A new five-story affordable housing project that would replace a downtown Taco Bell received enthusiastic support from a City Council subcommittee on Thursday. The project at 950 W. El Camino Real would create 71 badly needed affordable apartments, but it could require the largest city subsidy to date for a project of its kind.
In total, the project by the nonprofit Palo Alto Housing is expected to cost about $41 million to build. That hefty price is due to the familiar factors of the frenzied real estate market, said Danny Ross, Palo Alto Housing development manager.
“Land costs are at an all-time high; construction costs are at an all-time high,” he explained to the city committee. “The per-door costs are going up across the board for us.”
Mountain View would need to pay about half that price, $22.7 million, which would deplete most of the city’s affordable housing fund. But city housing staff suggested they could raise this amount from market-rate projects that are currently under planning review.
A good market-rate project for this, they suggested, would be a proposal by Prometheus Real Estate to build 471 apartments at the former Flower Mart property on the 500 block of E. Evelyn Avenue. Prometheus representatives offered to “prefund” the fees they would eventually have to pay for affordable housing.
City leaders have been receptive to this prefunding idea for other recent projects, pointing out that it can provide millions of dollars upfront that can immediately go toward affordable housing. By taking the money, city officials emphasize they are not agreeing to a quid pro quo to approve a developer’s project. Under this agreement, if Prometheus’ project was denied, the city would need to repay any money that was prefunded.
“This is one of the creative things the private sector is bringing forward,” said Mayor Lenny Siegel. “This is a great location for a project like this.”
Nearly all of the 71 affordable housing units proposed by Palo Alto Housing would be priced for households earning less than 60 percent of the median income. One quarter of the units would be reserved for developmentally disabled individuals.
The council committee supported several exemptions for the Palo Alto Housing project, allowing the building to be constructed taller and denser than normally allowed. They also gave conditional support to a minimal parking ratio that would provide a dedicated parking space for approximately one out of three residents.
The city’s “Notice of Funding Availability” committee supported the Palo Alto Housing proposal in a 3-0 vote. The project is expected to go before the full council next month.
Palo Alto Housing is also planning two other large projects that will be coming up soon for review. Those projects include a 70-unit development and a 101-unit studio project, both located on Terra Bella Avenue.