Google is backpedaling on its demands for Mountain View to approve an additional 800,000 square feet of office space for the search giant’s North Bayshore development. A Mountain View Voice report states that Google has also apologized for what many considered an ultimatum to block the construction of 9,850 housing units unless the demands were met.

In a letter sent to the Mountain View City Council, Google vice president of real estate David Radcliffe clarified that the company is completely on board for new housing near the North Bayshore headquarters. He wrote that the idea of adding more office space to the project could be a way to offset high housing costs, and he apologized that the statement came out as a threat.

Google was originally in a standoff with the Mountain View City Council, warning city officials that it would block the housing development if the city did not approve the tech giant’s request. According to a report by the East Bay Times, Google’s ultimatum caught city officials by surprise. More housing is critically needed in the Bay Area to combat the region’s skyrocketing rents and home prices.

Mountain View and other Peninsula cities are often criticized for making room for business expansion but not giving the green light to new housing. Mountain View already houses 2.7 workers for every housing unit. That is the second-worst ratio in Santa Clara County behind Palo Alto, which houses 3.8 workers per unit.

The additional 800,000 square feet Google requested would add to the 3.6 million square feet of development currently outlined in the North Bayshore plan. Of the 9,850 units of housing that Google proposed, 1,600 were planned to be affordable.

Council member Margaret Abe-Koga says that approving Google’s demands would also require an additional 2,700 units of housing be built in order to accommodate the additional workers without worsening traffic. The problem is that there’s not enough room to build that many more units.

If Google’s request for more office space is met, Mountain View can control the rate of development to ensure that road improvements and transit services can keep up with all the changes. According to Vice Mayor Lenny Siegel, this would also help ensure that the addition of thousands of housing units does not increase the amount of traffic in the area.

The North Bayshore expansion is not the only development project on Google’s roster right now. The search conglomerate is also building a transit village in Downtown San Jose and purchasing several properties in Sunnyvale.