A project to build 420,000 square feet of residential, office and retail space on the large vacant lot along El Camino Real (between Glenwood and Oak Grove avenues) in Menlo Park cleared a major milestone on Tuesday, Sept. 13. The Menlo Park City Council unanimously approved the terms of an agreement between the city and the developer, Greenheart Land Co.
The terms were negotiated by City Council members Peter Ohtaki and Catherine Carlton, plus several members of city staff including Assistant City Manager Chip Taylor and Senior Planner Thomas Rogers.
Under terms of the agreement, the developer would be required to provide 14 below-market-rate housing units, pay $2.1 million in cash to a public amenity fund, guarantee $83,700 in sales tax payment per year, and build a dog park.
The proposed development at 1300 El Camion Real is at a "public benefit bonus" level, which allows additional development in exchange for public benefits.
Greenheart proposes to build two office buildings of up to 199,300 square feet of floor space; one residential building for 183 dwelling units; up to 29,000 square feet for "community-serving" uses, such as retail and personal service; and an underground parking garage and small surface lot for 1,000 parking spaces.
Specific terms of the agreement indicate that Greenheart will:
● Give the city a $2.1 million cash contribution, which would be earmarked to be spent on a public amenity in the El Camino Real/downtown specific plan area, which includes El Camino from Watkins Avenue to the San Francisquito Creek and the city's downtown area and Civic Center.
● Designate 14 of the apartments for low-income tenants (three two-bedroom units, three large one-bedroom units, and eight small one-bedroom units). In addition, six small one-bedroom apartments would be designated for tenants whose income falls between the median and "moderate" income levels. Under the city's below-market-rate ordinance, the developer would be required to fund only 10 units for low-income tenants. In San Mateo County, the income threshold for low-income is no more than $98,500 for a family of four. A family of four qualifies for median or moderate-income housing if the income is between $107,700 and $129,250.
● Build a publicly accessible, fenced dog park where Greenheart had previously planned to put a bocce court. The council has had ongoing debates about where a dog park could or should operate at city parks.
● Guarantee that the retail space in the development would generate at least $83,700 in sales tax revenue per year for the city, or about $4.50 per square foot, beginning two years after the project is built. Each of the project's three buildings will have retail space that the owners will try to get occupied as soon as possible, said Bob Burke, principal at Greenheart. He said it can be difficult to get retail tenants to occupy a space right away when the site is still under construction. The developer, he said, has an interest in getting retail up and running as quickly as possible, even though retail doesn't bring in as much revenue as office space, because it helps attract office tenants.
● Market the office space for startup-friendly uses, such as incubators, accelerators and co-working locations, unless the space is rented to just one tenant.
In exchange, the city will:
● Not make Greenheart pay new impact fees or in-kind requirements, such as the housing impact fees the city is considering, for three years, with the chance of two annual extensions. The city can still increase the impact fees already in place, however.
● Allow the conditions in the first building permit to apply to other permits planned for different phases of the project's construction.
The terms of the agreement will last for 10 years, while the below-market-rate apartments would be held to a 55-year agreement with the city.
Next, city staff will finalize the project's environmental impact report and bring it before the Planning Commission and then the entire package to the City Council for possible approval. Mr. Burke said Greenheart plans to submit drawings to begin building the underground garage in advance of formal approval of the project.
When asked when groundbreaking could occur, Mr. Burke responded, "As fast as you can process it, we can build. ... If everything went right, we would hope to break ground in March or April."
Occupancy would be planned for some time in 2019, he said.