HAYWARD -- City voters will decide in June whether to raise the sales tax by a half-cent to 9.5 percent, generating about $10 million a year, with much of the money paying for more police officers, a new main library and upgrading of fire stations.

The City Council approved putting the sales tax proposal on the June 3 ballot shortly before midnight Tuesday near the end of a long meeting, most of which was spent debating whether to allow a developer to build 194 upscale townhouses and 16,800 square feet of retail space on the site of the old Mervyn's headquarters building on Foothill Boulevard.

In a 4-3 vote, the council said no to the housing proposed by Integral Communities, with Mayor Michael Sweeney and Councilmen Greg Jones, Marvin Peixoto and Al Mendall turning down the project.

Mendall called it the right project at the wrong place, saying the 11.3-acre parcel on the northern edge of downtown would be better suited for a hotel/conference center.

"It's large enough. It's close to downtown, it's close to BART, it's got a parking garage," he said.

If voters OK the sales tax increase, it would be the same as Union City's, according to the staff report.

In addition to supporting more police, a library and fire station upgrades, residents who took a city survey also favored a new fire department training center, street repairs and more maintenance workers.

Library supporters promised the council they would work to get the measure passed.


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"Please put this on the ballot. Let us go to work and show you what we can do," Kari McAllister, of Friends of the Hayward Public Library, said before the vote.

Hayward schools Superintendent Stan Dobbs said the city's children will benefit from a new library. "HUSD stands as a partner with our city," he said.

The current library was built in 1951, when the city had 14,000 residents, compared with almost 150,000 people today.

"We have old buildings," Councilman Mark Salinas said. "There comes a time when we need to buy a new library."

While the council unanimously supported the ballot measure, it was divided over Integral's proposal for townhouses. The company planned to tear down the site's four-story parking garage, along with the four-story, 336,000-square-foot structure, built in 1957 as a Capwell's department store. It would build townhouses on much of the property, with two commercial buildings fronting Foothill.

The parcel is zoned for retail or commercial on the ground floor, with housing or offices allowed on the second floor and above.

Almost 80 percent of Hayward voters who were polled favored the housing project, and several people at Tuesday's meeting spoke of the need to bring young people to the city to revitalize downtown.

"When you ask the experts, they all say downtown needs more market-rate housing," said Guy Warren, a commercial real estate broker. He told the council he had approached many businesses, including Costco, Whole Foods, Trader Joe's and Target, and none was interested in the parcel, adding there is no market for a hotel and convention center there because downtown first needs to thrive.

"Hayward desperately needs this," he said.

The project had the backing of construction labor unions, with the developer agreeing to use local workers.

Bishop Jerry Macklin of Glad Tidings Church of God in Christ said he had seen far too many of his church's members move to the Central Valley to purchase houses, and the project would make Hayward more attractive to those homebuyers.

"Please give it your support. I think your city will thank you," he said.

The building has sat vacant since 2008.

"I'm tired of looking at an empty building on Foothill," said Hayward resident Dennis Morrison. "It's been a nice spot for vagrancy."

Integral first proposed 570 townhouses on the site but revised its plans after meeting with people living nearby. Despite those changes, many of Prospect Hill neighbors at Tuesday's meeting held bright yellow signs opposing the project.

"It's important we keep a long-range perspective," said Cheryl Kojina, a Prospect Hill resident. "There are many places we can build housing."

Peixoto rejected the idea that more people living downtown would stimulate the area's economy, saying that the existing condominiums near City Hall had not attracted many businesses.

"I don't think it's good land use policy to trade commercial space for residential. Hayward needs to be about more than housing," he said.

Contact Rebecca Parr at 510-293-2473, or follow her at Twitter.com/rdparr1.