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The Menlo Park City Council is ready to fight the state to prevent a high-rise development on the former Sunset magazine campus, even if it means cutting local services to fund the effort, Mayor Betsy Nash announced on Sept. 29. Hours later, Councilmember Drew Combs dropped a bombshell in his newsletter: a “serious” buyer is interested in purchasing the property at 80 Willow Road from the Russian oligarch who reportedly owns it.
“The City Council believes it is important to get this right, even if there are financial consequences and service impacts for the city that may be triggered by our effort to vindicate our rights and protect the Menlo Park community,” said Nash at Tuesday’s City Council meeting. The read-out from closed session is the first report of the council’s closed-door meetings with legal counsel since the state attorney general’s office threatened Menlo Park with fines for its handling of the controversial development application in a July 29 letter.
The enormous scale of the multi-use 80 Willow project, dubbed Willow Park, has been controversial from the beginning. It was proposed by San Francisco-based N17 in December 2023 under the state’s builder’s remedy law, which allows developers to ignore local zoning rules in areas without a compliant housing element.
The proposal for the 6.7-acre site — which borders the San Francisquito Creek and Palo Alto at the corner of Middlefield Road — includes 665 housing units, over 300,000 square feet of office space and a 130-room hotel, in addition to a preschool and retail space. The tallest three proposed buildings would range from 301 up to 458 feet tall.
Almost immediately, people in the Lindfield Oaks and Willow neighborhoods, which border the site, organized in opposition, creating an organization called Menlo Forward that bills itself as pro-affordable housing and anti “mega towers.”
Attorney General Rob Bonta’s office accused Menlo Park in July of violating the law by delaying the project. Following Bonta’s letter, N17 founder Oisín Heneghan informed the city he intends to pursue legal action if Menlo Park does not reverse course.
Bonta’s letter could have real consequences. Under state law, if the city is successfully sued for violating housing reform laws after receiving a letter from the Attorney General’s Office, it faces stiff penalties including mandatory attorney fee awards and a potential fine of $10,000 per unit.
Despite the potential penalties, and after meeting around 10 times in closed session to discuss the letter, Menlo Park city officials rejected the state attorney general’s position.
In the first read out from closed session since receiving the letter, City Attorney Nira Doherty said the city has taken “good faith” positions on each of the issues posed by the Attorney General’s office, but rejected the view that state law requires approval of Willow Park.
“The City Council respectfully disagrees with the Attorney General’s analysis,” Doherty said in her prepared statement. “It believes the Attorney General’s conclusions are incorrectly reasoned and contrary to law.”
The city recognized that the “financial penalties” that both the Attorney General and N17 could impose could “impose severe consequences on the city,” she said in the statement.
“The City Council considers the threat of those penalties as deeply unfair and extremely punitive,” Doherty said. “Even so, the council maintains that the Attorney General’s position is inconsistent with the Legislature’s intent.”
Nash said that the City Council was united in its position, despite the risk of financial penalties.
“We need to be clear with residents that the City Council does not take this position lightly, but rather it does so because we feel Menlo Park is being ill-served by the state’s inappropriate position on various laws,” Nash said.
She acknowledged that the costs of litigation may threaten city services.
“The AG issued its opinion without having the benefit of the city’s extensive knowledge of the property and the history of the development application, and without once inquiring with the city about the background of the application,” Nash said.
Nash added that the development could potentially worsen infrastructure challenges, lengthen emergency response times and increase the jobs-to-housing imbalance.
“The project does not deliver the housing that Menlo Park needs, contrary to the very purpose of the builder’s remedy law,” Nash said, referring to the possibility that the commercial space would create more jobs than the residential space would house.
“Menlo Forward would like to thank the council for resisting the developer’s call to prematurely approve its application under threat of litigation,” Menlo Forward wrote in a 9 p.m. email to supporters on Sept. 29, after Nash made her statement.
A mystery buyer?
Shortly after the Menlo Park City Council’s forceful rejection of the Attorney General’s position, Councilmember Drew Combs announced in his newsletter that a buyer is interested in purchasing the property at 80 Willow Road.
While he did not identify the buyer, Combs told this news organization that it is a “serious buyer.”
“It’s a buyer that’s incredibly knowledgeable of the property,” Combs said. He added that there are two main reasons he is pursuing it with Mayor Betsy Nash: They are “well resourced” and “have done their homework.”
Combs also said that the buyer is prepared to pay more than the property’s 2018 sale price of $72 million. According to the Wall Street Journal and Russian investigative outlet Proekt, Russian businessman Vitaly Yusufov purchased the property in the “interest of” the family of Dmitry Medvedev, the former president and prime minister of Russia who has been sanctioned by the U.S. government.
While there may be interest in buying the property, it would require the current ownership to want to sell. A Sept. 23 letter from Rep. Sam Liccardo that calls for Yusufov to face economic sanctions may be a contributing factor. Liccardo sent a letter to U.S. Treasury Secretary Scott Bessent urging him to investigate the financial backing of 80 Willow and pursue sanctions in hopes of stopping the 80 Willow Road project.
“I want more housing in our community, but Russian oligarchs with ties to the Kremlin and criminal networks should not control assets in our country,” Liccardo told this news organization, adding that its location in the heart of Silicon Valley raises national security concerns.
Mayor Nash cited Liccardo’s letter as another reason for the city’s opposition to rubber-stamping the project.
N17 owner Heneghan did not immediately respond to request for comment about the prospective buyer and Nash declined to comment. The Attorney General’s Office previously told this news organization that the letter speaks for itself, and declined to comment further. The Treasury Department has not responded to repeated requests for comment.
About time.
Good on city council. Proud to live in a city that collectively stands up to bullying.