Menlo Park could reap more than $15 million in one-time payments and contributions and hefty annual payments from Facebook if it decides to accept the terms of a development agreement with the social media company outlined in a staff report released July 14.
Among the benefits the city could receive are subsidized rental housing for 22 teachers, public safety officers or nonprofit workers; $1.25 million a year in hotel taxes; $1.5 million to start a "Housing Innovation Fund"; and continued funding to research and further plan transportation improvements on the Dumbarton Corridor.
"I think it's fair and I'm happy with how the negotiations went," said Vice Mayor Kirsten Keith, who with Mayor Rich Cline was part of the subcommittee that negotiated for the development agreement.
If the terms in the development agreement are approved by the City Council, the city would give Facebook the right to build two office buildings totaling 962,400 square feet and a 174,800-square-foot, 200-room hotel in the city, knocking down several of the former sites on the TE Connectivity campus, located roughly along Bayfront Expressway, Constitution Drive and Chilco Street.
Facebook designs show the company intends to create a publicly accessible open space between the two office buildings with a bike and pedestrian bridge over Bayfront Expressway, with access to Bedwell Bayfront Park and to the Bay Trail.
The city would have to amend its zoning to allow the new Facebook buildings to be 75 feet tall – where now the permitted building height is capped at 35 feet – and to reconfigure the properties so that the buildings can be adjoining.
The development agreement would also permit Facebook to cut down 274 heritage trees.
In exchange for those permissions, Facebook would pay as a public benefit $300,000 per year for 20 years after the first office building is occupied as a public benefit, and $336,000 per year – four times the amount of sales tax historically generated from that site – until TE Connectivity, Facebook's current tenant on the site, leaves.
That annual $336,000 fee would rise to $1.25 million per year two years after TE Connectivity leaves the site. According to Kyle Perata, senior planner, that increase is an incentive for the company to build its proposed hotel and start generating hotel taxes for the city.
According to the development agreement, Facebook would also provide a number of other benefits in the areas of housing, transportation, community services and the environment. If all the proposed buildings are constructed within 10 years, Facebook's project would add about $2.1 million per year to Menlo Park's revenue, according to the staff report.
"It's our responsibility to provide public benefits that are responsive to community priorities and assist with finding solutions to address regional challenges related to housing and transportation," said John Tenanes, vice president of global facilities and real estate at Facebook. "We want to continue to build social value and grow responsibly in the city of Menlo Park."
Facebook would subsidize the rents of 22 units at 777 Hamilton Ave. a new market-rate development by Greenheart Land Co., paying $430,000 per year for five years. Teachers would have priority as tenants, but public safety or nonprofit professionals could also be eligible.
Facebook would also have to abide by the city's Below Market Rate ordinance, meaning it would pay $6.3 million or build 20 affordable housing units in the city. According to Facebook officials who spoke at a Menlo Park Housing Commission meeting, there are talks underway with MidPen Housing to channel those funds toward a project by the nonprofit housing developer on the 1300 block of Willow Road.
If the Menlo Park general plan update now being developed goes through, the company would also commit to plan and design at least 1,500 housing units on its Prologis site, located on Willow Road, just south of Bayfront of Expressway, fifteen percent of which would be below market rate.
It would also put $350,000 toward conducting a housing inventory and local supply study with Menlo Park and East Palo Alto. Funds for the study would be bolstered with an additional $1.5 million to go toward creating a "Housing Innovation Fund" to implement recommendations from the study and $1 million to launch a pilot "Housing Preservation Fund," which would find and buy housing to "protect at-risk populations."
Facebook would also contribute to the city's infrastructure and transportation initiatives. It would pay up to $1 million to fund future recommendations from the Dumbarton Corridor Study it has already funded with $1 million, and an additional $1 million toward a "forum" with Menlo Park and East Palo Alto to decide how to quickly implement those recommendations.
The company would also offer $100,000 toward a Transportation Management Association, which could involve working with other nearby companies to reduce the number of vehicle trips by employees.
In addition, Facebook would fund, up to $700,000, the design of a pedestrian and bike path between East Palo Alto and the Redwood City Caltrain station, and finish streetscape, bike and pedestrian improvements along Chilco Street.
Facebook would pay $60,000 per year to operate and maintain the Belle Haven community pool and would establish a scholarship program for East Palo Alto and Menlo Park residents, committing $100,000 per year for 10 years. It would also commit to pay $1 million toward the maintenance and operation of Bedwell Bayfront Park.
Facebook would pay $25,000 in seed money to fund a feasibility study for a recycled water system in the city's M-2 area east of U.S. 101. The company would commit to constructing its office buildings at "LEED Gold" the second-highest level of environmentally focused building standards. The buildings would have solar panels and an on-site recycled water system.
Editor's Note: Correction: A previous version of the story incorrectly stated that Facebook had committed to build at least 1,500 housing units on its Prologis site. The company has committed to plan and design those housing units, according to a Facebook spokesperson.