Facebook willing to pay Menlo Park $15 million-plus for company's expansion

Benefits include subsidized rent for 22 teachers, $350,000 for housing inventory and local supply study with Menlo Park and East Palo Alto and more

Menlo Park could reap more than $15 million in one-time payments and contributions and hefty annual payments from Facebook if it decides to accept the terms of a development agreement with the social-media company outlined in a staff report released Thursday evening, July 14.

Among the benefits the city could receive are subsidized rent for 22 teachers, public-safety officers or nonprofit workers; $1.25 million a year in hotel taxes; $1.5 million to start a "Housing Innovation Fund"; and continued funding to research and further plan transportation improvements on the Dumbarton Corridor.

"I think it's fair and I'm happy with how the negotiations went," said Vice Mayor Kirsten Keith, who with Mayor Rich Cline was part of the subcommittee that negotiated for the development agreement.

If the terms in the development agreement are approved by the City Council, the city would give Facebook the right to build two offices totaling 962,400 square feet and a 174,800-square-foot, 200-room hotel in the city, knocking down several of the former sites on the TE Connectivity campus, located along Bayfront Expressway, Constitution Drive and Chilco Street.

Designs show that Facebook also intends to create a publicly accessible open space between the two office buildings with a bike-and-pedestrian bridge over Bayfront, offering access to Bedwell Bayfront Park and to the Bay Trail.

The city would have to amend its zoning to allow the new buildings to be 75 feet tall -- where now the permitted building height is capped at 35 feet -- and reconfigure the properties so that the buildings can be adjoining.

The development agreement would also permit Facebook to cut down 274 heritage trees.

In exchange for those permissions, Facebook would pay $300,000 per year for 20 years after the first office building is occupied as a public benefit, and $336,000 per year -- four times the amount of sales tax historically generated from that site -- until TE Connectivity, Facebook's current tenant on the site, leaves.

After that, the company would have two years until taxes would spike to $1.25 million per year; any money the company earns in hotel taxes would count toward that amount, according to senior planner Kyle Perata.

According to the development agreement, Facebook would also provide a number of other benefits in the areas of housing, transportation, community services and the environment.

If all the proposed buildings are constructed within 10 years, Facebook's project would add about $2.1 million per year to Menlo Park's revenue.

"It's our responsibility to provide public benefits that are responsive to community priorities and assist with finding solutions to address regional challenges related to housing and transportation," said John Tenanes, vice president of global facilities and real estate at Facebook. "We want to continue to build social value and grow responsibly in the city of Menlo Park."


Facebook would subsidize the rents of 22 units at 777 Hamilton Ave., a new market-rate development by Greenheart Land Co., paying $430,000 per year for five years. Those units would give priority to teachers, but public-safety officers or nonprofit professionals could also be eligible.

Facebook would also have to abide by the city's Below Market Rate ordinance, meaning it would pay $6.3 million or build 20 affordable-housing units in the city. According to Facebook officials who spoke at a Menlo Park Housing Commission meeting, there are talks underway with MidPen Housing to channel those funds toward a project by the nonprofit housing developer on the 1300 block of Willow Road.

If the Menlo Park general plan update now being developed goes through, the company would also commit to plan and design at least 1,500 housing units on its Prologis site, 15 percent of which would be below-market rate.

It would also put $350,000 toward conducting a housing inventory and local supply study with Menlo Park and East Palo Alto. Funds for the study would be bolstered with an additional $1.5 million to go toward creating a "Housing Innovation Fund" to implement recommendations from the study and $1 million to launch a pilot "Housing Preservation Fund," which would find and buy housing to "protect at-risk populations."


Facebook would also contribute to the city's infrastructure and transportation initiatives. It would pay up to $1 million to fund future recommendations from the Dumbarton Corridor Study it has already funded with $1 million, and an additional $1 million toward a "forum" with Menlo Park and East Palo Alto to decide how to quickly implement those recommendations.

It would also offer $100,000 toward a Transportation Management Association, which could involve working with other nearby companies to efficiently transport employees.

In addition, Facebook would fund the design of a bike-and-pedestrian path between East Palo Alto and the Redwood City Caltrain station up to $700,000, and finish streetscape, bike and pedestrian improvements along Chilco Street.

Community services

Facebook would pay $60,000 per year to operate and maintain the Belle Haven community pool and would establish a scholarship program for East Palo Alto and Menlo Park residents, committing $100,000 per year for 10 years. It would also commit to paying $1 million toward the maintenance and operation of Bedwell Bayfront Park.


Facebook would pay $25,000 in seed money to fund a feasibility study for a recycled-water system in the city's M-2 area east of U.S. Highway 101. It also would commit to build at a Leadership in Energy and Environmental Design (LEED) Gold standard, the second-highest level of environmentally focused building standards, and would have solar panels and an on-site recycled-water system.

Editor's Note: A previous version of the story incorrectly stated that Facebook had committed to build at least 1,500 housing units on its Prologis site. The company has committed to plan and design those housing units, according to a Facebook spokesperson.

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7 people like this
Posted by Tom Lynch
a resident of Palo Alto Hills
on Jul 18, 2016 at 7:06 pm

It is true. Money can buy anyone or anything. Here Facebook is allowed to bend the rules and get whatever they want with the amazing dollar. The city council is at their knees drooling to take the dough.

I like the fable about the "affordable housing." Makes me chuckle...

8 people like this
Posted by Reality
a resident of Midtown
on Jul 18, 2016 at 8:03 pm

Reality is a registered user.

Actually, the money FB is willing to give Menlo Park is only a drop in the bucket compared to what MP is going to need if FB gets their way!

Sorry, but further commenting on this topic has been closed.

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