News

City to decide fate of Maybell loan

Options include city buying the Palo Alto site and finding its own use for it

The Palo Alto City Council will decide Monday whether to demand back $5.82 million it loaned the Palo Alto Housing Corp. to develop senior housing on Maybell Avenue -- a proposal that was defeated by referendum last month -- or wait for the organization to pay back the loan after finding its own buyer.

The Housing Corp. purchased the site at 567-595 Maybell Ave. for $15.6 million with the help of the city's loan, as well as loans from the Local Initiative Support Corporation, the Low Income Investment Fund and the county.

Now, after the defeat of Measure D in November -- which was a referendum on a City Council decision to rezone the site to allow 60 apartments for low-income seniors and 12 market-rate homes -- the development won't proceed, according to a staff report.

The report states that the Housing Corp. is looking to sell the land, which has gone up in value since it was purchased. The report estimates the site could be worth as much as $18.7 million.

One of the city's options, terminating its agreement with the Housing Corp., would effectively force the organization to sell the property to allow the city to recoup its loan. However, the city could also potentially buy the property from the Housing Corp.

If the city were to terminate its agreement, it would get the same results that it would have if it had done nothing (the option staff recommends). It would recoup its $5.82 million loan, which could then be used for another affordable-housing development somewhere in the city.

But if the city were to purchase the site for the purposes of developing it for affordable housing, it would be on the hook for the $10 million in loans the Housing Corp. took out from the other organizations, including $8 million from Local Initiative Support Corporation and the Low Income Investment Fund, and $2.8 million from the county.

The city would then have to decide how to develop the site, which is zoned for a maximum of 46 homes, with the addition of a state density-bonus inclusion.

Staff estimates that developing the site could cost $15.6 million and probably wouldn't have the advantage of generating revenue from tax-credit subsidies, which were to have made the Housing Corp. $13 million for its more dense development.

The council will decide which option it will take on during its meeting, Monday, Dec. 9, in City Hall at 250 Hamilton Ave.

Comments

Posted by You wanted existing zoning, a resident of Gunn High School
on Dec 5, 2013 at 10:34 am

Pretty sure the city doesn't have $18.7 million to buy this property. We need an earthquake-safe public safety station, road improvements, fire station upgrades. Public safety and existing infrastructure maintenance should come first.

The No on Measure D folks said they wanted the site developed to existing zoning. Now they will get their wish. A for-profit developer will be glad to do so, but a for-profit developer will be less inclined to provide the safety improvements to Maybell that PAHC offered.


Posted by Angela, a resident of Downtown North
on Dec 5, 2013 at 10:37 am

This should be interesting, and not in a good way. I predict the city council, with their wounded egos, will be as spiteful and petty as can be expected. I heard that Berman even told a constituent that he hoped something really ugly goes up on that parcel as payback for having the nerve to challenge his wisdom.

Berman is a terrible leader and should be recalled, since he's not up for reelection until 2016.


Posted by Craig Laughton, a resident of College Terrace
on Dec 5, 2013 at 11:07 am

>It would recoup its $5.82 million loan, which could then be used for another affordable-housing development somewhere in the city.

Just terminate the agreement with PAHC, and demand back the money that CPA lent it. However, do not agree to invest in more welfare housing...just invest in infrastructure, unfunded mandates, etc.

We don't need any more welfare housing in PA.


Posted by Concerned Retiree, a resident of Midtown
on Dec 5, 2013 at 11:46 am

Perhaps the City of Palo Alto Powers That Be will proceed more cautiously this time around. Before they decide to try a dramatic change in policy, they might just ask the voters and residents who will have to live with the so-called public benefits and new unzoned land uses they propose.


Posted by the_punnisher, a resident of Mountain View
on Dec 5, 2013 at 12:51 pm

the_punnisher is a registered user.

If this was any other city with government ( not ) serving the resident's interest, a recall petition would have been circulated right after the Measure D issue was decided.
That in itself should have told the City Council that their policies were not in the resident's best interests.
So why haven't any resignations been tendered? Could there be any other issues instead of the residents desires for the City Council?( heavy sarcasm in the previous sentence ).

Right now, a similar situation exists in CO for the elected government officials that support gun legislation instead of reading the Federal and State Constitutions. Two have been recalled and the third resigned before their job was put to a vote. That vote would have severely damaged the party, so Hudak resigned to put another Democrat in her place and keep a majority in office.

If P.A. is like any other city, why haven't trash removal proceedings started to clean up City Hall? Getting back that ill spent money would be a good start...


Posted by Be careful what you vote for, a resident of Gunn High School
on Dec 5, 2013 at 1:19 pm

I suspect Council will do exactly what the No on D folks asked. They will allow the site to be sold to a for-profit developer who will develop it to the limits of its existing zoning. This is what approximately 6,000 voters said you wanted. I thought the ballot arguments were very clear on the alternative.


Posted by Disguisted with city hall, a resident of Old Palo Alto
on Dec 5, 2013 at 2:36 pm

I hope our clueless city leaders get interest on the money they loaned to the housing corporation. Berman is a terrible leader and should be recalled, as should most of the city council members. The council is errogant and totally out of touch with the citizens of Palo Alto. Worst city council in memory.


Posted by Palo Altan, a resident of Green Acres
on Dec 5, 2013 at 3:04 pm

@ Be Careful,
I understand some of the Yes on D folk are bitter and out for retribution, but all that's going to do is push us further down this road of division and do nothing for Palo Alto.

The fact is, the No on D folks have a lot of recourse to fight overdevelopment of any kind through the subdivision process, among others, and were already prepared to do that if they lost the election. The City Council may get away with stuff if no one is fighting them, but neighbors will fight at Maybell. Many of the letters over the past months expressing their concerns, including the environmental concerns, were put into the file for the property. So any developer interested in that property is going to know they will face the kind of opposition the City together with PAHC were not able to overcome even with a save-the-baby-seals cause. It's an absolute headache for any developer to contemplate. Put that together with the risk inherent with trying to build next to the Tan Plaza and the APAC apartments, and that property is a lot less enticing for anyone to want to try to put the kind of development on that you envision. There are other legal avenues the neighbors never pursued, but will if it comes to it.

Rather than going down that road, why not consider a more positive alternative?
1) The City gives the neighbors the chance to convert the orchard into a community asset, like Gamble Gardens but for trees. (And no, it's not $16 or $18 million- it just means they give us the TIME to do it, and not being vindictive.)
2) The City takes the money it loaned PAHC at Maybell and loans it to the nonprofit at Buena Vista so the residents have a more competitive offer. Neighbors are not going to allow that property to be rezoned, period. CC may as well make at least a show of not being hypocrites, and try to save the affordable housing there of longtime Palo Altans.
3) The City does a demographic survey and puts together a working group to figure out how to match the need with the available assets, such as the empty BMR spots in current senior centers.
4) The City does a more holistic review of traffic, safety, and development, in concert with the community and vision for the City, so that we proceed working together and with knowledge of what works. Otherwise, we will continue on this path blazed by Measure D. i.e., we can do this the easy way, or the hard way


Posted by Palo Altan, a resident of Green Acres
on Dec 5, 2013 at 3:16 pm

@Disgusted in Old Palo Alto,
One of the things I hope the rest of Palo Alto got out of Measure D is that you (YOU ALL) can fight City Hall. The people who put together Measure D actually first began by trying to get the City and PAHC to work with them, but fought it when it became clear that the City had their own plans and felt the residents were beside the point.

We have our hands full over here still on the Maybell side, but if you and your neighbors start a recall of any of the gang of seven, you will find instant support over here. We do need to find good alternatives to serve.

Citizen action is not as hard as it used to be as we are so interconnected online these days. You can find how to recall councilmembers from the City Clerk.

You want an issue to dig your teeth into? The City continued to pursue the funding from the state and feds throughout the referendum process, verifying to the state CTCAC that the Maybell property was zoned PC (even though it never was), that CEQA appeals had expired (even though there was a CEQA lawsuit), that they had a comprehensive plan amendment (even though they had to take it out because of the 2nd referendum), etc. They repeatedly submitted information they knew was false, on forms PAHC signs under penalty of perjury, in order to get funding. Did you know they were granted funding based on the representations of those applications (for which they would not have qualified if they had admitted to the actual zoning of the property)? I don't know about you, but to me, there's a huge scandal there. Even if no one did anything illegal, it's absolutely unprofessional for City staff to go to such extents against the public. It's very likely some other community lost out on their affordable projects because of what PA did.


Posted by Reality check, a resident of Barron Park
on Dec 5, 2013 at 3:50 pm

@Palo Altan, I hate to break this to you, but you are not getting a 'heritage orchard' on Maybell (not unless you and your neighbors are going to take up a multi-million dollar collection to buy the property). You are also not going to get a developer who thinks that saber-rattling on Palo Alto Online is a reason to give up density. What you are going to get is a commercial, for-profit development built up to the limits of the existing zoning. That's going to be a bunch of cars, a bunch of driveways, and a bunch of traffic. You (and maybe the Weekly editor, I dunno) are the only ones left who haven't re-entered the real world on this one.


Posted by Palo Altan, a resident of Green Acres
on Dec 5, 2013 at 4:00 pm

@Reality Check,
Turning the orchard into parkland is an easier battle right now than fighting City Hall over the rezoning. I say battle because you and your friends seem determined to make it that. If you realize anything from Measure D, I hope you realize we are already geared for the battle. Are you so bitter and bent on revenge that you will fight the longterm interests of the environment, the residents, children's safety, and even affordable housing? These City Councilmembers will be gone much sooner than the thousands of residents PAHC seemed to be trying to turn against them. If they cared about affordable housing they would be thinking about rebuilding the bridges THEY burned. If you care about this community, you might think about your revenge motive and whether or not it's cutting of your nose to spite your face.


Posted by resident 1, a resident of Charleston Meadows
on Dec 5, 2013 at 5:21 pm

Why do people from Mountain View seem so intense about this matter? Mountain View has its own problems - he needs to go after MV. He can't vote in any of these matters - he is just flaming the fire. You would think he lost money here.

As to a developer buying the property he still has to present a plan approved by the city planning department. There is no blank check that allows unplanned growth.

I would like to see a commercial venture - a child-care center and community center for students so they have somewhere to go after school.
With the park across the street this would be a good addition to the city.
They could also have a community garden. This would be a great learning center.


Posted by Palo alto resident, a resident of Embarcadero Oaks/Leland
on Dec 5, 2013 at 5:43 pm

The City does not own Maybell, PAHC does and they need to pay back their 15.6 million in loans. All the City can decide is when to ask for their loan $$ back.


Posted by common sense, a resident of Midtown
on Dec 5, 2013 at 5:49 pm

Any developer who wants to build 46 units on the Maybell site of 2.5 acres, will need to take into account set backs, FAR rules, parking, etc, which would yield units of about 1100 - 1200 square feet.

Even PAHC projected that it would need variances to build the 12 houses in about 50% of the site; variances like sub standard lot size, set backs, FAR rules, etc. And these would be 12 houses that would maximize the developer's profit.

I suspect that there will be far fewer than 46 units, and the developer will be paying an in-lieu fee instead of dedicating any units to the BMR program.


Posted by Palo Altan, a resident of Green Acres
on Dec 5, 2013 at 7:43 pm

@Palo Alto resident,
Actually, the City has first right of refusal on the property. It can also decide to purchase the property without any competition. It could decide to purchase the property with Stanford funds and hold it for 6 months to give residents and environmental groups a chance to save the orchard, and sell it with no skin off their nose if it doesn't work out.

This side of town has taken a lot of density in the last few years, without commensurate investment in infrastructure or amenities. We have more affordable housing development than any other residential neighborhood -- much of which we are going to lose if the City doesn't act, which is a whole other discussion about City Council hypocrisy -- the only other part of Palo Alto with comparable is downtown, which also has Lucie Stern Community Center, Lucie Stern Theater, the children's theater, the children's library, the downtown library, the main library, the art center, Rinconada Park, Rinconada Pool, City Hall, the children's wading pool, the tennis courts, the bowling green, and is just up Embarcadero from the air port, baylands, and golf course. Our taxes help pay for those amenities, and what do we have on this side of town? Bol Park, which residents pretty much paid for themselves, and Briones Park, which would be an electrical substation if neighbors hadn't protested and gotten it moved.

Why are we chopped liver? We're not even asking the City to pay for it, just to give us (once again) a chance to find a way to pay for the few community assets we have on this side of town ourselves. We've been taking a lot of density, why shouldn't we be given the opportunity to make that open space? It's the last piece of orchard in the area, and this side of town could desperately use a meeting space. It's the perfect place to put in a sister site to Gamble Gardens, only for the trees.

If the City really cares about affordable housing instead of forcing developer giveaways on us, let them put their money where their mouths are, and take the $6million they invested at Maybell and loan it to the nonprofit at Buena Vista under similar terms and regulatory agreement as at Maybell. With nearly $21 million then, and the owner having the ability to write-off nearly $10 million as donation to the BV nonprofit, and saving the millions it would take to evict the residents, the residents would then have a competitive offer for the property, and the owners would get a clean deal sooner. The BV nonprofit could even then apply for grants to improve the park.

They were so gungho at Maybell, they were even willing to present inaccurate information to the state over and over again to apply for funding, they were willing to spend $660,000 on an election rather than setting aside the ordinance and working with residents. They kept flogging us over the need they could never really articulate well. Yet here we have a long-time residents of Palo Alto and the last truly affordable patch of the City, and a clear path to saving it, and what are they doing? The excuses are so bad they don't even count as lame.

Mountain View, by the way, when presented with this same exact circumstance recently, decided to save the historic orchard.


Posted by He's baaaaaaack, a resident of Downtown North
on Dec 5, 2013 at 7:56 pm

Vote no on D is back


Posted by Palo Altan, a resident of Green Acres
on Dec 5, 2013 at 9:27 pm

@ baaaaaack,

Actually, the thousands of us concerned about overdevelopment in Palo Alto never went away. City Council has awakened a sleeping giant.


I just heard something today that Palo Alto, Menlo Park, and Mountain View have job levels equal to the height of the dotcom boom, but other surrounding areas area still depressed.

We should be letting market forces take effect. When prices are too high here, the jobs will spillover to outlying areas. This is better for everyone, except the developers trying to Manhattanize Palo Alto.


Posted by detached from reality, a resident of Adobe-Meadows
on Dec 5, 2013 at 10:47 pm

[Post removed.]


Posted by Palo Altan, a resident of Green Acres
on Dec 6, 2013 at 1:59 am

[Post removed.]


Posted by Develop to existing zoning., a resident of Another Palo Alto neighborhood
on Dec 6, 2013 at 12:35 pm

The statement voters made with their ballots was a rejection of the proposed PC project. Anything else you choose to read into it is just your opinion.

Council should allow PAHC to sell which will enable them to return the loan money to City of Palo Alto. The site will then be developed to existing zoning limits. That's what voters asked for.


Posted by Palo Altan, a resident of Green Acres
on Dec 6, 2013 at 4:33 pm

@Develop,
Actually, if you were following it, residents asked that if the site was going to be developed, it be limited to existing zoning and subject to the Comprehensive Plan and safety considerations at that location. No one ever thought it was a great location for seniors, but if that's what the owner wanted to do, the neighbors just wanted the zoning respected. But apparently the owner bought the property only intending to build if they could build substantially over the zoning, i.e., they should have passed on that parcel when it came up.

Residents didn't push other uses in deference to the possibility that affordable housing would be built there, but what they asked for what actually a low-traffic use (developed or not).

Weren't residents promised a park at Alma Plaza? That's how we got Johnson Park, citizens were promised a park as part of a development and got squat. Johnson Park came about by initiative....


Posted by No_to_Manhattanizing, a resident of Midtown
on Dec 7, 2013 at 9:34 am

What I'd really like to find out is how the Alma Plaza developer managed to get away with providing almost zero benefits in exchange for getting permission to build a "packed like sardines" housing complex. We should not let city council get away without explaining this.

This is one of the reasons I will fight against any rezoning for "benefits". In fact I will fight any rezoning for any reason because the trust is lost.


Posted by Palo Altan, a resident of Green Acres
on Dec 8, 2013 at 7:58 am

[Portion removed.]

Anyone purchasing the property needs to understand the climate and motivations of the neighbors in overturning the ordinance. Those who believed it was about NIMBYism found it easy to dismiss the real motivations having to do with safety for children, the limits of the infrastructure there, the character of the neighborhood, and overdevelopment. If they convince a buyer that NIMBYism is all it was, the new developer isn't going to know what hit them if they try to build a massive development even under existing zoning.

As City Council has voiced its opinion that a market-rate development would be worse, they would be incurring significant liability for the City AND whoever wants to develop the property if they enable and encourage the vindictive scenario "detached" relishes seeing. The sentiments were pretty ugly, but sometimes seeing such ugly sentiments in black and white are the best argument against them.


If you were a member and logged in you could track comments from this story.

Post a comment

Posting an item on Town Square is simple and requires no registration. Just complete this form and hit "submit" and your topic will appear online. Please be respectful and truthful in your postings so Town Square will continue to be a thoughtful gathering place for sharing community information and opinion. All postings are subject to our TERMS OF USE, and may be deleted if deemed inappropriate by our staff.

We prefer that you use your real name, but you may use any "member" name you wish.

Name: *

Select your neighborhood or school community: * Not sure?

Comment: *

Verification code: *
Enter the verification code exactly as shown, using capital and lowercase letters, in the multi-colored box.

*Required Fields

On Tour at Selective Schools: Chapman, La Verne, Redlands, Whittier
By John Raftrey and Lori McCormick | 1 comment | 1,829 views

The dress code
By Jessica T | 16 comments | 1,683 views

Two Days to Save This Dog?
By Cathy Kirkman | 15 comments | 1,126 views

. . . People will never forget how you made them feel.
By Chandrama Anderson | 0 comments | 1,071 views

It Depends... Disguising Real Characters in Fiction
By Nick Taylor | 0 comments | 360 views