Los Altos housing development defaults on loan

Nearly 200 homes were proposed for site

LOS ALTOS >> A big residential development in Los Altos that would have added nearly 200 homes in the posh Silicon Valley city has stumbled into default on its mortgage, raising the specter of foreclosure on the property.

The default notice has been filed on a loan for a property where a highdensity housing project totaling 196 units has been proposed on El Camino Real in Los Altos.

This sort of high-density residential development is considered to be unusual — even unique — for the upper-crust city of Los Altos.

An office building totaling 76,500 square feet that currently occupies the 5150 El Camino Real property would be bulldozed to clear the land for the residential development.

The choice 3.8-acre site is two miles from the Googleplex campus in Mountain View and four miles from Stanford University.

Now, however, the property is in default on a $42 million loan provided by Loancore Capital Credit REIT, according to public documents filed in Santa Clara County on March 18.

Loancore Capital Credit warns of a potential foreclosure if the mortgage isn’t repaid, the county records show.

In 2018, the $42 million in financing was provided to 5150 ECR Group, an affiliate that is controlled by Dutchints Development and its principal executive, local developer Vahe Tashjian.

“The ownership group remains committed to delivering this project to the community,” Tashjian said in a comment that he emailed to this news organization. “Most of us live in the city, thus we understand the importance of this project to the City of Los Altos as well as the Bay Area in general.”

The Vahe Tashjian and Dutchints Development affiliate obtained the loan around the same time that it bought the property where the project has been proposed.

“COVID has impacted all of us in different ways,” Tashjian said. “We are working proactively with our lender to cure the default and create a successful project that brings value to the community.”

Dutchints Development paid $48 million for the site in April 2018, county documents show.

“The goal is to create

a great place to live while promoting sustainability, walkability, and the use of mass transit,” Tashjian and Dutchints Development wrote as part of a proposal submitted in late 2018 to Los Altos officials.

The 5150 El Camino project is deemed important for Los Altos in light of the Bay Area’s ongoing housing shortage.

“Every unit counts and we are trying to do our part to help solve the housing crisis,” Tashjian stated in an emailed comment. “This project will deliver the most below-marketrate units of any project in Los Altos history.”

Bay Area cities, including Los Altos, are under pressure to usher in their share of completed residential units in the upcoming years to help tackle the nine-county region’s brutal housing shortfalls.

“Overall, the project reflects a desired and appropriate development intensity for the commercial thoroughfare district and the El Camino Real corridor,” Sean Gallegos, an associate city planner, wrote in a 2019 report to the City Council.

The report also endorsed the number of units in the project. The development would consist of two fivestory condominium buildings with 172 units along El Camino Real and two threestory townhouse buildings along the rear of the project with 24 units, Gallegos wrote in the report.

“It achieves the maximum housing density permitted, which benefits the city’s housing goals,” the city staff report stated.