As a member of the Planning Commission, I have been given thousands of pages to review for this project. Buried among those pages is a single page, a spreadsheet, from a financial consultant that Menlo Park paid to evaluate the project. This spreadsheet indicates that the Menlo Gateway project will be generating about $50 million per year in net income starting in 2017, and that the project will be free and clear of debt by 2023.
Some simple calculations indicate that the net income of the same area, fully developed in accordance with existing zoning rules, would be no more than about $6 million per year. Therefore, the zoning entitlement that Menlo Park is considering for this project is worth $44 million per year. According to the current term sheet for Menlo Gateway, in return for granting development rights worth $44 million per year, Menlo Park would get about $1.4 million per year and a few million in other one-time goodies.
As far as I am concerned, the best legacy that I can give to Menlo Park as a resident and a volunteer on the Planning Commission is a fair share of the wealth created by the largest zoning action in the history of the city. In this case, I believe that the city is entitled to at least 25 percent of the windfall profits produced by its decision. This would be $11 million per year, not $1.4 million per year.
As I have stated in a previous guest opinion, I believe that it is best to structure the development agreement so that Menlo Park receives a share of the gross rents collected on the commercial properties in this development. This fair share could be negotiated so as not to add risk to the project or jeopardize financing. I am suggesting that when and if Mr. Bohannon enjoys his upside, the city of Menlo Park should get their share for making it possible.
Vince Bressler is a member of the Menlo Park Planning Commission.