EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: May 17, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Patrick Heisinger, Interim City Manager
BY: Patrick Heisinger, Interim City Manager
SUBJECT: Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto Sanitary District
Recommendation
It is recommended that the City Council:
1. Accept the report on the issues concerning the Light Tree Affordable Housing Project and the East Palo Alto Sanitary District;
2. Not accept the counter proposal proffered by the East Palo Alto Sanitary District regarding the Light Tree Affordable Housing Project; and
3. Authorize the Mayor to communicate the City’s position to the East Palo Alto Sanitary District.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Priority No. 4: Improve Public Facilities and Infrastructure Background
On June 12, 2020, the East Palo Alto Sanitary District (EPASD) and Eden Housing/EPACANDO, the developer of the Light Tree Affordable Housing Project (Light Tree), entered into a Wastewater Service Agreement (WSA). The WSA (Attachment 1) outlined the roles and responsibilities of each party, respectively, as described in the table below:
Entity Obligation
Developer Make a payment totaling $2,486,585 to fund infrastructure costs, as well as capacity, permitting, and other administrative fees.
EPASD
1. Provide wastewater service to Light Tree within 18 months of receiving the Developer’s payment; and
2. Commit $2,000,000 to contribute to the cost of existing maintenance in need of upgrade.
On March 15, 2022, in recognition of significant delay, the City Council directed staff to send a letter to the EPASD affirming the City’s desire to enter into a Memorandum of Understanding (MOU) with EPASD to ensure that Light Tree is able to provide much needed affordable housing availability to the community by January 2023.
For more information about the March 15, 2022, item, please follow the link that is listed and embedded below:
http://eastpaloalto.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=&MeetingID=1804&MediaP osition=7649.173&ID=2142&CssClass=
On April 6, 2022, EPASD forwarded a letter that may be considered as a “counter proposal” to the City’s proposed approach. (Attachment 2)
Analysis
In the letter from EPASD, it appears that the methodology proposed by the City is considered to be acceptable to EPASD. However, the letter states, “The District will not be responsible for additional costs, if any, associated with serving the development.” Staff Perspective
The April 6, 2022, letter from EPASD describes a counter proposal in which EPASD agrees to comply with the above-referenced WSA terms, but requires that the City or developer pay all unanticipated costs, which are currently undefined and un-estimated. This uncertainty about proposed costs is a critical issue that other developers and property owners are struggling with, in regard to obtaining necessary services from EPASD. EPASD is contractually obligated to provide the necessary sewer infrastructure to support Light Tree, though EPASD is in noncompliance with the previously agreed-upon 18-month term. To date, a formal cost estimate, by a qualified engineer, for the services and improvements required for Light Tree has yet to be produced.
Staff Recommendation
Without an informed understanding of anticipated costs associated with EPASD service to Light Tree, the proposal in the letter from EPASD perpetuates an unacceptable level of uncertainty for both the City and developer. As such, staff recommends that the City Council not accept the proposal.
Staff further recommends that EPASD complete a traditional bid process for the Light Tree sewer project to obtain actual costs of the improvements, which will inform all stakeholders and facilitate potential solutions.
Fiscal Impact
There are no fiscal impacts associated with this report.
Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.
Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.
Attachments
1. Wastewater Service Agreement between EPASD and Eden Housing/EPACANDO for the Light Tree Affordable Housing Project
2. EPASD Letter Received on April 6, 2022