Middle Income Housing a no-go in Milpitas (for now)

At the April 19 Milpitas City Council meeting, a proposal to turn the Eleanor Apartments at 312 Gates Drive into middle income housing was shot down by City Manager Steve McHarris, who stated that there was not enough time or resources to sufficiently analyze the proposal given the developer’s proposed deadline of May 17. 

During the discussion, Councilmember Phan also revealed that the developer of the Turing Apartments located at 1355 McCandless Drive, a similar moderate income housing project that had been given the green light back at the March 1 council meeting, had pulled out, citing rising interest rates.

The two projects were part of a Workforce Housing Bond Program initiative sponsored by the California Statewide Communities Development Authority (CSCDA), which converts existing high-quality properties into middle income housing by lowering rents through the sale of tax-free municipal bonds.

Phan is a huge fan of the program, which offers an innovative solution to the state’s housing shortage, particularly for those in the “missing middle” — i.e., those who can’t afford market rate housing but don’t qualify for subsidized housing. He initially proposed the CSCDA deal for the Turing Apartments back in May of 2021. After months of negotiation, the City finally approved the Turing deal in March of this year.

Phan expressed his frustrations during the April 19 meeting: “For the last project we took our time, we went through several public hearings, and we got it done and approved, but because we dragged our feet for so long, a lot of you might not know this, the project is not moving forward. Because during that period of time the interest rates changed, and it no longer pencils out for that applicant.”

Phan expressed appreciation toward City staff for their hard work and due diligence on the Turing project, proclaiming that the City of Milpitas now had “one of the most robust standards of middle income housing in the state.” Phan reasoned that since Staff had already gone through the process and since the City was already a member of the CSCDA, the Eleanor project should make for a fairly simple task.

Said Phan, “I would hate for us to have done all of that work for nothing. At the end of the day, I am pleading with my colleagues to give this program a chance.” Mayor Tran was also in support of the program. The point was moot, however, as McHarris said, “There is no possibility that we could bring this back for approval in May.” When pressed further, McHarris responded that staff could possibly bring it back by September or October.

The applicant presenting the Eleanor Project to council, Brad Griggs of Opportunity Housing Group out of Danville, said that the furthest he could extend the deadline was to June, citing the property owner’s business objectives. Griggs offered to provide additional resources to City Staff to help accelerate the process. But McHarris was adamant, explaining that they just didn’t have the number of qualified consultants needed for a thorough peer review, and that hiring more would take time.

Said Griggs, “It’s too bad. It’s a very simple process in my mind, but I understand your constraints. We will hopefully be back.”

Councilmembers Dominguez and Chua voiced their support for Staff, describing them as the “lifeline of City Hall” and saying that they would defer to them in this matter.

While the Workforce Housing Bond Program provides an innovative solution to the housing shortage, the financial complexities involved are incredibly difficult to decipher, and contain certain risks that some cities are not willing to assume.