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News - April 3, 2013

Menlo Park: Attorney scrutinizes hotel parking approval

by Sandy Brundage

The Menlo Park council voted 4-0 last week in favor of a proposed hotel on Glenwood Avenue, but that won't be the last time the public hears about the issue.

The project will replace Casa de Peninsula, a market-rate senior housing facility, with a 138-room Marriott Residence Inn. Of the eight residents remaining in the senior housing, six will be moved out this week and the other two are deciding between options, according to project representatives.

Attorney James Kashian, whose legal career includes representing the county of Los Angeles on a variety of projects, thinks the city took a misstep. He became aware of the hotel proposal when relatives who live in Menlo Park started receiving calls from relocation companies wanting to know if his mother, who resided at Casa de Peninsula, needed help finding a new home. (She has since relocated to Redwood City.)

The "elephant in the room," as he put it, is the parking. The hotel project violates the new downtown/El Camino Real specific plan, he said, and also sets a bad precedent by allowing a developer to obtain benefits for paying taxes the city would collect anyway.

On its face, Menlo Park's specific plan requires 173 off-street parking spaces for the hotel. The applicant, however, proposed 113 spaces — 74 on site and 39 public parking spaces on Garwood Way that have historically been used only by the senior home.

"This is a new development. Shouldn't it comply with the specific plan?" Mr. Kashian asked. "If the city and developer don't want to follow the specific plan, then the specific plan mandates they follow the variance process." On top of that, he said, another clause in the specific plan requires developments outside the downtown area to provide on-site parking.

Menlo Park Senior Planner Thomas Rogers said a variance wasn't necessary because "once an appropriate mechanism for project review has been identified, it's not necessary to review other hypothetical mechanisms." In this case, that meant distinguishing between hotel types to adjust the parking requirements. Since the Marriott would not have amenities for non-guests, such as restaurants or a conference center, the city agreed it shouldn't have to provide the same amount of parking as a full-service facility.

But that's only the first issue Mr. Kashian, along with some current and former commissioners, have raised. Another concerns the idea of swapping the public parking spaces for meeting transient occupancy tax (TOT) revenue goals.

The city and the applicant estimate the hotel will add about $669,000 to Menlo Park's annual revenue, mainly through the 12 percent TOT. If the hotel fails to provide the city with at least 50 percent of total room occupancy TOT revenue for two consecutive years, the hotel can be required to pay the difference, provide a public benefit, reduce its size, or revert to a senior living facility.

If in a given year, 85 percent of guests stay longer than 30 days, thereby generating no TOT, the hotel owes the city up to $50,000.

The agreement approved by the council includes a provision that after five years, the city will charge fair market rent for the parking spaces — but only if Menlo Park's tax revenue from the hotel in a given year drops below $700,000.

Local government watchdog Peter Carpenter as well as Mr. Kashian cried foul.

"The TOT is supposed to be tax revenue, not an in-lieu fee to pay for parking spaces or other special benefits from the city. Basically, they're using TOT to pay off the city to buy those 39 public parking spaces," Mr. Kashian said. "This could open a Pandora's box for any other development."

Both Mr. Carpenter and Mr. Kashian have asked what's to stop a new project, such as a restaurant, for example, from asking for the same accommodations?

City Attorney Bill McClure told the council that given the unique nature of the site, the risk of setting a damaging precedent in this case was very low. City officials have pointed out that Menlo Park's ban on overnight street parking presents a key obstacle for a hotel, which needs enough spaces at night to accommodate guests. Also an eatery may have a hard time arguing that it should fall into a unique category of restaurant, and thus deserve a modification to a specific plan requirement, as opposed to a limited-service vs. full-service hotel.

"We have always looked at this project as including Garwood Way (parking spaces), for better or worse," applicant Reed Moulds told the council. When the team realized the parking was actually in the public right-of-way, he said, they worked hard to figure out how to make the project viable anyway.

Mr. Moulds said he has been talking to other businesses in the vicinity, such as Ducky's car wash and Caltrain, which could possibly have parking spaces available at night after closing.

Mr. Kashian submitted a request for public records on March 29 related to the city's process in deciding to support the proposal, and said he'll consider his options once Menlo Park responds.


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