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Letter: Council should keep hands out of Bohannon's pockets

Original post made on Jun 2, 2010

The Menlo Park City Council thinks that the Menlo Gateway project by David Bohannon should be put up for vote.

Read the full story here Web Link posted Wednesday, June 2, 2010, 12:00 AM

Comments (57)

Posted by Hank Lawrence, a resident of Menlo Park: Sharon Heights
on Jun 2, 2010 at 2:45 pm

The City Council should keep its hands out of our pockets too!


Posted by city deserves more, a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 2, 2010 at 4:44 pm

It makes no sense to me that the city doesn't get more from Bohannon for granting enormous upzoning and changes to city zoning rules and general plan, just for this project. The only revenue to the city, other than usual fees, is from the hotel tax that guests pay. Some money will be spent by Bohannon for making capital improvements with a market value of about $1 million (not the developer's costs).
The project is primarily an office project that is larger than SUN's. It will increase traffic congestion greatly and increase greenhouse gas emissions. Bohannon gets great value from the upzoning, as the city's znalysis shows. Menlo Park should get more than it is. Sharing revenue may not be the right way, but the city should not be giving away for nothing the right to develop more than is currently allowed.


Posted by POGO, a resident of Woodside: other
on Jun 2, 2010 at 9:57 pm

If you truly believe that the Town should "participate" in potential property appreciation due to zoning changes, shouldn't they also compensate property owners when the city asks for easements, demands right of ways, widens roads or imposes new limitations? Wouldn't that only be fair?

Zoning changes should be made by elected officials for the good of the community, period.

If you give the city a financial incentive to change zoning - like providing commercial zoning in return for that revenue participation some of you seem to crave - beware of dramatic unintended consequences. Revenue participation by the city might make your elected officials very susceptible to bribes and kick-backs in return for reducing that economic participation. To me, this all sounds like a perfect inducement for corruption.

Change zoning for the right reasons.


Posted by city deserves more, a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 3, 2010 at 7:42 am

While I don't get the relationship of corruption with the city getting more revenue, there are other ways for the city to ensure it gets a share of the value of up zoning. One is upfront payments like Stanford is offering Palo Alto. Another is to make sure that whatever businesses are allowed to inhabit the spaces might bring revenue to the city. The hotel would. Most corporate or sales offices might. Other won't. One of the biggest job the city has is to manage land use for desired outcomes.


Posted by POGO, a resident of Woodside: other
on Jun 3, 2010 at 8:58 am

When there is so much money at stake, corruption is nearly inevitable.

Let me give you a shorthand illustration. A developer is being asked to share a percentage of revenues with the city. During one of the many meeting with the parties, one or more of those council members signals the developer that they can get that percentage lowered for "some consideration" (a campaign contribution, a payoff, etc.). This isn't exactly novel and it's almost too easy.

But you never commented on the counterpoint that the city should be PAYING property owners when they rezone or impose limitations on property. And that happens A LOT more often. Why isn't turnabout fair???


Posted by city deserves more, a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 3, 2010 at 11:00 am

I am not advocating sharing profits. It is just one way for the city to benefit from changing zoning when a developer asks. I expect the city to do the best deal for the community and sometimes that is not just monetary. I do not expect the city to be doing the best deal for the developer. Sometimes the city needs to say no, that's not enough value to the city.


Posted by POGO, a resident of Woodside: other
on Jun 3, 2010 at 11:25 am

The city needs to do what's best for the city, period. Whether it's approving a new park or school (which may hurt a property owner) or approving a new shopping center (which may benefit a property owner or developer).

The city benefits from tax revenues. Those additional revenues come in the form of property taxes (which, in case you've noticed, are pretty high around here...), sales taxes, hotel taxes, intangible and asset taxes which many businesses pay, and, of course, indirect revenues obtained from employees and vendors that serve the business.

I won't even get into the local employment benefits from the project.


Posted by what if, a resident of Menlo Park: Central Menlo Park
on Jun 3, 2010 at 12:38 pm

What if most of a project is filled with businesses that don't provide taxes to the city? That's the case for this one.


Posted by Steve, a resident of Menlo Park: Central Menlo Park
on Jun 3, 2010 at 2:07 pm

It would be nice to see the pros & cons from the city viewpoint laid out side by side.
PROS: As I understand it, the taxes to the city would come from the proposed hotel, the smaller part of the deal. Business offices will provide essentially no taxes to the city. There would likely be some jobs for residents of the city, though most jobs would be likely filled by residents from surrounding communities. What other PROS am I missing?
CONS: Lost opportunity for satisfying other needs of Menlo Park and its residents, such as lost housing units and lost retail businesses. As a consequence of these lost opportunities the property & sales tax revenues from these housing and retail businesses would also be lost forever. Office & hotels will require many additional trips into this community with its attendant traffic congestion and pollution.
Seems to me that more thought should be given to alternatives that would maximize benefits to the community, rather than the current landowner, and to zone accordingly.


Posted by POGO, a resident of Woodside: other
on Jun 3, 2010 at 2:36 pm

First, I do agree with Steve that the property should zoned to promote the best interests of the community. If preventing the enhancement of a property owners balance sheet is the objective, you will never develop anything. It's the developer that takes the risk, they should reap the reward or Red Elephant status.

Everyone keeps saying that these businesses will pay no taxes to the city. That is factually incorrect. ALL businesses pay taxes to the city - whether they are doctors, venture firms, or grocery stores.

Menlo Park has an annual license that, in addition to minimum fees, has a calculation based on revenues (and some of these businesses have millions of dollars of revenues) and the number of employees. If you're unhappy with Menlo Park's tax rates, change them, but you can't say these businesses don't pay taxes.

In addition to license fees, many of these businesses DO have revenues that are subject to sales tax which does go to the city. Also, you simply cannot ignore the taxes that businesses and employees pay for services and supplies that they purchase.

Don't underestimate taxes from a hotel. The property will pay sales taxes on its housing, food and all services. No one seems to complain about the tax revenues that originate at the Four Seasons or the Rosewood!

Then again, perhaps you'd prefer that Mr. Bohannon drop a Walmart in there so you could get more from sales tax revenues. Somehow, I don't think you'd support that.

So what is it that you want?


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Jun 3, 2010 at 2:44 pm

I think that Pogo has a great idea - given the proximity of this site to 101, Bayfront and Marsh Road this would be a perfect place for a Walmart and it would generate a lot of jobs and a lot of taxes.

Why not?

And if the City wanted to it could build the building for Walmart and lease it to them in return for another percentage of sales in addition to the sales taxes.


Posted by long term resident., a resident of Menlo Park: Downtown
on Jun 3, 2010 at 2:58 pm

Menlo Park down zoned the property after Bohannon owned it and had developed it. In fact they have been downzoning the entire city, zone by zone, for years. For example, none of the apartment buildings around the downtown area can be built under the current ordinace because of this down zoning. The council recently did this on El Camino Real.

The proponents of profit sharing argue that because the city is up zoning they are giving Bohannon something and should be paid for it. However, they did not pay Bohannon or any of the other property owners in the city when they took away development rights through down zoning.

This is another baseless no growth maneuver performed by our no growth council majority (Boyle excluded).


Posted by noblesse oblige, a resident of Menlo Park: Belle Haven
on Jun 3, 2010 at 3:21 pm

"Menlo Park has an annual license that, in addition to minimum fees, has a calculation based on revenues (and some of these businesses have millions of dollars of revenues) and the number of employees. If you're unhappy with Menlo Park's tax rates, change them, but you can't say these businesses don't pay taxes."

The business tax hits the max at $8,000, and that is for a company whose revenues top $30mm! That's rounding error for those companies. Compare that amount to the revenue received from businesses that generate sales tax, including the kinds of businesses we'd expect to see in the M-2 zone. Professional offices don't carry their weight. An office development like Bohannon's would not provide the city with enough revenue to offset the costs.

Either downsize the project to mitigate some of the negatives or ask for a sizeable settlement up front plus a well-negotiated contract that makes this upzoning non-transferrable.

The current agreement is a joke. It may appear that the city will get some money down the road -- if traffic exceeds a certain limit, for example -- but when the time comes, Bohannon's top dollar lawyers will cleverly reinterpret the wording to prove that he owes nothing.


Posted by Steve, a resident of Menlo Park: Central Menlo Park
on Jun 3, 2010 at 3:24 pm

Peter -
Not sure if you're being facetious in suggesting a WALMART for MP but you're absolutely right in noting that the location is ideal for a retail center, which would provide direct benefit to most residents, as well as a continual source of sales tax revenue that would be, I believe, far greater than the revenues expected from an office park. East Palo Alto's Gateway 101 retail center is an example. And I note that a lot of new housing has gone up on the periphery of Gateway 101, helping meet their goal of adding housing units.
And to respond to POGO's comment, I don't see the objective as "preventing the enhancement of a property owners balance sheet" but focusing first and foremost on what's best for the city of Menlo Park and its residents. The owner is likely to benefit in either case but the Council shouldn't be working to maximize his benefit but instead, that of the community, now and in the years to come.


Posted by POGO, a resident of Woodside: other
on Jun 3, 2010 at 3:25 pm

If it's sales taxes you're after (and I don't believe that for a moment), then build a Walmart.

You'll have enough sales tax revenues to fill a swimming pool.

But you don't want that, do you?


Posted by POGO, a resident of Woodside: other
on Jun 3, 2010 at 3:29 pm

Steve -

I don't know how I can be much clearer. I've said three times: "The city needs to do what's best for the city, period."

It's OTHERS that seem to be appalled that Mr. Bohannan is getting some benefit for making this enormous investment of his time and money. It's THEIR objective that Mr. Bohannon's returns be limited, not mine.


Posted by Menlo Voter, a resident of Menlo Park: other
on Jun 3, 2010 at 3:36 pm

POGO states: If it's sales taxes you're after (and I don't believe that for a moment), then build a Walmart.

You'll have enough sales tax revenues to fill a swimming pool.

But you don't want that, do you?

POGO, that's actually a pretty darn good location for a Wallmart. In fact, it's a good location for an outlet mall like the one in Gilroy. Isn't this the same area the city was trying to turn into an auto mall before the economy tanked.

Personally, I think these are all better uses for the area because they would generate significant sales tax revenue for the city.


Posted by POGO, a resident of Woodside: other
on Jun 3, 2010 at 3:56 pm

Then go for it!

But I'll be totally shocked if there's even an iota of support for an outlet mall, much less a Walmart, in tony and politically correct Menlo Park!


Posted by noblesse oblige, a resident of Menlo Park: Belle Haven
on Jun 3, 2010 at 3:58 pm

I personally would love to see some retail in that location. A discount mall would be a huge draw. Isn't it time to give MP residents a place in town to spend our money? The Santa Cruz boutiques have their place, but most people I know -- yes, even those with ample incomes -- go to Target or Costco for everyday shopping.


Posted by Steve, a resident of Menlo Park: Central Menlo Park
on Jun 3, 2010 at 4:00 pm

POGO -
Sorry. I thought you were including me in the group seeking to limit Mr. Bohannon's profits.
What I don't understand is why the discussion so far is focused on what Mr. Bohannon's proposing, rather than expanding the discussion to what the best use of the property would be for the surrounding community. Presumably that "best use" is reflected by the current zoning, which begs the question of why the city should be in any rush to re-zone to accommodate the current owner?


Posted by Steve, a resident of Menlo Park: Central Menlo Park
on Jun 3, 2010 at 4:31 pm

Costco and Target are just up the road so I don't think those companies would find this site compelling. WALMART on the other hand has nothing on the Peninsula between Mountain View and Brisbane. Similarly, the nearest Lowe's home center is in Sunnyvale and the nearest JC Penney is in Cupertino. A decent shopping center for middle class residents might be just the ticket for this area.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Jun 3, 2010 at 4:55 pm

Steve states:"A decent shopping center for middle class residents might be just the ticket for this area."

AND such a shopping center would provide a lot of jobs for local low wage earning residents who would then not have to commute long distances to find work.

How do we get Bohannon and the City to start over with a strategic view?


Posted by city deserves more, a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 3, 2010 at 5:26 pm

Yes, the city should do what is best for the city. If that means expanding the conversation to other possibly better uses, so be it. Again, I am not advocating a share of profits. The only reason I chimed in was to make the point that the city isn't getting much and deserves more benefits from the project than has been negotiated. The city can still say no, not good enough or say this is what we need.
For the person who said the traffic fines would bring revenue must be joking. Look at how easy it is to not pay a penny even if the limits are exceeded. Bohannon has outstanding negotiators; the city, not so much.

I am unaware of the city downsizing anything, at least not for a very long time. The city has changed its review process a few times, making it stricter and then making it looser.


Posted by Tim Yaeger, a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Jun 3, 2010 at 11:32 pm

At the end of the day the city has created its own monster. Menlo Park should provide updated zoning for all areas of the city and define the development standards. The Bohanon site in question should have had updated zoning 10-15 years ago when our local industry changed.

Atherton for example has clear zoning in terms of what residential structures can be built on a lot. There are not an abundance of variances granted and the building process is smooth rather then political.

Menlo's outdated zoning requires an office building in a C2 zone to have 6/1000 parking spaces which is far above the standard of 3.5-4/1000. The planning commission will fight a developer to stick to this higher ratio while at the same time tryig to get a developer to build to LEED standards which reward for less asphault area, this is makes no sense.

The current process where cities recieve benefits for changing zoning or allowing variances sounds so much like any other bribe that happens under the table in almost every other country in the world. US citizens go to prison for providing foreign governement officials with compensation to recieve building approvals, and this is different here because it is in the open?

The new proposed downtown plan offers increased FAR for certain "public benefits". Either the maximum FAR is acceptable for downtown or it isnt, it should not be tied to the "bribe" which the city is requesting.

The cities benefit is in increased property taxes. Many communities around the country actually give these taxes back to the developer in order to entice develope in the form of tax increment financing.
TOT tax, Belle Haven community funds, increased property taxes enough is enough.


Posted by city deserves more, a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 4, 2010 at 7:47 am

Property tax increases are capped by Prop 13. If the city relies on property taxes to sustain services, it will go bankrupt. And most property owners don't sell, so the land isn't even reassessed as a recent Almanac described. This is certainly not enough.
The city should have a varied portfolio of business types, just as our own investment portfolios should have a variety of investment types. Approving this project as it stands makes the city extremely vulnerable to changes that affect hotels. That's because it is the only part, a small part, of the project that would provide substantial taxes to the city. The rest of the project will be filled with professional firms, just as University Circle has been.
The city consultant's own analysis shows that the developer could get $100+ million per year from the offices. The city surely can figure out a way to get more from the project. Remember that the costs to the community are large, in the form of impacts that cannot be mitigated.


Posted by POGO, a resident of Woodside: other
on Jun 4, 2010 at 9:19 am

Prop 13 is an entirely different issue and not particularly relevant here. If you want to reform Prop 13 for commercial properties, have at it and you'll have my support.

But most cities do rely upon property taxes to sustain services. I'm not sure about the relative contributions between sales tax and property tax for Menlo Park, but I'm sure property tax is VERY significant.

Again, I would ask you, what business would YOU prefer for this site - professional offices, hotel, industry, retail, outlet mall, movie theater? Whatever your choice, there will be some issue from some corner of Menlo Park. And I can absolutely assure you, that whatever your choice, some developer is gonna make money doing it... and limiting their profit should not be the objection. Doing what's in the best interest of this community is.


Posted by city deserves more, a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 4, 2010 at 11:33 am

Both the city and the developer have a stake in a successful project. It has to be good for both. The city has a responsibility to create plans. By state law, it also must process the application for any project like this one that go against those plans. Seems to me that if the city gives a go-ahead, then it must figure out how to make it the best possible for the city or not approve it. While the issue is not how to limit profits, any negotiation that changes what the developer has requested may have that effect to some extent even if that is not the primary goal. My bottom line is that the city is not getting enough positive benefits to outweigh the many negative ones, and the point is that the project appears to be adequately advantageous to the developer that there is room for more benefit to the city.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Jun 4, 2010 at 12:00 pm

City deserves more states:"My bottom line is that the city is not getting enough positive benefits to outweigh the many negative ones"

And the Fire District, thanks to the city totally leaving it out of the negotiations, is getting ZERO in spite of the tremendous new burdens which this project will place on the Fire District.


Posted by Skeptic, a resident of Menlo Park: Central Menlo Park
on Jun 4, 2010 at 12:18 pm

I can't understand why the city is trying to get the developer to pay PG&E for carbon offsets. If we want to impose a carbon tax, the money should go to the city to purchase park land - not to a for profit corporation.


Posted by Answer, a resident of Menlo Park: other
on Jun 4, 2010 at 2:25 pm

Dear Skeptic
The answer to your "why" above is that starting out by using ClimateSmart is the most economical way to achieve carbon neutrality through northern California-based GHG reduction projects.

The ClimateSmart program selected by the developer and City here to achieve carbon neutrality for the buildings passes all funds through 100% to california-based high quality greenhouse gas reduction projects. PG&E does not make any money on it, and the ClimateSmart entity within PG&E has earned 501(c)(3) charitable status (members' payments are actually tax deducrtible.

ClimateSmart's price per ton of CO2-equivalent is currently a little less than $10 per ton. This is excellent, especially when all of the projects it invests in (which are audited and publicly disclosed to the California Public Utilities Commission) are independently verified and annually certified using the stringent measurement protocols of the California Climate Action Registry, which have been approved by the California Air Quality Management District.

The goal is to reliably zero out the remaining greenhouse gases of the project's electricity and natural gas usage, as well as the energy related to its water usage which the FEIR estimates at about 3,100 tons per year. The cost per acre and to maintain the amount of parks it would take to offset that amount of tons per year of CO2 would be a prohibitive cost.

That said, the final draft Development Agreement appears to provide that if the City or anyone else could find equivalent types of independently certified greenhouse gas reduction projects at a better value, there can be a substitution later.

The City and the developer have done a good job here of achieving the goal at least cost while providing flexibility if that changes in the future.


Posted by Steve, a resident of Menlo Park: Central Menlo Park
on Jun 4, 2010 at 3:04 pm

Answer -
Thanks for taking the time to provide that information about the ClimateSmart program. It's densely detailed information like this that 1) convinces me we have a smart board that is truly looking out for the best interests of MP residents, and 2) makes me glad I don't have to do it.


Posted by Just saying, a resident of Menlo Park: The Willows
on Jun 4, 2010 at 3:52 pm

A few facts.

Menlo Park has not "downzoned" any properties since the General Plan was adopted in 1994. There have been no rezonings of any property commercial or residential that have reduced the allowable building densities. The last down-zownings, which applied to offices in the Middlefield corridor, occurred before or within the 1994 GP.

To Pogo, there have been no unlawful "takings" by the government either. That is unconstitutional. The government may not "take" land without providing just compensation. While I appreciate that some in this community have expansive personal definitions of property rights, save it for someone who cares to listen. I don't. I am aware numerous cases in the last ten and twenty years when the city gave up easements and right of ways. It did so on Willow, on Marsh for Bohannon property, in Sharon Heights, and others.

Property owners are very cognizant of "inverse condemnation".

It is the one-sidedness, where government gives, but cannot take that is the reality under the myth.

The last eminent domain was for the properties on Hamilton Road who made a fortune from the City's Redevelopment Agency. As a general rule, "eminent domain" is a racket for properties. Yes, I'm aware of Bridgeport Ct. Its the exception not the rule.

As of 2010, the "land use element" of the General has expired. The housing element has been out of date since 1992. Menlo Park has no plan for the future. zip. nada. It is flying blind on an obsolete 1994 plan that was built out in 1997.

Bohannon properties are almost exclusively occupied now by law firms. The building on Willow has a financial services firm, and the 3-story glass building on Commonwealth is allegedly leased to intuit. In 1998, properties owned by the Bohannons generate nearly $1M for the city in sales tax that is no longer being collected by the city because those tenants were driven out in favor of higher-rent paying tenants who do not generate sales tax revenue.

I don't blame the Bohannons, I'm just saying.

The business license taxes in Menlo Park are trivial and are not enough to offset public costs of public services provided to the commercial properties.

When this council was first elected, it chose a number of priority projects, among which was to complete an M-2 area plan, which it promptly put on hold, and has made no progress to date in four years.

Owners are free to build conforming development under the existing zoning code. In fact there is almost no market for commercial construction of any kind, so now is a great time to complete much-needed commercial planning processes.

It is possible to update a plan, without UPZONING. ALL of the new construction in Menlo Park that has conformed in density to the existing zoning code has proceeded with little political controversy from neighbors. ALL of the political controversy has so far been over proposals and approvals to build at increased intensities.

The last politically controversial user permit over a project of conforming density was developer's complaining about a child care center, not neighbors complaining about a developer.

I personally believe that those who are suing the recent conforming approval for 1300 ECR are business competitors who don't want the retail competition proposed by the developer and won't reveal their identities. There is no evidence that they are "slow-growthers" in the community.

The Bohannon project does not achieve anything close to carbon "neutrality." It mitigates less than 30% of the project's emissions, and raises the total emissions over existing emissions for the site beyond the emissions goals set out for the city in its so-called Community Action Plan ("CAP"). So while the city's greens promised to do everything they could to reduce the city's yearly emissions goals (1990 levels by 2020) they promptly approved an auto-intense, single-use project which increases yearly emissions above the CAP cap.

The parking garages, not the offices, are the largest single building component of the Bohannon project. The above-grade parking garages do not count towards building density. In total the project is nearly 2M square feet of above-grade development six stories or higher.

Finally, the project creates a direct and indirect housing demand for about 1800 new units, most of which will be built "somewhere in the region" and whose average public cost per unit will exceed the public revenue per unit. So the city is dumping housing costs on the region (which is similarly dumping its housing costs on Menlo Park.) The externalized public housing costs are about the same as the net revenue for the project.

Personally, I agree that zoning for dollars is folly. I agree that the city should update its General Plan, particularly its M-2 plan, and that it should zone for what it wants. I don't think there is any requirement to upzone.




Posted by Just Saying, a resident of Menlo Park: The Willows
on Jun 4, 2010 at 3:57 pm

The current proposal has two "legislative" changes, a rezoning and a General Plan amendment. These are new laws. It also requires a contract called a developer's agreement.

The city had no legal obligation to process an application that requires new laws. That is also the debate that is taking place in the wider region over the Cargill project, which similarly requires new laws.

Menlo Park, may process the application, but it was not required to process the application.


Posted by POGO, a resident of Woodside: other
on Jun 4, 2010 at 5:13 pm

Just saying -

Thank you for the very thoughtful post.

First, I never said changing zoning constituted a "taking." Those were your words and you were the first person on this post to make that assertion. But, for your edification, there have been takings right in our neighborhood. Web Link But that's not what I'm talking about.

My comments were directed to those people who think the city should "participate" in the profits of the Bohannon development. By the same token, should the city also "subsidize" Bohannon in the event financial projections are not met? I think our cities have their hands full trying to maintain police, fire and schools - they don't need to dabble in complex business partnerships.

I don't dispute the business tax issues a bit. If you don't like the current rates, change them. But don't hold the business community accountable for that any more than you hold a church accountable for its tax exempt status.

But perhaps most importantly, we appear to agree "that zoning for dollars is folly." The city should make decisions that are in the best interests of the community. Forget about becoming business partners - there may be lots of unintended consequences.


Posted by Just saying, a resident of Menlo Park: The Willows
on Jun 5, 2010 at 7:59 am

Pogo; "Takings" nuance acknowledged.

Regarding "profit sharing." It's unfortunate that some have said the right thing wrongly. I do not advocate "PROFIT sharing" and I do not advocate "participation", but there are two points to be made in granting Bohannon an extremely generous entitlement:

1.) The 3X entitlement spares Bohannon from having to purchase 32 acres of land (more, actually if you understand the parking issues) that he would have to buy to build the same amount of development at the current allowable densities. Hence superficially, Menlo Park making a gift to Bohannon equivalent at least to the value of 32 acres of land, and, though I personally disagree with "zoning for dollars", if one is going to zone for dollars, one ought to get fair market value of dollars for doing so.

2.) The long term conversion to professional office USES in M-2 is crowding out the Menlo Park sales tax base. Full stop end of story. Bohannon's office isnt the solution, its part of the problem. A perfectly valid empirical case can be made that M-2 light industrial uses at 45% FAR produced more revenue per sf for the city with fewer impacts (both traffic and GHG.) Historically Menlo Park sales tax revenue peaked at about $12M prior to the 2001 recession, but whereas other cities and the state revenues also peaked and then recovered, Menlo Park sales tax continues to decline to about $6.5 M which is about 1995 levels.

In short, office is and has been wiping out sales tax. (Bohannon has been the main instigator, hence my earlier note about how much sales tax has already been lost to Bohannon office conversions alone.)

So what do? There could be a big fight between big bad "Government" and good, enterprising "private property owners" where big, bad govt refuses to allow office conversions or, worse from the perspective of property owners, big bad gov't eliminates professional offices uses as "permitted uses" in M-2.

Or government could allow M-2 property owners who want to build office (still at conforming 45% FAR) to do so, but impose the mitigation that these businesses pay sales-in-lieu impact fees if they don't generate a certain minimum amount of sales tax.

The overarching Menlo Park General Plan Directive for M-2 is to encourage clean, LIGHT INDUSTRIAL uses, that generate revenue. It is NOT to encourage gigundo professional office complexes that don't. So Menlo Park has a solid basis in law and a solid planning basis to just tell Bohannon and other property owners to pound sand. Personally, I support the "pound sand" position. The city should zone for the general welfare and stick to it. But as a practical matter, within the context of a developers agreement, allowing property owners to build professional office and charging a sales-in-lieu fee on a square footage basis is a legally solid and reasonable compromise that can help move the city past the potential "pound sand" logjam.

Project opponents are therefore not really asking for "profit sharing" or "participation" they are really asking the Greens council to obtain both fair market value for the gift of land-equivalents, and they are asking to both recover and set a precedent for the opportunity cost of lost sales tax, and they are just saying it wrong.

In my opinion the current "Greens" really are green -- land-use novices, thrilled by the big deal, who are simply zoning for dollars without extracting either the true market value of the land equivalent they are giving Bohannon, and they are not setting the precedent to recover the loss of sales tax that will inevitably occur when other property owners being to lick their chops to have their parcels upzoned by 3X as well.


Posted by Answer, a resident of Menlo Park: other
on Jun 5, 2010 at 10:44 am

Dear Just Saying:

While you are correct that the ClimateSmart portion of the package for reducing the GHGs from this project will by itself only address about 30% of the project's emissions (zeroing out the electricity, natural gas and water's imputed energy emissions), it is not true that these are the only mitigations the City got. First, the buildings being LEED gold and the Hotel LEED silver prevent lots of emissions to start with, and all buildings are properly oriented for solar and will be built to receive future solar panels when more cost-effective. Second, the TDM project is targeting a 17% reduction in trips. Plus, there will be Electric Vehicle and Plug-in Hybrid charging spaces right form the start, with conduit embedded in the concrete walls so that all parking garage spaces could easily be converted to include a plug, allowing significant further reductions in the carbon intensity of each vehicle. (Yes, transportation is the number one cause of GHGs for this project as for our entire CIty and the State, because of our current 97% dependence on petroleum fuel for transportation of all types - which must and will change)

So, while the project does increase the GHG emissions for the City, the increase is far lower than the original project was. More importantly, if every commercial building project in town in the future followed this project's lead, including redevelopment of old energy hog buildings, the City could reduce its carbon footprint by upwards of 30% from current levels. No single project can do it all.


Posted by truth, a resident of Menlo Park: Belle Haven
on Jun 5, 2010 at 12:50 pm

I think the idea that office space is the reason for the sales tax slow decline is ridiculous and the argument has no merit. It is a trick. First, look at the conversion of office space over the last ten years. Name one major office project that replaced retail. Please don't try to say Indian restaurant on El Camino because that restaurant was down long ago.


Posted by what if, a resident of Menlo Park: Central Menlo Park
on Jun 6, 2010 at 1:07 pm

I heartily disagree that there is no merit about the loss of sales tax revenue. The problem is more complex than "truth" might like. What is happening is that law firms, architects, financial services companies are moving into offices that used to house businesses that generate sales tax. Services businesses contribute very little revenue to the city. The problem with this project is that the offices are likely to be filled with service businesses, which are not what the city's general plan states is the purpose of that part of town (to generate "significant revenue with few environmental or traffic impacts").
For whatever reason, the Council is not limiting the proportion of the office space usable by services businesses. Easy fix.


Posted by Just Saying, a resident of Menlo Park: The Willows
on Jun 11, 2010 at 11:05 am

It's not a trick. No-one is saying that "office" is replacing "retail." I am saying that profession office *USES* (tenants) are replacing light industrial (tenants) or so-called "flex" uses in existing M-2 office buildings. Professional office uses, e.g high rents, and no sales tax, flex uses often generate sales tax. The declines of sales tax particularly in the M-2 area is well documented.


Posted by Just Saying, a resident of Menlo Park: The Willows
on Jun 11, 2010 at 1:25 pm

"Answer" is double counting (and greenwashing). The 30% mitigation level for GHG emissions is a best-case figure that includes LEEDS (2009) standards as a required mitigation. (Read the FEIR.) It's not 30% mitigation IN ADDITION TO Leeds (2009), its 30% mitigation INCLUDING LEEDS (2009) and offsets. (The LEEDS standard is not specifically designed to eliminate GHG's or to achieve carbon neutrality so use of it in a misleading and inaccurate way is greenwashing. )

It's simply not true that ".. if every commercial building project in town in the future followed this project's lead, including redevelopment of old energy hog buildings, the City could reduce its carbon footprint by upwards of 30% from current levels."

How is it possible that if every project in town would, like this project, admittedly failed to meet the city's goals to reduce yearly GHG's thereby increasing them, that the SUM of all such failures WOULD meet the city's goals to reduce yearly emissions? Only government double-speak can get away with this kind of logic.

In truth, the project increases building intensities by 3X. (You left that part out.) If we intensify by 3X and then reduce by 30%, we are INCREASING by more than double which is exactly what the project does . It more than doubles the existing GHGs at the site while city goals call for a yearly reduction in total GHGs, which, if applied to incremental sites, would also call for a reduction at each site.

The city could only reduce its carbon footprint by 30% if it re-develops AT EXISTING INTENSITIES and then fully mitigates building related emissions, but you cannot triple the traffic and reduce the emissions.

So your "logic" conflates two scenarios, re-use at constant building intensities and re-use at much-increased building intensities. Which is the issue, and why the project is not sustainable under any reasonable definition of that word.

Finally, the negotiation to mitigate GHG emissions didn't include the equivalent of regulatory "inflation". Bohannon transparently used the Developer's Agreement to legally avoid a stricter future regulatory environment that will prevail when he actually builds his project.

I wrote LEEDS above as "LEEDS (2009)" to remind us that the project must only meet the static 2009 LEEDS standard in effect at the time of project submission (its already one year later),but the project approvals grant future building options. The hotel can be built eight (8) years after approval and the offices up to twenty (20) years after approval. There is no requirement that Bohannon meet the LEEDs standard in place at the time he submits his building permits. Twenty years from now, in 2030, if Bohannon builds his office, he will only have to meet the 2009 LEEDS standard and meet GHG emissions levels negotiated for 2009, even though State and City standards become increasingly strict over time. By 2020, state GHG emissions levels are to be below those in 1990.

Menlo Park is not raising the bar, it is setting it back by up to 20 years to the year 2009 where allowable emissions levels were at their historical highest point, and right prior to a period in time when regulations were first put into effect.

The traffic "reduction" numbers are also bogus, and I will deal with those in another post.


Posted by truth, a resident of Menlo Park: Belle Haven
on Jun 11, 2010 at 8:36 pm

So the area to be rezoned produces $125K per year in sales tax. The proposed project produces potentially $1.5M annually in TOT alone.

While you may have a point about lawyers and architects and services firms, in this case, you are simply ignoring the potential revenue and spending your time trying to find support for rejecting the size of the buildings and the lack of a regional plan.

Do you have alternative ideas for $1.5M annually?

Next you will say this project may not be built, it may not be built for 20 years and it may change or fall into the ocean...what you mean is you don't like this project and your ideology is more important than revenue strategies.


Posted by Menlo Voter, a resident of Menlo Park: other
on Jun 11, 2010 at 9:41 pm

Truth:

you are ignoring half of the equation. Just because the project produces more sales taxes doesn't mean it's a good deal. You have to look at the cost of the impacts associated with the project. The potential costs far outweigh the added income from taxes.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Jun 11, 2010 at 9:48 pm

Truth asks:"Do you have alternative ideas for $1.5M annually?"

Yes - build a Walmart and Menlo Park will realize 5 times that in sales tax revenue.


Posted by what if, a resident of Menlo Park: Central Menlo Park
on Jun 13, 2010 at 11:00 am

Yes, I know what would generate even MORE than $1.5 million annually - the same project with the offices filled with businesses instead of professional firms.

Or what about the auto mall concept but with viable businesses instead of one headed for bankruptcy.

Or what about a destination design center, with furniture and accessory stores.

Another perspective on how to increase the benefits and simultaneously reduce the negative impacts is to put no office buildings along Bayfront Parkway, and instead put housing (great view) that should greatly reduce the traffic impacts and also reduce the jobs/housing imbalance that the proposed project aggravates.


Posted by POGO, a resident of Woodside: other
on Jun 13, 2010 at 12:51 pm

What if -

These are all very good ideas. Why don't you put together a group of investors and pursue them!

"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena..." - Theodore Roosevelt


Posted by Menlo Voter, a resident of Menlo Park: other
on Jun 13, 2010 at 2:05 pm

POGO:

perhaps if the council doesn't stupidly upzone the property there may be investors interested in doing just as you suggest.


Posted by what if, a resident of Menlo Park: Central Menlo Park
on Jun 13, 2010 at 2:18 pm

I am not in the investment business. Neither is the city. It is in the business to provide services and to regulate land use to provide, protect and fund, the services and quality of life the community expects.


Posted by POGO, a resident of Woodside: other
on Jun 13, 2010 at 4:22 pm

What if -

You have made my point quite nicely, thank you.

Mr. Bohannon puts his money where his mouth is. This is the project he wants to build and I assume he has made the calculations that this venture will be profitable. He isn't proposing furniture stores or car dealerships, perhaps they aren't profitable. You know, I seem to recall the closings of the Expo Center and several car dealerships in the recent past...

It is easy to sit back and say no. Mr. Bohannon isn't proposing a smoke belching power plant or a noisy factory, he's proposing very clean, upscale offices and a hotel. If people reject his project - which is perfectly fine with me - they shouldn't complain about the lack of local jobs (including very good construction jobs) or lack of tax revenues.

If Menlo Park has learned anything over the past few years, it's that good, well financed projects don't grow on trees and that empty lots do not make great assets.


Posted by what if, a resident of Menlo Park: Central Menlo Park
on Jun 13, 2010 at 4:39 pm

POGO - I don't fault Mr. Bohannon for proposing a project that is the most profitable for him and his family. In the absence of a city plan, he is just asking for whatever is best for him without regard for what is best for the city.

I do fault the city for not insisting that it will complete a plan and figure out what is best for the city and then review this project in that context.
I do fault the city for proceeding and not requiring that the jobs you mention be committed sooner (might not be until 2018 for first construction), for not requiring that the project be completed at all, for not requiring some upfront money for the 20-year option to build, and for not requiring the offices to provide some sales tax revenue (there are several ways to do this such as in lieu fees or simply limiting professional uses), for not imposing meaningful traffic reduction and penalties, etc.


Posted by POGO, a resident of Woodside: other
on Jun 13, 2010 at 9:32 pm

What if -

I appreciate you taking the time to provide the additional explanation.

That a developer would act in his best interests - maximizing his return - is certainly no surprise. Elected officials should act in their community's best interests which hopefully includes trying to reach a reasonable agreement.

I suspect we agree more than not!


Posted by Andy Cohen, a resident of Menlo Park: other
on Jun 14, 2010 at 7:22 am


Mr. Bohanon, I am happy to work with you on this project, and I may even come to support it. But I could only do so if it were part of a larger mixed use vision for what is now the M2 District---a vision that would include housing, retail, civic uses, schools and childcare, and that would minimize traffic by creating a community that people could live and work in, without having dire traffic impacts on the rest of Menlo Park and the region. For that reason, I'd like you to fund a comprehensive urban design study of the M2 area, that would lead to a Specific Plan and General Plan Amendment, and that your project--perhaps as proposed today, or perhaps with some revisions---would be a part of. With such a plan in place, then I could see supporting a project such as this, as long as I knew that it was part of a larger vision for the area.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Jun 14, 2010 at 7:40 am

Peter Carpenter is a registered user.

One way to implement Andy Cohen's proposal would be to rezone the property as a PD zone. With such a PD zone the specific development and development schedule is codified and cannot be changed without the City's approval and any plan is binding on successor owners.

Under such an approach the City would have control over what was done and Bohannon could not sell the PD zoned land for any other use or development except as provided in the established PC zone.

Here is Menlo Park's Planned Development or PD zone ordinance:

"16.57.010 Establishment of a P-D zone. Applications for the establishment of or reclassification to the P-D zone classifications must include a development plan as described in this chapter. The zone reclassification shall not be approved until a permit approving the development plan has been issued by the planning commission and the city council.

The planning commission and city council, after public hearings, may approve, disapprove, modify or attach conditions to a development plan."

"A development plan shall be accompanied by a development schedule indicating the approximate date when construction of the project can be expected to begin (which date shall be no later than one year from the effective date of the rezoning of the property) the anticipated rate of development, and completion date. The development schedule, if approved by the city council, shall be adhered to by the owner of the property in the P-D zone AND HIS SUCCESSORS IN INTEREST (emphasis added)"

So now the question is - why isn't Menlo Park using this tool for the Bohannon project?????


Posted by noblesse oblige, a resident of Menlo Park: Downtown
on Jun 14, 2010 at 9:29 am

Andy, thank you for posting. Peter, I think you misinterpret Andy's post. As I understand, he is suggesting a move away from a spot zoning model (which is what Bohannon wants, and what a PD would imply in this situation) and asking for a bigger picture look at this area. The current zoning served MP well in the past, generating a lot of revenue. If that zoning needs to be replaced, then so be it, but the entire area should be examined, and Bohannon's property rezoned as part of that area.

Bohannon isn't planning to do any construction in the foreseeable future -- I believe he said he's not going to start for at least five years -- so such a study would not delay his plans. In fact, it might be better for him in the long run because his project would fit with the vision for that entire area. No one would be able to accuse him of having undue influence because of his wealth (including donations to almost all sitting council members).

Let's do what's right for Menlo Park. Developers should make money off their property, but our council should not be encouraging renegade development. Whatever happens needs to be consistent with our long term vision -- be that retail, housing, manufacturing, or yet more lawyers' office.


Posted by interesting, a resident of Menlo Park: other
on Jun 14, 2010 at 9:58 am

I say approve the plan since it has been in process for years and has gone through a very open negotiation and then plan the M2. A dev agreement is set up to restrict precedence, correct?

The irony will be when Andy and his mates oppose the downtown plan which was created with the very same purpose in mind.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Jun 14, 2010 at 10:33 am

Peter Carpenter is a registered user.

Why should Bohannon be required to bear the costs of doing a study for the entire M 2 District when his property only constitutes a portion of that zone? Why should the other property owners in the M 2 District get a free ride?


Posted by How Dare He!?, a resident of Menlo Park: Felton Gables
on Jun 14, 2010 at 10:45 am

How dare Mr. Bohannon try to turn a profit, well that's just too darn crazy in this development "friendly" town of Menlo Park! Mr. Bohannon, run away, run away fast. You have too many people on this council, and too many large voices in this city that no nothing about construction, budgets, basic math, transportation issues and economics that have a say in your business. What you have to go through, I would think, has got to be 10X more stressful than attempting to build/improve, in some other jurisdiction. Why do this to yourself? It will take a few more of these fiascos to finally push these nuts out of office, and allow more forward thinking individuals to allow you to apply your trade. You'd have an easier time building a sewage treatment center or nuclear power plant in the middle of San Francisco!!


Posted by what if, a resident of Menlo Park: Central Menlo Park
on Jun 15, 2010 at 8:08 am

Many of us DO understand what it takes to run a business. That's one reason we are appalled that the city may grant a 20 year plus option, with no upfront payment for it, may allow the largest offices in Menlo Park's history without requiring that any revenue come from them. The city is in a "business", too, and that part of town is where most of the city's commercial revenue traditionally is generated. Until this project.
I am confident Bohannon is protecting well his family's profits and risk. I am totally unimpressed by the city's staff negotiating team's inability to do the same for the city.


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