CITY OF SAN MATEO
6 0
1 9
CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 15 Section Name: CONSENT CALENDAR Account Number: 26-3111 File ID: 25-10439 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Community Development Department
MEETING DATE: October 6, 2025
SUBJECT:
4th and Railroad Parking Lot, Bespoke Development — Amendment RECOMMENDATION:
Adopt a Resolution to approve Amendment No. 3 to the agreement with DTSM Housing LLC for exclusive negotiations related to the public-private partnership development project, commonly known as Bespoke, located partially on City- owned property at 4th and Railroad, for an extension of six (6) months from October 14, 2025, to April 14, 2026 with an option for the City Manager, at their discretion, to extend the ENA for an additional three (3) months for an expiration date no later than July 14, 2026; review the updated schedule of performance; and authorize the City Manager to execute this amendment.
BACKGROUND:
The City is currently a party to an Exclusive Negotiating Agreement (ENA) for the redevelopment of the City-owned surface parking lot located at 4th and Railroad Avenue adjacent to the parcel where the former Talbot’s building is located. The ENA is with a three-party development team comprised of Prometheus, Harvest Properties, and Alta Housing (Development Team) and is intended to be in place throughout the entitlement phase of the project. The City entered into the ENA in October 2021 and has since been working with the Development Team to refine the project (Project), now referred to as Bespoke, through the planning entitlement process, and prepare legal agreements that will accompany the entitlements.
The ENA was amended in October 2024 to extend the term for six months and amended again in April 2025 to extend the term for another six months, to October 2025. The draft Resolution amends the ENA for an additional six months, so that the term ends on April 14, 2026, with an option for the City Manager, at their discretion, to extend the ENA for an additional three months, with the discretionary extension set to expire no later than July 14, 2026. Staff does not plan on seeking an additional extension beyond this date. The prior extensions have been needed to allow time for City staff and the development team to work through specific deal terms that were of substantial consequence or complexity.
Project History
The proposed Project includes the following components:
• A seven-story, 71-unit 100 percent affordable housing building on the City’s lot with community space for Self- Help for the Elderly on the first floor;
• A six-story 156,000 square-foot commercial and office building; • 137 parking spaces on-site in an underground parking garage (of which 37 would be for residents' use and 25 would be shared between commercial and residential uses); access would be on City lot; the remaining commercial garage would be accessible to the public on evenings and weekends; • A combination of at-grade open space and roof top common areas; and • Improvements in the public right-of-way area along all four street frontages.
CITY OF SAN MATEO
6 0
1 9
ENA Extensions/Deal Terms
Key deal terms of the Project were presented to City Council by both staff and the developer team at a study session on September 16, 2024. The majority of these terms form the basis of the Development Agreement (DA)/Disposition and Development Loan Agreement (DDLA) and other legal documents that the City and developer team will enter into at the time the project receives its entitlements. At the study session, the City Council provided direction on the deal terms and project schedule, and the ENA was extended through April 14, 2025. Further refinements to these deal terms were made, but some terms remained unresolved, and an updated project schedule and extension were presented to City Council on March 17, 2025 as a consent item. The ENA was extended a second time, through October 14, 2025, so staff could work through the remaining unresolved deal terms and finalize the array of related legal documents with the development team.
Though there were, and still are, several parts of the legal documents that require final language revisions, there were a few major deal terms where staff and the development team spent a notable amount of time negotiating. The most substantive concerns construction of the underground garage, which is critical to the City’s interest, as it provides the foundation for the entire project, including the affordable housing component on the City’s land.
In the most recent iteration of the DDLA, language was inserted that removed the development team’s obligation to construct the garage, and negotiating adequate compensation should the garage not be constructed was time-consuming.
It was finally agreed that the Development Team would pay the City $100,000 per year, up to milestone four in the Performance Schedule (Attachment 4), which is the equivalent of four years, or a maximum of $400,000. The City is not currently collecting any rent on this property and will not collect anything until the property is constructed upon, so this money would provide some compensation for the loss, should it occur.
The other term concerns vesting of the current development impact fees, with an inflation multiplier in place, but no new added fees or substantive fee increases should any occur between entitlement and the time fees would become due. This can be handled through the DA. Related parts of the DDLA and DA will be refined accordingly.
In addition to the above substantive revisions, staff has included a revised Performance Schedule that reflects the ENA extension(s) under discussion. This is for Council’s information and is based on the approved overall timeline but includes new dates since so much time has passed. The ultimate schedule will be based on the specific entitlement effective date and whether any of the buffers are used. The best case for completion of the residential component is in 2035 and the worst is in 2040.
Staff is seeking City Council approval of the amendment to extend the ENA to April 2026, at the latest. If approved, staff will continue to work towards finalizing the required legal documents for the project following the key deal points outlined above and will bring them back to City Council for final review and approval as part of the overall development application.
The Planning Commission and City Council public hearings for this project are anticipated in early 2026.
BUDGET IMPACT:
There is no budget impact associated with extending the ENA and reviewing the amended Performance Schedule.
ENVIRONMENTAL DETERMINATION:
This item is not a project subject to CEQA, because it can be seen with certainty that it will not cause a physical change in the environment. (Public Resources Code Section 21065.) NOTICE PROVIDED:
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 – Proposed Resolution
Att 2 – Draft Amendment No. 3 to ENA
CITY OF SAN MATEO
6 0
1 9
Att 3 – Draft Project Schedule of Performance
STAFF CONTACTS
Christina Horrisberger, Assistant City Manager
[email protected]
650-522-7210
Rachel Horst, Housing Manager
[email protected]
(650) 522-7223