Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Raymond Hodges, Director, Department of Housing
Subject: Trilateral Memorandum of Understanding with the City of East Palo Alto and EPACANDO to Facilitate Affordable Housing Development and Expansion of Martin Luther King Jr. Park
RECOMMENDATION:
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Adopt a resolution:
A) Authorizing the County Executive, or designee, to execute a Trilateral Memorandum of Understanding between the County, the City of East Palo Alto, and East Palo Alto Community Alliance and Neighborhood Development Organization to facilitate the potential exchange of real property, interim site control, and future development of a 100% affordable housing project on University Avenue and the expansion of Martin Luther King Jr. Park in East Palo Alto; and
B) Authorizing and directing the Director of the Department of Housing, or designee, in consultation with the East Palo Alto Community Alliance and Neighborhood Development Organization, to conduct a competitive process to select a developer for the proposed University Avenue affordable housing development.
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BACKGROUND:
California Government Code Section 25365(a) authorizes counties, by a four-fifths vote of the Board of Supervisors, to exchange real property with a city when the property to be acquired is required for County use. Similarly, Government Code Section 37351 authorizes cities to exchange real property for municipal purposes.
The County owns approximately 1.85 acres of vacant land located at 1266 Beech Street in the City of East Palo Alto (Assessor’s Parcel Number 063-600-060) (“County Property”). The County Property abuts Martin Luther King Jr. (MLK) Park and is designated for Parks/Recreation/Conservation uses under the East Palo Alto Vista 2035 General Plan. The site is adjacent to low-density residential uses and environmentally sensitive areas, making it more suitable for park expansion than for high-density residential development.
The City of East Palo Alto owns approximately 0.36 acres at 2277 University Avenue (Assessor’s Parcel Number 063-302-460) (“City Property”), designated as Mixed-Use Corridor under the General Plan. The City Property is located along a major arterial roadway with access to transit and services, and is well-suited for high-density residential development, including affordable housing.
In April 2022, this Board authorized the County Executive or Director of Department of Housing to execute an MOU between the County and the City for due diligence activities regarding a potential real property exchange in connection with the County’s potential development of affordable housing on the City Property and the City’s expansion of MLK Park on the County Property. (Resolution No. 851893). Although these prior efforts did not proceed to completion and the MOU expired, the City and County each completed Surplus Land Act requirements, and both properties were determined to be exempt surplus land by the California Department of Housing and Community Development.
Since then, East Palo Alto Community Alliance And Neighborhood Development Organization, a California non-profit public benefit corporation (“EPACANDO”) holds an option and is currently under contract to acquire property at 2263 University Avenue (“2263 University Property”), which is adjacent to the City Property, and which consists of approximately 0.46 acres improved with three buildings built in 1931 and containing seven rent-stabilized residential units. EPACANDO has played a longstanding role in the community as a catalyst for affordable housing development and neighborhood stabilization.
In December 2025, County staff, City staff, and EPACANDO convened to discuss their shared interest in a potential property exchange between the City and the County that incorporates the 2263 University Property, enabling a larger and more feasible affordable housing development on University Avenue while advancing the City’s long-standing goal of expanding MLK Park.
DISCUSSION:
Staff have negotiated a proposed Trilateral Memorandum of Understanding (“Trilateral MOU”) which establishes a framework under which the County, City, and EPACANDO will cooperate to facilitate the exchange of property between the City and the County, subject to further review and approvals by their respective governing bodies, and conditional upon EPACANDO acquiring and operating the 2263 University Property until construction finance closing for the development of a multi-family, 100% affordable housing project on the 2263 University Property and City Property (the “Project”).
The proposed Trilateral MOU delineates responsibilities among the parties, including due diligence, title clearance, surplus land compliance, interim property operations, tenant relocation planning, developer selection, and entitlement coordination. All actions remain subject to future approvals by the Board of Supervisors and the City Council. The proposed Trilateral MOU contemplates, among other terms, that:
• The City and the County would take steps necessary to facilitate the exchange of the City and County Properties (clearing title, due diligence) and to seek required approvals;
• The County would conduct a competitive process to select a private developer, in consultation with and participation by EPACANDO, to construct and operate affordable housing, in collaboration with EPACANDO, on the City Property and 2263 University Property;
• The City, County and EPACANDO would cooperate to facilitate the merger of or parcel map adjustments to the parcels constituting the City Property (2277 University Avenue) and the 2263 University Property into a single development site suitable for a 60+ unit, 100% affordable housing project;
• EPACANDO would manage, operate and maintain the 2263 University Property in compliance with health, safety and habitability requirements and applicable law on an interim basis until construction finance closing for the development of the Project on the 2263 University Property and City Property;
• The County would review and consider such applications as may be submitted by EPACANDO for funding from the County in connection with the County’s NOFA process for HOME and CHDO funds to finance light rehabilitation and to make health and safety repairs to the current residential units on the 2263 University Property, subject to eligibility and availability of funding under such programs and approval by the County’s governing body;
• EPACANDO would cooperate with the Couty and the selected developer on predevelopment activities for the Project, including community engagement;
• EPACANDO grants an option and right of first refusal to the County to purchase the 2263 University Property, subject to the application of a credit at closing on the purchase of the 2263 University Property (pursuant to either the option or right of first refusal) in favor of EPACANDO for reasonable and necessary predevelopment expenses incurred in connection with the development of the 2263 University Property for affordable housing that were not otherwise reimbursed or funded by the County, in an amount not to exceed $100,000; and
• The City and County would cooperate to facilitate the expansion of MLK Park through the City’s acquisition of the County Property at 1266 Beech Street.
The term of the MOU will commence upon execution of all parties and approval by the City and County’s governing bodies and continue through June 30, 2027. The City is expected to consider the Trilateral MOU at its City Council meeting on February 24, 2026.
Execution of the proposed Trilateral MOU does not commit the County to a future property exchange or development approval but provides a structured path to evaluate and potentially implement the transactions. No exchange of funds is expected between the County and the City for their property exchange.
The County Attorney has reviewed and approved the proposed Trilateral MOU and accompanying resolution as to form.
COMMUNITY IMPACT:
The development of affordable housing in the City of East Palo Alto, as contemplated by the Trilateral MOU, will positively impact low-income residents by expanding the supply of affordable housing in an area zoned and suitable for higher-density residential development. The expansion of MLK Park will positively impact County residents by increasing areas for public recreation and community events
FISCAL IMPACT:
There is no Net County Cost associated with adopting this resolution. If the Board authorizes future actions contemplated by the Trilateral MOU in connection with the development of the Project and associated transactions, the fiscal impact will be specified in such future Board items.