If such an idea gains a third vote at the council's June 15 meeting, it would be a deal-breaker for the Bohannon Development Co., simply because it would make the project almost impossible to finance. Company vice president David Bohannon said that research by his company could find no other examples in the state in which a developer shared profits with a city.
Perhaps Mr. Cohen and Ms. Fergusson are simply reflecting the beliefs of their supporters who oppose the huge project that involves building three eight-story office towers, a hotel, and several parking garages at Marsh Road and the Bayfront Expressway. Total cost of the project is estimated to be $363 million.
At this writing, it is not clear if council member Heyward Robinson, who often votes with Mr. Cohen and Ms. Fergusson, would join them in opposition or side with Mayor Rich Cline and member John Boyle, who do not see profit-sharing as a deal-breaker and are expected to vote to approve the deal.
Mr. Robinson abstained at a May 25 meeting when council members indicated their feelings on the project, while his colleagues split 2-2.
By permitting office use — rather than sales-tax-generating industrial use in force now on the site — supporters of profit-sharing see the city giving up a huge windfall to the developers after the buildings are paid for. They believe that the city should get a portion of that cash flow. Estimates by a city-hired consultant show that before expenses, the Menlo Gateway office buildings alone would reap $35 million per year in rent beyond what a project that maximizes the current zoning would produce.
On the other side, the developers say they will provide major benefits to the city, including a revenue guarantee that is unprecedented in the state. Consultants estimate the project will provide $1.67 million (plus a more recent pledge of $150,000 in transit occupancy tax) to the city, not counting nearly $14 million in mitigation fees and various other payments. The Bohannons agreed to add a one-time payment of $250,000 to the city's Belle Haven neighborhood last month, in addition to $1 million already designated for Belle Haven and Bedwell Bayfront Park.
The company also has agreed to a host of environmental stipulations, including an agreement to completely offset carbon emissions generated by the operation of the buildings, reduce vehicle trips to and from the buildings by 17 percent, and build the offices to meet U.S. Green Building Council LEED Gold standards, and the hotel to meet LEED Silver standards.
We believe the city has extracted as much as it can from the Bohannons for Menlo Gateway. The council should approve the project without a profit-sharing restriction on June 15. If members are conflicted or Mr. Robinson continues to abstain, we recommend the council put the issue on the November ballot, an idea Mr. Bohannon himself suggested. That would give both sides ample time to make their case to Menlo Park voters.