Uploaded: Tue, Dec 17, 2013, 9:59 am
Palo Alto in no hurry to recoup Maybell loan
City Council agrees not to terminate its agreement with Palo Alto Housing Corporation
Palo Alto's plan to bring an affordable-housing complex to a Maybell Avenue orchard may have dissolved on Election Day, but the city is in no rush to recoup the money it loaned to the developer.
The City Council on Monday voted unanimously not to terminate its $5.8 million loan to the Palo Alto Housing Corporation, a nonprofit developer that builds and manages affordable-housing complexes throughout the city. The developer used the funds to purchase a 2.4-acre site at 567 Maybell Ave., where it had planned to build a 60-unit complex for low-income seniors and 12 single-family homes that would be sold at market rate. The development received the council's unanimous approval but was shot down by the citizens in a referendum on Nov. 5.
With the election fresh on their minds, council members considered on Monday what to do about the loans it made to the Housing Corporation. Their decision? Do nothing.
That was the recommendation from City Manager James Keene, who argued that affordable housing is still a critical need and that the Housing Corporation is the party best suited for addressing the issue. He dismissed alternative proposals from members of the public, some of whom argued that the city should buy the orchard site and develop it on its own. Keene said staff doesn't think the Housing Corporation "should be punished or lose money as a result of this project coming to an end."
Keene also argued against the idea that the city should purchase the site and use it for senior housing, a soccer field or some other public amenity. The city has many other priorities for spending, including a shrinking but still sizable infrastructure backlog, he said, and staff has little expertise or desire to get into the development business.
"The city doesn't, in my view, have the money to buy this property and it has had years of public process in exploring infrastructure investments and other needs under way that really should not be derailed by really a kind of an ad hoc request to make a public investment," Keene said.
Council members agreed wholeheartedly. Several characterized the Monday discussion as one they had never wanted to have. While they maintained that affordable housing remains a critical need in the community, they agreed that buying the property would not be in the city's best interests.
"The City of Palo Alto has many strengths and lots of expertise, but we are not an affordable-housing agency," Councilwoman Gail Price said. "The experts in that area are the Palo Alto Housing Corporation and I think for us or for community members to assume that we can get involved in a protracted discussion and yield a development that really addressed affordable housing or senior affordable housing is, I believe, unrealistic."
By doing nothing, the council effectively agreed to stand by while the Housing Corporation looks for a market-rate developer who would buy the property. The Housing Corporation had bought the site for $15.6 million, outbidding at least five other would-be buyers. The agency ultimately benefited from its nonprofit status, which enabled the family selling the orchard to receive a tax write-off.
Though the Housing Corporation's proposal was ultimately rebuffed by the voters, its loss may not be total. With Palo Alto's home values rising fast by about 20 percent in the past year alone, according to staff the city believes the property can now be sold for about $18.7 million. Once the property is sold, the city would be third in line to collect its loans (two other lenders, Low Income Investment Fund and the Local Initiative Support Corporation would be the first to collect), while the county would be last. Any proceeds that remain could be applied to a different affordable housing project.
Several Barron Park residents addressed the council and urged the council to work with the Housing Corporation to come up with a senior-housing project that would be acceptable to the surrounding neighborhood. Leaders of the "No on Measure D" campaign had repeatedly stressed that while they support senior housing, they oppose the site's densification and the market-rate component of the Maybell project. Joe Hirsch, who opposed Measure D, said he and his neighbors had reached out to the Housing Corporation in hopes of getting a compromise on a development, but the agency did not respond to its requests for a meeting.
"We would be willing to talk and hope a mutually satisfactory plan could be developed," Hirsch said.
Such a compromise now seems extremely unlikely. Candice Gonzalez, executive director of the Housing Corporation, said Monday that the agency was already at the edge of what was financially feasible. The project's density was necessary, she said, to secure state tax credits. Even if the City Council agreed to kick in a few million dollars to compensate for a loss of market-rate homes, the agency would have trouble sustaining the cost of running the facility.
"The last thing we wanted to do is to be here under these unfortunate circumstances," Gonzalez said. "We did not have a scaled-back alternative. There's just a lack of funds at the city, state and federal level."
The agency supported a staff proposal not to terminate the loan but to let the Housing Corporation proceed at its own pace in selling the property, which under the existing zoning could accommodate 34 to 46 housing units, depending on how many units the developer chooses to devote to affordable housing.
Had the council chosen to terminate the loan, it would have forced the Housing Corporation to immediately sell the property and pay the city back. No one on the council wanted to go that route.
Price and Councilwoman Liz Kniss both said lamented the fact that the Maybell project was struck down and spoke in favor of allowing the Housing Corporation to explore other options. Councilman Marc Berman wished the Housing Corporation good luck in finding another site for affordable housing.
"The sooner you can find affordable housing somewhere else, the better off we all will be," Berman said.
Posted by SWE,
a resident of Green Acres
on Dec 17, 2013 at 11:16 pm
SWE is a registered user.
@Coming home to roost,
Your neighbors fought a plan they deemed bad for the neighborhood. They did not feel the same way as you about a land use decision. The vote went 80% against in the areas nearest to the property where people are most familiar with it. If YOU keep making this about NIMBYism and rolling out your revenge fantasies, you're only going to continue to taint PAHC by association. Twenty years ago, some of these same people leading against D were part of a working group that saved the Terman School site from development and resulted in the 92-unit Terman Apartments. When have you ever done anything like that? Do you care about affordable housing, or is this about your ego? You're sending the message that it's the latter, bigtime. Who is that helping, except your own spleen?
On the neighborhood side, they've been calling for a working group, just like at Terman, in order to problem-solve in the same way. Unfortunately, the City and PAHC were chasing a very specific plan at Maybell and weren't going to easily give up on getting it at fire sale prices. They overshot, didn't understand their opposition because they dismissed their opponents as NIMBYs rather than understanding their real motives, and thus themselves cost any opportunity for a win-win. They tore the community apart by promoting conflict to get what they want. The cold, hard fact is that they never left open the possibility of collaboration, the plan was too rigid and they just assumed they would win because they had the City on their side. Unfortunately, because they framed the whole debate that way, they now exist in a paradigm where they must feel everyone is against them and I have to admit, their spiteful adherents make it very hard not to be they have shut out collaboration altogether. This is just sad for affordable housing, and the advocates don't even see their responsibility in it.
In San Francisco where they have an impartial ballot committee and a nearly identical measure, Measure C, their ballot question reflected the nature of the ordinance as a land use variance, so even though there was $12 million in affordable housing in the ordinance, the overturning of it via referendum (67% against, even larger than Measure D) was seen as the land use issue it was, not a rejection of affordable housing. Their question literally asked whether the developer should be able to violate the zoning by 80 feet or whatever it was.
Here, where the City did everything in its power to win, the City Attorney's biased ballot even left off the official "low-density" part of the existing zoning name and basically asked residents if they were for seniors. I'll bet most people who voted don't have a clear idea of which of the many zoning restrictions were violated in the ordinance, except for maybe the height going from 30 to 50 feet, because our City Attorney tried to rig the game by making it about seniors. Unfortunately, when the election is over, that's how outsiders interpret it, think people in Palo Alto hate the poor, and it becomes a self-fulfilling prophecy. I heard a Forum program with SF housing advocates in which they interpreted Palo Alto's election as rejecting senior housing, but didn't talk about their own that way because their ballot was about what it was really about.
roost, your revenge fantasy is very unlikely to happen, and you're hurting PAHC to push it. The City's failure to properly address the safety issues at that location has made developers and banks consider the site risky. The only City Councilmember who visited the site enough to know is on record saying it's not a safe route to school, even though it is a city-designated safe route to school, and the rest are on record saying they think a market-rate development under existing zoning would be less safe.
Neighbors have a range of options to fight the development you envision, because City Council, just as they overshot the mark with PC zoning, is doing the same when it comes to what could go there under market conditions. City Council continues to plan for allowing the most slanted interpretation of the Comprehensive Plan possible, but neighbors already planned to fight that, in court if necessary, in the subdivision process, for one. There are other possible actions, though I am not exactly going to say in a public forum. The point is, if you were a developer and just witnessed the populace handing the City Council their own @sses on a platter, despite lots of money on the developer side and the LWV shilling for them, too, even a ballot so slanted the election was practically rigged for one, you'd want them to stop stirring up the populace to make the development environment so hostile and two, if the neighborhood announced they'd go for a 20-house development you could still make a killing from, without fighting you, what would you choose?
If the City or PAHC tries to make a developer overlook what was really driving the neighborhood, safety and neighborhood character, and represent things as just NIMBYism (therefore easier for a market-rate project), they will be mirepresenting the property and potentially facing legal action down the road. And potentially incurring liability for the City.
If PAHC wants to hang onto the property, they should consider a working group with neighbors. It won't be easy, especially if their attitude is anything like their adherents who post on these forums. But if they are willing to accept that neighbors want to find a win-win, they will open themselves up to doing things differently but achieving a win for affordable housing (just like at Terman).
What about extending APAC with some single-story, regular family homes with full accessibility/universal design, with preferance for low-income children in wheelchairs, and/or their disabled veteran parents? After all, the site is across from the OH. Why were we arguing about putting seniors there, when we should be putting seniors where they can walk to what they need, and putting disabled children where they can motor (wheelchair) themselves to school independently from elementary to middle to high schools. If anything, the disabled are the more under-served group, and the fact that our planning essentially ignores them shuts the disabled out of the prosperity of Silicon Valley. This suggestion involves a whole other pot of available money for building, quite probably a bigger pot of money. Such a plan could be magical if it involved saving some of the orchard, integrated with the park across the street. Since universal design favors single-story, the whole thing inherently favors neighborhood acceptance from the start. The beauty of a working group is that the plan is hashed out first with everyone's requirements in mind, so the ultimate plan has buy in from the public. I don't know why PAHC doesn't seem to understand the opportunity they have if all these accomplished people in this community want to figure out how to get something they work on together paid for. I've been floored by these smart, ultra-capable people. (Some extra on-site parking for APAC would also be a boon for everyone.)
I'm not advocating for one action, I'm suggesting PAHC consider what's best for its own future and residents, reorient their thinking, and consider how to rebuild the bridges THEY burned. The alternative is possibly losing money on the sale of the property as developers shy away from such a risky site where they would be guaranteed to walk into conflict, or getting sued for failure to properly disclose, for one.
But just realize, by choosing to continue spinning all these revenge fantasies, you destroy that option for PAHC. The neighborhood will be okay if you do. PAHC may not.
And Buena Vista may not either. The other reason to form a working group is to see if the $5.8million can be made available for saving BV.
If you were a member and logged in you could track comments from this story.
To post your comment, please click here to login
. This topic is only for those who have signed up to participate by providing their email address and establishing a screen name.