Menlo Park To Offer Housing Development Funds

Menlo Park City Council unanimously approved on Tuesday placing millions of dollars into a fund that will subsidize the development of below market rate rental housing, closing two programs in the process.

Mayor Peter Ohtaki has sat on the Housing Element Steering Committee since it was created in May 2012 out of the need to create a new housing element for the City of Menlo Park. Ohtaki made the motion to approve the funding transfer.

The background behind Tuesday's decision:

Affordable housing advocates sued the City of Menlo Park at a time when it was in the process of negotiating a development deal with Facebook.  The city’s legal team settled out of court, instead of facing the possibility that all business permit issuances would cease while litigation was debated.  The settlement agreement stipulated that the city must update the land use laws that facilitate below market rate housing development.  

Ohtaki and a team of other volunteers, such as planning commissioners Katie Ferrick and John A. O Malley, worked for the past year to identify areas in Menlo Park where housing for people of various income levels could be placed to create the new housing element.

On June 18, the State Department of Housing and Community Development certified the city’s updated housing element was good through 2014, triggering another requirement. 

The City must commit funds to support future non-profit, rental housing projects that will feature some homes that have below market rate rent.

A one bedroom, one bathroom apartment in Menlo Park averages $1,800 per month plus utilities, according to a review of Craigslist postings on the morning of Wednesday July 17, 2013.

Tuesday night, Ohtaki motioned to suspend the city’s “Purchase Assistance Loan Program” and “Neighborhood Stabilization Program” and transfer the remaining balance, minus funds committed to programs, into the subsidization fund, which is called a “Below Market Rate Housing Reserve Fund." 

The act was partially motivated by the lack of movement in the other programs, according to Community Services Director Cherise Brandell, who is performing some of the administrative duties that used to belong to the city’s now defunct Housing Department.

“Even though we have a deferral program that allows someone not to start paying back their purchase assistance for five years, our interest rates are much higher than what they can get from other sources that it has not been used most recently by people who are buying either at market rate or BMR units in Menlo Park,” Brandell told City Council members on the dais Tuesday night before the vote. 

After Ohtaki motioned, Councilmember Rich Cline seconded the motion.  

Council unanimously approved making about $3.2 million available to developers and publicizing the availability of these funds.

The funds will be specifically be used to “fill financing gaps between projected total development costs and other available funding sources,” according to a staff report prepared for Tuesday’s City Council meeting.

The notice of funding availability is scheduled to be published on July 19, 2013.