MidPen outlines 95–98‑unit 100% affordable proposal for 626 Walnut Street; neighbors raise height, setback and parking concerns

MidPen Housing presented plans for a 95–98‑unit, 7‑story, 100% affordable rental development at 626 Walnut Street and described a timeline that would seek entitlements by the end of 2026 to be competitive for state financing in 2027.

The project team, introduced by city principal planner Ruja Dendi, said the site consists of three vacant county‑owned parcels totaling about 0.61 acres near downtown. Rebecca Cirelli, MidPen senior project manager, said the proposal includes a podium‑style building, a landscaped interior courtyard, and two levels of parking (one partially below grade). She said the application is being processed under SB 330 (Housing Crisis Act) and AB 130, streamlining state laws that limit discretionary review for qualifying affordable housing and provide a CEQA exemption for infill affordable projects.

Why it matters: the project would add deep‑affordability housing in a downtown location and include a county requirement for preferences and set‑asides: 25% of units with a public‑employee preference, at least 15% for extremely low‑income households, and a 5% measure‑K set‑aside for supportive housing tied to county funding.

Council members focused questions on specific trade‑offs. Architect Sarah Vaccaro explained that MidPen seeks to maximize resident parking while keeping a compact podium massing; the team proposed a two‑level parking garage with an upper level stepped back to provide a planted ledge and screening. Vaccaro said the project aimed for a minimum of 10‑foot setbacks on residential floors to provide privacy and daylight access. On ground‑floor activation, MidPen proposed 50% active frontage to accommodate required back‑of‑house functions and a resident community room facing Walnut Street rather than retail or child care, which the team said are not financially feasible on the constrained site.

Council members and staff pressed details on waivers and process. Council member Dugan asked which objective design standards the applicant will seek waivers for; MidPen said the formal application filed in June will itemize requested waivers under the SB 330 streamlined path, and the planning commission will be the final approval body under the nondiscretionary review framework. MidPen said the project's proposed height is near 80 feet and that state density bonus provisions can permit the scale needed to achieve the unit count and financing goals.

Child care, parking and tenant selection drew sustained scrutiny. MidPen said including an on‑site child care room would remove multiple two‑bedroom units (they used a 6,000‑square‑foot example that would consume roughly six to ten units) and that there is no identified funding source for commercial uses on site. Judy Hock, the city's economic development and housing manager, explained that San Carlos maintains a BMR wait list of about 8,000 names but that 100% affordable, tax‑credit projects typically run a property‑specific interest list and coordinated marketing with city and county staff.

County housing staff Kevin Zwick said the Measure K supportive set‑aside requires the county to allocate a share of units to people meeting the county’s definition of formally unhoused, and that the county’s NOFA process determines eligible supportive populations for funded projects.

Public comment: Brian Perkins, speaking in person, urged council support and framed the project as a small but meaningful response to a much larger regional housing need. MidPen reiterated outreach plans and an engagement timeline that includes follow‑up meetings with adjacent neighbors and pop‑up events for broader community input.

Next steps: MidPen anticipates submitting its formal application to city staff in June, a planning commission hearing in the fall, continued stakeholder engagement, and pursuing county HF funds and competitive state financing. MidPen said the earliest contemplated construction start is 2029 with a two‑year construction period and move‑in as early as 2031.