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Round two of city-Facebook negotiations begins this week •• Council to start work on development agreement for Gehry campus.

by Sandy Brundage

Negotiations with Facebook over its west campus development are imminent, but first Menlo Park has to decide what to ask for. The City Council takes up that question during its Oct. 30 meeting.

Facebook proposes building a sprawling office in a forest envisioned by Pritzker Prize-winning architect Frank Gehry on its 22-acre Constitution Drive Campus.

The 433,555-square-foot building would perch on top of approximately 1,540 parking spaces, and blend into the landscape by incorporating ground-level gardens that wind their way up to a rooftop terrace, creating a forest visible from the Bayfront Expressway. About 2,800 employees, mainly engineers, would go to work there.

In September the Planning Commission noted at least two areas for negotiation: Direct revenue, and ways to ease the burden on community services such as schools and transit in anticipation of population growth as Facebook employees move to the area and have kids.

The staff report for Tuesday's council meeting describes two ways to get that direct revenue: "The revenue could be in the form of an in lieu of sales tax comparable to the annual payment associated with the East Campus Development Agreement or some other mechanism such as the provision of monies to support police services in the Belle Haven neighborhood. An example of how the latter mechanism might be realized would be a requirement for the applicant to annually provide monies to fund two existing full time police officers."

The notion of payments to make up for a lack of sales tax revenue arises at an interesting time. The social networking giant launched "Facebook Gifts," a service allowing users to give each other real goodies such as chocolate or stuffed animals, in September. That could add sales tax revenue, depending on where the gift ships from, according to a Facebook representative. In some cases the tax will be factored into the price, a practice seen elsewhere online < 0x2014> Amazon began collecting sales taxes of 7.25 to 9.25 percent from California residents on Sept. 15.

The staff report also proposes possible one-time benefits, including sewer system upgrades, improvements to the citywide transportation network and updated emergency operations plans. In addition, Facebook is offering to pay $4.58 million instead of building below-market-rate housing elsewhere in the city.

The development agreement for the east campus — at 1 Hacker Way off Willow Road — included a one-time payment of $1.1 million as well as incrementally increased payments over 10 years starting at $800,000 annually, local bike trail improvements and other benefits. The recently launched local community foundation, with a $500,000 seed fund, represents Facebook's fulfillment of an agreement to fund local programs.

The city is eager to make sure that, should Facebook leave its east campus, the negotiated benefits don't all disappear. The west campus development agreement could contain clauses requiring the company to maintain its summer internships, the annual local community organization fair, and the Facebucks incentives program to support local businesses, according to the staff report.

The third main area of focus is imposing penalties for violating any caps on vehicle traffic the city and Facebook agree to implement. The east campus agreement carries stiff daily penalties of $500 to $100,000, depending on the number of violations.

On Menlo Park's negotiating team, in addition to City Attorney Bill McClure, are Public Works Director Chip Taylor, Development Services Manager Justin Murphy, and City Manager Alex McIntyre. Council members Kirsten Keith and Rich Cline serve as liaisons between the team and council.

The city expects to hold public hearings on the west campus development agreement in February and March of next year.

The Oct. 30 meeting starts at 7 p.m. in the council chambers at the Civic Center at 701 Laurel St.