Mayor Combs and City Council,
I enthusiastically support the Downtown Parking Plazas Citizens’ Initiative. Menlo Park’s downtown, quite simply, depends on the access provided by the parking plazas. A decision to repurpose those lots should be made by the residents who use them - not by outside consultants. Unfortunately, consultants rarely have real, practical experience and often make recommendations made on theory as opposed to what has worked, or not worked, in practice. I spent 25 years of my career working for a publicly-traded Real Estate Investment Trust that develops, redevelops, and operates roughly 100 retail-focused properties (many with upper story apartments, condos and office space) on the East and West Coasts, including Santana Row, which is where I had my office for 21 of those 25 years. As President and Chief Operating Officer, I was significantly involved in many interactions with tenants, elected officials and oversaw the development, redevelopment and operation of multiple commercial properties. Here’s what I’ve heard or read about in the public documents that warrants serious, further consideration before turning the parking plazas over to a developer.
1. Parking is the lifeblood of retail, restaurant and service business like we have in downtown Menlo Park. Parking must be adequate in its supply, convenient to use (i.e. no “friction”), and preferably free. Parking is essential for not only the customers of the businesses but also the employees, most of which are paid minimum wage and can’t afford to pay for parking when they come to work. Parking garages (structures) create friction, are expensive to build (more on that later), and if part of the plan is to charge for parking, create additional friction for the customer and put a significant economic burden on the business owner as their employees parking costs will need to be subsidized one way or the other. Finally, operating a parking garage is expensive (sweeping, lighting, and securing), and operating a revenue generating parking garage (i.e. paid parking) is even more expensive and complicated.
2. Construction of the type of buildings envisioned for the parking plazas will be very disruptive and will likely put many of the existing businesses in downtown Menlo Park out-of-business or at significant risk of failure. The proposed high rise residential buildings to-be built above parking garages are complicated and will take +/-3 years to build. During that time, some or all of the parking plazas will be unavailable AND there will be a large influx of construction workers, further burdening the parking supply in downtown. This will have a material, adverse impact on the downtown businesses. What the City’s Consultants likely don’t understand is the fragility of the finances of these businesses. With the exception of Walgreens and the banks, nearly all of the businesses downtown are owned independently ad have limited cash reserves to survive a downturn in their business. Most of these businesses only make a profit on the last 10-15% or so of their sales. So, if parking is impacted, customer traffic is down, and sales go down, many of the businesses will be unable to survive after only a handful of months. At my prior job, I worked with countless small businesses (the Company had over 3,000 in its properties) during the Great Financial Crisis and the Pandemic to help them stay in business during these two economic downturns, and the fragility of their finances was eye-opening. The multiple, independent landlords in downtown Menlo Park are ill-equipped to help their tenants. Again, I doubt this is being considered by the City’s Consultants to the extent that it needs to be.
3. Residential and commercial parking cannot be successfully co-mingled. Several of the properties owned by my prior employer had residential units above our adjacent the ground floor commercial spaces. We found that commingling of the parking for these different uses doesn’t work as the residents have unpredictable and variable times when they need to park their vehicles and must always know that a space is available. Further, safety issues for the residents arise when the garages are open to the general public. The concept of commingling, getting “double-use” from a space, and saving money by building fewer spaces sounds like a reasonable concept in a consultant’s report but practically speaking doesn’t work. “Nesting” the residential spaces within a multi-purpose use garage will be required, but that doesn’t create any synergies or reduce the parking space count.
4. The parcel sizes are relatively small and when combined with the need for “replacement parking” result in complicated, expensive buildings. The required unit count combined with the tall parking garages will force high-rise, concrete and steel “Type 1” construction that is materially more expensive than other construction methods and could make the projects difficult/impossible to finance or result in a lower unit count, defeating the objective of maximizing the affordable housing unit count. A better option would be to choose a larger site(s) that doesnt require “replacement parking”, results in more efficiently planned parking garages, and allows lower-height, less expensive construction methods such as wood frame (“Type 5”) or steel stud (“Type 3”) construction. This would ensure a more financeable project and yield more units.
5. The Replacement Parking will be expensive. Likely $35-45 million or more will be required to build the replacement, commercial use parking spaces on the current surface parking plazas in the proposed one floor down, 5 floor up garages. I doubt that the sources of affordable housing financing will include these costs, so WHO IS PAYING $35-45 MILLION OR MORE FOR THE REPLACEMENT PARKING? The Consultant may tell you that the City can charge for parking and cover the interest on a bond to pay for the lost spaces in parking garages, but that won’t work…get an independent parking garage operator (not a consultant) to do this analysis. The costs of operating a revenue-generating parking garage are substantial.
6. The additional downtown residents won’t materially impact the profits of the downtown businesses. I’ve read several comments about how the increased foot traffic from the residents living in the new housing units will be a great benefit to the downtown businesses. That is potentially the case for a few…Starbucks, Subway, Peet’s…maybe a few more. Based on my experience with larger, mixed-use projects, the overall benefit from a few hundred residents, however, will be incremental at best, and is not a reason to risk disrupting downtown for multiple years while the parking plazas are taken off-line and the buildings are constructed. This is something a Consultant could study and report on using traffic analysis from https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fplacer.ai&c=E,1,NfImcTdFH8bmZkOGz--QlAlDbHgzxjID_dP1JY_pafY0xXYC1Bl0OKOQHRUV9I0_qljA1nYhbFLa7NIYfQa0HzJ76GDZmqgodKrJFv8YyxGWmg,,&typo=1 and projecting the incremental sales generated by disposable income of those in the affordable units and comparing it to the gross sales of the existing downtown businesses. Interviews on this topic with some of the downtown merchants that operate in mixed-use environments (like left Bank) should be undertaken as well.
Clearly, the Council has a complicated and sensitive situation on its hands and must balance the requirements of the State and the desperate need for more affordable housing with the viability of our downtown not only now and during any major construction project, but after the projects are constructed and the garages are in operation. The proposed buildings will forever alter the landscape of our community. Given the number and breadth of the stakeholders and the longevity of the impacts of the decision before the Council, I think it should go to the voters, even with the negative implications of making the process more cumbersome.
Thank you for the service to our community. You bear a massive responsibility with this decision.
Jeff Berkes
1303 Johnson St.
Menlo Park, California
