Frequently Asked Questions

Menlo Gateway is a 21st-century mixed-use project designed to meet the needs of today's businesses and knowledge workers by providing sustainable office space, hotel, and fitness club facilities to serve workers and the surrounding community. It comprises three office buildings, an upscale hotel, a health club plus a café/restaurant with shared parking facilities, and retail and community space to serve the immediate neighborhood.

The Bohannon Development Company (BDC) is a Peninsula firm with deep roots in Menlo Park and the broader region. The company has owned property and invested in the Peninsula since 1930. Launched by David D. Bohannon in 1928, the firm began in residential real estate, and in 1941 initiated its commercial development activities with the Hillsdale Shopping Center. BDC developed Bohannon Industrial Park in Menlo Park’s current M-2 district in the 1940s. Throughout its history, the Bohannons have served as community stewards, working hand-in-hand with elected leaders and community groups developing innovative and responsible projects and programs to ensure Menlo Park’s successful future.

Menlo Gateway will be located on two tracts of industrial land east of Highway 101 near the Marsh Road interchange, ideally located between San Jose to the south and San Francisco to the north. It will offer easy access for employees, convenience for hotel guests, and opportunity for businesses to attract the area's top talent.

The project was originally proposed in 2004 to include approximately 500,000 square feet of office space with a 120-room Marriott Courtyard-type hotel. In this form, the project would have generated $575,000 in net new revenue to the City of Menlo Park (City) each year. After the original proposal was submitted, the Bohannon team was approached by a Marriott group representing the Renaissance ClubSport (RCS) brand, which proposed the concept of a luxury hotel combined with a high-end fitness center. This new combination triggered the re-evaluation of the original plans and the consideration of additional office space necessary to support this RCS concept. As reconstituted, the Menlo Gateway project will generate $1.67 million in net new revenue to the City of Menlo Park—almost three times the original program.

BDC seeks to transform a portion of the aging, underutilized Bohannon Industrial Park into a state-of-the-art campus environment primed to attract flagship tenants to Menlo Park. With such a transformation in mind, BDC designed Menlo Gateway as an exceptionally high-quality, sustainable project that will provide jobs and revenue to Menlo Park—with the likelihood of a reasonable return on investment for the Bohannon family.

From a tenant mix perspective, Menlo Gateway will tap into Silicon Valley companies and professional services firms attracted by a first-class hotel, health club, and restaurant on-site, in such close proximity to freeways and airports. Menlo Gateway’s vision and commitment to sustainability also will be a strong draw for forward-thinking Silicon Valley companies that increasingly are committed to minimizing their impact on the environment. We already are in discussions with potential tenants who want to operate in the superior business office environment provided by Menlo Gateway, which will be unparalleled in Silicon Valley or along the 101 corridor.

The Planning Commission and City Council approved the following:
• General Plan Amendment
• Zoning Ordinance Amendment
• Development Agreement
• Parcel Maps
• Architectural Control
• Tree Removal Permit
• Below Market Rate (BMR) Agreement
• EIR Certification

The Menlo Gateway team worked with the City to structure the development application in such a way as to maximize the opportunity to meet the needs of modern businesses, while providing meaningful contributions to the City. The M-3 district is intended to provide for greater density and height in exchange for high quality, cutting edge projects that will significantly contribute to the City. Importantly, the M-3 district specifically was designed to protect the M-2 from future conversions by including a Development Agreement requirement—a device which reserves the new M-3 designation for large-scale, sophisticated projects that can provide public benefits to the City.

This application allows BDC to deliver a high quality, sustainable, and financially viable project, while also providing substantial revenue to the City and creating a significant amount of jobs for the community.

A Development Agreement (DA) is an agreement entered into by the City and the developer that establishes certain contractual rights between the parties. Traditionally, the City locks in certain “public benefits” that will accrue to the City from the project, while in exchange the developer gets a “vested right” to develop the project in accordance with the rules and regulations that are in force at the time of the DA’s execution.

The City Council approved the DA in June that provides for the following “public benefits:”
• Guarantee payments;
• Capitol Improvements in the amount of $1,750,000;
• Voluntary 1% TOT Increase;
• Priority Hiring Program;
• LEED Certifications;
• Vehicle Trip Reduction; and
• GHG Emissions Reductions.v

The City prepared an Environmental Impact Report (EIR), which discloses all potentially significant environmental effects of the project, pursuant to the California Environmental Quality Act (CEQA). Most identified impacts will be mitigated to a less than significant level; however, a few impacts (e.g. traffic, air quality, water supply and noise) have been determined to be significant and unavoidable, as no feasible mitigations exist to lessen their effects.

The EIR identified local traffic impacts based on an evaluation of the potential traffic destined for Menlo Gateway. Based on the public scoping process, the EIR evaluated 21 roadway intersections to best understand potential traffic impacts. The EIR focused on traffic impacts during the morning and evening commuting peaks and identified 7 intersections for mitigation. All of the mitigations are straightforward changes to the existing intersection layouts including adding right or left turn lanes, adding new merge lanes for traffic, and adding a new traffic signal immediately adjacent to the site. As expected, there are more mitigations near the site and fewer as you travel away from the site.

BDC has taken a proactive design approach to each of the mitigations required in the EIR. To demonstrate that each mitigation is feasible, a conceptual design plan has been created for each intersection to validate that the mitigation is constructible based on the most current City and Caltrans design standards.

In addition, BDC has developed a comprehensive and robust Transportation Demand Management (TDM) program to create commute alternatives and encourage workers and visitors to use alternate modes of transportation. Elements proposed include new shuttles to Caltrain, vanpools, commuter subsidies, showers, changing areas, preferential vanpool/ carpool parking, a commute assistance center, and numerous other site amenities and incentives. With its location in close proximity to existing public transportation, and a range of transportation options for workers and visitors to choose from, Menlo Gateway intends to offer the widest range of transportation alternatives for a project of its type on the Peninsula.

The Menlo Gateway team designed the campus to provide the maximum accessibility for both pedestrians and cyclists throughout the site. The project also includes amenities such as shower/locker facilities and secured bicycle parking. In furtherance of this pedestrian and bike-friendly goal, the Menlo Gateway team felt it important to connect both the Constitution and Independence sites together. The result is a design that connects sidewalks along Independence Drive and Chrysler Drive, as well as a multi-use pathway from the Constitution site to the regional bike route along Bayfront Expressway, which also connects up directly to Bedwell Bayfront Park.

Off-street parking is located immediately adjacent to each of the buildings in surface lots and structures. These spaces will provide adequate and safe parking for employees, hotel guests, club members, and visitors to the site. The amount of off-street and shared parking has been determined using industry standards published in professional transportation engineering guides by recognized organizations, such as the Institute of Transportation Engineers (ITE) and the Urban Land Institute (ULI). These publications include nationwide data of parking demand for similar land uses. This data reports the average amount of parking demand expected for particular land uses, as well as times of peak parking demand, such as midday near a restaurant or morning near a coffee shop. The “sharing” of parking spaces between each use helps to determine the appropriate amount of parking spaces, so as to avoid the provision of underutilized parking spaces. In addition, the Menlo Gateway team is working with the City to provide some convenient on-street parking spaces for short-term uses, such as deliveries, brief client meetings, or pick-up and drop-off of employees.

Menlo Gateway takes a leading-edge "green" approach. The project will re-develop existing, under-utilized industrial land according to sustainable principles with the goal of achieving LEED certification. By combining more densely organized structures with concentrated parking in above-grade structures, more ground plane can be opened up and returned to use for landscaping, pedestrian open space, and tenant amenities. Site, building and interior design all contribute to these sustainability goals. For instance, the project proposes using drought tolerant landscaping material with a low-flow irrigation system. Moreover, the site has been designed to allow for primary biofiltration of storm water through vegetated bioswales. Heat island effect is reduced by shading of parking areas as well as the inclusion of major areas of landscaped open space (over 40% of the site). The buildings are designed with energy efficient exterior skins, large amounts of north facing glass for daylight harvesting, shading devices on the south facing windows for passive solar efficiency and light shelves to reduce dependency on artificial lighting. Both HVAC and water systems are state of the art, energy efficient and water conserving systems. Materials used will include locally produced products as well as those with high recycled content.

From project inception, the guiding principle for design has been to create a model of sustainability for mixed-use development, resulting in the most sustainable project of its type on the Peninsula.

LEED (Leadership in Energy and Environmental Design) is a sustainability rating system developed by the US Green Building Council (USGBC). This system takes into account such elements as site design, energy design, materials and indoor environmental quality, with the purpose of creating healthier, more sustainable environments for working and living.

At Menlo Gateway, the site and building design (both exterior and interior) will contribute to achieving LEED Gold certification for the office buildings and LEED Silver certification for the hotel and health club. The architecture, civil engineering and structural design all contribute to the accomplishment of this LEED certification. In addition, BDC is establishing a set of guidelines for the green design of interior improvements for tenants throughout the life of the project. A robust TDM program will further contribute to the project’s sustainability, namely by providing local shuttle systems that link up to the Cal Train stations in both Menlo Park and Redwood City. BDC is committed to LEED certification and has assembled the right team to deliver on this promise.

A provision in the DA requires BDC to fully offset GHG emissions from electrical and natural gas energy consumption for the Menlo Gateway buildings. These offsets will be accomplished through participation in PG&E’s ClimateSmart program.

The Menlo Gateway team currently is analyzing the economics of solar power, which we anticipate can be a significant part of the project. The buildings and parking structures already have been designed with solar panel arrays in mind. For instance, the top floor terraces are shaded by trellis structures that encompass integral photovoltaic panels. Similarly, the parking garages are designed to have rooftop mounted trellis structures that support photovoltaic panels, which also serve to provide shade for the top floors, thereby reducing the heat island effect.

Housing is not included in the Menlo Gateway project as residential uses tend to be incompatible with the industrial/commercial nature of the existing and proposed zoning. However, the project will pay an in-lieu fee to the City’s Below Market Rate (BMR) Housing Program, which requires residential and commercial/industrial developers to contribute either BMR housing units or BMR housing in-lieu fees to help increase the supply of affordable housing in the City. The project would pay about $8 million to the BMR program.

The EIR estimates that the project would generate the potential need for about 110 units of housing within the Association of Bay Area Government’s (ABAG) recent Regional Housing Needs Allocation (RHNA) cycle, which equates to an insignificant impact when considering the City’s overall responsibility to provide housing in the various income categories. As noted above, Menlo Gateway will pay a BMR fee that will help the City address its need to provide for very low, low and moderate income housing.

This factor is based on the current number of residents who live and work in Menlo Park. Given the higher than average housing prices, the lack of housing supply, and the lack of multi-family and affordable housing options in Menlo Park, this figure is reasonable and also typical of most cities in the area. As shown below, Menlo Park’s rate is similar to the overall county average rate.

(CHART) Number of People who Live and Work in Each City in San Mateo County

The City determined that Menlo Gateway would not directly generate any new students to the local school districts because the project includes no residential uses. Moreover, it is very rare for an employee to transfer their child into the school district where they work. Also, most school districts do not have excess capacity to accept students that live outside the district. Lastly, because of the housing costs and lack of availability in Menlo Park, the potential for an overwhelming number of Menlo Gateway employees to move to Menlo Park and overburden the school system simply is a myth.

The Renaissance ClubSport brand has feasibility criteria to evaluate the financial viability of potential development sites. These criteria include trade area competition for both hotels and health clubs, the amount of businesses and employees in the surrounding area, as well as critical mass criteria for both corporate and residential users. For the Menlo Gateway proposal, Marriott concluded that a minimum of 700,000 square feet of office would be necessary to provide business volumes to support a financially viable hotel and club project. As such, Menlo Gateway is “right-sized” to yield a successful project for the City, the community, the hotel operator, and the project sponsor.

The office buildings proposed for Menlo Gateway are designed to attract leading corporate and technology tenants that also will drive the success of the hotel and health club. These “Class-A” office buildings will provide space for a range of office and research & development businesses, professional services, hi-tech companies, , as well as many other business types that might be interested in locating along the 101 corridor of the Peninsula. New heavy industrial or manufacturing space is not proposed because there is no longer enough demand for such industrial space in the M-2 area. In fact, most of the existing industrial spaces have outlived their useful lives. Even during better economic conditions a few years ago, there existed a large number of vacancies in these buildings, which supports the conclusion that the market in the M-2 no longer exists solely for these industrial uses.

Menlo Gateway, however, does seek to complement the remaining industrial uses in the M-2 area, by providing the hotel, restaurant, health club, and banquet/conference facilities as neighborhood-serving resources. Moreover, the Menlo Gateway team anticipates that some of the businesses locating in the project could decide to place their heavier R&D or prototype manufacturing uses in the existing buildings surrounding the site.

Menlo Gateway will generate about $1.67 million in net new revenues annually, which constitutes a 4.4% increase in the City’s annual General Fund revenues35. What are the sources of the revenue to the City?

About 60% of this revenue would come from the hotel tax, 23% from property taxes, 7% sales tax, and the remainder from miscellaneous revenue sources, business licenses and utility taxes, etc. The following table summarizes the revenues and net fiscal impact that would be associated with the project.

(CHART) Menlo Gateway Fiscal Impact Analysis 2010: Summary of Revenues from Menlo Gateway

The project will generate about $15.6 million in one time revenues from impact fees, based on current 2010 fee rates.

(CHART) Menlo Gateway Fiscal Impact Analysis 2010: Impact Fees

The project generates a net of $1.67 million per year compared to a net of $2,326 per year from existing development.

(CHART) Menlo Gateway Fiscal Impact Analysis 2010: Comparative Revenues

Menlo Gateway will create roughly 1,800 construction jobs and total of 2,538 permanent jobs within the project. The net new employment is about 1,838 jobs after subtracting the existing 700 jobs associated with the site.

Yes. BDC has signed a letter of intent with JobTrain to enter into a First Source Hiring Agreement for Menlo Park residents. This agreement will provide JobTrain clients with the “first crack” at many jobs provided in the Menlo Gateway project—both construction and permanent jobs.

Menlo Gateway would trigger a significant infusion of dollars into the economy because of the project’s attraction of new users and employees who will spend their money locally. Based on an input/output analysis prepared by Brion & Associates, Menlo Gateway would generate an additional $256 million in business activity throughout San Mateo and Santa Clara Counties every year. For every direct dollar spent by the project, another $0.68 would be generated annually in the local economy.

New retail spending in Menlo Park alone is estimated at $12.3 million, some of which would occur on-site at the hotel and health club. In addition, the construction of Menlo Gateway would generate an additional $142 million in economic activity in the two counties during the construction of the project.

In terms of new jobs, Menlo Gateway indirectly would generate a net increase in employment of about 1,560 new jobs from project operations through the region and an additional 887 one-time jobs from construction and impact fees. These are in addition to the direct jobs discussed above. The construction jobs would be phased with construction of the project.

There are a total of 228 trees for the combined sites. Of those, 204 are proposed to be removed. The city requires a replacement factor of 2 new trees for every one tree to be removed. The project is proposing to add 686 new trees to the combined sites, which will be greater than a 3 to 1 replacement ratio.

When the City initially scoped the potential impacts of the Menlo Gateway project for the EIR, it determined that the project would have no substantial, adverse impacts to Bedwell Bayfront Park. Consequently, this potential impact analysis was scoped out of the EIR in accordance with CEQA. As part of the Developer’s Agreement with the City of Menlo Park, the developer has agreed to contribute $1.75 million for capital improvements for the Belle Haven neighborhood and Bedwell Bayfront Park.

The EIR found that the Menlo Gateway project will have significant and unavoidable impacts in the areas of traffic, air quality, water supply and noise. We direct your attention to those correlating chapters in the EIR for further discussion. Because the EIR finds these impacts to be significant and unavoidable, the City must adopt a “statement of overriding considerations” that requires the Council to balance the economic, legal, social, technological, or other benefits of the project against its unavoidable environmental risks when determining whether to approve the project.