If a 635-unit housing project on Pear Avenue is a trial balloon for new housing in North Bayshore, it could be in for a rough ride.
On Tuesday night, the City Council denied a request to heavily tweak the housing project, overruling concerns by the Sobrato Organization that rising city fees were making the homes too expensive to build. The decision puts more pressure on Mountain View leaders to balance the market forces needed to build 9,850 new homes with the fees needed to fund schools and parks.
First proposed in 2015, Sobrato's Pear Avenue project was well ahead of the curve for housing projects in North Bayshore. The proposal, which was submitted through the city's gatekeeper process, calls for 635 apartments and a new 231,000-square-foot office building intended to be leased by Google. As a carrot, Sobrato officials pledged to donate a 1.4-acre parcel that could fit up to 140 affordable homes.
After three years of planning, the Pear Avenue project was scheduled to be presented to the city earlier this summer, but Sobrato officials pulled it back. Tim Steele, Sobrato vice president, pointed out the city's total fees had ballooned to more than $38 million, or about $60,000 per home. The project no longer penciled out, he said.
City housing staff echoed similar warnings. Given the costs, housing services manager Wayne Chen estimated that housing developers would need to charge an additional $950 in monthly rent per apartment in order to recoup their expenses.
On Tuesday night, Sobrato officials presented a pair of alternatives to make the project feasible. Both proposals called for Sobrato reducing its housing commitment to about 400 apartments, but the company would donate land for a park and sell the city about 2.5 acres for an affordable housing project. Steele described it as a "win-win" solution that would trade some affordable housing for more parkland.
Councilman John McAlister wanted to go for it, describing it as a great opportunity to get more parks and affordable housing. He applauded the "out of the box" thinking that went into the alternatives.
"With the cost of property and all the requirements, being creative is what we need to get to housing solutions," he said.
Yet the pitch landed with a thud for other council members, who expressed reluctance to rejigger the plans at this late stage. City staff acknowledged that the alternatives would require some tricky legal agreements and construction phasing. Plus, the city would inherit a significant portion of the school fees that Sobrato would otherwise be obligated to pay.
For those reasons, Councilman Chris Clark said he wouldn't support the plan.
"I appreciate the alternatives, but the original gives us the maximum number of affordable units and maximum flexibility," said Clark. "My worry with the (alternatives) is I don't know how far down the rabbit hole we have to go to make it work."
In a 4-3 vote, Clark and council members Ken Rosenberg, Margaret Abe-Koga and Lisa Matichak voted to reject the alternatives. Clark acknowledged the city would probably need to scale back its fees.
At a Sept. 4 meeting, the council heard from several developers that due to skyrocketing land values, city fees for parks and schools have been rising precipitously, making it infeasible to build housing in North Bayshore. City staff say those fees are adding about $120,000 in costs for each apartment built. Local school districts have said that transforming North Bayshore from an office park into a residential neighborhood will create the need for new schools to be built, something the districts can't afford to do without significant help.
Modifying the city's fees will be discussed at a future City Council meeting.