Timing of highway overpass construction can't stop SLO housing project, planning commission says

The San Luis Ranch housing project that's slated to bring 580 new homes to San Luis Obispo appears to be on track, with plans for residents to start occupying the first homes by spring 2020.

But the city's Planning Commission recommended Thursday that the timing of the project's phased construction — located along Madonna Road, on a 131-acre property visible from Highway 101 — should not be contingent on when a major portion of the planned Prado Road overpass is completed that would bridge the highway and help relieve area traffic impacts.

At a special meeting Thursday to reconsider the development agreement and the project's environmental impacts, the commission unanimously recommended that the final five phases of San Luis Ranch's six-phase project should be able to move forward regardless of when the construction of the Prado overpass and northbound ramps are finished.

Under the original agreement for the San Luis Ranch project, Coastal Community Builders would be allowed to build 196 homes and then face a hard stop if the overpass and northbound bound ramp aren't built before occupancy of houses of the project's second phase.

The Prado Road project, which would include an overpass bridge, northbound on-ramps and off-ramps and a northbound auxiliary lane between Prado and Madonna Roads (as well as a future southbound ramp), is a joint effort between the city and Caltrans, and will cost an estimated $46 million.

San Luis Ranch's developer, Gary Grossman's Coastal Community Builders, must pay about $9.8 million of that, and the developer is required to pay that money or the San Luis Ranch project may be stopped.

But the San Luis Ranch project, as recommended by the Planning Commission, can't be stopped if the rest of the needed funding, collected by the government agencies, doesn't come through and the overpass and interchange can't be built before the housing project's second phase.

The Prado Road project is anticipated to begin construction in 2021, and most of the funding is in place, according to Jake Hudson, the city's transportation manager.

The City Council will formerly determine whether to tweak that agreement (as recommended by the commission) — potentially allowing all 580 San Luis Ranch homes to be built before overpass construction is finished — on July 17. The Planning Commission's vote was advisory.

Grossman's planning consultant, Rachel Kovesdi, said that lenders aren't willing to finance the San Luis Ranch project with a risk of a hard stop on construction after the first phase.

She said the developer's costs include a number of other infrastructure improvements, including bike paths and traffic improvements on city streets near the project site.

"Financing tens of millions of dollars infrastructure in an upfront way is simply impossible," Kovesdi said. "We need to be able to finance multiple elements of the project simultaneously."

More than 2,000 prospective buyers have expressed interest in purchasing a San Luis Ranch home, according to Grossman. Units will range from about 220 square feet to 2,200 square feet; the city approved the project with the idea it would be affordable by design.

The project will include 34 affordable homes that are deed restricted for low- and lower-income residents and 14 workforce homes for those with moderate-level incomes.

Under the original agreement, the first 196 homes to be built were all single-family, but the Planning Commission recommended Thursday that multi-family housing be allowed to be mixed in at any point during the six-year phasing plan.

As part of that recommendation, the number of homes planned and land use approvals would not change, and the six-part phasing would still be in place.

"The goal is to provide a variety of housing types to be brought on sooner to accommodate families at different income levels as contemplated by the City Council during the approval process," said Marshall E. Ochylski, another of the developer's consultants. "The actual mix will be based on market demand but will include a proportionate share of deed-restricted affordable and workforce housing units."

Of the roughly $46 million needed for the Prado Road overpass project, about $10 million would go toward constructing southbound ramps that aren't needed until closer to the city's future buildout. San Luis Obispo could have about 57,000 residents in 2035.

Funding for the Prado Road project will come from sources that include funds administered by the San Luis Obispo Council of Governments and city fees, such as developer impact fees.

"The interchange is on its own schedule and as long as San Luis Ranch can move forward all of the funding is secured," Hudson said.

The Prado Road project is expected to take about 18 months to complete.

The San Luis Ranch project includes approvals for a 200-room hotel and 250,000 square feet of commercial and office space, which would also impact traffic. But specific proposals for those buildings would still need to be approved through a city-planning process, and are unlikely to happen before 2021.

As newly built homes are occupied, the city has identified several intersections and thoroughfares in and around the San Luis Ranch project that would face traffic congestion.

Some members of the public warn the city will face major traffic jams in 10 years.

But county planning commissioners said Thursday, that despite concerns, they are comfortable with the San Luis Ranch project because of its contribution to the Prado Road interchange, which has a regional benefit, and the high demand for housing.

"At the end of the day, we need housing," commissioner Nick Ostebur said. "It's hard to understand how bad the need is unless you're in that position of being one of the 65 percent in the rental crowd, among the young professionals trying to make it ...

"If I have to sit in traffic at a particular intersection for three minutes, instead of two, I think I can hang with that."

Correction: This story has been corrected to reflect that the potential hard stop of the project is contingent on the completion of the Prado Road overpass and northbound ramp, and not just the funding of that project."

This story was originally published June 29, 2018 at 6:46 PM.