Financing keeps Bohannon hotel on drawing board

Facebook may wait a while for hotel

When the Menlo Park Planning Commission sat down for its annual review of the Bohannon Menlo Gateway project Dec. 5, there were no surprises, but maybe some disappointment from those tracking the development.

In 2010, the City Council and voters approved the 941,000-square-foot office-hotel complex, which would be built on two properties: 100 to 190 Independence Drive and 101 to 155 Constitution Drive.

Under the terms of the development agreement signed with the city, most of the hotel space must be built before anyone can lease office space.

Developer David Bohannon told the commission in a letter that tenants are interested in the office space. "Unfortunately we have had to advise them that because the office component cannot proceed without the hotel, and the timing of the hotel component remains problematic, we are not able to proceed with the office at this time," he said.

While Marriott International remains excited about opening a hotel on the site, he said, financing construction during this recession remains "a very challenging prospect."

Meanwhile, Facebook hopes the hotel happens sooner rather than later. An economic study commissioned by the social networking giant predicted that the company will need at least 14,000 hotel room nights per year to accommodate visitors, generating $1.95 million a year in Menlo Park, including $300,000 in annual transient occupancy tax revenues for the city.

Those figures may be on the low side since the analysis didn't include vendors and potential advertisers who travel to Facebook headquarters. If Menlo Park can't accommodate Facebook's guests, that revenue shifts to other cities.

Planning Commission chair Vince Bressler appeared to question Mr. Bohannon's willingness to build the hotel. " We're talking about being right next door to Facebook headquarters," he commented during the review. "That seems like a place you could build a hotel."

Mr. Bohannon responded that the current economy simply doesn't support constructing a new hotel outside Washington, D.C., or New York City, even though existing facilities are doing well. "We're just not there yet," he said. "At the same time, I don't want to leave you with the impression that we're not trying to bring investors to the hotel."

Asked to elaborate on his dealings with Facebook, the developer said he's had several meetings with their real estate staff, who introduced him to an architect from New York City who could design the hotel.

"They clearly understand that their business will benefit from having the hotel there, no question about it," Mr. Bohannon said. "I don't think it's enough to persuade, at least so far it hasn't been enough, to persuade investors." And so far Facebook hasn't offered to help with financing.

In the end, the commission voted 7-0 that the developer was upholding his end of the agreement by making a good faith effort to move the site forward.

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Like this comment
Posted by frugal
a resident of Menlo Park: Central Menlo Park
on Dec 9, 2011 at 12:11 pm

No surprise there. This was part of the Bohannan plan to tie up development rights for many many years. Let's hope that the EIR for Facebook includes the traffic from Bohannan, Stanford Hospital AND A MUCH EXPANDED DOWNTOWN.

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Posted by patience
a resident of Menlo Park: Allied Arts/Stanford Park
on Dec 9, 2011 at 3:58 pm

And the financial study for Facebook should not double count the revenue already counted by the Bohannon project, such as hotel revenue. The city doesn't get the hotel tax twice. The visitors won't eat more than once per meal.

Like this comment
Posted by w patterson
a resident of Menlo Park: Sharon Heights
on Dec 10, 2011 at 7:59 am

Thanks to the Planning Commission for a common sense decision. We can hope for the success of the project and the City of Menlo Park.
It would be nice to allow the office buildings to proceed. Great jobs near Menlo Park. Reconsider allowing the office buildings to proceed.

Like this comment
Posted by Menlo Voter
a resident of Menlo Park: other
on Dec 10, 2011 at 9:05 am

Absolutely not! No hotel, no office buildings. It's bad enough this development does little or nothing to pay for the impacts of the new office space. Allowing the hotel to not be built first will make that even worse.

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Posted by follow the money
a resident of Menlo Park: Central Menlo Park
on Dec 10, 2011 at 1:45 pm

Who didn't see this coming? The hotel was the carrot; we all knew that Bohannon would try to wiggle out of it as soon as the project was approved. (Check out the threads from a year ago.)

Additional office space does not produce additional revenues for our city. The city will get a tiny percentage of the property tax, but property taxes don't rise with costs. So in a few years, without the hotel, Bohannon's project stands to be a major drain on city finances.

Thanks to the planning commission (and, I hope, the council) for not letting someone evade his responsibilities just because he's rich and loud.

Like this comment
Posted by long time resident.
a resident of Menlo Park: Downtown
on Dec 10, 2011 at 6:18 pm

If Bohannon has made a good effort to bring in the hotel and he can't due to slump in the industry, he should be allowed to build the office buildings. The hotel recesssion is worse than most other sectors through no fault of Bohannon's. He can build the hotel when later.

Look at El Camino Real if you want to see the consequences of Menlo Voter's and Follow the Money's views.

Like this comment
Posted by Follow the money
a resident of Menlo Park: Central Menlo Park
on Dec 10, 2011 at 6:41 pm

El Camino 101:

* Most of the vacant ECR properties belong to Stanford, who is still receiving rent from the car manufacturers. They are hoping that the ECR plan gives them windfall development rights. Meanwhile, they have no incentive to do a thing.

* Most of the other underdeveloped ECR properties belong to owners who have projects approved and are waiting for the economy to pick up.

This is not the case with Gateway. When Bohannon asked for approval last year, he knew what the deal was with the economy. Moreover, a year ago we didn't have Facebook, a company that is now asserting that they need more hotel space to accommodate their visitors. (They don't want to send visitors to ECR -- they want them to stay over in the office park area.)

Bohannon's act is a total sham. I can only think that anyone who falls for it must be a relative or member of his empire.

Like this comment
Posted by Menlo Voter
a resident of Menlo Park: other
on Dec 10, 2011 at 8:50 pm

There are approved development projects on ECR. They aren't being built because of the economy. Bohannon knew what the economic conditions were and hence asked not to have to develop the property for many years. He agreed to put a hotel in as condition precedent to developing the office space. This was agreed to as the only [part deleted] monies the city would recieve to offset the costs associated with his huge development of office space (read NO sales tax revenue).

Bohannon needs to abide by the conditions of this agreement. [part deleted.] He can actually put forward a proposal that actually provides funds toward the cost impacts his development causes.

I'm not shocked Bohannon is pulling this [deleted]. It's par for the course for him. [deleted]

He needs to abide by the agreement. If he can't put in a hotel, he can just wait until he can. That was the deal.

If he wants to renegotiate, fine, he needs to cough up the actual costs associated with his office complex. [deleted] I'm sick and tired of developers like Bohannon thinking they can write their own rules.

Like this comment
Posted by Menlo Voter
a resident of Menlo Park: other
on Dec 11, 2011 at 9:00 am

Menlo Voter is a registered user.


so the word "crap" is not allowed on this forum? You guys are unbelievable.

Sorry, but further commenting on this topic has been closed.

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