Political Infighting Blocks Millbrae Veteran Housing

Article Source: The Bay City Beacon

Aug 29, 2017

The City of Millbrae will soon consider 400 homes, including 80 permanently affordable apartments for veterans, right next to its train station. Seemingly everyone wants it to happen—so why is it still in limbo?

Millbrae has the largest multi-modal transit station west of the Mississippi River, serving as a central hub connecting Silicon Valley towns on the Peninsula via Caltrain, and San Francisco to the north via Bay Area Rapid Transit (BART). It’s also adjacent to a massive parking lot, where developers and housing advocates hope to reduce car dependence and ease the region’s brutal affordability crisis by building dense urban housing.

Despite nearly unanimous support from city officials, local residents, business, and BART, local government decision-making has clashed with regional demands, and some worry that ultimately the parking lot may emerge as the only victor.

The latest fracas, during the City Council’s summer recess, has pitted city staff and the developer, Republic Urban, in a dispute largely over tax credit financing for the Below Market-Rate portion of the project. (Aside from housing, the Gateway to Millbrae Station is planned to include a 164-room hotel and 150,000 square feet of office space.) Republic Urban requested that the city exempt it from $4 million in fees for affordable housing, typically required when the developer does not build permanently affordable units on-site. City staff remained recalcitrant due to stated concerns that these conditions lacked an “ironclad” guarantee that the affordable veterans’ housing would, in fact, be built.

Having reached a total impasse, both the developer and city staff have agreed to defer to the decision of the City Council, which reconvenes in September.

City staff raised concerns that the affordable veterans’ housing may not be built because the developer did not plan for its construction in the first stage of the project. (Whoever inhabits the building completed first will have to endure construction of subsequent projects in their immediate vicinity.) The City Council passed new fees of $26,000 per residential unit in February, one year after certifying a new Millbrae Station Area Plan. An earlier plan for the station in the 1990s called for only commercial development, with no housing.

“We don’t want a situation where the developer says they’re going to do something and then walk away without building the affordable [housing],” said Tom Madalena, the city’s interim Director of Community Development. “Millbrae cannot afford to give away $4 million and get nothing in return,” he added. “We’re not a Redwood City, for example, with all these big-box stores and office space shoring up the tax base.” In this context, he explained, a recent $6.7 million dollar contribution from the City of Menlo Park toward an affordable housing project did not serve as an appropriate comparison.

Mr. Madalena emphasized that their disagreement did not concern the fee itself, but rather the city’s ability to enforce the provision of 80 affordable units for veterans.

But Republic Urban’s CEO Michael Van Every rebuffed these claims in an August 8th letter addressed to the Mayor and City Council: “The idea or notion that somehow the project will not be delivered is just not true,” the letter states. According to Mr. Van Every, the authority to enforce the permanently affordable provision was the BART Board of Directors, not Millbrae, since the project sits on BART-owned land.

The sentiment was echoed by Nick Josefowitz, who serves on the BART Board of Directors: “This is exactly where we should be building the homes that our teachers, our cops and our veterans so badly need,” he said via email. “It is a symbol of the total dysfunction of our current system that this project of regional and even statewide significance is unable to escape the permitting vortex, and that veterans will be sleeping on the streets rather than in homes as a result.”

Millbrae City Councilmember Ann Schneider expressed more optimism regarding the project, but hedged her statements with concerns that the city’s negotiations could run afoul of overall market conditions. “I feel more confident that this project will work out,” she said in a phone interview. “I am less confident that the economy isn’t going to turn around…The longer we wait, the more we are outside the peak of the building boom we’re in—and ultimately, we could be left with nothing.”

While Councilmember Schneider consistently praised the work of Mr. Madalena’s department, she cautioned that the worst-case scenario could leave Millbrae in even more dire financial straits. “Right now, the city makes $0 from that parking lot. All that revenue goes to BART, because it’s their land. We’re the ones who pay the price if [the project] doesn’t get built.”

The Councilmember reinforced Director Josefowitz’s remarks on the project’s regional importance. “We have to join Silicon Valley together,” she said, “and that means being open to new ideas, and working together, collaboratively. Right now, we don’t have that reputation.”

Schneider also added that in the unlikely event of Republic Urban going bankrupt, the private-public partnership between BART and another developer, the Core Companies, would still be responsible for the veterans’ affordable housing project.

A follow-up letter dated August 22nd from Core Companies Vice President Chris Neale, further underscored the need for regional collaboration in providing affordable housing close to mass transit. According to Neale, “even if other [funding] sources can be identified and secured, it is anticipated that the Veteran’s Housing Project…will require County of San Mateo financial support.”

Both developers insist that San Mateo County regulations prevent them from qualifying for countywide bond money for affordable housing if a particular city levies fees for the same purpose.

Mr. Neale’s letter cites specific Preference Criteria in the County’s Affordable Housing Fund urging cities to “[g]rant the Project one or more cost-saving incentives such as fee reductions or waivers, by-right zoning, density bonus, parking requirement reduction…” because the County “is unlikely to fund applications that include large fees payable to local jurisdictions when the subsidy needed to pay such fees could otherwise be used to fund development of additional affordable housing.”

In other words, Millbrae can’t double-dip from its own fees and the county’s Affordable Housing Fund.

On the City of Millbrae’s side, Mr. Madalena responded that other “cost-saving incentives” could involve lowering the requirement for affordable housing, since the project is complying with BART’s requirement for 20% Below Market-Rate housing on its land, rather than Millbrae’s 15% requirement. “If they want to lower costs that way to make the project feasible, we could work with that,” he said.

As indicated by BART Director Josefowitz’s comment, BART is unlikely to budge on its terms.

Councilmember Schneider added: “I would like to see as much affordable housing as possible built here. If we can build more rather than the barebones, I support that.”

Because these decisions go beyond the authority of the city’s Planning Commission, the Millbrae City Council could discuss the Gateway at Millbrae Station as early as its next meeting on September 12th.