Menlo Park has more than $14.1 million set aside to spend on below-market-rate (BMR) housing, according to the city's annual BMR report.
The City Council will vote on Tuesday, Dec. 15, on its consent calendar (along with nine other items) whether to endorse the report, which documents the city's continued need for funds dedicated to increasing below-market-rate housing units.
About $6.2 million of that amount has been committed to affordable housing projects such as the Purchase Assistance Loan program, Core Housing, and Mid-Pen housing, but there's still $7.9 million in the city's Below Market Rate fund yet to be claimed by affordable housing projects.
The Below Market Rate housing program, established in 1987, is intended to increase the supply of housing that is affordable for very low, low, or moderate-income people in Menlo Park. The policy requires residential developers to make 10 to 15 percent of the housing they build available at below-market rates, depending on the size of the development.
Commercial developments have to pay either $8.24 or $15.19 per new square foot of floor area, depending on the project's expected number of employees, in an effort to mitigate the demand for housing that the new building's additional employees will create.
Ideally, the report says, the policy should lean toward actual construction of new units, rather than having in-lieu fees go into a city fund. There is a five-year limit placed on those funds, which, if left unspent, must be justified as a continued existing need or be released back to the developers who paid it.
As proof of that continued existing need, the report pointed out that Menlo Park's current Below Market Rate waiting list is 125 households deep. Only 66 households are now housed by the BMR program while 118 are under construction or not yet occupied.
Fifty-nine of those are at the new affordable-housing complex at 605 Willow Road; that complex is administered by Core Affordable Housing, which will prioritize housing for homeless veterans, with move-in dates as soon as mid-December.
Thirty-seven BMR units will be at the St. Anton Development at 3639 Haven Ave. in Menlo Park.
This is the third consecutive year that the pool of funds held for five or more years and intended for below-market-rate construction has been greater than the amount of funds committed to current projects, according to the report.
In December 2014, the City Council eliminated the use of purchase assistance loans, which had used below-market-rate funds to help qualifying low- or middle-income first-time home buyers purchase homes. The program gave loans of about $75,000 or 20 percent of the home price, whichever was lower, while charging a 5 percent interest rate. Now those funds are all going toward developing new affordable units in Menlo Park.
To use the funds, though, affordable housing developers have to come forward with projects, using a process called "NOFA," or notice of financial ability; through the process, the city announces how much funding is available and asks for projects to fund. The 2015 NOFA process yielded three applicants that are now under review, the report said.
Jim Cogan, now the city's housing and economic development manager, will be leading the city's charge to address the affordable housing shortage.
He said there's a misconception in Menlo Park about affordable housing. "People think it's somehow lower-quality housing," he said. "Some people have that 'projects' mindset."
Perhaps, he said, that's because "we haven't had a lot of new affordable housing built."