Will The Menlo Park Downtown Affordable Housing Project Become A Train Wreck?

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While a failure of the Menlo Park Downtown Affordable Housing Project (“Housing Project”) is avoidable, I believe it is highly likely unless the City of Menlo Park (“City”) makes fundamental changes to its usual approach to planning major civic projects, including its philosophies, attitudes, strategies, organization, processes, and practices plus fully engages residents and downtown business owners in all phases of the planning, design and construction of the Housing Project.  If it doesn’t, the City and our community will inevitably experience a painful, multi-year “train wreck” both during and after construction. I encourage the Council to immediately acknowledge the systematic problems that plague its planning efforts and seek professional help to address them.  In this post, (a) I focus on how the City, i.e., Council + city planning staff , has lost the trust of our community and fostered an increasingly divisive political environment, (b) recommend ways the Council could both rebuild trust and improve the quality of the City’s project planning efforts, (c) and strongly encourage residents and local business owners to participate in the January 14, 2025 city council meeting where the Council plans to make two important decisions about this transformative project.

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Growing Community Distrust & Controversy (August-December 2024)

The general vision the Council has adopted for the Housing Project is likely embraced by most of the Menlo Park community.

“To create a development that (a) enhances the vitality of downtown Menlo Park while (b) addressing the critical need for (state-mandated) affordable housing.” (Source: City website, January 2025)

However, a rapidly growing number of residents and business owners are now aware of the potential negative impacts of the Housing Project and realize the achievement of BOTH inherently competing objectives will be extremely difficult. Therefore, the Council will need to make significant trade-off decisions that favor one objective over the other. For example, the Council will need to decide how to best allocate public land between multiple uses, e.g. housing, private and public parking, parking structures, and public amenities like open spaces, plazas and play areas and many in Menlo Park now believe the Council is inclined to favor affordable housing over everything else.

Unfortunately, the City has contributed a great deal to BOTH the growing community distrust of its potential biases and actual capabilities, and the intensifying political controversy now surrounding the Housing Project. So far, the Council has (a) largely focused on building the most affordable housing possible, (b) ignored how the Housing Project could improve rather than harm downtown, and (c) failed to appropriately engage our community in the City’s planning efforts.

=> Feasibility Study Review (August 27, 2024) <=

The Council reviewed a City planning staff (“staff”) housing feasibility report that proposed at least 345 housing units be built on land now used for the existing 545 public parking spaces in Parking Plazas 1, 2 and 3. (Note: 545 spaces amount to almost half of the 1200-space, total capacity of all downtown public parking lots.) Staff also introduced the idea of the City declaring the land as “exempt surplus” so the public land could be made available to a developer through a low cost, long term lease. Staff also claimed that as many as 483 housing units could be built since permissive state regulations allow greater housing density whenever “100% affordable housing” is built near public transit facilities like the Caltrain station.)  For example, buildings as high as 10-stories are allowed and a developer is not required to provide ANY private parking for 100% affordable housing built on developer-owned land. (Note: The City has not said whether these regulations would still apply when a city makes land available to a developer using a long term lease, as Menlo Park intends to do.)

PLANNING SHORTCOMINGS

City staff did not explain HOW the amounts of housing were calculated so its assumptions and methodology remain unknown.

• No estimate of the amount of private parking needed for new households.
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• No estimate of the need for FUTURE public parking.
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• Suggested at least one parking garage might be required and provided unrealistic cost estimates. For example, based on Palo Alto’s most recent experience, a reasonable “ballpark” cost estimate for replacing ALL the existing 556 spaces would be at least $43.9M (Note: This figure has not been adjusted for future inflation in construction costs.)
  

=> City Presentation To Downtown Businesses (November 14, 2024) <=

The City planning manager (Tom Smith) presented an update of the City’s planning effort to about forty business and property owners in what he viewed was an “informational” meeting. However, the session quickly deteriorated as the audience angrily challenged the City’s objectives and assumptions, protested that the City had ignored their needs for sufficient convenient public parking, and had not consulted downtown businesses.

PLANNING SHORTCOMINGS

• The presentation did NOT demonstrate a City understanding of how much downtown businesses depend on sufficient convenient public parking. Instead, it simply stated some replacement public parking was needed.
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• The City had not performed a credible public parking study, and none was planned. (Note: only a future parking management study was referenced)
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• City planning staff had not sought input and feedback from local business and property owners.

Note: Within 24 hours of this meeting, City staff inserted the phrase  “at least 504 public parking spaces” into the City planning objectives and indicated the number was based on a September audit of the occupancy rates in Parking Plazas 1, 2 and 3. It also included the following clarification:

“For the total (of existing) 556 spaces, these utilization patterns suggest a need to provide a minimum of 504 public parking spaces to serve existing peak demand across the three sites. The data is considered preliminary  and might be refined as part of the downtown parking management study that will continue into 2025.” 

• City staff did not explain how it determined 504 future spaces MIGHT be sufficient.
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• It did not indicate how the City plans to conduct a credible parking study.
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• Staff simply said there would be a future parking management study 

=> November 19, 2024 City Council Meeting <= 

The Council had planned to (1) declare three downtown parking lots to be “exempt surplus land”, an action that would make this public land available to an affordable housing developer AND (2) complete a final review of an important document (RFQ) the City would soon use to qualify developers who could potentially design and construct the Downtown Affordable Housing Project (“Housing Project”) and determine their interest in submitting a bid.

(Note: A request for qualifications (RFQ) is generally used to screen developers prior to requesting actual proposals via a request for proposals (RFP). It is not clear that the City intends to use a Design RFP, a Construction RFP or a Design & Construction RFP so the City will need to compare the advantages/drawbacks of each option.)

Dozens of  participants expressed strong opposition to both positions. Many do not believe the land is really surplus IF replacement public parking is still planned, several alleged the City does NOT have ownership rights to some of the land the it wants to declare surplus, and all fear the City would sacrifice public parking, i.e., the future health of downtown Menlo Park, IF less parking would enable a larger amount of affordable housing units. (Note: a city attorney claimed the City’s could declare ALL the land surplus based on a prior California Supreme Court decision.) Both business and property owners are upset by the City’s willingness to make decisions that could significantly harm downtown without first confirming community support. Three of the five council members – Drew Comb, Betsy Nash and Cecilia Taylor – acknowledged that the City had failed to perform adequate community outreach and mentioned two new council members would join the Council in January. So, the majority voted to postpone the two decisions a month and directed city staff to conduct additional community outreach.

January 13, 2025 Update: On January 10, 2025 Rutan & Tucker LLP sent the Menlo Park City Council a letter that challenges the City’s claim of ownership rights for the land it intends to declare as surplus.

COUNCIL SHORTCOMINGS – Surplus Land Declaration 

The Council appeared to feel it urgently needed to make a surplus land decision without first answering important community questions.

• Why does the Council feel a decision so quickly?
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• Does the City actually have the full ownership, i.e., fee simple, rights required for the City to legally declare the parking lot land as surplus?
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• How can the land be legally declared surplus if the city still needed public parking?
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• How would the City retain rights to approve “major” project design and construction decisions? A developer agreement? Would there be a request for proposal (RFP)? How could the land be legally declared surplus if the city still needed public parking?
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• If a parking structure were needed, who would fund, own and manage it?
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• Should the City retain ownership the land needed for a parking structure?

“For the total (of existing) 556 spaces, these utilization patterns suggest a need to provide a minimum of 504 public parking spaces to serve existing peak demand across the three sites. The data is considered preliminary  and might be refined as part of the downtown parking management study that will continue into 2025.”

Note: a credible projection of the need for future, e.g., 2030 public parking requires a professional quality study.)  

=> January 14, 2025, City Council Meeting <=

The City clearly views community outreach as simply the act of notifying residents and business owners of upcoming meetings instead of engaging the community in two-way communications.  In this case, the City relied primarily on a postcard invitation and digital signs placed in plaza parking lots. I doubt either was effective.

• City notifications did not provide compelling reasons for residents to attend the January 14 council meeting.
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• Why didn’t the invitation mention the controversial surplus land declaration?
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• Mailing a postcard invitation during the holiday season likely meant few people read it.
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• Why didn’t the City publish a well-written meeting announcement in local papers?

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How The Housing Project Becomes A Multi-Year Train Wreck

The risk the Housing Project will become a disastrous, multi-year experience  for the residents who depend on downtown and the businesses that serve them is extremely high. Here I highlight the primary reasons (problems) that are organized according to the three typical phases of project development: (1) pre-construction phase (planning + design), (2) construction, and (3) post-construction.

Pre-Construction Phase Risks

Public political infighting between Menlo Park residents who either support or oppose the Housing Project is already polarizing our community and online insults are now common. Both sides will pressure the Council. And lawsuits are underway.

An inefficient and ineffective City planning effort will harm Menlo Park, result in poor Council decisions and significant schedule delays, and will further undermine trust.

Community trust in our city government could deteriorate to the point where residents demand extreme corrective measures, e.g., a ballot measure, recall election

Construction Phase

• The pre-construction risks continue.
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• Construction activities harm businesses by discouraging existing customers from accessing downtown. Construction will be marked by frequent street closures, constant delays due to weekday construction traffic and construction that creates noise and poor air quality and environmental problems.
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• Some existing businesses will fail, potential new ones will stay way, and the number of extended vacancies on Santa Cruz Avenue could double to more than 30%.

Post-Construction Phase

• Sales to very low-income households do NOT offset the revenue loss due to existing customers deciding to shop elsewhere. Few “very low income” residents can afford to (a) eat at fine downtown restaurants where tabs including tip typically exceed $55 per person before drinks, (b) have their hair and nails done at salons, (c) use the services of high-end interior decorators, and (d) purchase expensive rugs and other home furnishings. 
  
  (Note: To qualify for the new housing, a family of four must earn between $59,000-$98,000 while the median income of the 11,700 existing households in Menlo Park is about  $200,000 (2023 Census) – and much higher in neighborhoods within 2 to 3 miles of downtown.  Naturally, most existing downtown businesses provide products and services for high income consumers.)
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• Business owners would suffer lost investments and livelihoods, workers would lose jobs and City sales revenues could decline.
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• At worst, downtown deteriorates to the point it is no longer an important community asset and never recovers.

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Closing Thoughts About Making The City Vision A Reality 

City Vision: “To create a development that (a) enhances the vitality of downtown Menlo Park while (b) addressing the critical need for (state-mandated) affordable housing.” (Source: City website, January 2025)

Building a Housing Project that accomplishes BOTH components of the City’s vision will remain extremely difficult, and likely impossible, unless the Council and its constituents totally rethinks how our community conducts the planning and implementation of the Housing Project. Here are a few initial ideas I believe both should consider now.

• Specific Project Objectives. The Council needs to establish measurable objectives for how the Housing Project will improve downtown, as “enhancing downtown vitality” is too vague and subjective.
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• Project Completion Date. The Council should acknowledge that the objective of completing the Housing Project in 2027 is unrealistic, unnecessarily puts extreme pressure on the Council, city planning staff, residents and local business owners, and leads to poorer quality decisions.
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• City Project Policies #1. A developer who owned land in downtown could take maximum advantage of Menlo Park and state regulations to design and build housing that a major majority of residents would strongly reject. Important ways to avoid this are (a) identifying specific policies that clearly establish “what is and what is not acceptable”, e.g., building heights, parking capacities and convenience, public amenities, traffic impacts, (b) including these in a negotiated developers agreement and (c) employing post-contract enforcement measures, e.g., performance bond, resolution and arbitration methods.
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• City Project Policies #2. The Council needs to establish acceptable boundaries when making trade-offs.
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• Community Engagement. The Counsel needs to identify and implement practices that engage residents and local business owners in planning decisions that involve major project trade-offs. For example, a parking structure could significantly reduce the amount of possible housing units. Conducting public hearings whenever controversial decisions arise and every 6 to 9 months would ensure the City not only keeps our community well-informed but understands major community  concerns and preferences.  
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• City Project Management. The City does not have the expertise required to work effectively with developers, our community, advocacy groups, funding sources. and other communities. The Housing Project requires a full-time project manager who has proven experience managing city urban affordable developments projects that are comparable in scale and challenges to the Housing Project. 
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• City Investment. How much is the community willing to invest in the Housing Project. For example, building a public parking structure is expensive and our community likely would need to subsidize its cost.
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• Civic Center Alternative. The City should genuinely evaluate the alternative suggested by some business owners: building affordable housing at sites near the City Civic Center rather than in downtown. While I have no idea whether this is a promising alternative, it might have a greater chance of being successful. Plus, a preliminary study could help rebuild trust between the Council and its constituents. Potential Benefits: Avoid problems that are unique to downtown, e.g., the need to build a costly public parking structure, the disruption and loss of businesses during construction, the loss of opportunities to attract new businesses AND the opportunity for the City to use the parking lot land for other purposes that serve the entire community.
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• Business Community Advocacy. I encourage Save Downtown Menlo Park to become a permanent advocacy group that strongly represents the interests of the downtown business community. The group could effectively advocate for a wide range of projects that improve the quality of downtown, e.g., parking lot repairs, re-surfacing Santa Cruz Avenue, street and sidewalk cleaning and repairs.
  

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Addendum – Community Advocacy Groups

Supports Downtown Affordable Housing – Menlo Together

Menlo Together is a group of Menlo Park and Peninsula residents that envisions an integrated, diverse, multi-generational, and environmentally sustainable Menlo Park. It supports both the Downtown Affordable Housing Project and the City’s current planning efforts. It has no direct economic stake in the Housing Project.

My Current Impressions

• Menlo Together claims hundreds of very low income residents would make downtown more economically vibrant. However, it has not provided a persuasive argument, i.e., facts, assumptions and sound logic, that supports this assertion. Instead, it appears to expect residents to simply accept its claim at “face value’.
  Local business owners clearly have a much better understanding of their customers and they do NOT believe their sales to these households would offset sales lost due to existing, much higher income customers deciding to shop elsewhere because free public parking is not convenient.
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• Menlo Together claims that the City has already identified the downtown site to be the best opportunity to provide affordable housing. But the City cannot determine whether the Housing Project actually makes sense for our entire community until it has evaluated the critical project trade-offs associated with this housing development. That is THE central challenge for the City.
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• Menlo Together claims the City’s current plans “call for” 90% of the 556 existing public parking spaces to be replaced plus additional parking for new households. I do not believe the City’s 90% assumption is a realistic estimate for the need for future downtown public parking. (Note: I have asked the City to  justify this important assumption but not received any response.)  And I have not seen any information about how much private parking the City hopes to provide. If the City were to allow households to use public parking spaces, this could create parking management problems. Finally,, there is no guarantee the City would not sacrifice public parking for housing units when faced with this design trade-off.

Opposes Downtown Housing Project – Save Downtown Menlo Park

Local business and property owners, alarmed by what they learned at the City presentation in November, have created Saving Downtown Menlo Park, a new advocacy group dedicated to ensuring the City understands and positively responds to the needs of the downtown businesses. Members support affordable housing in Menlo Park and many employ very low-income workers. However, they fear that any significant amount of housing in downtown would greatly harm them.

My Current Impressions

• Downtown business and property owners have valid concerns.
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• This advocacy group opposes any substantial housing development in downtown.
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• Public lands near the Menlo Park Civic Center might offer better alternative site (s) than downtown and is worth evaluating.

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My Earlier Menlo Park Downtown Affordable Housing Project Posts

=> Menlo Park Might Need More Downtown Parking In The Future – Not Less! (November 15, 2024)
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=> Will Menlo Park use 3 downtown parking plazas for affordable housing? (September 24, 2024)
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All “Creating A More Vibrant Menlo Park” Posts

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