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Redwood City approved major revisions to the Elco Yards housing project Tuesday, reducing the number of deeply affordable units, adding a local tenant preference, and raising new concerns about who will manage the development.
The new changes to Elco Yards include favoring market-rate construction, prioritizing local residents, and increasing the building to seven stories, in keeping with an 85-foot maximum height. Among the property management companies under consideration for this project is Greystar Management Services, which reached a $7 million settlement last week for colluding to drive up rental prices.
Formerly known as the South Main Mixed-Use project, the Elco Yards project is a mixed-use development on six blocks at 1601 El Camino Real, with 540 multifamily residential units, nearly 150 of which will be affordable, and around 110,000 square feet for office space, almost 30,000 square feet for retail, over 400,000 square feet for research and development, and under 10,000 square feet for childcare. The developers for Parcels A and D, which were discussed at the board’s Tuesday meeting, are High Street Residential and IQHQ.
“The market rate residential sector has faced significant headwinds ever since the pandemic: We have experienced an uncertain economic environment with rising interest rates, inflation and tariff uncertainty,” said Margo Sulmont, the vice president of High Street Residential. “This new economic reality makes it challenging for projects conceived before 2020 like Elco Yards to move forward without modifications.”
While the sheer number of housing units won’t change, 540 units, the number and kinds of affordable units would. Through this new plan, there will be 36 fewer “extremely low,” “very low,” and “low” income units, and 28 more “market rate” units. The impact fee would also rocket from $0 to $5,822,001 under this new proposal.
For Parcels A and D, the new density bonus requests would drop from 35% to 20%, and the affordable unit sizes would decrease by around 80 square feet for Parcel A and 97 square feet for Parcel D. They’d also waive concentration of uses for some parcels and the increase of stories to seven for Parcel A.
In 2023, this news organization reported that an ancient Native American burial ground was uncovered during early excavation at the site. Deputy City Manager Jennifer Yamaguma said that while some information is protected under state law, the landowner must follow the most likely descendant’s recommendations for treatment of the remains under the state Public Resources Code.
The Elco Yards project was first approved in 2020, with construction of its commercial structures beginning in 2022. The residential parcels have not yet broken ground; housing construction is slated to start in 2026 ahead of a projected 2029 opening.
The new proposal will give preference to Redwood City residents, former residents, and local workers for these units.
The design changes for Parcel A to make it “financially feasible,” according to Sulmont, would include using cement rather than metal for some panels, picket rails rather than glass, and vinyl rather than aluminum for windows. These are among the “cost-saving design revisions that maintain original high-quality design intent and architectural vision,” according to the developer’s presentation.
Council member Chris Sturkin said, “Initially, I was a little hesitant to support the amendment… because it eliminates low-income units.” However, he came around to agreeing to it, cautioning about the risk of property manager price gouging — referencing a recent antitrust lawsuit involving such practices.
On Nov. 18, Greystar, which is currently under consideration to manage the Elco Yards project, reached a $7 million settlement over its use of competitively sensitive information to align rent prices. Sares Regis Group and Bozzuto Management Company are also under consideration to manage the property, and are “major players,” according to Sulmont.
Vice Mayor Kaia Eakin underscored Sturkin’s concerns, stating that “we host several of these gigantic titans” in Redwood City and that the council should be wary that some of these major property ownership and management companies aim to find the “sweet spot” of how high they can charge rent with the maximum number of vacancies, “colluding with other large business owners.”
“If the California legislature is ignoring them,” the vice mayor added, “that doesn’t mean that we have to.”
She’d love to see some of the rental units transformed into condos in the coming years, to help residents build wealth and equity. As it stands, Kopf & Kopf owns Parcel A and is “here to stay,” though Parcel B was floated as an option for condo conversion in the future.
The construction of the housing component is slated to start in 2026 and open to occupants in 2029.
“Five-hundred units in early 2029 is going to make a big difference in our community,” said Council member Jeff Gee, of the estimated project completion date. “Hats off to the entire team.”
Editor’s Note: This article has been updated to include the square footage of the project’s non-residential components.
RWC needs a law that mixed use developers must finish residential units before commercial units. Give locals a place to live before jobs to out of towners.