News

Rising costs don't deter Palo Alto from pursuing interim housing project

City Council votes to move ahead with plan to build 88 apartments for the unhoused on San Antonio Road

A row of homes at LifeMoves Mountain View, a homeless housing complex that Mountain View completed in 2020. Palo Alto is now planning a similar project on a city-owned parcel at 1237 San Antonio Road. Photo by Magali Gauthier.

Despite a recent spike in the projected price tag, Palo Alto's city leaders reaffirmed on Monday their commitment to build an 88-apartment shelter for unhoused residents on a San Antonio Road site near the Baylands.

The facility, which would be operated by the nonprofit LifeMoves, is now expected to cost about $26 million, a sharp increase from the $17.6 million estimate that the City Council was looking at on Sept. 27, when it gave the project its initial vote of support. But with most of the funding for construction and operation projected to come from state, county and private sources, the council agreed by a 6-1 vote, with council member Greg Tanaka dissenting, to advance the project.

Jo Price, vice president for real estate and operations at LifeMoves, told the council Monday that the main reason for the gap is the organization's failure to factor in the higher cost of building larger apartments that can accommodate up to three people. Its initial tally relied on the cost model of a similar project in Mountain View, which was constructed last year at 2566 Leghorn St. and includes 100 apartments: 88 studios and 12 family units.

The housing project that Palo Alto wants to construct at 1237 San Antonio Road would feature 64 studios and 24 family apartments. Because the larger units are about twice the size of the studios, Palo Alto's unit composition adds about $5 million to the projected cost. In addition, the new cost estimate includes $1 million for solar panels, another $1 million to relocate GreenWaste, the city's trash hauler that currently uses the San Antonio site, and an additional $2.4 million for contingency costs, Price said.

"It in no way whatsoever means would we require money from the city of Palo Alto to meet any capital gap," Price said.

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State funding would cover most of the construction cost under the current plan. The city's decision to pursue larger units will allow it to apply for additional funding from Project Homekey, the state program that helped fund the Leghorn Street development in Mountain View. If things go as planned, more than $22 million for construction costs would come from Project Homekey, while another $5 million has been pledged by a private donor, according to LifeMoves.

Given the availability of outside funding to pay for construction, the council had few reservations about reasserting its support for the project. The biggest question for most council members revolved around the facility's operations. Project Homekey is expected to cover up to three years of operations and LifeMoves and Santa Clara County are also preparing chip in for building operations and services, which still leaves the city on the hook for about $7 million to run the complex over its first seven years of operations. Deputy City Manager Chantal Cotton Gaines said the city will likely have some flexibility on when to provide the funding and defer it to later years.

She also told the council that city staff as well as LifeMoves and the county are "committed at looking at ways to reduce costs where possible and leverage existing programs, as well as identify funding to solve the operating gap."

The council agreed that despite the abrupt cost revision, the project remains well worth pursuing, even if it means finding money to pay for operations.

"Yes, it means we'll have to make policy trade-offs and service trade-offs," council member Greer Stone said. "But I can't imagine a more important area to be spending our resources and time on than to be able to provide shelter for people who have none, or for those who are facing housing insecurity, as well as the services incorporated here to be able to give so many people in this community the opportunity to just have hope for a better future."

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Most of his colleagues agreed, with Vice Mayor Pat Burt calling the council's decision on whether to fund the project a "value determination" and noting that the the city's monetary contribution is highly leveraged by other sources.

"We as council members … and as a community need to take on responsibilities that do cost money," Burt said. "That's part of local government."

Tanaka, who voted against the project in September, pressed his colleagues and staff Monday to identify the services that would be reduced in future years to support the operations of the San Antonio development. He alluded to the major budget cuts that the city has made since the onset of the COVID-19 pandemic.

"We have a limited amount of resources. When we use this resource for this, what are we taking away?" Tanaka said.

Others suggested that the city should take advantage of the opportunity offered by the state. Lisa Van Dusen, executive director of Palo Alto Community Fund, was among them. Her foundation recently voted to contribute $100,000 for operations at the San Antonio Road project, with the money split evenly over two years.

"We really feel this is an opportunity that does not come along even in many generations," Van Dusen said. "We're excited to be part of it and hope that it can serve as an amplifier for the community to be involved."

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Gennady Sheyner covers the City Hall beat in Palo Alto as well as regional politics, with a special focus on housing and transportation. Before joining the Palo Alto Weekly/PaloAltoOnline.com in 2008, he covered breaking news and local politics for the Waterbury Republican-American, a daily newspaper in Connecticut. Read more >>

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Rising costs don't deter Palo Alto from pursuing interim housing project

City Council votes to move ahead with plan to build 88 apartments for the unhoused on San Antonio Road

by / Palo Alto Weekly

Uploaded: Tue, Nov 2, 2021, 9:44 am

Despite a recent spike in the projected price tag, Palo Alto's city leaders reaffirmed on Monday their commitment to build an 88-apartment shelter for unhoused residents on a San Antonio Road site near the Baylands.

The facility, which would be operated by the nonprofit LifeMoves, is now expected to cost about $26 million, a sharp increase from the $17.6 million estimate that the City Council was looking at on Sept. 27, when it gave the project its initial vote of support. But with most of the funding for construction and operation projected to come from state, county and private sources, the council agreed by a 6-1 vote, with council member Greg Tanaka dissenting, to advance the project.

Jo Price, vice president for real estate and operations at LifeMoves, told the council Monday that the main reason for the gap is the organization's failure to factor in the higher cost of building larger apartments that can accommodate up to three people. Its initial tally relied on the cost model of a similar project in Mountain View, which was constructed last year at 2566 Leghorn St. and includes 100 apartments: 88 studios and 12 family units.

The housing project that Palo Alto wants to construct at 1237 San Antonio Road would feature 64 studios and 24 family apartments. Because the larger units are about twice the size of the studios, Palo Alto's unit composition adds about $5 million to the projected cost. In addition, the new cost estimate includes $1 million for solar panels, another $1 million to relocate GreenWaste, the city's trash hauler that currently uses the San Antonio site, and an additional $2.4 million for contingency costs, Price said.

"It in no way whatsoever means would we require money from the city of Palo Alto to meet any capital gap," Price said.

State funding would cover most of the construction cost under the current plan. The city's decision to pursue larger units will allow it to apply for additional funding from Project Homekey, the state program that helped fund the Leghorn Street development in Mountain View. If things go as planned, more than $22 million for construction costs would come from Project Homekey, while another $5 million has been pledged by a private donor, according to LifeMoves.

Given the availability of outside funding to pay for construction, the council had few reservations about reasserting its support for the project. The biggest question for most council members revolved around the facility's operations. Project Homekey is expected to cover up to three years of operations and LifeMoves and Santa Clara County are also preparing chip in for building operations and services, which still leaves the city on the hook for about $7 million to run the complex over its first seven years of operations. Deputy City Manager Chantal Cotton Gaines said the city will likely have some flexibility on when to provide the funding and defer it to later years.

She also told the council that city staff as well as LifeMoves and the county are "committed at looking at ways to reduce costs where possible and leverage existing programs, as well as identify funding to solve the operating gap."

The council agreed that despite the abrupt cost revision, the project remains well worth pursuing, even if it means finding money to pay for operations.

"Yes, it means we'll have to make policy trade-offs and service trade-offs," council member Greer Stone said. "But I can't imagine a more important area to be spending our resources and time on than to be able to provide shelter for people who have none, or for those who are facing housing insecurity, as well as the services incorporated here to be able to give so many people in this community the opportunity to just have hope for a better future."

Most of his colleagues agreed, with Vice Mayor Pat Burt calling the council's decision on whether to fund the project a "value determination" and noting that the the city's monetary contribution is highly leveraged by other sources.

"We as council members … and as a community need to take on responsibilities that do cost money," Burt said. "That's part of local government."

Tanaka, who voted against the project in September, pressed his colleagues and staff Monday to identify the services that would be reduced in future years to support the operations of the San Antonio development. He alluded to the major budget cuts that the city has made since the onset of the COVID-19 pandemic.

"We have a limited amount of resources. When we use this resource for this, what are we taking away?" Tanaka said.

Others suggested that the city should take advantage of the opportunity offered by the state. Lisa Van Dusen, executive director of Palo Alto Community Fund, was among them. Her foundation recently voted to contribute $100,000 for operations at the San Antonio Road project, with the money split evenly over two years.

"We really feel this is an opportunity that does not come along even in many generations," Van Dusen said. "We're excited to be part of it and hope that it can serve as an amplifier for the community to be involved."

Comments

Online Name
Registered user
Embarcadero Oaks/Leland
on Nov 2, 2021 at 10:13 am
Online Name, Embarcadero Oaks/Leland
Registered user
on Nov 2, 2021 at 10:13 am

When is the city going to start fining the "landlords" renting out all those RV's on El Camino? Do they really think people are going to leave their RV's to move into these costly boxes?


Calius
Registered user
Barron Park
on Nov 2, 2021 at 11:21 am
Calius , Barron Park
Registered user
on Nov 2, 2021 at 11:21 am

The location that the city has planned to develop this much needed housing is directly in the path of wildlife corridors that cross Adobe Creek right at that location. Once again our human needs trump the needs of the wildlife that lives there. It is precisely that kind of development that is causing the Sixth Great Extinction which is happening as I write; Human encroachment on wildland. How can we stop this and force the housing to be built elsewhere?


Mike Bechler
Registered user
Midtown
on Nov 2, 2021 at 11:54 am
Mike Bechler, Midtown
Registered user
on Nov 2, 2021 at 11:54 am

26 million divided by 88 is close to 300k per unit. Really? 300k each for modular econoboxes?

The web says that costs for prefab homes run 80-160$ per square foot. This includes foundation, hookup and other necessities besides the structure. Lets start with a high figure: 150 per square foot, and 400 square feet per home. That comes to 60k per unit. Multiply by 88 and you get 5,280.000. Also note that this figure is for higher quality units, and they are probably larger than what is proposed for this site.

"If things go as planned, more than $22 million for construction costs would come from Project Homekey, while another $5 million has been pledged by a private donor, according to LifeMoves." With that kind of money, we should be able to build 450 such units. Again assuming 400 square feet per unit, that's 35200 square feet total. 26 million divided by 35200 = 738 per square foot! (I'm using the article's figure of 26 mil instead of the quoted paragraph's 27 mil)

The costs I quoted are orders of magnitude less than 26 million. Is the city paying 20 million for the land? What am I missing here?


chris
Registered user
University South
on Nov 2, 2021 at 9:42 pm
chris, University South
Registered user
on Nov 2, 2021 at 9:42 pm

This the type of housing that gets PA City Council excited. Building housing well situated for services get little consideration from our current City Council. Let's see if the Housing Element can change their attitude.


Jane
Registered user
Ventura
on Nov 3, 2021 at 11:04 pm
Jane, Ventura
Registered user
on Nov 3, 2021 at 11:04 pm

LifeMoves proposed this project based on a cost model that failed to factor in the size of the apartments and then oh, oops, guess what, now that it has been approved the actual project cost will be 50% more. That was not an unknown or subtle factor. It smacks of lowballing. At the very least it is worrisome that the people managing this project have already committed such a large error right out of the gate.


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