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Is it concessions or extortion?

Original post made by Reg Rice on Oct 24, 2006

Recently, the slate of Menlo Park City Council candidates opposed to incumbents Lee Duboc and Mickie Winkler and newcomer John Boyle (Heyward Robinson, Rich Cline, and Vincent Bressler) has featured the Derry project referendum as an important plank in their campaign.
Even though they agree with the goals and features of the project, they claim that they could obtain more "concessions" from the developer. In plain language, "concessions" translates to mean "dollars that can be extorted from developers for permission to build."
They claim that the city should get 2 percent of construction costs in exchange for a building permit. This amounts to $l million that the city should get in addition to all the other concessions the city obtained during three years of negotiations.
Why is it legal for the city to extort money, but not for you and me?
Please support the council's efforts in the past, and vote for Winkler, Duboc and Boyle. In spite of negative attacks by a few activists on just about everything they have tried to accomplish, they have remained steadfastly on course and their efforts are paying off now with successful progress on the Rosewood Hotel at Interstate 280; the General Motors auto mall at Bayshore; and, eventually, the Derry project on Oak Grove Avenue. Note that none of this development is in residential areas.
Reg Rice

Comments (2)

Posted by HorseTrader, a resident of Menlo Park: The Willows
on Oct 24, 2006 at 7:23 pm

Monies paid by the developer to the city, schools, fire district, etc in the forms of "impact fees" and "mitigation" costs are called "exactions". These are nothing more than legally enforceable reimbursements to public service providers for costs they will incur to provide public services to the project. Exactions are not paid until after the project is built.

"Exactions" are not "Public Benefits" though project proponents like to make it seem as if reimbursing tax payers for public costs is a genuine act of generosity.

"Public Benefit" is a planning term of Art that has several meanings, depending on context, that are different than the lay meaning.

Menlo Park was not legally required to generously upzone the project from 18.5 units/acre to 50 units/acre. Two similar downtown projects, Beltramos and Menlo Square, were approved or built recently with conforming housing components of 18.5 units per acre, so the upzoning was not even required to attract development, it was purely gratuitous.

According to a senior planner, the net density of the Derry project is 50 units per acre. The zoning code previously allow 18.5 units acre. Therefore about 60% of the 135 Derry condo units (about 80 units) were enabled by the city council's generous upzoning.

At $800k per condo (the prices were published on the developer's web site) City Council generosity added a whopping $64M in project revenues. (80 units @ $800k).

Now Menlo Park can either add $64M in revenue to the project for nothing, or they can negotiate to get something substantial in return. Recently Stanford built two soccer fields for Palo Alto worth about $4M in exchange for transferable development rights that were no more dense than those given to Derry.

Finally the 1% to 2% of project cost figure was a recommendation of a subcommittee of Menlo Park council members that included Lee Duboc and Andy Cohen. When council "forgot" to adopt this recommendation, Andy Cohen wisely said he wouldn't support the upzoning, but Duboc, Winkler, Jellins, and Fergusson gave it away for free, though Fergusson put up a fight.

Asking for something in return for adding $64M project revenues is not "extortion," but asking for NOTHING in return for adding $64M in project revenues is just naive.

And forgetting to cut a deal supported by a bi-partisan subcommittee of council *BEFORE* approving the project is simply unbelievable.






Posted by Elias Blawie, a resident of Menlo Park: Central Menlo Park
on Oct 26, 2006 at 9:58 pm

Mr. Rice seems to forget that his own Slate candidates fostered a City Council discussion on exactly this subject a meeting or two prior to the council's final decision on the Derry project, and embraced the concept of appropriate coontributions by developers.

When projects generate substantial negative externalities like excessive traffic, crowding of our schools and diversion of dollars from existing students and the like, if the city sees some value nonetheless to the project, of course it is reasonable to ask the developer to provide additional contributions to offset these negative impacts, OVER AND ABOVE mandated minimum fees.

If the developer wants a handout of increased zoning density and overlooking of serious impacts like unmitigatable traffic delays, it is perfectly reasonable to expect something in return. Zoning handouts are not an entitelement but rather a very special privilege. Unfortunately in Menlo Park they have become the norm. That's among the reasons the Slate needs to go and we need to elect independents like Bressler, Cline, and Robinson.


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