing gap for the project, and said changing the affordability of the units provided so they are all eligible for funding through the federal Low-Income Housing Tax Credit program could reduce the financial gap by $5.5 million. The change would mean the highest household income the project could serve would be 80% of area median income, which in 2019 is $103,200 for a two-person household and $128,960 for a four-person household, according to a staff report.

Changing target residents

City officials wondered whether changing the mix could exclude some public employees from being eligible for homes at the site, where 25% of the units are proposed to be available for public sector employees such as workers at the city, school districts, San Mateo County and other public agencies. Naber felt that even with the change, 25% of the project could still be designated for public employees, noting a market analysis found approximately 80% of public employees the projected was aimed to house earn less than 80% area median income, or AMI.

She added the group also conducted a survey of public employees receiving 800 responses and indicating that employees earning more than 80% AMI are likely to prefer older, suburban apartments with similar or less rent as compared to the units MidPen would provide at the downtown site. Naber noted an older apartment at a complex like Hillsdale Garden Apartments may be rented for around $2,800 a month while monthly rent for a two-bedroom unit in the MidPen development is proposed at $3,000. She said the survey showed the majority of employees in the higher-moderate income tier are not going to move unless they can get a good deal on rent.

Though the council supported changing the mix of units available so the project could be financed with tax credits, Papan cautioned officials to be sure they understand who the project is serving after the change is incorporated.

Temporary parking relocation

City officials also agreed with a proposal to build the parking garage and housing development concurrently, a change in the plans expected to save $2 million due to a reduction in construction loan interest and construction supervision. The project construction was originally phased so the parking garage would be built in the first year, after which point the residential structure would start so only 110 parking spaces are offline at a given time, explained Naber.

She said MidPen would work with city staff to identify other options for addressing the lost parking during construction, which Kleinbaum said could include working with private property owners to lease out spaces to those who hold permits to park in the existing lots.

Worker Resource Center

Officials also favored not including some 1,200 square feet of community space in the garage out of concerns about the challenges of managing it, a change that would save the project some $500,000. The community-serving space was originally planned to be 2,000 square feet and house the Worker Resource Center, a facility aimed at connecting day workers with jobs which currently stands on the site.

Kleinbaum explained it would be challenging for the Worker Resource Center, which is operated by the nonprofit Samaritan House, to relocate to another space for a year and a half while the community space is constructed and it could be less expensive for the facility to permanently relocate to another space. She said there are some locations on North Amphlett Boulevard that could be an option for the Worker Resource Center and rent for between $30,000 to $60,000 a year.

Laura Bent, Samaritan House’s chief operating officer, said the nonprofit has been in ongoing conversations with city officials about alternate locations for the Worker Resource Center that would meet the needs of both employers and workers who use the facility. She said the nonprofit and city staff have been looking for alternate locations for the Worker Resource Center that are both accessible from Highway 101 and near the neighborhoods where the workers live, and said some sites on North Amphlett Boulevard may work as a new location, depending on their specific locations.

(650) 344-5200 ext. 106

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