City Attorney Bill McClure told the council at the Jan. 11 meeting that including any BMR unit on the site would set a precedent.
"Commercial projects in Menlo Park pay in-lieu fees," he said, explaining that the mixed-use nature of the Beltramos project raised the cost of construction at the same time real estate values are declining.
The city and developer haggled for months over the number of below-market-rate (BMR) townhomes to be included on the 1.54 acre site, located at the intersection of San Antonio Street and El Camino Real. The original plan, first approved in 2006, followed city policy by setting aside three BMR units, but the Beltramos have now asked to include only one in light of declining real estate values.
The new agreement allows the Beltramos to include only one BMR townhome in exchange for 10 to 20 percent of sales revenue on each remaining unit if the unit's sales price exceeds $1 million, according to the staff report.
It also lets the city accept in-lieu fees on five market-rate townhomes and up to $382,704 in commercial linkage fees for the two-story, 26,800-square-foot office building.
A member of the Housing Commission, Ann Moser, told the council the same thing she'd told the Planning Commission during its hearing on the project — that Menlo Park doesn't have enough BMR housing to let the city collect in-lieu fees instead of units.
"I made a real mistake in voting for this on the Housing Commission," she said. "We should hold developers to the standards they agreed upon ... despite problems they may have run into over the years. I want you to know I'm very sorry we agreed to this project and wish we'd held them to the market rate agreements first agreed upon."
That didn't sway the City Council, however. Vice Mayor Kirsten Keith said it was important to get at least one BMR unit instead of zero. Mayor Rich Cline concurred, calling the project "very nice," and noted the BMR program was not meant to apply to low-density projects like the townhomes.
In light of the difficulties of providing affordable housing in an area like Menlo Park, Councilman Peter Ohtaki suggested holding a study session to rethink the BMR program. His colleagues agreed and asked city staff to schedule it.
Councilman Andy Cohen was recused from the discussion since he lives near the project site.