Milpitas planning commission backs Lion Living’s 109‑townhome plan, asks deed restriction for live‑work units

Milpitas Planning Commission on Monday recommended that city council approve a proposal by Lion Living to redevelop Lot 3A at 1320 McCandless Drive into 109 for‑sale townhomes, 10 accessory dwelling units (ADUs) and nine ground‑floor live‑work units.

Associate Planner Randy Baez told the commission the application packages five entitlements for the council’s consideration: a site development permit amendment (SA25‑0002), a vesting tentative map (TM26‑0001), a conditional use permit amendment (UA25‑0003), a density bonus permit (DB26‑0001) and a development agreement (DA26‑0001). The 5.49‑acre site is the last undeveloped parcel within The Fields master development; staff described the project as consistent with the Milpitas Metro Specific Plan and exempt from additional environmental review under the cited CEQA guidelines and prior EIRs.

The proposal would replace previously approved higher‑density apartment entitlements with 17 buildings of 3–4‑story townhomes (109 units for sale), including 218 covered parking spaces, a publicly accessible urban plaza at Market Street and McCandless, and nine live‑work units fronting Market Street. Under Milpitas’s affordable housing ordinance (AHO) — which requires 15% of units on projects of 10 units or more to be affordable — a 109‑unit ownership project would ordinarily require roughly 16 onsite affordable units. The applicant is not proposing onsite for‑sale BMR units; instead, Lion Living proposes to convert 22 rental apartments in the adjacent Gideon building to deed‑restricted below‑market rental units (18 low‑income and 4 very‑low‑income), which the applicant said are already built.

"Those units are guaranteed," said Peter Zack, a principal with Lion Living, referring to the conversions at the adjacent Gideon building. He told commissioners the rental conversions remove construction and financing risk and allow the company to deliver new for‑sale housing that the applicant says the market will support.

Several commissioners pressed the applicant on feasibility and tradeoffs. One commissioner said the proposal represents "a loss of potential housing for the city," pointing out the site’s earlier approvals called for several hundred apartment units rather than roughly 110 for‑sale townhomes. Lion Living responded that prior market conditions and rising construction costs and interest rates make the original high‑density entitlements infeasible today.

Planning staff also described the nine live‑work units as designed to function like commercial storefronts and recommended the commission ask for a deed‑restriction condition to ensure first‑floor spaces are used for commercial purposes rather than converted to residential uses. Commissioners agreed to add a recommendation that city council consider a condition requiring deed restrictions for the live‑work units to preserve the commercial character of Market Street.

Commissioner Calkins moved to adopt Resolution No. 26‑010 recommending approval of the five entitlements subject to the attached conditions of approval and to include the commission’s recommendation that the city council consider deed restrictions for the live‑work units; the motion was seconded and passed unanimously. The recommendation now goes to the Milpitas City Council for final action.

The development agreement included two public‑benefit elements flagged in staff materials: a $400,000 voluntary contribution to the city and the conversion of three low‑income and one very‑low‑income units at Gideon above the AHO baseline, producing a total of 22 deed‑restricted rental units tied to the project. Staff noted the development agreement’s initial term is three years with up to two separate two‑year extensions (a maximum total of seven years).

The commission closed the public hearing with no public speakers and advised staff to work with the applicant to frame deed‑restriction language for the live‑work units before the council hearing. The commission’s recommendation is advisory; the City Council will take final action. The chair read appeal rights and adjourned the meeting.