Menlo Park school board officials say the $2.5 million endowment slated to cover the costs of extra students from Stanford's new Middle Plaza housing project won't be enough.

Located within the boundaries of the Menlo Park City School District, Middle Plaza's 215 rental units will primarily house eligible university faculty and staff, including families with children. MPCSD's main source of funding is property taxes, but as a nonprofit, Stanford is exempt from paying taxes on the housing development. That means the project is expected to add students to Menlo Park schools, but it will not generate tax revenue that would help pay for their education.

Adding students without also adding new property tax revenue is a huge problem for the district. "It's our whole funding," the district's Chief Business Officer, Marites Fermin, said in an interview. She said about 60% of MPCSD's funding comes from property taxes. "We rely on the property tax. If there's no property tax, we might as well close the school districts."

As part of the development agreement, Stanford negotiated with the city of Menlo Park to provide $1.5 million to the school district in the form of an endowment, which was funded in January. The city of Menlo Park donated an additional $1 million to offset the remaining costs.

Erik Burmeister was superintendent of the school district at the time and was present at some negotiation meetings. "Would we like Stanford to just, like, write a check for every kid that comes to school? Yes," he said in a recent interview. "But it was clear that that wasn't where the conversation was going to go."

Joel Berman, Stanford's director of land and local policy communications, said in an email that

Middle Plaza "will revitalize long-underutilized properties along El Camino Real in Menlo Park and bring 215 units of much-needed housing to the city, including eight units of affordable housing for local residents."

Berman also highlighted that Stanford agreed to reimburse the city up to $5 million for bike and pedestrian crosswalk construction costs at Middle Avenue.

Burmeister said that Stanford's $1.5 million gift, "while generous," was not sufficient to cover the long-term needs of the district. "It's one thing for low-income housing to not pay taxes," he said in an interview. "It's a whole other thing for Stanford to not pay."

When Fermin was asked if she thought the $2.5 million endowment would be enough to mitigate Middle Plaza's fiscal impact on the district, she said," I don't think so."

At the time of the negotiations, the $2.5 million impact estimate was calculated based on the projected 2019 education costs of $17,000 per student annually. But Fermin said that the steep and increasing cost of living in Menlo Park is driving prices up every year. "Other districts, they might spend $15,000 or $18,000 per student," she said. "We're spending about $23,000 or $24,000 per student."

With construction projected to be complete by this spring, Middle Plaza is just a few months out from being ready for residents to move in. Students living there could enroll in the school district as early as next fall.

The burden now falls on the district to create returns on its investment so that the Enrollment Endowment Fund created with the $2.5 million does not run out. A new school board policy adopted on Jan. 19 directs the Menlo Park-Atherton Education Foundation Endowment Investment Committee to manage the fund's investment. The board's Finance and Audit Committee will make spending decisions for distributions from the fund.

A number of Stanford's other expansion proposals in recent years have been met with less-than-warm welcomes from neighboring cities. In 2016, Stanford applied for an ambitious General Use Permit that would have added 2.3 million square feet in new academic space, 2,172 new housing units and nearly 10,000 people per day to the main campus. In November 2021, Stanford President Marc Tessier-Lavigne floated the idea of building a ninth residential student neighborhood that would allow enrollment to increase by 25%. Just a month before that, Stanford entered into an option to purchase, renovate and expand into Notre Dame de Namur University in Belmont.

Stanford eventually withdrew its campus GUP application in 2019 after failing to gain Santa Clara County's approval, promising that "a new phase of engagement and dialogue with local communities" was ahead. Today, the deal to buy Notre Dame is still in progress, and in September, Stanford acquired the leasehold on the Oak Creek Apartments on Sand Hill Road in Palo Alto, giving priority to "university affiliates" at the 759-unit residential complex.

Expansion efforts like these have received pushback from local communities that complain that Stanford is icing community members out of housing and adding traffic to roads without paying taxes to support the necessary repairs or upgrades needed for the increased use. Criticism also extends to the university providing no funding for parks, emergency dispatch or first responders.

"It's a bit ironic that one of the top universities in the world cannot support our local schools that educate the children of Stanford employees," San Mateo County's Coalition for Stanford GUP Accountability wrote in an open letter to the university. The group comprises elected representatives and staff members from Atherton, East Palo Alto, Menlo Park, Portola Valley, Redwood City, Woodside and San Mateo County.

"What is needed is for Stanford to accept that it has a dual role not only as a global institution on the cutting-edge of research but also as a good neighbor and a regional leader," the letter said.