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Council Puts BMR Measure Before Voters

November ballot now includes a measure city staffers hope will solve a legal conundrum over below market rate housing in San Mateo.

City Council members addressed a great deal of the people’s business on Monday night, doling out congratulations to employees and community members and voting on a number of consent calendar items.

Then near the end of the meeting they discussed the one part of the people’s business that is ultimately in the hands of the people themselves: the General Election.

This Nov. 8, voters in San Mateo will pick a new council member to replace John Lee, who is termed out. They will also choose to either reelect Mayor Jack Matthews or bring a new face to the council. The action to call for a General Municipal Election to elect two council members was approved on Tuesday night.

But the council also took on a more complex issue pertaining to the Nov. 8 election, deciding to put a measure before voters that many hope will sort out a tangled web of legal issues around the city’s below market rate housing policy.

Like some other Peninsula cities, San Mateo has a below market rate, or BMR, housing ordinance in place that requires developers to set aside up to 15 percent of the housing they build for lower-income residents. So a developer building 100 condos would have to sell or rent 15 of them at a rate deemed affordable enough for people of low or moderate income.

Then in late 2009, the U.S. Court of Appeals ruled in “Palmer v. Los Angeles” that the BMR policy there was wrong to force developers to rent out apartments at a lower cost. Cities with BMR policies, including San Mateo, have been scrambling to catch up ever since.

“This holding puts the city in a unique and difficult position,” city attorney Shawn Mason explained to the council Monday night.

“The city must either impose the condition anyway, and risk being sued by the developer, or refrain from imposing the condition” and risk being sued by community members fighting for more affordable housing. Mason said he hoped the measure introduced Monday by the council – and now set to go to the voters on Nov. 8 – will solve this conundrum.

Measure H

In San Mateo, the issue begins with Measure H, which was passed by city voters in 1991. A group of residents had put the measure on the ballot to amend certain aspects of the city’s General Plan.

As Mason explained to Patch on Tuesday, one of those amendments was to the city’s BMR policy, establishing a so-called “inclusionary zoning ordinance” that required new housing projects to set aside a percentage of the units for lower-income buyers or renters.

Measure H was set to expire in 2004, so the council at that time submitted its own ballot measure – Measure P – that would extend the General Plan amendments enacted by H. In so doing, “It made a couple of minor changes” to the BMR ordinance, Mason said – resulting in the current BMR policy of 15 percent of the housing set aside for lower income residents.

Then came the Palmer decision, leading the city to call a moratorium on building until the legalities could be sorted out. “We kind of called a timeout,” Mason said.

“Palmer involved the question of whether a city, as it applies to rental projects, could require the developer of the residential rental project to rent units at certain rents specified by the city,” Mason explained. “And the court ruled that you cannot do that.”

Although other cities also have BMR policies, San Mateo’s is unique because  “ours was enacted by the voters,” Mason said. So while other towns can more easily change their BMR rules, “We are constrained by this ballot measure.”

The city attorney said he hopes the new measure introduced Monday night will “get us out of the box that we’re in right now.”

Two-Part Approach

Mason told the council on Monday that “The proposed measure would approve an ordinance that essentially creates a two-part approach to the issue created by the Palmer case.”

The first part, he said, is to amend the General Plan to allow the city to collect fees from developers for not building below market rate housing.

“Now, it’s our hope that we never collect any of these fees, which is where the second part comes in,” Mason said. That would be to provide a “fee refund incentive program” allowing developers to have their fees returned after agreeing to provide below market rate units.

The council unanimously approved the measure, but not before some members expressed reservations.

“Part of me doesn’t want to put this on the ballot,” said council member David Lim. “Residents already said they do not want housing impact fees, they want inclusive housing,” he said.

“But I do think staff has put together a very good resolution and I’m going to be voting for it.”

Mayor Matthews concurred, saying he didn’t want to “modify Measure P without the will of the people.”

“There was a clear message at the time,” he said, adding later, “It’s incredibly unwieldy to make any change. I feel obligated to not make any change to the will of the voters.”

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