A plan to build a 384-unit apartment building in Millbrae will proceed, following a settlement reached in a lawsuit filed by the developer earlier this year that alleged the city was illegally failing to approve the proposal.
The developer, Anton Development Company, sued the city in February after its plans to redevelop the site of the existing El Rancho Inn were repeatedly deemed incomplete. The developer alleged the project was illegally rejected, causing a drawn-out negotiation period in which the city passed new impact fees that were unlawfully tacked onto the project — potentially costing $18 million or more and rendering the effort financially feasible, according to the developer.
Per the settlement reached, Anton will now pay less than $10 million, though the project will still be subject to additional reviews such as those required by the California Environmental Quality Act.
“We reached a settlement on the pending disputes,” said Councilmember Gina Papan. “As in any agreement where nobody’s happy … everybody has to give and take. We would have liked to have seen more affordability, but it didn’t happen.”
Plans for the five-story development indicate 19 below-market rate units, affordable to households earning half of the county’s median income. Impact fees, which typically help pay for city infrastructure improvements, can go toward other community benefits like affordable housing.
The crux of the disagreement had to do with whether the development required zoning and General Plan amendments. The project site encompasses a parcel zoned for general commercial as well as a parcel zoned for high-density residential. The latter zone would likely allow for the project to proceed but, according to the city’s zoning code, the more restrictive zoning rule applies in such circumstances.
The developer disagreed, alleging state law should allow the project to proceed without the amendments. Between mid-2019 and mid-2020, the city and developer communicated about the project via a series of letters, in which the city sent at least six letters to the developer stating its position while the developer maintained that the city’s actions were in violation of Senate Bill 330, a state law limiting cities abilities to delay housing project approvals, among other state rules. The city passed increased impact fees in June 2020.
Original plans for the site indicated a 200-room hotel to be built adjacent to the housing, but more recent plans excluded the hotel, and part of the agreement will require the developer to submit a conceptual plan for the hotel. The city collects considerable revenue from taxes on hotels.
“The city still has an interest in pursuing a hotel,” said Papan. “By them submitting a conceptual plan we can then hopefully pursue it in the future.”
The agreement will also require that Anton provide eight affordable housing units for the site’s current residents, largely the existing hotel staff.
The El Rancho Inn, which will be demolished to make way for the apartments, has long been a landmark within the area, dating back to the ’50s with Mission Revival-style architecture and pool and bar. An environmental analysis of the project determined the site is not historic, and according to the developer, “the site is underused, the buildings are ailing.”
The new development will feature Spanish-style design reminiscent of the inn’s architecture. Included would be 560 vehicle parking spaces and 72 bicycle parking spaces.
Lawyers for both the city and developer still need to finalize the agreement. More information on the settlement will be made available upon that happening. The agreement reportedly includes a detailed timeline for the development with plans reaching the Planning Commission early next year.
“Now that this agreement is being signed, Millbrae can move forward,” said Mayor Ann Schneider. “We learned some lessons and we look forward to welcoming new residents.”
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