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Letter: Revised calculations on the Derry project

Original post made on Dec 19, 2007

In a recent city-wide e-mail, Menlo Park City Council member John Boyle writes of the newly proposed Derry project: "...our city actually loses more than $2 million worth of fees and subsidies that the old project would have generated ..."

Read the full story here Web Link posted Wednesday, December 19, 2007, 12:00 AM

Comments (16)

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Posted by MPT_math
a resident of Menlo Park: Allied Arts/Stanford Park
on Dec 19, 2007 at 9:54 pm

Here's a back of the envelope analysis.

A conservative value on the original Derry Lane Project was
$160 million. Let's say $1mil per unit, and $1000 per sqft
of commercial, $1mil x 135 + 25Ksqft x $1000 = $160mil.
San Mateo RE tax rate is 1.25%. Thus, the past year's delay
of the project has already cost the public 2 million dollars.
that means the so called extra $2mil that MBrown and his
band got us offsets only the past year's RE tax. The new
Derry project has fewer units, true, but more of them are
now BIGGER, thus more likely to have families with kids.
The impact fees (school, parks) are smaller, and all future
RE taxes are also smaller.

Finally, because of the actions of MBrown and MPT, a similar
project at the old Cadillac dealership was withdrawn. Guess
what's suppose to replace it? a big high end grocery store.
fine for the foodies in town, but ZERO sales tax revenue and
a whole lot of traffic from locals and nearby towns. Excuse me
if I happen to think we have enough overpriced gourmet food around

Thanks for your continuing interest in Menlo Park, Mr. C. but
perhaps it's high time you turned your fine talents towards
improving government in your current place of residence,
Redwood City.

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Posted by truth will set you free
a resident of Menlo Park: Belle Haven
on Dec 20, 2007 at 12:07 am

MPT_math makes such ridiculous assumptions it is not even worth the time. Your council dropped the ball on negotiations and John Boyle feels obligated to defend real estate and developers. You are probably one of those two groups based on your amateurish approach.
And we don't get taxes from grocery stores? What? And where is that grocery story contract? Hmmm, you must know more than we do, which furthers the suspicion that you are one of those same developers.

Paul served this city for eight years. Show some respect or put in your own eight.

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Posted by MPT_math
a resident of Menlo Park: Allied Arts/Stanford Park
on Dec 20, 2007 at 1:10 am

Our city gets a significant portion of its revenue from sales tax. Check your Safeway/Dregers/TraderJoes receipt. Are you paying sales tax?

"Truth...", what part of the property tax calc do you not understand? Check this newspaper for what a new condo sells for. Ask anybody in a newly purchased home whether or not they are paying $15K to $25K per year in RE tax. What has the city received during this past year while MBrown was negotiating? a tiny fraction of what the proposed project would have paid.

Fine, 108 units vs. 135, I can live with that too. But how did we get here? MBrown, an unelected citizen, convinces 2K citizens (of 31K) that they ought to have a say. He then turns around and negotiates a private party deal on behalf of the entire city because HE KNOWS WHAT'S BEST FOR US. The deal is the deal, if the city doesn't like it, everything starts at zero. i.e. the city can't change it.

Paul C, you worked to get elected. You presumably think that only elected officials should have the power to negotiate on behalf of the citizens that elected them. Do you think that this hijacked process was a good idea? What if this process was used more frequently? What if this process yielded an outcome you DID NOT like? Or are you too pleased with the outcome of this Derry process to criticize it. I.E. the end, not the means is matters to you?

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Posted by Paul Collacchi
a resident of another community
on Dec 20, 2007 at 1:06 pm

Let's just work with this: "Fine, 108 units vs. 135, I can live with that too."

If you can live with the 108 units, then I welcome your support to the compromise.

I know a lot of "slow-growthers" on the referendum side who worked hard to accept this much development (R40 + commercial). They are taking a big step. So if you can make the step down to 108, and put aside some of the other issues, help the city move forward.

This is an R40+ housing project, downtown. Think about it.

In general, I agree that the city can't be planned through referendum, but I also think the city can't be planned through ad hoc negotiations of three people (a majority of five) who set aside the zoning code and zone parcel by parcel. Neither method works. The city needs to update its zoning code, and stick to it. That's what the ECR plan is about, and I keep recommending to the Council and the Planning Commission that they finish the Housing Element Update.

Though we are being attacked as a group of "private" individuals, three of us were former public officials, and the truth is we absolutely insisted on using existing Menlo Park planning standards: the Draft Housing Element, the Zoning Ordinance, the General Plan, the Parking Ordinance, and historical precedents as confirmed by city officials. We kept as much of the original Planned Development Permit as possible.

The Derry parcels had been identified as a potential R-40 site in the draft Housing Element Update by my council, so moving Derry to R40-ish was consistent with the draft Housing Element.

When the O'Brien Group really saw that we were sincere in trying to adhere to Menlo Park community planning standards and not just trying to block the project, they came around very quickly. I hope you will, too.

I stand by my participation in this matter as relying on existing standards, including the Streamlined Parking Ordinance that I don't particularly like. We didn’t make up the rules; we used Menlo Park's rules, and we didn't just use those rules we liked, we used them all.

There is no standard for the Public Benefit component, but I believe Rich Cline is proposing to have council formulate one.

If you and John can sign onto the compromise, then Menlo Park can start to create more examples in which partisans are able to find common ground. We did it during Measure T. But if city councils don't stick to community standards, then its just going to a be painful partisan process that goes back and forth back and forth with each new council.

After eight years, I learned to lose gracefully. That's what I learned.

The referended Leaf Blower Ban, Ordinance 915, the rescinded Residential zoning ordinance, the Child Care Center, Santa Cruz, M-2, the 2002 election. Enormous losses all. No matter how it might appear, no-one gets the outcome they want in a democracy. I *never* did, and supposedly I sat in majority for six years.

Don't carry the pain. It's not personal. Democracy is a really crummy system that turns us all into fools. It just happens to be the least crummy system, and I finally learned to accept being a fool.

Like this comment
Posted by Sick to Death
a resident of Menlo Park: Allied Arts/Stanford Park
on Dec 21, 2007 at 10:42 am

Paul Collacchi's Reasoning: "Though we are being attacked as a group of "private" individuals, three of us were former public officials, and the truth is we absolutely insisted on using existing Menlo Park planning standards: the Draft Housing Element, the Zoning Ordinance, the General Plan, the Parking Ordinance, and historical precedents as confirmed by city officials. We kept as much of the original Planned Development Permit as possible."

Mr. Collacchi, you and your negotiation team had no business acting as a quasi governmental body whether you followed the Z. O., the G.P. or the Parking O.. This process should have gone back to the council (they are the elected officials) and all discussion and deliberations should have occurred in public. That's what I thought would happen when I signed the referendum papers. Wasn't the referendum based on an issue of faulty process? This rookie council was weak or frightened of the power you bullies have been holding over them. The 2 Million you forced out of the developer means nothing except that Menlo Park is a city where the nuts have take over.

The council election in 2008 will, thanks to you, cause another drastic political backlash. Could you do us all a favor and meddle in the politics of the city in which you now live. We had enough secret government with the Winkler and Duboc people. We don't like your brand of back room deals any more than we liked theirs.

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Posted by referendum supporter
a resident of Menlo Park: Central Menlo Park
on Dec 21, 2007 at 11:25 am

While I do not like much the fact that there were secret negotiations, it seems to me that the Council had hoped for an improved project to come forward. One has.
The council still has the obligation to make a decision about the referendum petition as well as about the new project.
Unlike the secret government of the prior council, it seems that this council has not been involved in similar secrecy. There's a big difference! I support the public process that is now underway to review the modified project.

Like this comment
Posted by laugh to death
a resident of Menlo Park: Central Menlo Park
on Dec 21, 2007 at 7:34 pm

Rich Cline is brilliant to come up with that idea, but wait, is this REALLY his idea? Or that "five individuals" had giving much thought into this and Rich just acting as spoke person without even processing in his BRAIN?

Like this comment
Posted by Observer
a resident of Menlo Park: other
on Dec 22, 2007 at 9:03 pm

Sick to Death:
"The 2 Million you forced out of the developer means nothing except that Menlo Park is a city where the nuts have take over."

WOW - $2 million means "nothing"? What world do YOU live in, STD? I say give Mr. Brown the keys to the city for his efforts!

Like this comment
Posted by Paul Collacchi
a resident of another community
on Dec 23, 2007 at 10:00 am

Sorry, “Sick to Death” there’s no cure for your disease. You confuse privacy with secrecy, and you're mad at the wrong people.

I represent myself, not the City or the Referendum signers, and I have said so publicly. As a private citizen, I cannot "deliberate" for anyone.

Open Meeting laws apply to public officials not private citizens. I have every right to associate privately with developers to influence their choices, as anyone does.

The Referendum Petition appeared publicly before two distinct City Councils, each on multiple occasions.
-The former council tried to de-certify (nullify) it.
-The current council certified the Petition, but delayed acting on it.

All rights of Petition signers are preserved, because
-The Referendum was certified, and
-Certification invalidates the adopted zoning ordinances until they are either formally rescinded or ratified at the ballot box. No other project can use them, but they can be restored by voters.

The Developer publicly requested and agreed to the delay by the City Council to meet with private citizens to discuss a compromise project. This is a common practice, done by developers usually for show. It is rare for developers to then actually submit a proposal for a compromise project. (They usually use the delay to acquire a political consultant and conduct a public opinion poll, and then push to go to the ballot box.)

All official City deliberations on both Derry projects, including at least two meetings to review the compromise project, have occurred in public before the Planning Commission and the City Council according to Open Meeting laws. Those bodies deliberate on behalf of the public and have the formal authority to take action.

While “Sick to Death" grouses anonymously about transparency, others have a new choice and a chance to influence the outcome.

- If you like the new project, support it.
- If you like the initial project, tell council to put the initial project on the ballot.
- If you don’t like either project, ask council to both rescind the initial one and deny the new one.

Once certified, the Referendum Petition obligates the city to

1.) Place the initial project on the ballot.
2.) Rescind the new zoning laws, (thereby voiding the initial project approvals)

Were the City to rescind, the developer could then

3a.) propose a new, not “substantially similar” project
3b.) do nothing.

The City Council could then accept, deny, or try to modify the new project, as it will with the compromise project.

What is proposed with the compromise project:

-The City will formally rescind the Zoning Laws challenged by the Referendum, thereby fulfilling the Referendum, and
-it will adopt a new project that is not "substantially similar" meaning it does not require the rescinded zoning ordinances.

PS: For those of you really itching to be Mad as Hell about secret government.

1.) Be mad at those public officials who attempt to de-certify the Referendum Petition.
2.) Be mad at those public officials who violate Open Meeting laws.
3.) Demand some kind of public transparency when Developers meet with Council members privately to lobby them about projects, which they do.
4.) Demand some kind of public transparency when Developers meet with Staff members to discuss projects that are or are not formally under application, which they do.

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Posted by Willows GUy
a resident of Menlo Park: The Willows
on Dec 24, 2007 at 1:03 pm

MPT_Math's logic and calculations aren't right. Menlo Park only gets 12% of the property tax paid to SM County which is fixed by Prop 13 at 1% not 1.25%.

The value of the project is closer to $110M not $160M. If each of 108 units fetches $1M.

On a $110M project Menlo Park collects only about $115k, not $2M, which is not enough to cover the cost of city services to the project.

MPT_Math also lives in a mythical world where 108 new residences pay taxes but don't receive city services.

Because of Prop 13, most development, including residential development doesn't pay enough in property taxes to cover city services, so residential development, in general is a money loser.

This is one of the reasons for other taxes, like the UUT, and bonds, including school bonds.

The delay doesn't lose the city or the school district money, it saves money for both.

Like this comment
Posted by MPT_math
a resident of Menlo Park: Allied Arts/Stanford Park
on Dec 27, 2007 at 12:43 am

Willows Guy is incorrect.

repeating myself, the ORIGINAL Derry Project, had it been approved

1.25pct * [ 135 units at $1mil per + 25000 sqft of Commercial at $1000 per sqft ] = $2mil

Also, check your facts! the RE tax rate is determined at 1.25 pct of purchase. there may well be counties in CA not inclined to collect the full 1.25 pct but San Mateo County is decidedly not one of them! Also, I did not claim that the total RE tax went to the city. most does go to the school districts and the county, but wherever it goes, it goes to the public benefit in some way, education, county roads, services etc. The tax NOT collected does NOT go to public service. Hence the year delay caused by MPT cost the PUBLIC (we folks) $2mil, not the city. it's not rocket science! Paul C. has had a while to dispute these numbers and has not done so because he KNOWS they are right!

I am not here to quibble about 135 or 108. The O'Brien Group are idiots and had their asses handed to them, which is fine by me. I cannot support this deal because of the way the deal was put together! Paul C. defends the outcome but not the process, defends his participation by justifying that he is an ex-official. Well ex is ex, he has no right to hijack what was already a public process. Two thousand plus signed on to VOTE on the deal already on the table, NOT to hand power to a handful of guys in a back room to cut a NEW deal with the developer.

Paul C. doesn't think that subsequent councils should be allowed to exercise power that might change something that his council left in place. HIS code/ordinance/housing element/gen plan are sacred and are not to be touched. All councils after his should limit themselves to ribbon cuttings and public proclamations.

Paul C. makes some pretty facetious demands about developers. First, who is a developer? If I remodel a house for myself and sell it two years later, am I a developer? Even if I were, why is it fair that I be subject to special rules not applied to other citizens or to other businesses? What about my privacy or my legitimate concerns about keeping my business private from competitors? Don't developers produce a product that people want? if not, why do they pay SO much for it? Is it because they make a profit? Aren't other types of businesses also making profits too?

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Posted by Get-it-right
a resident of Menlo Park: Central Menlo Park
on Dec 27, 2007 at 9:22 am

MPT_math, your logic and your numbers are out to lunch. Your evaluation is way too high -- you don't take into account the BMR units not having anyway near the 1MM valuation you put on them and $1000 /sf on the commercial is ridiculous.

It is refreshing to see you now plainly state that your $2MM is not money to the City, and that the City will only get 12% of that amount. Remember,$2,000,000 public benefit money goes fully to the City.

So Willows Guy is not incorrect, he basically gets the facts correct.
MPT_math calls the O'Brien Group idiots, which should immediately lead one to discard any arguments he offers.

The O'Brien group has won numerous awards for outstanding developments, they are extremely financially stable, and here in Menlo Park they developed the Vintage Oaks project, which by any account is a great project.

MPT_math, if you don't want the compromise project, than go to the planning commission meetings and council meetings and write and tell them you want the original project and send the referendum out to a full vote of the city at the next election.

Tell the City council to ignore the $2MM in public benefit monies they are going to receive and vote to let the people decide if they want a 50 foot high 135 unit project and most likely another 135 units on the old Cadillac site. This seems to be what MPT_math wants, so that must be what the City should have.

Something tells me that the voters pretty much already have spoken on that issue when they dismissed DuBoc and Winkler in the last election.


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Posted by MPT_math
a resident of Menlo Park: Allied Arts/Stanford Park
on Dec 28, 2007 at 1:27 am

there were approximately 22 BMRs in the original. let's take a 1/2 price markdown so we adjust my total project valuation by $11mil down. The tax is down to $1.86mil. Remember, MPT has delayed the project more than one year already. The clock is still ticking, perhaps it might stretch out yet longer, thus the foregone RE taxes increases. let's not forget the many other fees/taxes that have also been reduced.

$1000 per sqft is very much plausible and probable. Peruse any RE site. Newish commercial space at $4 per sqft per month triple net at a cap rate of 5% translates into a valuation of $960 per
sqft. BTW, Palo Alto downtown gets $5-$7 a foot.

"Get it right", so you think that giving all $2mil to the city is a good idea? Why? So they can hand it over for boondoggles like the Park theatre? Excuse me, but whether the forgone RE tax I calculated was $1.86mil or $2mil, maybe the money is better spent by my local school district or the county than by the city.

Yup, Vintage Oaks was a great project. So was the Keplers/Cafe Borrone building. The new Safeway opens to rave reviews. Every significant project or building that improved our city was fought tooth and nail by someone because THEY thought THEY should/must have a better idea on how to do it right. It sure isn't clear to me that the MPT folks improved the Derry Project, but it is very clear that they have cost us money.

It still appears that there has been only one wishy/washy defender of HOW we got here with the Derry Project and that's Paul C. I pose the challenge AGAIN, does anyone think that it was right that two thousand people were misled into thinking they would get to vote on the original project that had been subject to a three year public process thru Planning, then thrown out for a new project negotiated in secret whose features cannot be changed by the city which the city can only vote up or down? How many of you out there would agree to let all council decisions work this way? All legislation henceforth should be prepared by an interested/informed/indignant citizens group for presentation to the council for a up or down vote. Does that work for anyone?

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Posted by disappointed
a resident of Menlo Park: Central Menlo Park
on Dec 28, 2007 at 10:48 am

It is specious to evaluate the proposition merely in terms of dollars generated. By that argument, all older buildings should be demolished and replaced by newer buildings that will generate more property taxes, and all proposed projects should be fast-tracked so as to get the money into the city's coffers as soon as possible. Some cities operate in that manner, but Menlo Park has traditionally placed too high a value on intangibles (that nebulous "quality of life") to be willing to make those tradeoffs.

That said, I suspect that many people, including those closely involved with Derry, feel queasy about the way in which the project has unfolded. Paul's eloquent arguments aside, this is not what we, the public, requested when we signed those petitions. Maybe the new project represents the best possible outcome for our city, and maybe it's inevitable that we will see large blocks of dense housing along the El Camino corridor, but given the alacrity with which most residents signed the petitions, I don't think that's what most of us want. The extra $2 million is nice, but it's a one-time hit, and those housing units will be with us for many, many years.

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Posted by 50 year resident
a resident of Menlo Park: Downtown
on Dec 28, 2007 at 11:07 am

"disappointed" makes very valid points. As a long time resident I value our "quality of life" way above any public benefit money that is received from projects. If the now underway El Camino visualization effort results in high density housing similar to what Redwood City endorses, it will be a disaster.

If the City endorses grade separations of the rail line, effectively cutting MP into 2 sections, it will be a disaster.

Hopefully, another Derry will not take place. Development along El Camino will be low density, high class commercial space, and not what Stanford proposes, high density medical office.

50 year resident

Posted by Name hidden
a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle

on Jun 5, 2017 at 9:21 pm

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