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At its meeting on Tuesday, Nov. 19, the Menlo Park City Council voted 3-2, with Mayor Cecilia Taylor and Council member Betsy Nash dissenting, to commit $1 million of the city’s Below Market Rate Housing Fund to aid in the construction of 88 units of affordable housing for local educators at 320 Sheridan Ave.
The project, proposed by the Ravenswood City School District, was the center of controversy over affordable housing in Menlo Park, and was the catalyst for the citizen-sponsored Measure V in 2022, which, if it had passed, would have restricted the council’s ability to upzone lots in the city.
The city’s BMR Housing Fund is dedicated to providing funding to the preservation, acquisition or construction of affordable rental or ownership housing for residents in the extremely low- very low- and low-income brackets. Revenue for the fund is derived from fees collected from new, non-residential development projects in the city.
The 2.6-acre site at 320 Sheridan Ave., which housed the James Flood Magnet School in the Suburban Park neighborhood until it closed in 2011, is owned by the Ravenswood district. The district began leasing it to Alliant in 2021 for the construction of teacher housing. Most of the 88 units at the proposed development on the lot will target teacher households at 30-80% of the area median income, according to a staff report prepared for the meeting. At least eight of the units will be reserved for city anti-displacement measures, and one will be reserved for an apartment complex manager.
Just under 60% of the units will be dedicated to households at the extremely low-income level, or 30% of the area median income. The site was designated in Menlo Park’s housing element plans as a housing opportunity site.
The developer of the site, Alliant Communities, anticipates that the total project will cost $63.8 million, which amounts to about $733,000 per affordable unit. According to the staff report, Alliant anticipates obtaining about $41 million from Low Income Housing Tax Credits, $3.8 million from a deferred developer fee and $16 million from a conventional loan.
This leaves a gap of $2.9 million to fully cover the housing costs. Alliant requested the $2.9 million from the city of Menlo Park’s BMR Housing Fund, but as the fund only currently contains $2.6 million, the Alliant lowered its request to $2.6 million. The city’s Housing Commission recommended that the city contribute $600,000 instead.
Alliant told the City Council that for the project to receive funding through San Mateo County’s housing fund, there needs to be at least $1 million of city funds committed to the project to demonstrate project viability to the county. Steven Spielberg, senior vice president of affordable housing for Alliant, said that if the city committed at least $1 million, the development would likely get at least an additional $2 million from the county.
Spielberg urged council members to consider committing the full $2.6 million in the city’s BMR fund to the project, as that amount would take the project nearly to the level of funding needed to receive tax credits. Several public commenters, including housing advocates Ken Chan from Housing Leadership Council of San Mateo County, and Jordan Grimes from Greenbelt Alliance, also urged the council members to commit the full amount available to further promote affordable housing in the city.
Vice Mayor Drew Combs said that he was not comfortable with giving $2.6 million to the project, as there is another affordable housing project at 1162 El Camino Real coming down the pipeline that the city is more involved with that may need that funding as well.
“I do find it challenging for me to be supportive of taking our current (fund balance) down to zero on this project, when I know that there is this other project that we created, and I think we have more of an obligation to that project to make sure it is successful,” he said.
Nash said that she was struggling with funding the project at any level with city money, as the Ravenswood district would be getting a large chunk of money back from the developer once they have obtained construction loans and tax credits as part of its lease agreement with Alliant.
“I am very supportive of the project … however I am struggling with any funds for a project where we would be giving you (Alliant) money, and immediately, as soon as you get the tax credit and construction loans, you turn around and give money in a greater amount back to the school district,” said Nash. “I’m not saying it’s not deserved, but it just doesn’t seem like a good use of city funds to me.”
Taylor said that she would have supported funding the project at the $600,000, but that she would not be comfortable with the $1 million because, despite the fact that the project will be providing housing for residents of other nearby cities, no other cities have provided funding for the project.
The other three council members supported committing $1 million to the project.
“Ravenswood City School District is so grateful for the support of Council member Combs, Council member Doerr, and Council member Wolosin in bringing in $1 million to support 100% affordable housing with a preference for teachers and staff,” wrote Will Eger, chief business officer for the Ravenswood district, in an email to this news organization. “This is another positive milestone in a very long journey. While we still have a sizable funding gap to close before we can … competitively apply for tax credits, we are hopeful that this will unlock new funding sources.”
The district explored several different options for the site. These included use as district office space, redevelopment for bus yards, redevelopment for life science laboratories and leasing to a private school. Ultimately the district landed on developing the site for affordable housing to help address the regional housing crisis, and generate unrestricted revenue for the district, according to a presentation from Alliant.
Next steps
In his presentation to the council, Spielberg said that Alliant plans to go to the Planning Commission for entitlements in January 2025. Alliant will apply for tax credits for the project in May 2025.
Construction is planned to begin in December 2025, with the goal of completing the project and having units available to lease by August 2027.
This is so insulting and ridiculous. Giving our tax payer money to a for-profit project owned by the Ravenswood School District. And our council was just OK with that. The homeowners in Menlo Park are so apathetic.