The Mountain View City Council voted 3-2 Tuesday night to sink a proposal for an eight-story office building in the San Antonio shopping center, calling it too tall, too dense and the wrong fit for a city striving to build more housing.
The narrow vote blocks the developer Merlone Geier from moving forward with plans to construct a 230,000-square-foot office building at the corner of San Antonio Road and California Street. The building would have replaced the former Milk Pail market and other remaining low-density commercial buildings near the corner.
The vote at the Sept. 17 meeting was not for approval of the project -- it would have allowed the city to work with the developer on the so-called gatekeeper request -- but council members argued it was a fundamentally flawed proposal for the area and requested zoning exceptions far exceeding what they were willing to tolerate.
The preliminary proposal exceeded the density of what's allowed in the city's San Antonio Precise Plan by more than twofold, and would essentially pack all of the remaining office space allowed in the area on a parcel less than 1 acre in size. The precise plan also has provisions to spread out office development in and around the shopping center, which would need to be amended to allow Merlone Geier's office development to move forward.
"This is just way too much of an exception," said Mayor Lisa Matichak. "I'm not willing to make all those changes to the precise plan to accommodate this."
Matichak, joined by councilwomen Margaret Abe-Koga and Alison Hicks, voted in favor of blocking the project, while council members Chris Clark and Ellen Kamei voted against. Council members Lucas Ramirez and John McAlister both recused themselves on grounds of a potential conflict of interest.
Abe-Koga said she believes the proposal runs contrary to the city's vision for the San Antonio area, which was intended to be a destination shopping center with just enough offices to support retail development in the area.
"My concern is that it's becoming more of an office park than a shopping center," she said.
A long time coming
Since at least 2013, Merlone Geier has sought to buy the properties near the corner of San Antonio Road and California Street to complete its higher-density vision for the mixed-use shopping center. The location includes the Milk Pail and the so-called Pilling property, which today stand in stark contrast to the nearby offices and Showplace Icon theater.
Buying out the corner property has been tricky, as Milk Pail owner Steve Rasmussen was reluctant to relocate the European-style open air market and refused to sell the property. He eventually accepted a buyout earlier this year for an undisclosed amount, and permanently shuttered the market in June.
The sheer size of the proposed office building is fueled largely by a complex deal with the Los Altos School District, whereby Merlone Geier agreed to purchase the ability to overbuild on the San Antonio property in exchange for nearly $20 million.
The process, known as the Transfer of Development Rights (TDRs), allows the Los Altos School District to buy land for a school in the San Antonio area and build below the density allowed on the property. The district can then "sell" to developers the remaining density in exchange for about $130 per square foot.
Earlier this year, the school district announced its plans to purchase 11.65 acres of land from the real estate company Federal Realty for $155 million. The property is located at the corner of California Street and Showers Drive and is currently occupied by several commercial tenants, including the Kohl's department store. It's also a short distance away from Merlone Geier's proposed office building.
A 2-acre portion of the land will immediately be resold to the city of Mountain View for use as a park.
In order to defray the massive cost of the land purchase, the district lined up several agreements to sell 610,000 square feet of development rights -- including 150,000 square feet to Merlone Geier -- for a total of $79.3 million. The sales are contingent upon the council's approval of any projects using TDRs.
While the big boost in density helps finance a new school practically next door to the office project, city officials cautioned that the council should not view TDRs as a free pass. The city still has full discretion over any development that runs afoul of the zoning standards in the San Antonio area, and council members are free to reject special exemptions requested by Merlone Geier.
The transition from a cozy community market to a large, eight-story building with ground-floor retail and seven stories of offices didn't sit well with nearby residents, said Matt Raschke, a resident of the Crossings neighborhood. He said he was happy to see the school district moving forward with plans for a school, but the monolithic shape and size of the proposal wouldn't be pedestrian-friendly and would block the view of the newly built theater.
"We're very disappointed in the loss of the Milk Pail, we're very sad that that left," Raschke said. "And to be presented with this giant box of architecture to replace it is quite a shock."
Council members Kamei and Clark, who voted against denying the gatekeeper proposal, made a pitch that the project could be revised to be more palatable, bringing down the building height and stark, boxy appearance. Clark said the high density is the result of the TDR program and simply moves office space within the San Antonio area rather than exceeding what was initially planned for the area, and that Merlone Geier's proposal would hit the area's office cap and prevent further office development.
Kamei said the council put forward the TDR program in good faith, and that the city ought to allow the proposal to move forward in the interest of bringing a school to San Antonio.
"Given all the discussion, I want to be committed to the area getting that open space, getting that park and getting the school," she said.
Under the framework of the deal between the city and the Los Altos School District, any TDRs sold can be resold by the developer on a secondary market. Merlone Geier is also free to submit another gatekeeper proposal that meets the council's expectations. Despite these options, Superintendent Jeff Baier said the denial Tuesday brings uncertainty to a school district on the cusp of making a $155 million land purchase.
"Uncertainty creates complications for us," he said. "As purchasers, we are looking for certainty in order to have the confidence to close our sale, so this is an important piece for us."
Abe-Koga said she wanted to go back to the drawing board and consider housing on the corner property, rather than dense offices, and do a better job spreading out office development. While she acknowledged the school district's concerns, she said the city has already done more than its fair share to help build a new school.
"There has to be a balance, and I think that we have frankly gone above and beyond to try to make this school site happen," Abe-Koga said. "But it really needs to be balanced with our community's and our residents' interests."