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Mountain View council scrambles to save older apartments

Plan to save Mariposa apartments hits snags; city's prevailing wage rules may curtail affordable housing

The city's good intentions to save a few dozen cheap apartments from demolition nearly ended up backfiring when plans for more than 200 new homes were thrown into limbo. One problem: Mountain View's public housing subsidies triggered prevailing wage rules, making the project financially infeasible.

In a long and messy Tuesday night meeting, the City Council ended up brainstorming ideas to preserve as much affordable housing as possible while performing a delicate balancing act between demands from developers, tenants, labor unions and other stakeholders.

At first glance, the proposal by Prometheus Real Estate Group was relatively straightforward -- build an upscale 226-unit apartment building on Villa Street a short walk from downtown Mountain View.

The twist was the Villa Street project was inextricably linked to a 48-unit apartment building about four blocks away on Mariposa Avenue. The Mariposa apartments are dilapidated and desperately in need of repairs, and the developer said it made sense to tear the whole place down. But there are 44 families still living there, so Prometheus officials proposed a trade. If they rehabilitated the Mariposa apartments, they asked the city to nix the 34 subsidized apartments they would be required to include at the Villa Street project.

When Prometheus first proposed the idea in June, it lead to a desperate scene as the predominately Latino families living at Mariposa implored the City Council to approve the luxury apartments. Parents described the run-down Mariposa apartments as their only option for staying in Mountain View. Children told the council they would be forced to change schools and lose friends.

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Those families returned to the City Council on Tuesday and again urged the city to find some way to save their homes.

"We need diversity in Mountain View, and preserving these affordable units is a good way to preserve the people here in our city," said Fernando Romero, a city human relations commissioner who lives at the Mariposa apartments. "We've had a lot of projects where people had to leave their homes, and we don't want that to happen anymore."

While City Council members gave tentative support for the proposal in June, they stipulated that they needed to crunch the numbers to make sure that it balanced out.

At the Tuesday meeting, city staff reported the deal wasn't as good as it seemed. It would be about $8 million cheaper for Prometheus to fix up the Mariposa apartments instead of building 34 new affordable apartments, reported senior planner Matthew VanOosten.

Instead, he and other city planning staff proposed a "hybrid option" that would attempt to preserve affordable housing at both sites. If the city chips in about $8.2 million, then Prometheus might be willing to relinquish the Mariposa property while still building 17 affordable apartments at Villa Street. The 48 apartments at Mariposa would be managed by the affordable housing nonprofit Bridge Housing.

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It was an idea immediately embraced by everyone at the dais, many calling it a "win-win." Councilman John McAlister beamed with pride, happy that his idea of having the city buy up older apartments was finally being taken up.

"Persistence pays off," he said. "I think this will be the start of many things we will do to prevent the removal of naturally affordable units."

Then the deal swiftly fell apart. Stepping up to the podium, Prometheus vice president Jon Moss warned that there are other looming factors that made it difficult to swap housing. In particular, he took aim at construction trade unions and the extra costs if the project has to follow prevailing wage rules. Just to fix up the Mariposa apartments would cost $2 million more, and if prevailing wages extended to the Villa Street project, it would make construction $40 million more expensive, he said. That would be a complete deal breaker and his firm would just scuttle the whole project, he said.

"If we're exposed to affordable housing requirements that could be anything under the sun, it'd be opening up Pandora's box," he said. "It's not inconceivable that labor could make the claim that prevailing wages should be mandated for the entire project."

Due to a 2013 ordinance, Mountain View requires that all affordable housing projects using city funds pay prevailing wages to all construction workers. As of 2018, state law imposes similar requirements. Prevailing wage rules can increase the public costs of low-income housing projects anywhere from 9% to 37%, according to a 2005 University of California at Berkeley study.

The city's hybrid plan to save affordable housing at Mariposa and Villa was acceptable in concept, Moss said. But he warned that dedicating city funds, even indirectly, toward the Villa Street project could mean it is also subject to the city's prevailing wage law. It was a risk that city attorneys eventually acknowledged was plausible.

At the meeting, Josué García of the Santa Clara Building & Construction Trades Council was asked repeatedly by council members if he would limit prevailing wage rules to only the Mariposa site. He explicitly avoided making any commitments, but he said he was willing to negotiate with Prometheus.

"We always negotiate in good faith. All I'm asking is for you to trust us," García said. "Wage theft and worker abuse continues to happen in this area. The city has more leverage here, and I suggest that you take advantage of it."

If the city couldn't make a deal work, Prometheus was content to just build the Villa Street project, Moss said. Left unsaid was the likely outcome that the Mariposa apartments would be razed and 44 families would lose their homes.

Council members, scrambling to keep any deal alive for the two sites, started spitballing ideas. Councilman Chris Clark proposed having the city foot the bill for the added prevailing wage costs. Other council members tinkered with different sets of requirements if Prometheus wasn't able to negotiate a deal with the labor unions.

Ultimately, the City Council decided to extricate any public funding from the project, essentially sidestepping the city's own prevailing wage laws. Council members tabled their discussion for about an hour as a team of Mountain View planners did the math for how much affordable housing they could expect without paying a dime from the city's coffers. City planners later reported that the city should require seven below-market-rate apartments at Villa in addition to rehabilitating the Mariposa homes.

Moss said he disagreed with the city's calculation, warning he would rescind the whole project rather than build the seven affordable units. Making a motion, Councilman Clark lowered the requirement to five affordable units, which the council unanimously approved.

As part of their decision, city officials are leaving open the possibility that Prometheus and labor representatives can reach a deal in the coming weeks over the prevailing wage requirements. If that issue can be resolved, city officials say they may be able to build more affordable units.

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Mountain View council scrambles to save older apartments

Plan to save Mariposa apartments hits snags; city's prevailing wage rules may curtail affordable housing

by / Mountain View Voice

Uploaded: Thu, Dec 5, 2019, 1:45 pm

The city's good intentions to save a few dozen cheap apartments from demolition nearly ended up backfiring when plans for more than 200 new homes were thrown into limbo. One problem: Mountain View's public housing subsidies triggered prevailing wage rules, making the project financially infeasible.

In a long and messy Tuesday night meeting, the City Council ended up brainstorming ideas to preserve as much affordable housing as possible while performing a delicate balancing act between demands from developers, tenants, labor unions and other stakeholders.

At first glance, the proposal by Prometheus Real Estate Group was relatively straightforward -- build an upscale 226-unit apartment building on Villa Street a short walk from downtown Mountain View.

The twist was the Villa Street project was inextricably linked to a 48-unit apartment building about four blocks away on Mariposa Avenue. The Mariposa apartments are dilapidated and desperately in need of repairs, and the developer said it made sense to tear the whole place down. But there are 44 families still living there, so Prometheus officials proposed a trade. If they rehabilitated the Mariposa apartments, they asked the city to nix the 34 subsidized apartments they would be required to include at the Villa Street project.

When Prometheus first proposed the idea in June, it lead to a desperate scene as the predominately Latino families living at Mariposa implored the City Council to approve the luxury apartments. Parents described the run-down Mariposa apartments as their only option for staying in Mountain View. Children told the council they would be forced to change schools and lose friends.

Those families returned to the City Council on Tuesday and again urged the city to find some way to save their homes.

"We need diversity in Mountain View, and preserving these affordable units is a good way to preserve the people here in our city," said Fernando Romero, a city human relations commissioner who lives at the Mariposa apartments. "We've had a lot of projects where people had to leave their homes, and we don't want that to happen anymore."

While City Council members gave tentative support for the proposal in June, they stipulated that they needed to crunch the numbers to make sure that it balanced out.

At the Tuesday meeting, city staff reported the deal wasn't as good as it seemed. It would be about $8 million cheaper for Prometheus to fix up the Mariposa apartments instead of building 34 new affordable apartments, reported senior planner Matthew VanOosten.

Instead, he and other city planning staff proposed a "hybrid option" that would attempt to preserve affordable housing at both sites. If the city chips in about $8.2 million, then Prometheus might be willing to relinquish the Mariposa property while still building 17 affordable apartments at Villa Street. The 48 apartments at Mariposa would be managed by the affordable housing nonprofit Bridge Housing.

It was an idea immediately embraced by everyone at the dais, many calling it a "win-win." Councilman John McAlister beamed with pride, happy that his idea of having the city buy up older apartments was finally being taken up.

"Persistence pays off," he said. "I think this will be the start of many things we will do to prevent the removal of naturally affordable units."

Then the deal swiftly fell apart. Stepping up to the podium, Prometheus vice president Jon Moss warned that there are other looming factors that made it difficult to swap housing. In particular, he took aim at construction trade unions and the extra costs if the project has to follow prevailing wage rules. Just to fix up the Mariposa apartments would cost $2 million more, and if prevailing wages extended to the Villa Street project, it would make construction $40 million more expensive, he said. That would be a complete deal breaker and his firm would just scuttle the whole project, he said.

"If we're exposed to affordable housing requirements that could be anything under the sun, it'd be opening up Pandora's box," he said. "It's not inconceivable that labor could make the claim that prevailing wages should be mandated for the entire project."

Due to a 2013 ordinance, Mountain View requires that all affordable housing projects using city funds pay prevailing wages to all construction workers. As of 2018, state law imposes similar requirements. Prevailing wage rules can increase the public costs of low-income housing projects anywhere from 9% to 37%, according to a 2005 University of California at Berkeley study.

The city's hybrid plan to save affordable housing at Mariposa and Villa was acceptable in concept, Moss said. But he warned that dedicating city funds, even indirectly, toward the Villa Street project could mean it is also subject to the city's prevailing wage law. It was a risk that city attorneys eventually acknowledged was plausible.

At the meeting, Josué García of the Santa Clara Building & Construction Trades Council was asked repeatedly by council members if he would limit prevailing wage rules to only the Mariposa site. He explicitly avoided making any commitments, but he said he was willing to negotiate with Prometheus.

"We always negotiate in good faith. All I'm asking is for you to trust us," García said. "Wage theft and worker abuse continues to happen in this area. The city has more leverage here, and I suggest that you take advantage of it."

If the city couldn't make a deal work, Prometheus was content to just build the Villa Street project, Moss said. Left unsaid was the likely outcome that the Mariposa apartments would be razed and 44 families would lose their homes.

Council members, scrambling to keep any deal alive for the two sites, started spitballing ideas. Councilman Chris Clark proposed having the city foot the bill for the added prevailing wage costs. Other council members tinkered with different sets of requirements if Prometheus wasn't able to negotiate a deal with the labor unions.

Ultimately, the City Council decided to extricate any public funding from the project, essentially sidestepping the city's own prevailing wage laws. Council members tabled their discussion for about an hour as a team of Mountain View planners did the math for how much affordable housing they could expect without paying a dime from the city's coffers. City planners later reported that the city should require seven below-market-rate apartments at Villa in addition to rehabilitating the Mariposa homes.

Moss said he disagreed with the city's calculation, warning he would rescind the whole project rather than build the seven affordable units. Making a motion, Councilman Clark lowered the requirement to five affordable units, which the council unanimously approved.

As part of their decision, city officials are leaving open the possibility that Prometheus and labor representatives can reach a deal in the coming weeks over the prevailing wage requirements. If that issue can be resolved, city officials say they may be able to build more affordable units.

Comments

Steven Nelson
Registered user
Cuesta Park
on Dec 5, 2019 at 3:01 pm
Steven Nelson, Cuesta Park
Registered user
on Dec 5, 2019 at 3:01 pm
5 people like this

too bad - as a son of union people (Teamsters and Retail Clerks) I fully understand the problem of reasonable wages (+ benefits). As a school board member - I always found the local MVW local fairly reasonable to deal with [hats off to Jonathan, their former local president]. But what happens when the union cost of "Promote the General Welfare" starts to make public benefit policy impossible to implement? I have a bit of a hard time, myself, from having construction union 'regionals' contributing thousands per trade to school bond campaign spending. [comming up, MVWSDs March Bond / like 2012's Bond Measure]

I see why the Council got so tied up!


Dan Waylonis
Registered user
Jackson Park
on Dec 5, 2019 at 4:38 pm
Dan Waylonis, Jackson Park
Registered user
on Dec 5, 2019 at 4:38 pm
105 people like this

"Mountain View's public housing subsidies triggered prevailing wage rules, making the project financially infeasible." So the unions strong-armed the city and state into adding this unworkable language into the law books in order to benefit the unions. And then the city and state are SHOCKED that developers are resisting building housing and choose to add more office space.

If you want more of something, you subsidize it. If you want less of something, you tax it.


rent control?
Cuesta Park
on Dec 6, 2019 at 12:29 am
rent control?, Cuesta Park
on Dec 6, 2019 at 12:29 am
104 people like this

This is not as much about wages as it is about rent control. While rent control was passed in good faith, it is driving out the middle class landlords with (old buildings) out of business. Prometheus and such will raze those old affordable housing and build new luxury (unaffordable) appartments, leaving no space for socioeconomically disadvantage citizens. Rent control has totally opposite impact on low income tenants. I feel for those people who lived frugal life and paid mortgage all life to be able to retire on their little rental building. Their plan fell on it's face.


JFK
Bailey Park
on Dec 6, 2019 at 10:06 am
JFK, Bailey Park
on Dec 6, 2019 at 10:06 am
12 people like this

This has notjing to do with rent control and points to city council's lack of leadership. Agreeing to a mere five units while not knowing the fate of Mariposa apartments is irresponsible. City attorney needs to wake up and think about these issues ahead of time. Sigh and ugh. Nelson can u pls just move to Idaho?


Persistence pays off
The Crossings
on Dec 6, 2019 at 10:17 am
Persistence pays off, The Crossings
on Dec 6, 2019 at 10:17 am
6 people like this

Gulp, doesn't look like a win win situation at all. The same guy who told the school district to do a better job and that he expected more from them, doesn't even know how his own 2013 ordinance affects development projects approved by him and the council . . . YIKES!


Mark
Old Mountain View
on Dec 6, 2019 at 11:01 am
Mark, Old Mountain View
on Dec 6, 2019 at 11:01 am
83 people like this

Low income housing,
Public Housing,

Is NOT the job or responsibility of any private individual.

If you say that it is important to have those, then it is the Governments job to raise the money, buy/build those properties, and manage them.


Those of you who say it is about greed, then please tell me why do you not go after the banks?, the ones that people need to go, to borrow money to build/buy these properties.

No project that does not make a profit, according to the bank, will not get any money to buy/build these projects.


@Mark
Rex Manor
on Dec 6, 2019 at 3:40 pm
@Mark, Rex Manor
on Dec 6, 2019 at 3:40 pm
2 people like this

Mark,

your point is:

> Low income housing,
> Public Housing,

> Is NOT the job or responsibility of any private individual.

Certainly. However, any jurisdiction is allowed to assess community impact fees. These can take the form of requiring sewer main upgrades, school district funding, park land, etc.

Below market rate housing requirements is merely a reasonable way for a developer to pay for the community impact their highend apartments or office project is making on mountain view.


Get Real
Bailey Park
on Dec 6, 2019 at 4:54 pm
Get Real, Bailey Park
on Dec 6, 2019 at 4:54 pm
86 people like this

Why is the city considering investing in a hovel and money pit of a decrepit old apartment building? It makes no sense other than a few council members wanting to feel good. Is showing a guy sipping coffee on his couch in his tiny studio meant to imply this is the best and most economically feasible solution? Come take a picture of me watching TV in my shorts and then tell me what the city is going to do to ensure I can live in my home forever. Who thinks like that? It's just plain unrealistic.


@@Mark
Rex Manor
on Dec 6, 2019 at 9:20 pm
@@Mark, Rex Manor
on Dec 6, 2019 at 9:20 pm
87 people like this

You said,
"Certainly. However, any jurisdiction is allowed to assess community impact fees. These can take the form of requiring sewer main upgrades, school district funding, park land, etc.

Below market rate housing requirements is merely a reasonable way for a developer to pay for the community impact their highend apartments or office project is making on mountain view"


The city has the right to have a developer pay for the impacts that their development has against the community.

Example, when a developer comes in and razes a 25 unit apt. building and replaces it with 20 row homes, there is no impact on the water/sewer system or any added park or impact on schools. Yet the developer has to pay these fee's, which is unfair.

Then the city also says that the developer has to provide 25% Below Market Rate housing from this project. This is totally not fair and is not the job of any individual to provide this type of housing for the city good. That would be the job of the local government to pay for those subsidized housing, not a private individual.


A resident
Blossom Valley
on Dec 9, 2019 at 7:55 am
A resident, Blossom Valley
on Dec 9, 2019 at 7:55 am
1 person likes this

Developers don't like using unionized labor as they have to pay prevailing wages. Using a large force off undocumented labor is good for the bottom line. Though well meaning, the City Council's attempt to fight market forces is failing. What we need is high speed transportation in/out of Silicon Valley. If a worker living in Tracy can make it to Palo Alto in 1hr via train then it would be good for many.


sfcanative
Registered user
Whisman Station
on Dec 10, 2019 at 8:02 pm
sfcanative, Whisman Station
Registered user
on Dec 10, 2019 at 8:02 pm
7 people like this

Please spend these public funds incentivizing businesses and employees to take their operations and livelihoods elsewhere--like out of state! It is the fastest way to solve the housing issue CA faces. No feasible amount of government involvement in the housing sector will ever solve the shortage issue. There. are. too. many. people. trying. to. live. in. the. Bay. Area. Period. Full stop.

We need fewer people, not more housing!


Darin
Registered user
Another Mountain View Neighborhood
on Dec 11, 2019 at 3:52 pm
Darin, Another Mountain View Neighborhood
Registered user
on Dec 11, 2019 at 3:52 pm
16 people like this

@sfcanative

Are you volunteering to leave?


@Darin
Bailey Park
on Dec 11, 2019 at 4:10 pm
@Darin, Bailey Park
on Dec 11, 2019 at 4:10 pm
19 people like this

Fingers crossed...


sfcanative
Registered user
Whisman Station
on Dec 13, 2019 at 12:04 pm
sfcanative, Whisman Station
Registered user
on Dec 13, 2019 at 12:04 pm
5 people like this

I was born here, raised here, went to school here, raised a family here, provided multifamily housing for thousands of families over the past five decades . . . and you?


@sfcanative
Bailey Park
on Dec 13, 2019 at 12:08 pm
@sfcanative, Bailey Park
on Dec 13, 2019 at 12:08 pm
14 people like this

Wow, you want us to give you a prize because you were a landlord for 50 years? Ok, Boomer.


He's Baaack!
Bailey Park
on Dec 13, 2019 at 3:36 pm
He's Baaack!, Bailey Park
on Dec 13, 2019 at 3:36 pm
29 people like this

LOL just posted above. You all know him as the banned poster on this site.


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