City takes $8M hit on North Bayshore park fees

Seeking to bring down the high cost of building housing in North Bayshore, Mountain View City Council members voted last week to cut park fees for a development in exchange for an acre of private open space.

Council members warned that they were not setting a precedent with the Sobrato Organization’s project, calling it an anomaly. But some city leaders worry this is the latest in a string of concessions that will leave little cash to build a school within Mountain View’s dense, tech park neighborhood.

Sobrato’s project at 1255 Pear Ave., which was approved by the City Council months ago, is a mixed-use development of offices and 635 apartments, and marks the city’s first foray into housing in North Bayshore. But Sobrato and other prospective developers in the area north of Highway 101 say the ever-increasing cost of park and school fees is threatening the viability of building the thousands of homes slated for the area.

Last month, the council agreed on a framework through which Sobrato could apply for an “open space credit” and construct a privately owned park on its property — accessible to the public — in exchange for a reduction in park fees equal to 75% of the value of the 1-acre park proposed in the project. According to city staff, that lowers the park fees Sobrato has to pay the city from $38.1 million to $30.4 million. The City Council approved the discount on a 5-2 vote at the April 9 meeting, with council members Margaret Abe-Koga and John McAlister opposed.

A similar compromise on school fees was approved when Sobrato’s project came before the council for approval in October. The two school districts serving the area, Mountain View Whisman and Mountain View-Los Altos High, had asked for a combined $24.4 million from Sobrato to offset the cost of new students generated by the project, but the developer sought to pay roughly one-third that amount. The council split the difference, requiring Sobrato pay $12 million.

Escalating costs have been a major concern for the developers seeking to build homes in North Bayshore, specifically Google and Sobrato, whose representatives told the council in September that costs per apartment unit shot up by $120,000 in one year to a total of $645,000. The increase was caused primarily by escalating park and school fees tied to property values.

Abe-Koga said the city’s concessions are jeopardizing the chances of schools getting built in North Bayshore. School district officials say they’re already facing a shortfall, and a loss of park fees means the city may not have money available to help. In the case of the Los Altos School District, the city pitched in $23 million in park fees for adjacent parkland, but it’s not clear whether Mountain View will be able to do the same in North Bayshore.

“We’re not collecting the fees that we should be collecting to help pay for the school that will need to be built,” Abe-Koga said. “And if the school district is not being made whole and now we’re not being made whole … my question is, who is going to pay for it?”

The Mountain View Whisman School District will be receiving $5.5 million as part of its agreement with Sobrato, which includes the $1.4 million that Sobrato owed the district in state-mandated developer fees. Just the construction to house those future students would cost the district an estimated $5.3 million, Superintendent Ayinde Rudolph told the Voice in an email, but the proportionate cost for land adds an additional $20 million unmet obligation.

McAlister, calling in to the meeting from Massachusetts, said he was worried in general that there will be a dearth of park space in North Bayshore, and that Sobrato’s project falls far short of the city’s goal of 3 acres of open space per 1,000 residents.

“I am always concerned about giving away credit for parkland. We are going backwards on our open space, and if land is going for approximately $12 million to $15 million an acre out there, we are going to shortchange ourselves again,” he said.

The majority of the council, however, wasn’t inclined to block Sobrato’s already approved project. Councilman Lucas Ramirez said he wasn’t prepared to modify a project that already won the council’s blessing before he took office, despite having “zero optimism” that a school will be built based on the fees being collected. Councilwoman Alison Hicks took a similar stance, adding that the parents who typically organize bond campaigns haven’t shown a lot of enthusiasm for passing a measure to pay for a school serving North Bayshore’s future residents.

Mountain View Whisman school board member Laura Blakely, who championed past school funding initiatives, including the Measure C parcel tax in 2008, said at a school board meeting last month that developers — not the taxpayers — should foot the bill for a school serving the neighborhoods planned in North Bayshore. Blakely also urged the council in October not to set a precedent for developers to shortchange local schools.

Councilman Chris Clark argued it was explicitly clear from the outset that Sobrato’s project was a special case and the first North Bayshore project out the gate, so it shouldn’t be seen as setting a precedent. Switching gears so deep into the process could also frighten other developers with the possibility that the council might demand more concessions in the 11th hour.

“I don’t think it makes sense, and frankly it would be bad for our reputation to go back on our word and change our minds at the last minute as to what we expect from this developer,” Clark said.