Letter: City loses on delayed Derry project | April 2, 2008 | Almanac | Almanac Online |



Viewpoint - April 2, 2008

Letter: City loses on delayed Derry project

We, the citizens of Menlo Park, will never know what the settlement with the Derry project included.

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Posted by Paul Collacchi
a resident of another community
on Apr 2, 2008 at 9:00 am

Before cleaning off the mud thrown by Ms. Lasensky onto the negotiated project and its process, let me remind everyone:

The Derry referendum is and has always been in force. If you were a signer of the referendum, you are entitled to one of two outcomes. Menlo Park’s city council must

1.) put the ORIGINAL zoning changes to a vote of the people, or
2.) rescind the ORIGINAL zoning changes needed by the project.

NOW IS YOUR TIME TO ADVOCATE YOUR PREFERRED OUTCOME. The referendum is soon to be legally fulfilled.

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Posted by morris brown
a resident of Menlo Park: Park Forest
on Apr 2, 2008 at 9:09 am

Response to Letter from Elizabeth Lasensky – April 2sd, Almanac

Web Link

The letter in the April 2sd Almanac from Ms. Lasensky contains so much erroneous content that I feel I must respond. Statements from her letter are enclosed in quotes and followed by my comments..

“We, the citizens of Menlo Park, will never know what the settlement with the Derry project included.”

“A group of private citizens, Menlo Tomorrow, who were not elected or appointed by any official body, sued the developer, the O'Brien Group, and after months of secret negotiations, reached a secret deal.”

Menlo Park Tomorrow (MPT), did not sue the developer. MPT circulated a referendum petition which gathered over 2500 signatures and which was certified by the County as being valid.

The City council elected to have MPT enter into discussions with the developer (The O’Brien Group) to see if an agreement could be reached for a revised project and which would permit a revised project to be built which would satisfy the objections of MPT to the Derry project as then approved.

These discussions led to an agreement, the terms of which are certainly not secret. The Planning commission last evening (March 31, 2008), approved the revised project. See:

Web Link

The negotiating team consisted of:

Morris Brown, contact person for MPT
Jack Morris, former planning commissioner, 3 term council person and former Mayor
Paul Collacchi, former 2 term council person and former Mayor
Patti Fry, former planning commissioner
Elias Blawie, attorney and partner of Heller Erhmann
David Speer, former candidate for council, facilities planning and development manager for the County of Marin

“People who signed the Derry referendum petition did not necessarily agree with having a secret body that had secret negotiations and which then decided to become a private "planning commission" for the city”

The agreement has full public disclosure and the City’s Planning Commission and Council have the final word on acceptance or rejection. Last evening the Planning Commission accepted the agreement. The City Council can still either accept or reject the agreement. City officials were kept informed during the negotiating period; we had much staff help during this period. City Attorney Bill McClure was present at the final negotiating sessions. Former mayor Dee Tolles was also present and very helpful in the final negotiations.

“Many of those same Menlo Tomorrow members are also part of Mayor Andy Cohen's kitchen cabinet. At least we can make that public.”

Some of the negotiating team are part of Mayor Cohen’s kitchen cabinet. I fail to understand what relevance this has to this item. Mayor Cohen uses this method to get input from and outreach to the community.

“So now the Derry project is more than two years late in getting started. It will have five fewer below-market-rate units, which have a value of about $1.5 million. It is saddled with $2 million in public benefit fees, more and expensive parking requirements and less profit margin. Additionally, the Derry project finds itself caught in the current financial crisis, which is not friendly to any development, let alone one so encumbered with public and secret restrictions.”

This is really an amazing statement!

There are no secret restrictions. There are no “more and expensive parking requirements”. I certainly agree the developer has less profit margin and indeed the City will receive $2 million dollars in un-restricted public benefit funds. We did indeed lose five BMR units.

Please note that Ms. Lasensky herself is on the BMR list and as such certainly has a conflict of interest in discussions on this subject.

Ms. Lasensky was forced to recuse herself from the housing commission meeting which discussed the project’s BMR agreement, because of this conflict of interest.

She has now distorted her own thinking to the point where increased "public benefit" is a burden that has "saddled" the project, and implicitly emphasized the "good" of maximized profits for the developer. Yet she wants to be a council candidate whose job
presumably is to maximize public good.

“This project is a beautiful example of transit-oriented development, one that Menlo Park will be proud of. Had there been no referendum or protracted negotiations, the project would be almost finished, with people looking forward to moving into their new homes.”

“I wish the O'Brien Group good fortune with their grant application so that the project can proceed. It would be a shame if Menlo Park lost out on this well-designed, transit-oriented project..”

“Elizabeth Lasensky”

There indeed has been a delay in getting this project built. The negotiating team fully supports the revised new project. The last hurdle for City approval is approval by the City Council. Approval or rejection by the City Council should take place with the next 5 to 6 weeks.

For many reasons too long to continue on here, MPT feels this project is vastly superior to the original project. We too wish the O’Brien group all the best in building this project.

Morris Brown
Contact Person
Menlo Park Tomorrow
661 Live Oak Ave #4

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Posted by Ever hopeful
a resident of Menlo Park: Downtown
on Apr 3, 2008 at 12:20 pm

I have signed up for affordable, below-market-rate housing in Atherton. With my income, I can’t afford to buy at-market-rate housing there. I suppose I will have to wait a while before something opens up. Also, I’m waiting for Atherton to build TOD high-density housing at or near their train station. That probably won’t happen for a while either. It’s certainly a good thing that all this is happening in Menlo Park.

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Posted by J
a resident of Menlo Park: Downtown
on Apr 3, 2008 at 4:09 pm

Where do you sign up for the housing you are talking about in Atherton and Menlo Park? Thanks.

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Posted by Elizabeth Lasensky
a resident of Menlo Park: Downtown
on Apr 5, 2008 at 9:28 pm

To get more information on the Menlo Park BMR program, go to Web Link. Or go to the city's administrative building and ask for a BMR packet.

Menlo Park has about 300+ people on the wait list and not many units. Applicants must live and/or work in Menlo Park.

I'm not familiar with any program in Atherton and I wasn't able to find anything on Atherton's website. But call the City Manager's office.

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Posted by ReaHousingAdvocate
a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Apr 6, 2008 at 8:26 am

The wait list is somewhat inflated. It costs nothing to get on the Menlo Park list; those on the list may be on the lists for multiple cities.

If Menlo park charged a small fee - $5.00 - $25.00 refundable at any time, for placement on the list to see who's really serious, I project that the list would be much smaller.

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Posted by another view
a resident of Menlo Park: Fair Oaks
on Apr 7, 2008 at 5:42 am

Although the BMR list may well be 300 long now, history shows us that the demand is really very thin.

A few years in the Menlo Square development, the City had to buy from the developer 3 BMR units, since the developer couldn't find buyers for them.

As was pointed out in a post above, Lasensky, a leading advocate for BMR and who is currently the chair of the City's housing commission, wants as many BMR units as can be obtained. Thus she favors higher and higher density regardless of the problems in traffic and city services this creates.

Development criteria should not be driven by a single force, such as the need for BMR units. Rumor has it she is planning to run for council this fall. Maybe she will set a record for fewest votes obtained.

another view

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Posted by pay my own way
a resident of Menlo Park: Downtown
on Apr 7, 2008 at 8:11 am

It is interesting that there is really only one voice that's persistently calling for more and more BMR units. Did you all see the Palo Alto Weekly article on the perils of BMRs? There are good reasons why many people would be smarter to buy a home in a more affordable community than put their money in a BMR.

Nothing personal against Elizabeth, but I don't see why we need to subsidize her housing, any more than we should be subsidizing the housing of any other middle class educated members of our community.

The existence of BMRs distorts the local housing economy, as noted by the previous poster. We'd all be much better off if we could eliminate this distortion.

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Posted by realist
a resident of Menlo Park: Central Menlo Park
on Apr 7, 2008 at 9:03 am

Another View, as I recall the situation with the Menlo Square development, there were prospective buyers but they could not qualify for loans once the monthly homeowners' fees were added to their regular mortgage payments. So the city agreed to buy those units and rent them to the would-be buyers.

Should our city be in the landlord business? I don't think so, but the shortsightedness of the BMR program has forced Menlo Park into this role. Another reason to rethink or perhaps move beyond BMRs. It's not 1975 anymore.

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Posted by Sick of smugness
a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Apr 7, 2008 at 10:26 am

Based on what Realist is saying, I think it's the "shortsightedness" of the BMR program that needs fixing. Maybe if we had more affordable housing in this town, we'd have brighter, more civic-minded people living here to sign up for our citizen commissions and run for city council and fix such problems -- people whose interests go far beyond their own economic self-interest. People who could figure out how to have a viable BMR housing program that would allow teachers, artists, social workers and other lower-paid individuals to live here so that this town's riches could be measured by something other than money money and more money.

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Posted by Ever Hopeful
a resident of Menlo Park: Downtown
on Apr 7, 2008 at 10:54 am

You are absolutely correct, Sick. "Money, money and more money" shouldn’t be the measure of this town's riches. That’s why I think that Atherton and Hillsborough ought to have BMRs for people like us. Why don’t they provide the affordable housing that we deserve? Actually the entire housing market in Menlo Park is way overpriced. We should demand that they all cut their prices by 50%. That way, think of all the “brighter and civic-minded people” such as ourselves we could attract to run for city council. By the way, whom did you have in mind for that job?

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Posted by Penny Ury
a resident of Menlo Park: other
on Apr 7, 2008 at 5:37 pm

One reason for BMR programs is to fulfill state-mandated goals for "affordable" housing.

I think if you take a closer look at Menlo Park's program, you'll see that it applies to a fairly narrow band of people who earn enough money to qualify for mortgages but don't make nearly enough to dream of buying a market-rate home of any kind.

It's kind of grim that there are people on this thread who'd rather see anyone who doesn't earn $200K a year move to Omaha, but it takes all kinds to make a community, right?

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Posted by midwesterner
a resident of Menlo Park: Belle Haven
on Apr 7, 2008 at 6:32 pm

I have plenty of artist, teacher, and social worker friends who don't make $200k/year, who live in Menlo Park, and who don't expect handouts from anyone. Those of you who think that only rich people can live in Menlo Park need to visit some of the neighborhoods outside the Bay Laurel area.

BMRs are not a panacea. They actually exacerbate the problem. If you don't understand that, you need to take a course in elementary econ.

P.S. No need to make snide cracks about Omaha. Have you been there, Penny? It's a pretty nice place to live, plus most folks there don't expect others to pay their way.

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Posted by With bated breath
a resident of Menlo Park: Allied Arts/Stanford Park
on Apr 7, 2008 at 9:23 pm

Midwesterner, I don't have time to take a course in elementary econ. I'm working 80 hours a week to pay my mortgage. Perhaps you'd be so kind as to give us a quick summary: HOW, pray tell, do BMRs exacerbate the problem?

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Posted by NoTrickleDownTheoryPlease
a resident of Menlo Park: other
on Apr 7, 2008 at 10:22 pm

No econ "lessons" please: It's not called "the dismal science" for 'nothing, after all!

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Posted by MBA in Menlo
a resident of Menlo Park: Central Menlo Park
on Apr 8, 2008 at 8:44 am

It's not "trickle down," it's distorting the market through subsidies. Not to mention that some buyers of BMRs believe they are getting a stake in the housing market, when in actuality they are just paying for the opportunity to live in a city. They do not benefit from the appreciation that accrues; there are severe limitations on their ability to borrow against the value of their homes.

Maybe it IS time for that econ course. Though anyone who is dumb enough to buy a house that s/he can't afford probably is impervious to learning anything useful.

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Posted by GetReal
a resident of Menlo Park: Felton Gables
on Apr 8, 2008 at 10:22 am

"Distorting the market through subsidies" -- ya mean like what's going on in the oil industry?

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Posted by another MBA
a resident of Menlo Park: South of Seminary/Vintage Oaks
on Apr 9, 2008 at 9:51 am

Try this: BMR units are "below market" by definition. This does not mean they are "affordable".
A new project of a certain size must provide 15% of the units at this rate. The other 85% of the units are "at market" so for every BMR unit, we get 5-2/3 units "at market". If the BMR units don't cover costs, then the "at market" units must - driving up the market rate.
Oh yes, the state allows the projects to build more units than local rules allow to help compensate in some way for the BMR units but then there really could be 7-2/3 "at market" units for every BMR unit.

These projects may add housing, but over time the market rate actually increases and even the below market units become even less affordable.
Adding to this locally, Menlo Park allows much larger replacement houses to be built, causing "market rate" to go even higher than a renovation alone would.
The only way I know to provide "affordable" housing (or at least as much as possible where land is so costly) is for a nonprofit organization like Habitat for Humanity to build the housing on land that is either donated or purchased by the city. This would remove labor costs (nearly all is volunteer labor), material costs (most is donated), and profit from the ultimate price.

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Posted by Casita
a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Apr 9, 2008 at 11:47 am

From what I can tell, BMR units are usually smaller and more cheaply made than other the market-price units in a development -- no high-end appliances or marble bath tubs. At Vintage Oaks, the BMRs are townhouses, not mini-mansions.

So is the developer really losing money on these things? Losing a higher profit margin, certainly, but losing money on building costs and land? I doubt it.

It seems more like a way to force a developer to include a few units of more modest proportions for people of modest means. Otherwise, there'd be nothing but McMansions as far as the eye could see.

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Posted by what I know
a resident of Menlo Park: Downtown
on Apr 9, 2008 at 8:34 pm

The BMR program is supposed to work such that the developer is forced to provide a percentage of the units to the BMR program. The selling price is supposed to be the construction cost that the developer paid to build the unit(s). I believe that would be the incremental cost. So if the developer could have built a project for $1 million without the BMR unit(s) and it cost him $1.2 Million with the BMR unit(s), 200,000 would be the selling price of the unit(s).

In Menlo Park the developer must allot 15% of the unit total to BMR units. BTW, he gets credit for these units, so that if the zoning only allowed 100 units, he would get to build 100 units at market rate price and add the 15 units for the BMR program.

There can be trade offs. Sometimes the City will allow the developer to pay a BMR in lieu fee, which can be used to build BMR units elsewhere.

what I know.

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Posted by pragmatist
a resident of Menlo Park: Belle Haven
on Apr 9, 2008 at 9:16 pm

The developers love the BMR units. If not for BMRs, the city might try to force developers to respect the zoning ordinances, but BMRs enable developers to bend the rules.

Here's how that works. Say, for example, that a developer wants to build on acreage that should (according to existing zoning) accommodate 20 homes. Menlo Park will tell the developer that a 20-unit project must be accompanied by an additional 3 BMR units. The developer whines that this won't pencil out and threatens to walk, whereupon the city agrees to spot rezone the property so that the developer can build 30 units on it.

Assuming the developer has paid a fixed price for the land, of course s/he would rather sell 27 units at full price and 3 BMRs than 20 units at full price. Result: densification increases, along with the burden on traffic, schools, and the infrastructure, yet the number of "affordable" units remains negligible.

BMRs don't make much sense for Menlo Park. If we want to provide a way for our underpaid service workers--police, teachers, social workers--to live here, let's help them directly. A lot of these would-be residents have families and the small, substandard BMR units can't accommodate them anyway. Why not just subsidize the housing of their choice instead of depending on this outdated program to level the field?

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Posted by another MBA
a resident of Menlo Park: South of Seminary/Vintage Oaks
on Apr 10, 2008 at 7:59 am

Pragmatist almost gets it right, but misses the fact pointed out by What I Know. The develop of 100 units has to provide 15 BMR units but gets to add them to the 100, thus the right to build 115 even though the city rules supposedly place a limit at 100!
I don't know what Menlo Park's rules are about how the rate is set, but I do know that what is "market" varies by part of town.

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Posted by Wait Wait, Don't Tell Me
a resident of Menlo Park: Linfield Oaks
on Apr 10, 2008 at 12:23 pm

Some details of BMR are missing...

If someone proposes 100 units, they must provide 15% BMR.

So it's 85 market, 15 BMR. But wait, there's more. To compensate the developer for the loss of revenue of the BMR units, they are allowed more market units, a negotiated number, to recover the cost. So the 100 unit proposal may get to be 105 units. One of the consequences of BMR is that it creates more density and more impacts.

But wait, there's more!
BMR housing is not free. Someone has to pay. It is also not really paid by the developer. It is paid by selling the other units, or in increasing the price of the market units. Thise increased prices push prices up for any other house.

But wait, there's more!
Now we get to condos, which are a special case. Condos have a condo association which collectively manages and pays for maintenance, insurance and upkeep. If you have a 10 unit condo, each unit's owner pays 1/10 of the collective costs. There was a problem about 6 years ago with a new condo project where prospective buyers of the BMR units could not qualify for a loan because the monthly condo fees created a lending problem for the borrower. So the city purchased the units and rented them out until the owners could qualify for the loan.

I hear that there was a change to BMR condos so that the BMR units pay less of the condo fees, pushing that expense onto the market units.

But wait, there's more!
What happens if a BMR owner defaults on the mortgage? (As may not be surprising in the current economy.)
This is a bonus question for extra credit.

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Posted by BMRnt
a resident of Menlo Park: Downtown
on Apr 10, 2008 at 12:58 pm

WWDTM, if you read the thread, you will see that your points were not missing but were already made by others. As for the "bonus question," I assume the city would have to find someone to take over the mortgage. That shouldn't be too hard, given how low the payments are, and the fact that (in dire economic times) more people will qualify for BMRs.

The homeowner fees are often more than 1/x the actual cost. The developers usually expect a fairly high monthly fee so as to quickly build up a fund that they may still control. And those fees aren't just for condominium owners. Many of the new developments with detached homes have private streets and shared open space, so those homeowners will presumably also have to pay monthly fees.

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Posted by Henny
a resident of Menlo Park: other
on Apr 10, 2008 at 4:41 pm

If a BMR occupant defaults on the mortgage and enters foreclosure, I assume the house or condo would then get sold to the next eligible person on the city's BMR list. The city has the first right of refusal for all BMRs for 50 years after they are built.

I have to question whether BMR units really push up the price of the remaining market-value homes. If the price of a new home is more than the market will bear, the developer will have to lower the price in order to sell it, right? Isn't this what's going on with new developments all over the Bay Area?

Perhaps all you capitalists with the fancy MBAs can provide a definitive answer for all of us MBA-less dullards.

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Posted by New to your game
a resident of Menlo Park: Downtown
on Apr 10, 2008 at 9:05 pm

I don't know who this Paul guy is who posts at the beginning of this nonsense but he needs to clarify his truncated message. How does this fellow who lives in another community know what he knows but can't be more specific.

He sounds like a jerk

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Posted by Tom
a resident of Menlo Park: Allied Arts/Stanford Park
on Apr 10, 2008 at 9:40 pm

NTYG, Giving you the benefit of the doubt -- accepting your claim that you really don't know "who this Paul guy is" I-- I'll provide some information. The person who started this thread is Paul Collacchi, who moved to another community only recently but who lived in Menlo Park for many years, including those years he was seriously involved in civic affairs as a council member and mayor (as recently, I think, as three or four years ago).

Your assessment of him is baffling to me. I, for one, am grateful that he started this thread, which I have returned to numerous times because it has offered so much information and such interesting perspectives. I was under the impression that that's what these forums are intended to do.

By the way, I've only met Paul a few times, mostly when he was serving on the council, so I can't claim to be a friend or close aquaintance. The only reason I'm able to supply you with this information is that Paul identified himself. The real jerks on this forum (I don't think there are many, relatively speaking) don't identify themselves.

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Posted by Menlo Park Citizen
a resident of Menlo Park: Central Menlo Park
on Apr 11, 2008 at 11:16 am

Paul is a member of the dried up old prune cabal (Morrisd Brown, et. al.) who are trying to run Menlo Park as an unelected City Council. They have their own non-family oriented agenda that they pursue to the detriment of the community.

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Posted by Sue
a resident of Menlo Park: Menlo Oaks
on Apr 11, 2008 at 12:49 pm

MPC - At least Paul and Morris sign their comments and seem to try to provide facts rather than your unfounded and nasty personal accusations.

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Posted by Derry Err
a resident of Menlo Park: Downtown
on Apr 11, 2008 at 1:36 pm

I think it's terrific that so many people care enough about our city to stay involved, year after year. I am not sure what a "non-family oriented agenda" is, but my observation is Morris, Paul, and others are trying to ensure that MP retains its focus on the community rather than becoming a pawn of a few rich people. I admire both Morris, who repeatedly sticks his neck out on behalf of our city, and Paul, whose knowledge is encyclopedic.

As a volunteer who was very peripherally involved with the petition drive, I found that most residents were not at all happy about the proposed project. Interestingly enough, when I talked one-on-one to people that the O'Brien Group hired to oppose the signature effort, they also sympathized with the desire to keep high density projects off the El Camino corridor. The original Derry project was just way too burdensome for a built-out city like ours.