SAN LEANDRO | Oct. 20, 2011 | San Leandro Crossings, the  stalled and controversial housing project proposed to be built adjacent to the San Leandro BART station, is being eyed for expansion by neighboring OSIsoft, according to city staff.

“The project is stalled, but I wouldn’t say it is dead, said Luke Sims, the city’s community development director. “We will go forward, albeit, perhaps in a little bit different way.”

Sims told the City Council Monday night the growing software firm headquartered in San Leandro is in negotiating to expand its Davis Street footprint to the neighboring vacant lot once set aside for construction of 100 market rate and low-income homes.

“Hopefully, with that component, the rest of the pieces can come together,” said Sims.

The project known as “The Crossings” also includes a multi-story parking garage for BART riders south of the development and 200 market rate homes across San Leandro Boulevard to the east of the BART station.

The Crossings project, though, has been in a holding pattern for nearly a year-and-a-half after the owner of the property threatened to pull out of the deal when the state asked for more stringent guarantees that all of the units would eventually be constructed.

“That put the city in a precarious risk position,” Sims said, “and we had to pull back from moving forward.” Others involved in the development, including Bridge and the Westlake Group, also became ancy over the financial risks, said Sims.

Ultimately, tax credits awarded by state were revoked. The city is still searching to find alternative sources of revenue to allow the project to move forward. “We are continuing to work and try to identify either tax credits or other financing from the state to allow this project to proceed,” said Sims. That has not been achieved.”

The more pricey portion of the development compromising 200 market rates homes is also suffering due to the poor housing market. “It is confounded by the residential market,” said Sims. “Rents are not there to support new construction at this point.”

When initially proposed in 2008, the Crossings was described as one of the focal points of San Leandro’s new transit-oriented downtown linking the BART station to the city’s downtown. A small group of rabid opponents, though, decried the inclusion of low-income housing units in the plan.

The group sometimes known as “Save San Leandro” wondered how the city would handle the influx of young children that may have added to already stuffed classrooms. Some proponents of The Crossings still contend the opposition’s stance was rooted in racism and housing discrimination.

In the end, thousands of BART riders each day peer through the windows of their trains and see a vacant, weed-infested plot of real estate with little or no possibility of being developed anytime in the near future.